FORM 10-K FOR 9/30/10
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended September 30, 2010 Commission file Number 0-7376
Hynes & Howes Insurance Counselors, Inc.
(Exact name of registrant as specified in its' charter)
Iowa 42-0948341
(State or other jurisdiction I.R.S. Employer Identification No.
of incorporation or organization)
2920 Harrison St., Davenport, Iowa 52803
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code (563) 326-6401
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
None None-filing pursuant to Section 12 (g)
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed with the Commission and (2) has
been subject to the filing requirements for at least the past ninety (90) days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
11,222,699
Item 1. Business
(a) Hynes & Howes Insurance Counselors, Inc. (hereafter the "Registrant")
was an independent insurance agency handling principally all types of
casualty, fire and surety insurance. Registrant was organized as a
corporation under the laws of the State of Iowa on June 28, 1969, as
Hynes & Howes Insurance Company. Because it became apparent this name
created confusion as to the business of Registrant, an amendment to the
Articles of the Incorporation was filed on November 17, 1970, with the
Secretary of the State of Iowa changing the name to Hynes & Howes
Insurance Counselors, Inc. This action was ratified by the
stockholders at a meeting February 5, 1971.
At the annual stockholders meetings for 1973, 1974, 1975, 1976, 1977,
1978, and 1979, a proposal was made to amend the Articles of
Incorporation to change the name of the registrant from Hynes & Howes
Insurance Counselors, Inc., to the United Insurance Counselors
Corporation. The Iowa Business Corporation Act requires an affirmative
vote of the majority of the outstanding shares of the corporation to
effectuate such amendment. Although a quorum was present at each of
these annual meetings, fifty per cent (50%) required to change the
Articles of Incorporation were not represented, and the proposal could
not be acted upon.
(b) The general insurance agency and brokerage business was highly
competitive. Registrant competed locally and regionally with many
direct-line writers of fire, casualty and surety insurance who were
much larger than Registrant in all respects including premium volume,
capital and personnel employed. Registrant was also in competition
with thousands of independent insurance agencies, some of whom had
higher premium volume and more employees than Registrant. Registrant
was not a significant factor in the total volume of general insurance
business.
Registrant has sold Davenport agency to Ralph Parry Insurance Agency
Ltd. in January 1981.
(At the present time, the Registrant does not have any plans to acquire
any insurance agencies.)
At fiscal year end, Registrant, in its business has no employees. The
Trustee of the Frank B. Howes Trust which holds 36.5% of the
outstanding common stock, Janice Howes died in July 1983, and John
Howes became Trustee of the Frank B. Howes Trust.
During the fiscal year ending September 30, 1980, the Viking Agency and
the Hansen and Hansen, Inc. general insurance agencies, were sold on
contract to R.A.P. Enterprises, Inc., Ralph A. Parry, former president
of Registrant and the former manager of the Davenport agency owned by
Registrant is the owner of R.A.P. Enterprises, Inc.
During the fiscal year ending September 30, 1981, the Davenport
agencies were sold to Ralph A. Parry Insurance Agency, Ltd., as of
January 1, 1981. Also owned by Ralph A. Parry.
The intention at this time is to continue to loan on and invest in real
estate properties and equities.
(c) Line of Business
The Registrant has not engaged in more than one line of business which
meets the requisites of item 1 (c) (A), (B) or (C) for business with
sales and revenues which do not exceed $50,000.00.
Registrant and its subsidiaries are not engaged in material operations
in foreign countries, nor does Registrant or its subsidiaries have a
material portion of sales or revenues derived from customers in foreign
countries.
ITEM 2. MANAGEMENT DISCUSSION FOR 9/30/10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE STATEMENT OF OPERATIONS
Liquidity
Registrant receives no cash each month.
Capital Resources
The principal assets of the registrant at September 30, 2010 have all
been sold.
Ongoing Viability
Management feels that, with the ongoing losses and the sale of its
income producing assets to meet current obligations, there is substantial doubt
in its ability to continue as a going concern.
Results of Operations
The loss from operations for the year ended September 30, 2010
decreased $25,581 compared to the year ended September 30, 2009.
Total loss of revenue decreased $17,416. This was primarily due to a
reduced number of real estate contracts receivable.
Operating expenses decreased $8,165. The decrease resulted from the
following:
The Company utilizes the employees of a related entity. For
the fiscal year ended September 30, 2010, the Company paid the related
entity $1,977 for it's prorata share of wages and payroll tax costs. For the
year ended September 30, 2009, those payments were $14,938. The Company
repairs and maintenance decreased by $1,157, management fees decreased
by $13,000, accounting fees increased by $21,457 and other expenses
decreased by $2504.
Item 3. Properties
The Registrant has its offices at 2920 Harrison Street, Davenport,
Iowa. The Company rents approximately 700 square feet of space with
furnishings at a monthly rate of $2,000 per month.
Registrant feels this office space is of adequate size and capacity to
handle the business of Registrant and its foreseeable future needs.
Item 4. Parents and Subsidiaries of the Registrant
The Frank B. Howes Trust, which holds 36.5 per cent of the Registrant's
outstanding common stock, is the parent of the Registrant. This
percentage includes 3,000,000 shares which is held in escrow by the
Insurance Department of Iowa. The escrow arrangement was required by
the Commissioner of Insurance of the State of Iowa in order to gain
approval of Registrant's new stock issue of April 1971. Under the
terms of this arrangement, those shares could not be sold for a period
of five (5) years or until Registrant attained certain profitable
operating goals for three (3) consecutive years. The escrow
arrangement also required that should Registrant dissolve during this
period, the shares held in escrow will not participate in the assets of
Registrant legally available for distribution until after there has
been paid or irrevocable set aside for all other shares an amount equal
to the other shares at the per offering price of $1.25, adjusted for
stock splits and stock dividends. As of April 6, 1976, five (5) years
elapsed.
The Insurance Department of Iowa, Securities Division has indicated
that under the terms of the Escrow Agreement the approval of the
Commissioner of Insurance was required. The Insurance Department,
reviewing the condition of the Registrant, did conclude that the
requisite approval of the Commissioner would not be forthcoming at that
time, and furthermore, that the Insurance Department will act as escrow
agent for the shares of the Frank B. Howes Trust.
Item 5. Legal Proceedings
None
Item 6. Increases and Decreases in Outstanding Securities and Indebtedness
(a) In the fiscal year, Registrant has not issued any new shares or
otherwise created additional outstanding securities; neither has it
reduced outstanding securities by purchase or acquisition of treasury
shares. Therefore, there were 11,222,699 shares of Registrant's stock
outstanding on September 30, 2010.
(b) None
(c) None
Item 7. Changes in Securities and Changes in Security for Registered Securities
None
Item 8. Defaults upon Senior Securities
None
Item 9. Approximate Number of Equity Security Holders
The approximate number of holders of each class of equity securities of
Registrant, as of September 30, 2010, is indicated in the following
table:
(2) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Common Stock, Approximately 4,774
no par value
Item 9A(T). CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated,
under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer,
the effectiveness of the design and operation of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this Annual Report
Form on 10-K. These disclosure controls and procedures include controls
and procedures designed to ensure that information required to be
disclosed under the Exchange Act is accumulated and communicated to
our management on a timely basis to allow decisions regarding required
disclosure. Based upon our evaluation as of September 30, 2010, our
principal executive officer and principal financial officer concluded
that our disclosure controls and procedures were effective as of
September 30, 2010, to ensure that information is accumulated and
communicated to our management, including our principal executive
officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure and is recorded,
processed, summarized and reported within the time periods specified
in the rules and forms of the SEC.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Our internal
control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Under
the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer,
we evaluated the effectiveness of the design and operation of our
internal control over financial reporting as of September 30, 2010
based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) as well as criteria established
in Item 308T of Regulation S-K.
Our internal control over financial reporting includes policies
and procedures that (1) pertain to maintenance of records that,
in reasonable detail, accurately and fairly reflect transactions
and dispositions of assets; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures are being made only
in accordance with authorizations of our management and Board of
Directors; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition
of assets that could have a material effect on the financial statements.
Due to its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements and, even when
determined to be effective, can only provide reasonable, not absolute,
assurance with respect to financial statement preparation and presentation.
Projections of any evaluation of effectiveness to future periods are
subject to risk that controls may become inadequate as a result of
changes in conditions or deterioration in the degree of compliance.
Based on the assessment, our management has concluded that our internal
control over financial reporting was effective as of September 30, 2010
and provides reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
reporting purposes in accordance with generally accepted accounting
principles. The results of management's assessment were reviewed with
the Audit Committee of our Board of Directors. This annual report does
not include an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us to provide only
management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the fourth quarter ended September 30, 2010, there were no changes
in our internal control over financial reporting that materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
Item 10. Submission of Matters to a Vote of Security Holders
On March 2008 Harold Luebken's resignation was accepted.
Marsha Baker was appointed as President.
On September 28, 2007 the resignation of Joe Coon as
President was approved. The appointment of Harold
Luebken as President was approved.
On December 14, 2006 approval was given for Joe Coon
to be President and Monica Wilcher to be Secretary.
On June 23, 2006 Joyce Whitt resigned as President and
from the Board of Directors.
On July 26, 2004 Sharon Miller resigned as President and
from the Board of Directors. Joyce Whitt was made a member
of the Board of Directors. Joyce Whitt was elected as
President.
On June 26, 2003 Jennifer Burkhart and Sharon Miller were
made members of the Board of Directors. Cindy Kepford and
Kendra Jeffries resigned as officers. Jennifer Burkhart
was elected as Secretary.
On July 10, 2002 Sharon Miller was elected as President.
On December 17, 2001 Paul Coe was elected as President.
On April 27, 2000 Jan Forrest resigned as President and
as a member of the Board of Directors. Cindy Kepford was
elected President and made a member of the Board of
Directors.
On February 7, 2000 all previous resignations of the Board
of Directors were accepted. Jan Forrest was elected President
and Kendra Jeffries was elected Secretary. They both also
serve as Directors of the Corporation.
On February 17, 1994, Renee Parrish was elected a member of the
Board of Directors and to the office of Secretary.
On February 3, 1986, Harold L. Luebken was elected a member of the
Board of Directors and to the office of President. Dan B. Davis
resigned as a director.
On July 12, 1983, Dan B. Davis was elected to the Board of Directors.
Item 11. Executive Officers of the Registrant
(a) The following table indicates, as of September 30, 2010, the names and
ages of the executive officers of Registrant. Their term of office
with Registrant held by such person:
Position and
Office with Held Office Term of
Name Age Registrant Since Office
Marsha Baker 43 President March 2008 Next Annual
Shareholders'
Meeting
Monica Wilcher 41 Secretary November 2006 Next Annual
Shareholders'
Meeting
There are no family relationships among the executives of the
registrant.
There is no arrangement or understanding between any executive officer
and any other person to which he/she was selected as an officer.
(b) The following is a brief account of the business experiences during
the past five (5) years of each executive officer.
1. Marsha Baker has been in the property management business
since 2006, and employed in the legal field for the five
years prior.
2. Monica Wilcher has been an accountant and real estate property
manager for the past nine (9) years.
Item 12. Indemnification of Directors and Officers
Provisions regarding indemnification of directors and officers of
Registrant, pursuant to Chapter 496A of the Iowa Code of 1973, were
detailed in Item 17 --Indemnification of Directors and Officers, pages
59--63 of Registrant's Form 10 filed with the Securities and Exchange
Commission August 23, 1973.
Item 13. Financial Statements and Exhibits Filed
(a) Financial Statements and audited financial statements are herewith
included.
Exhibits
None
(b) Reports on Form 8-K
1. Registrants filed a Form 8 Amendment to the Form 10-K filed
December, 1991.
2. Registrants filed a Form 8 Amendment to the Form 10-K filed
December, 1993, on April 04, 1993, reporting on February 17, 1994
Brigitta Anderson had resigned from the Board of Directors.
3. Registrants filed a Form 8-K on May 14, 2008, to disclose a
change in the registrant's Certifying Accountant.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
HYNES & HOWES INSURANCE COUNSELORS, INC.
Dated By:
December 1, 2010 Marsha Baker, President
This corporation has no treasurer.
Dated By:
December 1, 2010 Monica Wilcher, Secretary
HYNES & HOWES INSURANCE COUNSELORS, INC.
Statistical Data for Form 10K
September 30, 2010
September 30,
2010 2009 2008 2007 2006
1. Net Operating
Revenues $ (23,160) $ (40,576) $ 13,027 $ 30,098 $ 71,624
2. Income (Loss) from
Operations $(159,023) $(184,604) $(150,959) $(120,074) $ (26,508)
Per Share Earnings
(Loss) $ (.01) ( .02) $ ( .00) $ (.01) $ (.00)
3. Working Capital $ (14,954) (965) $ 17,586 $ 32,927 $ 12,672
4. Total Assets $ 101 147,385 $ 336,114 $ 493,684 $ 611,039
5. Long Term Obligations
Mortgage Payable $ .00 $ .00 $ .00 $ .00 $ .00
6. Cash Dividends per
Common Share $ .00 $ .00 $ .00 $ .00 $ .00
Hynes & Howes Insurance Counselors, Inc.
Davenport, Iowa
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors
Hynes & Howes Insurance Counselors, Inc.
Davenport, Iowa
We have audited the balance sheet of Hynes & Howes Insurance Counselors (an Iowa
corporation) as of September 30, 2010 and September 30, 2009, and the related
statements of income, changes in stockholders' equity, and cash flows for
the years then ended and the year ended September 30, 2008. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Hynes &
Howes Insurance Counselors, Inc. as of September 30, 2010 and
September 30, 2009, and the results of its operations and its cash flows
for the years then ended and the year ended September 30, 2008
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 12 to the financial statements, the Company has suffered
recurring losses from operations and has a net retained deficit,
which raise substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters
also are described in Note 12. The financial statements do
not include any adjustments that might result from the outcome
of this uncertainty.
Huckfeldt & Smith, PLC
Certified Public Accountants
Bettendorf, Iowa
November 7, 2010
HYNES & HOWES INSURANCE COUNSELORS, INC.
Balance Sheets
Years Ended September 30, 2010 and 2009
Years Ended
September 30,
2010 2009
ASSETS
Current Assets:
Cash in Bank $ 101 $ 991
Other Current Assets $ 0 $ 1,360
Total Current Assets $ 101 $ 2,351
Other Assets:
Real Estate on Hand $ 0 $ 34,000
Long Term Contracts Receivable $ 0 $110,640
Equipment - Net of Accumulated $ 0 $ 394
Depreciation
Total Assets $ 101 $147,385
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Buyers Escrow $ 0 $ 1,933
Deferred Gross Profit $ 0 $ 1,383
Loan Payable $ 15,055 $ 0
Total Current Liabilities $ 15,055 $ 3,316
Long Term Liabilities:
Stockholders' Equity:
Common Stock, No Par Value, 100,000,000
Authorized, 11,260,675 Issued,
11,222,699 Outstanding $3,780,765 $3,780,765
Paid in Capital 100 100
Treasury Stock, at Cost (33,252) (33,252)
Retained Earnings (Deficit) (3,762,567) (3,603,544)
Total Stockholders' Equity $( 14,954) $ 144,069
Total Liabilities & $ 101 $ 147,385
Stockholders'Equity
See Accompanying Notes.
HYNES & HOWES INSURANCE COUNSELORS, INC.
STATEMENTS OF INCOME
Years Ended September 30, 2010, 2009, and 2008
Years Ended
September 30,
2010 2009 2008
REVENUES:
Loss on Sale of Real Estate $ (26,465) $ (12,756) $ (17,576)
Interest Income 2,928 21,448 27,845
Unrealized Loss in Fair Market
Value of Assets Held 0 (53,555) 0
Other Income 377 4,287 2,758
Total Revenue (23,160) (40,576) 13,027
EXPENSES:
Management Fees $ 65,000 $ 78,000 $ 78,000
Legal Fees 109 838 1,104
Payroll Expenses 1,977 14,938 22,389
Accounting Fees 43,274 21,817 14,075
Real Estate Taxes 335 335 2,213
Repairs and Maintenance 1,246 2,403 17,015
Rent 22,000 24,000 24,000
Office Expenses 147 158 46
Utilities 1,381 300 2,862
Advertising 0 0 300
Depreciation 394 1,239 1,982
Total Expenses $ 135,863 $ 144,028 $ 163,986
Loss Before Income Taxes (159,023) (184,604) (150,959)
Income Taxes 0 0 0
Net Loss $(159,023) $(184,604) $ (150,959)
Loss Per Share $(0.014170) $(0.016449) $(0.013451)
See Accompanying Notes.
HYNES & HOWES INSURANCE COUNSELORS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 2010, 2009, and 2008
Years Ended
September 30,
2010 2009 2008
RETAINED EARNINGS:
Balance-Beginning of Year (deficit) $(3,603,544) $(3,418,940) $(3,267,981)
Income (Loss) for the Year ( 159,023) ( 184,604) ( 150,959)
Balance-End of Year (deficit) $(3,762,567) $(3,603,544) $ (3,418,940)
PAID-IN CAPITAL:
Balance at Beginning $ 100 $ 100 $ 100
& End of Year
COMMON STOCK:
Balance at Beginning $ 3,780,765 $ 3,780,765 $ 3,780,765
& End of Year
TREASURY STOCK:
Balance at Beginning ( 33,252) ( 33,252) ( 33,252)
& End of Year
Total Stockholders' Equity $( 14,954) $ 144,069 $ 328,673
(deficit)
See Accompanying Notes.
HYNES & HOWES INSURANCE COUNSELORS, INC.
STATEMENTS OF CASH FLOW
Years Ended September 30, 2010, 2009, and 2008
Years Ended
September 30,
2010 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received From Customers for $ 377 $ 1,919 $ 2,758
Other Income
Payments Made to Suppliers (135,469) (140,421) (162,004)
Interest Received 2,928 21,448 27,845
Net Cash Used by
Operating Activities (132,614) (117,054) (131,401)
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal Collected on
Real Estate Contracts 109,247 95,794 120,362
Buyers Escrow Collected/(Paid)-Net 445 (363) (1,126)
Real Estate Sold 6,527 0 0
Payments Made to Improve Real
Estate On Hand 0 0 (9,580)
Net Cash Provided by
Investing Activities 116,219 95,431 109,656
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan Proceeds-Net of Repayments 15,055 0 0
Net Decrease in Cash and
Cash Equivalents (890) (21,623) (21,745)
Cash and Cash Equivalents-Beginning
of Year 991 22,614 44,359
Cash and Cash Equivalents-End of Year $101 $ 991 $ 22,614
RECONCILIATION OF NET INCOME TO CASH PROVIDED
BY OPERATING ACTIVITIES:
Net Loss (159,023) (184,604) (150,959)
Add: Non Cash Trasnactions-
Depreciation 394 1,239 1,982
Unrealized Loss in Fair Market Value
of Assets Held 0 53,555 0
Gross Loss on Real Estate Contracts 26,465 12,756 17,576
Net Cash Used by Operating
$(132,164) $(117,054) $(131,401)
See Accompanying Notes.
HYNES & HOWES INSURANCE COUNSELORS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 2010 and 2009
Note 1 - Summary of Significant Accounting Policies
Nature of operations: The Company invests in real estate, primarily
single family residences, which it then resells on contract. The
Company operates exclusively in the Quad City metropolitan area of
Eastern Iowa and Western Illinois. The Company has a concentration of
credit risk, in that all of its creditors live and work in the Quad
City area.
Accounting Policies: The books and records of the Company are
maintained on the accrual basis of accounting. Investments in
contracts receivable are stated at the collectible balance. The
method of income recognition on installment contracts is the
installment method when the downpayment by the purchaser is less
than 5%. Earnings per share are computed on the basis of weighted
average number of common shares outstanding. Cash and cash equivalents
are considered to be any investment with an original maturity of three
months or less. The Company did not pay any taxes during 2010 or 2009.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Other significant accounting policies are detailed in other Notes to
Financial Statements.
Note 2 - Related Party Transactions
The Company has entered into a management consultant agreement with
Oak Helm Partners. The Company pays a monthly retainer fee of $6,500
Oak Helm Partners is an affiliated company due to common
ownership and control. This contract expired September 30, 2010.
The Company occupies office space in a building located at 2920
Harrison Street, Davenport, Iowa, owned by OHP 5, LLC. The
Company rents approximately 700 square feet of space with furnishings
at a monthly rate of $2,000 under a five year lease effective
October 1, 2007. OHP 5, LLC is an affiliated entity due to common
ownership and control.
HYNES & HOWES INSURANCE COUNSELORS, INC.
Notes to Financial Statements
Years Ended September 30, 2010 and 2009
The following is a schedule of rent commitments for the next two years.
Year Ending:
September 30, 2011 24,000
September 30, 2012 24,000
The Company utilizes the employees of OHP 5, LLC. The company pays
OHP 5, LLC for it's prorated share of wages and payroll taxes. OHP 5,
LLC is an affiliated entity due to common ownership and control.
Note 3 - Other Current Assets
2010 2009
Real Estate Contracts Receivable
Current Portion (Note 4) $ 0 $ 1,360
Note 4 - Real Estate Contracts Receivable
2010 2009
Contracts receivable $ 0 $156,476
Less-Decline in Fair
Market Value 0 (44,476)
Less-Current Portion (Note 3) 0 ( 1,360)
Long-Term Portion $ 0 $110,640
At September 30, 2010 and 2009 there were 0 and 3 contracts
respectively. The monthly payment of principal and
interest was $0 at September 30, 2010 and $1,303 at September 30, 2009.
Interest rates on these contracts vary from 9.0% to 11%.
Management is of the opinion that an allowance for uncollectibility is
not necessary due to the collateral value of the properties.
HYNES & HOWES INSURANCE COUNSELORS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 2010 and 2009
Note 5 - Equipment
2010 2009
Office equipment $19,252 $19,252
Accumulated depreciation (19,252) (18,858)
Book value 0 394
Depreciation is recorded using straight-line rates over 5 to 7 year
lives. Depreciation expense for the year ended September 30, 2010
and 2009 was $1,239and $1,982.
Note 6 - Common Stock
The Company is authorized to issue 100,000,000 shares of no par value
common stock. Shares issued at September 30, 2010 and 2009
were 11,260,675. The Company has purchased 37,976 shares of treasury
stock, leaving 11,222,699 shares issued and outstanding.
2010 2009
Earnings (Loss) Per Share
Net Income (Loss) $ (159,023) $ (184,604)
Average Number of Shares
Outstanding 11,222,699 11,222,699
Earnings (Loss) Per Share $ (0.014170 $ (0.016449)
Note 7 - Stock Held in Escrow
At September 30, 2010 and 2009 there were 3,546,000 shares of
Company's common stock held in trust. Those shares were owned by the
Frank B. Howes Trust and by directors or former directors of the
Company. The Trust agreement was required by the Commissioner of
Insurance of the State of Iowa in order to gain approval of the
Company's stock issue of April, 1971. Under terms of this agreement
these shares were to be released after a period of five years or when
the Company attains certain profitability goals for three consecutive
years and upon written approval from the Commissioner of Insurance of
the State of Iowa. It is also required that should the Company
dissolve during this period that the pro-rated distribution of assets
to stockholders would be done on a basis which would pay these
shareholders less per share than would be distributable to the
shareholders of the new issue. The Company's earnings to date have not
been sufficient to qualify for the release of these shares held in
escrow. The condition requiring that these shares be held in escrow
for five years has been fulfilled, however, the Commissioner of
Insurance of the State of Iowa has not granted the written approval for
the release of these shares at this time. The shares will continue to
be held in escrow until the Commisioner grants written approval for
their release.
HYNES & HOWES INSURANCE COUNSELORS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 2010 and 2009
Note 8 - Contingent Liability for Rescission of Common Stock Sales
Since its inception, the Company has issued and sold 11,222,699 shares
of its common stock. Although most of these shares were registered
with the State of Iowa, none of these shares were registered for sale
under the federal securities law. These shares were issued and sold in
reliance either upon the exemption provided in Section 4 (2) or Section
3 (a) (11) of the Securities Act of 1933.
The Company feels that any possible shares and federal contingent
liabilities that may have existed because of the issuance of securities
which may not have been exempt from registration under the Securities
Act of 1933 and unless the subject of an existing legal proceeding
filed appropriately, may now be extinguished as a result of the new
Iowa Uniform Securities Act which became effective on January 1, 1976
under Section 613 of that Act, liability must now be ascertained by
looking to the statute in effect at the time that the stock issue was
sold. The two year statute of limitations in effect on January 14,
1973, at the time of the closing of the issue has run, as have the
other applicable federal statutes of limitation. As a result, with
the exception of the Federal and State Tolling Doctrines, possible
contingent liabilities may no longer exist.
Note 9 - Contingent Liability on Pending Litigation
On November 2, 1973, in U. S. District Court a Final Judgment of
permanent Injunction was brought against the Company because of a
complaint filed by the Securities and Exchange Commission. The
Injunction enjoins the Company from failing to file timely and proper
reports as required by Section 12 (a) of the Securities Exchange Act
of 1934. The Company is currently complying with filing requirements,
however, it may be subject to subsequent court action and potential
fine if there are future filing deficiencies.
Note 10- Provision for Income Taxes
Due to loss carryforwards from previous years, a provision for income
taxes has not been made. Net operating loss carryovers will expire
as follows:
September 30, 2017 4,385
September 30, 2022 6,032
September 30, 2023 38,528
September 30, 2024 23,285
September 30, 2025 44,667
September 30, 2026 54,095
September 30, 2027 120,074
September 30, 2028 150,959
September 30, 2029 130,801
September 30, 2030 212,579
________
Total Deferred Taxable Income $785,405
Less-Valuation allowance (785,405)
________
Net Deferred Income Tax $ 0
HYNES & HOWES INSURANCE COUNSELORS, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 2010 and 2009
Note 11- Contingent Liability
To maintain operations in Fiscal Year Ending September 30, 2010 it has been
necessary for the Company to dispose of assets to generate cash. The Company
sold three contracts to Walnut Management (a related company due to common
control.) These sales generated $109,246 in cash for the Company. The sales
price was equal to what the contracts were carried on the books of the
Company as adjusted to the fair market value.
Note 12- Going Concern Uncertainty
As Noted in Note 10, the Company has suffered recurring losses from
operations over the past several years. These losses have produced a
retained deficit of $3,762,567 and have contributed to rapidly declining
capital. The Company has had to sell producing assets over the past year
to generate capital to continue operations as noted in Note 11.
Management has sold all of its producing assets which severely limits
its ability to generate revenue into the future.
EX-99.23
ART. 5 FDS FOR 9/30/10
PERIOD-TYPE 12-MOS
FISCAL-YEAR-END SEP-30-2010
PERIOD-END SEP-30-2010
CASH 101
SECURITIES 0
RECEIVABLES 0
ALLOWANCES 0
INVENTORY 0
CURRENT-ASSETS 101
REAL ESTATE ON HAND 0
PP&E 19,252
DEPRECIATION 19,252
TOTAL-ASSETS 101
CURRENT-LIABILITIES 15,055
BONDS 0
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 3,780,765
OTHER-SE 100
TOTAL-LIABILITY-AND-EQUITY 101
SALES 0
TOTAL-REVENUES (23,160)
CGS 0
TOTAL-COSTS 135,863
OTHER-EXPENSES 0
LOSS-PROVISION 0
INTEREST-EXPENSE 0
INCOME-PRETAX (159,023)
INCOME-TAX 0
INCOME-CONTINUING 0
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME (159,023)
EPS-PRIMARY 0
EPS-DILUTED 0
EXHIBIT 31(a)
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002
I, Marsha Baker, certify that:
(1) I have reviewed this annual report on Form 10-K of Hynes and Howes
Insurance Counselors;
(2) Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circum-
stances under which such statements were made, not misleading
with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
(4) The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) discolsed in this report any change in the registrant's internal
control over financial reporting that ocurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter
in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting;and
(5) The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing
the equivalent function):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Marsha Baker
------------------------
(Marsha Baker)
President
December 1, 2010
exhibit32
EXHIBIT (32)
SECTION 1350 CERTIFICATIONS
Pursuant to 19 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, the undersigned officer of Hynes & Howes Insurance
Counselors, Inc. (the Company) certifies to his knowledge that:
(1) The Annual Report on Form 10-K of the Company for the year ended
September 30, 2010, fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in that Form 10-K fairly presents, in all
material respects, the financial condition and results of operations
of the company.
Marsha Baker
--------------------------
(Marsha Baker)
President
December 1, 201
