SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER: 000-29331
IKON VENTURES, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
NEVADA 76-0270295
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
Suite 305, Collier House, 163/169 Brompton Road, London, England SW3 1PY
(Address of Principal Executive Offices)
011-171-591-4435
Issuer's Telephone Number. Including Area Code
Check whether the issuer (1), has filed all reports required to be filed by
Section 13 or 15(d) of The Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes _x_ No___
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of October 16, 2000, the registrant
had 15,055,000 shares of Common Stock outstanding.
<PAGE>
IKON VENTURES, INC.
FORM 10-QSB
For the Quarter Ended September 30, 2000
Contents
PART I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets as of September 30, 2000 (unaudited)
and December 31, 1999 (audited) 3
Consolidated Statements of Operations for the nine months ended
September 30, 2000 and 1999 (unaudited) and for the
three months ended September 30, 2000 and 1999 (uanaudited) 4
Consolidated Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 (unaudited) 5
Notes to the Unaudited Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis or Plan of Operation 13
PART II OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8 - K 14
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IKON VENTURES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31,
2000 1999
(unaudited) (audited)
$000 $000
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 2 13
Trade accounts receivable, net - -
Prepaid and other current assets 5 56
------- -------
Total current assets 7 69
Property, plant and equipment, net 3 2
------- -------
10 71
======= =======
Liabilities and stockholders' equity
Current liabilities
Trade accounts payable 74 18
Accrued expenses and other 141 38
------- -------
Total current liabilities 215 56
Other liabilities - -
------- -------
Total liabilities 215 56
------- -------
Stockholders' equity
Common stock, $0.001 par value. Authorized 100,000,000 shares; issued and
outstanding 15,055,000 shares on September 30, 2000 and 14,655,00 shares on
December 31, 1999
15 15
Additional paid-in capital 11,715 11,675
Accumulated deficit (11,935) (11,675)
------- -------
Total stockholders' equity (205) 15
------- -------
Total liabilities and stockholders' equity 10 71
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
3
<PAGE>
IKON VENTURES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Three Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
$000 $000 $000 $000
(uanaudited) (uanaudited) (uanaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales - continuing operations - - - -
Cost of goods sold - continuing operations - - - -
-------- -------- -------- --------
Gross profit - continuing operations - - - -
Selling, general and administrative expenses (260) (543) (33) (89)
--------- -------- -------- --------
Operating loss - continuing operations (260) (543) (33) (89)
Other income, net - - - -
-------- -------- -------- --------
Loss from continuing operations before provision for (260) (543) (33) (89)
income taxes
Provision for income tax (6) - - - -
-------- -------- -------- --------
Loss from continuing operations (260) (543) (33) (89)
Loss on disposal of discontinued operations (4) - (440) - -
-------- -------- -------- --------
Net loss (2) (260) (983) (33) (89)
======== ======== ======== ========
Loss per common share (basic) - all operations ($0.017) ($0.07) ($0.002) ($0.006)
======== ======== ======== ========
- continuing operations ($0.017) ($0.04) ($0.002) ($0.006)
======== ======== ======== ========
- discontinued operations - ($0.03) - -
======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
4
<PAGE>
IKON VENTURES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
$000 $000
(unaudited) (unaudited)
<S> <C> <C>
Net cash used by operating activities (7) (9) (663)
--------- ---------
Cash flows from investing activities
Purchase of equipment (2) -
Proceeds from disposal of discontinued operations (3) 600
Proceeds from disposal of equipment - 27
--------- ---------
Net cash provided by investing activities (2) 627
--------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock - -
Net cash provided by financing activities - -
--------- ---------
Net decrease in cash and cash equivalents (11) (36)
Cash and cash equivalents at beginning of period 13 166
--------- ---------
Cash and cash equivalents at September 30 2 130
========= =========
Major non-cash transactions
</TABLE>
During the nine months ended September 30, 2000 as part of a settlement of an
amount due to a supplier, 400,000 shares of the Company's Common Stock were
issued at a value of $.01 per share.
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
1 Summary of significant accounting policies and practices
Description of business
IKON Ventures, Inc. ("the Company") was incorporated in Nevada on May
31, 1997. The Company operated a Zeolite and related chemicals
production facility in Mira, Italy, through its main subsidiary
Zeolite Mira S.r.l. ("Zeolite Mira"). The Company's customers were
major European detergent companies with a small proportion of
production being sold through trading companies.
At the beginning of 1999 Zeolite Mira was sold. The Company now has no
trading operations and is exploring new opportunities.
(b) Cash equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
(c) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation on
plant and equipment is calculated on the straight-line method over the
estimated useful lives of the assets.
(d) Research and development
Research and development costs are expensed as incurred. There were no
research and development costs in the three months ended September 30,
2000 and 1999.
6
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
1 Summary of significant accounting policies and practices (continued)
(e) Income taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
(f) Commitment and contingencies
Liabilities for loss contingencies, including environmental
remediation costs, arising from claims, assessments, litigation, fines
and penalties, and other sources are recorded when it is probable that
a liability has been incurred and the amount of the assessment and/or
remediation can be reasonably estimated. Recoveries from third parties
which are probable of realization are separately recorded, and are not
offset against the related environmental liability, in accordance with
Financial Accounting Standards Board Interpretation No.39, Offsetting
of Amounts Related to Certain Contracts.
In October 1997, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 96-1, Environmental
Remediation Liabilities. SOP 96-1 was adopted by the Company on
January 1, 1998 and requires, among other things, environmental
remediation liabilities to be accrued when the criteria of Statement
of Financial Accounting Standards ("SFAS") No. 5, Accounting for
Contingencies, have been met. The guidance provided by SOP 96-1 is
consistent with the Company's current method of accounting for
environmental remediation costs and, therefore, adoption of this new
statement does not have a material impact on the Company's financial
position, results of operations, or liquidity.
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably
estimable. Accruals for estimated losses for environmental remediation
obligations generally are recognized no later than completion of the
remedial feasibility study. Such accruals are adjusted as further
information develops or circumstances change. Costs of future
expenditures for environmental remediation obligations are not
discounted to their present value. Recoveries of environmental
remediation costs from other parties are recorded as assets when their
receipt is deemed probable.
7
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
1 Summary of significant accounting policies and practices (continued)
(g) 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, the disclosures of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
(h) Impairment of long-lived assets and long-lived assets to be disposed
of
The Company adopted the provisions of SFAS No 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, on January 1, 1997. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(i) Foreign currency translation
Assets and liabilities denominated in foreign currencies are
translated into US dollars at current exchange rates. For operations
using the US dollar or the currency of a highly inflationary economy
as their functional currency, translation gains or losses are
generally reported in non-interest revenues. Translation gains and
losses for operations using any other currency as their functional
currency are reported, net of tax effects, in stockholders' equity as
cumulative translation adjustments.
8
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
2 Financial position and basis of accounting
These consolidated financial statements have been prepared on a going
concern basis which contemplates the commencement, continuation and
expansion of trading activities as well as the realization of assets and
liquidation of liabilities in the ordinary course of business.
During 1997 the Company acquired the net liabilities of Zeolite Mira,
issuing shares to finance the acquisition. The Company traded at a loss
during 1997 and Zeolite Mira continued to record losses in 1998, depleting
the Company's cash resources. The Company sold Zeolite Mira in 1999
resulting in the Company having no operating entities.
The Company is seeking to enter into a business combination with one or
more as yet unidentified privately held businesses.
Management intends to raise capital from both existing and new shareholders
and to use the proceeds to pay for routine expenses, such as making
required filings with the SEC and office rent and related expenses. There
can be no assurance that the Company will be able to find sources of
financing on terms acceptable to the Company, if at all. If the Company
does not find the sources to finance such activities, it may be unable to
timely file the reports required under the Securities Exchange Act of 1934,
as amended. This could subject the Company to fines and penalties and make
it less desirable to a potential combination candidate. This would make it
difficult for the Company to pursue its plans to acquire additional
businesses.
The Company's continuation as a going concern is dependent on its ability
to issue new stock which will be required to fund the purchase of
additional businesses. This factor among others may indicate that the
Company may be unable to continue as a going concern for a reasonable
period of time. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
3 Acquisitions and dispositions
1999
On March 24, 1999, the Company sold the 90% of the capital stock of Zeolite
Mira it owned. The consideration was $600,000 cash, the return of 180,000
shares of the Company's stock and the cancellation of all indebtedness
between the Company and Zeolite Mira. Part of the loss arising on the sale
was provided in the 1998 accounts and the balance has been provided in
1999.
9
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
4 Discontinued operations
On March 24, 1999, the Company completed the sale of its sole operating
subsidiary, Zeolite Mira, to CEFT Engineering & Trading, a Swiss registered
company. Under the terms of the purchase agreement, the Company received
$600,000 cash consideration and the return of 180,000 shares of the
Company's common stock. Results of these operations were classified as
discontinued in 1998 and the trading of Zeolite Mira from January 1, 1999
to March 24, 1999 has been excluded from these financial statements on the
grounds that the Company did not have effective control of the subsidiary
during that period. Summarized financial information on the discontinued
operations is as follows:
<TABLE>
<CAPTION>
Nine Months Ended, Three Months Ended
September 30 September 30,
2000 1999 2000 1999
$000 $000 $000 $000
<S> <C> <C> <C> <C>
Net sales - - - -
---------- ---------- ---------- ----------
Gross profit - - - -
---------- ---------- ---------- ----------
Operating loss (note (i)) - - - -
---------- ---------- ---------- ----------
Loss from discontinued operations - - - -
========== ========== ========== ==========
Loss on disposal of discontinued - (440) - -
operations (note (i)) ========== ========== ========== ==========
</TABLE>
(i) Loss on disposal of discontinued operations in 1999 includes a tax
credit of $80,000.
<TABLE>
<CAPTION>
Nine Months Ended, Three Months Ended
September 30, September 30,
2000 1999 2000 1999
$000 $000 $000 $000
<S> <C> <C> <C> <C>
Net assets of discontinued operations
Current assets - - - -
Property, plant and equipment - - - -
Other assets - - - -
Current liabilities - - - -
Other liabilities - - - -
---------- ---------- ---------- ----------
Net assets of discontinued operations - - - -
---------- ---------- ========== ==========
</TABLE>
10
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
5 Fair value of financial instruments
SFAS No 107, Disclosure About Fair Value of Financial Instruments, requires
certain disclosures regarding the fair value of financial instruments. Cash
and cash equivalents, trade accounts receivable, other current assets,
trade accounts payable and accrued expenses are reflected in the
consolidated financial statements at fair value because of the short term
maturity of these instruments.
6 Income taxes
No credit has been taken for the operating losses which potentially give
rise to a deferred tax asset for the Company, on the grounds that the
directors do not believe that the Company will be able to derive any value
from such an asset.
7 Reconciliation of net loss to net cash provided by operating activities
The reconciliation of net loss to net cash provided by operating activities
was as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
$000 $000
<S> <C> <C>
Net loss (260) (983)
Adjustments to reconcile loss to net cash provided by operating
activities:
Issue of common stock in payment of supplier 40 -
Loss on disposal of discontinued operations - 440
Changes in assets and liabilities net of effect from acquisitions and
disposals:
Depreciation and amortization of property, plant and equipment 1 5
Decrease (increase) in accounts receivable - 738
(Decrease) increase in accounts payable 19 (279)
(Decrease) increase in accrued expenses and liabilities 140 (173)
Decrease (increase) in prepayments and other assets 51 74
-------- -------
Cash used by continuing operations (9) (178)
Cash used by discontinued operations - (485)
-------- --------
Cash used by operating activities (9) (663)
======== ========
</TABLE>
11
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(continued)
8 Stock option plan
On June 20, 1998, the directors of the Company adopted a stock option plan
(the "Plan") pursuant to which the Board of Directors of the Company may
grant stock options to officers, directors and key employees. The Plan
authorizes grants of options to purchase up to 3,500,000 shares of
authorized but un-issued common stock. At September 30, 2000, no options
had been granted under the Plan.
9 Related party transactions
(i) Mr. I.W. Rice, a director of the Company, paid the following amounts
in settlement of a debt to a supplier in the nine month period ended
September 30, 2000. The amounts paid have been shown as liability of
the company and are payable to Mr. Rice.
Three Months Ended September 30,
2000 1999
$000 $000
15 -
---- ----
(ii) Sigma Limited S.A., a company for which Mr. Rice, a director of the
Company, acts as a consultant provided funding to the business and
made payments to suppliers in the nine month period ended September
30. The amounts paid have been shown as a liability of the company and
are payable to Sigma.
Three Months Ended September 30,
2000 1999
$000 $000
Payments made on behalf of IKON 30 -
==== ====
(iii)Sigma Limited S.A provided consulting services to the Company
pursuant to a consulting agreement. The amounts paid to Sigma Limited
S.A. in the three months to Sept. 30, 2000 and 1999 were $nil and
$36,750, respectively. As a result, $nil has been included as a
liability under accrued expenses to account for unpaid amounts under
the consulting agreement together with $85,750 previously accrued in
the six months period ended June 30, 2000. Such amounts are not due
until the Company completes a business combination.
10 Business and credit concentrations
The business is not currently trading and has no concentration of business
or credit risk.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results Of Operations
The Company has been inactive since April 1999, when it disposed of all of
its then operations. Accordingly, management believes that comparison between
the results of operations for the current period and prior periods would not be
meaningful.
Liquidity And Capital Resources
As of September 30, 2000, the Company's principal sources of liquidity
consisted of cash of $2,000. The Company has no commitments for any capital
expenditure and foresees none. However, the Company will incur routine fees and
expenses incident to its reporting duties as a public company, and it will incur
fees and expenses in the event it makes or attempts to make an acquisition. The
Company expects no significant operating costs other than professional fees
payable to attorneys and accountants and monthly rental payments of
approximately $1,500 for its executive office suite. In addition, the Company
was obligated to pay a monthly consulting fee of $12,250 to Sigma Limited S.A.
for the services of the Company's Chairman. This agreement expired by its terms
on June 30, 2000. Effective January 2000, Sigma agreed that the Company may
defer payment of such fee until the completion of a combination transaction by
the Company.
The Company is seeking to enter into a business combination with one or
more as yet unidentified privately held businesses. The Company does not
anticipate that funding will be necessary in order to complete a proposed
combination, except possibly for fees and costs of the Company's professional
advisers. Accordingly, there are no plans to raise capital to finance any
business combination, nor does management believe that any combination candidate
will expect cash from the Company. The Company hopes to require the candidate
companies to deposit with the Company an advance that the Company can use to
defray professional fees and costs and travel, lodging and other due diligence
costs of management. Otherwise, management would have to advance such costs out
of their own pockets, and there is no assurance that they will advance such
costs.
Management intends to raise capital from both existing and new shareholders
and to use the proceeds to pay for routine expenses, such as making required
filings with the SEC and office rent and related expenses. There can be no
assurance that the Company will be able to find sources of financing on terms
acceptable to the Company, if at all. If the Company does not find the sources
to finance such activities, it may be unable to timely file the reports required
under the Securities Exchange Act of 1934, as amended. This could subject the
Company to fines and penalties and make it less desirable to a potential
combination candidate. This would make it difficult for the Company to pursue
its plans to acquire additional businesses.
Forward Looking Statements
This Form 10-QSB and other reports filed by the Company from time to time
with the Securities and Exchange Commission (collectively the "Filings") contain
or may contain forward looking statements and information that are based upon
beliefs of, and information currently available to, the Company's management as
well as estimates and assumptions made by the Company's management.
When used in the Filings the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan" and similar expressions as they relate to
the Company or the Company's management identify forward looking statements.
Such statements reflect the current view of the Company with respect to future
events and are subject to risks, uncertainties and assumptions relating to the
Company's operations and results of operations and any businesses that may be
acquired by the Company. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may differ significantly from those anticipated, believed, estimated,
intended or planned.
13
<PAGE>
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities and Use of Proceeds
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized
IKON VENTURES, INC.
Date: November 2, 2000 By: /s/ Ian Rice
-------------------------------
Ian Rice
Chief Executive Officer and
Principal Financial Officer
15
