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 June 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 August 6, 2000, the registrant
had 15,055,000 shares of Common Stock outstanding.
<PAGE>
IKON VENTURES, INC.
FORM 10-QSB
For the Quarter Ended June 30, 2000
Contents
PART I FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets as of June 30, 2000 (unaudited)
and December 31, 1999 (audited) 3
Consolidated Statements of Operations for the six months ended
June 30, 2000 and 1999 (unaudited) and for the
three months ended June 30, 2000 and 1999 (uanaudited) 4
Consolidated Statements of Cash Flows for the six months ended
June 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
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IKON VENTURES, INC.
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
June 30, December 31,
2000 1999
(unaudited) (audited)
$000 $000
Assets
Current assets
Cash and cash equivalents 2 13
Trade accounts receivable, net - -
Prepaid and other current assets 6 56
--------- ---------
Total current assets 8 69
Property, plant and equipment, net 4 2
--------- ---------
12 71
========= =========
Liabilities and stockholders' equity
Current liabilities
Trade accounts payable 57 18
Accrued expenses and other 127 38
--------- ---------
Total current liabilities 184 56
- -
---------- ---------
Other liabilities
Total liabilities 184 56
---------- ---------
Stockholders' equity
Common stock, $0.001 par value. Authorized 100,000,000 shares; issued and
outstanding 15,055,000 shares on June 30, 2000 and 14,655,000 shares
on December 31, 1999 15 15
Additional paid-in capital 11,715 11,675
Accumulated deficit (11,902) (11,675)
--------- ---------
Total stockholders' equity (172) 15
---------- ---------
Total liabilities and stockholders' equity 12 71
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
IKON VENTURES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<S> <C> <C> <C> <C>
Six Months Three Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
$000 $000 $000 $000
(uanaudited) (uanaudited) (uanaudited) (unaudited)
Net sales - continuing operations - - - -
Cost of goods sold - continuing operations - - - -
---------- ---------- ---------- ----------
Gross profit - continuing operations - - - -
Selling, general and administrative expenses (227) (454) (60) (295)
----------- ---------- ---------- ----------
Operating loss - continuing operations (227) (454) (60) (295)
Other income, net - - - -
---------- ---------- ---------- ----------
Loss from continuing operations before provision for (227) (454) (60) (295)
income taxes
Provision for income tax (6) - - - -
---------- ---------- ---------- ----------
Loss from continuing operations (227) (454) (60) (295)
Loss on disposal of discontinued operations (4) - (440) - -
---------- ----------- ---------- ----------
Net loss (2) (227) (894) (60) (295)
========== ========== ========== ==========
Loss per common share (basic) - all operations ($0.015) ($0.06) ($0.004) ($0.02)
=========== ========== =========== ==========
- continuing operations ($0.015) ($0.03) ($0.004) ($0.02)
=========== ========== =========== ==========
- discontinued operations - ($0.03) - -
=========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
<CAPTION>
IKON VENTURES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C>
Six Months Ended June 30,
2000 1999
$000 $000
(unaudited) (unaudited)
Net cash used by operating activities (7) (9) (572)
--------- -----
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) 55
Cash and cash equivalents at beginning of period 13 166
--------- ---------
Cash and cash equivalents at June 30 2 221
========= =========
Major non-cash transactions
During the six months ended June 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.
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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
June 30, 2000 and 1999.
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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 recognised 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 recognised 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 realisation 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 recognised
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.
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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 recognised 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.
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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 realisation 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.
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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. Summarised
financial information on the discontinuted operations is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
$000 $000 $000 $000
Net sales - - - -
---------- ---------- ---------- ----------
Gross profit - - - -
---------- ---------- ---------- ----------
Operating loss (note (i)) - - - -
---------- ---------- ---------- ----------
Loss from discontinued operations - - - -
========== ========== ========== ==========
Loss on disposal of discontinued - (440) - (440)
========== =========== ========== ==========
operations (note (i))
(i) Loss on disposal of discontinued operations in 1999 includes a tax credit of $80,000.
Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
$000 $000 $000 $000
Net assets of discontinued operations
Current assets - - - -
Property, plant and equipment - - - -
Other assets - - - -
Current liabilities - - - -
Other liabilities - - - -
---------- ---------- ---------- ----------
Net assets of discontinued operations - - - -
---------- ---------- ========== ==========
</TABLE>
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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 payables 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>
<S> <C> <C>
Six Months Ended June 30,
2000 1999
$000 $000
Net loss (227) (894)
Adjustments to reconcile loss to net cash provided by operating
activities:
Issue of common stock in payment of supplier 40 -
Loss of disposal of discontinued operations - 440
Changes in assets and liabilities net of effect from acquisitions and
disposals:
Depreciation and amortisation of property, plant and equipment - 4
Decrease (increase) in accounts receivable - 686
(Decrease) increase in accounts payable 39 (260)
(Decrease) increase in accrued expenses and liabilities 89 (152)
Decrease (increase) in prepayments and other assets 50 89
--------- ---------
Cash used by continuing operations (9) 87
Cash used by discontinued operations - (485)
--------- ---------
Cash used by operating activities (9) (572)
========= =========
</TABLE>
<PAGE>
IKON VENTURES, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 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 authorises grants of options to purchase up to
3,500,000 shares of authorised but un-issued common stock. At June 30,
2000 no options had been granted under the Plan.
9 Related party transactions
(i) 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 three-month
period ended June 30, 2000. The amounts paid have been shown
as a liability of the company and are payable to Sigma.
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended June 30,
2000 1999
$000 $000
Payments made on behalf of IKON 14 -
======== ========
</TABLE>
(ii) Sigma Limited S.A provided consultancy services to the Company
pursuant to a consulting agreement. The amounts paid to Sigma
Limited S.A. in the three months to June 30, 2000 and 1999
were $nil and $36,750, respectively. As a result, $36,750 has
been included as a liability under accrued expenses to account
for unpaid amounts under the consulting agreement together
with $49,000 previously accrued in the quarterly period ended
March 31, 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.
<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 June 30, 2000, the Company's principal sources of liquidity
consisted of cash of $2,000 and it had no material liabilities. 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.
<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
<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 August 14, 2000 By: /s/
---------------------------------
Ian Rice, Chief Executive Officer
and Principal Financial Officer
