<PAGE>
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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(X) Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the period ended July 31, 2000
( ) Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period from _______ to
_______
Commission file number 0-8155
NANO WORLD PROJECTS CORPORATION
----------------------------------------------
(Name of Small Business Issuer in Its Charter)
DELAWARE 73-0977756
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
11715 NORTH CREEK PARKWAY
SOUTH BOTHELL, WA 98011
(Address of Principal (Zip Code)
Executive Offices)
(425) 415-1483
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(Issuer's Telephone Number, Including Area Code)
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Breccia International Minerals, Inc.
4418 Patterdale Drive
North Vancouver, British Columbia,
V7R 4L8
------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 common equity as
of July 31, 2000: 18,378,206 shares of Common Stock, $.01 par value.
<PAGE>
INDEX
<TABLE>
<S> <C>
Part I. NANO WORLD PROJECTS CORPORATION FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 1
Index to Financial Statements F-1
Review Engagement Report F-2
Consolidated Interim Financial Statements F-3
Summary of Significant Accounting Policies F-7
Notes to Consolidated Interim Financial Statements F-10
Item 2. Management's Discussion and Analysis Of Financial
Condition and Results of Operations 2
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 5
Item 2. Changes in Securities 5
Item 3. Defaults upon Senior Securities 5
Item 4. Submission of Matters to a Vote of Security Holders 5
Item 5. Other Information 5
Item 6. Exhibits and Reports on Form 8-K 6
SIGNATURES
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. FINANCIAL STATEMENTS.
Unaudited Consolidated Financial Statements
Quarter ended July 31, 2000 and year ended April 30, 2000.
The consolidated financial statements for the three months ended July 31, 2000
and 1999 include, in the opinion of management, all adjustments (which consist
only of normal recurring adjustments) necessary to present fairly the results of
operations for such periods. Results of operations for the three months ended
July 31, 2000, are not necessarily indicative of results of operations which
will be realized for the year ending April 30, 2001.
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Financial Statements
For the three months ended July 31, 2000
(Unaudited)
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Financial Statements
For the three months ended July 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Contents
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<S> <C>
Review Engagement Report F-2
Consolidated Interim Financial Statements
Consolidated Interim Balance Sheet F-3
Consolidated Interim Statement of Deficit F-4
Consolidated Interim Statement of Operations F-5
Consolidated Interim Statement of Cash Flows F-6
Summary of Significant Accounting Policies F-7
Notes to Consolidated Interim Financial Statements F-10
</TABLE>
F-1
<PAGE>
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Review Engagement Report
--------------------------------------------------------------------------------
To the Shareholders of
Nano World Projects Corporation
(a development stage company)
We have reviewed the consolidated interim balance sheet of Nano World Projects
Corporation (a development stage company) as at July 31, 2000 and the
consolidated interim statements of deficit, operations and cash flows for the
three months then ended. Our review was made in accordance with generally
accepted standards for review engagements and accordingly consisted primarily of
enquiry, analytical procedures and discussion related to information supplied to
us by the Company.
A review does not constitute an audit and consequently we do not express an
audit opinion on these consolidated interim financial statements.
Based on our review, nothing has come to our attention that causes us to believe
that these consolidated interim financial statements are not, in all material
respects, in accordance with generally accepted accounting principles.
/s/ BDO Dunwoody LLP
Chartered Accountants
Edmonton, Canada
September 21, 2000
F-2
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Balance Sheet
(Expressed in U.S. $)
(Unaudited)
July 31 2000 1999
--------------------------------------------------------------------------------
Assets
Current
Cash $ 1,833,514 $ 10,597
Accounts receivable 6,810 -
Prepaid expenses 35,992 -
------------------------
1,876,316 10,597
Capital assets (Note 2) 97,124 -
------------------------
$ 1,973,440 $ 10,597
===============================================================================
Liabilities and Shareholders' Equity (Deficiency)
Current
Accounts payable and accrued liabilities (Note 3) $ 388,983 $ 4,590
Short-term loan (Note 6) 19,736 19,995
Promissory note (Note 5) 500,000 -
------------------------
908,719 24,585
------------------------
Shareholders' equity (deficiency)
Share capital (Note 4) 5,523,937 285,165
Deficit
Accumulated during the development stage (3,928,647) -
Other (530,569) (299,153)
------------------------
1,064,721 (13,988)
------------------------
$ 1,973,440 $ 10,597
================================================================================
On behalf of the Board:
"Giorgio Marinoni" Director
------------------
"Andrew Cochrane" Director
------------------
The accompanying summary of significant accounting policies and notes are an
integral part of these consolidated interim financial statements.
F-3
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Statement of Deficit
(Expressed in U.S. $)
(Unaudited)
For the three months ended July 31 2000 1999
--------------------------------------------------------------------------------
Deficit, beginning of period $ (3,815,456) $(291,796)
Net loss for the period (643,760) (7,357)
-----------------------------
Deficit, end of period $ (4,459,216) $(299,153)
================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these consolidated interim financial statement.
The accompanying summary of significant accounting policies and notes are an
integral part of these consolidated interim financial statement.
F-4
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Statement of Operations
(Expressed in U.S. $)
(Unaudited)
For the three months ended July 31 2000 1999
--------------------------------------------------------------------------------
Expenses
Amortization of capital assets $ 7,875 $ -
Franchise taxes 280,000 -
General and administrative 378,285 7,357
-------------------------------
666,160 7,357
-------------------------------
Loss before the undernoted (666,160) (7,357)
-------------------------------
Other income (expense)
Interest income 32,400 -
Imputed interest on promissory note (10,000) -
-------------------------------
22,400 -
-------------------------------
Net loss for the period $ (643,760) $ (7,357)
================================================================================
Loss per share (Note 7) $ (0.055) $ (0.001)
================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these consolidated interim financial statement.
F-5
<PAGE>
Nano World Projects Corporation
(a development stage company)
Consolidated Interim Statement of Cash Flows
(Expressed in U.S. $)
(Unaudited)
For the three months ended July 31 2000 1999
--------------------------------------------------------------------------------
Cash provided by (used in)
Operating activities
Net loss for the period $ (643,760) $ (7,357)
Adjustments to reconcile net loss to net cash
Amortization of capital assets 7,875 -
Imputed interest on promissory note 10,000 -
Changes in assets and liabilities
Accounts receivable (6,810) -
Prepaid expenses (8,493)
Accounts payable and accrued liabilities 180,037 17,695
-------------------------
(461,151) 10,338
-------------------------
Investing activity
Purchase of capital assets (74,250) -
-------------------------
Financing activity
Subscriptions payable (311,757) -
-------------------------
Increase (decrease) in cash during the period (847,158) 10,338
Cash, beginning of period 2,680,672 259
-------------------------
Cash, end of period $ 1,833,514 $ 10,597
================================================================================
The accompanying summary of significant accounting policies and notes are an
integral part of these consolidated interim financial statement.
F-6
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Summary of Significant Accounting Policies
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
Significant Accounting Policies These consolidated interim financial statements
have been prepared in conformity with generally
accepted accounting principles in the United
States. The following are the significant
accounting policies of the Company.
Nature of Business Breccia International Minerals Inc. was
incorporated under the laws of the State of
Delaware on April 25, 1975 and was renewed on
March 18, 1994. The Company changed its name to
Nano World Projects Corporation on February 18,
2000 by resolution of the Board of Directors in
accordance with the provisions of Section 242
of the General Corporation Law of the State of
Delaware. The resolution was approved by the
requisite number of shares of the Company's
$0.0001 par value common stock entitled to vote
pursuant to Section 228 of the General
Corporation Law of the State of Delaware.
The Company owns the technology known as the
Dynamic Thin Laminar Flow which makes it
possible to produce monolayers of particles of
either organic or inorganic materials and apply
them to either solid or liquid surfaces. A
patent on the Dynamic Thin Laminar Flow method
was obtained in 1997 in Italy and subsequent
patent applications have been filed in the
United States and other countries. The Company
is engaged solely in the research and
development of the Dynamic Thin Laminar Flow
technology and is not currently engaged in any
commercial production of licensing of the
technology. The Company's future operations are
dependent upon successfully developing the
technology, obtaining the necessary financing
to complete the development and ultimately
marketing the technology (Note 1).
Basis of Presentation These consolidated interim financial statements
include the accounts of the Company and its
wholly-owned subsidiary companies. All
significant intercompany transactions and
accounts have been eliminated.
Financial Instruments The Company as part of its operations carries a
number of financial instruments. Unless
otherwise noted, it is management's opinion
that the Company is not exposed to significant
interest, currency or credit risks arising from
these financial instruments.
The fair values of these financial instruments
approximate their carrying values, unless
otherwise noted.
F-7
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Nano World Projects Corporation
(a development stage company)
Summary of Significant Accounting Policies
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
Capital Assets Capital assets are stated at cost less accumulated
amortization. Amortization based on the estimated
useful life of the asset is calculated on the declining
balance basis at a rate of 30% per annum.
In March 1998, the Accounting Standards Executive
Committee issued Statement of Position 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained
for Internal Use" ("SOP 98-1"). SOP 98-1 requires all
costs related to the development of internal use
software other than those incurred during the
application software development stage to be expensed as
incurred. Costs incurred during the application
development stage are required to be capitalized and
amortized over the estimated useful life of the
software. Accordingly, direct external costs associated
with the development of the web page have been
capitalized and are being amortized over the estimated
useful life.
Use of Estimates The preparation of financial statements requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, revenue
and expenses and other reported amounts in these
consolidated interim financial statements and the
related notes. Actual results may differ from those
estimates.
Long-Lived Assets The Company reviews the carrying value of long-lived
assets when events or changes in circumstances indicate
that the carrying amount of the assets may not be
recoverable through the estimated undiscounted future
cash flows resulting from these assets. An impairment
would be for the amount by which the carrying amount of
the assets exceeds the fair value of the assets.
Income Taxes The Company accounts for income taxes under the asset
and liability method as required by SFAS No. 109,
"Accounting for Income Taxes". Under this method,
deferred income taxes are recognized for the tax
consequences of temporary differences by applying
enacted tax rates applicable to future years to
differences between the consolidated interim financial
statements' carrying amounts and the tax bases of
existing assets and liabilities. When tax credits are
available, they are recognized as reductions of current
year's tax expense.
F-8
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Summary of Significant Accounting Policies
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
Foreign Currency Translation The Company has determined that the U.S. dollar is
the functional currency for its subsidiary
companies. Translation gains and losses are
included in income in the period in which they are
incurred.
Earnings per Share Loss per share has been computed by dividing loss
applicable to common shareholders by the weighted
average number of shares of common stock
outstanding during the respective years.
Recently Issued Standards SFAS No. 133, "Accounting for Derivatives
Instruments and Hedging Activities" requires
companies to record derivatives on the balance
sheet as assets or liabilities, measured at fair
market value. Gains or losses resulting from
changes in the values of those derivatives are
accounted for depending on the use of the
derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting
is that the hedging relationship must be highly
effective in achieving offsetting changes in fair
value or cash flows. SFAS No. 133 is effective for
fiscal years beginning after June 15, 2000.
Management believes that the adoption of SFAS No.
133 will have no material effect on its
consolidated interim financial statements.
F-9
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Notes to Consolidated Interim Financial Statements
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
1. Future Operations
Since April 1999, the Company's efforts have been devoted to identifying
potential investments and raising capital to finance the acquisition of the
same. In January 2000, the Company, through its wholly-owned subsidiary
company, acquired the patent on the technology known as the Dynamic Thin
Laminar Flow. Currently, the Company is engaged solely in the research and
development of the Dynamic Thin Laminar Flow technology and is not
currently engaged in any commercial production of licensing of the
technology. As a result, the Company has no revenue and expects to incur
losses during the foreseeable future.
The Dynamic Thin Laminar Flow technology and the Company's ability to
commence commercial exploitation of the patent are subject to additional
proof of process research and development. Subsequent to the period end,
the Company established a research and development facility in Quebec,
Canada. The Company is in the process of constructing an automated
prototype that is expected to produce films applicable to the filter
industry. Management expects to incur substantial additional costs and
expenses during the foreseeable future in connection with research and
development and construction of prototype commercial equipment.
The Company's ability to continue as a going concern is contingent upon its
ability to raise capital, to develop a viable technology or application, to
market any such technology or application and to achieve profitable
operations. The Company can give no assurance as to the ability of the
Company to continue as a going concern. These consolidated interim
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
-------------------------------------------------------------------------------
2. Capital Assets
2000 1999
Accumulated Net Book Net Book
Cost Amortization Value Value
Web page $ 27,100 $ 9,525 $17,575 $ -
Computer equipment 65,067 9,594 55,473 -
Other equipment 26,028 1,952 24,076 -
-------- ------- ------- -------
$118,195 $21,071 $97,124 $ -
======== ======= ======= =======
The estimated useful lives of the above assets range from three to five
years.
F-10
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Notes to Consolidated Interim Financial Statements
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
3. Accounts Payable and Accrued Liabilities
2000 1999
---- ----
Trade accounts payable $ 88,983 $4,590
Accrued liabilities 20,000 -
Franchise taxes payable 280,000 -
-------- ------
$388,983 $4,590
================
4. Share Capital
Authorized
Seventy-five million (75,000,000) $0.0001 par value common shares
Issued
Additional
Number of Par Paid in Total
Shares Value Capital Consideration
---------------------------------------------
Balance, April 30, 2000 8,128,206 $ 813 $ 523,124 $ 523,937
Issued during the period 10,250,000 1,000 4,999,000 5,000,000
---------------------------------------------
Balance, July 31, 2000 18,378,206 $1,813 $5,522,124 $5,523,937
=============================================
F-11
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Notes to Consolidated Interim Financial Statements
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
5. Acquisition
On January 31, 2000, the Company entered into an agreement to acquire all
of the issued and outstanding shares of Nano World Project Colloid &
Coating LLC for a total consideration of $2,980,000. The Company's interest
in the underlying net assets acquired at assigned values are as follows:
Cash $ 500
Acquired in process research and development 2,979,500
----------
$2,980,000
==========
Consideration consists of:
Promissory note, at net present value $ 480,000
5,000,000 common shares 2,500,000
----------
$2,980,000
==========
Nano World Project Colloid & Coating LLC holds the patent (Note 1). To
date, this company has not earned any revenue, nor incurred any expenses.
Pursuant to the purchase and sale agreement dated January 31, 2000, the
Company acquired 100% of the shares of Nano World Project Colloid & Coating
LLC. Under the terms of the agreement, a promissory note was issued to the
vendors in the amount of $500,000. The note is non-interest bearing and is
due and payable no later than August 6, 2000.
6. Related Party Transactions
The Company was charged consulting fees of $26,700 (1999 - $nil) by
directors of the Company, either directly or indirectly. These amounts were
incurred in the normal course of business and are included in general and
administrative expenses.
The short-term loan is due to a company controlled by a former director as
a result of reimbursement of expenses paid by this company.
7. Loss per Share
Loss per share is calculated on the basis of the weighted average number of
common shares outstanding during the period. The weighted average number of
common shares amounted to 11,701,576 (1999 - 8,128,206).
F-12
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Nano World Projects Corporation
(a development stage company)
Notes to Consolidated Interim Financial Statements
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
8. Income Taxes
A reconciliation between the Company's effective tax rate and the U.S.
statutory rate is as follows:
2000 1999
-----------------
U.S. statutory rate applied to pre-tax income 34.0% 34.0%
Differential arising from:
Increase in valuation adjustment
for current period's losses (34.0)% (34.0)%
-----------------
0.0% 0.0%
=================
Deferred income taxes consists of the following:
2000 1999
------------------
Benefit of loss carryforwards $ 511,300 $ 317,700
Less valuation adjustment (511,300) (317,700)
---------------------
$ - $ -
=====================
F-13
<PAGE>
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Nano World Projects Corporation
(a development stage company)
Notes to Consolidated Interim Financial Statements
(Expressed in U.S. $)
(Unaudited)
July 31, 2000
--------------------------------------------------------------------------------
8. Income Taxes (continued)
The Company has non-capital losses available for income tax purposes totaling
$1,500,000. This amount can be used to reduce taxable income of future
years. The potential tax benefit that may result from application of these
losses against future taxable income has not been recognized in these
consolidated interim financial statements. These losses expire as follows:
Year Amount
2001 $ 119,000
2002 23,000
2003 23,000
2004 22,000
2005 22,000
2006 22,000
2007 22,000
2008 46,000
2009 25,000
2010 39,000
2011 97,000
2012 93,000
2015 317,000
2016 630,000
----------
$1,500,000
==========
9. Subsequent Event
Subsequent to July 31, 2000, the Company entered into a collaboration
agreement with Centro Richerche Fiat, an Italian company, whereby the
parties agree to collaborate on research and development of
nanotechnology. Under this agreement, the Company is committed to spending
$1,000,000 per year for the next three years.
10. Comparative Figures
The comparative figures were not subject to review procedures.
F-14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following description of our financial condition and results of operations
should be read in conjunction with the information included in this report. The
description contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ significantly from the results
discussed in the forward-looking statements as a result of the risk factors set
forth in this report.
GENERAL
Our current business is the result of a purchase of a company holding the
technology known as the Dynamic Thin Laminar Flow ("DTLF Method"). The DTLF
Method was invented in 1997 with the goal of rendering monolayer preparations
compatible with industrial standards. A patent on the DTLF method was invented
in 1997 in Italy and subsequent patent applications have been filed in the
United States and other countries. Our sole significant asset is the company
holding the DTLF Method patent. We are engaged solely in research and
development of the DTLF Method Technology. We are not currently engaged in any
commercial production or licensing of the DTLF Method technology. As a result,
we have no revenue and expect to incur losses during the foreseeable future. The
DTLF Method technology and our ability to commence commercial exploitation of
the patent is subject to on-going proof of process research and development.
Given the foregoing status of our operations, we should be considered a high-
risk startup technology concern, in our early and inchoate stages of
development.
We are aware, and advise our shareholders and potential shareholders that we are
a high-risk venture with no ability to ensure the establishment of significant
revenue streams, or enhancement of shareholder value.
We are currently pursuing a two-prong business strategy:
. Research, development and expansion of existing DTLF Method Technology;
. Identification of potential joint venturers and/or licensees.
The company is continuing in its efforts to establish a complete senior
management roster and is devoting its efforts in this regard to the
identification and engagement of permanent Chief Executive, Financial, and
Operating Officers, and the establishment of administrative offices in New York.
To date, the company has formed two subsidiaries: Nano World (Canada)
Incorporated, a Canadian Federal Company, and Centre de Recherche en Assemblage
Nano Mechanique Ltd. ("Nano Mechanique"), a company incorporated in the province
of Quebec. Additionally, the company is in the process of forming an additional
subsidiary in Italy and expects this process to be completed shortly.
The research center established in Trois Rivieres, Quebec was officially opened
by Dr. Gilles Picard on the 7th day of September, 2000. The Nano Mechanique
research centre (formally known as "Centre De Rechereche En Assemblage
Nanomechanique Inc.")is now actively engaged in basic and applied research and
development concerning the exploitation of the DTLF Method. The center's mission
is to exploit a new process known as the DTLF Method through broad research as
to potential applications in the fields of applied chemistry generally, and more
specifically, electronics, optics, and health industries.
2
<PAGE>
At the opening of the center, the Company demonstrated the operation of the
prototype DTLF equipment which can produce continuous sheets of molecular
materials that can be as thin as one molecule. The development goals for the
DTLF method are to allow for the production, on an industrial basis, of such
monolayer sheets which may be composed of particles of either organic or
inorganic material and can be applied to either solid or liquid surfaces. There
can be no assurance that the Company will be able to obtain such results.
The company has entered into an agreement on September 6, 2000 with Centro
Richerche Fiat S.c.p.A. of Turin, Italy ("Centro Richerche Fiat") for the
purpose of collaborating with respect to experimentation, application and
exploitation of DTLF and related technology, particularly in the fields of
optics, electro-optics, and photonics. An Italian subsidiary is in the process
of being created for servicing the operational requirements of this
collaboration.
We believe that the collaboration agreement with Centro Richerche Fiat holds the
potential to widen and accelerate research and development with respect to the
DTLF method and its commercial exploitation through product development as it
provides the company with immediate access to the resources and personnel of an
established and recognized research facility, more particularly known for its
development of automotive and related applications.
The collaboration agreement is of a three year term and consists of three
phases: an experimentation phase, an application phase and an exploitation
phase. The principal purpose of the experimentation phase is to establish an
inspection technique to confirm the validity and reliability of the DTLF Method
in order to prove the concept. During the application phase, CRF will assist the
company in establishing a development program directed at developing
applications derived from the DTLF Method. Finally, once applications are
realized, the parties will co-operate to exploit and bring the results to
market. All nanotechnology related to the DTLF method at CRF shall be the
exclusive property of the company. CRF has been granted a non-exclusive world
wide license to use nanotechnology related to the DTLF method for product
development and experimentation in vehicle applications and lighting. However,
pursuant to the agreement, CRF is precluded from transferring, commercializing,
assigning or sub-licensing such technology without the consent of the company.
RESULTS OF OPERATIONS
Assets. At July 31, 2000, the Company had cash of $1,833,514, accounts
receivable of $6,810 and prepaid expenses of $35,992, compared to $10,597 in
cash, and no accounts receivable and no prepaid expenses at July 31, 1999. The
company's capital assets were valued at $97,124 at July 31, 2000 compared to no
capital assets at July 31, 1999.
Liabilities and Shareholders' Equity (Deficiency). At July 31, 2000, the Company
had current accounts payable and accrued liabilities of $388,983 compared to
$4,590 at July 31, 1999. At July 31, 2000, the Company had a short term loan of
$19,736, as compared to $19,995 at July 31, 1999. The Company had a promissory
note at July 31, 2000 for $500,000, as compared to no promissory note at July
31, 1999. At July 31, 2000 the deficit accumulated during the development stage
was ($3,928,647) as compared to no deficit at July 31, 1999. Other deficit at
July 31, 2000 was ($530,569), as compared to ($299,153) at July 31, 1999.
Deficit. The Company's deficit for the three months ended July 31, 2000 was
($3,815,456), as compared to ($291,796) for the three months ended July 31,
1999. The Company's net loss for the three months ended July 31, 2000 was
($643,760) as compared to ($7,357) for the three months ended July 31, 1999.
Operations. The Company's amortization of capital assets for the three months
ended July 31, 2000 was $7,875, as compared to no amortization for the three
months ended July 31, 1999. For the three months ended July 31, 2000, the
Company's general and administrative expenses were $378,285, as compared to
$7,357 for the three months ended July 31, 1999. The Company's interest income
for the three months ended July 31, 2000, was $32,400 as compared to no interest
income for the three months ended July 31, 1999. The Company imputed interest on
the promissory note in the amount of ($10,000) for the three months ended July
31, 2000, as compared to no imputed interest on the promissory note for the
three months ended July 31, 1999. The Company's net loss for the three months
ended July 31, 2000 was ($643,760) as compared to ($7,357) for the three months
ended July 31, 1999.
Cash Flows. For the three months ended July 31, 2000, the net loss was
($643,760) as compared to ($7,357) for the three months ended July 31, 1999. For
the three months ended July 31, 2000, the Company's amortization of capital
assets amounted to $7,875, as compared to no amortization of capital assets for
the three months ended July 31, 1999. The Company imputed interest on the
promissory note for the three months ended July 31, 2000 in the amount of
$10,000, as compared to no imputed interest on the promissory note for the three
months ended July 31, 1999. For the three months ended July 31, 2000, the
Company had accounts receivable in the amount of ($6,810), as compared to no
accounts receivable for the three months ended July 31, 1999. The Company's
prepaid expenses for the three months ended July 31, 2000 amounted to ($8,493)
as compared to no prepaid expenses for the three months ended July 31, 1999. The
Company's accounts payable and accrued liabilities for the three months ended
July 31, 2000 amounted to $180,037, as compared to $17,695 for the three months
ended July 31, 1999. The total cash used in the three months ended July 31, 2000
was $461,151, as compared to cash provided $10,338 for the three months ended
July 31, 1999. The Company's purchase of capital assets for the three months
ended July 31, 2000 amounted to ($74,250), as compared to no purchase of capital
assets for the three months ended July 31, 1999. The Company's subscription
payable for the three months ended July 31, 2000 amounted to ($311,757)
reflecting refunds due to subscribers of a private placement, as compared to no
subscriptions payable for the three months ended July 31, 1999. The total
cash flow for the three months ended July 31, 2000 amounted to $1,833,514, as
compared to $10,597 for the three months ended July 31, 1999.
In July 1999 the Company received notice of deficiency from the State of
Delaware with respect to non-payment of State franchise tax fees in the
aggregate amount of approximately $280,000. The Company intends to vigorously
appeal such assessment, however, there can be no assurance of the outcome of an
appeal and the Company may be liable for all or a substantial portion of such
assesment.
LIQUIDITY
Given the early stages of development and limited resources that are anticipated
to continue for the balance of calendar 2000, management functions have been
carried out to date and are expected to continue to be carried out in large
measure by our directors as delegated by the Board. The Board plans to delegate
to professional managers and assume more of a policy-making role subsequent to
completion of the initial phases of start up development. We expect to complete
such initial phase before calendar year-end 2000, however, there can be no
assurance in this regard.
The Company has had insignificant revenue since the acquisition of our
technology through our subsidiary Nano World Colloid & Coating, consisting
entirely of interest on funds held in our accounts. No additional revenue is
expected until commercial applications of proprietary technology are
established, and joint ventures and/or license agreements are initiated. We have
entered into the first of what is hoped to be a series of such collaborations by
execution of our agreement with Centro Richerche Fiat.
Despite the promises of such a collaboration, we remain conservative in our
revenue forecasts and do not anticipate final product development and sales
revenue in the short to medium term.
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Initially, revenues are expected to be derived from license agreements, but are
not expected to be sufficient alone for us to sustain ourselves on the basis of
revenue, and further depletion of capital is therefore presumed in the short and
medium term.
We believe that we may begin to receive a more sizeable revenue stream in the
final quarter of 2002 based on product development plans, and discussions with
potential joint venture partners and licensees. However, we can give no
assurances that we will generate any such revenues.
To date, we have financed our development primarily through the sale of our
common stock and have been dependent upon such outside sources of financing for
continuation of our development. We believe that we have sufficient cash to
satisfy our cash requirements through the end of December 2000, however, there
can be no assurance in this regard. Without additional funding or collaboration,
our ability to further our current development plans, and continue as a going
concern, will be at serious risk without a significant reduction of expenditures
and a related re-appraisal of operational plans, or a significant and, at
present, unanticipated increase in revenue.
Several start up tasks remain, which include proof of process of the prototype
for exploitation of the DTLF Method technology on a commercial basis, such step
constituting the initial phase of collaboration with CRF. There can be no
assurance that the DTLF Method will prove to be viable on a commercial basis. In
the event that such initial tasks are not concluded successfully in the fall of
2000, a re-evaluation of our development and operational plans will be required
as a result of limited capital and diminished ability to raise new funding.
Additional one-time expenditures related to start up plans for the development
of our technology have had a significant budget impact in our first fiscal
quarter of May 1, 2000 through July 31, 2000, causing monthly expenditures to
vary. Further, the opening and operation of our Quebec Research facility, our
collaboration with Centro Richerche Fiat, and the associated administrative
requirements tasked to our Italian subsidiary will generate an increase to the
company's monthly expenditure rate, together with additional one time
expenditures in the second and third quarters. Management is in the process of
evaluating and projecting these impacts over the next three years to establish a
budget for the company and a direction for its subsidiaries which incorporates
recent developments, including the execution of a collaboration agreement with
Centro Richerche Fiat and the adjusted role of our own research facility. Given
that the Collaboration Agreement with Centro Richerche Fiat entails new
administrative and operational costs, together with cash payments to CRF of $1.2
million in the first year, and $1 million in years 2 and 3 of the contract, our
projected average monthly expenditure rate will increase significantly. While
the specific budgeted amount projected on a monthly basis will depend in large
measure on the company's decision as to the role of our research centre, it is
anticipated that given these developments, the company, together with its
subsidiaries, will expend on average $250,000 per month ($3,000,000 per annum),
however, there can be no assurances that such expenses will not exceed this
amount.
Our capital requirements will also depend on numerous factors, including the
progress of our research and development, the cost of filing, prosecuting,
defending and enforcing any patent claims and other intellectual property
rights, the economic impact of competing technologies and the timeliness of
company developments, the costs of implementing and operating a marketing and
licensing system in the medium to long term, and the terms of any new
collaborative, licensing and other arrangements that we may establish.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently involved in any pending legal proceedings that are expected
to have a material adverse effect on our business. We may from time to time
become involved in legal proceedings in the ordinary course of our business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information.
On August 21, 2000, the Board of Directors of the Company accepted the
resignation of David Hunter, Chief Executive Officer.
On August 21, 2000, the Board of Directors approved the appointment of George
Marinoni as Director and President of the Company.
Item 6. Exhibits and Reports on Form 8-K
EXHIBITS.
Exhibit No. Description of document
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27.1 Financial Data Schedule
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended July 31, 2000.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Nano World Projects Corporation
Date: September 22, 2000 By: /s/ J. Andrew Cochrane
------------------------------
J. Andrew Cochrane
Treasurer, Secretary and
Acting Chief Financial Officer
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