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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB A1
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 33-2775-A
TECHNICAL VENTURES INC.
(Exact name of registrant as specified in its charter)
New York State 13-3296819
(State or other Jurisdiction (I.R.S.Employer
of incorporation or Identification No.)
organization)
3411 McNicoll Avenue, Unit 11
Scarborough, Ontario, Canada M1V 2V6
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (416) 299-9280
Securities registered pursuant to Section 12 (b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $.01 Par Value
Indicate by check mark whether the Registrant (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 ___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB [ ]
State Issuer's revenues for its most recent fiscal year, $1,504,339
The appropriate aggregate market value of the voting stock of the Registrant
held by non-affiliates of the Registrant as of August 30, 1996 (based upon
the average bid and asked prices as reported by the National Association of
Securities Dealers Automatic Quotation System) was approximately $1,006,237.
The number of shares outstanding of the Registrant's common stock, as of June
30, 1996 is 14,586,341.
Exhibit index is located on page 13 of this Annual Report on Form 10-KSB.
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Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
During the year ended June 30, 1996, the Company's operating loss was funded
primarily by working capital provided by a Canadian Tax refund and debt
financing. The Company has reduced a portion of past due balances due to
vendors and creditors. However, continued operating losses and significant
monthly debt service requirements continue to leave the Company in a position
where it is unable to meet its monthly cash flow requirements.
Three of the Company's long term debt financing arrangement are currently in
arrears, however, the debtors have verbally agreed to allow a moratorium on
principal repayments until the Company is in a financial position to make
payment(s). The aggregate amount of principal payments currently in arrears
and outstanding, $1,165,886 [US].
Additionally at June 30,1996, the Company was in arrears on approximately
$100,000 in debt interest payments and $90,000 to vendors on account.
Payment of expenses directly associated with the Company's production
operations have been given a higher priority and management has made informal
verbal arrangements with creditors regarding resolution of past due balances.
As a result of the Company's inability to resolve its past due balances to
its independent auditors as well as the uncertainty as to whether funds will
be available for current period audits, the Company has not been able to
include audited financial statements with its annual filing on Form 10-K.
Intentions are to arrange for completion of the required audits when and if
appropriate funding is available. However, sustaining the day to day
operations will continue to be our utmost priority. Accordingly, there can
be no assurances as to when such arrangements can be made.
Presently there has been no indication from any of the Company's creditors of
intent to take legal action for collection of balances due from the Company
or to file bankruptcy petition against the Company. There are no present
intentions on the part of the Company to seek bankruptcy protection from it
creditors. There can be no assurance that this status will not change.
A Canadian tax refund for the years 1993 and 1994 was received during May
1996 in the amount of $54,768 (Canadian). The Company will also submit a
claim for fiscal 1995 amounting to approximately $27,000 (Canadian),
additionally a claim for fiscal 1996 of approximately $17,500 (Canadian).
The tax department has notified the Company of their intent to audit all such
claims submitted.
Management does not consider these financings (assuming the above refund
claims are accepted) to be a long-term solution to the Company's financial
needs and efforts are being made to complement these funds with additional
financing. However, the present financial condition has hindered management
in their pursuit of acceptable financing arrangements. Several major
investment banking providers have been meeting with the Company in respect of
financial requirements. If it is deemed to be in the best interest of the
Company and its stockholders, serious consideration will be given to raising
additional funds through private or public equity issuance's in the future.
The Company's current capital structure of an authorized issue of fifteen
million common shares is almost complete. Therefore, a change in the capital
structure would become necessary to raise additional funds through private or
public issuance's in the future. However, if significant funds are to be
raised in this manner, it would require approval from a majority of the
Company stockholders, which management is confident it can receive.
Based on projections provided by existing customers, management expects
increases in sales during fiscal 1997, these projections are as follows:
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Flame Retardant Products
Royalty payments by Dow to the Company are based on sales of Dow resin to
licensee's and could generate $1.5 million(Canadian) over the remaining 17
year term of license; the agreement does not contain minimum royalty
provisions.
No Royalty payments were received during fiscal 1996 and Dow has not
indicated the anticipated amount of their 1997 sales of resin, subject to
the Royalty Agreement. Lucent Technologies have specified our material for
use in their fiber optic product and doubled their purchases during fiscal
1996. Sales levels for the Company's product are forecast at $850,000 if
1997. Lucent Technologies and several clients based in the US., Europe and
1998. Canada meet their forecasts. Sales for this product during fiscal 1996
1999. where less than $100,000.
Composite Technology
A contract signed with a training munitions manufacturer was renewed for an
additional two years through December 31, 1997 and remains in force; without
significant sales during fiscal 1996. Management has recently been advised
that this manufacturer was successful in its bid for a contract in the US,
the residual effect on the Company has not been indicated by the customer
and the Company retains some optimism. The fishing sinkers were well
received, but there has been some delay in the implementation of legislation
giving rise to a complete ban on lead. However, there are indications that
public pressure to ban the use of lead is on the rise again. There are
several projects within the realm of the metal technology that are currently
being assessed and which could represent major sources of revenue, should
they come to fruition. One such project is the supply of a composition to be
used in the production of a metal filled laminated sheet. The laminated
sheet is being considered in the manufacture of visual display boards, which,
by applying the metal technology would allow the use of magnetized items on
the surface of the display. Other potential markets are: light weight x-ray
blankets, self lubricating bearings and bushings, the toy industry and any
lead replacement industry.
Specialty (Contract) Compounding
During 1996 total contract compounding revenues were $1,380 Million,
representing 92 % of net revenues. Quotes on further contract work have been
given and the Company has been actively looking for suitable applications.
The dispersion of powders into plastic, is normal in the industry. However,
due to environmental concerns and the need for perfect dispersion of the
powders in the resins, more and more companies are starting to use
masterbatch powders and plastics. The powders are predispersed and the
extruders or moulder will add essential ingredients to the resin in the final
stages of manufacture. This is particularly useful when the powders are
reactive as in the curing or cross-linking of rubber or plastic. The
Company has concentrated on this business and has worked very closely for
over two years with a few major customers. The Company has qualified to be
appointed the compounder with three( 3) major customers and expects
substantial orders over a long period. Typical masterbatches are: foaming
agents, sulphur, zinc oxide, flame retardants, curing agents, processing
aids, antioxidant stabilizers and slip and anti block agents.
Significant property and equipment purchases and/or expansion of facilities
will only be considered if demand for Company products warrant such expansion
and the financing of such expansion would not adversely effect the Company's
financial condition.
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Results of Operations - Comparison of Fiscal 1996 To Fiscal 1995:
For the fiscal year ending June 30, 1996, the Company had GROSS sales of
$1.5 million, of which $1,380,000 was generated from specialty [contract]
compounding work.
Gross margins as a percentage of net sales decreased to 15.4% from 17.5% for
the year ended June 30, 1996. This decline was the result of lower pricing
on sales orders, caused by a decline in component raw material prices.
Additionally, more resources were committed to production in the current year
increasing the Company's fixed manufacturing overhead.
Financial and Interest Expense increased $36,698 in fiscal 1996. Increases
in average outstanding indebtedness and less favorable foreign currency
exchange positions were the primary factors contributing to this increase.
Administrative expense decreased by $25,880 primarily due to the absence in
fiscal 1996 of non recurring costs relative to the quest for financing. R&D
and selling expenses declined in fiscal 1996 due to utilization of their
resources in manufacturing.
Efforts by the Company in the metal and polymer technologies has opened
several avenues to sales of related products. Lucent Technologies (AT & T)
have specified the Company's material for use in their fiber optic product;
Lucent Technologies (AT&T) doubled their purchases of the Company's material
during fiscal 1996.
Although revenues for fiscal 1996 increased slightly over the preceding year
they were significantly below anticipated levels, in particular, sales of
proprietary products. Furthermore, while the Company's materials have been
accepted by its customers for use in their manufacturing, acceptance of the
finished products by the end users continue to be slower than expected.
This had an adverse effect on demand for the Company's materials during the
fiscal year.
While management is confident that these conditions will only have a
temporary effect on sales of proprietary products, this area of marketing
requires highly qualified representation and in this regard the Company is
considering such qualified representation to market it's proprietary products
more rapidly. There can be no assurance of success in this regard.
Projections for the current year anticipate a major growth of sales revenues.
Such growth is anticipated to take place in all areas of the Company's
expertise and technolgoy. Currently the Company is actively involved in some
15 projects which could lead to the projected major growth. However, there
can be no assurance in this regard. During fiscal 1996 sales to several
newer customers of specialty compounding materials were lower than levels
which they had expected and had indicated to Company management.
Additionally, customers anticipated significant increases in sales of fishing
sinkers and munitions products, manufactured using a composite of metal and
plastic materials, manufactured by the Company as a substitute for lead.
Customer projections had anticipated legislation banning lead, which did not
take place. The customers have indicated their optimism that future growth
in this market is imminent, but there can be no assurance in this regard.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TECHNICAL VENTURES INC.
Dated: November 11, 1996 By: Frank Mortimer
Frank Mortimer, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: November 11, 1996 By: Frank Mortimer
Frank Mortimer, President, Principal
Executive Officer and Director
Dated: November 11, 1996 By: Bryan Carter
Bryan Carter, Vice President
Director
Dated: November 11, 1996 By: Larry Leverton
Larry Leverton, Secretary
Treasurer and Principal
Accounting Officer and Director
