<PAGE>1
Form 10 -QSB A2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
Commission File Number 33-2775-A
TECHNICAL VENTURES INC.
_____________________________________________________________________________
(Exact Name of small business issuer as specified in its charter)
New York 13-3296819
_____________________________________________________________________________
(State or other jurisdiction of (I.R.S Employer
incorporation of organization) identification No.)
3411 McNicoll Avenue, Unit 11, Scarborough, Ontario, Canada M1V 2V6
____________________________________________________________________________
(Address of Principal Executive Offices, Zip Code)
Issuer's Telephone Number, Including Area Code (416) 299-9280
______________________________________________________________________________
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of September 30, 1999.
23,248,011 shares of common stock, $.01 par value
______________________________________________________________________________
Page 1 of 20 Pages
<PAGE>2
TECHNICAL VENTUES INC.
FORM 10-QSB A
Fiscal Quarter Ended September 30, 1999
The Registrant is filing this amendment for the purpose of addressing certain
additional deficiencies in its financial statements occuring in its Report
10 QSB, for the financial period ending September 30, 1999, filed
November 29, 1999 and 10 QSB A1 report filed January 26, 2000.
(2)
<PAGE>3
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED CONSOLIDATED BALANCE SHEETS
September 30 September 30
1999 1998
NOT AUDITED NOT AUDITED
ASSETS
CURRENT ASSETS
Cash $10,368
Accounts Receivable $146,590 65,680
Inventory (Note 2) 40,982 37,510
Prepaid Expenses 6,346 704
TOTAL CURRENT ASSETS 193,918 114,262
OTHER ASSETS
Advances To Shareholders 62,319 36,407
Deposits 13,607 10,902
^
PROPERTY AND EQUIPMENT, at cost, net of
accumlated depreciation of $498,846 at
Sept. 30,1999 and $449,943 at
Sept. 30, 1998 147,148 162,496
INTANGIBLE ASSETS, net of accumulated
amortization of $5,517 at Sept. 30, 1999
and $4,979 at Sept. 30, 1998 563 847
TOTAL ASSETS $417,556 $324,914
<PAGE>4
September 30 September 30
1999 1998
NOT AUDITED NOT AUDITED
LIABILITIES
CURRENT LIABILITIES
Bank Overdraft $5,527
Accounts payable and accrued expenses 384,003 $286,276
Current Portion Of Notes Payable 370,773 440,597
Capital lease obligations (Note 4) 77,052 77,052
Notes From Private Lenders 61,824 101,339
Current Portion of Loans From
Shareholders, Unsecured, Interest free. 183,923 172,745
TOTAL CURRENT LIABILITIES 1,083,102 1,078,008
LONG-TERM LIABILITIES, net of current
portion:
Convertible Debentures 220,490
Notes Payable (Note 4) 61,256
Shareholders 307,232 296,704
Other 26,717 47,692
615,695 344,396
MINORITY INTEREST 0 0
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value, 50,000,000
shares authorized (Note 6):
Issued and outstanding, 23,248,011 at
September 30, 1999 and 19,798,011 shares
at September 30, 1998 $232,480 $197,980
Additional Paid in capital (Note 6): 4,881,294 4,498,040
ACCUMULATED OTHER COMPREHENSIVE INCOME 313,757 347,256
Deficit (6,708,772) (6,140,766)
Total Shareholders' deficiency (1,281,241) (1,097,490)
$417,556 $324,914
See Notes To Revised Condensed Consolidated Financial Statements
(3)
<PAGE>5
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
THREE MONTHS ENDED
SEPTEMBER
1999 1998
SALES $288,411 $240,990
COST OF SALES 237,554 186,389
GROSS MARGIN 50,857 54,601
EXPENSES
Administration 224,176 314,960
Interest And Other 21,904 20,694
Research & Development 17,104 83,196
Selling 33,963 17,194
Contingent Related Expenses 73,353
TOTAL GENERAL EXPENSES 371,501 436,044
^
^
^
LOSS BEFORE INCOME TAX RECOVERY (320,644) (381,443)
Income Tax Recovery 215
NET INCOME (LOSS) (320,644) (381,228)
BASIC INCOME (LOSS) PER COMMON SHARE ($0.01) ($0.02)
FULLY DILUTED INCOME (LOSS) PER COMMON SHARE ($0.01) ($0.02)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING FOR THE PERIOD 22,734,424 15,512,864
See notes to revised condensed consolidated financial statements.
(4)
<PAGE>6
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
(Amounts Expressed In U.S. Dollars)
Not Audited
<S> <C> <C> <C> <C> <C>
Common Stock Additional Cumulativ
Issued and Outstanding Paid In Translati
Shares Amount Capital Deficit Adjustmen
$ $ $ $
Balance, June 30, 1998 14,711,341 147,113 4,056,744 (5,759,538) 306,571
^
^
Common Shares Issued (Note 6) 5,086,670 50,867 441,296
^
Net Loss (381,228)
Cumulative Translation Adjustment 40,685
Balance, September 30, 1998 19,798,011 197,980 4,498,040 (6,140,766) 347,256
Balance June 30, 1999 22,198,011 221,980 4,702,463 (6,388,128) 313,319
^
Common Shares Issued (Note 6) 1,050,000 10,500 180,338
Additional Costs For Issuance of
Convertible Debentures & Warrants (1,507)
Net Loss (320,644)
Cumulative Translation Adjustment 438
Balance, September 30, 1999 23,248,011 232,480 4,881,294 (6,708,772) 313,757
See notes to revised consolidated financial statements
(5)
</TABLE>
<PAGE>7
REVISED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts Expressed in U.S. Dollars)
Not Audited
THREE MONTHS ENEDED
September 30,
1999 1998
CASH FLOW FROM OPERATING ACTIVITIES:
Net [Loss] Income ($320,644) (381,228)
Adjustment to reconcile net [loss] income
to net cash used by operating activities:
Depreciation and amortization 8,259 7,785
^Issue of Stock For Services 190,838 340,130
^
(Increase) Decrease in accounts receivable (22,520) 47,454
(Increase) Decrease in inventory 4,029 (4,316)
Increase (Decrease) in accounts payable and
accrued expenses 100,862 (67,221)
(39,176) (57,395)
CASH FLOW FROM INVESTING ACTIVITIES:
Increase In Deposits 9,377 13,215
(Increases) Decreases In Advances
To Stockholders (110) (2,024)
Property & Equipment Acquisition 484
Proceeds From Sale of Property & Equipment
9,267 11,675
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase In Bank Overdraft 5,527
Repayments of note payable to Cooper
Financial Corp (2,298) (6,490)
Proceeds from (repayments of) note payable
to Dow Chemical Canada (33,801)
Proceeds from (repayments of) Capital
Lease Obligations 232
Proceeds from (repayment of) Other Loans
Payable (211)
Proceeds from (repayments of) Private Lenders
Proceeds from (repayments of) Stockholders' loans 16,315 (47,853)
Proceeds from issue of restricted common stock 55,710
^Related Issuance costs of convertible debentures
and warrants (1,507) 72,232
18,269 39,587
EFFECT OF EXCHANGE RATE ON CASH (2,242) (1,104)
NET INCREASE (DECREASE) IN CASH BALANCE
FOR THE PERIOD (13,883) (7,238)
Cash Balance, begining of period 13,883 17,605
Cash Balance, end of period 0 10,368
PAYMENTS MADE DURING THE PERIOD FOR INTEREST 4,175 5,720
INCOME TAXES PAID - -
See notes to revised condensed consolidated financial statements.
(6)
<PAGE>8
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :
a) The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB
and Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. Operating
results for the three months ended September 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended
June 30, 2000. For further information refer to the financial
statements and footnotes thereto included in the Company's annual report
on form 10-KSB for the year ended June 30, 1999.
b) Principals Of Consolidation
The consolidated financial statements include the accounts of Technical
Ventures Inc. ("the Company") and its majority-owned subsidiaries,
Mortile Industries Ltd.,("Mortile"), Fam Tile Restoration Services Ltd.
and MPI Perlite Ltd. All material intercompany transactions and balances
have been eliminated.
c) Foreign Currency Translation:
Mortile maintains its books and records in Canadian dollars. Foreign
currency transactions are reflected using the temporal method. Under
this method, all monetary items are translated into Canadian funds at
the rate of exchange prevailing at balance sheet date. Non-monetary
items are translated at historical rates. Income and expenses are
translated at the rate in effect on the transaction dates.
Transaction gains and losses are included in the determination of
earnings for the year.
The translation of the financial statements of the subsidiary from
Canadian dollars into United States dollars is performed for the
convenience of the reader. Balance sheet accounts are translated
using closing exchange rates in effect at the balance sheet date and
income and expense accounts are translated using an average exchange
rate prevailing during each reporting period. No representation is
made that the Canadian dollar amounts could have been or could be
realized at the conversion rates. Adjustments resulting from the
translation are included in the accumulated other comprehensive
income in stockholders' deficiency.
^
(7)
<PAGE>9
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 1: (cont'd)
d) Fair Value Presentation:
The Company has financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all
financial instruments at September 30, 1999, does not differ
materially from the aggregate carrying values of its financial
instruments recorded in the accompanying balance sheet. The estimated
fair value amounts have been determined by the Company using available
market information and appropriate valuation methodologies.
Considerable judgement is necessarily required in interpreting market
data to develop the estimates of fair value, and accordingly, the
estimates are not necessarily indicative of the amounts that the
Company could realize in a current market exchange.
e) Net Income (Loss)Per Share:
Basic income per share is computed based on the average number of
common shares outstanding during the year.
Diluted income per share reflects the potential dilution that could
occur if securities, or other contracts to issue common stock, were
exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the income of the company. Such
securities or contracts are not considered in the calculation of
diluted income per share if the effect of their exercise or
conversion would be antidilutive.
e) Stock Based Compensation:
In December 1995, SFAS No. 123, Accounting for Stock-Based
Compensation, was issued. It introduced the use of a fair
value-based method of accounting for stock-based compensation. It
encourages, but does not require, companies to recognize compensation
expense for stock-based compensation to employees based on the new
fair value accounting rules. Companies that choose not to adopt the
new rules will continue to apply the existing accounting rules
contained in Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. However, SFAS No. 123 requires
companies that choose not to adopt the new fair value accounting
rules to disclose pro forma net income and earnings per share under
the new method. SFAS No. 123 is effective for financial statements
for fiscal years beginning after December 15, 1995. The Company has
adopted the disclosure provisions of SFAS No. 123.
^
(8)
<PAGE>10
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 2: GOING CONCERN
The company has sustained significant operating losses since its
inception and there is substantial doubt as to the Company's ability
to continue as a going concern. The Company's continued existence is
dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis. It is not expected that cash
flows from operations in the immediate future will be sufficient to
meet the Company's requirements. As a result the Company is in need
of additional financing. No adjustment has been made to the value of
the Company's assets in consideration of its financial condition.
NOTE 3: INVENTORY:
Inventory is comprised of the following:
September 30, September 30,
1999 1998
Raw Materials $40,982 $37,510
NOTE 4: LONG TERM DEBT:
At September 30, 1999 the Company was in default on it's notes
payable to I.O.C. and it's lease payable to FBX Holdings Inc.
Although the respective creditors have not called the obligations,
payments are due on demand and accordingly the balances are reflected
on the September 30, 1999 balance sheet as current liabilities.
<R/>
In August 1999 the Company refinanced it's note payable due to Cooper
Financial Corp. This obligation, is guaranteed by a shareholder of
the Company. A refinancing charge was assessed, increasing the
principal owed to $95,999 US. At September 30, 1999 the Company was
current with the new loan provisions; with a payable balance of
$91,280. The Company has been maintaining monthly payments of $3,150
Interest charged is 10% per annum calculated over a period of 35
months.
<R/>
(9)
<PAGE>11
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 5: Contingent Liability And Related Costs:
The Company is contingently liable under a breach of secrecy
agreements, fiduciary duty and misuse of confidential information
lawsuit. The Company's attorneys are of the opinion that the
company's defences are meritorious and the lawsuit will result in no
material losses. Accordingly, no provision is included in the
accounts for possible related losses.
The Company does, however, reflect legal and any other related costs
incurred for any contingencies as a charge to operations of the year
in which the expenditures are determined.
NOTE 6: COMMON SHARES
Common shares have been issued in consideration of services rendered
and consulting services for financing incurred. The shares have been
valued at their fair market value considering that they are
restricted shares. The excess of the fair market value of the shares
over the consideration received at their issue has been charged to
expenses in the current period as the period over which the services
have been rendered does not extend beyond the balance sheet date.
The shares issuances for the three months ended September 30, 1998
are summarized as follows:
Nature Of Number Of Paid Up Additional Paid Subscription
Payments Shares Capital In Capital Proceeds Expense
Research &
Development
Services 500,000 5,000 66,072 6,812 64,260
Consulting
Fees For
Financing 3,850,000 38,500 292,790 55,420 275,870
In Exchange
For Loans &
Accounts
Payable 670,000 6,700 73,101 79,801
Issued For
Cash 66,670 667 9,333 10,000
TOTALS 5,086,670 50,867 441,296 152,033 340,130
(10)
<PAGE>12
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 6: (cont'd)
The share issuances for the three months ended September 30, 1999
are summarized as follows:
Nature Of Number Of Paid Up Additional Paid Subscription
Payments Shares Capital In Capital Proceeds Expense
Consulting
Fees For
Financing 1,050,000 10,500 180,338 190,838
TOTALS 1,050,000 10,500 180,338 190,838
The expense amounts indicated above have been included in the following:
September 30, September 30,
1999 1998
Administration 190,838 275,870
Research & Development 67,260
TOTALS 190,838 343,130
NOTE 7: SEGMENTED INFORMATION
The company operates in Canada through Mortile a controlled
subsidiary and this entity represents the only operating segment of
the company. Mortile performs services in the areas of specialty
compounding in composite technology, polymer technology and its
proprietary technology, Morfoam (a chemical foaming agent for the
plastic industry). During the three month periods ended September 30,
1999 and 1998, speciaty compounding represented 90 % and 99 % of
gross revenue, respectively.
Mortile derives its revenue from customers located in the U.S.,
Canada, and France. The products produced are delivered to
enterprises located in Canada and the U.S.
Three Months US FRANCE CANADIAN CONSOLIDATED
Ended September 30,1999 $ $ $ $
Revenue from unaffiliated
customers 16,730 85,521 185,160 288,411
Income (loss) from
operations (18,598) (96,193) (205,853) (320,644)
Identifiable Assets at
end of year 417,556 417,556
(11)
<PAGE>13
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 7: (cont'd)
Three Months Ended US FRANCE CANADIAN CONSOLIDATED
September 30, 1998 $ $ $ $
Revenue from
unaffiliated customers 19,038 54,464 167,488 240,990
Income (loss) from
operations (30,117) (86,158) (264,953) (381,228)
Identifiable Assets
at end of year 324,914 324,914
NOTE 8: COMPREHENSIVE INCOME
The company has adopted Statement of Financial Accounting Standard
No. 130, "Reporting Comprehensive Income" as of January 1, 1998,
which requires new standards for reporting and display of
comprehensive income and its components in the financial statements.
However, it does not affect net income or total stockholders equity.
The components of comprehensive income are as follows:
Sept. 30,1999 Sept. 30, 1998
$ $
Net Loss (320,644) (381,228)
Other Comprehensive Income (Loss)
Foreign Currency translation 438 40,685
COMPREHENSIVE LOSS (320,206) (340,543)
The foreign currency translation adjustments are not currently
adjusted for income taxes since the company operates primarily in
Canada and the adjustments relate to the translation of the financial
statements from Canadian dollars into United States dollars, done
only for the convenience of the reader.
(12)
<PAGE>14
TECHNICAL VENTURES INC. AND SUBSIDIARIES
REVISED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 9: MAJOR CUSTOMERS
Two customers accounted for 82 % and 74 % of the Company's
consolidated revenues for the three month period ending December
30,1999 and 1998 respectively.
The loss of one or more of these customers would have a detrimental
effect on the Company's operating results.
NOTE 10: INCOME TAXES
Three Month Period Ended
September 30
1999 1998
a) Current income tax recovery consists
of:
U.S. Federal state and local
rates of 43% (138,000) (164,000)
Increase (decrease) resulting from:
Losses carried forward 138,000 164,000
Losses applied against extraordinary
gain in the year
Others (272)
Research and development refundable
tax credits 5,930
5,658
The Company had submitted a claim for $24,000 for 1998. The Company
has received notice from the tax department that the claim was
approved and the amounts remitted shortly. A claim for approximately
$24,000 will be filed for 1999. It is anticipated that the claim for
1999 will be subject to audits and there can be no assurance that
they will be honoured and, if they are, the amount of the refunds
may be substantially less than the claim amount.
(13)
<PAGE>15
PART 1 - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources:
The company's first quarter of fiscal 2000 was not profitable; additionally
monthly debt service requirements and payment of $65,000 CND towards
contingency related legal costs, leave the Company in a position where it is
unable to meet its monthly cash flow requirements.
Two of the Company's long term debt financing arrangements, Note 4, are
currently in arrears, as such these debt's continue to be reflected as
current liabilities on the September 30/99 balance sheet. Both debtors
clearly understand the Company's financial position and as such have verbally
agreed to a moratorium on principal repayments until the Company is in a
financial position to make a payment[s] or suggest an alternate acceptable
method of settlement.
The Company has submitted a tax claim for fiscal 1998 amounting to
approximately $35,000 (Canadian). The tax department will perform both a
scientific and financial audits in December 1999 relative to this claim.
Additionally, a claim for fiscal 1999 of approximately $35,000 (Canadian)
will be filed. The tax department has notified the Company of their intent
to audit all such claims submitted.
GOING CONCERN(Note 2), the company has sustained significant operating losses
since its inception and there is substantial doubt as to the Company's
ability to continue as a going concern. The Company's continued existence is
dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis. It is not expected that cash flows from
operations in the immediate future will be sufficient to meet the Company's
requirements. As a result the Company is in need of additional financing, in
that regard;
During the first three months of fiscal year 2000, the Company issued
1,050,000 Restricted Common Shares in exchange for Consulting-Financial &
(14)
<PAGE>16
Public Relations Services to the company, expensing $190,838 for the service,
at an overall value per share of $0.18.
The company had concluded in late January 1999, a Private Offering under
Regulation D of the Securities Act of 1933. The offering consisting of 8 %
Convertible Debentures in the aggregate of $225,000; additionally as part
thereof, Non-Redeemable Warrants of a three year term, allowing the investor
to purchase shares of the Corporation's Common Stock. Accordingly the
company has set aside the appropriate number of shares from the authorized
and unissued shares of common stock for issuance upon conversion of the
Debentures and exercise of the Warrants issued in connection with the
offering.
The Company had prepared and filed on April 8, 1999 a Registration Statement
on Form SB-2, in accordance with it's Private Offering of late January 1999.
This Private Offering having been reported in its quarterly Report 10 QSB of
March 31, 1999 and annual Report 10 KSB of June 30th, 1999, both having been
filed with the Securities Exchange Commission,. The Company also filed an
amended SB 2 Registration in September 1999 and will also submit a further
amendment to the registration. It is expected the 2nd amended filing will be
completed in late November.
At September 30, 1999 the net residuals of this private offering are reported
as a long term liability on the company's balance sheet amounting to $220,490.
The net amount reflects the addition of $75,000 intrinsic value assigned the
underlying warrants, less a $21,733 actual value assigned to the warrants,
less an additional $57,777, related to accounting, finders, and legal fee's
expensed.
The company will continue to assess and investigate all avenues in respect
of it's 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 issuance's in the future.
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.
Based on projections provided by existing customers, management expects
increased sales in all areas of it's expertise, during fiscal 2000.
Additionally, the company's financial and public relations consultants have
(15)
<PAGE>17
expressed their confidence in being able to secure financing enabling the
company to maintain cash flow requirements and also provide capital for
expansion when required. However, there can be no guarantee of this.
The Company's new product "Morfoam" introduction to many potential customers,
could necessitate immediate expansion of existing warehouse facilities by
approximately 30% and consideration of acquiring additional manufacturing
equipment necessary to performing a relative manufacturing function in house,
rather than contracting the work to an outside firm.
"Morfoam", a product for the plastics and rubber industry, is a chemical
foaming agent and processing aid, providing significant cost reductions by
reducing the amount of plastic consumed, but also provides many other
advantages to the industry, such as improved surface finishes, physical
properties and sink mark elimination, lower part weight and shorter cycle
times. Morfoam is a concentrate encapsulated in an olefin binder, presented
in pellet form to be easily blended or metered into the users formulations.
The product improves cell structure and reduces voids when nitrogen is used
as the primary foaming agent.
^
Results of Operations:
Sales revenues for the first three months of fiscal 2000 increased 20 %, when
compared to those for the corresponding period of the previous year. The
majority increase due to an increase in orders from two of the Company's
major customers. Comparative gross margins, however, decreased due to a
change in the mix of orders and related pricing from customers. The Company
therefore undertook and has been successful in negotiating an increase in
prices from some of it's customers.
Technical Ventures continues to develop and market the specialty compounding,
with this segment representing 94 % of total revenues during the first three
months of fiscal 2000. The Company also continues to assess additional
opportunities in it's expertise of specialty compounding.
Administrative expenses decreased 28 % when compared to those for the
corresponding period of the previous year, as significant administrative
(16)
<PAGE>18
expense on the issue of common stock [See Note 6 For Detail]. Direct
administrative expenses, excluding the preceding, actually increased
12 % for the three month period ending September 30, 1999. This increase due
in part to the on going quest for financing and resources being directed to
the current lawsuit.
R&D expenses decreased 77 % when compared to those for the corresponding
period of the previous year as significant R&D expenses arose on the issue of
common stock [See Note 6 For Detail]. However, actual R&D expenses decreased
20%, when compared to those of the corresponding three month period for the
previous fiscal year, due to resources being redirected to manufacturing and
sales.
Selling expenses have increased 97 % as efforts are stepped up to introduce
and market the company's new product Morfoam. This has included increased
market activity in Canada and the US. Potential customers that have
completed their testing advise that Morfoam is the product of choice, in that
regard; a major international toy manufacturer, a plastic crate and skid
manufacturer, as well, manufacturers in the construction and marine
industries, with applications for plastic wood, decorative trim and marine
plywood.
Sales revenue in this product have, as yet, been minimal but the company
continues to remain very optimistic in this regard.
The Company, however, continues to take measures to contain all areas of
expense.
Forward Looking Statements:
This Form 10-QSB contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21B of the Securities
Exchange Act of 1934. The Company's actual results could differ materially
from those set forth in the forward looking statements.
(17)
<PAGE>19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
A legal action was commenced against the Corporation, its subsidiary ,
Mortile Industries Ltd., their President, Frank Mortimer and the Dow Chemical
Company, on June 4,1999 in the Ontario Superior Court of Justice (Commercial
List); by a former customer, Endex Polymer Additives Inc., Endex Polymer
Additives Inc. (USA), Endex International Limited and G. Mooney And
Associates. The Dow Chemical Company is defending separately.
The claims allege breach of secrecy agreements, fiduciary duty and misuse of
Endex confidential information. The Plaintiffs are seeking CND $10 Million
compensatory damages, further punitive damages of CND $1 Million and
interlocutory and permanent injunctions.
After submission of the Defendants' evidence, the Plaintiffs abandoned their
claim for an interim injunction. The Defendants have moved for an expeditious
trial. The Court has ordered the parties to combine the examinations for
injunction proceedings with those for the preparation for trial.
Based on prior written legal opinion from its patent attorneys that the
allegations are without merit, the Corporation has retained a law firm
specializing in Intellectual Property Law and is vigorously defending the
action.
On September 16-17, 1999, at the hearing of the interlocutory injunction
motion, the parties agreed, on consent, to adjourn the motion until trial.
The parties agreed to expedite the matter to trial with a target date of
about December 1999.
Subsequently, it appears that date of trial will now be delayed until
January 2000.
(18)
<PAGE>20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
(a) Exhibits - none
(b) Reports on Form 8-K -
During the quarter for which this report is filed,
the Company filed a Current Report on Form 8K, dated
September 28, 1999, updating and regarding a legal
action referenced under Item 5 - Legal Proceedings in
this report 10 QSB, September 30, 1999.
(19)
<PAGE>21
SIGNATURES
Pursuant to 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 thereunto duly authorized.
TECHNICAL VENTURES INC.
Date: March 9, 2000 BY: /s/Frank Mortimer
Frank Mortimer, President and
Chief Executive Officer
Date: March 9, 2000 BY: /s/Larry Leverton
Larry Leverton, V/P & Secretary
Chief Financial Officer
(20)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND INCOME STATEMENT INCLUDED IN PART I, ITEM 1 OF
THE REGISTRANT'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED
September 30,1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 146,590
<ALLOWANCES> 0
<INVENTORY> 40,982
<CURRENT-ASSETS> 193,918
<PP&E> 645,994
<DEPRECIATION> 498,846
<TOTAL-ASSETS> 417,556
<CURRENT-LIABILITIES> 1,083,102
<BONDS> 0
<COMMON> 232,480
0
0
<OTHER-SE> (1,281,241)
<TOTAL-LIABILITY-AND-EQUITY> 417,556
<SALES> 288,411
<TOTAL-REVENUES> 288,411
<CGS> 237,554
<TOTAL-COSTS> 237,554
<OTHER-EXPENSES> 371,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,904
<INCOME-PRETAX> (320,644)
<INCOME-TAX> 0
<INCOME-CONTINUING> (320,644)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (320,644)
<EPS-BASIC> .00
<EPS-DILUTED> .00
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