<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 March 31, 2000
[ ] 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 March 31, 2000.
23,802,031 shares of common stock, $.01 par value
______________________________________________________________________________
Page 1 of 12 Pages
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TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED REPORT 10 QSB A FOR THE FINANCIAL PERIOD ENDING MARCH 31, 2000
The Registrant is filing this amendment for the purpose of addressing certain
additional deficiencies in its quarterly report 10 QSB for the financial
period ending March 31, 2000.
The deficiencies, relating specificially to the above noted report,
were brought to the attention of the Registrant by the S.E.C. in a Letter
of Comments dated June 6, 2000, in conjunction with the Registrants most
recent amended SB 2 filing.
Deficiencies noted in Item 2 - MDA - necessitated expansion of information
provided in the original filing of the report. This expansion is included in
this amended report.
Deficiencies noted in Part II - Item 2 necessitated expansion of information
provided in the original filing of the report. This expansion is included in
this amended report.
(2)
<PAGE>3
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
PART 1 - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources:
During the first nine months of fiscal 2000 the company incurred a loss,
however, during the second quarter the company had two profitable months of
operation resulting in a marginal, direct operating profit for that period.
This profit excluded compensation and financing charges expensed, as well
contingency related legal expense. Nine month sales revenues, have been
increasing. The nine month operating loss was funded by, debt financing,
sales revenues and a tax refund. The company has been able to reduce some
balances due vendors and creditors, however, monthly debt service
requirements, aggregate payments of $ 91,500 [CND] towards contingency
related legal costs; aggregate payments of $9,392 to the company's auditors
and $5,000 additional legal expenses paid to the company's securities counsel
for services relative to the SB2 Registration, leave the Company in a
position where it has difficulty in being able 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 March 31/00 balance sheet. The amount of debt,
including both principal and accrued interest is as follows: ODC [formerly
IOC] is $604,529 CND; FBX Holdings $202,056 CND. 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 and acceptable
method[s] of settlement.
The Company received during the third quarter of fiscal 2000 it's 1998 tax
claim of $35,000 [CND]. Additionally, a claim for fiscal 1999 of
approximately $35,000 (Canadian) will be filed. The tax department had
notified the Company of their intent to audit all such claims submitted.
(3)
<PAGE>4
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
During the first nine months of fiscal year 2000, the Company issued
1,050,000 Restricted Common Shares in exchange for Consulting - Financial &
Public Relations Services to the company, expensing $190,838 for the service,
at an average price per share of $0.183.
During the 2nd fiscal quarter of 2000 the company issued 504,020 Restricted
Common Shares to a shareholder of the company in exchange for a debt due the
shareholder in the amount of $55,442, at a price per share of $0.11.
Additionally, during the third financial quarter, the company issued 50,000
Restricted Common Shares to it's Securities Counsel's firm for legal expense
related to the on going SB 2 registration, at a value of $10,000 or $0.20
per share.
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;
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 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, Annual Report 10 KSB of June 30th, 1999 and quarterly Report
10 QSB of September 30, 1999, all reports having been filed with the
Securities Exchange Commission. The Company has also filed an amended SB-2
Registration in September 1999 and December 30, 1999, in response to S.E.C.
comments. The Company received S.E.C. comments relative to its most recent
amended SB-2 filing and responded on April 24, 2000, along with an amended
SB 2 Registration.
(4)
<PAGE>5
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
At March 31, 2000 the net residuals of this private offering are reported as
a long term liability on the company's balance sheet amounting to $189,574.
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 $88,417 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, this
expectation, which to date is supported by a 22 % increase in sales revenues
during the nine month period ending March 31, 2000 of this fiscal year
compared to those for the corresponding period of the previous year.
Additionally, the Company's financial and public relations consultants have
expressed their confidence in being able to secure financing enabling the
company to sustain cash flow requirements and also provide capital for
expansion when required. However, there can be no assurance of these factors.
The Company's new product "Morfoam" introduction to many potential customers,
could necessitate, should sales efforts come to fruition, 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.
(5)
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Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
The product improves cell structure and reduces voids when nitrogen is used
as the primary foaming agent.
Results of Operations:
Net sales revenues for the first nine months of fiscal 2000 increased 22 %,
when compared to those for the corresponding period of the previous year.
The majority increase due to an increase in orders from core customers. ^
Increased order volumes and improved production operating parameters have
enhanced productivity of the manufacturing facility, however, a decline in
volume by one of the company's core customers in the 3 rd quarter offset this.
This decline resulted in a negative impact of $191,816 CND on sales revenues,
however, this has been offset by increases sales orders and revenues from
existing and new customers.
|Sales by geographic area for the nine month period ended March 31, 2000
|and 1999, in US$ are as follows:
| Geographic Area 2000 1999
|
| United States $ 98,735 $ 97,061
| Canada 641,778 574,275
| France 246,837 137,503
|
| $987,350 $808,839
|Sales by product line for the nine month period ended March 31, 2000 and
|1999, in US$ are as follows:
| Product Line 2000 1999
|
| Specialty Compounding $931,338 $742,975
| (including Composite)
| Polymer Technology 48,974 36,089
| Miscellaneous 7,038 29,775
|
| $987,350 $808,839
Technical Ventures continues to develop and market the specialty compounding,
with this segment representing 95 % of total revenues during the first nine
months of fiscal 2000. There have been major volume increases in this area
of the company's business, from several of the existing customers, during the
year. Additionally there are new customers in this market which the company
is developing and has secured minimal initial orders. The Company will
(6)
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Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
continue to assess all potential and additional opportunities in it's
expertise of specialty compounding.
Comparative gross margins, as a percent of revenue, decreased 10%. The
decrease was due to mix of clients from which the Company received orders;
with the major portion of revenue earned in the first nine months coming from
clients for which the company purchases raw materials and provided compounding
services, charging the client accordingly. Margins for this segment of the
business are lower because of very competitive circumstances. The Company
undertook negotiations for price increases from some of it's core customers,
with some success, and will continue to seek other increases.
|Net sales revenues for the period ending March 31, 2000 and 1998 are
|catagorised as follows:
| Category 2000 1999
|
| Proprietary -Thermo Plastic $ 7,415 $ 0
| Proprietary - Morfoam 41,559 53,210
| Compounding With Materials 571,503 374,289
| Compounding Without Materials 359,690 351,565
| Miscellaneous Without Materials 7,183 29,775
|
| $987,350 $808,839
During the third fiscal quarter of 2000, net sales revenues increased by 4 %
to $315,280 from $303,761 for the corresponding period for the previous year.
With gross margins declining, as a percent of revenue, by 18% when compared
to those for the corresponding period of the previous year. The decline in
gross margins is due in part to the change in the mix of clients. A major
portion of the revenue earned in this fiscal quarter came from clients for
which the company purchases raw materials and provides services for the
compounding, charging the client accordingly; margins for this segment of the
business are lower because of very competitive circumstances.
Administrative expenses decreased 45 % and 21 % respectively, when compared
to those for the corresponding nine and three month period of the previous
year as significant administrative expense arose on the issue of common stock
[See Note 6 For Detail]. Excluding the preceding, administrative expenses had
a decrease of 12 % for the nine month period ending March 31, 2000 when
compared to those for the corresponding period of the previous year.
(7)
<PAGE>8
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
The decline, as a result of reduced legal expenses not being incurred in the
current fiscal year, relative to the modification of the Company's Certificate
of Incorporation and Special Shareholders meeting, which had been accounted
for in the previous financial year. As well, consulting fees which took place
during fiscal 1999 were not incurred again in the current fiscal period.
R&D expenses decreased 58 % when compared to those for the corresponding
period of the previous year and decreased 3 % when compared to those for the
3 month period ending March 31, 1999, as significant R&D expense arose on the
issue of common stock [See Note 6 For Detail]. However, actual direct R&D
expenses decreased 9 %, when compared to those of the corresponding nine
month period for the previous fiscal year; resources being redirected to
manufacturing and sales.
Selling expenses increased 56 % for the nine month period ending March 31,
2000 and 54 % for the three month period ending March 31, 2000, when compared
to the corresponding periods for the previous year, as efforts are stepped up
to introduce and market the company's new product Morfoam. This has included
increased market activity in both the U.S. and Canada. 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.
In that regard, during April the company received a large order from it's US
distributor, which is ultimately destined for Australia. The company
continues to remain very optimistic in this regard as efforts in both the US
and Canada are proceeding quickly and with very positive reactions from
potential clients.
Total expenses for the nine month period experienced an average overall
decrease of 20 %, when compared to those for the corresponding period of the
previous year as significant expenses had arose on the issue of common stock
[See Note 6 For Detail]. Actual direct expenses, however, increased 47 %,
when compared to those of the corresponding nine month period for the previous
fiscal year due to the ongoing legal costs of the litigation in which the
company is currently involved; the Company, however, continues to take
measures to contain all areas of expense whenever and wherever possible.
(8)
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Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
Effect of the Year 2000 Issue On Our Operations
None, it is not expected that any problems will arise.
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.
(9)
<PAGE>10
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
|During the first nine months of fiscal year 2000, the Company issued a total
|of 1,050,000 Restricted Common Shares in exchange for Consulting - Financial
|& Public Relations Services to the company, expensing a total of $190,838 for
|the service, at an average price per share of $0.183. The shares were issued
|for remuneration defined in an agreement for corporate advisory and finance
|services and which was due on execution of the agreement. The amount
|expensed is based on a fair value of the quity instrument issued on the date
|of issue; as that value is more reliably measurable than the consideration
|received.
|This issue consisted of two[2] transactions one of which took place on August
|12, 1999 when 350,000 shares were issued to Coleman Capital; the average
|selling price for the company's common shares on that date was $0.20 and
|the basis of the expensed amount was $0.136 per share. The second transaction
|took place on August 20, 1999 when 700,000 shares were issued to Hudson
|Consulting; the average market price for the company's common shares on that
|date was $0.325 and the basis of the expensed amount, $0.2045 per share.
The company also issued 504,020 Restricted Common Shares to shareholder of
|the company, Peter Wherle, in exchange for a debt and accrued interest due
|the shareholder in the amount of $55,442, a price per share of $0.11. This
|transaction took place on December 13, 1999 during the second financial
|quarter, on that date the average market price for the company's common
|shares was $0.16. In this instance the value of the consideration was known
|and the number of equity instruments issued was based on a discount, to fair
|market value of the equity instrument, on the date of conversion.
Additionally, during the 3 rd fiscal quarter of 2000 the company issued 50,000
|Restricted Common Shares to it's securities counsel's firm, Sichenzia, Ross
|& Friedman LLP, for legal services invoiced, related to the 8% debentures
|which had been issued in January 1,1999 and as such the issue was expensed
|against the residuals of the debenture, at a price of $0.20 US per share or
|$10,000. This transaction took place on February 16, 2000, with the average
|market price per share $0.31. The value of the consideration being known and
|the number of equity instruments issued was based on a discount to the fair
|market value of the equity instrument, on the date of conversion.
(10)
<PAGE>11
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
|All of the shares indicated in the preceding information were issued in
|private transactions pursuant to Section 4(2) of the Securities Act Of 1933.
|Shares issued were in exchange for services provided based on the date of
|consideration for the service agreement, for an invoice provided and in
|consideration of debt owed to an existing shareholder of the company.
|All shares issued bore a Restrictive Legend restricting their transfer and
|may only be publicly traded when and if registered for sale by means of a
|duly processed registration, filed with the Securities And Exchange
|Commission by the Company or, alternatively, pursuant to Rule 144.
|Due to the Restrictions of the instruments issued, the value of the shares
|issued is based on a discount of 35 - 40 % to the average market price on
|the date of the transaction.
|The aggregate number of Restricted Common Shares issued to March 31, 2000 of
|fiscal year 2000, 1,604,020.
(11)
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Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A2 For The Financial Period Ending March 31, 2000
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 authorised.
TECHNICAL VENTURES INC.
Date: July 5, 2000 BY: /S/Frank Mortimer
Frank Mortimer, President and
Chief Executive Officer
Date: July 5, 2000 BY: /S/Larry Leverton
Larry Leverton
Chief Financial Officer
(12)
