<PAGE>1
Form 10 -QSB A1
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 December 31, 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 December 31, 1999.
23,752,011 shares of common stock, $.01 par value
______________________________________________________________________________
Page 1 of 24 Pages
<PAGE>2
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED REPORT 10 QSB A FOR THE FINANCIAL PERIOD ENDING DECEMBER 31, 1999
The Registrant is filing this amendment for the purpose of addressing certain
deficiencies in its quarterly report 10 QSB for the financial period ending
December 31, 1999.
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 1 - Financial Information - Financial Notes were
created in the transition of the word processing file to Edgarization for the
purpose of electronic filing.
Deficiencies noted in Item 2 - MDA - necessitated expansion of information
provided in the original filing of the report. The 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. The expansion is included in
this amended report.
(2)
<PAGE>3
TECHNICAL VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31 December 31
1999 1998
NOT AUDITED NOT AUDITED
ASSETS
CURRENT ASSETS
Cash $21,835
Accounts Receivable 145,656 $77,538
Inventory (Note 3) 48,699 49,639
Prepaid Expenses 4,070 655
TOTAL CURRENT ASSETS 220,260 127,832
OTHER ASSETS
Advances To Stockholders 63,361 57,357
Deposits 13,835 10,887
PROPERTY AND EQUIPMENT, at cost, net of
accumlated depreciation of $515,152 at
Dec. 31,1999 and $456,684 at Dec. 31, 1998
141,648 154,912
INTANGIBLE ASSETS, net of accumulated
amortization of $5,690 at Dec. 31, 1999
and $5,049 at Dec. 31, 1998 491 769
TOTAL ASSETS $439,595 $351,757
<PAGE>4
December 31 December 31
1999 1998
NOT AUDITED NOT AUDITED
LIABILITIES
CURRENT LIABILITIES
Bank Overdraft $8,460
Accounts payable and accrued expenses $462,612 311,669
Current Portion Of Notes Payable (Note 4) 376,975 433,493
Capital lease obligations (Note 4) 78,341 77,051
Loans From Private Lenders 62,022 61,316
Current Portion of Loan From Shareholders,
Unsecured, 187,000 187,431
TOTAL CURRENT LIABILITIES 1,166,950 1,079,419
LONG-TERM LIABILITIES, net of current portion:
Convertible Debentures 203,991
Notes Payable (Note 4) 55,955
Shareholders 259,298 302,817
Other 27,163 35,398
546,408 338,214
MINORITY INTEREST 0 0
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value, 50,000,000
shares authorized (Note 6):
Issued and outstanding, 23,752,031 at
December 31, 1999 and 21,948,011 shares at
December 31, 1998 $237,520 $219,480
Additional Paid in capital(Note 6): 4,933,203 4,645,340
ACCUMULATED OTHER COMPREHENSIVE INCOME 303,838 348,140
Deficit (6,748,324) (6,278,837)
Total Shareholders' deficiency (1,273,763) (1,065,877)
$439,595 $351,757
See Notes To Condensed Consolidated Financial Statements
(3)
<PAGE>5
TECHNICAL VENTURES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
SIX MONTHS ENDED
DECEMBER
1999 1998
SALES $672,070 $505,078
COST OF SALES 513,445 356,402
GROSS MARGIN 158,625 148,676
EXPENSES
Administration 256,777 488,687
Interest And Other 40,556 37,142
Research & Development 35,047 106,143
Selling 65,482 41,661
Contingent Related Expense 120,959
518,821 673,633
LOSS BEFORE INCOME TAX RECOVERY (360,196) (524,957)
Income Tax Recovery 5,658
NET LOSS (360,196) (519,299)
BASIC LOSS PER COMMON SHARE ($0.02) ($0.03)
FULLY DILUTED LOSS PER COMMON SHARE ($0.02) ($0.03)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING FOR THE PERIOD 23,043,263 18,430,709
See notes to condensed consolidated financial statements.
(4)
<PAGE>6
TECHNICAL VENTURES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
THREE MONTHS ENDED
DECEMBER
1999 1998
SALES $383,659 $264,088
COST OF SALES 275,891 170,013
GROSS MARGIN 107,768 94,075
EXPENSES
Administration 32,601 173,727
Interest And Other 18,652 16,448
Research & Development 17,943 22,948
Selling 31,518 24,466
Contingent Related Legal Expense (Note 5) 46,606
147,320 237,589
LOSS BEFORE INCOME TAX RECOVERY (39,552) (143,514)
Income Tax Recovery 5,443
NET LOSS (39,552) (138,071)
BASIC LOSS PER COMMON SHARE ($0.00) ($0.01)
FULLY DILUTED LOSS PER COMMON SHARE ($0.00) ($0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING FOR THE PERIOD 23,352,102 21,348,554
See notes to condensed consolidated financial statements.
(5)
<PAGE>7
<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) 7,236,670 72,367 588,596
Net Loss (519,299)
Cumulative Translation Adjustment 41,569
Balance, December 31, 1998 21,948,011 219,480 4,645,340 (6,278,837) 348,140
Balance June 30, 1999 22,198,011 221,980 4,702,463 (6,388,128) 313,319
Common Shares Issued (Note 6) 1,554,020 15,540 230,740
Net Loss (360,196)
Cumulative Translation Adjustment (9,481)
Balance, December 31, 1999 23,752,031 237,520 4,933,203 (6,748,324) 303,838
See notes to consolidated financial statements
(6)
</TABLE>
<PAGE>8
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts Expressed in U.S. Dollars)
Not Audited
SIX MONTHS ENDING
December 31,
1999 1998
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($360,196) ($519,299)
Adjustment to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 16,433 15,213
Issue of Stock For Services 190,838 479,930
(Increase) Decrease in accounts receivable (19,510) 35,440
(Increase) Decrease in inventory (2,935) (16,491)
Increase (Decrease) in accounts payable and
accrued expenses 174,770 (58,587)
(599) (63,793)
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) Decreases In Deposits/Prepaid Expenses 11,915 14,213
(Increases) Decreases In Advances To Stockholders (111) (28,241)
Property & Equipment Acquisition (484)
Proceeds From Sale of Property & Equipment
11,805 (14,512)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Overdraft 8,460
Repayments of note payable to Cooper Financial Corp (7,097) (13,144)
Repayments of note payable to Dow Chemical Canada (33,755)
Proceeds from Capital Lease Obligations 235 2,848
Repayment of Other Loans Payable (15,182)
Repayment of Private Lenders (15,899)
Proceeds from (repayments of) Stockholders' loans 18,957 30,660
Proceeds from issue of restricted common stock 98,232
Related 'Issuance costs of convertible debentures
and warrants (16,500)
(4,405) 62,221
EFFECT OF EXCHANGE RATE ON CASH 1,152 (1,521)
NET INCREASE (DECREASE)IN CASH BALANCE FOR THE PERIOD 7,952 (17,605)
Cash Balance, begining of period 13,883 17,605
Cash Balance, end of period 21,835 0
PAYMENTS MADE DURING THE PERIOD FOR INTEREST 7,699 10,685
INCOME TAXES PAID
See notes to condensed consolidated financial statements.
(7)
<PAGE>9
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED 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 six months ended December 31, 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.
(8)
<PAGE>10
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED 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 December 31, 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 net income (loss) per share is computed based on the average
number of common shares outstanding during the period.
Fully diluted net income (loss) 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.
f) 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.
(9)
<PAGE>11
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED 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:
December 31, December 31,
1999 1998
Raw Materials $48,699 $49,639
NOTE 4: LONG TERM DEBT:
At December 31, 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
December 31, 1999 balance sheet as current liabilities.
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 December 31, 1999 the Company was
current with the new loan provisions; with a payable balance of
$86,481 US. The Company has been maintaining monthly payments of
$3,150 US. Interest charged is 10% per annum calculated over a period
of 35 months.
(10)
<PAGE>12
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED 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 six months ended December 31, 1998 are
summarized as follows:
Nature Of Number Of Paid Up Additional Paid Subscription
Payments Shares Capital In Capital Proceeds Expense
Directors,
Officers &
Employee
Remuneration 2,100,000 21,000 142,800 21,000 142,800
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 116,670 1,167 13,833 15,000
TOTALS 7,236,670 72,367 588,596 178,033 482,930
_______
(11)
<PAGE>13
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 6: (cont'd)
The share issuances for the six month ended December 31, 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
In Exchange
For Loans
Payable 504,020 5,040 50,402 55,442
TOTALS 1,554,020 15,540 230,740 55,442 190,838
The expense amounts indicated above have been included in the following:
December 31, December 31,
1999 1998
Administration 190,838 418,670
Research & Development 64,260
______
TOTALS 190,838 482,930
_______
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 six month periods ended December 31,
1999 and 1998, speciaty compounding represented 95 % and 85 % 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.
Six Months US FRANCE CANADIAN CONSOLIDATED
Ended December 31,1999 $ $ $ $
Revenue from unaffiliated
customers 58,551 189,293 424,226 672,070
Income (loss) from
operations (31,380) (101,452) (227,364) (360,196)
Identifiable Assets at
end of year 439,595 439,595
(12)
<PAGE>14
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 7: (cont'd)
Six Months Ended US FRANCE CANADIAN CONSOLIDATED
December 31, 1998 $ $ $ $
Revenue from
unaffiliated customers 65,944 109,937 329,197 505,078
Income (loss) from
operations (67,801) (113,032) (338,466) (519,299)
Identifiable Assets
at end of year 351,757 351,757
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:
Dec. 31,1999 Dec. 31, 1998
$ $
Net Loss (360,196) (519,299)
Other Comprehensive Income (Loss)
Foreign Currency translation (9,481) 41,569
COMPREHENSIVE LOSS (369,677) (477,730)
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.
(13)
<PAGE>15
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 9: MAJOR CUSTOMERS
Two customers accounted for 84 % and 71 % of the Company's
consolidated revenues for the six month period ending December 31,1999
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
Six Month Period Ended
December 31
1999 1998
a) Current income tax recovery consists
of:
U.S. Federal state and local
rates of 43% (155,000) (221,000)
Increase (decrease) resulting from:
Losses carried forward 155,000 221,000
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.
(14)
<PAGE>16
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
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 six 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 excludes compensation and financing charges expensed, as well
contingency related legal expense. Six month sales revenues, on a monthly
basis, have been increasing. The six month operating loss was funded by debt
financing and sales revenues. The company has been able to reduce balances
due vendors and creditors, however, monthly debt service requirements,
aggregate payments of $ 75,354 towards contingency related legal costs;
aggregate payments of $5,410 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 December 31/99 balance sheet. The amount of debt,
including both principal and accrued interest is as follows: ODC[formerly
IOC] amounts to $602,785 CND; FBX Holdings totals $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 submitted a tax claim for fiscal 1998 amounting to approximately
$35,000 (Canadian). The tax department has performed both a scientific and
financial audits in December 1999, relative to this claim. The company has
been advised that the claim has been approved and it is expected that the
refund will be forthcoming in the third quarter of fiscal 2000.
(15)
<PAGE>17
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
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.
During the first six 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
overall value per share of $0.183. ________
______
Additionally, 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, a price per share
of $0.11.
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 has now received S.E.C. comments relative to its most
recent amended SB-2 filing and will respond shortly.
(16)
<PAGE>18
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
At December 31, 1999 the net residuals of this private offering are reported
as a long term liability on the company's balance sheet amounting to $203,991.
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 $74,000, 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 33 % increase in sales revenues
during the six month period ending December 31, 1999 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
(17)
<PAGE>19
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
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:
Net sales revenues for the first six months of fiscal 2000 increased 33 % to
$672,070 for the six months December 31, 1999, as compared to $505,078 for
the six months ended December 31, 1998. The majority increase due to an
increase in orders from core customers.
Sales by geographic area for the six month period ended December 31, 1999
and 1998, in US$ are as follows:
Geographic Area 1999 1998
United States $ 58,551 $ 65,944
Canada 424,226 329,197
France 189,293 109,937
$672,070 $505,078
Sales by product line for the six month period ended December 31,
1999 and 1998 , in US$ are as follows:
Product Line 1999 1998
Specialty Compounding $634,750 $475,061
(including Composite)
Polymer Technology 32,748 19,411
Miscellaneous 5,015 10,606
$672,070 $505,078
Gross margins, as a percentage of sales, declined 6% to 23 % during the six
months ended December 31, 1999 as compared to 29 % for the six months ended
December 31, 1998. This decrease was due to a change in the mix of orders
and related pricing from customers. Some clients provide their own raw
materials for compounding and the sales amount represents only our charge
for services for compounding their materials. For other clients, we purchase
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<PAGE>20
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
the raw materials and charge for both the raw materials and the compounding
service. The gross margin for sales which include both materials and
compounding service is lower than for sales which are only for compounding
services. The Company undertook negotiations for price increases from some of
it's core customers, with some success, and will continue to seek other
increases. Also, increased order volumes and improved production operating
parameters have enhanced productivity of the manufacturing facility.
Net sales revenues for the period ending December 31, 1999 and 1998 are
catagorised as follows:
Category 1999 1998
Proprietary -Thermo Plastic $ 7,415 $ 0
Proprietary - Morfoam 25,333 19,411
Compounding With Materials 376,383 251,025
Compounding Without Materials 257,924 224,036
Miscellaneous Without Materials 5,015 10,606
$672,070 $505,078
Technical Ventures continues to develop and market the specialty compounding,
with this segment representing 95 % of total revenues during the first six
months of fiscal 2000. The Company also continues to assess all potential
and additional opportunities in it's expertise of specialty compounding.
During the second fiscal quarter of 2000, net sales revenues increased by 45%
|to $383,659 from $264,088 when compared to those for the corresponding period
|of the previous year. Gross margins as a percentage of sales decreased by 8
% when compared to those for the corresponding period of the previous year.
The company experienced profits [before expense items related to the issuance
of shares and contingency related legal expense] in both October and November,
however, December presented a loss due to necessary equipment maintenance and
the effect of the holiday period. At December 31st the company had
approximately $95,000 in orders which could have been produced in December
had it not been for the previously stated hindrances. Should these orders
have been completed, December should also have resulted in profits [before
extraordinary items]. The company had an income of $7,054 for the second
fiscal quarter of 2000.
(19)
<PAGE>21
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
|Administrative expenses decreased 47 % to $256,777 for the six months ended
|December 31, 1999, as compared to $488,687 for the six months ended December
|31, 1998. This decrease is primarily attributable to the issuance of common
|shares in consideration of services rendered and financing consulting
|services previously incurred. However, actual direct administrative
|expenses, excluding the issuance of common shares, increased 9 % for the six
month period ending December 31, 1999 as compared to those for the
corresponding period of the previous year. This increase due in part to the
|on going quest for financing and legal expenditures relating to the current
|lawsuit with Endex.
|During the three month period ending December 31, 1999 Administrative
|expenses decreased 45% or $119,571 to $32,601 when compared to the period
|ending December 31, 1998. The decrease being primarily attributable to the
|issuance of common shares issued in consideration of services; excluding the
|issuance of common shares, administrative expenses were $32,601 at December
|31, 1999 and $30,927 at December 31, 1998.
|Research and Development expenses decreased 68 % to $35,047 for the six
|months ended December 31, 1999 as compared to $106,143 for the six months
|ended December 31, 1998. This decrease is primarily attributable to the
|issuance of common shares in consideration of services rendered, as
significant R&D expense arose on the issue of common stock [See Note 6 For
Detail]. However, actual direct R&D expenses decreased 22 %, when compared
|to the six months ended December 31, 1998. This decrease is primarily due to
|our resources being redirected to manufacturing and sales.
|During the three month period ending December 31, 1999 Research and
|Development expenses decreased 22 % to $17,943 at December 31, 1999 compared
|to $22,948 at December 31, 1998. This decrease being attributable to
|research testing expenses which occurred in the quarter ending December 31,
|1998, not reoccurring in the comparative period.
|Selling expenses increased 57 % to $65,482 for the six months ended December
|31, 1999 as compared to $41,661 for the six months ended December 31, 1998.
|Similarly selling expenses increased 29 % to $31,518 for the three months
|ending December 31, 1999 as compared to $24,466 for the three month period
|ending December 31, 1998. This increase is due to our increased efforts 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
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<PAGE>22
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
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.
|Overall General expenses for the six month period experienced an average
|increase of 12 % to $217,524 , when compared to $193,703 for the
corresponding period of the previous year; for the three month period ending
|December 31, 1999 an increase of 6 % to $100,714 the Company, however,
|continues to take measures to contain all areas of expense whenever and
|wherever possible.
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.
(21)
<PAGE>23
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
|During the first six 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 $190,838 for the
|service, at a an average price per share of $0.183. The shares were issued
|for remuneration defined in 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 equity 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.
Additionally, during the 2nd fiscal quarter of 2000 the company issued 504,020
|Restricted Common Shares to shareholder of the company, Peter Wehrle, 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.
(22)
<PAGE>24
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
|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 December 31, 1999
|of fiscal year 2000, 1,554,020.
(23)
<PAGE>25
Technical Ventures Inc.
Amended Report 10 QSB A For The Financial Period Ending December 31, 1999
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 10, 2000 BY: /S/Frank Mortimer
Frank Mortimer, President and
Chief Executive Officer
Date: July 10, 2000 BY: /S/Larry Leverton
Larry Leverton
Chief Financial Officer
(24)
