<PAGE>1
Form 10 -QSB
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, 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 September 30, 2000.
26,238,006 shares of common stock, $.01 par value
______________________________________________________________________________
Page 1 of 20 Pages
<PAGE>2
PART 1 FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
TECHNICAL VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Notes 1,and 2)
September 30 September 30
2000 1999
NOT AUDITED NOT AUDITED
ASSETS
CURRENT ASSETS
Cash $71,360 -
Accounts Receivable 87,835 146,590
Inventory (Note 3) 51,022 40,982
Prepaid Expenses 37,190 6,346
TOTAL CURRENT ASSETS 247,407 193,918
OTHER ASSETS
Advances To Stockholders 52,122 62,319
Deposits 13,280 13,607
PROPERTY AND EQUIPMENT, at cost, net of
accumlated depreciation of $513,519 at
Sept. 30,2000 and $498,846 at
Sep. 30, 1999 125,927 147,148
INTANGIBLE ASSETS, net of accumulated
amortization of $5,934 at Sept. 30, 2000
and $5,517 at Sept. 30, 1999 0 563
TOTAL ASSETS $438,736 $417,556
September 30 September 30
2000 1999
NOT AUDITED NOT AUDITED
LIABILITIES
CURRENT LIABILITIES
Bank Overdraft - $5,527
Accounts payable and accrued expenses $661,451 384,003
Current Portion Of Notes Payable (Note 4) 365,716 370,773
Capital lease obligations (Note 4) 75,198 77,052
Loans From Private Lenders 61,539 61,824
Current Portion of Loan From
Shareholders, Unsecured, Interest Free 218,265 183,923
TOTAL CURRENT LIABILITIES 1,382,169 1,083,102
LONG-TERM LIABILITIES, net of
current portion:
Convertible Debentures 278,267 278,267
Notes Payable (Note 4) 28,089 61,256
Shareholders 173,976 307,232
Other 26,070 26,717
506,402 673,472
MINORITY INTEREST 0 0
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value, 50,000,000
shares authorized (Note 6):
Issued and outstanding, 26,238,006 at
Sept. 30, 2000 and 23,248,011 shares at
Sept. 30, 1999 $262,380 $232,480
Additional Paid in capital(Note 6): 5,279,593 4,882,801
ACCUMULATED OTHER COMPREHENSIVE INCOME 323,323 313,747
Deficit (7,315,131) (6,768,046)
Total Shareholders' deficiency (1,449,835) (1,339,018)
$438,736 $417,556
See Notes To Condensed Consolidated Financial Statements
(2)
<PAGE>3
PART 1 FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
TECHNICAL VENTURES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
2000 1999
SALES $276,806 $288,411
COST OF SALES 218,662 237,544
GROSS MARGIN 58,144 50,867
EXPENSES
Administration 52,978 224,176
Interest And Other 47,421 23,411
Research & Development 14,629 17,104
Selling 28,215 33,963
Contingent Related Expense 714 74,353
143,957 373,008
LOSS BEFORE INCOME TAX RECOVERY (85,813) (322,141)
NET LOSS (85,813) (322,141)
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 25,340,923 22,734,424
See notes to condensed consolidated financial statements.
(3)
<PAGE>4
PART 1 FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
TECHNICAL VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
(Amounts Expressed In U.S. Dollars)
Not Audited
<TABLE>
<C> <C> <C> <C> <C> <C>
Common Stock Additional Cumulative
Issued and Outstanding Paid In Translation
Shares Amount Capital Deficit Adjustment
$ $ $ $
Balance June 30, 1999 22,198,011 221,980 4,702,463 (6,445,905) 313,319
Common Shares Issued
(NOTE 6) 1,050,000 10,500 180,338
Net Loss (322,141)
Cumulative Translation
Adjustment 428
Balance,
September 30, 1999 23,248,011 232,480 4,882,801 (6,768,056) 313,747
Balance June 30, 2000 24,847,031 248,470 5,126,586 (7,229,318) 310,124
Issued For Services 77,260 773 8,499
Issued For Debt
Reduction 1,313,715 13,137 144,508
Net Loss (85,813)
Cumulative Translation
Adjustment 13,199
Balance, September 30,
2000 26,238,006 262,380 5,279,593 (7,315,131) 323,323
</TABLE>
See notes to consolidated financial statements
(4)
<Page 5>
PART 1 FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS
TECHNICAL VENTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts Expressed in U.S. Dollars)
Not Audited
THREE MONTHS ENDED
SEPTEMBER 30,
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($85,813) ($322,141)
Adjustment to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 5,841 8,259
Issue of Stock For Services 9,271 190,838
(Increase) Decrease in accounts receivable 45,636 (22,500)
(Increase) Decrease in inventory 9,575 4,029
Increase (Decrease) in accounts payable and
accrued expenses 27,921 100,862
(12,433) (39,156)
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) Decreases In Deposits/Prepaid Expenses (35,985) 9,377
(Increases)Decreases In Advances To Stockholders (1,277) (110)
Property & Equipment Acquisition (1,035) -
Proceeds From Sale of Property & Equipment - -
(38,296) 9,267
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Overdraft - 5,527
Repayments of note payable to Cooper Financial (7,789) (2,298)
Proceeds from Capital Lease Obligations - 232
Proceeds (Repayment) of Other Loans Payable
Repayment of Private Lenders
Proceeds from (repayments of) Stockholders' loans 104,571 16,315
Proceeds from issue of restricted common stock
96,782 19,776
EFFECT OF EXCHANGE RATE ON CASH (4,521) (2,242)
NET INCREASE (DECREASE) IN CASH BALANCE FOR THE PERIOD 66,397 (13,883)
Cash Balance, begining of period 4,963 13,883
Cash Balance, end of period 71,360 -
PAYMENTS MADE DURING THE PERIOD FOR INTEREST 3,523 4,175
NON CASH FINANCING ACTIVITIES (Issue of Shares
Reducing Debt) 157,645 -
See notes to condensed consolidated financial statements.
(5)
<PAGE>6
TECHNICAL VENTURES INC. AND SUBSIDIARIES
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, 2000 are not necessarily
indicative of the results that may be expected for the year ended
June 30, 2001. 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, 2000.
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) Accounting Changes
In June 1998, the Financial Accounting Standards Board [FASB]
issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This Statement requires that an entity recognizes
all derivatives as either assets or liabilities and measure those
instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge. The
accounting for changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting
designation. The adoption of this standard will not have a
material impact on the financial statements of the company.
d) Foreign Currency Translation:
Mortile maintains its books and records in Canadian dollars.
Foreign currency transactions are reflected using the temporal
method. 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 comprehensive income in stockholders'
deficiency.
(6)
<PAGE>7
TECHNICAL VENTURES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 1: (cont'd)
e) 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, 2000, 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.
f) 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.
g) 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.
(7)
<PAGE>8
TECHNICAL VENTURES INC. AND SUBSIDIARIES
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:
Sept. 30, Sept. 30,
2000 1999
Raw Materials $51,022 $40,982
NOTE 4: LONG TERM DEBT:
At September 30, 2000 the Company was in default on it's notes
payable to Ontario Development Corporations [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, 2000
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 September 30,
2000 the Company was current with the new loan provisions; with
a payable balance of $61,256 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.
(8)
<PAGE>9
TECHNICAL VENTURES INC. AND SUBSIDIARIES
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 issuance's for the three months ended September 30, 2000
are summarized as follows:
<TABLE>
<C> <C> <C> <C> <C> <C> <C>
Nature Of Number of Shares Additional Issue Subscription
Payments of Shares Paid Up Paid Expense Proceeds
Capital In Capital Expense
In Exchange
For Loans &
Accounts
Payable 1,390,975 13,910 153,007 166,917 - -
TOTALS 1,390,975 13,910 153,007 - 166,917 -
</TABLE>
The share issuance's for the three months ended September 30, 1999
are summarized as follows:
<TABLE>
<C> <C> <C> <C> <C> <C> <C>
Nature Of Number of Shares Additional Issue Subscription
Payments of Shares Paid Up Paid Expense Proceeds
Capital In Capital Expense
Consulting
Fees For
Financing 1,050,000 10,500 180,338 - - 180,838
TOTALS 1,050,000 10,500 180,338 - - 180,838
</TABLE>
(9)
<PAGE>10
TECHNICAL VENTURES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 6: (cont'd)
The expense amounts indicated above have been included in the following:
Sept. 30, 2000 Sept. 30, 1999
Administration 190,838
Research &
Development
TOTALS - 190,838
NOTE 7: MAJOR CUSTOMERS
Two customers accounted for 78 % and 82 % of the Company's
consolidated revenues for the three month period ending Sept. 30,
2000 and 1999 respectively. The loss of one or more of these
customers would have a detrimental effect on the Company's operating
results.
NOTE 8: SUBSEQUENT EVENT
Subsequent to the quarter ending, the Company entered into a letter
of intent to acquire by November 1, 2000, all of the outstanding
shares of an unrelated company in exchange for the issuance of
2,125,000 shares of common stock of the Company at fair market
value on the date of closing. This acquisition will be accounted
for as a purchase. The acquiree company is a manufacturer of
industrial products compatible to the Company's operations.
Completion of the legal documentation relative to this acquisition
has delayed the closing of November 1, 2000, however, the Letter of
Intent remains effective and a new target date of December 1,2000
has been agreed to.
NOTE 9: RELATED PARTY TRANSACTIONS
For the quarter ended September 30, 2000, 1,313,715 common shares
were issued in consideration of debt due a stockholder of the
company.
(10)
<PAGE>11
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
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 three months of fiscal 2001 the company incurred a loss of
$85,813 on sales revenues of $276,806. The loss was funded by receivable's,
an increase in accounts payable and proceeds from stockholder loans. However,
monthly debt service requirements 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 September 30,2000 balance sheet. The amount of debt,
including both principal and accrued interest is as follows: ODC
[formerly IOC] is $613,238 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 has filed a tax claim for $34,000 CND for financial year 1999 and
is expected to receive payment during the 2nd fiscal quarter should the claim
be approved. Additionally the Company will file a tax claim for fiscal 2000
of approximately $34000. (Canadian) . The tax department had notified the
Company of their intent to audit all such claims submitted.
During the first quarter of fiscal year 2001, the Company issued 1,313,715
Restricted Common Shares in consideration of loans and interest due a
shareholder in the amount of $157,646. Additionally during the first fiscal
quarter of 2001 the company issued 77,260 Restricted Common Shares to it's
former Canadian Accounting firm, for outstanding invoices in the amount of
$9,272. The price per share $0.11, with fair market value on the date of both
considerations being $0.20. As the shares are Restricted they were valued at
a 40% discount to the market price.
(11)
<PAGE>12
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
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. 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 this amended SB-2 filing and responded on
April 24, 2000, along with an amended SB 2 Registration. Subsequently the
Company received comments in early June 2000, on it's April amended SB 2,
however, no further amendments or responses have been filed at the date of
this report and therefore the registration has not become effective. An
aggregate of 8,625,512 shares were to have been registered to be sold to the
public by our shareholders and purchasers of our debentures which are
convertible into our common stock and which, additionally, bear warrants to
purchase our common stock.
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.
Additionally, the Company's financial and public relations consultants have ex
pressed their confidence in being able to secure financing enabling the
company to sustain cash flow requirements and also provide capital for expansi
on when required. However, there can be no assurance of these factors.
(12)
<PAGE>13
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
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.
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.
Additionally, on September 19, 2000 the company reached agreement in principal
to acquire control of Multi-Web Lamination Inc. a Canadian corporation
located in Woodbridge, Ontario, Canada; in consideration of certain
commitments, to take place over the next 30 - 60 days, one of which being a
Definitive Agreement to be concluded by no later than November 1, 2000.
Multi-Web Lamination will survive as a corporation, as a wholly owned
subsidiary of the company. Multi-Web currently has annual sales of $1 Million
CND and is forecasting sales of $2 Million CND during the current financial
year. A Letter of Intent was signed on October 1, 2000 outlining the basic
agreement, subject to the purchase being effected in accordance with a
negotiated definitive agreement containing representations and other terms, in
which the company will acquire control of all outstanding shares of Multi-Web
Laminations Inc. in exchange for 2,125,000 Restricted Common Shares of
Technical Ventures Inc. Completion of the legal documentation relative to
this acquisition has delayed the closing of November 1, 2000, however, the
Letter of Intent remains effective and a new target date of December 1,2000
has been agreed to.
Results of Operations:
Net sales revenues for the first three months of fiscal 2001 decreased 4 % to
$276,806 from $288,411, when compared to those for the corresponding period
of the previous year. Gross margins, however, increased 3 % from 18 % to 21%.
Total expenses declined $227,544 to $143,957 from $371,501 for the cor-
responding period of the previous year. Much of the decline due to reduced
administration expenses of $52,978 as compared to $224,176 for the cor
responding period of the previous year and a $73,639 reduction in contingent
related legal expenses.
(13)
<PAGE>14
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
Net Sales by geographic area for the three month period ended September 30,
2000 and 1999, in US$ are as follows:
Geographic Area 2000 1999
United States $ 37,778 $ 16,730
Canada 141,083 185,160
France 97,945 86,521
$276,806 $ 288,411
Net Sales by product line for the three month period ended September 30, 2000
and 1999, in US$ are as follows:
Product Line 2000 1999
Specialty Compounding $250,781 $ 267,708
(including Composite)
Polymer Technology 25,125 17,123
Miscellaneous 900 3,580
$276,806 $ 288,411
Technical Ventures continues to develop and market the specialty compounding,
with this segment representing 90 % of total revenues during the first three
months of fiscal 2001. There have been some decreases in this area of the
company's business in this financial quarter, stemming from several existing
customers. Additionally there are new customers in this market which the
company is developing and has secured minimal initial orders. The Company will
continue to assess all potential and additional opportunities in it's
expertise of specialty compounding.
Comparative gross margins, as a percent of revenue, increased 3 %. The
increase was due to mix of clients from which the Company received orders;
with the major portion of revenue earned in the first three months coming from
both proprietary [Morfoam] and 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, however, the Company continues to undertake negotiations for
price increases from some of it's core customers, with some success, and
will continue to seek other increases.
(14)
<PAGE>15
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
Net sales revenues for the period ending September 30, 2000 and 1999 are
categorised as follows:
Category 2000 1999
Proprietary -Thermo Plastic $ - $ 7,415
Proprietary - Morfoam 26,338 10,036
Compounding With Materials 117,846 144,206
Compounding Without Materials 131,722 123,174
Miscellaneous Without Materials 900 3,580
$ 276,806 $288,411
Administrative expenses decreased 76 % or $171,198, when compared to those for
the corresponding three month period of the previous year as significant
administrative expense arose on the issue of common stock in fiscal 2000.
R&D expenses decreased 14 % when compared to those for the corresponding
period of the previous year as expense rose on the issue of common stock in
fiscal 2000. Additionally resources were being redirected to manufacturing.
Selling expenses decreased 17 % or $5,748 from $33,963 to $28,215 for the
three month period ending September 30, 2000, when compared to the
corresponding period for the previous year. 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. However,
during October 2000 the company received a large order from it's US
distributor for a customer. 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.
"Morfoam", is 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.
(15)
<PAGE>16
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
The product improves cell structure and reduces voids when nitrogen is used as
the primary foaming agent.
The Company's total orders on hand, from all sources, at September 30,2000
had a gross sales revenue value of $133,835.
Effect of the Year 2000 Issue On Our Operations
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar problems
may arise in some systems which use certain dates in 1999 to represent
something other than a date. Although the change in date has occurred, it is
not possible to conclude that all aspects of the Year 2000 Issue that may
effect the entity, including thos related to customers, suppliers, or other
third parties, have been fully resolved.
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 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially
from those set forth in the forward looking statements.
(16)
<PAGE>17
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
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 (Commerical
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.
Based on prior written legal opinions from its patent attorneys that the
allegations are without merit, the Corporation retained a law firm
specializing in Intellectual Property Law and is vigorously defending the
action.
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.
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 an original target date of
about December 1999.
At September 30, 2000 no further direction had been received by the company's
counsel as to when the matter might proceed to trial nor had any direction
been received at the time of filing this report.
(17)
<PAGE>18
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the 1 St fiscal quarter of 2001 the company issued 77,260 Restricted
Common Shares to it's former Canadian Accountants in consideration of
outstanding accounts payable. This transaction took place on August 29, 2000,
with the average market price per share $0.20. The value of the consideration
being known and the number of shares issued was based on a 40 % discount, to
fair market value, on the date of conversion, that being $0.12 per share.
Additionally the company issued 1,313,715 Restricted Common Shares in
consideration of a loan and accrued interest due to a shareholder of the
company. The transaction took place on August 31,2000, with the average market
price per share $0.20. The value of the consideration being known and the
number of shares issued was based on a 40 % discount, to fair market value, on
the date of conversion, that being $0.12 per share.
Please refer to Page 4 of this report, Statement of Shareholders' Deficiency
and Note 6 - Common Stock on page 9 and 10 of this report for information in
this regard.
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 of the invoice provided and in consideration of debt owed to a
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.
(18)
<PAGE>19
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
(a) Exhibits - none
(b) Reports on Form 8-K - On October 4, 2000 the Company
filed in regard of reaching an agreement in principal
to acquire control of Multi-Web Lamination Inc.
Please refer to page 13, Item 2 - Liquidity and
Captial Resources for more detailed infomation
related to this matter.
(19)
<PAGE>20
Technical Ventures Inc. And Subsidiaries
Report 10 QSB For The Financial Period Ending September 30,2000
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: November 14, 2000 BY: \s\Frank Mortimer
Frank Mortimer, President
and Chief Executive Officer
Date: November 14, 2000 BY: \s\Larry Leverton
Larry Leverton
Chief Financial Officer
(20)
<PAGE>21
