<PAGE>1
Form 10 -QSB A
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 21 Pages
<PAGE>2
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
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 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. This expansion is included in
this amended report.
(2)
<PAGE>3
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED CONSOLIDATED BALANCE SHEETS
March 31, March 31,
2000 1999
NOT AUDITED NOT AUDITED
ASSETS
CURRENT ASSETS
|Cash $3,647 $27,388
Accounts Receivable 150,184 171,320
Inventory (Note 3) 53,926 64,209
Prepaid Expenses 1,979 667
TOTAL CURRENT ASSETS 209,736 263,584
OTHER ASSETS
Advances To Stockholders 63,115 58,403
Deposits 13,775 11,086
PROPERTY AND EQUIPMENT, at cost, net of
accumlated depreciation of $520,797 at
Mar. 31,2000 and $471,334 at Mar. 31, 1999 134,650 158,166
INTANGIBLE ASSETS, net of accumulated
amortization of $5,747 at Mar. 31, 2000
and $5,219 at Mar. 31, 1999 408 706
TOTAL ASSETS $421,684 $491,945
<PAGE>4
March 31, March 31,
2000 1999
NOT AUDITED NOT AUDITED
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses $489,937 $317,967
Current Portion Of Notes Payable (Note 4) 376,505 432,621
Capital lease obligations (Note 4) 78,002 77,198
Loans From Private Lenders 61,970 61,522
Current Portion of Loan From Shareholders,
Unsecured, Interest Free 180,326 173,251
TOTAL CURRENT LIABILITIES 1,186,740 1,062,560
LONG-TERM LIABILITIES, net of current portion:
Convertible Debentures 189,574 168,705
Notes Payable (Note 4) 45,085
Shareholders 258,933 296,973
Other 27,046 26,033
520,638 491,711
MINORITY INTEREST 0 0
STOCKHOLDERS' DEFICIENCY
Common stock, $.01 par value, 50,000,000 shares
authorized (Note 6): Issued and outstanding,
23,802,031 at March 31, 2000 and
22,048,011 shares at March 31, 1999 $238,020 $220,480
Additional Paid in capital(Note 6): 4,942,703 4,655,170
ACCUMULATED OTHER COMPREHENSIVE INCOME 303,532 330,335
Deficit (6,769,949) (6,268,311)
Total Shareholders' deficiency (1,285,694) (1,062,326)
$421,684 $491,945
See Notes To Condensed Consolidated Financial Statements
(3)
<PAGE>5
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
NINE MONTHS ENDED
MARCH
2000 1999
SALES $987,350 $808,839
COST OF SALES 768,282 547,670
GROSS MARGIN 219,067 261,169
EXPENSES
Administration 295,772 538,068
Interest And Other 56,172 52,677
Research & Development 51,674 123,248
Selling 96,271 61,606
Contingent Related Expense 126,054
625,943 775,599
LOSS BEFORE INCOME TAX RECOVERY (406,876) (514,430)
Income Tax Recovery 25,055 5,658
NET LOSS (381,821) (508,772)
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 23,285,983 19,609,385
See notes to condensed consolidated financial statements.
(4)
<PAGE>6
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
THREE MONTHS ENDED
MARCH
2000 1999
SALES $315,280 $303,761
COST OF SALES 254,838 191,269
GROSS MARGIN 60,442 112,492
EXPENSES
Administration 38,995 49,381
Interest And Other 15,616 15,535
Research & Development 16,627 17,105
Selling 30,789 19,945
Contingent Related Legal Expense (Note 5) 5,094
107,122 101,966
LOSS BEFORE INCOME TAX RECOVERY (46,680) 10,526
Income Tax Recovery 25,055
NET LOSS (21,625) 10,526
BASIC LOSS PER COMMON SHARE ($0.00) $0.00
FULLY DILUTED LOSS PER COMMON SHARE ($0.00) $0.00
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING FOR THE PERIOD 23,776,756 22,019,122
See notes to condensed consolidated financial statements.
(5)
<PAGE>7
<TABLE>
AMENDED
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) 7,336,670 73,367 598,426
Net Loss (508,772)
Cumulative Translation Adjustment 23,764
Balance, March 31, 1999 22,048,011 220,480 4,655,170 (6,268,311) 330,335
Balance June 30, 1999 22,198,011 221,980 4,702,463 (6,388,128) 313,319
Common Shares Issued (Note 6) 1,604,020 16,040 240,240
Net Loss (381,821)
Cumulative Translation Adjustment (9,787)
Balance, March 31, 2000 23,802,031 238,020 4,942,703 (6,769,949) 303,532
</TABLE>
See notes to consolidated financial statements
(6)
<PAGE>8
AMENDED CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts Expressed in U.S. Dollars)
Not Audited
NINE MONTHS ENDED
MARCH 31,
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss ($381,821) ($508,772)
Adjustment to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 24,321 19,183
Issue of Stock For Services 200,838 489,831
(Increase) Decrease in accounts receivable (24,584) (56,281)
(Increase) Decrease in inventory (8,361) (30,456)
Increase (Decrease) in accounts payable
and accrued expe 203,332 (58,132)
13,725 (144,628)
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) Decreases In Deposits / Prepaid Expenses 13,937 14,471
(Increases)Decreases In Advances To Stockholders (139) (23,442)
Property & Equipment Acquisition (1,491) (9,173)
Proceeds From Sale of Property & Equipment 3,321
12,307 (14,823)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of Line Of Credit (34,371)
Repayments of note payable to Cooper Financial (16,936) (19,966)
Proceeds From Debentures 225,000
Proceeds from Capital Lease Obligations 234 1,642
Proceeds (Repayment) of Other Loans Payable 0 (25,469)
Repayment of Private Lenders 0 (16,189)
Proceeds from (repayments of) Stockholders' loans 14,009 1,742
Proceeds from issue of restricted common stock 0 93,942
Related 'Issuance costs of convertible debentures
and warrants (30,916) (56,295)
(33,610) 170,036
EFFECT OF EXCHANGE RATE ON CASH (2,657) (802)
NET INCREASE (DECREASE) IN CASH BALANCE FOR THE PERIOD (10,236) 9,783
Cash Balance, begining of period 13,883 17,605
Cash Balance, end of period 3,647 27,388
PAYMENTS MADE DURING THE PERIOD FOR INTEREST 12,579 15,295
NON CASH FINANCING ACTIVITIES
(Issue of Shares Reducing Debt) 55,442 88,020
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 nine
months ended March 31, 2000 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) Accounting Changes
In June 1998, the Financial Accounting Standards Board 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 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)
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 March 31, 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.
(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:
March 31, March 31,
2000 1999
Raw Materials $53,926 $64,209
NOTE 4: LONG TERM DEBT:
At March 31, 2000 the Company was in default on it's notes payable
to I.O.C.[Ontario Development Corporations] 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 March 31, 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 March 31, 2000 the
Company was current with the new loan provisions; with a payable
balance of $76,642 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 nine months ended March 31, 1999 are
| summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Nature Of Number Of Paid Up Additional Paid Issue Subscription
Payments Shares Capital In Capital Expense 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 61,260
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
Issued For 100,000 1,000 9,830 9,830
Services
Related To
Debentures
TOTALS 7,336,670 73,367 598,426 9,830 178,033 479,930
</TABLE>
(11)
<PAGE>13
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
<TABLE>
NOTE 6: (cont'd)
The share issuances for the nine months ended March 31, 2000
are summarized as follows:
<S> <C> <C> <C> <C> <C> <C>
Nature Of Number Of Paid Up Additional Paid Issue Subscription
Payments Shares Capital In Capital Expense 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
Issued For
Services 50,000 500 9,500 10,000
Related To
Debentures
TOTALS 1,604,020 16,540 240,240 10,000 55,442 190,838
</TABLE>
The expense amounts indicated above have been included in the following:
March 31, March 31,
2000 1999
Administration 190,838 418,670
Research & Development 61,260
TOTALS 190,838 479,930
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 nine month periods ended March 31,
2000 and 1999, speciaty compounding represented 95 % 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.
Nine Months US FRANCE CANADIAN CONSOLIDATED
Ended March 31,2000 $ $ $ $
Revenue from unaffiliated
customers 98,735 246,837 641,778 987,350
Income (loss) from
operations (38,182) (95,455) (248,184) (381,821)
Identifiable Assets at
end of year 421,684 421,684
(12)
<PAGE>14
TECHNICAL VENTURES INC. AND SUBSIDIARIES
AMENDED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(NOT AUDITED)
NOTE 7: (cont'd)
Nine Months Ended US FRANCE CANADIAN CONSOLIDATED
March 31, 1999 $ $ $ $
Revenue from
unaffiliated customers 97,061 137,503 574,275 808,839
Income (loss) from
operations (86,491) (61,053) (361,228) (508,772)
Identifiable Assets
at end of year 491,945 491,945
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:
Mar. 31,2000 Mar. 31, 1999
$ $
Net Loss (381,821) (508,772)
Other Comprehensive Income (Loss)
Foreign Currency translation (9,787) 23,764
COMPREHENSIVE LOSS (391,608) (485,008)
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 80 % and 71 % of the Company's
consolidated revenues for the nine month period ending March 31,2000
and 1999 respectively.
The loss of one or more of these customers would have a detrimental
effect on the Company's operating results.
NOTE 10: INCOME TAXES
The Company submitted a claim for $24,000 for 1998. The Company
received,during this financial period, full payment of it's 1998
submitted tax claim. 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. And Subsidiaries
Amended Report 10 QSB A 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, tax
refund and sales revenues. 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.
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 $180,338 for the service,
at an overall value per share of $0.19.
(15)
<PAGE>17
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A For The Financial Period Ending March 31, 2000
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.
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.
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
(16)
<PAGE>18
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A For The Financial Period Ending March 31, 2000
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.
The product improves cell structure and reduces voids when nitrogen is used
as the primary foaming agent.
(17)
<PAGE>19
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A For The Financial Period Ending March 31, 2000
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.
|Comparative gross margins however, as a percent of revenue, decreased 10%.
|The decrease was due to mix of clients from which the Company received
|orders; with a major portion of revenue earned in the first nine months
|coming from clients for which the company purchases raw materials and
|provides compounding services, charging the client accordingly. Margins for
|this segment of the business are lower because of very competative
|circumstances. Company undertook negotiations for price increases from some
of it's core customers, with some success, and will continue to seek other
increases. 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 increased
|sales orders and revenues from existing and new customers.
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
continue to assess all potential and additional opportunities in it's
expertise of specialty compounding.
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 competative 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.
|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 taken in
|the previous financial year. As well consulting fees which took place during
|fiscal 1999 were not incurred again in the current fiscal period.
(18)
<PAGE>20
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A For The Financial Period Ending March 31, 2000
|R&D expenses decreased 58 % when compared to those for the first nine months
|of 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.
(19)
<PAGE>21
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A 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.
(20)
<PAGE>22
Technical Ventures Inc. And Subsidiaries
Amended Report 10 QSB A 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 authorized.
TECHNICAL VENTURES INC.
Date: June 14, 2000 BY: /s/Frank Mortimer
Frank Mortimer, President and
Chief Executive Officer
Date: June 14, 2000 BY: /s/Larry Leverton
Larry Leverton, V/P & Secretary
Chief Financial Officer
(21)
