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, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
Commission File Number 33-2775-A
TECHNICAL VENTURES INC.
[ ] Accelerated Filer [X] Is Not an Accelerated Filer
______________________________________________________________________________
(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, 2003.
41,336,106 Shares Of Common Stock, $.01 Par Value
______________________________________________________________________________
Page 1 of 15 Pages
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
CONSOLIDATED BALANCE SHEETS[ Notes 1 and 2 ]
[Not Audited]
ASSETS September 30,2003 June 30,2003
CURRENT ASSETS
Cash $ 5,497 $23,417
Accounts Receivable 87,410 110,761
Inventory [Note 3] 53,754 67,010
TOTAL CURRENT ASSETS $146,661 $201,188
OTHER ASSETS
Deposits 15,394 15,421
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation of $667,346
at Sept.30,2003 and $656,917 at June 30,
2003 301,040 313,169
TOTAL ASSETS $463,095 $529,778
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
[Not Audited]
CONSOLIDATED BALANCE SHEETS [Notes 1 and 2]
LIABILITIES September 30,2003 June 30,2003
CURRENT LIABILITIES
Accounts Payable And Accrued Expenses $716,473 $681,186
Current Portion of Notes Payable 90,000 90,000
(Note 4)
Capital Lease Obligations (Note 4) 83,757 83,904
Loans From Private Lenders 104,221 67,211
Current Portion of Loan From
Stockholders, Unsecured, Interest Free 144,658 149,374
Total Current Liabilities 1,139,109 1,071,675
LONG-TERM LIABILITIES, net of current portion
Notes Payable 63,257 41,969
Shareholders 182,850 191,124
Other 29,208 29,259
275,315 262,352
STOCKHOLDERS' DEFICIENCY
Common stock $.01 par value, 50,000,000
shares authorized (Note 6):
Issued and outstanding, 41,336,106 at
Sept. 30, 2003 and 41,236,106 at
June 30, 2003 $413,361 $412,361
Additional Paid in Capital (Note 6): 6,511,456 6,504,456
ACCUMULATED OTHER COMPREHENSIVE INCOME 289,684 289,767
Deficit (8,165,829) (8,010,833)
Total Stockholders' Deficiency (951,328) (804,249)
$463,096 $529,778
See Notes To Condensed Consolidated Financial Statements
(2)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(NOT AUDITED)
Three Months Ended Three Months Ended
Sept. 30, 2003 Sept. 30, 2002
SALES $212,531 $250,274
COST OF SALES 226,911 229,240
GROSS MARGIN (14,380) 21,034
EXPENSES
Administration 53,442 43,651
Interest and Other 31,400 14,198
Research & Development 29,889 24,717
Selling 25,884 22,368
140,615 104,934
LOSS BEFORE UNDER NOTED ITEMS ($154,995) ($83,900)
Recovery of Realty Taxes - 2,521
NET LOSS ($154,995) ($81,379)
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 41,258,932 35,470,706
See Notes To Condensed Consolidated Financial Statements
(3)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIENCY)
(Amounts Expressed In US Dollars)
NOT AUDITED
Common Stock Additional Cumulativ
Issued and Outstanding Paid In Translati
Shares Amount Capital Deficit Adjustmen
$ $ $ $
Balance June 30, 2002 34,595,706 345,957 5,874,320 (7,417,920) 344,128
Subscription Received 150,000
Common Shares Issued 1,500,000 15,000 135,000
NET LOSS (81,379)
Cumulative Translation
Adjustment 10,123
Balance, September 30,
2002 36,095,706 360,957 6,159,320 (7,499,299) 354,251
Balance June 30, 2003 41,236,106 412,361 6,504,456 (8,010,833) 289,767
Common Shares Issued
(Note 6) 100,000 1,000 7,000
NET LOSS (154,995)
Cumulative Translation
Adjustment (83)
Balance, September 30,
2003 41,336,106 413,361 6,511,456 ` (8,165,828) 289,684
See Notes To Consolidated Financial Statements
(4)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amount Expressed In US Dollars)
Not Audited
Three Month Period Three Month Period
Ended Ended
Sept. 30, 2003 Sept. 30, 2002
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss ($154,995) ($81,379)
Adjustment to reconcile net loss
used by operating activities
Depreciation and amortization 11,568 12,701
Stock Issued for Services Performed 8,000 -
(Increase) Decrease In Accounts
Receivable 23,157 (17,154)
(Increase) Decrease In Prepaid Expenses _ 3,608
(Increase) Decrease In Inventory 13,139 (1,940)
Increase (Decrease) In Accounts
Payable And Accrued Expense 36,480 (11,042)
(62,651) (95,206)
CASH FLOW FROM INVESTING ACTIVITIES
(Increase) Decrease In Deposits - -
(Increase) Decrease In Advances
to Stockholders - -
Acquisition of Equipment & Property (203,071)
- (203,071)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of note payable to Cooper
Financial (10,225)
Proceeds from Private Lenders 21,287 (17,718)
Proceeds from (repayments of)
Stockholders' Loans 24,645 45,164
Proceeds from stock option issuances 300,000
45,932 317,221
EFFECT OF EXCHANGE RATE ON CASH (1,201) (19,308)
NET INCREASE (DECREASE) IN CASH
BALANCE FOR THE PERIOD (17,920) (364)
Cash Balance, beginning of period 23,417 32,663
Cash Balance, end of period $5,497 $32,299
PAYMENTS MADE DURING THE PERIOD
FOR INTEREST $4,308 $5,418
See Notes To Condensed Consolidated Financial Statements
(5)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
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 30,2003 are not
necessarily indicative of the results that may be expected for the year
ended June 30, 2004. For further information refer to the financial
statements and footnotes thereto included in the annual report on form
10-KSB for the year ended June 30, 2003.
b) Principals Of Consolidation
The consolidated financial statements include the accounts of Technical
Ventures Inc. ("TVI") 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. 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.
d) Fair Value Presentation:
There are financial instruments, none of which are held for trading
purposes. Estimates that the fair value of all financial instruments
at September 30, 2003, 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 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 could realize in a current market exchange.
(6)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
NOTE 1: (cont'd)
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 any income . 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 disclosure provisions of SFAS
No. 123 has been adopted.
NOTE 2: GOING CONCERN
Significant operating losses have been sustained since inception and
there is substantial doubt as to the ability to continue as a going
concern. Continued existence is dependent upon the ability to
generate sufficient cash flow to meet obligations on a timely basis.
As a result there is need of additional financing. No adjustment has
been made to the value of assets in consideration of the financial
condition.
NOTE 3: INVENTORY:
Inventory is comprised of the following:
September 30, June 30,
2003 2003
Raw Materials $53,754 $67,010
(7)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
NOTE 4: LONG TERM DEBT:
The interest accrued on the Convertible Debenture was converted to a
promissory note of $179,585 . This note is payable monthly at the
amount of $6,500, including interest at the rate of 5% per annum.
At Sept. 30, 2003 the company was current with the obligation.
At September 30, 2003 a lease payable to FBX Holdings, in the amount
of $149,683 including principal and interest is in default. The
creditor has not called the obligation, however payment is due on
demand and as such the balance is reflected on the September 30,2003
balance sheet as a current liability.
NOTE 5: CONTINGENT LIABILITY AND RELATED COSTS:
Contingent liability under a breach of secrecy agreements, fiduciary
duty and misuse of confidential information lawsuit. Company's
attorneys are of the opinion that it'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.
However,legal and any other related costs incurred, are reflected
for any contingencies, as a charge to operations for the year in
which the expenditures are determined.
NOTE 6: COMMON SHARES
The shares issuance's for the three months ended September 30, 2003
are summarized as follows:
Nature
Of
Payments Number of Paid Up Additional Issue
Shares Capital Paid Expense Proceeds Expense
In Capital
For Services
Rendered and
Pursuant to
S8
Registration 100,000 1,000 7,000 - - 8,000
TOTALS 100,000 1,000 7,000 - - 8,000
(8)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30,2003
The share issuance's for the three months ended September 30, 2002 are
summarized as follows:
Nature
Of
Payments Number of Paid Up Additional Issue
Shares Capital Paid Expense Proceeds Expense
In Capital
For Cash
Consideration
From Private
Investors 1,500,000 15,000 135,000 - 150,000 -
TOTALS 1,500,000 15,000 135,000 - 150,000 -
NOTE 7: MAJOR CUSTOMERS
Four customers accounted for 85 % of consolidated net revenues for
the first three month period of fiscal 2004, ending September 30,2003.
In the corresponding period of fiscal 2003, 75 % of consolidated
revenues were accounted for by four customers. The loss of one or
more of these customers would have a detrimental effect on operating
results.
(9)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
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 2004 the company incurred an operating
loss of ($154,995), on net sales revenues of $212,531. Operations were funded
by, accounts receivable, debt financing and increases in accounts payable.
Additionally, 1,550,000 options were outstanding as of September 30,2003, with
an aggregate strike price value of US $325,000, should they be exercised.
However, there can be no assurance of this; further 1,500,000 or US$300,000
of these options will expire at December 31, 2003.
The accrued and outstanding interest due a former debenture holder has been
established as a note payable, bearing 5% per annum interest, with an
outstanding balance of $153,257 at September 30, 2003. Monthly payments of
$6,500 were current at September 30, 2003.
A lease payable to FBX Holdings and which has been in default since 1994,
continues to be reflected on the September 30, 2003 balance sheet as a
current liability. The creditor fully appreciates the circumstance of the
corporation and has not called the obligation, however, payment is due on
demand. Reference should also be made to Financial Note 4 in regard of
this matter.
At September 30, 2003 there was a back log of orders totaling $101,717, and
in mid-October a $53,423US order has now been received from the European
Distributor, for delivery in early December 2003.
Continued existence is dependent upon the ability to generate sufficient cash
flow to meet obligations on a timely basis; please reference Financial Note 2,
"Going Concern". It is anticipated that cash flows from operations in the
immediate future will be minimally sufficient to meet requirements, however,
there can be no assurance of this and in order that current operations,
development and growth be sustained, there is therefore the need of additional
financing. TVI 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.
(10)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
Results of Operations:
Net sales revenues for the first three months of fiscal 2004 decreased 15 %
when compared to those for the corresponding period of the previous year.
The decrease taking place in both custom compounding and proprietary products.
Comparative gross margins, as a percent of revenue, decreased (15 %) from 8 %.
for the three month comparative period. This decline is primarily based on
decreased sales resulting in resources being redirected to maintenance of
equipment and sustaining the highly experienced manufacturing work-force.
Administrative expenses increased 22 %, when compared to those for the
corresponding three month period of the previous year as legal expense
occurred relative to a claim by a former financial consulting firm, Please
note Part II, Item I. Additionally there was an accrual for potential
vacation pay expense.
Financial expenses increased dramatically when compared to those for the
corresponding three month period of the previous year as increased debt
interest and penalties associated with payables were expensed.
R&D expenses increased 21 % when compared to those for the corresponding
period of the previous year as development of proprietary products continued
and expanded.
Selling expenses increased 16 % when compared to previous year as resources
were directed to marketing of proprietary foaming products, particularly in
Europe.
At September 30, 2003 there was a back log of orders totaling $101,717 ;
TVI's proprietary foaming products are for the plastics and rubber industry,
and are a 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. During fiscal 2002 the company finished developing it's HSF type
foaming compound. HSF is a cross-link able - expandable plastic compound made
for direct injection processes. During a 'direct inject' process, a granular,
expandable compound is being transformed with a specialized injection molding
machine into a finished foamed part, which combines several features, such as
fine and closed cell structure, soft skin, profiled and color surface,
flexibility, buoyancy and light weight. HSF is based on ethylene and
propylene (co)polymers blends which can be processed into a finished foamed
part with commercially available injection-molding machines. The flow
properties of the HSF foaming material have been adjusted in such a manner
(11)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
that these machines are able to process it without any modification. The most
significant attribute of HSF foams is heat stability. The heat stability has
been quantified as a % of shrinkage of a foam specimen after a 24 hour
treatment at 105 degrees Celsius (221 F). The shrinkage of HSF foams typically
is 4% - highly competitive with industry standards.
Growth is anticipated to take place in all areas of the Company's expertise
and technology through the balance of the current financial year. In that
regard the company has received its first order of $53,423US on it's
proprietary foaming products from the European distributor and subsequent
marketing efforts indicate additional orders could be placed during the
second quarter. However there can be no assurance of this.
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.
ITEM 3. Controls and Procedures
Both the principal executive and financial officers examination of
the issurer's disclosure controls and procedures have concluded
that the controls and procedures practiced by the issuer and which
are maintained on a daily, weekly, monthly, quarterly and as of
the end of the period of this quarterly report, are effective in
both accumulation and communication to management; further,
Internal Control Over Financial reporting by the issuer, upon the
required evaluation, has not changed during the last fiscal quarter
ending September 30, 2003.
(12)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
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 CAD $10 Million
compensatory damages, further punitive damages of CAD $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, 2003 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.
On October 10, 2001 Hudson Consulting Group ("Hudson") commenced an action in
the Third Judicial District Court of Salt Lake County, State of Utah against
the Company and obtained a default judgment for payments allegedly due Hudson
pursuant to a consulting agreement between Hudson and the Company. After the
court vacated the default judgment by order dated October 23, 2002, the
Company answered the complaint and asserted a counterclaim against Hudson for
fraudulently inducing the Company to enter into the consulting agreement.
In October 2003, following discovery, the action was dismissed with prejudice
and with each party bearing its own costs.
(13)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the first quarter of fiscal 2003, 100,000 common stock
were issued pursuant to the company's S8 Registration, in
consideration of bone fide consulting at a strike price of $0.08 US
per unit. [Note 6, Page 8]
Additionally, 1,550,000 options were outstanding as of
September 30, 2003, with an aggregate strike price value of
$325,000, should they be exercised. However, there can be
no assurance of this. Furthermore 1,500,000 - US$300,000 of
these options will expire at December 31, 2003.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
(a) Exhibits - (3)
(1) Exhibit 31(1) - Section 302 Certifications of Chief
Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(2) Exhibit 31(2) - Section 302 Certifications of Chief
Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
(3) Exhibit 32 - Section 906 Certifications of Chief
Executive and Financial Officers
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports - none
(14)
Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial
Period Ending September 30, 2003
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: November 20, 2003 BY:/S/"Frank Mortimer"
Frank Mortimer, President and Chief
Executive Officer
Date: November 20, 2003 BY:/S/"Larry Leverton"
Larry Leverton, Secretary & Treasurer
and Chief Financial Officer
(15)