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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the Month of DECEMBER 2003
Commission File No.: 0-13966
MERCURY PARTNERS & COMPANY INC.
(Translation of Registrant's name into English)
SUITE 613, 375 WATER STREET, VANCOUVER, BRITISH COLUMBIA, CANADA V6B 5C6
(Address of principal executive office)
Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
[X] Form 20-F [ ] Form 40-F
Indicate by check mark if the Registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
-----
Indicate by check mark if the Registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
-----
Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
---- -----
If "Yes" is marked, indicate below the file number assigned to the Registrant in
connection with Rule 12g3-2(b): 82-_________________.
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Third Quarter Report
September 30, 2003
Mercury Partners & Company Inc. is a publicly traded financial services company
engaging in merchant banking and private equity activities with operations in
Canada and the United States. Mercury's investment objective is to acquire
influential ownership in companies and through direct involvement bring about
the change required to realize the strategic value of the companies it invests
in.
Mercury's shares are quoted on the NASD OTC Bulletin Board in the United States
under the symbol "MYPIF" and on the TSX Venture Exchange, in U.S. dollars under
the symbol "MYP.U".
Press releases and other financial information can be accessed through the
Internet at www.mercury.ca or by writing to:
--------------
Office of Corporate Relations
Mercury Partners & Company Inc.
PO Box 28051 Harbour Centre
Vancouver, British Columbia
V6B 5L8
www.mercury.ca
--------------
SCHEDULE A: FINANCIAL INFORMATION
MERCURY PARTNERS & COMPANY INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
-------------------------------
SEPTEMBER 30, DECEMBER 31,
2003 2002 (1)
------------- --------------
ASSETS
CURRENT
Cash and cash equivalents $ 297,290 $ 656,580
Marketable securities (Note 3) 4,447 14,629
Loans, notes and receivables (Note 4) 51,150 51,001
------------- --------------
352,887 722,210
LONG-TERM INVESTMENTS (Note 5) 1,698,346 1,532,867
CAPITAL ASSETS 13,869 14,641
------------- -------------
$ 2,065,102 $ 2,269,718
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 31,584 $ 123,067
Due to related party - 18,714
------------- -------------
31,584 141,781
------------- -------------
SHAREHOLDERS' EQUITY
Capital stock
Authorized - Unlimited number of common shares
Issued and outstanding - 8,183,733 common shares 3,456,139 3,456,139
Additional paid-in capital 971,859 971,859
Less: Treasury stock - 2,250,219 common shares (1,294,050) (1,294,050)
Deficit (1,100,430) (1,006,011)
------------- -------------
2,033,518 2,127,937
------------- -------------
$ 2,065,102 $ 2,269,718
============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
(1) Audited
MERCURY PARTNERS & COMPANY INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)
-------------------------------- --------------------------------
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- --------------------------------
2003 2002 2003 2002
----------- ----------- ----------- ----------
REVENUE $ 62,589 $ 262,020 $ 4,897 $ 2,844
EXPENSES
General and administrative expenses
(Note 6) 149,695 91,524 25,282 44,319
Directors and management fees 3,529 - - -
Interest expense 29 169 18 -
----------- ---------- ----------- ----------
153,253 91,693 25,300 44,319
----------- ---------- ----------- ----------
Income (loss) before other items (90,664) 170,327 (20,403) (41,475)
OTHER ITEMS
Equity loss (3,755) - 10,839 -
----------- ---------- ----------- ----------
NET INCOME (LOSS) FOR THE PERIOD (94,419) 170,327 (9,564) (41,475)
Deficit, beginning of the period (1,006,011) (632,972) (1,090,866) (421,170)
----------- ---------- ----------- ----------
Deficit, end of the period $(1,100,430) $ (462,645) $(1,100,430) $ (426,645)
=========== ========== =========== ==========
Basic and diluted earnings (loss) per share $ (0.02) $ 0.03 $ (0.01) $ (0.01)
=========== ========== =========== ==========
Weighted average number of common
shares outstanding 5,933,514 5,933,514 5,933,514 5,933,514
=========== ========== =========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
MERCURY PARTNERS & COMPANY INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)
------------------------------- -------------------------------
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- -------------------------------
2003 2002 2003 2002
----------- ---------- ----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period $ (94,419) $ 170,327 $ (9,564) $ (41,475)
Items not affecting cash:
Amortization 798 4,544 266 1,515
Equity loss 3,755 - (10,839) -
Changes in current assets and current
liabilities:
(Increase) decrease in marketable securities 10,182 (78,320) - (104,056)
Increase (decrease) in securities sold short - (52,654) - (8,211)
Increase (decrease) in accounts payable (91,477) (77,385) (94,260) (29,479)
Increase due to/from related party (18,747) (883) (14,028) -
Increase (decrease) in loans payable - - - -
----------- ---------- ----------- ---------
Net cash provided by (used in)
operating activities (189,908) (34,371) (128,425) (181,706)
----------- ---------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition) disposal of capital assets,
net - - 89 -
(Acquisition) disposal of long-term
investments (169,234) (607,894) (32,976) (27,514)
Loans, notes and receivables (148) 590,004 12,295 (598)
----------- ---------- ----------- ---------
Net cash provided by (used in) investing
activities (169,382) (17,801) (20,681) (28,112)
----------- ---------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of share capital,
net of issue costs - (756) - -
----------- ---------- ----------- ---------
Net cash provided by (used in)
financing activities - (756) - -
----------- ---------- ----------- ---------
Increase (decrease) in cash
and equivalents (359,290) (52,928) (149,106) (209,818)
Cash and cash equivalents,
beginning of the period 656,580 301,383 446,396 458,273
----------- ---------- ----------- ---------
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD $ 297,290 $ 248,455 $ 297,290 $ 248,455
=========== ========== =========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
SCHEDULE B: SUPPLEMENTARY INFORMATION
MERCURY PARTNERS & COMPANY INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
These interim consolidated financial statements should be read in conjunction
with Mercury Partners & Company Inc.'s (the "Company") most recent annual
consolidated financial statements.
1. BASIS OF PRESENTATION
The consolidated financial statements contained herein include the accounts
of the Company and its wholly-owned subsidiaries.
The interim period consolidated financial statements have been prepared by the
Company in accordance with Canadian generally accepted accounting principles.
All financial summaries included are presented on a comparative and consistent
basis showing the figures for the corresponding period in the preceding year.
The preparation of financial data is based on accounting principles and
practices consistent with those used in the preparation of annual consolidated
financial statements. Certain information and footnote disclosure normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. These
interim period statements should be read together with the audited consolidated
financial statements and the accompanying notes included in the Company's
latest annual report. In the opinion of the Company, its unaudited interim
consolidated financial statements contain all adjustments necessary in order to
present a fair statement of the results of the interim periods presented.
Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.
2. ORGANIZATION AND OPERATIONS
The Company is organized under the Business Corporations Act (Yukon). The
Company currently operates in the financial services industry, engaging in
private equity and merchant banking, consulting activities and asset-based
commercial lending.
3. MARKETABLE SECURITIES
September 30, 2003 DECEMBER 31, 2002
-------------------------------------------------------------------
Fair Value Cost Fair Value Cost
-------------------------------------------------------------------
Fixed Income Securities
Canadian Bonds and Debentures $ - $ - $ - $ -
-------------------------------------------------------------------
Variable Income Securities
Publicly Traded Securities
Canadian 68,664 4,447 93,908 14,629
-------------------------------------------------------------------
Total Variable Income Securities 68,664 4,447 93,908 14,629
-------------------------------------------------------------------
Total Marketable Securities $ 68,664 $ 4,447 $ 93,908 $ 14,629
-------------------------------------------------------------------
4. LOANS, NOTES AND RECEIVABLES
September 30, 2003 December 31, 2002
---------------------------------------
Loans and notes receivable $ 44,417 $ 33,346
Receivables 6,733 17,655
---------------------------------------
Total $ 51,150 $ 51,001
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5. LONG-TERM INVESTMENTS
September 30, 2003 DECEMBER 31, 2002
--------------------------------------------------------------------
Fair Value Cost Fair Value Cost
--------------------------------------------------------------------
Fixed Income Securities
Canadian Bonds or Debentures $ - $ - $ - $ -
-------------------------------------------------------------------
Variable Income Securities
Publicly Traded Securities
Canadian 1,192,534 1,698,346 839,379 1,532,867
American - - - -
-------------------------------------------------------------------
Total Variable Income Securities 1,192,534 1,698,346 839,379 1,532,867
-------------------------------------------------------------------
Total Long-term Investments $ 1,192,534 $1,698,346 $ 839,379 $1,532,867
-------------------------------------------------------------------
September 30, 2003 December 31, 2002
---------------------------------------
Investments carried at cost . $ 1,121,445 $ 972,318
Investments carried at equity 576,901 560,549
---------------------------------------
Total $ 1,698,346 $ 1,532,867
=======================================
For the nine months ended September 30, 2003, the Company recorded an equity
loss of $3,755 for its 19.89% ownership in North Group Limited.
6. GENERAL AND ADMINISTRATIVE EXPENSES
For the nine months ended September 30, general and administrative expenses were
comprised of the following:
September 30, 2003 September 30, 2002
-----------------------------------------
Administration office and travel $ 2,944 $ 3,914
Amortization 798 4,544
Consulting fees, salaries and employee benefits 43,557 75,902
Foreign exchange (66,770) (305)
Non-recoverable GST 114,476 -
Professional fees 41,457 -
Regulatory, transfer agent and shareholder communications 13,233 7,469
-----------------------------------------
Total $ 149,695 $ 91,524
=========================================
7. CAPITAL STOCK
Number of shares $ Amount
-------------------------------------
Issued and Outstanding - December 31, 2002 8,183,733 $ 3,456,139
Less: Treasury Stock - December 31, 2002 (2,250,219) (1,294,050)
-------------------------------------
Balance September 30, 2003 and December 31, 2002 5,933,514 $ 2,162,089
=====================================
8. EARNINGS (LOSS) PER SHARE
The weighted average number of common shares outstanding used in determining
earnings (loss) per share amounts was 5,933,514.
9. SUMMARY OF SECURITIES ISSUED AND OPTIONS GRANTED DURING THE PERIOD
During the years ended December 31, 2002, 2001 and 2000 and the nine months
ended September 30, 2003, no stock options were granted, exercised, forfeited or
cancelled, nor does the Company have any common shares held in escrow or subject
to any pooling agreements. The following is a summary of the status of stock
options outstanding issued to former management as at September 30, 2003:
==================================================================================================
Outstanding Options Exercisable Options
- --------------------------------------------------------------------------------------------------
Weighted Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price of Shares Life (Years) Price of Shares Price
- --------------------------------------------------------------------------------------------------
$ 1.25 120,000 2 $ 1.25 120,000 $ 1.25
==================================================================================================
10. RELATED PARTY TRANSACTION
For the nine months ended September 30, 2003, the Company did not enter into any
related party transactions.
11. DIRECTORS AND EXECUTIVE OFFICERS AT SEPTEMBER 30, 2003.
Name of Director Principle Position
- ------------------ -------------------
Tom S. Kusumoto President & CEO
Greg MacRae Director & Secretary
Lance Eng Director
Alex W. Blodgett Director
* * *
SCHEDULE C: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
consolidated financial statements and related notes included in this quarterly
report. The Company's financial statements included herein were prepared in
accordance with Canadian and United States GAAP and are expressed in U.S.
dollars. The Company has not entered into any investor relations arrangements or
contracts or engaged in any form of investor relations activities during the
period.
FORWARD-LOOKING STATEMENTS
Statements in this financial report, to the extent that they are not based
on historical events, constitute forward-looking statements within the meaning
of the United States Private Securities Litigation Reform Act of 1995. These
statements appear in a number of different places in this report and include
statements regarding the intent, belief or current expectations of the Company
and its directors or officers, primarily with respect to the future market size
and future operating performance of the Company and its subsidiaries.
Forward-looking statements include, without limitation, statements regarding the
outlook for future operations, forecasts of future costs and expenditures,
evaluation of market conditions, the outcome of legal proceedings, the adequacy
of reserves, or other business plans. Investors are cautioned that any such
forward-looking statements are not guarantees and may involve risks and
uncertainties, and that actual results may differ from those in the
forward-looking statements as a result of various factors such as general
economic and business conditions, including changes in interest rates, prices
and other economic conditions; actions by competitors; natural phenomena;
actions by government authorities, including changes in government regulation;
uncertainties associated with legal proceedings; technological development;
future decisions by management in response to changing conditions; the ability
to execute prospective business plans; and misjudgments in the course of
preparing forward-looking statements. Investors are advised that these
cautionary remarks expressly qualify in their entirety all forward-looking
statements attributable to the Company or persons acting on its behalf.
EXCHANGE RATES
In this financial report, unless otherwise specified, all monetary amounts
are expressed in U.S. dollars.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2003, the Company's readily available cash and cash
equivalents totaled $297,290 while additional sources of liquidity included
$4,447 in marketable securities and $51,150 of loans, notes and other
receivables. The Company held cash and cash equivalents and marketable
securities of $656,580 and $14,629, respectively as of December 31, 2002. The
Company's accounting policy is to report the value of marketable securities at
the lower of cost or market at the time of the financial reporting period. The
market value of marketable securities as of September 30, 2003 was $68,664.
Total current assets as of September 30, 2003 were $352,887 compared to $722,210
as of December 31, 2002.
During the nine-month period ending September 30, 2003, operations used
cash of $189,908 predominately as a result of operating losses and a decrease in
accounts payable during the year.
The Company's long-term assets totaled $1,698,346 as of September 30, 2003,
and included meaningful equity ownership percentages in North Group Limited
("North Group") and Cybersurf Corp. ("Cybersurf"), both of which trade on the
TSX Venture Exchange in Canada. During the year, the Company purchased further
shares in North Group and added to its investment in Cybersurf, which resulted
in the use of cash of $169,234 for the acquisition of long-term investments.
The market value of long term investments as of September 30, 2003 was
$1,192,534.
The Company continues to seek representation on the board of Cybersurf as
the current management of Cybersurf does not appear to have turned around the
operations of the Company as represented at the last annual general meeting held
on November 28, 2002. The Company is concerned about the long-term
survivability of Cybersurf if it continues under its current strategy.
Accordingly, the Company plans to nominate its slate of directors at Cybersurf's
next annual general meeting, which has been postponed by the board of Cybersurf
for the second time, scheduled to be held on June 29, 2004.
Total assets of the Company as at September 30, 2003 were $2,065,102
compared to $2,269,718 at December 31, 2002.
Accounts payables and accrued liabilities for the quarter ending September
30, 2003 were reduced to $31,584 from $123,067 at December 31, 2002.
OPERATING RESULTS
For the three-month period ending September 30, 2003, the Company reported
revenues of $4,897 and expenses of $25,300 resulting in a loss of $9,564 after
accounting for the equity earnings of $10,839 from North Group Limited. The
Company reported revenues of $2,844 and expenses of $44,319, resulting in a loss
of $41,475 for the comparative three-month period ending September 30, 2002.
During the year, the Canadian Customs and Revenue Agency ("CCRA") audited
the Company's Goods and Services Tax ("GST") filings and based on a
reclassification of the Company's commercial activities assessed that the
Company owed $114,476 in GST. The Company reported the CCRA GST assessment
during the second quarter; however, the Company disagrees with the CCRA's
assessment and has filed a Notice of Objection to recover the paid amount.
Excluding the CCRA GST assessment, general and administrative costs were
$35,219 for the nine month period ending September 30, 2003 and included
consulting fees, salaries and employee benefits of $43,557 professional fees of
$41,457, regulatory, transfer agent and shareholder communication costs of
$13,233 and foreign exchange translation from Canadian to U.S. dollars of
($66,770). The volatility of the U.S. dollar in comparison to the Canadian
dollar over the past year resulted in the significant currency exchange during
the nine-month period. Basic and diluted earnings per common share were ($0.01)
for the three-month periods ending September 30, 2003 and 2002, respectively.
Realized investment gains or losses may fluctuate significantly from period
to period, with a meaningful effect upon the Company's consolidated net
earnings. However, the amount of realized investment gain or loss for any given
period has no predictive value, and variations in amount from period to period
have no practical analytical value.
* * *
MERCURY PARTNERS & COMPANY INC.
BC FORM 51-901F
QUARTERLY AND YEAR END REPORT
Incorporated as part of Schedules A, B & C
* * *
ISSUER DETAILS:
Name of Issuer: MERCURY PARTNERS & COMPANY INC.
Issuer Address: Ste. 613, 375 Water Street
Vancouver, British Columbia V6B 5C6
Issuer Telephone Number: (604) 689-7565
Contact Name: Tom S. Kusumoto
Contact Position: President
Contact Telephone Number: (604) 689-7533
Contact E-mail Address: isf@mercury.ca
For the Quarter Ended: September 30, 2003
Date of Report: November 25, 2003
CERTIFICATE
THE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A
COPY OF THIS REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS IT. PLEASE
NOTE THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED FILING OF SCHEDULE A
AND SCHEDULES B & C.
/s/ Tom S. Kusumoto /s/ Greg MacRae
---------------------- ----------------------
Tom S. Kusumoto Greg MacRae
President Secretary
Mercury Partners & Company Inc. Mercury Partners & Company Inc.
November 25, 2003 November 25, 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.
Registrant: MERCURY PARTNERS & COMPANY INC.
-----------------------------------
By: /s/ Tom S. Kusumoto
-----------------------------------
TOM S. KUSUMOTO, PRESIDENT
Date: July 7, 2004
-----------------------------------