SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
Commission file number 0-30285
ENERGY VENTURES INC.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
43 Fairmeadow Avenue, Toronto, Ontario, Canada M2P 1W8
(Address of principal executive offices)(Zip Code)
(416) 733-2736
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
As of August 10, 2000, the Registrant had 12,957,579 shares of its Common Stock
outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
ENERGY VENTURES INC.
(unaudited)
(Expressed in U.S. Dollars)
CONDENSED BALANCE SHEETS
June 30, September 30,
2000 1999
(unaudited)
$ $
ASSETS
Current
Cash and short term deposits 227,431 -
Accounts receivable 38,192 27,150
Refundable investment tax credits 108,328 113,486
Prepaids & sundry assets 149,592 14,376
---------------- ----------------
523,543 155,012
Long Term
Capital assets 436,893 413,376
Licence and technology costs 323,834 353,822
---------------- ----------------
760,727 767,198
---------------- ----------------
1,284,270 922,210
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Bank indebtedness - 7,898
Accounts payable and accrued liabilities 481,022 333,141
Advances from related company 54,340 65,600
Advances from director 201,989 238,982
Debentures payable 306,922 -
---------------- ----------------
1,044,273 645,621
Capital stock
Authorized
50,000,000 Common shares of $0.0001 par value
5,000,000 Preferred shares of $0.0001 par value
Issued
12,957,579 (1999 - 12,637,579) Common shares of
$0.0001 par value 1,296 1,264
Additional paid in capital 6,234,846 4,429,834
Deferred compensation charges (24,344) -
Accumulated other comprehensive earnings (loss) (3,566) (11,373)
---------------- ----------------
6,208,232 4,419,725
Deficit (5,968,235) (4,143,136)
---------------- ----------------
Stockholders' equity 239,997 276,589
---------------- ----------------
1,284,270 922,210
================ ================
ENERGY VENTURES INC.
CONDENSED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(unaudited)
(Expressed in U.S. Dollars)
Nine months ended June 30,
2000 1999
$ $
CASH WAS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net (loss) (1,825,099) (3,412,471)
Items not affecting cash:
Common stock issued for services 210,567 -
Noncash compensatory charge on stock issued to an officer - 3,018,815
Issue of compensatory stock options 775,923 -
Issue of compensatory stock warrants 292,753 -
Depreciation and amortization 72,830 61,183
Net change in non-cash working capital balances
related to operations 93,336 (47,348)
---------------- ----------------
(379,690) (379,821)
FINANCING ACTIVITIES
Issue of common shares 215,000 200,000
Advances from related company (11,260) (1,970)
Advances from director (36,993) 199,536
Debentures payable 506,825 -
---------------- ----------------
673,572 397,566
INVESTING ACTIVITIES
Capital asset purchases (66,359) (2,647)
---------------- ----------------
NET INCREASE IN CASH 227,522 15,098
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS 7,807 (17,041)
CASH (BANK INDEBTEDNESS) AT BEGINNING OF PERIOD (7,898) 2,772
---------------- ----------------
CASH AT END OF PERIOD 227,431 829
================ ================
Interest paid 28,787 6
---------------- ----------------
ENERGY VENTURES INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(Expressed in U.S. Dollars)
Period from
Three months Nine months November 19, 1996
Ended June 30, Ended June 30, (inception to)
2000 1999 2000 1999 June 30 2000
$ $ $ $ $
REVENUE
Revenues 66,675 6,612 200,025 8,023 386,348
--------------- --------------- --------------- --------------------------------------
EXPENSES
Technology expense 177,915 54,800 408,341 192,972 831,919
Administration fees & salaries 105,212 3,041,104 429,426 3,084,022 3,705,463
Legal and audit 325,877 306 632,300 20,239 804,483
Amortization 27,892 21,257 72,830 61,183 218,655
Professional fees 4,634 7,338 43,418 28,684 196,623
Office and general 17,656 4,451 36,179 14,752 105,573
Financing fees & interest 338,995 - 357,885 6 377,507
Occupancy costs 7,137 6,018 21,804 10,174 39,827
Travel and promotion 10,746 3,318 22,941 8,462 74,533
--------------- --------------- --------------- --------------------------------------
1,016,064 3,138,592 2,025,124 3,420,494 6,354,583
--------------- --------------- --------------- --------------------------------------
NET LOSS (949,389) (3,131,980) (1,825,099) (3,412,471) (5,968,235)
NET LOSS PER SHARE OF COMMON STOCK -
BASIC AND DILUTED ($0.073) ($0.265) ($0.143) ($0.312)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 12,927,909 11,824,392 12,782,553 10,947,469
=============== =============== =============== ==============
See notes to condensed financial statements
ENERGY VENTURES INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2000
(unaudited)
1. Basis Of Presentation:
The interim financial statements are unaudited, but in the opinion of
management reflect all adjustments necessary for a fair presentation of results
of such periods. All such adjustments are of a normal recurring nature. The
results of operations for any interim period are not necessarily indicative of
results for a full fiscal year.
The condensed balance sheet as of September 30, 1999, is derived from
the audited financial statements but does not include all disclosures required
by generally accepted accounting principles. The notes accompanying the
financial statements in the Company's Registration Statement on Form 10-SB for
the year ended September 30, 1999, include accounting policies and additional
information pertinent to an understanding of both the September 30, 1999,
condensed balance sheet and the interim financial statements. The information
has not changed substantially except as a result of normal transactions in the
nine months ended June 30, 2000, and as discussed in the following notes.
2. Stock Transactions:
On April 11, 2000, the company issued 100,000 common shares to its
legal counsel in respect of legal services provided and to be provided. These
shares were valued at $2.25 per share based on the market value of the common
shares at the time of issue. As at June 30, 2000, $210,567 has been charged to
operations to reflect the value of legal services provided to date. The amount
representing services not yet provided has been recorded as a deferred charge
and was valued at $8,820 based on the market value of $1.375 per common share as
at June 30, 2000.
In addition, legal counsel was granted the option to purchase 200,000
shares of the company's common stock in respect of the legal services referred
to above, exercisable over a three year period ending March 28, 2003 at a price
not lower than $1.00 nor greater than $2.00 per share depending on the market
price of the company's common stock. These options were valued at $396,000,
which represented their fair market value at the time of issue. As of June 30,
2000, $370,598 has been charged to operations to reflect the value of legal
services provided to date. The amount representing services not yet provided has
been recorded as a deferred charge and was valued at $15,523, which represented
their fair market value at June 30, 2000.
If the market price of the company's common stock drops below $1.40
with respect to the shares described above or $2.00 with respect to the options
described above for a period of 10 consecutive days, the company will issue
additional common shares or reduce the price of the optioned shares based on the
greater of $1.00 and the average trading price during such trading period. Until
all legal services have been provided by counsel to the Company, the Company
will value the common shares and options to purchase common shares representing
the services to be provided in the future based on the market value of the
Company's common stock at each balance sheet date and adjust the deferred charge
accordingly.
During the three months ended June 30, 2000, the Company also issued
100,000 shares to a director and officer upon the exercise of stock options.
3. Debentures Payable:
The Debentures payable, in the principal amount of Cdn.$750,000, were
issued on March 30, 2000, bear interest at 10% per annum and are due September
30, 2000. The Debentures were extended at September 30, 2000 and accordingly
such Debentures are now due at January 31, 2001 (Cdn. $250,000) and February 28,
2001 (Cdn. $500,000). The Debentures are secured by the personal assets of the
President and CEO.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion should be read in conjunction with the
financial statements and related notes which are included under Item 1.
Statements made below which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to, general economic conditions, our
ability to complete development and then market our products, competitive
factors and other risk factors as stated in other of our public filings with the
Securities and Exchange Commission.
This report is for the three and nine month interim period ended June
30, 2000. Accordingly, this section will primarily discuss the Company's
position as of such date. This filing is being made in February 2001 to amend
certain financial disclosures. This document continues to speak as of June 30,
2000 and has value only as an historical document. Certain events have occurred
subsequent to June 30, 2000, some of which may be deemed material. You are
directed to the Company's Annual Report on Form 10-KSB being filed
simultaneously herewith for more current disclosures.
Overview
Energy Ventures Inc. (hereafter, the "Company" or "EVI") was formed in
November 1996, to research, develop and commercialize rechargeable battery
technologies. The Company has four core battery technologies - 1) Lithium Ion
("LI") now licensed to Pacific Lithium Limited ("PLL") of New Zealand), 2)
Nickel Zinc ("NiZn"), 3) Zinc Carbon Bromine ("ZnCBr") and 4) the Direct
Methanol Fuel Cell ("DMFC"), which technology was acquired in October 1999. The
company is currently working on the development and optimization of the latter
three technologies with the highest priority being directed towards the Direct
Methanol Fuel Cell.
The Company's major focus is upon two areas - the research and
development of the Company's Direct Methanol Fuel Cell Technology and the
Pre-Commercialization of the company's Nickel Zinc and Carbon-Zinc Bromine
technologies. Costs re the latter project are in large part supported by
Industrial Research Assistance Program through the Pre-Commercialization
contribution agreement executed in March 2000. The company expects to spend
significant sums upon expanding its battery testing capability and has purchased
and is refurbishing a pilot battery production line to further expand its
facilities at the Ottawa laboratory. While there can be no assurance that our
business plan for the next year will be successful, the R&D programs, strategic
alliances and targeted financing planned for the Company are expected to support
the Company's activities until significant income streams of royalties and
license fees develop.
Comparative Disclosure
During the quarter ended June 30, 2000, the Company was still a
development stage company and has yet to achieve significant revenues. Revenues,
in the quarter to June 30, 2000 and in the nine months then ended ($66,675 and
$200,025, respectively) were entirely earned from research and development and
licensing fees from PLL. Pursuant to the terms of the License Agreement, such
revenues should continue at the minimum rate of $100,000 per annum through March
2002. We expect revenues from PLL to increase once PLL commences selling LI
cathode materials and LI batteries containing such materials thereby generating
additional royalties for the Company. Other revenue sources will not result
until the Company successfully completes the commercialization of its other
technologies and is able successfully to license them to battery manufacturers.
These revenue figures are significantly higher than for the comparative three
and nine month periods in 1999 ($6,612 and $8,023, respectively) due entirely to
the fact that the PLL Agreement was not in effect during these comparative
periods in 1999.
The Company's expenses in the quarter ended June 30, 2000 and in the
nine months then ended totalled $1,016,064 and $2,025,124, respectively. The
comparative numbers in 1999 were $3,138,592 and $3,420,494. The year to date
1999 value includes a non cash compensatory charge of $3,018,815 respecting
stock issued to an officer.
The most significant costs included in such values are the Company's
technology expenses i.e. expenses related to the research and development cost
of the company's battery technologies ($177,815 and $408,341, respectively, for
the three and nine month periods ended June 30, 2000). Both of such values
include a charge of $41,875 for the issuance of stock options. Excluding such
items, technology expenses essentially doubled from the comparable periods in
1999 which reflects the Company's continued focus on developing its products and
expanding its product line. Technology expenses are expected to continue to
increase as EVI continues to develop its facilities, expertise and activities
and continues to fund research and development work undertaken on its behalf by
National Research Council of Canada.
Expenses other than technology costs have remained relatively static
over the last two years with the exception of legal costs and financing fees and
interest. Legal costs in fiscal year 2000 are substantially higher than in prior
years ($320,040 in the quarter and $619,452 year to date) primarily related to
securities law matters arising from the Company's registration with the
Securities and Exchange Commission and required compliance with the federal
securities laws. The current year values include non cash charges of $199,308
and $370,598 respecting share purchase options issued to the Company's US
counsel Technology as set out under Stock Transactions above. Financing fees and
interest, for which there were essentially no costs in 1999, were $338,995 in
the quarter and $357,885 year to date. Such costs include cash agents' fees and
interest respecting the issue of Cdn. $750,000 of Debentures but most
significantly includes also $286,458 in the quarter and $292,753 year to date
respecting non cash charges re the issue of stock purchase warrants to the
Debenture holders and to the agent.
The Company increased its laboratory staffing in April 2000 by hiring
four additional employees and further increased laboratory staffing can be
expected in the future, provided sufficient funding can be obtained. During the
quarter, the Company also spent approximately $53,000 to acquire battery test
equipment, a pilot battery manufacturing line that will be refurbished, and
increased computer facilities at its Ottawa plant.
In the quarter ended June 30, 2000 the Company accrued US$12,740 for
the interest payable upon Cdn. $750,000 of 10% debentures issued March 30, 2000
and due September 30, 2000 and incurred US$35,711 in financing costs relative to
such financing.
Liquidity
As of June 30, 2000, the company had US$227,431 cash on hand. At July
31, 2000, the Company had US$135,312 cash on hand. The Company currently has
approximately US$100,000 in monthly expenses and $8,000 in revenues. The
Debentures due on September 30, 2000 were extended as outlined above.
Accordingly, the Company believes it has sufficient cash to continue its current
operations until January 30, 2001.
Since its inception, the activities of the Company have been supported
from the personal resources of its President and Chief Executive Officer. The
Company is in need of new capital to support its growth and technology research
and development costs. The Company also must repay Cdn. $250,000 of short term
10% debentures on January 31, 2001 and Cdn. $500,000 on February 28, 2001. The
Company does not currently have sufficient resources to make such payments. EVI
is currently, through Northern Securities Inc. of Toronto, seeking new capital
in the range of US$4,000,000 toUS$6,750,000. However, there can be no assurance
that this or any other financing will be successful and if it is not successful
the Company's research and development activities will have to be reduced and
will certainly not accelerate to the extent they otherwise would. Should that
financing not be successful, the President and Chief Executive Officer intends
to continue personally supporting the Company on a limited basis with loans.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
On April 11, 2000, the company issued 100,000 common shares to its
legal counsel in respect of legal services provided and to be provided. These
shares were valued at $2.25 per share based on the market value of the common
shares at the time of issue. As at June 30, 2000, $210,567 has been charged to
operations to reflect the value of legal services provided to date. The amount
representing services not yet provided has been recorded as a deferred charge
and was valued at $8,820 based on the market value of $1.375 per common share as
at June 30, 2000.
In addition, legal counsel was granted the option to purchase 200,000
shares of the company's common stock in respect of the legal services referred
to above, exercisable over a three year period ending March 28, 2003 at a price
not lower than $1.00 nor greater than $2.00 per share depending on the market
price of the company's common stock. These options were valued at $396,000,
which represented their fair market value at the time of issue. As of June 30,
2000, $370,598 has been charged to operations to reflect the value of legal
services provided to date. The amount representing services not yet provided has
been recorded as a deferred charge and was valued at $15,523, which represented
their fair market value at June 30, 2000.
If the market price of the company's common stock drops below $1.40
with respect to the shares described above or $2.00 with respect to the options
described above for a period of 10 consecutive days, the company will issue
additional common shares or reduce the price of the optioned shares based on the
greater of $1.00 and the average trading price during such trading period. Until
all legal services have been provided by counsel to the Company, the Company
will value the common shares and options to purchase common shares representing
the services to be provided in the future based on the market value of the
Company's common stock at each balance sheet date and adjust the deferred charge
accordingly.
During the three months ended June 30, 2000, the Company also issued
100,000 shares to a director and officer upon the exercise of stock options.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) 27 Financial Data Schedule
(b) None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned thereto duly
authorized.
Date: February 2, 2001
ENERGY VENTURES INC.
/s/D. Wayne Hartford
---------------------
D. Wayne Hartford
Chief Executive Officer
/s/Peter F. Searle
---------------------
Peter F. Searle
Vice President, Finance