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UNITED STATES
SECURITIES EXCHANGE CONMSSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended
December 31, 1999
Commission file number: 0-24262
ADVEN INC.
(Exact name of registrant as specified in charter)
WASHINGTON 91-1363905
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
3653 Hemlock Court, Reno, Nevada 89509
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code..... 702-829-8812
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for at least the past 90 days. Yes X No
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which stock was sold, as of a specified
date within 60 days prior to the date of filing.
As of December 31, 1999, the Company had 5,469,667 shared of common
stock issued and outstanding, and on March 31, 1998, the Company had
5,469,667 shares of common stock issued and outstanding, 859,700 of these
shares being held by non-affiliates of the registrant. The aggregate market
value of the voting stock held by non-affiliates of the registrant, based on
the closing bid price of such stock, as of March 31, 1998 is $51,582.,
based upon $.06 mulitiplied the 859,700 shares of common stock held by
non-affiliates.
PART I
Item 1. Description of Business.
A. General Description of Business
ADVEN, INC., a Washington corporation (the "Company"), was
incorporated on August 22'nd, 1986. Adven, Inc. began conducting business
through its wholly owned subsidiary, Surface Technologies, Inc. ("STI").
STI manufactures a cushioned playground surface which is sold primarily to
restaurants, schools, parks and other entities which provide playgrounds for
children. STI operates under a license from SAFEPAC, Inc., whereby SAFEPAC
has authorized STI to use a patent in the production of the product and its
registered trademark "SAFE-T-TURF".
The Company was not able to obtain profitability as expected, due to poor
performance by its dealer network, which faced too many installations and
warranty problems. As a result, by the end of fiscal 1989, the Company was
inactive and nearly insolvent.
On December 28, 1990, the Company transferred its interest in STI to a
creditor in full satisfaction of a debt. The company did not engage in
active business in 1991, 1992, 1993, 1994 and 1995.
On December 29, 1993, a shareholder meeting was held, at which the existing
officers and directors resigned, and new officers and directors were elected.
The Company's outstanding shares were reversed one for four, and a new block
of treasury shares representing control of the company were issued to the new
officers and directors.
During 1993, 1994 and 1995 the Company actively sought business acquisitions
and opportunities and funding for those efforts.
On March 17, 1997, ADVEN, Inc. (the "Company") entered into a Supply
and Licensed Manufacturing Agreement (the "Agreement") with DIS International
(Marketing) Inc., a Barbados corporation ("DIS"). Pursuant to the Agreement,
the Company received the exclusive right to formulate, manufacture, sell,
distribute and put into use an oil-absorbent urethane foam (currently marketed
under the name Zorbolite) in Australia and New Zealand.
This oil-absorbent urethane foam ("Zorbolite") has been blended with
various additives and concentrates through a process that changes the
structure of the foam, allowing the foam to absorb hydro carbon liquids.
Zorbolite has many potential industrial and consumer applications related
to cleaning oil based pollutants.
Item 2. Description of Property.
The Company uses the office of its president, located at 3653 Hemlock Court,
Reno, Nevada, 89509, provided at no expense to the Company
Item 3. Legal proceedings.
In June 1999, the Company filed suit against DIS International, Inc., to void
its supply and licensed manufacturing agreement with DIS International, Inc.
and to obtain a refund of all monies paid as well as Adven common stock
issued to DIS International, Inc. Currently, this lawsuit is pending.
Due to the above lawsuits regarding the rights to the products covered by the
supply and licensed manufacturing agreement, the Company has determined that
the carrying value of the asset generated by the agreement exceeded its fair
value as of December 31, 1999. Accordingly, a loss of $818,066, which
represents the excess of the carrying value of $818,066 over the fair value
of $-0-, has been charged to operations in 1999.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company did not submit any matters to a vote of Security holders during
1997.
PART II
Item 5. Market for the Registrant's Common Equity and Related Matters.
Market Information:
The Common Stock of the Company began trading over the counter on December
3,1996. The following table sets forth for the period indicated the range of
high and low representative bid quotations for the Company's Common Stock.
Fiscal Year Ended December 31, 1998
Bid
High Low
Year Ended Dec. 31, 1999 0.30 0.06
(b) Holders
The Company had approximately 140 shareholders of record as of March 31,
1999, which number does not include shareholders whose shares are held in
street or nominee names.
(c) Dividends
The Company has never paid a cash dividend on its common stock and does not
expect to pay one in the foreseeable future. Payment of dividends in the
future will depend on the Company's earnings (if any) and its cash
requirements at that time. Management does not plan any stock dividend.
Item 6. Selected Financial Data
The selected financial data presented below was derived from the audited
financial statements of the Company. The data should be read in conjunction
with the Company's financial statements and the accompanying notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Selected Operating Information
Year Ending December 31, 1995
Adven, Inc.
Consolidated
As at and for the Years Ended December 31,
1995 1996 1997 1998 1999
Operating Revenue Nil Nil 1,343 25,180 Nil
Income (Loss) 6,416) (1,844) (8,794) 11,975 (1,007,745)
from operations
Income (Loss) Nil (.0011) (.0016) .0022 (.1512)
per common share
Total Assets 15,635 13,391 1,710,604 1,609,639
Long Term Obligations Nil Nil 505,100 389,160 8,225
Redeemable Preferred Stock Nil Nil Nil Nil
Cash Dividends Nil Nil Nil Nil Nil
per common share
Item 7. Management's discussion and Analysis of Financial condition and
Results of Operation.
Financial Condition
On January 15, 1997, an S-8 filing acknowledged the payment to John B.
Lowy, 80,000 common shares as payment for services. The S-8 filing is
incorporated by referrence to such filing.
On March 13, 1997, the Company sold an aggregate of 2,666,666 shares
of its Common Stock to a foreign company for an aggregate of $1,000,000.
The Company issued an aggregate of 533,000 shares to another foreign entity
as finders fee related to the aforementioned $1,000,000 sale.
During 1998, the Company received common stock valued at $397,523 from a
related corporation (see Note 2) as payment on several notes receivable.
The Business and Strategy
On March 17, 1997, ADVEN, Inc. (the "Company") entered into a Supply
and Licensed Manufacturing Agreement (the "Agreement") with DIS International
(Marketing) Inc., a Barbados corporation ("DIS"). Pursuant to the Agreement,
the Company received the exclusive right to formulate, manufacture, sell,
distribute and put into use an oil-absorbent urethane foam (currently marketed
under the name Zorbolite) in Australia and New Zealand.
Pursuant to the Agreement, the Company is required to purchase the
materials required to manufacture Zorbolite from DIS or its affiliates.
Commencing in the first quarter of 1998, the Company is required to purchase
a minimum of $50,000 of materials per quarter.
The term of the Agreement is five years; however, the Company has the
right to renew the Agreement for successive five year periods, provided the
Company is not in default under the Agreement at that time. DIS has the right
to terminate the Agreement upon 60 days written notice in the event that the
Company fails to meet its obligations under the Agreement or acts in a manner
prohibited under the Agreement. The Company has a right to cure any
deficiency within the 60 day period. The Company's principal obligations
under the Agreement are to pay the balance of the licensing fee ($500,000)
and purchase minimum quotas of materials from DIS and to manufacture and
exploit the sale and distribution of Zorbolite in the Territory. DIS also has
the right to terminate the Agreement upon the happening of certain events
related to the bankruptcy or insolvency of the Company.
As consideration for the Agreement, the Company has paid $625,000 and
is obligated to pay an additional $375,000 within the next six months. The
amount and terms of the foregoing consideration were negotiated between the
Company and DIS.
The initial $625,000 was paid from the proceeds of the Company's
Regulation S offering (see "Item 9 Notes to Financial Statements, Sales of
Equity Securities Pursuant to Regulation S"). The Company plans to use the
balance of the proceeds from the Regulation S offering to purchase equipment
and hire personnel. Management plans to raise the remaining $375,000
required to be paid under the Agreement from the sale of securities. No
assurance can be given that the Company will be able to raise sufficient
funds.
In June 1999, the Company filed suit against DIS International, Inc., to void
its supply and licensed manufacturing agreement with DIS International, Inc.
and to obtain a refund of all monies paid as well as Adven common stock
issued to DIS International, Inc. Currently, this lawsuit is pending.
Due to the above lawsuits regarding the rights to the products covered by the
supply and licensed manufacturing agreement, the Company has determined that
the carrying value of the asset generated by the agreement exceeded its fair
value as of December 31, 1999. Accordingly, a loss of $818,066, which
represents the excess of the carrying value of $818,066 over the fair value
of $-0-, has been charged to operations in 1999.
Results of Operations
The Company has had little to no revenues for the past three fiscal years, the
Company expects revenues to begin in the second half of 2000 subsequent to
the establishment of a manufacturing and marketing distribution center in
Australia or New Zealand.
Item 8. Financial Statements.
The report of independent certified public accountants is attached hereto as
Exhibit A. See index to financial statements at page 11.
Item 9. Changes in and Disagreements with Accountants or Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Identification of Directors and Executive Officers
The present directors and executive officers and significant employees of the
Company, their positions held in the Company, and duration as such, are as
follows:
Name Position Since
Henri Hornby President / Director 12/29/93
Neil F. Hornby Secretary / Director 12/29/93
Family Relationships
Henri Hornby, President and Director, and Neil F. Hornby, Secretary and
Director, are brothers.
Significant Employers
None, other than officers of the Company.
HENRI HORNBY has been self employed, managing his personal investments since
1989. From October 1988 to November 1989 he was the Chairman of the Board
of Directors and the sole shareholder of Advent Securities, Inc., a Utah
corporation, then licensed by the Commission as a broker/dealer. Advent
began its retail brokerage business in January 1989. From January 1985 to
December 1988, Mr. Hornby was a partner of International Projects Group of
San Jose, California, a management consulting and public relations firm.
Mr. Hornby has been an officer and director of five "blank check" companies:
Yarborough Ventures Corporation (now Elegant Illusions, Inc. ("Ell"));
Mont Blanc Resources, Inc. (now Grafix Time Corporation ("GTC")); Mont Rouge
Resources, Inc. (now American Digital Communications, Inc. ("AMDC" or/and
"Mont Rouge")); Zenith Ventures Corporation ("Zenith")); and Adven, Inc.
In November, 1992, Ell completed a public offering of 137,800 Units at $1.00
per Unit. In May 1993, Ell acquired all of the outstanding stock of Elegant
Illusions, Inc., a retailer of copy jewelry, in exchange for 13,400 shares
of Ell common stock. The Company changed its name to Elegant Illusion, Inc.
and Mr. Hornby and the other officers and directors of Ell resigned following
the transaction.
In March, 1987, GTC completed a public offering of 371,000 Units at $1.00
each. In May, 1987, GTC acquired all of the outstanding common stock of
Movies Marketing, Inc. ("Movies"), a manufacturer and marketer of watches and
electronic buttons and badges, in exchange for 4,000,000 shares of GTC common
stock. Mr. Hornby and the other officers and directors of GTC resigned
following the transaction. Mr. Hornby does not know the current status of
this company.
Mont Rouge completed a public offering 792,970 Units at $1.00 each in
December of 1987. On March 1, 1988, Mont Rouge signed an agreement to
acquire American Fidelity Holding Company ("AFH"), a company engaged in the
purchase and sale of second mortgages. As a result of this transaction,
Mr. Hornby and the other officers and directors of Mont Rouge resigned. As
a consequence of the acquisition, Mont Rouge transferred $798,184 to AFH.
AFH depleted all of the funds transferred to it by Mont rouge and, by about
March, 1989, AFH closed its offices. Thereafter, Mr. Hornby confronted the
then current management of Mont Rouge and negotiated a rescission of the
acquisition. All of the shares issued pursuant to the acquisition were
returned to Mont Rouge, however, Mont Rouge was unable to retrieve any of
the $792,184 from AFH. In September 1993, Mont Rouge changed, its name to
American Digital Communication, Inc., and acquired SMR (Specialized Mobile
Radio) cellular channel licenses and operations.
In January, 1989, Zenith completed a public offering of 510,000 Units at
$1.00 each. In February, 1989, Zenith acquired all of the outstanding common
stock of Epic Industries, Inc., a manufacturer of specialized computer chips,
in exchange for 3,200,000 shares of Epic's common stock. Mr. Henri Hornby
and all the officers and directors of Zenith resigned following the
transaction. In 1993, Epic ceased doing business.
In December of 1993, Henri Hornby purchased a controlling interest of 85 % of
the issued and outstanding stock of Adven, Inc., representing 1,393,301
shares. He then brought Adven, Inc. up to date with its audited financial
statements and with its filings with the Securities Exchange Commission.
NEIL F. HORNBY has been President and Director of RAT International
(Marketing) Limited, a company listed on the Vancouver Stock Exchange that
holds the worldwide rights for certain proprietary encryption software
programs, since July, 1993. Neil F. Hornby has been President and Director
of Strategic Planning Group, Inc., a Nevada corporation, since December 15,
1992. Also, Mr. Hornby has been Secretary and Director of Adven, Inc.,
since December 29, 1993. Mr. Hornby was a partner in Western Wireless, Inc.,
an engineering firm, from 1989 to 1992. Mr. Hornby was President of Hamilton
Williams & Co., San Jose, a full service licensed broker/dealer from 1988 to
1989. From 1986 to 1988 he was Executive Administrator for International
Projects Group, a management consulting and public relations firm.
Mr. Neil F. Hornby is the brother of Henri Hornby. Both Neil F. Hornby and
Henri Hornby devote approximately 10 % of their time to the Company's
business.
Item 11. Executive Compensation
Cash Compensation
No cash compensation has been paid to the officers and directors of the
Company.
Compensation Pursuant to Plans
No compensation was paid to executive officers pursuant to any plan during
the fiscal year just ended, and the Company has no agreement or understanding,
express or implied, with any officer or director concerning employment or
cash compensation for services.
Other compensation
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 25'TH, 1997, the names of persons
who own of record, or were known by the Company to own beneficially, more
than five percent of its total issued and outstanding common stock and the
beneficial ownership of all such stock as of that date by officers and
directors of the Company and all such officers and directors as a group.
Except as otherwise noted, each person listed below is the sole beneficial
owner of the shares and has sole investment and voting power as such shares.
No person listed below has any option, warrant o r other right to acquire
additional securities of the Company, except as may be otherwise noted.
Name and Address Amount&Nature Percent
of Beneficial of Beneficial of
Title of Class Owner Ownership Class
Common Stock
par value .0001
SAME Henri Hornby* 1,393,301 25.0 %
Vanuatu International
Trust Company Ltd. 2,666,666 48.8 %
Kennington Investments,
Ltd. 533,000 9.7 %
DIS International (Marketing),
Ltd. 550,000 10.1 %
All officers and directors 1,393,301 25.0 %
*Officers and directors
The Company's management knows of no affiliations between the
foregoing entities or any arrangements between them with regard to the
election of directors or other matters.
Vanuata International Trust Company Ltd. is a trust organized under
the laws of Vanuata, whose trustee is Lindsay Barret.
Kennington Investments, Ltd. is a corporation incorporated under the
laws of the Bahamas whose principal officers are Robert Montgomery/President
and M.K. Parcell/Secretary.
DIS International (Marketing) Inc. is a corporation organized under the
laws of Barbados whose sole officer is Margaret Bruce/President.
Item 13. Certain Relationships and Related Transactions.
On March 17, 1997, ADVEN, Inc. (the "Company") entered into a Supply
and Licensed Manufacturing Agreement (the "Agreement") with DIS International
(Marketing) Inc., a Barbados corporation ("DIS"). Pursuant to the Agreement,
the Company received the exclusive right to formulate, manufacture, sell,
distribute and put into use an oil-absorbent urethane foam (currently marketed
under the name Zorbolite) in Australia and New Zealand.
This oil-absorbent urethane foam ("Zorbolite") has been blended with
various additives and concentrates through a process that changes the
structure of the foam, allowing the foam to absorb hydro carbon liquids.
Zorbolite has many potential industrial and consumer applications related
to cleaning oil based pollutants.
On March 13, 1997, the Company sold an aggregate of 2,666,666 shares
of its Common Stock to a foreign company for an aggregate of $1,000,000.
The Company issued an aggregate of 533,000 shares to another foreign entity
as finders fee related to the aforementioned $1,000,000 sale.
Pursuant to the Agreement, the Company is required to purchase the
materials required to manufacture Zorbolite from DIS or its affiliates.
The term of the Agreement is five years; however, the Company has the
right to renew the Agreement for successive five year periods, provided the
Company is not in default under the Agreement at that time. DIS has the right
to terminate the Agreement upon 60 days written notice in the event that the
Company fails to meet its obligations under the Agreement or acts in a manner
prohibited under the Agreement. The Company has a right to cure any
deficiency within the 60 day period. The Company's principal obligations
under the Agreement are to pay the balance of the licensing fee ($375,000)
and purchase minimum quotas of materials from DIS and to manufacture and
exploit the sale and distribution of Zorbolite in the Territory. DIS also has
the right to terminate the Agreement upon the happening of certain events
related to the bankruptcy or insolvency of the Company.
As consideration for the Agreement, the Company has paid $625,000 and
is obligated to pay an additional $375,000, and has issued 550,000 shares of
its restricted common stock to DIS. The amount and terms of the foregoing
consideration were negotiated between the Company and DIS.
The initial $625,000 was paid from the proceeds of the Company's
Regulation S offering (see "Item 9 of Notes to Financial Statements, Sales
of Equity Securities Pursuant to Regulation S"). The Company plans to use
the balance of the proceeds from the Regulation S offering to purchase
equipment and hire personnel. Management plans to raise the remaining
$375,000 required to be paid under the Agreement from the sale of securities.
No assurance can be given that the Company will be able to raise sufficient
funds.
During 1997, Adven, Inc. loaned Wincanton Corporation a total of $ 1 00,000 at
1O% interest per annum, to be paid one year from the dates of issuance.
During 1998, Adven, Inc. loaned Wincanton Corporation an additional $275,000
also at 10% interest per annum. These notes were also to be paid one year
from the dates of issuance. Wincanton Corporation repaid $4,000 on the notes
during 1998. On October 7, 1998, the Company exchanged the total notes
receivable balance of $371,000, plus accrued interest to date of $23,444, for
1,806,924 share of Wincanton Corporation stock. This transaction resulted in
a gain of $3,079. As of December 31, 1998, Adven, Inc. owned 15.96% of
Wincanton Corporation.
During 1999, an unrelated third party purchased the outstanding shares of
Wincanton, Inc., and changed the corporation's name to Parks America!, Inc. The
Board of Directors of Parks America!, Inc., declared a reverse stock split of
100 to 1, and issued additional stock, resulting in Adven, Inc.'s interest in
Parks America!, Inc. being reduced to less than 10%
PART IV
Item 14. Exhibits and Reports on Form 8-K
(a) Exhibits: (1) Financial Statements - The Company's audited financial
statements for the year ended December 31, 1998, are attached hereto as
Exhibit A.
(b) Reports on Form 8-K. The following report on form 8-K was filed by
the Company during the fourth quarter of the fiscal year ended December 31,
1996.
The Company filed an 8-K on March 21, 1997, which is incorporated by
reference to such filing.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereto duly authorized individual.
ADVEN, INC.
By
Henri Hornby/President and Director
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name/Title Date
Henri Hornby March 30, 1999
Henri Hornby
President / Director
Neil F. Hornby March 30, 1999
Neil F. Hornby
Secretary Director
Exhibit A
Audited
Financial Statements
MARK BAILEY & COMPANY, LTD.
Certified Public Accountants
Management Consultants
Office Address:
1495 Ridgeview Drive, Ste. 200
Phone: 775/332.4200
Fax; 775/3 32.42 10
Mailing Address:
P.O. Box 6060
Reno, Nevada 89509-6634
Reno, Nevada 895 1 3
Independent Auditors' Report
February 10, 2000
Board of Directors
Adven, Inc.
We have audited the accompanying balance sheets of Adven, Inc. as of December
31, 1999 and December 31, 1998 and the related statements of operations and
other comprehensive income (loss), changes in stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. The statements
of operations and other comprehensive loss, changes in stockholders' equity,
and cash flows of Adven, Inc. for the year ended December 31, 1997 were
audited by other auditors whose report dated March 10, 1998, expressed an
unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Adven, Inc. as of December 31,
1999 and December 31, 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the company incurred a net loss of $1,007,745 for 1999. The factors, as
discussed in Note 1, raise substantial doubt about the company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Mark Bailey & Company, Ltd.
Reno, Nevada
ADVEN, INC.
BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
1999 1998
Current Assets
Cash $ 209 $ 2,866
Prepaid legal fees 922 -
Total current assets 1,131 2,866
Other Assets
Investment (Note 2) 216,828 397,523
Supply and licensed manufacturing agreement (Note 3)
- 1,206,250
Total other assets 216,828 1,603,773
Total assets $ 217,959 $ 1,606,639
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
Accounts payable $ 3,225 $ 975
Accrued interest (Note 3) - 13,185
License agreement payable (Note 3) - 375,000
Advance from shareholder (Note 5) 5,000 -
Total current liabilities 8,225 389,160
Stockholders' Equity
Common stock, $.0001 par value, 20,000,000 shares
authorized, 5,469,667 shares issued and outstanding
547 547
Additional paid-in-capital 1,377,715 1,377,715
Unrealized loss on available for sale securities
(180,695) -
Accumulated deficit (987,833) (160,783)
Total stockholders' equity
209,734 1,217,479
Total liabilities and stockholders' equity
$ 217,959 $ 1,606,639
The Accompanying Notes are an Integral Part of These Financial Statements
ADVEN, INC.
STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
Revenue
Interest income (Note 2) 22,101 1,343
Gain on asset exchange (Note 2) 3,079 -
Total revenue 25,180 1,343
General and administrative expenses (8,985) (4,145) (10,137)
Loss on impairment of supply and license
agreement (Note 3) (818,065) -
Net income (loss) before interest expense,
income taxes and extraordinary item(827,050) 21,035 (8,794)
Interest expense (Note 3) (13,185)
Net income (loss) before income taxes and
extraordinary item (827,050) 7,850 (8,794)
Provision for income taxes (Note 4) -
Net income (loss) before extraordinary item (827,050) 7,850 (8,794)
Extraordinary item (Note 5) 4,125
Net income (loss) (827,050) 11,975 (8,794)
Unrealized loss on securities (net
of tax of $0) (Note 2) (180,695) -
Comprehensive income (loss) $ (1,007,745)11,975(8,794)
Earnings per common share:
Net income (loss) before extraordinary item $ (0.1512) 0.0014 (0.0016)
Extraordinary item 0.0008
Earnings (loss) per share $ (0.1512) 0.0022 (0.0016)
The Accompanying Notes are an Integral Part of These Financial Statements
ADVEN, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS'EQUITY
For the Years Ended December 31, 1999, 1998 and 1997
Additional Retained Other
Common Stock Paid-in Earnings Comprehensive Total
Shares Amount Capital (Deficit) Deficit Equity
Balance at December 31, 1996
1,640,001 164 $ 169,848 (163,964) $ - $ 6,048
Sale of common stock
2,666,666 267 999,733 - - 1,000,000
Finders fee paid by issuing common stock
533,000 53 199,822 - - 199,875
Finders fee charged to paid-in capital
- - (199,875) - - (199,875)
Payment on license agreement by issuing common stock
550,000 55 206,195 - - 206,250
Payment of legal fee by issuing common stock
80,000 8 1,992 - - 2,000
Net loss at December 31, 1997
- - - (8,794) - (8,794)
Balance at December 31, 1997
5,469,667 547 1,377,715 (172,758) - 1,205,504
Net income at December 31, 1998
- - - 11,975 - 11,975
Balance at December 31, 1998
5,469,667 547 1,377,715 (160,783) - 1,217,479
Net loss at December 31, 1999
- - - (827,050) - (827,050)
Other comprehensive loss at December 31, 1999
- - - (180,695) (180,695)
Balance at December 31, 1999
5,469,667$ 547$ 1,377,715 $ (987,833)$(180,695) $ 209,734
The Accompanying Notes are an Integral Part of These Financial Statements
ADVEN, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
Cash Flows from Operating Activities
Net income (loss) $ (827,050) $ 11,975 $(8,794)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Loss on impairment of assets 818,066 -0- -0
Gain on exchange of assets -0- (3,079) -0
Gain on extinguishment of debt -0- (4,125) -0
Payment of legal fees by issuance
of common stock -0- -0- 2,000
Increase in interest receivable -0- (22,101)(1,343)
Increase in prepaid expenses (923) -0- -0
Increase (decrease) in accounts
payable 2,250 -0- (2,243)
Increase in accrued interest -0- 13,185 -0
Net cash used in operating
activities (7,657) (4,145) (10,380)
Cash Flows from Investing Activities
Issuance of notes receivable -0- (275,000)(100,000)
Principal payments received on notes
receivable -0- 4,000 -0
Payment of license agreement -0- (125,000)(500,000)
Net cash used in investing
activities -0- (396,000)(600,000)
Cash Flows from Financing Activities
Proceeds from issuance of common stock -0- -0- 1,000,000
Proceeds from shareholder advance 5,000 -0- -0
Net cash provided by financing
activities 5,000 -0- 1,000,000
Net increase (decrease) in cash and
cash equivalents (2,657) (400,145) 389,620
Cash and cash equivalents at
beginning of period (Note 1)
2,866 403,011 13,391
Cash and cash equivalents at end
of period (Note 1). $ 209 $ 2,866 $ 403,011
The Accompanying Notes are an Integral Part of the Financial Statements
ADVEN, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998, and 1997
Supplementary Schedule of Noncash Activities
During 1998, the Company received common stock valued at $397,523 from a
former related corporation (see Note 2) as payment on several notes
receivable.
During 1999, 1998 and 1997, no amounts were actually paid for either interest
or income taxes.
During 1997, legal fees of $2,000 were paid through the issuance of 80,000
shares of the Company's common stock, and a finders fee of $199,875 was paid
through the issuance of 533,000 shares of the Company's common stock. Also
during 1997, partial payment of the license agreement was made through the
issuance of 550,000 shares of the Company's common stock valued at $206,250.
The Accompanying Notes are an Integral Part of These Financial Statements
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Organization And Significant Accounting Policies
The Company was incorporated in the State of Washington on August 22, 1986, as
a subchapter C corporation for income tax purposes. The majority of
outstanding shares are owned by the Company's President Mr. Henri Hornby.
These financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has sustained recurring losses over
the past years and currently has no source of operating income. The Company's
cash flow and existing credit are insufficient to fund the Company's cash
flow needs based on the expenses expected to be incurred during the next year.
The President of the Company intends to advance funds as necessary to fund
the cash flow needs of the Company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
Public Offering
The Company registered 15,000,000 of its common stock shares with the
Securities and Exchange Commission and made an initial public offering of
5,000,000 shares at $.03 per share in 1987.
Capitalization
The Company has authorized 20,000,000 shares of common stock, and has 400,000
shares of common stock issued and outstanding.
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
2. Investment
Until December, 1999, the Company's President was also the President of
Wincanton. During 1997, Adven, Inc. loaned Wincanton Corporation a total of
$100,000 at 10% interest per annum, to be paid one year from the dates of
issuance.
During 1998, Adven, Inc. loaned Wincanton Corporation an additional $275,000
also at 10% interest per annum. These notes were also to be paid one year from
the dates of issuance. Wincanton Corporation repaid $4,000 on the notes during
1998. On October 7, 1998, the Company exchanged the total notes receivable
balance of $371,000, plus accrued interest to date of $23,445, for 1,806,924
shares of Wincanton Corporation stock. This transaction resulted in a gain of
$3,079. As of December 31, 1998, Advert, Inc. owned 15.96% of Wincanton
Corporation.
During 1999, an unrelated third party purchased the outstanding shares of
Wincanton, Inc., and changed the corporation's name to Parks America!, Inc. The
Board of Directors of Parks America!, Inc., declared a reverse stock split of
100 to 1, and issued additional stock, resulting in Adven, Inc.'s interest in
Parks America!, Inc. being reduced to less than 10%
FAS13 No. 115 "Accounting for Certain Investments in Debt and Equity
Securities," requires that all applicable equity securities be classified as
either trading or available for sale. The Company classified the investment in
Parks America!, Inc. as available for sale at December 31, 1999. FASB No. 115
also requires that all available for sale securities be reported at fair value,
with any unrealized losses included as a part of comprehensive income and as a
separate component of stockholders' equity until the losses are realized (net
of the effect of income taxes). The fair market value and the unrealized loss
of the Parks America!, Inc. investment at December 31, 1999 were $216,828
and $180,695, respectively.
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
3. Supply and Licensed Manufacturing Agreement
On March 17, 1997, the Company entered into a supply and licensed manufacturing
agreement with DIS International, Inc., a Barbados corporation. Pursuant to the
agreement, the Company received the exclusive right to formulate, manufacture,
sell, distribute, and put into use two products, the first a plant growing
medium that aids the use of hydroponics, and the second an oil absorbent
urethane foam. The Company's rights to these products extend only to Australia
and New Zealand.
As consideration for the agreement, the Company paid $625,000, issued 550,000
shares of its common stock to DIS International, Inc., and was obligated to pay
an additional $375,000 plus interest, by June 30, 1999.
During 1998, Adven, Inc. became aware that a company located in the Isle of Man
has claimed that it owns the patent on one of the products and that DIS
International, Inc. has no rights to the product at all. This company is suing
DIS International, Inc. in Canada. The lawsuit is still ongoing as of December
31, 1999.
In June 1999, the Company filed suit against DIS International, Inc., to void
its supply and licensed manufacturing agreement with DIS International, Inc.
and to obtain a refund of all monies paid as well as Adven common stock issued
to DIS International, Inc. Currently, this lawsuit is pending.
Due to the above lawsuits regarding the rights to the products covered by the
supply and licensed manufacturing agreement, the Company has determined that
the carrying value of the asset generated by the agreement exceeded its fair
value as of December 31, 1999. Accordingly, a loss of $818,066, which
represents the excess of the carrying value of $818,066 over the fair value
of $-0-, has been charged to operations in 1999.
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Provision for Income Taxes
The Company recognizes deferred tax liabilities and benefits for the expected
future tax impact of transactions that have been accounted for differently for
book and tax purposes.
Deferred tax benefits and liabilities are calculated using enacted tax rates in
effect for the year in which the differences are expected to reverse. The
following is a schedule of the composition of the provision for income taxes:
1999 1998 1997
Current $ -0- $ -0- $ -0
Deferred -0- -0- -0
Total provision for income taxes -0- $ -0- $ -0-
Deferred federal income taxes consist of future tax benefits and liabilities
attributed to:
1999 1998
Loss carry forward 314,056 $ 32,859
Loss on available for sale securities 61,436 -0
Valuation allowance (375,492) (32,859)
Net deferred income tax $---0- $ -0-
The net change in the valuation account for 1999 was $(342,633).
The following net operating loss carryforwards as of December 31, 1999 will
expire if
not applied by the dates scheduled below:
Year ending December 31 Net Operating Loss
2002 $ 9,914
2003 21,740
2004 5,628
2005 4,571
2006 592
2007 415
2008 7,824
2009 28,907
2010 6,416
2011 1,844
2012 8,794
2014 827,050
$923,695
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
5. Related Party Transactions
During 1993, a former President of Wincanton Corporation, Walter Doyle, loaned
Adven, Inc. $4,125. Subsequent to this transaction, Mr. Doyle's employment was
terminated and he moved out of the country. No payments have ever been made on
this note, and the company no longer communicates with Mr. Doyle. It is
management's belief that Adven, Inc. is no longer liable for this amount.
During 1999, the President of Adven, Inc. paid a $5,000 legal retainer on
behalf of the Company. The advance is due on demand and carries an interest
rate of 10.0%.
6. Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") Statement No. 107, "Disclosure
about Fair Value of Financial Instruments," is a part of a continuing process
by the FASB to improve information on financial instruments. The following
methods and assumptions were used by the Company in estimating its fair value
disclosures for such financial instruments as defined by the Statement.
The carrying amounts reported in the balance sheets for cash and prepaid
expenses approximate fair value at December 31, 1999 and 1998.
The carrying amounts reported in the balance sheets for the investment in
Wincanton at December 31, 1998 was $397,523. The estimated fair value of this
investment at December 31, 1998 was $198,761, based on the quoted market price
of this investment.
The carrying amount and the estimated fair value of the investment in Parks
America!, Inc. at December 31, 1999 was $216,828. The estimated fair value of
this investment is based on the quoted market price for the investment.
The carrying amounts reported in the balance sheets for both the accounts
payable and the shareholder advance at December 31, 1999 and December 31, 1998
and the licenses agreement payable at December 31, 1998 approximate fair values
because the maturities are less than one year in duration.
7. Sales Of Equity Securities Pursuant To Regulations
On March 13, 1997, the Company sold an aggregate of 2,666,666 shares of its
Common Stock to a foreign company for an aggregate of $1,000,000. The Company
issued an aggregate of 533,000 shares to another foreign entity as payment of a
finder's fee related to the aforementioned $1,000,000 sale.
All of the foregoing shares were issued to entities that are not "U.S. Persons"
as that term is defined under Regulation S and were issued pursuant to the
exemption from registration provided by Regulation S.