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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, 1998
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, 1998, the Company had 5,469,667 shared of common
stock issued and outstanding, and on March 31, 1997, 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.
The Company is not involved in any threatened or pending legal proceeding.
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, 1997 0.40 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,
1994 1995 1996 1997 1998
Operating Revenue Nil Nil Nil 1,343 25,180
Income (Loss) (28,907) (6,416) (1,844) (8,794) 11,975
from operations
Income (Loss) (0.02) Nil (.0011) (.0016) .0022
per common share
Total Assets 23,187 15,635 13,391 1,710,604 1,609,639
Long Term Obligations Nil Nil Nil 505,100 389,160
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.
Subsequent to the Company's year end, Dec 31, 1977, the Company has
an additional note receivable of $150,000 with a maturity of less than one
year.
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.
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. owns 15.96% of
Wincanton Corporation.
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 & CO. LTD.
Certified Public Accountants
Management Consultants
Office Address: Mailing Address:
1495 Ridgeview Drive, Ste. 200 Phone: 775/332.4200 P.O. Box 6060
Reno, Nevada 89509-6634 Fax: 775/332.4210 Reno, Nevada 89513
Independent Auditors' Report
Board of Directors
Adven, Inc.
We have audited the accompanying balance sheet of Adven, Inc. as of December
31, 1998 and the related statements of income, stockholders' equity, and cash
flows for the year 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 audit. The financial
statements of Adven, Inc. as of December 31, 1997 and 1996 were audited by
other auditors whose report dated March 10, 1998, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides 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, 1998, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
Reno, Nevada
March 10, 1999
ADVEN, INC.
BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
1998 1997
Current Assets
Cash $2,866 $403,011
Interest receivable (Note 2) - 1,343
Note receivable (Note 2) - 100,000
Total current assets 2,866 504,354
Other Assets
Investment in related party
(Note 2) 397,523 -
Supply and licensed manufacturing
agreement (Note 3) 1,206,250 1,206,250
Total other assets 1,603,773 1,206,250
Total assets $1,606,639 $1,710,604
LIABILITIES AND STOCKHOLDERS'EQUITY
Current Liabilities
Accounts payable 975 975
Accrued interest (Note 3) 13,185 -
License agreement payable
(Note 3) 375,000 500,000
Loan payable - related party
(Note 2) - 4,125
Total current liabilities 389,160 505,100
Stockholders' Equity
Common stock, $.OOO1 par value,
20,000,000 shares authorized,
5,469,667 shares issued 547 547
Additional paid-in-capital 1,377,715 1,377,715
Accumulated deficit (160,783) (172,758)
Total stockholders' equity 1,217,479 1,205,504
Total liabilities and
stockholders' equity $1,606,639 $1,710,604
The Accompanying Notes are an Integral Part of the Financial Statements
ADVEN, INC.
STATEMENTS OF INCOME
For the Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Revenue
Interest income (Note 2) $22,101 $1,343 0
Gain on asset exchange(Note 2) 3,079 - -
Total revenue 25,180 1,343 -
General and administrative
expenses (4,145) (10,137) (1,844)
Net income before interest expense, income
taxes and extraordinary item 21,035 (8,794) (1,844)
Interest expense (Note 3) (13,185) - -
Net income before income taxes and
extraordinary item 7,850 (8,794) (1,844)
Income taxes (Note 4) - - -
Net income before
extraordinary item 7,850 (8,794) (1,844)
Extraordinary item (Note 2) 4,125
Net income $11,975 $(8,794) (1,844)
Earnings (loss) per share 0.0022 $(0.0016) (0.0011)
The Accompanying Notes are an Integral Part of the Financial Statements
ADVEN, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS'EQUITY
For the Years Ended December 31, 1998, 1997 and 1996
Additional Retained
Common Stock Paid-in Earnings Total
Shares Amount Capital (Deficit) Equity
Balance at
Dec.31,1995 1,640,001 $164 $169,848 $(162,120) 7,892
Net income at
Dec31,1996 (1,844) (1,844)
Balance at
Dec31,1996 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
Dec31,1997 - - - (8,794) (8,794)
Balance at
Dec31,1997 5,469,667 547 1,377,715 (172,758) 1,205,504
Net income at
Dec31,1998 - - - 11,975 11,975
Balance at
Dec31,1998 5,469,667 $ 547 $1,377,715 $(160,783) $1,217,479
The Accompanying Notes are an Integral Part of The Financial Statements
ADVEN, INC.
STATEMENTS OF CASH FLOWS
December 31, 1998, 1997 and 1996
1998 1997 1996
Cash Flows from Operating Activities
Net income $ 11,975 $(8,794) $ (1,844)
Adjustments to reconcile net income to net
Cash provided by operating activities:
Gain on exchange of assets (3,079) -0- -0-
Gain on extinguishment of debt (4,125) -0- -0-
Payment of legal fees by issuance
of common stock -0- 2,000 -0-
Increase in interest
receivable (22,101) (1,343) -0-
Decrease in accounts
payable -0- (2,243) (400)
Increase in accrued interest 13,185 -0- -0-
Net cash used in operating
activities (4,145) (10,380) (2,244)
Cash Flows from Investing Activities
Issuance of notes receivable (275,000) (100,000) -0-
Principal payments received on notes
receivable 4,000 -0- -0-
Payment of license agreement (125,000) (500,000) -0-
Net cash used in investing
activities (396,000) (600,000) -0-
Cash Flows from Financial Activities
Proceeds from issuance of
common stock -0- 1,000,000 -0-
Net cash provided by financing
activities -0- 1,000,000 -0-
Net increase (decrease) in cash and
cash equivalents (400,145) 389,620 (2,244)
Cash and cash equivalents at
beginning of period (Note 1) 403,011 13,391 15,635
Cash and cash equivalents at end
of period (Note 1) 866 3011 $13,391
The Accompanying Notes are an Integral Part of the Financial Statements
ADVEN, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998, 1997, and 1996
Supplementary Schedule of Noncash Activities
During 1998, the Company received common stock valued at $397,523 from a
related corporation (see Note 2) as payment on several notes receivable.
During 1998, 1997 and 1996, 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 the Financial Statements
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
1. Organization And Significant Accounting Policies
The Company was incorporated in the State of Washington on August 22, 1986.
In 1987 the Company entered into an agreement to exchange 21,500,000 shares
of unregistered, restricted common stock of the Company for all outstanding
capital stock of Surface Technologies, Inc., which became a wholly owned
subsidiary of the Company until December 28, 1990. On that date the Company
exchanged 100% of its interest in Surface Technologies, Inc. to Forsell
Investors Limited Partnership (a related party) in full satisfaction of all
amounts owed by the Company to the partnership. On March 17, 1997, the
company entered into a supply and licensed manufacturing agreement with DIS
International, a Barbados corporation (see Note 3). Pursuant to the
agreement, the Company received the exclusive right to formulate, manufacture,
sell, distribute, and put into use a product that aids in growing plants via
hydroponics, and an oil absorbent urethane foam in Australia and New Zealand.
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.
2. 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.
3. Capitalization
The Company approved a 25 for I reverse stock split on December 28, 1990
which reduced the number of authorized shares from 100,000,000 to 4,000,000,
and reduced the amount of issued and outstanding shares from 40,000,000 to
1,600,000 shares. Immediately after the reverse stock split the Company
approved an increase in the authorized common stock to 50,000,000 shares. On
December 29, 1993 the Company approved a 4 for 1 reverse split which reduced
the number of authorized shares from 50,000,000 to 12,500,000, and reduced
the amount of issued and outstanding shares from 1,600,000 to 400,000 shares.
Immediately after the reverse stock split the Company approved an increase in
the authorized common stock to 20,000,000 shares.
4. Related Parly Transactions
Forsell Investors Limited Partnership (FILP) is a limited partnership
controlled by Richard Forsell, a shareholder and past President of Adven, Inc.
FILP loaned $50,000 to the Company in December, 1988. No interest payments
had been made on the loan and by November, 1990 there was in excess of
$13,000 accrued interest in arrears. FILP gave written notice of default on
the loan in 1990. FILP agreed to purchase 100% of the stock in Surface
Technologies, Inc. (A wholly owned subsidiary acquired in 1987. See Note 1)
in full satisfaction of its $50,000 loan and all accrued interest. Surface
Technologies, Inc. had sustained repeated losses, warranty work problems, and
excessive debt which obviated any reasonable prospect for Adven, Inc. to
acquire the funds from the subsidiary to service the debt owned to FILP.
In conjunction with the sale of all interest in Surface Technologies, Inc.,
Richard Forsell agreed to purchase 4,800,000 shares of stock in 1990 (prior
to the reverse stock split of 25 for 1) for $4,500 to provide funds to pay
Adven's outstanding bills as of December, 1990. The result of these
transactions was to eliminate virtually all assets and liabilities from
Adven, Inc. which would facilitate the search for a merger candidate to place
in the public shell, and thereby create value for the shareholders.
Wincanton Corporation is a corporation whose current President is also the
current President of Adven, Inc. During 1997, Adven, Inc. loaned Wincanton
Corporation a total of $ 1 00,000 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 $23,444, 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. owns 15.96% of
Wincanton Corporation.
During 1993, the former President of Wincanton Corporation, Walter Doyle,
loaned Adven, Inc. $4,125. Subsequent to this transaction Mr. Doyle was
terminated and 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.
5. 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.
Pursuant to the agreement, the Company is required to purchase the materials
required to manufacture these products from DIS International, Inc. or its
affiliates. Commencing in the first quarter of 1998, the Company was
required to purchase a minimum of $50,000 of materials per quarter. During
1998, Adven, Inc. purchased no materials from either DIS International, Inc.
or its affiliates. The term of the agreement is five years. The Company has
the right, however, to renew the agreement for successive five-year periods,
provided the Company is not in default under the agreement at that time. DIS
International, Inc. 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), to purchase minimum quotas of materials from
DIS International, Inc., and to manufacture and promote the sale and
distribution of the products in Australia and New Zealand. DIS International,
Inc. also has the right to terminate the agreement upon the occurrence of
certain events related to the bankruptcy or insolvency of the Company.
As consideration for the agreement, the Company paid $625,000, issued 550,000
shares of its common stock to DIS International, Inc., and is obligated to
pay an additional $375,000 by June 30, 1999.
During 1998, Adven, Inc. became aware that a company located in the Isle of
Man, claiming that it owns the patent on one of the products and that DIS
International, Inc. has no rights to the product at all, is suing DIS
International, Inc. in Canada. Adven, Inc. is carefully watching the outcome
of this trial.
6. Federal Income Taxes
There are no material timing differences that would produce a deferred tax
liability or asset.
The following net operating loss carryforwards as of December 31, 1998 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
$96,645
7. Uncertainties
During past years, the Company has sustained recurring losses, and the source
of the Company's operating income was eliminated in the sale of all interest
in Surface Technologies, Inc. in 1990. As a result of this sale in 1990, the
Company was reduced to a public "shell" with no operations. Cash in 1998 was
generated solely from the issuance of a note receivable to a related party
(see Note 2), and the exchange of this note for common stock in the same
related party.
8. 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 amount reported in the balance sheet for cash approximates fair
value.
The carrying amount reported in the balance sheet for the investment at
December 3 1, 1998 is $397,523. The estimated fair value of this investment
at December 31, 1998 is $198,761, based on the quoted market price for this
investment.
The carrying amount reported in the balance sheet for both the accounts
payable and the license agreement payable approximates fair value because the
maturities are less than one year in duration.
9. Sales Of Equiiy 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 "US Persons"
as that term is defined under Regulation S, and were issued pursuant to the
exemption from registration provided by Regulation S.
10 - CONCENTRATION OF CREDIT RISK
All of the Company cash is held in one account at the Comstock Bank in
Carson City, Nevada. The FDIC amount is $100,000.