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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, 2001
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, 2001, the Company had 4,919,667 shares of common
stock issued and outstanding, and on March 31, 2000, 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 28, 2002 is $52,152,
based upon $.06 mulitiplied by the 859,700 shares of common stock held by
non-affiliates.
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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
2001.
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, 2001
Bid
High Low
Year Ended Dec. 31, 2001 0.24 0.06
(b) Holders
The Company had approximately 171 shareholders of record as of March 28,
2001, 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, 1996 to 2000
Adven, Inc.
Consolidated
As at and for the Years Ended December 31,
1996 1997 1998 1999 2000 2001
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Operating Revenue Nil 1,343 25,181 Nil Nil Nil
Income (Loss) (1,844) (8,794) (1,209) (1,007,745) (217,218) (195,402)
from operations
Income (Loss) (.0011) (.0016) (.0002) (.1512) (0.0026) (0.04)
per common share
Total Assets 13,391 1,710,604 1,609,639 217,959 24,718 1,528
Long Term Obligations Nil 505,100 389,160 8,225 32,265 33,372
Redeemable Preferred Stock Nil Nil Nil Nil Nil Nil
Cash Dividends Nil 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.
As of December 31, 2001, per Company settlement agreement with DIA Ltd.,
the Company received back and has cancelled 550,000 shares of it's common stock.
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 four fiscal years.
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
Sheila Ledrew Director 01/01/02
Family Relationships
None
Significant Employees
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.
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 28'TH, 2002, 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 %
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.
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, 2001, are attached hereto as
Exhibit A.
(b) Reports on Form 8-K.
None.
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 /s/ Henri Hornby
Henri Hornby/President, Secretary 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
/s/ Henri Hornby March 28, 2002
Henri Hornby
President / Secretary / Director
/s/ Sheila Ledrew March 28, 2002
Sheila Ledrew
Director
Exhibit A
Audited
Financial Statements
ADVEN, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 2001,
WITH
AUDIT REPORT OF
CERTIFIED PUBLIC ACCOUNTANTS
TABLE OF CONTENTS
Independent Auditors' Report.................................................2
Balance Sheet................................................................4
Statements of Income and Other Comprehensive Income..........................5
Statements of Changes in Stockholders' Equity................................6
Statements of Cash Flows.....................................................7
Notes to Financial Statements................................................8
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
----------------------------
March 18, 2002
Board of Directors
Adven, Inc.
We have audited the accompanying balance sheets of Adven, Inc., as of
December 31, 2001, and the related statements of operations and other
comprehensive income (loss), changes in stockholders' equity, and cash
flows for the years ended December 31, 2001, and 2000. 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.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 2001, and the results of its operations and its cash
flows for the years ended December 31, 2001, and 2000, in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note 1 to
the financial statements, the Company has no operations, and existing
cash and available credit are insufficient to fund the Company's cash
flow needs for the
-2-
next year. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Mark Bailey & Company, Ltd.
Reno, Nevada
-3-
ADVEN, INC.
BALANCE SHEETS
--------------
December 31, 2001
ASSETS
------
DECEMBER 31, 2001
-----------------
CURRENT ASSETS
- --------------
Cash $ 67
Prepaid legal fees 211
---
Total current assets 278
---
OTHER ASSETS
- ------------
Investment 103
Deferred tax asset (Net of valuation allowance of $387,504) 0
---
Total other assets 103
---
FIXED ASSETS
- ------------
Computer equipment 2,390
Accumulated depreciation (1,243)
-----
Total fixed assets 1,147
-----
Total assets $ 1,528
=====
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable $ 759
Accrued interest 3,794
Advances from stockholder 28,819
------
Total current and total liabilities 33,372
------
COMMITMENTS AND CONTINGENCIES
- -----------------------------
STOCKHOLDERS' EQUITY
- --------------------
Common stock, $.0001 par value, 20,000,000 shares
authorized, 4,919,667 shares issued and outstanding 492
Additional paid-in-capital 1,171,520
Unrealized loss on securities available for sale (397,420)
Accumulated deficit (806,436)
-------
Total stockholders' equity (31,844)
-------
Total liabilities and stockholders' equity $ 1,528
=======
-4-
ADVEN, INC.
STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
---------------------------------------------------
For the Years Ended December 31, 2001, and 2000
FOR THE YEARS ENDED
DECEMBER 31, DECEMBER 31,
----------- -----------
2001 2000
----------- -----------
REVENUE $ 0 $ 0
- -------
EXPENSES
- --------
General and administrative expenses (4,596) (1,890)
Accounting and legal fees (3,326) (9,912)
Depreciation expense (765) (478)
----------- -----------
Loss from operations (8,687) (12,280)
206,250 0
----------- -----------
Gain on cancellation of stock
Net income (loss) before interest expense and income
taxes 197,563 (12,280)
Interest expense (2,161) (1,725)
----------- -----------
Net income (loss) before income taxes 195,402 (14,005)
Provision for income taxes 0 0
----------- -----------
Net income (loss) 195,402 (14,005)
Unrealized loss on securities (net of tax of $0 for the years) (13,449) (203,276)
----------- -----------
Comprehensive income (loss) $ 181,953 $ (217,218)
=========== ===========
Earnings (loss) per share $ 0.04 $ 0.00
=========== ===========
Weighted average of basic and diluted common shares 4,919,667 5,469,667
=========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements
-5-
ADVEN, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years December 31, 2001, and 2000
ADDITIONAL RETAINED OTHER
COMMON STOCK PAID-IN EARNINGS COMPREHENSIVE TOTAL
SHARES AMOUNT CAPITAL (DEFICIT) DEFICIT EQUITY
------------------------------------------------------------------------------------------------
Balance at
December 31, 2000 5,469,667 $547 $1,377,715 $(1,001,838) $(383,971) $(7,547)
Cancellation of shares
issued for license
agreement in 1997 (550,000) (55) (206,195) 0 0 (206,250)
Net income 195,402 0 195,402
Other comprehensive loss (13,449) (13,449)
------------------------------------------------------------------------------------------------
Balance at
December 31, 2001 4,919,667 $492 $1,171,520 $(806,436) $(397,420) $(31,844)
================================================================================================
The Accompanying Notes are an Integral Part of the Financial Statements
-6-
ADVEN, INC.
STATEMENTS OF CASH FLOWS
------------------------
For the Years Ended December 31, 2001, and 2000
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net income (loss) $195,402 $(14,005)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation expense 765 478
Gain on cancellation of stock (206,250) 0
Increase (decrease) in accounts payable (4,781) 2,314
(Increase) decrease in prepaid legal fees (211) 923
(Increase) decrease in deferred tax asset 61,684 (73,876)
Increase (decrease) in valuation allowance (61,684) 73,876
Increase in accrued interest 2,069 1,725
---------- ----------
Net cash used in operating activities (195,090) (8,565)
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
------------------------------------
Purchase of fixed assets 0 (2,390)
---------- ----------
Net cash used in investing activities 0 (2,390)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds from shareholder advance 3,819 20,000
---------- ----------
Net cash provided by financing activities 3,819 20,000
---------- ----------
Net decrease in cash and cash equivalents (9,187) 9,045
Cash and cash equivalents at December 31, 2000, and 1999 9,254 209
---------- ----------
Cash and cash equivalents at December 31, 2001, and 2000 $ 67 $ 9,254
========== ==========
SUPPLEMENTARY INFORMATION
-------------------------
During the years ended December 31, 2001, and 2000, $92 and $101 were paid for
interest, respectively, and no amounts were actually paid for income taxes.
The Accompanying Notes are an Integral Part of the Financial Statements
-7-
ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2001
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------------
The Company was incorporated in the State of Washington in August 1986
as a subchapter C corporation for income tax purposes. The Company has
no operations at this time.
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 the financial statements in conformity with
generally accepted accounting standards 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. The Company had no cash
equivalents as of December 31, 2001.
FIXED ASSETS
------------
Depreciation expense is recorded using an accelerated method of
depreciation.
LOSS PER SHARE
--------------
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share".
Basic loss per share for each period is computed by dividing net loss
by the weighted average number of shares of common stock outstanding
during the period. Diluted loss per share reflects per share amounts
that would have resulted if dilutive common stock equivalents had been
converted to common stock. As of December 31, 2001, the Company had no
dilutive common stock equivalents such as stock options.
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ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2001
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
-----------------------------------------------------------
In 2000 the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements."
Pursuant to SAB No. 101 and the relevant generally accepted accounting
principles, the Company will recognize revenue upon the passage of
title, ownership and the risk of loss to the customer. During the
period ended December 31, 2001, there was no revenue.
NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
In June 2001 the Financial Accounting Standards Board (FASB) issued
SFAS No. 141, "Business Combinations" which requires that the purchase
method of accounting be used for all business combinations initiated
after June 30, 2001, establishes specific criteria for the recognition
of intangible assets separately from goodwill, and requires that
unallocated negative goodwill be written off immediately as an
extraordinary gain instead of being deferred and amortized. The Company
will account for business combinations in accordance with the guidance
in SFAS No. 141.
In June 2001 the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets". This statement establishes accounting and reporting
standards for goodwill and intangibles for years commencing after
December 15, 2001. Whether already acquired or subsequently acquired
after the effective date, companies are required to identify
intangibles with finite lives and those with indefinite lives. Those
intangibles with finite lives are to be amortized over the estimated
useful lives of the assets while those with indefinite lives are not to
be amortized. Goodwill is not to be amortized. Each intangible or
goodwill asset should be analyzed at least annually for impairment
where the carrying value is in excess of the fair value of the
intangibles and in excess of the implied fair value in the case of
goodwill assets. The asset's carrying value is to be reduced by a
charge to income if the fair value is lower than the carrying value. As
of December 31, 2001, the Company has no intangibles or goodwill and
will implement the standard as of that date.
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ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2001
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
-----------------------------------------------------------
In August 2001 the FASB issued SFAS No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets." SFAS No. 144 modifies the
rules for accounting for the impairment or disposal of long-lived
assets. The new rules become effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. Management does
not feel that this standard will materially affect the Company.
2. INVESTMENT
----------
According to SFAS No. 115 "Accounting for Certain Investments in Debt
and Equity Securities," all applicable equity securities should be
classified as either trading or available for sale. The Company
classified the investment in Asconi Corporation, formerly Grand Slam
Treasures, Inc., as available for sale at December 31, 2001. Also
according to SFAS No. 115, available for sale securities are required
to 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
Asconi Corporation investment at December 31, 2001, were $103 and
$397,420, respectively.
3. SUPPLY AND LICENSED MANUFACTURING AGREEMENT
-------------------------------------------
In March 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. During 1998 Adven, Inc., became aware that a company located
in the Isle of Man claimed that it owns the patent on one of the
products and that DIS International, Inc., had no rights to the product
at all.
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.
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ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2001
3. SUPPLY AND LICENSED MANUFACTURING AGREEMENT (CONTINUED)
------------------------------------------------------
In 2001, the Company reached an agreement with DIS International, Inc.,
whereby the agreement was voided and the 550,000 shares of stock that
had been previously held by DIS International, Inc. were cancelled.
4. COMMON STOCK
------------
In December 2001 550,000 shares of common stock that had been
previously held by DIS International, Inc. as part of an agreement were
canceled due to the cancellation of the agreement. This resulted in a
gain on cancellation of shares of $206,250.
5. PROVISIONS 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. A valuation allowance has been provided to reduce the asset to
the amount of tax benefit management believes it will realize. As time
passes, management will be able to better assess the amount of tax
benefit it will realize from using the carryforward. 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:
December 31, 2001
-----------------
Deferred noncurrent tax asset $387,504
Valuation allowance (387,504)
---------
Total provision for income taxes $ -0-
=======
Deferred federal income taxes consist of future tax benefits and
liabilities attributed to:
December 31, 2001
-----------------
Loss carry forward $ 252,381
Loss on available for sale securities 135,123
Valuation allowance (387,504)
---------
Net deferred income tax $ -0-
========
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ADVEN, INC.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 2001
5. PROVISIONS FOR INCOME TAXES (CONTINUED)
--------------------------------------
The net change in the valuation account at December 31, 2001, was
$61,684. The Company has available net operating loss carryforwards
totaling approximately $742,000, which expire in the years 2019 to
2020.
6. RELATED PARTY TRANSACTIONS
--------------------------
The President of Adven, Inc. has advanced the Company funds to pay
expenses. The advance is due upon demand and carries an interest rate
of 8.0% per annum. As of December 31, 2001, the outstanding advance
balance was $28,819 and the related accrued interest was $3,794.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The FASB issued SFAS No. 107, "Disclosure about Fair Value of Financial
Instruments," as part of a continuing process to improve information on
financial statements. 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 and the estimated fair value of the investment in
Asconi Corporation at December 31, 2001, were $103. The estimated fair
value of this investment is based on the quoted market price.
The carrying amounts reported in the balance sheet for the shareholder
advances and the related interest payable at December 31, 2001,
approximate fair values because they mature in less than one year.
-12-