10-K 1 form10-k_11154.txt ADVEN, INC. FORM 10-K DATED DECEMBER 31, 2001 ================================================================================ 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. ================================================================================ 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 ----------------------------------------------------------------------------------------------------- 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. -8- 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. -9- 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. -10- 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- ======== -11- 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-