SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended January 31, 2004
Commission File Number: 0-31539
COVENTURE INTERNATIONAL INC.
(Exact name of small business issuer as specified in its charter)
Delaware 98-0231607
--------------------- -------------
(Jurisdiction of Incorporation) (I.R.S. Employer
Identification No.)
404 First Street West, Unit 3
Cochrane, Alberta, Canada T4C 1A5
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (403) 851-2600
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.) Yes
[x ] No [ ]
As of March 15, 2004 the Company had 7,022,200 shares of common stock issued and
outstanding.
Coventure International Inc.
(formerly Liquidpure Corp.)
(a development stage enterprise)
Consolidated Financial Statements
January 31, 2003 and January 31, 2002
(Unaudited)
Coventure International Inc.
(a development stage enterprise)
Consolidated Balance Sheets
(expressed in U.S. dollars)
ASSETS
January 31, July 31,
2004 2003
----------------------------------
(Unaudited)
CURRENT
Cash $ 53 $ 4,992
Accounts receivable 30,529 -
Prepaid expenses and deposits 1,641 824
-----------------------------------
32,223 5,816
----------------------------------
PROPERTY, PLANT AND EQUIPMENT, at cost (Note 2)
Furniture and equipment 15,729 583
Leasehold improvements 6,186 -
-----------------------------------
21,915 583
Less: accumulated depreciation 1,753 218
-----------------------------------
20,162 365
----------------------------------
$ 52,385 $ 6,181
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 24,452 $ 14,238
Advances from stockholder (Note 4) 10,000 10,000
Deferred revenue 59,419 -
Current portion of loan payable to
stockholder (Note 4) 1,314 -
---------------------------------
95,185 24,238
LOAN PAYABLE TO STOCKHOLDER (Note 4) 24,905 -
---------------------------------
120,090 24,238
--------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Share capital (Note 3) Common stock -
$0.0001 par value 30,000,000 authorized;
7,022,200 issued and outstanding
(July 31, 2003 - 6,974,200) 702 697
Preferred stock - $0.0001 par value
5,000,000 authorized
Additional paid-in capital 139,280 127,285
Deficit accumulated in the development stage (207,687) (146,039)
------------------------------
(67,705) (18,057)
------------------------------
$ 52,385 $ 6,181
===================================
COMMITMENTS (Note 6)
The accompanying notes are an integral part of these financial
statements.
Coventure International Inc.
(a development stage enterprise)
Consolidated Statements of Operations
For the Three-Month and Six-Month Periods Ended
January 31, 2004 and January 31, 2003
(Unaudited)
(expressed in U.S. dollars)
Period From Period From
March 31, March 31,
Three Three Six Six 1999 1999
Months Months Months Months (date of (date of
Ended Ended Ended Ended incorporation incorporation)
January 31, January 31, January 31, January 31, to January 31, to January 31,
2004 2003 2004 2003 2004 2003
--------------------------------------------------------------------------------------
Revenue $ 22,829 $ 3,971 $ 32,416 $ 3,971 $ 49,882 $ 6,649
------------------------------------------------------------------------------------
Expenses
Professional fees 5,750 36,674 12,750 37,483 93,396 67,535
Management fees 18,476 1,190 31,391 1,190 55,101 22,695
Administration 14,413 2,319 21,138 2,754 47,018 21,112
Consulting fees - 4,500 - 9,000 18,850 23,350
Advertising and
promotion 7,538 272 11,585 272 17,227 5,336
Sub-contract 8,231 1,595 9,575 1,595 16,902 1,595
Commissions 3,149 - 6,090 - 6,090 -
Write-off of impaired
Asset - - - - 1,000 1,000
Bad debts - - - - 244 -
Gain on sale of
equipment - - - (49) (49) (49)
Depreciation 1,180 36 1,535 73 1,790 182
------------------------------------------------------------------------------------
58,737 46,586 94,064 52,318 257,569 142,756
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Loss from Operations $ (35,908) $ (42,615) $ (61,648) $(48,347) $(207,687) $ (136,107)
=====================================================================================
Loss per Share-
Basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01)
==================================================
The accompanying notes are an integral part of these financial statements.
Coventure International Inc.
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Six-Month Periods Ended
January 31, 2004 and January 31, 2003
(Unaudited)
(expressed in U.S. dollars)
Period From Period From
March 31, March 31,
Six Six 1999 1999
Months Months (date of (date of
Ended Ended incorporation) incorporation)
January 31, January 31, to January 31, to January 31,
2004 2003 2004 2003
--------------------------------------------------------------------
Cash flows used in operating activities
Net loss for the period $ (61,648) $ (48,347) $ (207,687) $ (136,107)
Adjustments to reconcile net loss to
net cash
used in operating activities
Depreciation 1,535 73 1,790 182
Write-off of impaired asset - - 1,000 1,000
Gain on sale of equipment - (49) (49) (49)
Changes in operating assets and
liabilities
Accounts receivable (30,529) (893) (30,529) (2,152)
Prepaid expenses and deposits (817) - (1,641) -
Accounts payable 10,214 41,898 24,452 57,933
Deferred revenue 59,419 - 59,419 -
Customer deposits - 657 - 657
------------------------------------------------------------
Net cash used in operating activities (21,826) (6,661) (153,245) (78,536)
------------------------------------------------------------
Investing activities
Proceeds on sale of equipment - 304 304 304
Purchase of license - - (1,000) (1,000)
Purchase of property, plant and
equipment (21,332) - (22,207) (875)
-------------------------------------------------------------
Net cash provided by (used in) (21,332) 304 (22,903) (1,571)
-------------------------------------------------------------
Financing activities
Increase in loan payable to 26,219 - 26,219 -
stockholder
Increase in note payable - 6,681 - 6,681
Advances from stockholder - - 10,000 10,000
Issuance of share capital 12,000 - 139,982 63,982
-------------------------------------------------------------
Net cash provided by financing
activities 38,21 96,681 176,201 80,663
-------------------------------------------------------------
Increase in cash during the period (4,939) 324 53 556
Cash at beginning of period 4,992 232 - -
------------------------------------------------------------
Cash at end of period $ 53 $ 556 $ 53 $ 556
============================================================
The accompanying notes are an integral part of these financial statements.
Coventure International Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
January 31, 2004
(Unaudited)
(expressed in U.S. dollars)
1. FORMATION AND BUSINESS OF THE COMPANY
Coventure International Inc. (the "Company") was incorporated in Delaware,
U.S.A. on March 31, 1999 as Bullet Environmental Systems, Inc. and changed
its name on May 25, 2000 to Liquidpure Corp. On February 14, 2002, the
Company changed its name to Coventure International Inc.
The Company is a development stage enterprise engaged in the business of
providing management consulting products and services through an eventual
network of regionally licensed operators in North America. The Company's
services include accounting, tax, planning and consulting.
These financial statements include the accounts of the Company and its
wholly-owned subsidiary Coventure Canada Inc. (the "Subsidiary"). The
Subsidiary was incorporated in the Province of Alberta, Canada on February 5,
2002.
Going concern
The accompanying financial statements have been presented assuming the
Company will continue as a going concern. At January 31, 2004, the Company
had accumulated $207,687 in losses and had no material revenue producing
operations. At present, the Company's ability to continue as a going concern
is dependent upon its ability to raise additional capital, achieve profitable
operations or merge with a revenue-producing venture partner.
2. SIGNIFICANT ACCOUNTING POLICIES
General Information
The accompanying unaudited interim financial statements have been prepared
in accordance with generally accepted accounting principles in the United
States and Form 10-QSB requirements. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles financial statements. In the opinion of management, the
accompanying interim financial statements contain all the adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the Company's financial position as of January 31, 2004 and its results of
operations and its cash flows for the six-month period ended January 31,
2004. The results of operations for the interim period are not necessarily
indicative of the results to be expected for the fiscal year. For further
information, refer to the Company's financial statements and related
footnotes for the year ended July 31, 2003.
Coventure International Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
January 31, 2004
(Unaudited)
(expressed in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Revenue Recognition
The Company recognizes revenue in accordance with applicable accounting
regulations. Accordingly, revenues from services are recognized when all
significant contractual obligations have been satisfied and collection is
reasonably assured.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates.
Income taxes
The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
difference between financial statement and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance in respect of
amounts considered by management to be less likely than not of realization in
future periods.
Foreign currency translation
Unless otherwise stated, all amounts are in United States dollars. The
functional currency of the Company and its Subsidiary is the Canadian dollar.
Hence, all asset and liability amounts denominated in Canadian dollars have
been translated using the exchange rate as at January 31, 2004 and all
expenses have been translated using the average exchange rate for each month.
The rates used were as follows:
(equivalent Cdn $ per U.S. $)
January 31 rate .7548
Depreciation
Depreciation of property, plant and equipment is provided for on the
straight-line basis over the estimated useful life of the assets at the
following rates:
Furniture and equipment 25%
Leasehold improvements 33%
One-half the normal rate is taken in the year of acquisition.
Coventure International Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
January 31, 2004
(Unaudited)
(expressed in U.S. dollars)
3. SHARE CAPITAL
Holders of the common stock are entitled to one vote per share and share equally
in any dividends declared and distributions on liquidation.
During the six-month period ended January 31, 2004, the Company issued 48,000
shares of common stock at a price of $0.25 per share.
4. RELATED PARTY TRANSACTIONS
a) The advances from a stockholder are interest-free and repayable on demand.
b) During the six-month period ended January 31, 2004, the Company paid
management fees of $1,190 (2003 - $1,190) to a director and officer of the
Company. In addition, management fees of $4,414 (2003 - $ 0) have been paid
to the spouse of this director and officer. These transactions have been
recorded at the exchange amount. Accounts payable include $3,041 (2003
-$3543) due to the same director and officer.
c) Details of the loan payable to stockholder are as follows:
January 31, July 31,
2004 2003
Interest at 14.75%, unsecured monthly
payments of $415 including principal
and interest, remaining unpaid balance
due November 24, 2008 $ 26,219 $ -
Less: current portion 1,314 -
---------------------------------
$ 24,905 $ -
==================================
Principal payments over the next 5 calendar years are expected to be as
follows:
2005 $ 1,314
2006 1,516
2007 1,748
2008 2,015
2009 19,626
-----------
$ 26,219
Coventure International Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
January 31, 2004
(Unaudited)
(expressed in U.S. dollars)
5. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, loan payable to stockholder and advances from stockholder.
It is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.
The fair value of these financial instruments approximate their carrying
values.
6. COMMITMENTS
The Company entered into an operating lease for office premises. The lease
calls for monthly payments of $886 starting September 1, 2003 until August
31, 2006. In addition, the Company is responsible for its proportionate share
of operating costs, currently at $235 per month.
Item 2. Management's Discussion and Analysis or Plan of Operations
In the fall of 2003 we began providing accounting, tax and business consulting
services to small and medium sized businesses in-and-around the Calgary, Alberta
region. It is the intent of our management to leverage the experience from this
regional office to template offices throughout Canada through a network of
regionally licensed operators. The consulting services will be designed to
improve a client's profitability through strategic analysis, planning,
consulting and ongoing evaluation. Our core services will attempt to identify
inefficiencies and trouble spots in a business before they cause significant
problems.
We commenced significant operational activities as of September 1, 2003. A
regional office was opened in Cochrane, Alberta, a community west of Calgary, on
October 1, 2003. Administrative and inside support staff were hired at that
time. Currently two full-times sales people are supported by two inside
appointment setters. Client servicing is done by John Hromyk, President and
Carla Cochran, CGA.
During the six months ended January 31, 2004 our operations used $21,826 in cash
and we spent $21,332 on office equipment and leasehold improvements. Operating
capital was provided from the sale of our common stock, which was registered by
means of SB-2 registration statement, a loan from John Hromyk and cash on hand
at July 31, 2003.
On March 17, 2004 the over-the-counter Bulletin Board operated by NASDR, Inc.
began quotation of our common stock under the symbol "CVNI".
We are targeting between $150,000 and $300,000 CDN in revenue by the end of the
2004 fiscal year provided that we are able to raise $100,000 in capital. Of this
amount, $50,000 will be used to hire and train the analysts and consultants
which will provide these services to future clients and $50,000 will be used to
market our products, services, and licensing program. We do not know when we
will obtain the $100,000 in capital. Our initial focus will be on the
development of the Canadian market. However, we will not be able to grow without
raising these funds.
As of March 1, 2004, we had established 32 accounts. These clients are small and
medium sized businesses that have selected one of our standard programs that
incorporate tax and business advisory services for a one-year initial period.
Client response has been strong and we have implemented numerous refinements to
its programs from its experience with its clients. As a result of the foregoing,
our revenue for the six month period ended January 31, 2004 has increased to
$32,416 from $3,971 for the six month period ended January 31, 2003. However,
the increased revenue has been matched by increased expenses ($61,648 for the
six month period ended January 31, 2004 as compared to $48,347 for the six month
period ended January 31, 2003) and as a result our net loss for the six month
period ended January 31, 2004 has increased to $61,628 from $48,347 in the
previous period. In addition, our loss from inception is now $136,107.
As a result of the foregoing, while we expect that our core business will
achieve profitability in the next twelve months, we expect that, after paying
the legal, accounting and other regulatory costs associated with maintaining the
currency of our filing with the Securities and Exchange Commission, we will
continue to operate at a loss. In order to address the foregoing, our management
will attempt to raise additional capital in excess of the $100,000 referred to
above in order to accelerate the expansion of our business. However, there is no
guarantee that our management will be successful in this regard. In the event
that our management fails to raise additional capital, we will be forced to seek
to merge with or acquire a revenue producing venture partner seeking the
benefits of being publicly traded or suspend our filing obligations with the
Securities and Exchange Commission, which will result in our common stock being
delisted from the over-the-counter Bulletin Board.
This report contains certain forward-looking statements. We wish to advise
readers that actual results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from those expressed in or
implied by the statements, including, but not limited to ability of us to meet
our cash and working capital needs, our ability to maintain its existence as a
viable entity, and other risks detailed in the Company's periodic report filings
with the Securities and Exchange Commission.
Item 3. Controls And Procedures
Based on the evaluation of our disclosure controls and procedures by John
Hromyk, our President and Principal Financial Officer, as of a date within 90
days of the filing date of this quarterly report, such officer has concluded
that our disclosure controls and procedures are effective in ensuring that
information required to be disclosed by us in the reports that it files or
submits under the Securities and Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported, within the time period specified by the
Securities and Exchange Commission's rules and forms.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Exhibit
31 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
(b) Reports on Form 8-K - None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on March 19, 2004.
COVENTURE INTERNATIONAL INC.
By: /s/ John Hromyk
------------------------------------
John Hromyk, President, Principal
Financial Officer and Principal Accounting
Officer