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 October 31, 2003
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
-----------------------------------------
(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 December 13, 2003 the Company had 7,022,200 shares of common stock issued
and outstanding.
Coventure International Inc.
(a development stage enterprise)
Consolidated Financial Statements
October 31, 2003
(Unaudited)
Coventure International Inc.
(a development stage enterprise)
Consolidated Balance Sheets
(expressed in U.S. dollars)
ASSETS
October 31, July 31,
2003 2003
----------------------------------
(Unaudited)
CURRENT
Cash $ 1,833 $ 4,992
Accounts receivable 19,314 -
Prepaid expenses and deposits 1,649 824
-----------------------------------
22,796 5,816
----------------------------------
PROPERTY, PLANT AND EQUIPMENT, at cost (Note 2)
Furniture and equipment 2,529 583
Leasehold improvements 6,186 -
-----------------------------------
8,715 583
Less: accumulated depreciation 573 218
------------------------------------
8,142 365
-----------------------------------
$ 30,938 $ 6,181
=================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 22,013 $ 14,238
Advances from stockholder (Note 4) 10,000 10,000
Deferred revenue 30,722 -
---------------------------------
62,735 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 (171,779) (146,039)
------------------------------
(31,797) (18,057)
---------------------------------
$ 30,938 $ 6,181
=================================
COMMITMENTS (Note 6)
The accompanying notes are an integral part of these consolidated financial
statements.
Coventure International Inc.
(a development stage enterprise)
Consolidated Statements of Operations
For the Three-Month Periods Ended
October 31, 2003 and October 31, 2002
(Unaudited)
(expressed in U.S. dollars)
Three Three
Months Months Period from Period from
Ended Ended March 31, March 31, 1999
October 31, October 31, 1999 (date of (date of
2003 2002 incorporation) incorporation)
To October 31, to October 31,
2003 2002
--------------------------------------------------------------
Revenue $ 9,587 $ - $ 27,053 $ 2,678
--------------------------------------------------------------
Expenses
Professional fees 7,000 809 87,646 30,861
Management fees 12,915 - 36,625 21,505
Administration 6,725 435 32,605 18,793
Consulting fees - 4,500 18,850 18,850
Advertising and promotion 4,047 - 9,689 5,064
Sub-contract 1,344 - 8,671 -
Commissions 2,941 - 2,941 -
Write-off of impaired - - 1,000 1,000
asset
Bad debts - - 244 -
Gain on sale of equipment - (49) (49) (49)
Depreciation 355 37 610 146
------------------------------------------------------------
35,327 5,732 198,832 96,170
------------------------------------------------------------
Loss from operations $ (25,740) $ (5,732) $(171,779) $ (93,492)
============================================================
Loss per Share Basic
and diluted $ (0.00) $ (0.00)
========================
The accompanying notes are an integral part of these consolidated financial
statements.
Coventure International Inc.
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Three-Month Periods Ended
October 31, 2003 and October 31, 2002
(Unaudited)
(expressed in U.S. dollars)
Three Three
Months Months Period from Period from
Ended Ended March 31, March 31, 1999
October 31, October 31, 1999 (date of (date of
2003 2002 incorporation) incorporation)
To October 31, to October 31,
2003 2002
--------------------------------------------------------------
Cash flows used in operating
activities
Net loss for the period $(25,740) $ (5,732) $(171,779) $ (93,492)
Adjustments to reconcile net
loss to net cash used in
operating activities
Depreciation 355 37 610 146
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 (19,314) (594) (19,314) (1,853)
Prepaid expenses and deposits (825) - (1,649) -
Accounts payable 7,775 5,913 22,013 21,948
Deferred revenue 30,722 - 30,722 -
-------------------------------------------------------
Net cash used in operating
activities (7,027) (425) (138,446) (72,300)
--------------------------------------------------------
Investing activities
Purchase of property, plant and (8,132) - (9,007) (875)
equipment
Purchase of license - - (1,000) (1,000)
Proceeds on sale of equipment - 304 304 304
-----------------------------------------------------
Net cash provided by (used in)
investing activities (8,132) 304 (9,703) (1,571)
--------------------------------------------------------
Financing activities
Advances from stockholder - - 10,000 10,000
Issuance of share capital 12,000 - 139,982 63,982
-------------------------------------------------
Net cash provided by financing
activities 12,000 - 149,982 73,982
-----------------------------------------------------
Increase (decrease) in cash
during the period (3,159) (121) 1,833 111
Cash at beginning of period 4,992 232 - -
------------------------------------------------------
Cash at end of period $ 1,833 $ 111 $ 1,833 $ 111
=========================================================
The accompanying notes are an integral part of these consolidated financial
statements.
Coventure International Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements
October 31, 2003
(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 October 31, 2003, the Company
had accumulated $171,779 in losses and had no material revenue producing
operations. At the date of this report, 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 October 31, 2003 and its results of
operations and its cash flows for the three-month period ended October 31,
2003. 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
October 31, 2003
(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 October 31, 2003 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. $)
October 31 rate .7583
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
October 31, 2003
(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 quarter ended October 31, 2003, the Company issued 48,000 shares
of common stock at a price of $0.25 per share.
4. RELATED PARTY TRANSACTIONS
a) During the period, the Company paid management fees of $12,434 (2002 - $0)
to a director and officer of the Company. These transactions have been
recorded using the exchange amount. Accounts payable include $11,692 (July
31, 2003 - $1,987) due to the same officer and director.
b) The advances from a stockholder are interest-free and repayable on demand.
5. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments consist of cash, accounts receivable,
accounts payable 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 $890 starting September 1, 2003 until August
31, 2006. In addition, the Company is responsible for its proportionate share
of operating costs, currently at $232 per month.
Item 2. Management's Discussion and Analysis or Plan of Operations
In the fall of 2003 the Company 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 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. The Company's core services will
attempt to identify inefficiencies and trouble spots in a business before they
cause significant problems.
As of December 1, 2003, the Company has established 15 accounts. These clients
are small and medium sized businesses that have selected one of the Company's
standard programs that incorporate tax and business advisory services for a
one-year initial period. Client response has been strong and the Company has
implemented numerous refinements to its programs from its experience with its
clients.
The Company 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. Cash flow deficiencies are being covered through shareholder
loans from John Hromyk.
The Company is targeting between $500,000 and $750,000 CDN in revenue by the end
of the 2004 fiscal year. The Company will be able to expand its consulting
services once it raises $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 the Company's
products, services, and licensing program. The Company does not know when it
will obtain the $100,000 in capital. The Company's initial focus will be on the
development of the Canadian market.
During the three months ended October 31, 2003 the Company's operations used
($7,027) in cash and the Company spent $8,132 on office equipment and leasehold
improvements. Operating capital was provided from the sale of the Company's
common stock which was registered by means of SB-2 registration statement.
This report contains certain forward-looking statements. The Company wishes 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 the Company to meet its cash and working capital needs, the ability of the
Company 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 the Company's disclosure controls and procedures by
John Hromyk, the Company's 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 the Company's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by the Company
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 the Company's 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 December 12, 2003.
COVENTURE INTERNATIONAL INC.
By: /s/ John Hromyk
------------------------------------
John Hromyk, President, Principal
Financial Officer and Principal
Accounting Officer