SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For The Quarterly Period Ended December 31, 2003 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT Commission File Number 33-2775-A TECHNICAL VENTURES INC. [ ] Accelerated Filer [X] Is Not an Accelerated Filer ______________________________________________________________________________ (Exact Name of Small Business Issuer As Specified In Its Charter) New York 13-3296819 ______________________________________________________________________________ (State Or Other Jurisdiction Of (I.R.S. Employer Incorporation Of Organization) Identification No.) 3411 McNicoll Avenue, Unit 11, Scarborough, Ontario, Canada M1V 2V6 ______________________________________________________________________________ (Address of Principal Executive Offices, Zip Code) Issuer's Telephone Number, Including Area Code (416) 299-9280 ______________________________________________________________________________ (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) Indicate by a check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding for each of the issuer's classes of common stock, as of February 2, 2004. 41,952,606 Shares Of Common Stock, $.01 Par Value ______________________________________________________________________________ Page 1 of 16 Pages Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 CONSOLIDATED BALANCE SHEETS[ Notes 1 and 2 ] [Not Audited] ASSETS December 31,2003 June 30,2003 CURRENT ASSETS Cash $ 338 $23,417 Accounts Receivable 128,216 110,761 Inventory [Note 3] 64,885 67,010 TOTAL CURRENT ASSETS $193,439 $201,188 OTHER ASSETS Deposits 15,187 15,421 PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation of $714,845 at Dec. 31,2003 and $656,917 at June 30, 2003 300,292 313,169 TOTAL ASSETS $508,918 $529,778 Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 [Not Audited] CONSOLIDATED BALANCE SHEETS [Notes 1 and 2] LIABILITIES December 31,2003 June 30,2003 CURRENT LIABILITIES Accounts Payable And Accrued Expenses $767,523 $681,186 Current Portion of Notes Payable 90,000 90,000 (Note 4) Capital Lease Obligations (Note 4) 87,205 83,904 Loans From Private Lenders 145,018 67,211 Current Portion of Loan From Stockholders, Unsecured, Interest Free 146,929 149,374 Total Current Liabilities 1,236,675 1,071,675 LONG-TERM LIABILITIES, net of current portion Notes Payable 103,541 41,969 Shareholders 184,741 191,124 Other 30,410 29,259 318,692 262,352 STOCKHOLDERS' DEFICIENCY Common stock $.01 par value, 50,000,000 shares authorized (Note 6): Issued and outstanding, 41,952,606 at Dec. 31, 2003 and 41,236,106 at June 30, 2003 $419,526 $412,361 Additional Paid in Capital (Note 6): 6,555,248 6,504,456 ACCUMULATED OTHER COMPREHENSIVE INCOME 267,296 289,767 Deficit (8,288,519) (8,010,833) Total Stockholders' Deficiency (1,046,449) (804,249) $508,918 $529,778 See Notes To Condensed Consolidated Financial Statements (2) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (NOT AUDITED) Six Months Ended Six Months Ended Dec. 31, 2003 Dec. 31, 2002 SALES $451,550 $397,616 COST OF SALES 467,693 391,456 GROSS MARGIN (16,143) 6,160 EXPENSES Administration 95,009 103,646 Interest and Other 63,044 32,145 Research & Development 56,619 50,395 Selling 46,871 33,760 261,543 219,946 LOSS BEFORE UNDER NOTED ITEMS ($277,686) ($213,786) Recovery of Realty Taxes - 2,521 NET LOSS ($277,686) ($211,265) BASIC LOSS PER COMMON SHARE ($0.00) ($0.00) FULLY DILUTED LOSS PER COMMON SHARE ($0.00) ($0.00) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING FOR THE PERIOD 41,536,424 35,797,880 See Notes To Condensed Consolidated Financial Statements (3) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (NOT AUDITED) Three Months Ended Three Months Ended Dec. 31, 2003 Dec. 31, 2002 SALES $239,782 $147,342 COST OF SALES 240,782 162,217 GROSS MARGIN (1,763) (14,875) EXPENSES Administration 41,567 57,994 Interest and Other 31,642 17,948 Research & Development 26,731 25,678 Selling 20,988 11,391 120,928 115,011 LOSS BEFORE UNDER NOTED ITEMS ($122,691) ($129,886) NET LOSS ($277,686) ($129,886) BASIC LOSS PER COMMON SHARE $0.00 $0.00 FULLY DILUTED LOSS PER COMMON SHARE $0.00 $0.00 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING FOR THE PERIOD 41,813,916 36,125,054 See Notes To Condensed Consolidated Financial Statements (4) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (Amounts Expressed In US Dollars) NOT AUDITED Common Stock Additional Cumulativ Issued and Outstanding Paid In Translati Shares Amount Capital Deficit Adjustmen $ $ $ $ Balance June 30, 2002 34,595,706 345,957 5,874,320 (7,417,920) 344,128 Subscription Received 150,000 Common Shares Issued 1,600,000 16,000 144,000 NET LOSS (211,264) Cumulative Translation Adjustment (9,233) Balance, December 31, 2002 36,195,706 361,597 6,168,320 (7,629,184) 353,351 Balance June 30, 2003 41,236,106 412,361 6,504,456 (8,010,833) 289,767 Common Shares Issued (Note 6) 716,500 7,165 50,792 NET LOSS (277,686) Cumulative Translation Adjustment (22,471) Balance, December 31, 2003 41,952,606 419,526 6,555,248 ` (8,288,519) 267,296 See Notes To Consolidated Financial Statements (5) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 CONSOLIDATED STATEMENT OF CASH FLOWS (Amount Expressed In US Dollars) Not Audited Six Month Period Six Month Period Ended Ended Dec. 31, 2003 Dec. 31, 2002 CASH FLOW FROM OPERATING ACTIVITIES Net Loss ($277,688) ($211,265) Adjustment to reconcile net loss used by operating activities Depreciation and amortization 25,198 25,701 Stock Issued for Services Performed 16,000 - (Increase) Decrease In Accounts Receivable (13,097) 47,409 (Increase) Decrease In Prepaid Expenses 841 3,630 (Increase) Decrease In Inventory 4,762 13,737 Increase (Decrease) In Accounts Payable And Accrued Expense 59,535 23,470 (184,449) (97,318) CASH FLOW FROM INVESTING ACTIVITIES (Increase) Decrease In Deposits - (143) (Increase) Decrease In Advances to Stockholders - (63) Acquisition of Equipment & Property - (207,202) - (207,408) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of note payable to Cooper Financial - (10,225) Proceeds from Private Lenders 61,572 (23,399) Proceeds from (repayments of) Stockholders' Loans 54,903 29,695 Proceeds from Issue of Stock 41,957 309,999 158,432 306,070 EFFECT OF EXCHANGE RATE ON CASH 2,938 (16,207) NET INCREASE (DECREASE) IN CASH BALANCE FOR THE PERIOD (23,079) (14,863) Cash Balance, beginning of period 23,417 32,663 Cash Balance, end of period $338 $17,800 PAYMENTS MADE DURING THE PERIOD FOR INTEREST $9,177 $11,359 See Notes To Condensed Consolidated Financial Statements (6) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : a) The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the six months ended December 31,2003 are not necessarily indicative of the results that may be expected for the year ended June 30, 2004. For further information refer to the financial statements and footnotes thereto included in the annual report on form 10-KSB for the year ended June 30, 2003. b) Principals Of Consolidation The consolidated financial statements include the accounts of Technical Ventures Inc. ("TVI") and its majority-owned subsidiaries, Mortile Industries Ltd., ("Mortile"), Fam Tile Restoration Services Ltd. and MPI Perlite Ltd. All material intercompany transactions and balances have been eliminated. c) Foreign Currency Translation: Mortile maintains its books and records in Canadian dollars. Foreign currency transactions are reflected using the temporal method. The translation of the financial statements of the subsidiary from Canadian dollars into United States dollars is performed for the convenience of the reader. Balance sheet accounts are translated using closing exchange rates in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during each reporting period. No representation is made that the Canadian dollar amounts could have been or could be realized at the conversion rates. Adjustments resulting from the translation are included in the accumulated comprehensive income in stockholders' deficiency. d) Fair Value Presentation: There are financial instruments, none of which are held for trading purposes. Estimates that the fair value of all financial instruments at December 31, 2003, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. Considerable judgement is necessarily required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that could realize in a current market exchange. (7) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 NOTE 1: (cont'd) e) Net Income (Loss) Per Share: Basic net income (loss) per share is computed based on the average number of common shares outstanding during the period. Fully diluted net income (loss) per share reflects the potential dilution that could occur if securities, or other contracts to issue common stock, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in any income . Such securities or contracts are not considered in the calculation of diluted income per share if the effect of their exercise or conversion would be antidilutive. f) Stock Based Compensation: In December 1995, SFAS No. 123, Accounting for Stock-Based Compensation, was issued. It introduced the use of a fair value-based method of accounting for stock-based compensation. It encourages, but does not require, companies to recognize compensation expense for stock-based compensation to employees based on the new fair value accounting rules. Companies that choose not to adopt the new rules will continue to apply the existing accounting rules contained in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. However, SFAS No. 123 requires companies that choose not to adopt the new fair value accounting rules to disclose pro forma net income and earnings per share under the new method. SFAS No. 123 is effective for financial statements for fiscal years beginning after December 15, 1995. The disclosure provisions of SFAS No. 123 has been adopted. NOTE 2: GOING CONCERN Significant operating losses have been sustained since inception and there is substantial doubt as to the ability to continue as a going concern. Continued existence is dependent upon the ability to generate sufficient cash flow to meet obligations on a timely basis. As a result there is need of additional financing. No adjustment has been made to the value of assets in consideration of the financial condition. NOTE 3: INVENTORY: Inventory is comprised of the following: December 31, June 30, 2003 2003 Raw Materials $64,885 $67,010 (8) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 NOTE 4: LONG TERM DEBT: The interest accrued on the Convertible Debenture was converted to a promissory note of $179,585. This note is payable monthly at the amount of $7,500, including interest at the rate of 5% per annum. At Dec. 31, 2003 the company was not current with the obligation, however, the creditor has not called the obligation. At December 31, 2003 a lease payable to FBX Holdings, in the amount of $155,846 including principal and interest is in default. The creditor has not called the obligation, however payment is due on demand and as such the balance is reflected on the December 31,2003 balance sheet as a current liability. NOTE 5: CONTINGENT LIABILITY AND RELATED COSTS: Contingent liability under a breach of secrecy agreements, fiduciary duty and misuse of confidential information lawsuit. Company's attorneys are of the opinion that it's defences are meritorious and the lawsuit will result in no material losses. Accordingly, no provision is included in the accounts for possible related losses. However,legal and any other related costs incurred, are reflected for any contingencies, as a charge to operations for the year in which the expenditures are determined. NOTE 6: COMMON SHARES The shares issuance's for the three months ended December 31, 2003 are summarized as follows: Nature Of Payments Number of Paid Up Additional Issue Shares Capital Paid Expense Proceeds Expense In Capital For Services Rendered and Pursuant to S8 Registration 200,000 2,000 14,000 - - 14,000 Private Place- ment Restricted Stock 516,500 5,165 36,793 41,958 TOTALS 716,500 7,165 50,793 - 41,958 14,000 (9) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31,2003 The share issuance's for the six months ended December 31, 2002 are summarized as follows: Nature Of Payments Number of Paid Up Additional Issue Shares Capital Paid Expense Proceeds Expense In Capital For Cash Consideration From Private Investors 1,600,000 16,000 144,000 - 160,000 - TOTALS 1,600,000 16,000 144,000 - 160,000 - NOTE 7: MAJOR CUSTOMERS Five customers accounted for 88 % of consolidated net revenues for the first six month period of fiscal 2004, ending December 31,2003. In the corresponding period of fiscal 2003, 78 % of consolidated revenues were accounted for by five customers. The loss of one or more of these customers would have a detrimental effect on operating results. (10) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 PART 1 - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS Liquidity and Capital Resources: During the first six months of fiscal 2004 the company incurred an operating loss of ($277,686), on net sales revenues of $451,550. Operations were funded by, accounts receivable, equity capital, debt financing and increases in accounts payable. At December 31, 2003 accounts receivable due are $128,216.11. At December 31, 2003 there was a back log of orders totaling $80,028 . Additionally, 50,000 options were outstanding as of December 31, 2003, with an aggregate strike price value of US $25,000, should they be exercised. However, there can be no assurance of this. The accrued and outstanding interest due a former debenture holder has been established as a note payable, bearing 5% per annum interest, with an outstanding balance of $193,541 at December 31, 2003 . Monthly payments have been deferred by the debtor/stockholder of the company. A lease payable to FBX Holdings and which has been in default since 1994, continues to be reflected on the December 31, 2003 balance sheet as a current liability. The creditor appreciates the circumstance of the corporation and has not called the obligation, however, payment is due on demand. Reference should also be made to Financial Note 4 in regard of this matter. Continued existence is dependent upon the ability to generate sufficient cash flow to meet obligations on a timely basis; please reference Financial Note 2, "Going Concern". It is anticipated that cash flows from operations in the immediate future will be minimally sufficient to meet requirements, however, there can be no assurance of this and in order that current operations, development and growth be sustained, there is therefore the need of additional financing. TVI will continue to assess and investigate all avenues in respect of it's financial requirements. If it is deemed to be in the best interest of the Company and its stockholders, serious consideration will be given to raising additional funds through private or public issuance's in the future. Significant property and equipment purchases and/or expansion of facilities will only be considered if demand for company products warrant such expansion and the financing of such expansion would not adversely effect the Company's financial condition. (11) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 Results of Operations: Net sales revenues for the first six months of fiscal 2004 increased 13.5 % when compared to those for the corresponding period of the previous year. The increase taking place in both custom compounding and proprietary products. For the quarter ending December 31, 2003, revenues increased 62 % when comparted to those for the corresponding period of the previous year. Comparative gross margins, as a percent of revenue, decreased (5%) from 2 % for the six month comparative period. This decline continued in the quarter ending December 31, 2003. The decline is primarily based on maintaining and sustaining the highly experienced manufacturing work-force. Administrative expenses decreased 8.3 %, when compared to those for the corresponding six month period of the previous year as legal expense in the previous year were higher. Similarly the fiscal quarter ending December 31, 2003 experiencced a (30.7 %) decrease in administrative expense when compared to the previous year. Please note Part II, Item I. . Financial expenses increased dramatically when compared to those for the corresponding six month period of the previous year as increased debt interest and penalties associated with payables were expensed; as well in the 2nd quarter of fiscal 2004. R&D expenses increased 12 % when compared to those for the corresponding period of the previous year as development of proprietary products continued and expanded. Selling expenses increased 39 % when compared to previous year as resources were directed to marketing of proprietary foaming products, particularly in Europe. At December 31, 2003 there was a back log of orders totaling $80,028. TVI's proprietary foaming products are for the plastics and rubber industry, and are a processing aid, providing significant cost reductions by reducing the amount of plastic consumed, but also provides many other advantages to the industry, such as improved surface finishes, physical properties and sink mark elimination, lower part weight and shorter cycle times. Morfoam is a concentrate encapsulated in an olefin binder, presented in pellet form to be easily blended or metered into the users formulations. The product improves cell structure and reduces voids when nitrogen is used as the primary foaming agent. During fiscal 2002 the company finished developing it's HSF type foaming compound. HSF is a cross-link able - expandable plastic compound made for direct injection processes. During a 'direct inject' process, a granular, expandable compound is being transformed with a specialized injection molding machine into a finished foamed part, which combines several features, such as fine and closed cell structure, soft skin, profiled and color surface, flexibility, buoyancy and light weight. HSF is based on ethylene and propylene (co)polymers blends which can be processed into a finished foamed part with commercially available injection-molding machines. (12) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 The flow properties of the HSF foaming material have been adjusted in such a manner that these machines are able to process it without any modification. The most significant attribute of HSF foams is heat stability. The heat stability has been quantified as a % of shrinkage of a foam specimen after a 24 hour treatment at 105 degrees Celsius (221 F). The shrinkage of HSF foams typically is 4% - highly competitive with industry standards. Growth is anticipated to take place in all areas of the Company's expertise and technology through the balance of the current financial year. In that regard the company has received and delivered the first order of $53,423US on it's proprietary foaming products from the European distributor and the distributors subsequent marketing efforts indicate additional orders could be placed during the second quarter. However there can be no assurance of this. Forward Looking Statements: This Form 10-QSB contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward looking statements. ITEM 3. Controls and Procedures Both the principal executive and financial officers examination of the issurer's disclosure controls and procedures have concluded that the controls and procedures practiced by the issuer and which are maintained on a daily, weekly, monthly, quarterly and as of the end of the period of this quarterly report, are effective in both accumulation and communication to management; further, Internal Control Over Financial reporting by the issuer, upon the required evaluation, has not changed during the last fiscal quarter ending December 31, 2003. (13) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 PART II - OTHER INFORMATION Item 1. - Legal Proceedings A legal action was commenced against the Corporation, its subsidiary, Mortile Industries Ltd., their President, Frank Mortimer and the Dow Chemical Company, on June 4,1999 in the Ontario Superior Court of Justice (Commerical List); by a former customer, Endex Polymer Additives Inc., Endex Polymer Additives Inc. (USA), Endex International Limited and G. Mooney And Associates. The Dow Chemical Company is defending separately. The claims allege breach of secrecy agreements, fiduciary duty and misuse of Endex confidential information. The Plaintiffs are seeking CAD $10 Million compensatory damages, further punitive damages of CAD $1 Million and interlocutory and permanent injunctions. Based on prior written legal opinions from its patent attorneys that the allegations are without merit, the Corporation retained a law firm specializing in Intellectual Property Law and is vigorously defending the action. After submission of the Defendants' evidence, the Plaintiffs abandoned their claim for an interim injunction. The Defendants have moved for an expeditious trial. The Court has ordered the parties to combine the examinations for injunction proceedings with those for the preparation for trial. On September 16-17, 1999, at the hearing of the interlocutory injunction motion, the parties agreed, on consent, to adjourn the motion until trial. The parties agreed to expedite the matter to trial with an original target date of about December 1999. At December 31, 2003 no further direction had been received by the company's counsel as to when the matter might proceed to trial nor had any direction been received at the time of filing this report. On October 10, 2001 Hudson Consulting Group ("Hudson") commenced an action in the Third Judicial District Court of Salt Lake County, State of Utah against the Company and obtained a default judgment for payments allegedly due Hudson pursuant to a consulting agreement between Hudson and the Company. After the court vacated the default judgment by order dated October 23, 2002, the Company answered the complaint and asserted a counterclaim against Hudson for fraudulently inducing the Company to enter into the consulting agreement. In October 2003, following discovery, the action was dismissed with prejudice and with each party bearing its own costs. (14) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS During the first quarter of fiscal 2003, 200,000 common stock were issued pursuant to the company's S8 Registration, in consideration of bone fide consulting at a strike price of $0.08 US per unit. [Note 6, Page 8] Further, 516,500 restricted stock were sold in a Private Placement in which the company received $41,958, and used for working capital. Additionally, 50,000 options are outstanding as of December 31,2003, with an aggregate strike price value of $25,000, should they be exercised. However, there can be no assurance of this. Also, 50,000 shares are set aside for the possible conversion of debt. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K (a) Exhibits - (3) (1) Exhibit 31(1) - Section 302 Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (2) Exhibit 31(2) - Section 302 Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (3) Exhibit 32 - Section 906 Certifications of Chief Executive and Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports - none (15) Technical Ventures Inc. Condensed Consolidated Report 10QSB For Financial Period Ending December 31, 2003 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TECHNICAL VENTURES INC. Date: February 4, 2004 BY:/S/"Frank Mortimer" Frank Mortimer, President and Chief Executive Officer Date: February 4, 2004 BY:/S/"Larry Leverton" Larry Leverton, Secretary & Treasurer and Chief Financial Officer (16)