iTech loses seven cents a share in 2000
iTech Capital Corp ITE
Shares issued 30,374,357 Apr 9 close $0.22
Tue 10 Apr 2001 Company Review
Mr. William Staudt reviews the company
Medsite, Inc.
iTech Capital originally invested in Medsite in June, 1999. In August,
2000, iTech made an additional investment in the company through a Series C
convertible preferred stock, bringing its total investment to $2,612,600
(U.S.).
Medsite filed a U.S. registration statement on Feb. 17, 2000, and on the
advice of its underwriters, withdrew the statement on June 14, 2000, due to
market volatility. Subsequently in 2000, Medsite raised in excess of
$25-million (U.S.) through a private placement in which the company
invested $1.5-million (U.S.) in Class C preferred stocks.
Elastic Networks, Inc.
Elastic Networks became a public company on Sept. 29, 2000, through an
initial public offering led by the investment banking group, Chase H&Q. The
7.8 million shares offered were priced at $13 (U.S.). iTech Capital owns
281,479 shares of common stock acquired in a prior private financing round
at a cost of $5.44 (U.S.) per share.
For the 12 months ended Dec. 31, 2000, Elastic Networks reported revenues
of $39.8-million (U.S.) compared with revenues of $8.2-million (U.S.) for
the comparable period of 1999. With $68.5-million (U.S.) in cash as of Dec.
31, 2000, Elastic Networks anticipates it has sufficient capital to see it
through to profitability. As of January, 2001, Nortel Networks continued to
be the largest shareholder in Elastic Networks with an approximate
46-per-cent interest.
Applied Data Systems, Inc. (ADS)
Applied Data Systems' target markets (including hand-held devices, wireless
communication, information appliances, industrial automation, medical
devices and transportation/fleet management) are experiencing an explosive
growth driven by numerous industry and technology trends and innovations.
ADS reports that it is presently generating positive cash flow and does not
require additional private financing.
PinPoint Corporation
In April, 2000, Pinpoint announced an alliance with GE Medical Systems
(GEMS) to market asset-tracking services that locate and track equipment
within health care facilities. GEMS provides equipment management and
maintenance services to more than 2000 hospitals worldwide. Under the terms
of the alliance, GEMS will market PinPoint's LPS systems to these hospitals
and others globally. PinPoint intends to expand and leverage its
relationships with business partners who play a key role in the sales,
marketing and distribution of its products. PinPoint has a team dedicated
to identify and pursue distribution, software development, and joint
marketing with established third parties.
PinPoint is seeking additional private capital to further its growth
strategy. The proceeds from this financing round will be used to expand
sales and marketing activities, finance further product development, and
for general working capital and corporate purposes.
HorizonLive, Inc.
HorizonLive is currently seeking financing through a private equity round.
This financing will enable HorizonLive to continue to enhance its products
and services, support its sales and marketing programs, and accelerate
development of its Knowledge MarketPlace, a database/directory of
interactive live and archived on-line presentations and learning events.
In February, 2001, HorizonLive reported that it is in the process of
completing a $1-million (U.S.) equity financing among its shareholders of
which the company's pro-rata share is $76,500 (U.S.). The company intends
to participate in this financing.
BizFon, Inc.
During calendar year 2000, BizFon introduced several new important products
including the BizFon 680 Multi-Tenent, a communications switch that allows
up to three companies sharing office space to co-own a single PBX phone
system, while maintaining separate telephone lines and extensions for each
company.
As of late 2000, BizFon served a customer base of over 7,000 with 73
employees. In the year ended Dec. 31, 2000, sales increased significantly
from the previous year.
During 2000, BizFon completed a $4.25-million (U.S.) bridge loan. The
company did not participate in this debt financing. In February, 2001,
BizFon reported that it has spun-off a second business segment into a
separate entity with BizFon retaining a royalty bearing licence and
10-per-cent equity percentage in the new entity. Further, subject to
shareholders' consent, BizFon has agreed to raise approximately $5-million
(U.S.) in cash through an equity funding of preferred stock. The company
does not intend to participate in this equity financing.
Effective for the fourth quarter of 2000, the company recorded a $249,000
write-down in respect to its investment in BizFon, being one-third of the
original recorded amount.
Enviromation Technologies, Inc.
iTech Capital purchased Enviromation effective Dec. 31, 1999, with the
knowledge that the water industry was about to undergo a massive
transformation.
Enviromation experienced some transitional pains last year. Its former
majority shareholder and chief executive officer retired. Wayne Simmons,
Enviromation's new CEO, an engineer with water industry experience, is
quickly adapting to his new role of leading Enviromation back to
profitability. While the year 2000 was a year of transition for
Enviromation, its backlog of contracts and bid activity, both at
significant levels, are positive indicators starting the year. A recently
hired head of sales and marketing is focused on Enviromation's plan to
achieve revenue growth of approximately 50 per cent in the year 2001, which
growth is 12 per cent above 1999 revenue.
For the year 2000, Enviromation incurred an operating loss of $593,200
before amortization of good will of $157,200.
The transition in senior management personnel following purchase took far
longer than anticipated. Identification of appropriate individual skill
sets and then placement of personnel took far longer than expected. During
this period the business suffered by a downturn in volume.
The company believes it now has the right personnel and incentive structure
in place and Enviromation in order to get the business back to
profitability in 2001, and to execute a business plan which will realize on
the potential the company believes exists in this fragmented industry
sector. Enviromation's backlog of contracts and bid activities beginning
2001 are at relatively strong levels which are positive indicators starting
the year.
WholesalePortal.com Inc. (WP)
The company invested in WP on April 26, 2000. WP is an early-stage
business-to-business and business-to-retail portal which to date has not
been able to commercialize its sales and marketing plan. WP was unable to
raise additional equity financing and is currently in the process of
attempting to sell its assets, including its technology platform.
Effective for the fourth quarter of 2000, the company wrote-off its
investment in full of $755,000.
Loma de Niquel Holdings Ltd. (LDNH)
Included in portfolio investments at Dec. 31, 2000 and 1999, is the legacy
participating interest in the Loma de Niquel laterite nickel project in
start-up in Venezuela in which the company has been accepting dilution as a
result of it decision to not continue financing. The project is controlled
and managed by a division of the Anglo-American plc group. Upon completion
of the project, the company's participating interest is estimated to be
0.77 per cent.
Results of operations
Working capital decreased in 2000 by $10,214,300 to $5,869,500 as at Dec.
31, 2000, compared with a working capital decrease in 1999 by $4,807,800 to
$16,083,800 as at Dec. 31, 1999. In 2000, $8,275,700 was spent on portfolio
investments in five technology companies and one private limited
partnership, $1,414,800 was spent towards the total $2,474,000 acquisition
cost of Enviromation, including related expenses, and $979,200 was
classified as restricted cash equivalents in connection with the pledge of
security for the remaining principal amount owing on the acquisition of
Enviromation.
In 1999, $3,167,600 was spent on portfolio investments in three private
technology companies, unrealized foreign exchange gains on cash and cash
equivalents reduced by $2,134,400 and unrealized cash equivalent losses
increased by $441,600.
Although the acquisition of Enviromation was legally effective Dec. 31,
1999, and the balance sheet of Enviromation is included in the consolidated
balance sheet of the company as at Dec. 31, 1999, the actual closing
occurred Jan. 28, 2000, and accordingly, none of the purchase price was
paid until 2000.
The company acquired all of the issued and outstanding shares of
Enviromation effective Dec. 31, 1999. As the actual closing of the
acquisition took place on Jan. 28, 2000, the acquisition had no impact on
the consolidated cash flows of the company in 1999. The impact Enviromation
had on consolidated operating activities' cash flows in 2000 was a $311,400
use of cash.
The impact the acquisition had on the consolidated balance sheet of the
company as at Dec. 31, 2000, was working capital of $329,600, restricted
cash equivalents of $979,200, capital assets of $616,542, good will of
$1,414,400 and long-term debt, net of current portion of $1,330,700. The
impact the acquisition had on the consolidated balance sheet of the company
as at Dec. 31, 1999, was a net reduction in working capital of $596,800,
capital assets of $257,000, good will of $1,478,300 and long-term debt, net
of current portion of $1,053,300.
The company's process controls business segment (Enviromation) for 2000
incurred an operating loss of $593,200, before amortization of good will of
$157,200, on net sales of $3,754,700. The 2000 operating loss includes
$81,200 of interest on debt incurred in connection with the purchase of the
business by the company and a non-recurring expense of $51,000. Pre-tax
income of Enviromation for 1999, the year immediately prior to acquisition,
was $756,500 on net sales of $4,992,200. Thus, net sales decreased 25 per
cent in 2000 compared with 1999. In addition to the personnel transitional
problems referred to previously, year 2000 expenses include the salary of
the new president which adds to the total number of senior executives in
the short term.
The company earned interest and other income from cash and cash equivalents
for 2000 of $590,800 compared with $1,007,700 for 1999.
General administration and marketing expense for 2000 was $1,171,500
compared with $881,300 for 1999.
Loss for the year ended Dec. 31, 2000, was $2,119,200 compared with a loss
for fiscal 1999 of $1,667,600, principally due to the technology
write-down/off, loss by the process controls business segment
(Enviromation) and reduced interest and other income of the portfolio
investments business segment.
As at Dec. 31, 2000, the company has working capital of $5,869,500 (1999 --
$16,083,800) and its total current assets plus restricted cash equivalents
exceed total liabilities, including long-term debt, by $5,518,100 (1999 --
$15,030,500). The only material commitment for capital expenditures is the
balance of the subscription agreement amount with Ironside Ventures, LP of
$1,462,500 plus the 2 per cent fee to Hamilton Group LLC.
CONSOLIDATED STATEMENT OF
LOSS AND DEFICIT
For years ended Dec. 31
2000 1999
Revenue
Sales-process
controls $ 3,754,721 $ -
Interest and
other income 590,769 1,007,710
----------- -----------
4,345,490 1,007,710
----------- -----------
Expenses
Cost of sales --
process controls 3,189,575 -
Operating --
process controls 1,059,568 -
General and
administration 852,912 770,066
Interest on
long-term debt 96,099 -
Interest other 2,651 -
Marketing 318,567 111,221
Professional fees 174,904 199,502
----------- -----------
5,694,276 1,080,789
----------- -----------
Loss before the
following 1,348,786 73,079
Amortization of
good will 157,155 -
Foreign exchange
(gain) loss (439,610) 1,152,907
Realized loss on
cash equivalents 334,604 -
Unrealized (gain)
loss on cash
equivalents (339,556) 441,604
Write-off of
deferred charge 52,903 -
Write-down/off of
long-term
investments 1,004,900 -
----------- -----------
Loss for the
year 2,119,182 1,667,590
Deficit --
beginning of
year 19,807,079 18,139,489
Deficit -- end
of year $21,926,261 $19,807,079
=========== ===========
Basic loss per
share $ 0.07 $ 0.06
(c) Copyright 2001 Canjex Publishing Ltd. stockwatch.com |
