SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C.
U.S.A. 20549
FORM 6-K
Dated: January 29, 1999
Commission File #: 0-13967
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 of 15d of
The Securities Exchange Act of 1934
VERONEX TECHNOLOGIES, INC.
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(Translation of Registrant's Name Into English)
#1505 800 West Pender Street, Vancouver,
British Columbia Canada V6C 2V6
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(Address of Principal Executive Offices)
FORM 61
Quarterly Report
Incorporated as part of: x Schedule A
Schedules B & C
ISSUER DETAILS:
NAME OF ISSUER Veronex Technologies, Inc.
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ISSUER ADDRESS 1505 - 800 West Pender Street
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CONTACT PERSON Peggy Martin
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CONTACT'S POSITION Secretary
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CONTACT TELEPHONE NUMBER (604) 647-2225
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FOR QUARTER ENDED November 30, 1998
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DATE OF REPORT January 29, 1999
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CERTIFICATE
THE SCHEDULE(S) REQUIRED TO COMPLETE THIS QUARTERLY REPORT ARE ATTACHED AND THE
DISCLOSURE CONTAINED THEREIN HAS BEEN APPROVED BY THE BOARD OF DIRECTORS. A
COPY OF THIS QUARTERLY REPORT WILL BE PROVIDED TO ANY SHAREHOLDER WHO REQUESTS
IT. PLEASE NOTE THIS FORM IS INCORPORATED AS PART OF BOTH THE REQUIRED FILING
OF SCHEDULE A AND SCHEDULES B & C.
DAVID A. HITE David A. Hite 99/01/29
SANDRA MILLIGAN Sandra Milligan 99/01/29
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources Ltd.)
Interim Consolidated Balance Sheets (In U.S. Dollars)
November November February
30, 1998 31, 1997 28, 1998
(Unaudited) (Unaudited) (Audited)
ASSETS
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Current Assets
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Cash and short-term deposits $ 327,000 $ 3,201,000 $ 2.493.000
Accounts receivable (note 3) 17,203,000 72,000 130,000
Prepaid expense 15,000 8,000 17,000
---------------------------------------------
17,545,000 3,281,000 2,640,000
Software Acquisition and Integration
Costs (note 4)
(net of accumulated amortization of
$23,000:1997-$Nil) 2,323,000 2,152,000 1,803,000
Resource Properties and Related
Deferred Costs (note 5) 66,000 66,000 66,000
Fixed Assets and Depreciation (note 7)
(net of accumulated depreciation of
$69,000: 1997-$87,000) 95,000 117,000 24,000
Investments (note 6) 152,000 152,000 152,000
---------------------------------------------
$ 20,181,000 $ 5,768,000 $ 4,685,000
=============================================
LIABILITIES
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Current Liabilities
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Accounts payable (note 8) $ 7,942,000 $ 376,000 $ 307,000
SHAREHOLDERS' EQUITY
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Share Capital (note 9)
Authorized - 100,000,000
(1997 - 100,000,000)
common shares without par value
Issued - 6,996,159
(1997 - 6,897,501) common shares 50,920,000 50,508,000 50,508,000
Deficit ( 38,681,000) ( 45,116,000) ( 46,130,000)
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12,239,000 5,392,000 4,378,000
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$ 20,181,000 $ 5,768,000 $ 4,685,000
=============================================
APPROVED BY THE DIRECTORS
Corporate History (note 1)
/S/ David A. Hite Director
Contingencies and Commitments (note 14)
/S/ Sandra M. Milligan Director
- See Accompanying Notes -
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources, Ltd.)
Interim Consolidated Statements of Shareholders' Equity
(In U.S. Dollars)
Number of Share
Shares Capital Deficit
Balance - February 28, 1997 (audited) 5,355,001 $47,628,000 $44,979,000
Issued by private placement 502,000 1,614,000
Issued on the exercise of options 530,500 270,000
Issued for subsidiary company 200,000 454,000
Issued for software technology 300,000 519,000
Issued as a finder's fee 10,000 23,000
Loss for the period 137,000
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Balance - November 30, 1997 (unaudited) 6,897,501 $50,508,000 $45,116,000
=========================================
Balance - February 28, 1998 (audited) 6,897,501 $50,508,000 $46,130,000
Issued on exercise of options 98,658 412,000
Loss (income) for the period (audited) (7,449,000)
-----------------------------------------
Balance - November 30, 1998 (unaudited) 6,996,159 $50,920,000 $38,681,000
=========================================
- See accompanying notes -
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources, LTD.)
Interim Consolidated Statements of Income (Loss)
(In U.S. Dollars)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
November November November November
30, 1998 30, 1997 30, 1998 30, 1997
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
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Software licensing sales $15,417,000 $210,000 $16,500,000 $250,000
Software royalties 900,000 0 900,000 0
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Total Revenue 15,317,000 210,000 17,400,000 250,000
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Expenses
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Software distribution costs 7,050,000 0 7,050,000 0
Software marketing costs 508,000 142,000 1,235,000 142,000
Operating and administration 468,000 95,000 1,665,000 290,000
Amortization of software acquisition
and integration costs 21,000 0 23,000 0
Depreciation 7,000 2,000 18,000 4,000
Exploration costs 1,000 2,000 10,000 (1,000)
Interest expense 0 1,000 0 4,000
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8,055,000 242,000 10,001,000 439,000
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Other Expenses (Income)
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Investing activities 0 0 0 10,000
Interest (income) (4,000) (24,000) (50,000) (62,000)
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Total Expenses 8,051,000 218,000 9,951,000 387,000
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Earnings (Loss) for the Period $7,266,000 $(8,000) $7,449,000 $(137,000)
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Earnings (Loss) per Share $1.04 $(0.001) $1.07 $(0.02)
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Weighted Average Number of Shares 6,996,000 6,437,000 6,983,000 5,858,000
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Fully Diluted Earnings (Loss) per
Share $0.97 $N/A $0.96 $N/A
==============================================
Fully Diluted Weighted Average
Number of Shares 7,352,000 N/A 7,339,000 N/A
==============================================
- See accompanying notes -
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources, Ltd.)
Interim Consolidated Statements of Cash Flows
(In U.S. Dollars)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
November November November November
30, 1998 30, 1997 30, 1998 30, 1997
(unaudited) (unaudited) (unaudited) (unaudited)
Cash Provided from (Used for)
Operating Activities
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Earnings (loss) for the period
Items not affecting cash: $7,266,000 $(8,000) $7,449,000 $(137,000)
Amortization of software
acquisition and integration
costs 21,000 0 23,000 0
Depreciation 7,000 2,000 18,000 4,000
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7,294,000 (6,000) 7,490,000 (133,000)
Changes in non-cash working
capital items:
Accounts receivable and prepaid
expense (15,190,000) (14,000) (17,071,000) (42,000)
Accounts payable 7,115,000 168,000 7,638,000 (471,000)
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(781,000) 148,000 (1,943,000) (646,000)
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Financing Activities
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Share capital issued for cash 0 1,614,000 412,000 1,880,000
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0 1,614,000 412,000 1,880,000
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Investing Activities
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Software acquisition and
integration costs, net (150,000) (507,000) (543,000) (1,136,000)
Fixed assets (48,000) 0 (89,000) (100,000)
Investments 0 (2,000) 0 (2,000)
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(198,000) (509,000) (632,000) (1,238,000)
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Changes in Cash and Short-Term
Deposits (979,000) 1,253,000 (2,163,000) (4,000)
Cash and Short-Term Deposits
Opening Balance 1,306,000 1,948,000 2,490,000 3,205,000
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Closing Balance $327,000 $3,201,000 $327,000 $3,201,000
=================================================
- See accompanying notes -
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources, Ltd.)
Interim Consolidated Schedules of Administrative Expense
(In U.S. Dollars)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
November November November November
30, 1998 30, 1997 30, 1998 30, 1997
(unaudited) (unaudited) (unaudited) (unaudited)
Filing and other fees $ 2,000 $ 1,000 $ 6,000 $ 3,000
Foreign exchange (9,000) 1,000 16,000 (7,000)
Management salaries 15,000 15,000 45,000 45,000
Management and secretarial fees 0 8,000 0 20,000
Office expenses 214,000 27,000 549,000 88,000
Professional fees 16,000 9,000 413,000 (13,000)
Shareholder relations 75,000 40,000 396,000 105,000
Transfer agent fees 3,000 1,000 9,000 13,000
Travel 152,000 (7,000) 231,000 36,000
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Total Administrative Expenses $468,000 $95,000 $1,665,000 $290,000
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- See accompanying notes -
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources Ltd.)
Notes to Interim Consolidated Financial Statements)
As at November 30, 1998 and 1997
(Prepared by Management in U.S. Funds)
1. CORPORATE HISTORY
On January 14, 1997, the Company entered into a Property Purchase Agreement
(the Agreement) with Thomas J. Price, a software developer, to acquire
certain software technology including, but not limited to, an automated
information manager and information management application system including
a source program analyzer (collectively referred to as the I/Nova System).
The terms of the Agreement provide for the Company to issue up to
12,000,000 shares of its common stock to acquire the I/Nova System
contingent on the future revenues earned from I/Nova System licensing fees.
Pursuant to the terms of the Agreement, up to 6,500,000 of these shares may
be issued to Mr. Price. A further 3,500,000 shares have been reserved for
contingent issue to Promax Conceptual Strategies (Promax), a California
company of which Mr. Price was the majority shareholder and 2,000,000
shares have been allocated to the Company's 1997 Contingent Stock Option
Plan. These shares are to be issued on a contingent basis. The Company
paid $20,000 on signing the agreement and issued 100,000 shares of its
capital stock to Mr. Price, and the remaining 6,400,000 shares will be
issued to Mr. Price based on an earn-out formula contingent upon future
revenues generated from licensing sales and maintenance contracts of the
I/Nova System.
Effective January 14, 1997, the board of directors of Promax approved an
agreement to merge Promax with and into a yet to be incorporated wholly-
owned Subsidiary of the Company. On August 15, 1997, the Company
incorporated in the State of California, a wholly-owned Subsidiary, PCS
Acquisition Corp., (PCS), for the purpose of completing the merger with
Promax. Approval of the merger by the shareholders of Promax was obtained
in August of 1997, and the merger documents were filed with the California
Secretary of State in September of 1997. PCS had no assets, liabilities or
operations at February 28, 1998.
A finders fee was paid pursuant to the rules, policies and guidelines of
the regulatory authorities. The Company has also agreed to employ Mr.
Price for a period of five years at a salary of $120,000 per year.
By agreement dated August 1, 1997, the Company has acquired 100% of the
issued and outstanding shares of Mainstream Technologies, Inc.,
(Mainstream), a company incorporated in the State of California. As
consideration for the acquisition of Mainstream the Company issued 200,000
of its shares at a deemed value of US $2.26875 per share. The Company also
agreed to employ the vendor for a period of two years at a salary of
$90,000 per year. The acquisition costs of Mainstream have been included
in Software Acquisition and Integration Costs (Note #4). These
consolidated financial statements include the assets and liabilities of
Mainstream as of November 30, 1998 and November 30, 1997 and the operations
of Mainstream for the periods March 1, 1998 to November 30, 1998 and August
1, 1997 to November 30, 1997.
By agreement dated August 1, 1997, the Company acquired exclusive rights to
software technology known as the ArchiData System, (ArchiData). As
consideration for the acquisition of ArchiData the Company issued 200,000
of its shares at a deemed value of US $2.26875 per share. The Company has
also agreed to employ the vendor for a period of two years at a salary of
$90,000 per year. The acquisition costs of the ArchiData System have been
included in Software Acquisition and Integration Costs (Note #4).
Effective December 4, 1997, the Company formally changed its name to
Veronex Technologies, Inc.
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources Ltd.)
Notes to Interim Consolidated Financial Statements)
As at November 30, 1998 and 1997
(Prepared by Management in U.S. Funds)
1. CORPORATE HISTORY (Cont.)
As of November 30, 1998, the Company has signed agreements with four
Strategic Alliance Partners to license the I/Nova System. The terms of
the agreements provide for license fees to be paid out of the revenues
generated by the use and/or sub-licensing of the I/Nova System by the
Licensees to their clients. The Licensees are also required to share all
gross revenues on a ratio of 65% to Veronex, and 35% to the Licensees,
until Veronex receives the entire license fee. Thereafter, the revenues
generated by the use and/or sub-licensing of the I/Nova System by the
Licensees to their clients will be shared on a ratio of 65% of all gross
revenues to the Licensees, and the remaining 35% of all gross revenues to
Veronex. As of November 30, 1998, Veronex has recorded $4,500,000 of
revenue from Strategic Alliance Agreements (See Note #3).
As of November 30, 1998, the Company has signed agreements with two
Distribution Partners to license the I/Nova System. As of November 30,
1998, Veronex has recorded $11,750,000 of revenue from Distribution
Agreements (See Note #3) and has accrued $$7,050,000 to cover distribution
costs (See Note #8).
During the past several years, the Company has been a party to a number of
legal actions and appeals to court decisions, all arising out of an
arbitration panel award (the Arbitration Award), that resulted in the
transfer of the Company's interest in the Enim Oil Project in Indonesia to
its former joint venture partner Triton Energy Corporation (Triton), and/or
its affiliates. The Company fully provided for its interest in the Enim
Project during the year ended February 28, 1995.
During the year ended February 28, 1997, the Company settled the lawsuits
against its former attorneys and received a net cash payment of $5.2
million in complete settlement of all complaints and cross-complaints
against these attorneys. As a result of a continuing action by Triton to
enforce the remaining balance of its arbitration award claim against the
Company for approximately $765,000 in connection with the Arbitration
Award, $1.2 million of cash was lodged with the US District Court for the
Central District of California pending a determination of Nordell's, (the
Company's Subsidiary), obligation to pay the Arbitration Award. On May 16,
1997, the US District Court approved the application of these funds to
retire the remaining Triton liability. Triton was paid and the remaining
funds were returned to the Company on June 11, 1997.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The Company is incorporated in the Province of British Columbia,
Canada. These consolidated financial statements have been prepared in
accordance with accounting principles and practices generally accepted
in Canada. Application of United States generally accepted accounting
principles would not result in any material differences to the
consolidated financial statements.
Principles of Consolidation
---------------------------
These consolidated financial statements include the accounts of the
Company, and its subsidiaries (all of which are wholly owned) which
are listed below. Intercompany transactions and balances have been
eliminated in consolidation.
VERONEX TECHNOLOGIES, INC.
(Formerly International Veronex Resources Ltd.)
Notes to Interim Consolidated Financial Statements)
As at November 30, 1998 and 1997
(Prepared by Management in U.S. Funds)
2. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Align Energy, Inc.
Bonaparte Resources, Ltd.
High River Industries, Ltd.
Mainstream Technologies Inc. (Mainstream)
Nordell International Resources Ltd. (Nordell)
PCS Acquisition Corp. (PCS)
Richport Resources Ltd. (Richport)
Veronex Resources, Inc.
Resource Properties
-------------------
Costs related to the acquisition of mineral properties are
capitalized. Mineral exploration costs are expensed in the year
incurred. If it is determined that a prospect contains economically
recoverable reserves, all costs relating to that prospect for the
current and subsequent years, including expenses net of revenues
during the start-up phase, are capitalized until the prospect is
capable of sustained operations at commercial production levels.
These capitalized costs, together with property acquisition and
ongoing development costs, are amortized on a unit-of-production
method based on the estimated life of the ore reserves.
Management reviews annually the carrying value of the interest in each
property and, where necessary, properties are written down to fair
market value.
Investments
-----------
Investments are recorded at cost unless there is a decline in market
value that is other than temporary.
Revenue Recognition
-------------------
The Company is engaged as a Licensor of Software. Generally, revenue
is recognized upon evidence of a license agreement, delivery of the
software and customer acceptance of the product. Installation and
implementation of the software generally occur when it is determined
that collection of the fees is probable and immediately prior to
customer acceptance of the software. The Company has a standard
business practice of using a two year contract for payment of fixed
and determinable revenues. Pursuant to guidance of SOP 97-2, the
Company recognized such revenues upon delivery of the software. Post
contract customer support agreements, service and maintenance
agreements are sold separately from the license agreements and revenue
from these contracts is recognized as payments from customers as they
become due. |
