Zeev:
Part 1 of 2: cut and paste of the financial stuff to be followed by the Mgt. Discussion. I first tried the fixed font post but it is hard as h*** to read. So this is the best I can do.
Thermo TechT Technologies Inc., has elected to provide quarterly financial and other information generally comparable to that required to be provided by United States issuers on Form 10-Q. This report relates to the period ended January 31, 1998.
INDEX
PART 1 - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets - January 31, 1998 (unaudited)
and April 30, 1997 (audited) 3&4
Consolidated Statements of Loss and Deficit (unaudited) for the
nine months ended January 31, 1998 and 1997. 5
Consolidated Statement of Changes in Financial Position
(unaudited) for the nine months ended January 31, 1998 and 1997 6
Notes to Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-20
PART 11 - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security 20
Item 5. Other Information 20
Signatures 21
THERMO TECHT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEET
(Canadian $)
January 31 April 30
1998 1997
(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash in Bank $ 3,473,012 $ 1,559,057
Accounts Receivable - Trade 1,210,070 593,634
Accounts Receivable - Other 970,367 588,155
Loan Receivable-Thermo Enzymes 232,811 -
Prepaid Expenses 736,054 860,789
Total Current Assets 6,622,314 3,601,635
OTHER ASSETS
Due from Pacific Ocean Resources 230,177 295,572
Loan Receivable -Thermo Enzymes - 400,000
Plant and Equipment 20,043,942 18,529,415
Land 607,475 -
Pre-Construction Costs 871,062 418,134
Engineering Design Package 3,691,830 2,402,655
Licenses 5,132,278 4,557,278
Deferred Pre-Operating Cost 50,718 192,219
Goodwill 766,419 836,097
Total Other Assets 31,393,901 27,631,370
TOTAL ASSETS $ 38,016,215 $ 31,233,005
========= =========
THERMO TECHT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEET
(Canadian $)
January 31 April 30
1998 1997
(unaudited) (audited)
LIABILITIES
CURRENT
Bank Indebtedness $ - $1,088,876
Accounts payable 2,372,537 3,358,526
Due to Officers & Directors 577,938 24,166
Current portion of Capital Lease 153,479 167,056
Current portion of Equipment Loan 286,754 575,023
Total Current Liabilities 3,390,708 5,213,647
LONG TERM DEBT
Equipment Loan - 57,303
Lease Payable 36,000 204,114
Total Long Term Debt 36,000 261,417
SHAREHOLDERS' EQUITY
Convertible Debentures 7,645,166 -
Share Capital 35,495,378 65,020,240
Retained Earnings (8,551,037) (39,262,299)
Total Shareholders' Equity 34,539,507 25,757,941
TOTAL LIABILITIES $38,016,215 $31,233,005
========================
APPROVED ON BEHALF OF THE BOARD
/s/ Rene J. Branconnier Director
/s/ Daniel B. Cumming Director
THERMO TECH T TECHNOLOGIES INC.
Consolidated Statements of Loss and Deficit
FOR NINE MONTHS ENDED January 31, 1998 and 1997
(UNAUDITED)
(Canadian $)
Nine Months ended
January 31
1998 1997
Revenue $2,684,295 $2,079,927
Cost of Operations 1,651,120 2,641,382
Profit (Loss) before Expenses 1,033,175 (561,455)
OPERATING EXPENSES
Selling, General & Administrative 3,982,881 4,179,836
Engineering deficiencies 1,929,052 891,974
Research & Development 1,659,904 1,281,695
7,571,837 6,353,505
Loss from Operations (6,538,662) (6,914,960)
OTHER EXPENSE (INCOME)
Other Expense (income) (112,112) 508,817
Gain on sale of investment - (321,266)
Depreciation & Amortization 2,124,487 2,527,423
Total Other Expense 2,012,375 2,714,974
NET LOSS (8,551,037) (9,629,934)
DIVIDENDS IN KIND - (503,185)
DEFICIT BEGINNING PERIOD - (26,602,445)
DEFICIT END OF PERIOD $(8,551,037) $(36,735,564)Weighted average common shares outstanding 54,277,048 29,193,726
Loss Per Common Share $ (0.16) $ (0.33)
THERMO TECHT TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR NINE MONTHS ENDED January 31, 1998 and 1997 (UNAUDITED)
(Canadian $)
Nine Months Ended January 31
1998 1997
OPERATIONS
Net Loss $(8,551,037) $ (9,629,934)
Gain on sale of investments - (321,266)
Amortization & Dep. not affecting cash 2,124,487 2,527,423
(6,426,550) (7,423,777)
Change in non-cash operating working
capital items (1,859,902) (1,303,401)
(8,286,452) (8,727,178)
FINANCING
Share Capital 9,737,438 12,891,990
Convertible Debentures 7,645,166 -
Due to Global Technologies - (1,800,000)
Capital Leases (34,880) (286,433)
Equipment Loans (492,383) -
Due to Officers and Directors 553,772 268,470
17,409,113 10,932,996
INVESTING
Acquisition of Plant-equipment
and Construction Cost (3,390,671) (1,120,541)
Acquisition of Land (607,475) -
Proceeds (Acquisition) of Investments - 859,201
Engineering and Design (1,554,268) 123,241
Repayment from Pacific Ocean 65,395 19,074
Repayment from Thermo Enzymes 167,189 -
Deposit on Licence right (800,000) (1,200,000)
(6,119,830) (1,442,266)
Increase in Cash 3,002,831 763,552
Cash, Beginning of Period 470,181 1,779,323
Cash, End of Period $3,473,012 $ 2,542,875
=========================
THERMO TECHT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
January 31, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada for interim information and with the instructions to Form 10Q and Rule 10-1 of the United States Securities Act of 1933 or Regulation S-X. 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 and certain adjustments to reserves and allowances considered necessary for a fair presentation have been included. Operating results for the 9 month period ended January 31, 1998 are not necessarily indicative of the results that may be expected for the year ending April 30, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report and Form 20F for the year ended April 30, 1997.
2. DIFFERENCE BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CANADA AND THOSE IN THE UNITED STATES.
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada ("Canadian GAAP") which differ in certain significant respects with those in the United States ("US GAAP"). The significant differences relate principally to the following items and the adjustments necessary to restate net loss and shareholders' equity in accordance with US GAAP are shown in the tables below.
(a) The Company has advanced funds to Pacific Ocean Resources Corporation who in turn performed research and development activities on behalf of the Company. The terms of the agreement are such that this advance is to be repaid by Pacific Ocean Resources as they receive royalties from the Company. As a result the advance has been set up as a receivable. Under US GAAP such an advance would be considered a research expenditure and would be expensed in the period the advance was made.
(b) Under US GAAP, the company would expense pre-operating costs in the year incurred.
(c) Under US GAAP, the Company would have been required to reclassify the convertible debentures as Mezzanine Equity.
(d) Under US GAAP, the company would be required to recognize interest expense on convertible debt with below market conversion privileges at the date the debt was issued. As a result of convertible debt issued in 1996, 1997 and 1998 with below market conversion privileges, interest expense is recognized in these years. There is no such requirement in accordance with Canadian GAAP.
(e) Under US GAAP, the company would be required to record as compensation expense the dollar value difference between the option price and the market price of stock options granted to employees. In addition, the Company would be required to account for stock options granted to non-employees at fair value.
January 31, 1998 January 31, 1997
Net loss under Canadian GAAP $(8,551,037) $(9,629,934)
Expense - research (a) 65,395 19,074
Expense - operating costs (b) 141,501 127,804
Interest expense (d) (1,482,350) (895,700)
Net Loss under US GAAP $(9,826,491) $(10,378,756)
Loss Per Share under US GAAP $(0.18) $(0.36)
1998 1997
Shareholders' Equity under
Canadian GAAP $34,589,507 $26,296,805
Expense research (a) (230,177) (308,060)
Expense pre-operating costs (b) (50,718) (234,816)
Deferred interest expense (d) (6,450,650) (4,520,750)
Convertible debentures (c) (7,645,166) (1,558,206)
Shareholders' Equity
under US GAAP $20,212,796 $19,674,973
3. SHARE CAPITAL
The Company has authorized share capital of an unlimited number of common shares without par value and an unlimited number of Class A and Class B Preference shares without par value. No Class A or Class B Preference shares have been issued. During the period, the common shares issued are as follows:
NUMBER AMOUNT
Balance April 30, 1997 49,834,681 $65,020,240
Deficit Adjustment - (39,262,299)
Balance April 30, 1997 - restated 49,834,681 25,757,941
Options and Warrants 9,915,124 8,873,928
Private Placements 176,252 88,126
Share Subscription Received - 775,383
Balance January 31, 1998 59,926,057 $35,495,378
4. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to comply with the current period's presentation. |
