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THERMO TECHT TECHNOLOGIES INC.
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 July 31,
1997.
INDEX
PART 1 - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets - July 31, 1997 (unaudited)
and April 30, 1997 (audited) 3&4
Consolidated Statements of Loss and Deficit (unaudited) for the
three months ended July 31, 1997 and 1996. 5
Consolidated Statement of Changes in Financial Position
(unaudited) for the three months ended July 31, 1997 and 1996 6
Notes to Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-17
PART 11 - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security 18
Item 5. Other Information 18
Signatures 19
THERMO TECHT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEET
(Canadian $)
July 31 April 30
1997 1997
(unaudited) (audited)
ASSETS
CURRENT ASSETS
Cash in Bank 1,269,555 1,559,057
Accounts Receivable - Trade 950,877 593,634
Accounts Receivable - Other 641,449 588,155
Loan Receivable-Thermo Enzymes 411,384 400,000
Prepaid Expenses 892,749 860,789
Total Current Assets 4,166,014 4,001,635
Due from R&D 275,490 295,572
Plant and Equipment 17,837,529 18,529,415
Pre-Construction Costs 847,292 418,134
Engineering Design Package 2,913,990 2,402,655
Licenses 5,282,278 4,557,278
Deferred Pre-Operating Costs 144,167 192,219
Goodwill 812,871 836,097
Total Other Assets 28,113,617 27,231,370
TOTAL ASSETS 32,279,631 31,233,005
========= =========
THERMO TECHT TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEET
(Canadian $)
July 31 April 30
1997 1997
(unaudited) (audited)
LIABILITIES
CURRENT
Bank Indebtedness $ 902,097 $1,088,876
Accounts payable & Accrued Liab. 3,150,739 3,358,526
Due to Officers & Directors 419,285 24,166
Total Current Liabilities 4,472,121 4,471,568
LONG TERM DEBT
Obligation Under Capital Leases 175,516 224,359
Equipment Loans 623,779 779,137
Total Long Term Debt 799,295 1,003,496
SHAREHOLDERS' EQUITY
Share Capital 68,855,062 65,020,240
Retained Earnings (39,262,299)
(27,158,126)
Net Profit (Loss) - Current Period (2,584,548)
(12,104,173) Total Shareholers' Equity
27,008,215 25,757,941
TOTAL LIABILITIES $32,279,631 $31,233,005
========================
APPROVED ON BEHALF OF THE BOARD
Director
Director
THERMO TECH T TECHNOLOGIES INC.
Consolidated Statements of Loss and Deficit
FOR THREE MONTHS ENDED July 31, 1997 and 1996
(UNAUDITED)
(Canadian $)
Three Months ended
July 31
1997 1996
Revenue $ 985,945 $ 729,215
Cost of Operations 737,555 841,570
Profit (Loss) before Expenses 248,390 (112,355)
OPERATING EXPENSES
Selling, General & Administrative 1,405,198 1,387,487
Engineering deficiencies 545,034 170,555
Research & Development 137,625 195,264
2,087,857 1,753,306
Loss from Operations (1,839,467) (1,865,661)
OTHER EXPENSE (INCOME)
Other Expense 70,151 62,161
Depreciation & Amortization 674,930 898,666
Total Other Expense 745,081 960,827
NET LOSS $(2,584,548) $(2,826,488)
DEFICIT BEGINNING PERIOD (39,262,299) (26,602,445)
DEFICIT END OF PERIOD (41,846,847) (29.428,933)
Weighted average common shares
outstanding 50,756,352 15,242,013
Loss Per Common Share $ (0.05) $ (0.18)
THERMO TECH TTECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THREE MONTHS ENDED April 30, 1997 and 1996 (UNAUDITED)
(Canadian $)
Three Months Ending July 31
1997 1996
OPERATIONS
Net Loss $(2,584,548) $ (2,826,488)
Amortization & Dep. not affecting cash 674,930 898,666
(1,909,618) (1,927,822)
Change in non-cash operating working
capital items (661,668) (520,884)
(2,571,286) (2,448,706)
FINANCING
Share Capital 3,834,822 3,204,810
Due to Global Technologies - (1,800,000)
Capital Leases (48,843) (158,127)
Equipment Loans (155,358) -
Shareholders' Advance 395,119 (403,000)
Dividends in kind payable - (7,092)
4,025,740 836,591
INVESTING
Acquisition of Plant-equipment
and Construction Cost (777,259) (397,523)
(Advances) from Pacific Ocean 20,082
6,264
Deposit on Licence right (800,000) -
(1,557,177) (391,259)
(Decrease) Increase in Cash (102,723) ( 2,003,374)
Cash, Beginning of Period 470,181 1,779,323
Cash, End of Period $ 367,458 $ (224,051)
=========================
THERMO TECHT TECHNOLOGIES INC.
NOTES TO CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
July 31, 1997
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 3 month period ended
July 31, 1997 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 ("U.S.
GAAP"). The significant differences relate principally to the following items and
the adjustments necessary to restate net loss and shareholders' equity in
accordance with U.S. 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 U.S. GAAP such
an advance would be considered a research expenditure and would be expensed
in the
period the advance was made.
a) Under U.S. GAAP, the company would expense pre-operating
costs in the year incurred.
b) Under U.S. GAAP, the Company would have been required to
reclassify the convertible debentures as Mezzanine Equity. In addition, the
shares issued pursuant to the purchase of Thermo Waste Exchange Inc. (formerly
Canadian Waste Exchange Inc.) in fiscal 1996 and the purchase of the Peel Bio
Conversion Inc. in fiscal 1995 were subject to the vendor retaining an option to
require the Company to buy back all the shares. Under U.S. GAAP, the Company
would be required to disclose the issued shares as Mezzanine Equity.
c) Under U.S. 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 and 1997, interest expense is recognized. However, as the majority of
conversion occurred in 1997 it would be appropriate to recognize the expense
when converted.
d) Under U.S. 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 adition, the Company
would be required to account for stock options granted to non-employees at fair
value.
July 31, 1997 July 31, 1996
Net loss under candian GAAP $(2,584,548) $(2,826,488)
Expense research (a) 20,082 6,264
Interest expense (d) - (1,233,500)
Expense compensation and stock
option expense (e) - (30,000)
Net Loss under US GAAP $(2,564,466) $(4,083,724)
Loss Per Share under US GAAP $(0.05) $(0.18)
1997 1996
Shareholders' Equity under
Canadian GAAP $27,015,065 $23,472,756
Expense research (a) (275,490) (327,134)
Expense pre-operating costs (b) (144,167) (362,623)
Deferred interest expense (d) - (3,700,500)
Convertible debentures (c) - (7,930,968)
Shares issued on acquisition of
subsidiary company (c) (2,927,098) (2,927,098)
Shareholders' Equity
under US GAAP $23,668,310 $ 8,224,433 |
