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3. SHARE CAPITAL
The Company has authorized share capital of 100,000,000 common shares
without par value. During the period, the shares issued are as follows:
NUMBER AMOUNT
Balance April 30, 1997 49,834,681 $65,020,240
Options 2,182,500 1,546,388
Private Placements 176,252 88,126
Share Subscription Received - 2,200,308
Balance July 31, 1997 52,193,433 $68,855,062
4. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to comply with the
current period's presentation.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
GENERAL BUSINESS ENVIRONMENT
Thermo TechT is listed and trades on NASDAQ under the symbol "TTRIF". The
Company was incorporated in 1983 pursuant to the laws of the Province of
British Columbia, Canada and has traded in the public market since 1987. The
Company has an exclusive license, save and except for five states in the United
States, to develop and commercially exploit a patented aerobic thermophilic
microbial fermentation process which efficiently and effectively converts organic
waste materials to value added products including animal feeds and fertilizers.
The Company has trademarked the terms Thermo TechT and Thermo MasterT
as they are applied to its products, process and plants.
New Thermo MasterT Plants will be built to the third generation design.
Lockerbie Thermo TechT Inc., the joint venture company formed with Lockerbie
and Hole Contracting Limited will build and commission plants. The new design
is for a 400 ton per day plant but a 600 ton per day option offers even greater
operational efficiency with only a 40% increase in capital costs.
Hamilton Bio Conversion recorded a net profit in the first quarter of fiscal 1998.
Thermo TechT is pursuing a wide range of debt financing including banks,
municipal bonds, industrial revenue bonds and project partnerships.
To better deliver on the corporate goals, action has been taken to establish the
Corporate Headquarters and the corporate management function in new larger
facilities in Langley, British Columbia. A new Chief Financial Officer was hired
and the CEO and CFO will both operate from the Corporate Headquarters. BDO
Dunwoody (Vancouver) was appointed as corporate auditors. Dr. Owen
Anderson has joined Thermo TechT as Vice President and will be President of
Thermo Bio TechT International, a new company responsible for international
marketing and development. Thermo TechT Research which manages the
Company's R&D programs, is in the process of relocationg to Langley. Urgent
needs for solutions to agricultural waste problems has caused Thermo TechT to
establish Thermo Agri Systems, a separate agricultural division which can
effectively bring the patented Thermo MasterT Process to the sector and
capitalize on the potential of this market.
RECENT BUSINESS ADVANCES BY THE COMPANY
In the three months since the fiscal year end at April 30, 1997, the Company has
realized a number of significant advances.
The Thermo MasterT Plant business model has been proven.
Completed engineering design drawings have been received from Dick
Engineering for 400 and 600 ton per day plants and have been turned
over to Lockerbie Thermo TechT for construction.
Agreement was reached with an entrepreneurial business partner
having more than 30 years experience in the waste management
industry, to build two plants in Ontario (Oshawa and Niagara Falls),
both plants with put or pay contracts for the waste stream.
The Company entered into an investment banking arrangement with
Blount Parrish Roton of Montgomery, Alabama to secure debt financing
for Thermo MasterT Plants to be built in the United States.
The Industrial Development Authority of the Port of Anacortes passed
an inducement resolution which will allow the Company to pursue tax-
free industrial revenue bond financing for a 600 ton per day plant in
Skagit County, WA.
The Company took a decision to form a new service company, to
complement the role of Thermo Waste Exchange by ensuring, on an
incentive contract basis, that waste supplies are secured before new
plant construction begins and that those supplies are maintained once
operation commences.
Licence agreement is being finalized with Thermo Enzyme Production
Inc., to further develop and exploit enzyme technology created through
the Company's research program.
A corporate Head Office was established in Langley, B.C. and steps
taken to consolidate senior management function in one location.
A new Chief Financial Officer, Mr. Howard Reich, CA, CPA was recruited
to the Thermo TechT management team.
A new corporate Vice President, Dr. Owen Anderson, was also recruited
and will head up a new company which will be responsible for
international markets and marketing.
The Company has patents pending in the U.S. and Canada for the
Thermo MasterT Process. A filing was made under the international
Patent
Cooperation Treaty, which will protect the Company's filing rights in
over 90 countries around the world.
Thermo MasterT feed pellets were approved for registration as a feed
ingredient for swine and poultry by the Canadian Food Inspection
Agency.
Summary of plant operations and development of new plants.
The Company currently has three Thermo MasterT Plants:
Hamilton Bio Conversion Inc. To meet increasing market demand, Hamilton Bio
Conversion Inc. is in an expansion program to 600 tonne per day capacity. The
Company anticipates current revenues will increase dramatically with the
expansion complete with resulting increases in profits due to the improved
efficiency of the 600 tonne per day plant design. Expansion is projected to be
completed by the end of the third quarter of the 1998 fiscal year. There will be no
disruption to current production.
Brampton Bio Conversion Inc. Brampton Bio will become known as Brampton
Depackaging Inc. Demand in the market for secure modern depackaging
services caused Brampton to set up a full service depackaging facility with
complete recycling capability to meet the needs of a large number of major food
processors. Success has been achieved in this new market sector with large
brand name manufacturers such as Coca Cola, Mead Johnson, Wyeth Ayerst,
Nestl‚, Pepsi Cola, Nabisco, Beatrice Foods, Quaker Oats, Ault Foods, Campbell
Soups, and others contracting for depackaging services. Secure service with
complete recycling of container and contents makes this a very attractive option
for waste generators.
Richmond Bio Conversion Inc. Richmond Bio Conversion will be the Company's
showcase plant for its third generation Thermo MasterT Plants. Over 75% of
plant capacity has already been committed. A purchase order for construction of
a Thermo MasterT Plant was issued to Lockerbie Thermo TechT in August.
Local building permits are being acquired, shop activity is ongoing and
arrangements are being finalized for delivery of the building itself. Based on
market demand, Richmond Bio is being built to 450 ton per day capacity
(expandable to 600 tons). The plant is ideally located on Mitchell Island, in
Richmond B.C. and is situated close to large volumes of waste material from the
Greater Vancouver Regional District.
Fort Devens Bio Conversion Inc. The Devens Enterprise Commission made
public a powerful endorsement of the Company's technology and the need for a
Thermo MasterT Plant as part of the "Devens Reuse Plan". They stated that they
believe, "...the process offers to America a step change in the science of
recycling food waste and waste water treatment residuals that will minimize
landfills and eliminate the current, and now outlawed, sludge beds that leach
forever into the soil. Devens could be proud to have had the vision to employ
this technology." The Company is seeking debt financing for this project.
Oshawa Bio Conversion Inc. and Niagara Bio Conversion Inc. With the joint
venture partner having extensive expertise and experience in the waste industry
and being able to deliver permitted sites, access to financing and waste supplies,
these plants are on a fast track development program. Both plants have put or
pay contracts for waste supplies and take or pay contracts for the end product.
The Oshawa and Niagara Bio Conversion plants will be built to 300 ton per day
capacity, expandable to 600 tons. Niagara Bio is to receive waste from the U.S.
as well as Canada. The partner is completing arrangements for construction
financing as well as long term debt financing for both of these projects. Pre-
construction planning and preparations are ongoing.
Skagit Bio Conversion Inc. With the inducement resolution in place,
negotiations are ongoing for debt financing via industrial revenue bonds and the
plant capacity more than 80% committed, this project is on track for a short term
construction start. The vision of those involved with the Skagit project has
stirred interest throughout Washington State.
Corinth Bio Conversion Inc. Re-activation of the Corinth plant is being
undertaken by Paul Miller, a long time associate and newly contracted consultant.
Mr. Miller has been assiting the Company to assess the options available for
bringing Corinth Bio Conversion back to production. He has identified an ideal
opportunity for the relocation and re-activation of the Corinth Thermo MasterT
Plant at a site near to Corinth. The local economic development authority is
enthusiastic about the possibility of the move and the solution the plant will offer
for local sewage sludge management. A wide range of attractive financial
incentives are available including long term tax exemptions, training allowances,
development loans and reduced rate services and utilities. |
