Part II COMPANY/SHAREHOLDER COMMUNICATIONS (1)From Yahoo
by: TOASTMAN_2001 (39/M/Costa Mesa, CA)
k) Management roles.
i) Question: What are the past, present and future anticipated roles of senior management personnel (i.e. Rene Branconnier, Wayne Hanson, Kevin Simpson, Dan Cummings, Owen Anderson, Ed Kroeker, others)?
Response: Current positions/roles are as indicated in Item 10 of Form 20-F (Annual Report dated April 30, 1998). Future changes are in discussion with Thermo Tech Ventures (TTV) as indicated in news release dated April 6, 1999. Management changes are intended to be as follows: a) Kevin Simpson, who is the president and CEO of TTV Inc. will also become same for TT; b) Rene Branconnier will then become Chairman of the Board and assist Kevin in becoming familiar with all the day to day operations over the next 6 to 12 months (after which, it's expected he would act in an advisory capacity if and when requested). Note: This request for management change was made from the Financiers as well as Rene himself. Rene had been actively looking for a new CEO for the last year (as those who spoke to him from time to time would have known) as he is more interested in the startup aspect of companies rather than in running a more mature enterprise.
ii) Question: Will Residential Resources Inc. have any input into constituency of management and roles/responsibilities?
Response: See (i) above.
l) TT Ventures (TTV).
i) Question: What are the exact details and terms of this arrangement (same as question g.(iv))?
Response: This information will be provided when an initial deal is completed.
ii) Question: Do any officers of TT have a financial interest in TTV, other than their indirect interest through TT?
Response: No other financial interests.
m) Thermo Tech Enzymes (TTE).
i) Question: What is status and progress?
Response: Much confusion exists regarding this separate company. The company name is going to be changed to reduce this confusion. [OUR
UNDERSTANDING: It is important we express our new understanding, which may be incorrect. TT shareholders "will not directly participate in any way in TTE' unless they are also shareholders/investors in that totally separate company. Being a TT shareholder does not of itself provide an interest in TTE. It is for this reason, all interested persons are to communicate directly with Rene Branconnier.]
ii) Question: When is the IPO expected to occur?
Response: It will not be an IPO, it will be a RTO (Reverse Take Over). The date is not currently set.
iii) Question: What is the anticipated share distribution of TTE to TT shareholders? Is it still 10:1 as was announced previously? When is this distribution supposed to occur? What is the anticipated opening price of these shares?
Response: It was requested that any questions regarding this be directed to Rene.
iv) Question: What is the location of the TTE building? Is the land owned by Rene? Is TTE leasing the land from Rene? If so, is the lease rate a commercially competitive rate verified by an independent assessment? Where can shareholders get a copy of this lease?
Response: The R&D and Prototype effort are taking place on Rene's permitted property. Contact Rene Branconnier for further information.
n) Shares owned by officers and senior management.
i) Question: How many shares does each officer and senior manager own directly and indirectly?
Response: As indicated in Item 4 of Form 20-F (Annual Report, dated April 30, 1998), Officers and Directors possessed 2,324,897 common shares and 908,000 options. An update should be provided in the upcoming April 30, 1999, Annual Report.
ii) Question: Have any of these people added to or reduced their holding recently and/or do they intend to increase or reduce their holdings in the near future?
Response: Refer to insider reports from EDGAR. An update should be provided in the upcoming April 30, 1999, Annual Report.
iii) Question: Have any of these people traded shares recently directly and or indirectly with or without registration?
Response: Once traded, officers and directors are required to register shares. However, under Canadian law, family members may own or trade equities without registrations.
iv) Question: It is alleged that Rene recently sent a fax to his broker to buy $900,000 of TT shares. This fax was allegedly sent in error to an incorrect fax address. Can any comment be provided regarding this allegation?
Response: It was indicated that Rene places share buy and sell requests by phone to his broker (faxes aren't used for this purpose).
o) Audited Financial Statements.
i) Question: Have any company assets been used or pledged to facilitate personal acquisitions by any Officer(s), Director(s) or Employee(s) of Thermo Tech or related/associated companies?
Response: Refer to Items 11 and 13 of Form 20-F (Annual Report, dated April 30, 1998). An update should be provided in the upcoming April 30, 1999, Annual Report.
ii) Question: If so, who oversees/approves these arrangements and are they documented in the company reports and records as defined by standard Canadian Accounting & Reporting practices?
Response: Refer to Items 11 and 13 of Form 20-F (Annual Report, dated April 30, 1998). An update should be provided in the upcoming April 30, 1999, Annual Report.
iii) Question: Are any loans outstanding to or from the company related to Officer(s), Director(s) or Employee(s) of Thermo Tech or related/associated companies as of March 14, 1999?
Response: Refer to Items 11 and 13 of Form 20-F (Annual Report, dated April 30, 1998). An update should be provided in the upcoming April 30, 1999, Annual Report.
iv) Question: Has there been any distribution of funds made in the form of gifts and or bonuses to the group listed in iii) above, other than salaries previously disclosed.
Response: Refer to Items 11 and 13 of Form 20-F (Annual Report, dated April 30, 1998). An update should be provided in the upcoming April 30, 1999, Annual Report.
v) Question: Are there and or have there been any relatives of this same group under iii) employed by the company? If so, what have been or are their positions, remuneration and or formal training for these positions? Were or are these full or part time positions?
Response: Rene has two nephews (Dean and Chad) who are full time plant managers for Richmond and Hamilton, respectively. Both are fully qualified and competitively remunerated. Sharon (Mrs. Branconnier) has been the Langley Office Manager and is currently phasing out of this position.
p) Numerous Subsidiaries.
i) Question: Why are there so many subsidiaries? Certainly this creates an unnecessary and costly administration burden, can many or most be eliminated?
Response: No, each subsidiary is to operate as a separate entity and contribute to the corporate entity. The yearly cost associated with a subsidiary is approx. $1,000 (filing, report, and misc.).
ii) Question: Have or are any of the officers, BoD and or senior management receiving remuneration of any kind from any of these subsidiaries in addition to or in lieu of remuneration through TT? Please include TTE in this grouping.
Response: No subsidiaries are/have been providing any known remuneration. Note: TTE is not a subsidiary of TT and related questions should be directed to Rene Branconnier.
DETAILED QUESTIONS
a) Question: What is life expectancy of plant components?
Response: Expected plant life of 30 years with maintenance (component replacements and servicing). Depreciation for 10 years being used.
b) Question: What is status or has happened to the following previously announced and/or discussed venture projects?
Responses:
1) Skagit (Washington State) - not determined economical.
2) Spain - still interested.
3) Halifax - choose standard compost, so missed opportunity.
4) Korea - still interested.
5) USF - TT put out a release based on an USF subsidiary release (that USF corporate didn't have prior knowledge of) which caused hardships. Still possible to work some deal.
6) Russia - It is believed that Mr. Jacobson is investigating potential opportunities. Not a major issue at this time. Immediate potentials in North America and Western Europe are much greater at this time.
7) Corinth (N.Y. State) - Equipment still located at plant but is outdated technology (75% still good). Possible retrofit to bring up to latest standards is in consideration or equipment may be moved to another location in NY State or elsewhere.
8) John Hancock - still possible.
9) IRB - There are low cost municipal bonds available in various areas for financing environmental projects, these could be still be utilized in the future. (Note: we didn't catch what the problem was with this particular project.)
10) William Blount - Couldn't sell minimum revenue bond of $500,000 block so funding fell short to finance project.
11) Bergen Point (N.Y. State) - people problems.
c) Question: When will Richmond be profitable?
Response: After the commission phase is completed (should be a maximum of a month).
d) Question: Size of Richmond facility..present..future?
Response: Presently at 600 tons for everything, but fermentation tank storage. Future will be 600 tons for everything. Additional cost to accomplish increased capacity approx. $1.5 million.
e) Question: What was the building component cost and total cost for the Richmond plant?
Response: The total cost approx. C$26 million (including upgrade to 600 tons).
f) Question: Who owns the land Richmond plant is on?
Response: A third party called EAS Financial. What is monthly lease rate? $7,000.
g) Question: Have all the bills for Richmond plant been paid?
Response: No, approx. $4 million remains plus upgrade of $1.5 million.
h) Question: Have all the bills been paid on Ham I plant?
Response: Yes.
i) Question: What % of bills on Ham II plant have been paid?
Response: Approx. 75%.
j) Question: We hear rumors that TT wants to build a de-packaging facility and sludge facility in Richmond. Why?
Response: De-pack will provide increased efficiency and additional revenue with container recycling. The sludge will provide more corporate revenue. What is the timeline on these projects? Completion expected during this next fiscal year. How will they be paid for? Using part of the $200 million debt facility.
k) Question: We have also heard a rumor that the Brampton de-pack facility may be moved to Hamilton site. Same q's as j) above?
Response: As a matter of good operational practice, the company intends to move the de-packaging operation to the Hamilton site at a suitable future date, thus consolidating it's current Ontario operations at a single efficient location. This will be funded using part of the $200 million debt facility.
l) Question: What legal proceedings exist against TT and/or its subsidiaries?
Response: As indicated in Item 1, Part 11, of the Form 6-K (Report of Foreign Issuer, for period ending January 31,1999), the company has been named as a defendant in two lawsuits commenced in British Columbia and two lawsuits commenced in Ontario. In the opinion of
management, the outcome of the lawsuits, now pending, would not be material to operations. Should any loss result from the resolution of these claims, such loss will be charged to operations in the year of resolution.
m) Question: What funds have been received through the issuance of all shares?
Response: This is a duplicate question to f. (ii) from the general questions.
n) Question: What are present and future anticipated tipping fees in Hamilton I and in Richmond?
Response: $45/ton each plant.
o) Question: What is the end product price in Hamilton and in Richmond?
Response: $140 guaranteed (plus upside potential).
p) Question: Where can we obtain random samples of the end product?
Response: Visit one of the operating plants.
q) Question: Does the Mark II process achieve 100% Aerobic Thermophilic Digestion resulting in single cell microbia upon completion?
Response: [We were unable to address during the discussion.] Contact Dan Cummings to obtain an answer for this question.
r) Question: What is minimum tipping fee required to make a plant profitable?
Response: A $19/ton tipping fee.
s) Question: How profitable can a 600 ton per day plant be (please support with TRUE figures)?
Response: A 600 ton plant has yet to be operated. However, literature addressing this is provided from company in the IR packet (in "The Thermo Master Solution" handout). Estimates operating profits range from $7.4 million (year 1) to $11.8 million (year 15), prior to amortization, interest and taxes.
t) Question: Has the BoD considered and or approved a reverse split?
Response: As identified in the latest Form 6-K (Report of Foreign Issuer, for period ending January 31, 1999), the company has determined that it was not in the best interest of shareholders to take action on a reverse share split or rollback. Although the company announced that shareholders may be given the option to consider such action at some future date, there is no such plan to put such a question to shareholders and the company
is not considering a rollback. |
