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Technology Stocks : Thermo Tech Technologies (TTRIF) -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (3880)	4/6/1998 10:57:00 AM
From: Casey	Respond to of 6467

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.

To: Zeev Hed who wrote (3880)	4/6/1998 11:02:00 AM
From: Casey	Respond to of 6467

Zeev: oops! I gues there is too much text, the post didn't work, so this is 2 of 3: 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 continued into the Canadian federal jurisdiction under the Canada Business Corporations Act, effective December 2, 1997. The continuation is reflective of the Company's expansion and evolution as a Company with national and international business interests. The Company has an exclusive license 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. Our main goal remains the same and is described by the Company's mission statement: to effectively assist the global environmental crisis in waste management by utilizing our patented thermophilic fermentation process to convert wet organic waste to valuable end products, in a way which provides financial benefits to our shareholders, venture partners and communities where we operate. This overall approach enables the Company to continually grow, to construct new plants and to attract the interest of corporations, governments and individuals on a global basis. Our business strategy is clear. Thermo MasterT Plants will be marketed in North America and Internationally through Thermo TechT Waste Systems Inc. providing shareholders maximum benefit from delivery of Thermo MasterT Plants to the world market. The Company continues to build a top management team by building on its strengths and adding experienced professional individuals who base their careers on a reputation for performance. The recent appointment of Karl Gonnsen, P.Eng. as Manager of Engineering in charge of operations demonstrates the latter point. Further details of this appointment are found in the following section. As the Thermo MasterT Plant has now proven itself with respect to profitability through operations at Hamilton Bio Conversion, priority is being given to identifying and securing attractive debt financing for plant development and to marketing plants. The Company is in the final stages of arranging 100% non-recourse debt financing for its projects in Niagara Falls and Oshawa Ontario and plans to use this type of financing whenever possible. RECENT BUSINESS ADVANCES BY THE COMPANY In the first three quarters of the current fiscal year, the Company realized many significant advances. ú Hamilton Bio Conversion Inc. has operated profitably, exceeding its financial targets, through the first nine months of the current fiscal year. Third quarter results show Hamilton returning profit before amortization of $1,688,000 and Hamilton is projected to achieve $2,251,000 by fiscal year end. Third quarter profit is $359,000 ahead of financial projections. Hamilton Bio was designed and built as a 200 ton per day facility but operational experience showed the fermentation process/thermophilic plant capable of performing at 300 tons per day. Upgrades and retrofits which will be complete by April 30, 1998 will allow the remainder of the plant to consistently process at 300 tons per day. This provides for an increase in revenue of 50%, with only minimal increase in overheads and cost of operations. ú Installation and start-up of a highly efficient evaporator has been completed at the Hamilton Thermo MasterT Plant. The new evaporator is increasing finished product yields and revenue, while eliminating the cost for removal of excess process water. This effectively completes a major component of the program to eliminate engineering deficiencies in the plant. ú Hamilton Bio Conversion expansion construction is proceeding on schedule. The expansion at Hamilton to 300 tons per day will be completed in April. The new Model 4 Thermo MasterT Plant will be completed in June. It is located immediately adjacent to the existing Model 3 Hamilton plant. Total daily capacity will be 700 tons. Sewage sludge will be processed in the new Model 4 plant with a shorter retention time which will increase capacity. ú Hamilton Bio Conversion Inc. is now 100% owned by the Company. The purchase of the remaining minority interest in Hamilton Bio Conversion and the land on which the Hamilton plant is located was completed on January 16, 1998. ú Ontario Thermo TechT creates vertical integration of business and major new revenue streams for the Company. This new company results from a 50/50 joint venture between Ontario Disposal and Thermo TechT Waste Systems. The Company acquired a half interest in two transfer stations, Northwood Recycling and Energy Inc. and Power Grow Systems Inc. Each of these will in turn own and operate a 400 ton per day Thermo MasterT Plant, expandable to 600 ton per day capacity to be constructed by Oshawa Bio Conversion and Niagara Bio Conversion. Ontario Thermo TechT currently receives revenue from both the transfer stations and will receive future revenue from the Thermo MasterT Plants, which will commence operations at total capacity of 800 tons per day able to expand to total tonnage of 1200 tons per day as soon as the market indicates. Northwood is permitted to receive 800 tons per day of waste at current tipping fees of $75/ton. This alone represents revenue of $60,000 per day, growing to $75,000 per day over the next two years. The Oshawa Thermo MasterT Plant, which will be part of the package, is projected to contribute another $24,000 per day. Tipping fees in Durham Region are expected to increase to $93/ton by the year 2000. The nearest landfill (Brock Road) has shut down and Toronto's Keele Valley Landfill is to close in the next 3-4 years, assuring a large supply of waste materials. Power Grow is the only transfer station in Canada which is permitted to receive waste from the United States and is in an ideal location to serve New York State. Power Grow is permitted to have 100,000 tons of waste under management on its 66 acre site in Niagara Falls, Ontario. Niagara Bio Conversion is siting its Thermo MasterT Plant there. Ontario Thermo TechT will also provide administrative services for the entire Ontario operation of Thermo TechT, thus providing greater operational efficiency and coordination of waste sourcing. This is anticipated to enhance the profitability of the Company's Ontario operations due to the success of Harvey Ambrose and Todd Dupuis in the waste management business. Ontario Thermo MasterT plants in operation and under construction have total tonnage capability of up to 1,900 tons per day. The Company projects annual revenue potential from Ontario Thermo TechT in excess of $100,000,000, upon completion of the Oshawa and Niagara Thermo MasterT Plants. The partner in this venture, Mr. Harvey Ambrose, has 35 years experience in the waste industry, especially the management of biosolids with over 200,000 acres permitted for land application of sludge. The Thermo MasterT solution is seen by Mr. Ambrose as a major improvement in this business. ú 100% Non-recourse debt financing is being finalized for both the Oshawa and Niagara Falls Thermo MasterT Plants. This package will provide 100% debt financing for these plants. But, more importantly, the process that has produced this financing program will be able to be used to complete financing for future projects. When fully completed, this non-recourse debt financing will represent a full endorsement of the soundness of the Thermo MasterT Plant design and the thermophilic process, the access to raw materials at attractive prices, a market for finished products, the profitability of the Thermo MasterT Plant operating model and above all, the strength of the management team. ú Construction of the new model 6 Thermo MasterT Plant in Richmond, Canada began January 13, 1998. This state-of-the-art Model 4 Thermo MasterT Plant combines the patented Thermo MasterT Process with four other major technologies that make the Thermo MasterT Plant. The project engineer, Stothert Engineering has provided the detailed construction schedule, with each stage locked in and leading to plant start-up in late July. The Company has scheduled the plant opening for July 26, 1998. Richmond is to serve the Vancouver market of more than 1.6 Million people. Richmond will be built to 600 ton per day capacity. By August, Hamilton and Richmond will have combined current operating capacity of 1,300 tons per day. When combined with Oshawa Bio and Niagara Bio later in the year, the Company's total capacity will rise to 2,100 tons per day with expansion capability to 2,500 tons per day. Full capacity expansion is seen to be achievable in both markets. ú Halifax Bio Conversion received the official environmental permit from the Nova Scotia Department of the Environment on January 15, 1998. Completion of this project later in the year will add another 600 tons per day capacity bringing the Company total to 2,700 tons per day, with expansion capacity to 3,100 tons per day, excluding any of the other plants expected to be completed within the calendar year. ú The Company has contracted Clarke & Company to provide services in the area of public and investor relations as well as issues management. Clarke & Company is a highly respected firm in its field and enjoys an extensive client list filled with corporate leaders in virtually every sector of commerce from North America and around the world. The public list of clients provided by Clarke & Company includes Industry giants such as IBM, Miller Brewing and W.R. Grace as well as the Boston Marathon, Massachusetts Port Authority and Tiffany and Company employ Clarke and Company to assist them. Clarke and Company is an important part of Thermo TechT's strategy to increase awareness for major analysts and institutions, and to expand its business. Thermo TechT has made itself fully ready to deliver Thermo MasterT Plants. It has operated "the plant" profitably, exceeding the projections of the Thermo MasterT Model. It has refined its Thermo MasterT Plant design to be highly effective, efficient and unique in the world. It has been carefully building the management team it needs to market and deliver plants to a waiting market. Clarke and Company helping management share this news with the market and the world. ú Continental Capital has been contracted to increase awareness in the investor and brokerage community. Continental Capital and Equity states that it "was founded to bridge the gap between publicly traded company's, investors and the brokerage community." The role of Continental Capital is to tell the financial community about Thermo TechT, an undiscovered and undervalued gem in the marketplace. Continental publishes Inside Wall Street, a well recognized journal for investors, brokers and the financial community. Thermo TechT will be featured in an upcoming issue. ú Stothert Engineering has become new project managers for the Company. Stothert Engineering Ltd, is a well respected engineering firm which has worked with the Company over a period of many years. They will provide project management for Thermo MasterT Plant construction and ensure that it is efficient and effective. As project managers they will see that individual Thermo MasterT Plants are built to specification, on time and on schedule, regardless of where they may be located. Effective project management is a key element in the Company strategy for the rapid roll-out of new plants in North America and around the world. Stothert will oversee and coordinate detailed feasibility studies which are to be conducted prior to approval of each new plant project. These studies are a key aspect of assuring that each project is viable and attractive for the Company and the partner. Both parties can be assured that all the critical aspects of the project and market conditions are properly researched and assessed prior to the commitment to proceed. ú Mr. Karl Gonnsen, P.Eng. joined the Company as Manager of Engineering. Mr. Gonnsen is President of Metropolitan Planning and Engineering. Karl Gonnsen spent 21 years as project manager for the City of Burlington in Ontario. Mr. Gonnsen and Metropolitan have served the Company for approximately 7 years in providing services related to acquisition of environmental permits and site selection. Metropolitan continues to provide this service. Mr. Gonnsen made the decision to move to Vancouver in order to provide engineering management services so the Company can meet better meet its objectives. This commitment is a large endorsement of the Company. ú The Company announced the incorporation of U.S. Thermo TechT Inc. which will lead the way to the U.S. market. It will open its Head Office in Washington State. U.S. Thermo TechT will focus on effective marketing of Thermo MasterT Plants and rapid penetration of the U.S. market. ú The Company is receiving many international contacts as its reputation spreads. Partnership potentials, agency agreements and financing possibilities are rapidly emerging for firms in Japan, Korea, the United Kingdom, Saudi Arabia and Russia. Interest is global in scope with every corner of the Earth represented. Hyundai Precision & Ind. Co. Ltd, an affiliate company of the Hyundai Business Group, is just one of the many firms working with the Company to develop working relationships and establish Thermo MasterT Plants. Summary of plant operations and development of new plants. Hamilton Bio Conversion Inc. The flagship Thermo MasterT Plant of Hamilton Bio Conversion has exceeded projected profitability throughout this fiscal year. Despite the difficulties of working around retrofit and expansion construction, Hamilton has produced profit before amortization that exceeds projections. $359,000 more profit before amortization was achieved than was projected for the end of the third quarter. $479,000 more profit before amortization is projected over over the model by year end. The plant was designed, permitted and built to 200 ton per day capacity. With the retrofit and the expansion, Hamilton will have 3.5 times that capacity. $12,000,000 or more in annual revenue is projected due to Increases in capacity. This plant, alone, will provide sufficient profit to bring the Company to profitable operations. The new evaporator is in full operation. The upgraded Hamilton Plant is a Model 3 Thermo MasterT Plant. Construction is well advanced on the new Model 4 Thermo MasterT Plant which is located on the Hamilton site. The Model 4 plant will be dedicated to processing biosolids residuals. By July, Hamilton will be able to process 700 tons per day. Brampton Bio Conversion Inc. Brampton continues to expand its business and has added a third receiving bay to handle its capacity. Brampton provides fast, efficient and secure depackaging services to an expanding list of name brand manufacturers such as Coca Cola, Mead Johnson, Wyeth Ayerst, Nestl‚, Pepsi Cola, Nabisco, Beatrice Foods, Quaker Oats, Ault Foods, Campbell Soups, and others. Secure depackaging and full recycling capability make this service highly attractive to clients. This full recycling capability is what makes Brampton successful. Finally, generators have an option that gives them recycling not only of the container, but of the contents as well. The recycling "loop" is truly closed. The Company is receiving demands for depack facilities in association with Thermo MasterT Plants. The success of Brampton is a model for other locations where manufacturers require this modern, sophisticated approach to full recycling and responsible "destruction" services for over-date and out of specification products. Richmond Bio Conversion Inc. . Site work commenced in the second half of January after an official ribbon cutting on January 13, 1998. Stothert Engineering, the project managers have provided the Company a firm construction schedule. The construction is ongoing according to the schedule. Commissioning and start-up are set for July. Richmond Bio Conversion is the Company's showcase plant for its state-of-the-art, third generation Model 6 Thermo MasterT Plant. With completion of this plant the Company will have a full group of flagship plants, including the Model 3, Model 4 and Model 6 Thermo MasterT Plants.

To: Zeev Hed who wrote (3880)	4/6/1998 11:03:00 AM
From: Casey	Read Replies (1) \| Respond to of 6467

Zeev: Heres 3 of 3: Oshawa Bio Conversion Inc. As detailed elsewhere, Oshawa Bio Conversion is part of Ontario Thermo TechT. This Model 4 plant will be located approximately 35 miles to the East of Toronto, Canada's largest city. It will be owned by Northwood Energy and Recycling. This plant will be 100% financed through non-recourse debt financing arranged jointly by Thermo TechT and Ontario Disposal, its partner in Ontario Thermo TechT. Niagara Bio Conversion Inc. This plant is also part of the Ontario Thermo TechT package and will be located at the Power Grow site in Niagara Falls, Ontario. It will be constructed to 400 ton per day capacity with possibility to expand to 600 tons. Its location near the Fort Erie/Buffalo border crossing puts it in an ideal location to service the Niagara Region and the U.S. Niagara Frontier. It will be supplied with debt financing through the a non-recourse financing facility similar to that to be used for Oshawa Bio Conversion. In combination with Oshawa Bio, Hamilton Bio and Brampton Depack Center, Northwood and Power Grow, Niagara Bio Conversion will be part of an integrated package to provide full service waste management to Ontario's Golden Horseshoe region. Halifax Bio Conversion. On January 15, 1998 the Nova Scotia Department of the Environment issued the "Industrial Approval Permit" for Halifax Bio Conversion Inc. This is the main environmental permit for this project and allows all other aspects of this project to proceed toward plant construction. Local authorities are working closely with the project team to ensure that each step of the project development is completed as efficiently as possible. The project development team is working to complete the securing of waste streams and to finalize other details necessary for construction to commence. New England States. New England represents a major market for both biosolids and food wastes. Representatives of the Company have been working together with officials from one of the largest wastewater treatment firms in the United States to locate potential projects which can be jointly developed, starting in the state of Massachusetts. Projects are being evaluated for Carver, Springfield, Martha's Vineyard and Fort Devens Massachusetts. Massachusetts and adjoining states offer a ready market for the superior Thermo MasterT Technology and will be a primary target area for Thermo MasterT Plant development. Massachusetts Department of Environmental Protection. The Company is working to open the North Eastern United States for rapid plant construction. In support of this goal, the Company has been working with the Massachusets DEP to deepen their understanding of how the Thermo MasterT Process and Plant can benefit the environment through effective organic waste management. A presentation made in February regarding the Thermo MasterT Process as an environmentally sound solution for organic waste problems was very positive and well received. The Company left the meeting participants with one clear message which was that the Thermo MasterT Plant must enter any community as a technologically sound project but also as a welcome partner in the effective management of organic wastes. Corinth Bio Conversion Inc. The Company is completing details of a settlement of the outstanding issues related to the Corinth Plant and the joint venture partner. This will free the Company to undertake the dismantling, relocation and marketing of the Model 1 Thermo MasterT Plant. New York State. The area surrounding New York City is a major focus for the Company. The immense population and business base in the area makes this region a potential market for a number of Thermo MasterT Plants. The Company is working with a number of partners to develop this area and provide the financing packages needed to rapidly site plants. Washington State. The Company is confident that Washington State represents a major opportunity for placement of Thermo MasterT Plants. Development activity is moving forward on individual opportunities for Seattle (King County), Olympia, Vancouver, Skagit County and in Yakima County Washington. Although the Skagit project is still progressing, the Company must give top construction priority to projects with the highest potential returns for shareholders. A large waste generator in the Seattle area has expressed interest in a joint venture for a Model 4 Thermo MasterT Plant which would solve its waste management needs and provide an opportunity to handle other wastes as a net revenue generator. International. The Thermo MasterT Plant is developing more and more interest in the international market. Development of these markets will fall to the Company's international division, International Thermo TechT. The Company is looking at the best ways to move forward, but it is clear that every international project must be preceded by a thorough feasibility study. International Thermo TechT has tools in place to complete a full, in-depth feasibility study for any potential partner ready to commit US$50,000 to complete such a detailed study in support of a proposed project. This study will be conducted under the direction of Stothert Engineering, the Company's engineering consultant in this area. The study will determine, in detail, the amount, price, ownership and availability of waste streams, infrastructural, regulatory and political aspects of the market and the potential of the Thermo MasterT Plant. The fee will be applied to the project cost when plant construction goes ahead. RESULTS OF OPERATIONS Nine months ended January 31, 1998 and 1997 $1,594,630 improvement in profits before expenses was recorded by the Company. Profit before expenses of $1,033,175 was recorded for the nine months ended January 31, 1998 compared to a loss of $561,455 for the nine months ended January 31, 1997. $604,368 increase in revenue was achieved. $990,262 decrease in operating costs was recorded. This 37.5% decrease in operating costs is another milestone that the Company has met. $2,091,248 improvement was recorded in net loss before non-cash, non-recurring and R&D costs. This was a result of reducing this item to $2,837,594 at January 31, 1998 from $4,928,842 a year earlier. The Company's investment in engineering improvements has been significant. These designs, which have been guaranteed by Dick Engineering, will assure delivery of highly effective Thermo MasterT Plants for the Company's present and future business expansion. The expense has been largely absorbed in the current fiscal year. These changes have contributed to the profitable operation of Hamilton Bio Conversion and allowed the Company to undertake the expansion of that facility to three and a half times its original construction design of 200 tons per day. The Company is now ready and has committed to its construction program for new Thermo MasterT Plants, which began January 13, 1998 in Richmond, B.C. $196,955 savings was recorded in selling, general and administrative cost. The saving was realized even though the Company continues to undertake a number of new ventures and has stepped up its marketing program in support of new plant establishment throughout North America and the World. $38,016,215 in assets was recorded by the Company at January 31, 1998. $6,783,210 was the increase over assets of $31,233,005 at April 30, 1997. The increase in assets resulted from increased working capital and investments in the Thermo MasterT Process and Plants. Assets are projected to demonstrate strong growth as plant projects already in construction or about to commence, are completed over the first and second quarter of the next fiscal year. The expansion of Hamilton Bio Conversion, construction at Richmond and the Northwood and Power Grow acquisition through Ontario Thermo TechT will continue the strong trend of asset growth, in the fourth quarter of the current fiscal year. The Company has no long term debt and is in an excellent position to expand its Thermo MasterT Plant development program which began in January with the construction start of Richmond Bio Conversion Inc. Liquidity and Capital Resources $3,231,606 working capital was reported at January 31, 1998. This compared to a $77,659 deficiency at January 31, 1997. $3,473,012 was the Company's cash position at the end of the third quarter. The Company has received US$1,750,000 pursuant to a previous financing. Due to certain defaults by the purchaser, the Company has taken the position certain conversion provisions and registration rights are not effective. The Company is in a strong position to employ cash and draw upon a US$26,000,000 convertible debenture to provide the equity portion of new plant projects. The Company intends to employ debt financing for at least 75% of each project. Performance of the Hamilton plant and assured waste supply streams have made it possible to enhance access appropriate debt financing facilities. The endorsement represented by the Ontario Disposal joint venture is a major step forward. The Company also intends to establish joint venture or similar arrangements with waste management industry participants in selected markets for financing, construction, and operation of Thermo MasterT Plants. Cash proceeds from joint venture agreements are expected to finance a portion of the cost associated with the construction of additional plants. The Company intends to enter into major financing arrangements for multiple projects and is currently in negotiations with several organizations capable of providing such debt financing packages. PART 11 OTHER INFORMATION Item 1. Legal Proceedings The Company has been named as a defendant in two lawsuits commenced in British Columbia. 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. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information