SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
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TTI HOLDINGS OF AMERICA CORP.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Information Statement,
if other than the Registrant)
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TTI HOLDINGS OF AMERICA CORP.
INFORMATION STATEMENT
THIS IS AN INFORMATION STATEMENT, AND NOT A PROXY STATEMENT. WE ARE NOT ASKING
YOU FOR A PROXY, AND YOU ARE NOT REQUESTED TO SEND IN A PROXY
To All Stockholders in
TTI HOLDINGS OF AMERICA CORP.
At a Special Meeting of Stockholders (the "Special Meeting") of TTI
HOLDINGS OF AMERICA CORP., a Delaware corporation (the "Company"), that was held
on May 29, 2001, at the offices of the Company, the Board of Directors, and the
majority of shares entitled to vote, voted to approve the following actions:
The Company shall declare a stock dividend of its subsidiary, Panama
Industries Ltd. of .333 shares for each share owned as of the record date. This
means that for every three (3) shares owned in the Company, you will be issued
one new share in the subsidiary. The new corporation will be called
THERMALCOATING SYSTEMS LTD. ("TCS"). The dividend has been declared with a
record date of June 22, 2001, and an effective date of July 2, 2001. The Board
of Directors has determined that the operations that made up the Company, prior
to the recent acquisitions, would be better off in a separate company, with its
own goals.
The Company will shortly after the filing of this Schedule 14C
Information Statement, file with the SEC a Form 10-SB to register the shares of
TSC under the 34 Act, in order to make the new company a "reporting company" and
eligible for listing on the NASDAQ OTC Bulletin Board.
The Company has begun closing on the CORF's as previously announced. It
will continue to concentrate on these acquisitions. Because of the two extremely
diverse types of business, it has been decided by the Board of Directors to
"spin off" the old business into another publically traded company.
Please review all of the information carefully.
Sincerely,
Andrew B. Mazzone,
President
Hicksville, New York
TTI HOLDINGS OF AMERICA CORP.
76 North Broadway
Suite 3000
Hicksville, New York 11803
(516) 931-5700
INFORMATION STATEMENT
GENERAL
This Information Statement is furnished in connection by the Board of Directors
of TTI HOLDINGS OF AMERICA CORP. (the "Company"), in connection with the stock
dividend in the subsidiary of the Company, to be called Thermalcoating Systems
Ltd ("TCS") of .333 share for each one (1) share of the Company owned as of the
record date of June 22, 2001, effective as of July 2, 2001. Effectively, for
each three (3) shares owned in the Company, the shareholder will receive one (1)
dividend share (the "Dividend Shares").
The Company's Board of Directors approved the resolutions on May 29, 2001. A
Written Consent of Shareholders was executed on May 29, 2001.
As a result of these actions, the Company will, on July 2, 2001, issue to all
shareholders of record on June 22, 2001, Dividend Shares in TSC as described
above.
The Company intends to file a Form 10-SB, prior to the date of issuance of the
shares of TSC. This is to be done to make TSC eligible to be traded on the
NASDAQ OTC Bulletin Board.
TSC is to consist of the operations of the Company, prior to the recent
acquisitions. The original business is so diametrically opposite from the
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
concerning the beneficial ownership of the Common Stock, (i) by each stockholder
who is known by the Company to own beneficially in excess of 5% of the
outstanding Common Stock; (ii) by each director; (iii) by each executive
officer; and (iv) by all executive officers and directors as a group. Except as
otherwise indicated, all persons listed below have (i) sole voting power and
investment power with respect to their shares of Common Stock, except to the
extent that authority is shared by spouses under applicable law, and (ii) record
and beneficial ownership with respect to their shares of Common Stock.
Out of a total of 6,560,775 shares of Common Stock, which have been issued and
are outstanding, as of May 29, 2001, Officers, Directors and Beneficial Owners
held 2,678,982 shares of Common Stock as follows:
Shares Percent
--------- -------
Andrew Mazzone(1) 1,152,000 17.6%
513 Dryden Street
Westbury, NY 11590
Laura Klein(2) 225,000 3.4%
2 North Broadway
Apt. 4F
White Plains, NY 10601
Kevin Klein(2) 225,000 3.4%
52 Webster Ave
Apt. 20
New Rochelle, NY 10801
Robert J. Lalumiere(3) 250,000 3.8%
P.O. Box 896
Enfield, NH 03748
Benjamin S. Eichholz(4) 826,982 12.6%
301 West York Street
Savannah, GA 31401
Directors, Officers and 2,678,982 40.8%
Beneficial Owners
(as a group)
-----------------------------
(1) Andrew Mazzone was issued 1,425,000 shares on November 21, 1995. Mr.
Mazzone sold 225,000 shares each to Kevin Klein and to Laura Klein in private
transactions in 1998.
(2) Kevin and Laura Klein are brother and sister; both disclaim beneficial
ownership to each other.
(3) Robert J. Lalumiere, President of Panama Industries, Ltd., was issued
250,000 shares pursuant to the acquisition of High Velocity Technologies, Inc.
in May 2000.
(4) Benjamin Eichholz was issued 826,982 shares pursuant to various
acquisitions in May 2001.
STOCK DIVIDEND OF SUBSIDIARY OF TTI HOLDINGS OF AMERICA CORP.
The Board of Directors of the Company has declared a dividend, payable in stock,
at the rate of .333 share for each one (1) share owned of the Company on the
record date in the subsidiary of the Company, known as Panama Industries, Ltd.
Effectively, this means that for each three (3) shares owned in the Company, a
shareholder will receive one (1) share in the subsidiary (the "Dividend
Shares"). The Board of Directors of the Company has declared June 22, 2001, as
the record date for this share dividend, with a payment date of July 2, 2001.
The subsidiary, Panama Industries, Ltd., will change its name, prior to July 2,
2001, to Thermalcoating Systems Ltd. ("TCS").
The business of TCS consists of the operations of the Company prior to its
recent acquisitions. It is fully described in the Company's Form 10-SB,
originally filed on April 7, 2000 and amended thereafter.
Briefly, the business can be described as follows:
Thermal spraying is a technology used by Thermaltec International to coat a
substrate (surface) with various materials such as metals, alloys, carbides,
ceramics, and some plastics. The coating material utilized depends upon the
requirements of each specific application.
The coatings utilized by Thermaltec International are produced from materials in
the form of either wire or powder. The material is melted in a flame or heat
source, and projected onto a substrate by a mixture of air flammable gases to
form the coating. The air, flammable gases and coating are brought together in a
flame in the nozzle of the gun where the coating is melted ! and sprayed forward
onto the surface to be coated. The gases and molten coating are cooled by the
surface and the coating adheres to the surface.
Thermal spray coating technology can be utilized in situations in which metal
surfaces are worn from use or exposed to erosion or corrosion. A few of the most
common applications include the rebuilding of mechanical parts, the protection
of pipes (inside and outside) from corrosion, and the repair of crankshafts,
turbine blades and pumps.
Thermal spraying is a generic term used to describe a number of different
technologies. Each sub-technology shares a common element in that molten or
semi-molten metal particles are propelled !onto a substrate where they adhere to
form a coating. Each sub-technology involves trade-offs among coating quality,
deposition rates, and cost. Each of the thermal spray technologies is discussed
in greater detail below.
Thermal spray technology is a subset of materials science and surface coating
engineering. Using thermal spray, technicians can apply a thick or thin metal or
ceramic coating on top of a metal substrate. The coating is bonded strongly to
the substrate, because the process projects molten particles onto the targeted
surface at high, sometimes hypersonic, velocities. The coatings are thus applied
with a combination of thermal and kinetic energies.
Since it is usually only the exposed surface of parts that are subjected to
stresses such as wear, erosion, or corrosion, it is possible using this
technology to economically protect such surfaces. The required protection can be
provided with thin coatings, using relatively little material. As a result, high
performance coatings and even exotic materials can be utilized at limited cost.
The thermal spray process is widely used to solve corrosion and wear problems in
Europe, North America and Japan. Estimated sales are $1,800,000,000 -
$2,000,000,000 per year for North America as published in the Gorham Report for
1999. Estimates for Japan and Europe are not available. The registrant's
estimates have been replaced by the authoritative industry Gorham Report
published by Gorham Advanced Materials Institute, Gorham, Maine 04038.
The Company develops its business primarily by training a sales force of
mechanical or metallurgical engineers, and having them call on leading
industrial companies in the markets where its thermal spray shops are located.
At the present time, Costa Rica is the company's main prototype installation;
New York is a smaller prototype. In Costa Rica, Thermaltec International does
business with over 300 customers. A typical method of operation would have an
engineer call on a customer who uses industrial machinery. Industrial equipment
is subject to wear. Thermaltec International's engineers would assess the wear
problem, and recommend a thermal spray solution. If needed, the worn part would
be taken out of service, and shipped to the thermal spray shop. A coating
designed to solve the problem would be applied, and then the part would be
ground or machined to original specification and returned to the customer. Often
24-hour turnaround can be achieved. The Company maintains a full complement of
coating devices and metalworking finishing equipment.
The use of this service has value to third world industries because: (1) the
repair is generally cheaper than the cost of a new part, and the turnaround of
the refurbished part is much quicker than reordering a new one. (2) Downtime of
the customers' equipment is minimized. (3) The inventory of customers' spare
replacement parts can be minimized by the accessibility to the thermal spray
process. Pricing usually targets at 40% to 50% the cost of buying a new part.
Prices above and below that target are influenced by need for quick turnaround.
Specific Technologies of Thermal Spraying:
Wire Flame Spraying
Coating material in wire form is fed into an oxygen-fuel gas combustion flame,
melted, and then atomized and projected by compressed air onto a prepared
substrate (the object to be sprayed upon). This is the oldest of the thermal
spray processes used in industry today. This process, because of the inherent
nature of the gases used, achieves a relatively low velocity flame with a
temperature maximum of 55000 F. The process is simple to use and is employed
heavily in industry for rebuilding lightly worn surfaces, anticorrosion and mild
wear resistant application.
Powder Flame Spraying
Coating material in powder form is fed into an oxygen-fuel combustion flame,
melted, and projected by the gas stream onto a prepared substrate. The key
difference between this and wire flame spraying is that the coating material is
a powder; the powder form lends itself to a greater variety of formulations.
Electric Arc Spraying
Coating material in wire form is electrically charged when two wires are brought
together and an arc is struck between them. Compressed air atomizes the molten
material and projects it onto a prepared substrate. This process allows for
higher deposition rates, and higher quality coatings than traditional flame
spraying.
Plasma Spraying
Coating material in powder form is fed into a heat source created by using a
high intensity electric arc, which disassociates and ionizes into a plasma gas,
either of hydrogen or nitrogen. The plasma gas is used as a carrier to transfer
the heat available in the arc to the particles of material being sprayed. The
melted particles are projected at high velocity by the plasma gas stream onto a
prepared substrate. The plasma process was developed in the late 1950's and was
a technological development that allowed tremendous growth in the thermal
coatings industry. Because of the high temperatures involved, virtually any
material can be sprayed, and the high temperatures produce good coatings. Plasma
spraying is currently utilized by industry and in particular, the aerospace
industry.
HVOF (High Velocity Oxygen/Fuel) / HVAF (High Velocity Air/Fuel)
Coating material is fed into a mini rocket chamber and mixed with either air and
kerosene (HVAF) or oxygen and propane (HVOF). A high velocity combustion flame,
melts, and then projects the material onto a prepared substrate. This process
was developed in the mid-1980's and is the l!atest development in thermal spray
technology. The extremely high particle velocity (4000' per second) achieved in
this process causes the particles to flatten upon impact with the substrate,
resulting in high density, high bond strength coatings that are essentially
stress free and of very low porosity.
The Company utilizes all of the following processes: wire flame spraying, powder
flame spraying, electric arc spraying, plasma spraying, high velocity
oxygen/fuel, and high velocity air/kerosene.
Industries Using Thermal Sprayed Coatings:
Industry Key Applications
-------- ----------------
Chemical Processing Solving corrosion problems in processing equipment.
Textiles Used on mill components such as guides and pins.
Medical/Dental Titanium and hydroxyapatite coatings on medical and
dental implants to prolong life and reliability.
Iron and Steel making Rolls, conveyors, thermal barriers.
Electronics Dielectric coatings and coatings on recording heads
to improve quality and prolong life.
Agricultural A wide variety of erosion and corrosion resistant
coatings for machine parts.
Aerospace Wear resistant and thermal barrier coatings for the
operating parts of turbojet engines.
Automotive Wear resistant coatings for cylinders and
transmission parts. Corrosion resistant coatings,
oxygen sensor coatings to regulate fuel air flow.
Railroad Traction motors.
Other industrial uses are found in the Petrochemical industries, pumps, paper
and pulp manufacturing, power plants, electric motor repair, food handling, and
diesel engines.
There are over 4,000 different industrial applications for thermal coatings.
Competition:
The Company may experience competition from different sources. First, the
traditional manufacturers of thermal spray equipment and supplies i.e. Sulzer
Metco, Westbury, NY, Eutectic Corporation, Flushing, NY, and Praxair Inc.,
Danbury, Connecticut, etc. Although primarily engaged in selling equipment and
supplies, the users of the thermal spray processes are shifting their strategy
to become prime users also of the process.
In further characterizing the competition in thermal spraying, the two largest
original equipment manufacturers in the United States are Sulzer Metco and
Praxair. Between them they control over 65% of the market share in the U.S.
Their combined sales in the U.S. are estimated by the Company at over $160
million. The company even with its acquisition of High Velocity Technology will
only obtain at best a $1.5 million estimated sales in the next 12 months or less
than 1% of the market share. The contract shop business is estimated at
$800,000,000 per year with over 200 companies competing in that market. The
company would estimate that its revenues would not exceed $400,000 in sales in
the next 12 months, or less than 1% of the contract shop market.
In the Costa Rican market, the competition for original equipment is Eutectic
Corporation of Flushing, NY. It is expected that they will sell $50,000 worth of
equipment and supplies in Costa Rica. The company does not intend to sell any
original equipment in Costa Rica for reasons of not wanting to create new
contract shop competitors. In the contract shop side of the business the company
believes that combined competitive work does not exceed $100,000 per year.
Therefore, we estimate that the company has about 60% of the current thermal
spray business in Costa Rica.
Management of the Subsidiary:
Upon the distribution of the dividend on July 2, 2001, TSC will become a
separately owned corporation from the parent, TTI. At that date, TSC will have
the same shareholders as TTI, but will have its own management and officers and
directors.
Currently, Andrew B. Mazzone, Chairman and President of TTI will become the
Chairman of the Board of Directors and the President of TSC. It is the intention
of TSC to add two more members to the Board of Directors as soon as possible.
Mr. Mazzone, will resign as President of TTI, but will remain as Chairman after
July 2, 2001. TTI will announce the appointment of a new President and
additional Board Members shortly.
TAX CONSEQUENCES
Neither TTI nor TSC makes any representations to any shareholder about the tax
consequences of this dividend. All shareholders are urged to discuss this matter
with their tax consultant or advisor. The following can be used as a summary and
guide.
The distribution of the shares of Panama Industries to a Thermaltec stockholder
may result in the stockholder recognizing taxable gain without receiving any
cash to pay the resulting tax liability. All shareholders should be aware that
no appraisal of the fair market value of the shares of TSC will be obtained by
either TSC or Thermaltec at the time of the distribution. If the fair market
value of the shares of Panama Industries received by a Thermaltec stockholder is
subsequently determined to be greater than the stockholder's basis in his shares
of Thermaltec stock as of the date of the distribution, the difference will be
treated as a capital gain for federal income tax purposes. If the stockholder
has held his Thermaltec stock for more than twelve months, the gain will be a
long-term capital gain. A holding period of twelve months or less will result in
a short-term capital gain. Thermaltec has received an opinion from its legal
counsel as to the federal income tax effects of the spin-off.