UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934: For the quarterly period ended December 31, 2000.
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934: For the transition period from _______ to _________
COMMISSION FILE NUMBER: PENDING
THERMALTEC INTERNATIONAL CORPORATION
(Name of small business issuer in its charter.)
Delaware 11-3255619
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
68A LaMar Street, Babylon, NY 11704
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number (631) 643-2285
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and 2(2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ]No
The number of shares of Common Stock, par value $.0001, outstanding on
January 30, 2001 was 4,503,301.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Thermaltec International Corp. and Subsidiaries
Consolidated Balance Sheet
As of December 31, 2000
(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents $ 39,314
Trade Accounts Receivable 189,010
Inventories 131,592
Prepaid and Other Current Assets 63,644
-----------
Total current Assets 423,560
Fixed Assets
Machinery and Equipment 399,101
Leasehold Improvements 40,120
-----------
Gross Fixed Assets 439,221
Less: Accumulated Depreciation (215,108)
-----------
Net Fixed Assets 224,113
Other Assets
Goodwill, Net 424,477
Organization Cost, Net of Amortization 809
Other Assets 6,842
-----------
Total Other Assets 432,128
Total Assets $ 1,079,801
-----------
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Notes Payable $ 90,590
Vendor Accounts Payable 301,810
Other Current Liabilities 180,829
Due to Officer 35,000
Due to Shareholder 129,540
-----------
Total Current Liabilities 737,769
Long-Term Liabilities
Long-Term Debt less Current Maturities 67,331
-----------
Total Liabilities 805,100
Common Stock 450
Additional Paid-In Capital 3,890,561
Retained Earnings (Deficit) (3,646,604)
Accumulated Other Comprehensive Income:
Foreign Currency Translation Adjustment 30,294
-----------
Total Stockholders' Equity (Deficit) 274,701
-----------
Total Liabilities and Stockholders' Equity (Deficit) $ 1,079,801
===========
See accompanying notes to consolidated financial statements.
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Thermaltec International Corp. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For the
Three Months Ended
December 31
1999 2000
----------- -----------
Sales $ 57,057 $ 185,919
Cost Of Sales 35,327 119,041
----------- -----------
Gross Profit 21,730 66,878
General and Administrative Expenses 107,813 307,274
----------- -----------
Net Loss (86,083) (240,396)
Other Comprehensive Income:
Foreign Currency Translation Adjustment 3,295 3,629
----------- -----------
Total Comprehensive Income (Loss) ($ 82,788) ($ 236,767)
----------- -----------
Basic and Diluted Loss per Share ($ 0.03) ($ 0.06)
----------- -----------
Weighted Average Number of Shares Outstanding 2,490,420 4,361,551
----------- -----------
See accompanying notes to consolidated financial statements.
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Thermaltec International Corp. and Subsidiaries
Consolidated Statement of Cash Flow
(Unaudited)
For the
Three Months Ended
December 31
1999 2000
-------- ---------
Cash Flows from Operating Activities:
Net Loss ($ 86,083) ($240,396)
Adjustments to reconcile net loss to net cash used
In operating activities:
Depreciation and Amortization 5,328 23,799
Common Stock Issued for Services -- 108,952
Increases (Decreases) in:
Receivables (21,526) (62,512)
Inventories (6,014) 8,359
Prepaid and Other Current Assets (103) (17,527)
Other Assets 19 15,002
Increases (Decreases) in:
Accounts Payable 37,440 35,443
Accrued Expenses and Other Current Liabilities 7,288 (246)
--------- ---------
Total Adjustments 22,432 111,270
--------- ---------
Net Cash used in Operating Activities (63,651) (129,126)
--------- ---------
Cash Flows from Investing Activities:
Purchase of Fixed Assets -- --
Excess of Purchase Price of Net Assets Acquired -- --
Net Cash used in Investing Activities 0 0
--------- ---------
Cash Flows from Financing Activities:
Proceeds from sale of shares, net of offering costs -- 35,850
Proceeds from issuance of Long-Term Debt -- --
Common Stock issued for Debt -- --
Principal Repayment of Long-Term Debt (6,268) (14,423)
Net Proceeds (repayments) of Officer Loans -- (15,000)
Net Proceeds (repayments) of Shareholder Loans 21,667 92,947
--------- ---------
Net Cash provided by Financing Activities 15,399 99,374
--------- ---------
Effect of Exchange on Cash 3,295 3,629
Net Increase (Decrease) in cash and cash equivalent (44,957) (26,123)
Cash & Cash Equivalent, Beginning of Period 131,278 65,437
--------- ---------
Cash & Cash Equivalent, End of Period $ 86,321 $ 39,314
--------- ---------
See accompanying notes to financial statements.
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THERMALTEC INTERNATIONAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDING DECEMBER 31, 2000
(Unaudited)
1.BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared by management in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for financial statement presentation. In the opinion of
management, all adjustments consisting of normal recurring accruals considered
necessary for a fair presentation have been included. The results of operations
for interim periods are not necessarily indicative of the results to be expected
for the full year. These consolidated interim financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Form 10-SB which is filed with the Securities and Exchange
Commission.
2.GOODWILL
As a result of the purchase of High Velocity Technology, Inc. on May 19, 2000,
the Company has recorded, in consolidation, goodwill of $450,772. Goodwill is
being amortized on a straight-line basis over a life of ten years.
3.EQUITY TRANSACTIONS
During the three months ending December 31, 2000 the Company issued 180,000
shares for services to outside consultants as follows:
Marketing services 170,000 shares $ 102,052
Administrative services 10,000 shares $ 6,900
4.INCOME TAXES
No provision for income taxes was recorded for the three month period ending
December 31, 2000, due to a net loss having been incurred; the Company does not
anticipate the recording of a profit by the end of the fiscal year.
5.GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $240,396 for the three months ended December
31, 2000 and has incurred a substantial net loss in the prior year. At December
31,2000 current liabilities exceed current assets by $314,209.These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
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and classification of liabilities that might be necessary in the event the
Company cannot continue in existence.
6.MERGERS AND ACQUISITIONS
On January 31, 2000 the Company signed a letter of intent to acquire one million
shares, representing 10% of the outstanding shares of I(x) Partners, Ltd. I(x)
Partners, based in Salem, NH, is active in the field of information technology,
with a special emphasis on developing and enhancing real-time data processing
systems by means of the Internet. The acquisition was to have been effected by
the exchange of 200,000 shares of Thermaltec common stock; the completion of the
acquisition was subject to the usual due diligence process. Upon completion of
the due diligence process on December 14, 2000 the Company chose to withdraw
from further negotiations with I(x).
As of December 31, 2000 the Company does not have any other mergers or
acquisitions pending.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS
Thermaltec International Corp.
Results of Operations
Three Months Ending December 31, 2000 vs. December 31, 1999
For the Three months ended December 31, 2000, Thermaltec International had $ 186
thousand of consolidated sales, an increase of 226 % from the prior year's
comparative period, as the inclusion of High Velocity Technologies, acquired in
May, 2000 more than offset a decline in thermal coating revenues in the United
States. Gross margins were 36 %, a decline from 38 % in the prior year,
primarily reflecting lower margin on revenues from the New York State Energy
Research and Development Authority project, compared to the same period in the
prior year. Selling, general and administrative expenses were $ 307 thousand, $
199 thousand more than the prior period, of which $ 109 thousand was the result
of shares issued for services during the period. The inclusion of High Velocity
resulted in an increase in expenses of $ 90 thousand, compared with the prior
year's comparative period; expanded marketing costs in the U.S. accounted for a
further increase of $ 110 thousand.
Liquidity and Financial Resources
The Company has not yet achieved profitability since its inception in 1994. As a
result, it has limited the amount of the debt it has raised to cover only the
acquisition of assets with reliably predictable benefits, such as production
machinery. The Company is of the opinion that the financing necessary to fund
market development is more appropriately obtained through the sale of equity.
Debt outstanding as of December 31, 2000 consists primarily of $ 159 thousand of
notes payable and $ 34 thousand in equipment financing. Additional liquidity has
been provided by shareholder loans as of December 31, 2000 of $ 130 thousand.
Since inception, the Company has raised $2.4 million through the sale of common
stock other than stock issued in exchange for services.
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The financial statements of the Company have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $ 240 thousand for the three months ended
December 31, 2000 and has incurred substantial net losses for the prior year. At
December 31, 2000 current liabilities exceed current assets by $ 314 thousand.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.
The Company's payment terms for its receivables are thirty calendar days after
invoicing. At December 31, 2000, there were $ 35 thousand due from NYSERDA,
representing retainage under the terms of the original contracts for Phase I and
for Phase II. Upon completion of the project, the remaining balance is expected
to be paid by NYSERDA.
Inflation
The amounts presented in the financial statements do not provide for
the effect of inflation on the Company's operations or its financial position.
Amounts shown for machinery, equipment and leasehold improvements and for costs
and expenses reflect historical cost and do not necessarily represent
replacement cost. The net operating losses shown would be greater than reported
if the effects of inflation were reflected either by charging operations with
amounts that represent replacement costs or by using other inflation
adjustments.
Forward-looking Information
Certain statements in this document are forward-looking in nature and relate to
trends and events that may affect the Company's future financial position and
operating results. The words "expect" "anticipate" and similar words or
expressions are to identify forward-looking statements. These statements speak
only as of the date of the document; those statements are based on current
expectations, are inherently uncertain and should be viewed with caution. Actual
results may differ materially from the forward-looking statements as a result of
many factors, including changes in economic conditions and other unanticipated
events and conditions. It is not possible to foresee or to identify all such
factors. The Company makes no commitment to update any forward-looking statement
or to disclose any facts, events or circumstances after the date of this
document that may affect the accuracy of any forward-looking statement.
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings
There is no past, pending or, to our knowledge, threatened litigation
or administrative action which has or is expected by our management
to have a material effect upon our business, financial condition or
operations, including any litigation or action involving our officer,
director or other key personnel. There have been no changes in the
company's accountants, or disagreements with its accountants since
its inception.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
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Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders.
Item 5. Exhibits and Forms on 10K-SB
Exhibits:
27.1 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: 7 February 2001 THERMALTEC INTERNATIONAL CORP.
By: /s/
--------------------------------
Andrew B. Mazzone, President and
Chairman of the Board of Directors
Principal Financial Officer
Principal Accounting Officer
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