UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934: For the quarterly period ended March 31, 2001.
[ ] 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
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TTI Holdings, Inc (formerly Thermaltec International Corp)
(Name of small business issuer in its charter.)
Delaware 11-3255619
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(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
76 North Broadway, Hicksville, NY 11704
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(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number (516) 931-5700
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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 March 30,
2001 was 4,644,755.
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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TTI Holdings, Inc. and Subsidiaries
Consolidated Balance Sheet
As of March 31, 2001
(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents $ 63,588
Trade Accounts Receivable 196,006
Inventories 151,265
Prepaid and Other Current Assets 37,570
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Total Current Assets 448,429
Fixed Assets
Machinery and Equipment 395,049
Leasehold Improvements 40,120
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Gross Fixed Assets 435,169
Less: Accumulated Depreciation (222,742)
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Net Fixed Assets 212,427
Other Assets
Goodwill, Net 413,372
Organization Cost, Net of Amortization 809
Other Assets 6,729
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Total Other Assets 420,910
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Total Assets $ 1,081,766
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Notes Payable $ 121,899
Vendor Accounts Payable 295,527
Other Current Liabilities 134,644
Payment for Shares not Issued 31,000
Due to Officer 35,000
Due to Shareholder 21,055
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Total Current Liabilities 639,125
Long-Term Liabilities
Long-Term Debt less Current Maturities 56,677
Total Liabilities 695,802
Common Stock 464
Additional Paid-In Capital 4,099,327
Retained Earnings (Deficit) (3,747,786)
Accumulated Other Comprehensive Income:
Foreign Currency Translation Adjustment 33,959
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Total Stockholders' Equity (Deficit) 385,964
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Total Liabilities and Stockholders' Equity (Deficit) $ 1,081,766
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See accompanying notes to consolidated financial statements.
2
TTI Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For the For the
Six Months Ended Three Months Ended
March 31 March 31
2000 2001 2000 2001
---- ---- ---- ----
Sales $ 90,582 $ 327,119 $ 33,525 $ 141,200
Cost Of Sales 81,571 195,517 46,244 76,476
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Gross Profit 9,011 131,602 (12,719) 64,724
General and Administrative Expenses 634,730 473,180 526,917 267,958
----------- ----------- ----------- -----------
Net Loss (625,719) (341,578) (539,636) (203,234)
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Other Comprehensive Income:
Foreign Currency Translation Adjust 5,761 7,294 2,466 3,665
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Total Comprehensive Income (Loss) ($ 619,958) ($ 334,284) ($ 537,170) ($ 199,569)
=========== =========== =========== ===========
Basic and Diluted Loss per Share ($ 0.24) ($ 0.08) ($ 0.20) ($ 0.04)
=========== =========== =========== ===========
Weighted Avg. No. of Shares Outstanding 2,652,737 4,451,294 2,712,229 4,570,951
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
3
TTI Holdings, Inc. and Subsidiaries
Consolidated Statement of Cash Flow
(Unaudited)
For the
Six Months Ended
March 31
2000 2001
---- ----
Cash Flows from Operating Activities:
Net Loss ($625,719) ($341,578)
Adjustments to reconcile net loss to net cash used
In operating activities:
Depreciation and Amortization 10,808 42,538
Common Stock Issued for Services 332,736 176,905
Increases (Decreases) in:
Receivables 97,862 (69,508)
Inventories (8,156) (11,314)
Prepaid and Other Current Assets (71,302) 8,547
Other Assets 769 15,115
Increases (Decreases) in:
Accounts Payable (54,715) 29,160
Accrued Expenses and Other Current Liabilities 20,705 (42,379)
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Total Adjustments 328,707 149,064
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Net Cash used in Operating Activities (297,012) (192,514)
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Cash Flows from Investing Activities:
Purchase of Fixed Assets -- --
Excess of Purchase Price of Net Assets Acquired -- --
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Net Cash used in Investing Activities 0 0
Cash Flows from Financing Activities:
Proceeds from sale of shares, net of offering costs 1,000 176,677
Proceeds from sale of shares not yet issued 999,000 31,000
Proceeds from issuance of Notes Payable -- 41,232
Repayment of Notes Payable (13,607) --
Net Proceeds (repayments) of Officer Loans -- (50,000)
Net Proceeds (repayments) of Shareholder Loans (148,400) (15,538)
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Net Cash provided by Financing Activities 837,993 183,371
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Effect of Exchange on Cash 4,810 7,294
Net Increase (Decrease) in cash and cash equivalent 545,791 (1,849)
Cash & Cash Equivalent, Beginning of Period 131,278 65,437
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Cash & Cash Equivalent, End of Period $ 677,069 $ 63,588
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See accompanying notes to financial statements.
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TTI Holdings, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDING MARCH 31, 2001
(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-KSB 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 six months ending March 31, 2001 the Company issued shares for
services to outside consultants as follows:
Administrative services 114,304 shares $176,905
During the six months ending March 31, 2001, the Company issued 184,000 shares
of common stock in lieu of cash repayment of shareholder loans; the company also
issued 4,500 shares in lieu of payment for trade payables.
4.INCOME TAXES
No provision for income taxes was recorded for the six-month period ending March
31, 2001, 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 $341,578 for the six months ended March 31,
2001 and has incurred a substantial net loss in the prior year. At March 31,
2001 current liabilities exceed current assets by $190,696.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.
5
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 Ix Partners, Ltd. Ix
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 Ix.
On March 27, 2001 the Company announced the signing of letters of intent to
purchase nineteen separately owned health care delivery companies in nine
states. The estimated revenues of these facilities total, in the aggregate,
approximately $ 50 million. The nineteen companies are composed of thirteen
outpatient rehabilitation facilities, two diagnostic testing enterprises and
occupational health clinic and practice. The acquisitions will be effected by
the exchange of shares, valued at approximately twenty million dollars, of the
common stock of the Company for the common shares of the acquired companies; the
amount will be proportionately less if less than the nineteen facilities are
acquired. The completion of the acquisitions is subject to the usual due
diligence process. On May 3, 2001 the Company announced the closing of the
contracts to purchase Diversified Diagnostics, LLC in Jacksonville, Florida and
Senior Healthcare Inc. in Savannah, Georgia. The acquisitions were effected by
the exchange of common stock valued at $1 million and $1.1 million respectively.
The Company will continue to announce individual closings as they occur.
On March 29, 2001 the Company announced the signing of a letter of intent to
purchase Cobex Technologies Inc. The estimated annual revenues of Cobex are
approximately $ 3 million. Cobex, located in West Babylon, New York, is an
interconnect/communication company specializing in the sales, installation and
maintenance of communication systems, including data and voice cabling and
network services. Cobex serves the New York area with market niches in
healthcare and financial services. The acquisition will be effected by the
exchange of common shares, currently valued at $ 500 thousand in common stock of
the Company for the assets of Cobex. The completion of the acquisition is
subject to the usual due diligence process.
On April 2, 2001 the Company announced the signing of a letter of intent to
purchase two facilities owned by Main Incorporated (dba) Cactus Salons. The
estimated annual revenues of the two facilities are approximately $ 2 million.
Cactus currently owns eleven salons on Long Island, New York and specializes as
a day spa, offering spa services, hair dressing and professional retail
products. The acquisition will be effected by the exchange of common shares,
currently valued at $ 600 thousand in common stock of the Company for the assets
of Cactus. The completion of the acquisition is subject to the usual due
diligence process.
6
On May 9, 2001 the Company announced the signing of a letter of intent to
acquire Transventures, Inc., a private Huntington, New York transportation and
logistics firm. The estimated annual revenues of Transventures is $ 5 million.
The purchase is to be effected by the exchange of the Company's shares, valued
at approximately $ 500,000 for essentially all of the assets of Transventures.
The completion of the acquisition is subject to the usual due diligence process.
Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS
TTI Holdings, Inc.
Results of Operations
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Three Months Ending March 31, 2001 vs. March, 2000
For the three months ended March 31, 2001, TTI Holdings, Inc. had $ 141 thousand
of consolidated sales, an increase of 321 % from the prior year's comparative
period, as the inclusion of High Velocity Technologies, acquired in May, 2000
added $ 66 thousand to revenues; thermal coating revenues in the United States
and in Costa Rica grew by $ 42 thousand. Gross margins were 46 %, an improvement
from the loss in the prior year, reflecting substantially improved manufacturing
cost efficiencies in Costa Rica and in thermal spray operations in the United
States. Selling, general and administrative expenses were $ 268 thousand, $259
thousand less than the earlier period, reflecting expense reductions in Costa
Rica and a reduction in the amount of shares issued for services during the
period. The inclusion of High Velocity in this year's results created an
increase in expenses of $ 60 thousand, compared with the prior year's three
months.
Six Months Ending March 31, 2001 vs. March 31, 2000
For the six months ended March 31, 2001, TTI Holdings, Inc. had $ 327 thousand
of consolidated sales, an increase of 261 % from the prior year's comparative
period, as the inclusion of High Velocity Technologies, acquired in May, 2000
added $ 204 thousand to revenues; thermal coating operations in the United
States and in Costa Rica also grew by $ 32 thousand. Gross margins were 40 %, an
increase from 10 % in the prior year, primarily reflecting improvements made in
the efficiency of the Costa Rican operation; margins also improved in thermal
coating operations in the United States. Selling, general and administrative
expenses were $ 473 thousand, $ 162 thousand less than the prior year,
reflecting lower costs in Costa Rica and reductions in shares issued for
services. The inclusion of High Velocity resulted in an increase in expenses of
$ 149 thousand, compared with the prior year's comparative period.
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 March 31, 2001 consists primarily of $ 12 thousand of
notes payable and $ 166 thousand in equipment financing. Additional liquidity
has been provided by shareholder and officer loans as of March 31, 2001 of $ 56
thousand. Since inception, the Company has raised $2.5 million through the sale
of common stock other than stock issued in exchange for services or in lieu of
payments for purchases.
7
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 $ 342 thousand for the six months ended March
31, 2001 and has incurred substantial net losses for the prior year. At March
31, 2001 current liabilities exceed current assets by $ 190 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 March 31, 2001, 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
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Item 1. Legal Proceedings
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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
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Not applicable.
Item 3. Defaults Upon Senior Securities
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Not applicable.
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Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of security holders.
Item 5. Exhibits and Forms on Form S-8
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Reports on Form S-8:
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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: 11 May 2001 TTI Holdings, Inc.
By: /s/ Andrew B. Mazzone
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Andrew B. Mazzone, President and
Chairman of the Board of Directors
Principal Financial Officer
Principal Accounting Officer
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