<PAGE>
As filed with the Securities and Exchange Commission on November 16, 1999
Registration No. 333-82463
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
PRE-EFFECTIVE AMENDMENT NO. 2
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THERMALTEC INTERNATIONAL, CORP.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 3313 11-3255619
-------- ---------------------------- ----------
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
68A Lamar Street
West Babylon, New York 11704
(516) 643-2285
--------------
(Address, Including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
Andrew B. Mazzone
President
Thermaltec International, Corp.
68A Lamar Street
West Babylon, New York 11704
(516) 643-2285
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
COPIES TO:
Martin D. Sklar Deborah A. Hays
Kleinberg, Kaplan, Wolff & Cohen, P.C. Archer & Greiner, P.C.
551 Fifth Avenue One Centennial Square
New York, New York 10176 Haddonfield, New Jersey 08033
(212) 986-6000 (609) 795-2121
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Registration Statement becomes
effective and the effective time of the merger of Solar Communications Group,
Inc. with and into the Registrant as described in the Agreement and Plan of
Reorganization, dated as of June 16, 1999.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box, and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-----------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
[GRAPHIC OMITTED]
68A Lamar Street
West Babylon, New York 11704
-------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER ____, 1999
-------------------------
TO THE STOCKHOLDERS:
A Special Meeting of Stockholders of Thermaltec International, Corp., a
Delaware corporation, will be held at ___________________________________, at
9:00 A.M., local time, on __________ December ___, 1999, for the following
purposes:
(1) To approve the merger of Camanco Communications, Inc. (formerly known
as Solar Communications Group, Inc.), a New Jersey corporation, with and
into Thermaltec. As a result of the merger, (a) each outstanding share
of the common stock of Camanco Communications will be converted into
10,000 shares of Thermaltec common stock, resulting in the issuance of
59,500,000 shares of Thermaltec common stock, (b) Thermaltec will
conduct only the business conducted by Camanco Communications prior to
the merger, and (c) Thermaltec's corporate name will be changed to
"Camanco Communications, Inc."
(2) To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
The accompanying Joint Proxy Statement/Prospectus contains detailed
information about the merger and includes a complete copy of the merger
agreement. You should read the entire Joint Proxy Statement/
Prospectus and its exhibits carefully before you decide how to vote.
Stockholder approval of the merger will result in a change in the majority
equity ownership interest, business, name and management of Thermaltec.
The sole director of Thermaltec has fixed the close of business on
November ___, 1999 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting. The affirmative vote
of the holders of a majority of all outstanding shares of Thermaltec common
stock is necessary to approve the merger.
HOLDERS OF THERMALTEC COMMON STOCK ARE ENTITLED TO APPRAISAL RIGHTS UNDER
DELAWARE LAW IN CONNECTION WITH THE MERGER. See "The Plan of Merger and Related
Transactions -- Dissenters' Rights for Thermaltec Stockholders."
The sole director of Thermaltec recommends that the Thermaltec
stockholders vote in favor of the merger.
You are welcome to attend the Special Meeting. Whether or not you plan to
attend the meeting, please complete, date and sign the enclosed proxy card and
return it promptly in the enclosed envelope. You may revoke your proxy at any
time prior to the time it is voted by following the directions on page 23 of
the Joint Proxy Statement/Prospectus.
By Order of the Board of Directors,
----------------------------------------
Andrew B. Mazzone, Secretary
West Babylon, New York
November ____, 1999
<PAGE>
[GRAPHIC OMITTED]
1100 Coombs Road
Millville, New Jersey 08332
-------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER ____, 1999
-------------------------
TO THE STOCKHOLDERS:
A Special Meeting of Stockholders of Camanco Communications, Inc.
(formerly known as Solar Communications Group, Inc.), a New Jersey corporation,
will be held at ____________________________, at 9:00 A.M., local time, on
________ December ___, 1999, for the following purposes:
(1) To approve the merger of Camanco Communications with and into
Thermaltec International, Corp., a Delaware corporation. As a result of
the merger, (a) Thermaltec will be the surviving corporation, (b) each
outstanding share of Camanco Communications common stock will be
converted into 10,000 shares of Thermaltec common stock, (c) Thermaltec
will conduct only the business conducted by Camanco Communications prior
to the merger, and (d) Thermaltec's corporate name will be changed to
"Camanco Communications, Inc."
(2) To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
The accompanying Joint Proxy Statement/Prospectus contains detailed
information about the merger and includes a complete copy of the merger
agreement. You should read the entire Joint Proxy Statement/
Prospectus and its exhibits carefully before you decide how to vote.
The Board of Directors of Camanco Communications has fixed the close of
business on November ___, 1999 as the record date for the determination of
stockholders entitled to notice of and to vote at the Special Meeting. The
affirmative vote of a majority of the votes cast by the holders of Camanco
Communications common stock at the Special Meeting is necessary to approve the
merger.
HOLDERS OF CAMANCO COMMUNICATIONS COMMON STOCK ARE ENTITLED TO DISSENTERS'
RIGHTS UNDER NEW JERSEY LAW IN CONNECTION WITH THE MERGER. See "The Plan of
Merger and Related Transactions -- Rights of Dissenting Camanco Communications
Stockholders."
The Board of Directors of Camanco Communications unanimously recommends
that the Camanco Communications stockholders vote in favor of the merger.
You are welcome to attend the Special Meeting. Whether or not you plan to
attend the meeting, please complete, date and sign the enclosed proxy card and
return it promptly in the enclosed envelope. You may revoke your proxy at any
time prior to the time it is voted by following the directions on page 24 of
the Joint Proxy Statement/Prospectus.
By Order of the Board of Directors,
----------------------------------------
Alisa A. Rossi, Secretary
Millville, New Jersey
November ____, 1999
<PAGE>
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
JOINT PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT! The boards of
directors of Thermaltec International, Corp. and Camanco Communications, Inc.
(formerly known as Solar Communications Group, Inc.) have agreed on a merger of
the two companies. As a result of the merger, the following things will happen:
(1) Each outstanding share of the common stock of Camanco Communications will
be exchanged for 10,000 shares of Thermaltec common stock. A total of
59,500,000 shares of Thermaltec common stock will be issued.
(2) The stockholders of Camanco Communications will own 95.8% of the
outstanding shares of Thermaltec common stock.
(3) Thermaltec will conduct only the business conducted by Camanco
Communications immediately prior to the merger.
(4) Thermaltec will change its name to "Camanco Communications, Inc."
(5) Thermaltec will be managed by the current officers and directors of
Camanco Communications.
In preparation for the merger, Thermaltec has transferred substantially
all of its assets and all of its ongoing business operations and liabilities to
a wholly-owned subsidiary, Panama Industries, Ltd. Immediately prior to the
merger, all of the issued and outstanding shares of Panama Industries will be
transferred by Thermaltec to its stockholders of record on May 28, 1999, on a
pro rata basis.
If you are a Thermaltec stockholder presently but you did not own any
shares of Thermaltec common stock on the record date for the spin-off, May 28,
1999, you will not receive any shares of Panama Industries common stock in the
spin-off. If you were a stockholder of Thermaltec on the record date for the
spin-off, May 28, 1999, but subsequently transferred all of your shares of
Thermaltec common stock prior to the record date for the special meeting
(November __, 1999), you are not entitled to attend the special meeting and
vote on the merger. In such event, you are receiving a copy of this joint proxy
statement/prospectus for information regarding the spin-off only, and you will
be entitled to receive one share of Panama Industries common stock for every
share of Thermaltec common stock you owned on May 28, 1999 upon completion of
the spin-off and without any further action on your part.
The merger cannot be completed unless the stockholders of both companies
approve it. We have scheduled special meetings for our stockholders to vote on
the merger. Your Vote Is Very Important.
Whether or not you plan to attend a special meeting, please take the time
to vote by completing and mailing the enclosed proxy card to us. If you sign,
date and mail your proxy card without indicating how you want to vote, your
proxy will be counted as a vote in favor of the merger. If you are a Thermaltec
or Camanco Communications stockholder and fail to return your card, the effect
in most cases will be a vote against the merger.
Only stockholders of record of Thermaltec and Camanco Communications
common stock as of November ___, 1999 are entitled to attend and vote at the
special meetings. Both the Camanco Communications and Thermaltec special
meetings will take place on December ___, 1999. The times and places of the
meetings are as follows:
For Thermaltec stockholders: 9:00 a.m. at_____________________________
For Camanco Communications stockholders: 9:00 a.m. at
This joint proxy statement/prospectus provides you with detailed
information about the proposed merger and the spin-off of Panama Industries
which will be completed immediately prior to the merger. We encourage you to
read this entire document carefully.
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<S> <C>
/s/ /s/
-------------------------------- ------------------------------------
Andrew B. Mazzone, President James M. Rossi, Chairman and CEO
Thermaltec International, Corp. Camanco Communications, Inc.
</TABLE>
<PAGE>
For a more complete description of the terms and conditions of the merger,
see "The Merger Agreement" beginning on page 38. For a more complete
description of the spin-off, see "The Spin-Off" beginning on page 43.
For a description of the risk factors associated with the merger, see
"Risk Factors, beginning on page 9.
The Thermaltec common stock trades on the OTC Bulletin Board under the
symbol "THRM."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the proposed merger, or the shares of
Thermaltec common stock to be issued in connection with the merger, or
determined if this joint proxy statement/prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated November _______, 1999 and
is first being mailed to stockholders of Thermaltec and Camanco Communications
on or about November _______, 1999.
<PAGE>
AVAILABLE INFORMATION
Thermaltec has filed with the SEC a Registration Statement on Form S-4 under
the Securities Act of 1933, as amended, with respect to the shares of
Thermaltec common stock to be issued in connection with the merger. This joint
proxy statement/prospectus does not contain all of the information set forth in
the registration statement. Certain portions of the registration statement are
omitted from this joint proxy statement/prospectus in accordance with the rules
and regulations of the SEC. Copies of the registration statement, including the
exhibits to the registration statement and other material that is not included
herein, may be inspected without charge at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may also be obtained from the SEC at prescribed rates by writing
to the Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, certain of the documents filed by Thermaltec with the SEC
are available through the SEC's Electronic Data Gathering and Retrieval System,
also known as EDGAR, on the SEC's worldwide web site at http://www.sec.gov.
i
<PAGE>
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE THERMALTEC/CAMANCO COMMUNICATIONS
MERGER .................................................................. 1
QUESTIONS AND ANSWERS ABOUT THE PANAMA INDUSTRIES SPIN-OFF ............... 3
SUMMARY .................................................................. 4
The Companies ......................................................... 4
The Merger ............................................................ 4
The Spin-Off of Panama Industries ..................................... 5
Approval of the Merger ................................................ 5
Our Reasons for the Merger ............................................ 5
Our Recommendations to Stockholders ................................... 6
Conditions to the Merger .............................................. 6
Termination of the Merger Documents ................................... 7
Regulatory Approvals .................................................. 7
Accounting Treatment .................................................. 7
Material Federal Income Tax Consequences .............................. 7
Listing of Thermaltec Common Stock .................................... 8
RISK FACTORS ............................................................. 9
Risk Factors Related to the Merger and the Surviving Company .......... 9
Risk Factors Related to Panama Industries and the Spin-Off ............ 16
WHERE YOU CAN FIND MORE INFORMATION ...................................... 20
FORWARD-LOOKING STATEMENTS ............................................... 20
THERMALTEC SELECTED CONSOLIDATED FINANCIAL DATA .......................... 20
CAMANCO COMMUNICATIONS SELECTED FINANCIAL DATA ........................... 21
COMPARATIVE PER SHARE MARKET PRICE INFORMATION ........................... 21
SPECIAL MEETINGS OF STOCKHOLDERS ......................................... 22
Thermaltec Special Meeting ............................................ 22
Camanco Communications Special Meeting ................................ 23
THE PLAN OF MERGER AND RELATED TRANSACTIONS .............................. 26
Background of the Merger .............................................. 26
Reasons for the Merger ................................................ 27
Thermaltec's Reasons for the Merger ................................... 27
Camanco Communications' Reasons for the Merger ........................ 28
Material Federal Income Tax Consequences -- Camanco Communications .... 29
Material Federal Income Tax Consequences -- Thermaltec ................ 30
Accounting Treatment .................................................. 31
Restrictions on Resale of Thermaltec Common Stock ..................... 31
Nasdaq Listing ........................................................ 32
Government and Regulatory Matters ..................................... 32
Dissenters' Rights for Thermaltec Stockholders ........................ 32
Rights of Dissenting Camanco Communications Stockholders .............. 34
THE MERGER AGREEMENT ..................................................... 38
The Merger ............................................................ 38
Conversion of Shares; No Fractional Amounts ........................... 38
Treatment of Camanco Communications Stock Options ..................... 38
Conduct Following the Merger .......................................... 39
Conduct of Business Pending the Merger ................................ 39
ii
<PAGE>
Representations and Warranties ......................................... 39
Conditions to the Merger ............................................... 39
Termination of the Merger Documents .................................... 40
Indemnification ........................................................ 40
Ownership of Thermaltec Following the Merger ........................... 41
Management of Thermaltec Upon Consummation of the Merger ............... 41
Regulatory Approvals ................................................... 41
Affiliate Agreements ................................................... 42
THE SPIN-OFF .............................................................. 43
INFORMATION CONCERNING THERMALTEC ......................................... 44
Business ............................................................... 44
Employees .............................................................. 44
Properties ............................................................. 44
Legal Proceedings ...................................................... 44
DESCRIPTION OF THERMALTEC'S SECURITIES .................................... 44
Thermaltec Common Stock ................................................ 44
Shares Available for Future Sale ....................................... 45
Transfer Agent ......................................................... 46
Thermaltec Warrants .................................................... 46
Price Ranges of Thermaltec Common Stock ................................ 46
PRINCIPAL STOCKHOLDERS OF THERMALTEC ...................................... 46
INFORMATION CONCERNING PANAMA INDUSTRIES .................................. 47
General ................................................................ 47
Company Specific ....................................................... 47
Plan of Expansion ...................................................... 48
Technology ............................................................. 49
Sub Technologies of Thermal Spraying ................................... 49
Industries Using Thermal Sprayed Coatings .............................. 50
Competition ............................................................ 50
Suppliers .............................................................. 51
Employees .............................................................. 51
Executive Compensation ................................................. 51
Facilities ............................................................. 51
Legal Proceedings ...................................................... 52
Significant Customers .................................................. 52
Latin American Government Regulations .................................. 52
MANAGEMENT DISCUSSION & ANALYSIS OF OPERATIONS OF THERMALTEC
INTERNATIONAL, CORP. AND PANAMA INDUSTRIES, LTD .......................... 52
Results of Operations .................................................. 52
Liquidity and Financial Resources ...................................... 54
Year 2000 Compliance ................................................... 54
Inflation .............................................................. 54
Forward-looking Information ............................................ 54
PANAMA INDUSTRIES COMMON STOCK ............................................ 54
General ................................................................ 54
Restrictions on Transferability ........................................ 55
Transfer Agent ......................................................... 56
PRINCIPAL STOCKHOLDERS OF PANAMA INDUSTRIES ............................... 56
iii
<PAGE>
INFORMATION CONCERNING CAMANCO COMMUNICATIONS ............................. 57
Business ............................................................... 57
Competition ............................................................ 63
Employees .............................................................. 64
Properties ............................................................. 64
Legal Proceedings ...................................................... 64
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF CAMANCO COMMUNICATIONS ...................... 65
Overview ............................................................... 65
Statement of Operations ................................................ 65
Liquidity and Capital Resources ........................................ 66
Certain Factors that may Affect Future Results ......................... 66
Year 2000 Readiness Disclosure ......................................... 66
MANAGEMENT OF CAMANCO COMMUNICATIONS ...................................... 68
Executive Officers and Directors ....................................... 68
Biographical Information ............................................... 68
Executive Compensation ................................................. 70
Certain Transactions ................................................... 70
CAMANCO COMMUNICATIONS COMMON STOCK ....................................... 70
General ................................................................ 70
Shares Available for Future Sale ....................................... 71
PRINCIPAL STOCKHOLDERS OF CAMANCO COMMUNICATIONS .......................... 71
COMPARISON OF STOCKHOLDERS RIGHTS ......................................... 73
Comparison of Delaware General Corporation Law and the New Jersey
Business Corporation Act .............................................. 73
Comparison of Certificates of Incorporation and By-Laws of Thermaltec and
Camanco Communications ................................................ 76
Legal Matters ............................................................. 77
Experts ................................................................... 77
Index to Financial Statements and Pro Forma Financial Information ......... F-1
Annex A -- Agreement and Plan of Reorganization ........................... A-1
Annex B -- Delaware Dissenters' Rights Statute ............................ B-1
Annex C -- New Jersey Dissenters' Rights Statute .......................... C-1
iv
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE THERMALTEC/CAMANCO
COMMUNICATIONS MERGER
Q: What do I need to do now?
A: If you were the holder of shares of Thermaltec common stock or Camanco
Communications common stock on November __, 1999 (the record date for the
special meetings), you are being asked to vote upon the proposed merger of
Camanco Communications into Thermaltec. You may vote on the merger by
signing your proxy card and mailing it to us in the enclosed return
envelope or by voting in person at the special meetings. Both the
Thermaltec and Camanco Communications special meetings will take place on
December ____, 1999.
Q. What if I want to change my vote?
A: Just send in a later-dated, signed proxy card before your special
meeting or attend your special meeting in person and vote.
Q. If I am a Thermaltec stockholder, will I have dissenters' rights?
A: Thermaltec stockholders who do not wish to approve the merger have
dissenters' rights, which are also referred to as "appraisal rights," under
Delaware law. These rights permit a Thermaltec stockholder to have the
"fair value" of their shares determined by the Delaware Chancery Court
under certain circumstances. These rights are subject to a number of
restrictions and technical requirements. Generally, in order to exercise
such rights:
o A Thermaltec stockholder must not vote in favor of the merger; and
o The stockholder must make a written demand for appraisal before the
vote on the merger.
Merely voting against the merger will not protect a Thermaltec stockholder's
appraisal rights. Annex B attached hereto contains the text of the Delaware
dissenters' rights statute.
Q. If I am a Camanco Communications stockholder, will I have dissenters'
rights?
A: Camanco Communications stockholders who do not wish to approve the
merger have dissenters' rights under New Jersey law, which is the right to
be paid the "fair value" of their shares. These dissenters' rights are
subject to a number of restrictions and technical requirements. Generally,
in order to exercise dissenters' rights:
o A Camanco Communications stockholder must not vote in favor of the
merger; and
o The stockholder must file a written notice of dissent with Camanco
Communications before the vote on the merger.
Merely voting against the merger will not protect a Camanco Communications
stockholder's dissenters' rights. Annex C attached hereto contains the text
of the New Jersey dissenters' rights statute.
Q: When do you expect the merger to be completed?
A: We are working towards completing the merger as quickly as possible, and
expect to complete it immediately following the special meetings.
Q. If I am a Thermaltec stockholder, what will I receive in the merger?
A: Thermaltec stockholders who own shares of Thermaltec common stock on the
date the merger is completed will continue to own such shares of Thermaltec
common stock following the merger. However, your interest in Thermaltec
will be highly diluted due to the issuance of 59,500,000 shares of
Thermaltec common stock to stockholders of Camanco Communications in the
merger. Current Thermaltec stockholders will collectively own approximately
4.2% of the outstanding shares of Thermaltec common stock following the
merger.
Q. If I am a Camanco Communications stockholder, what will I receive in the
merger?
A: As a result of the merger, for each share of Camanco Communications
common stock they own on the date the merger is completed, Camanco
Communications stockholders will receive 10,000 shares of Thermaltec common
stock.
1
<PAGE>
No fractional shares of Thermaltec common stock will be issued and no cash
will be paid for fractional shares. Instead, Camanco Communications
stockholders will receive shares of Thermaltec common stock rounded off to
the nearest whole number. Fractional shares of less than one-half of one
share will be rounded down to the nearest whole number. Fractional shares
of one-half of one share or greater will be rounded up to the nearest whole
number.
Camanco Communications stock options will be converted into Thermaltec
stock options at the share exchange ratio for Camanco Communications common
stock with an adjusted exercise price. Please refer to page 38 for more
information regarding the treatment of Camanco Communications stock
options.
Q: Should I send in my stock certificates now?
A: No. After the merger is completed, we will send Camanco Communications
stockholders written instructions for exchanging their stock certificates.
Thermaltec stockholders will keep their current stock certificates.
Q: When will Camanco Communications stockholders receive shares of Thermaltec
common stock in the merger?
A: If the merger is completed, Thermaltec will issue, shortly thereafter,
shares of Thermaltec common stock to Camanco Communications stockholders
who have returned their Camanco Communications stock certificates together
with a completed letter of transmittal supplied by Thermaltec or
Thermaltec's exchange agent, Manhattan Transfer Registrar Co.
Q: What are the tax consequences of the merger to me?
A: We have structured the merger so that, as a general matter, neither you,
Thermaltec nor Camanco Communications will recognize any gain or loss for
federal income tax purposes in the merger, except for those Thermaltec or
Camanco Communications stockholders who exercise their dissenters' rights.
We have received legal opinions that this is the case.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should consult your
tax advisors for a full understanding of the tax consequences of the merger
to you.
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PANAMA INDUSTRIES SPIN-OFF
Q. Why did Thermaltec transfer all of its ongoing operations, assets and
liabilities to Panama Industries and why is Thermaltec spinning off Panama
Industries to Thermaltec
stockholders?
A. Camanco Communications provides communication alternatives to the
business community, specializing in providing Internet access to hotel
rooms. Thermaltec is a metallurgical engineering company specializing in
the metal coating of industrial equipment. The proposed merger is intended
to give Thermaltec stockholders access to a dynamic Internet business and
Camanco Communications greater access to the public markets and the
financial community and to the expertise and Latin American contacts of
Thermaltec's present management.
We believe that these two essentially unrelated businesses should be
operated independently by separate management and have separate employee
incentive compensation plans and financing arrangements. Thermaltec,
therefore, created its Panama Industries subsidiary in anticipation of the
proposed merger with Camanco Communications. Immediately prior to the
consummation of the merger, Thermaltec will distribute all of the
outstanding shares of Panama Industries common stock to Thermaltec's
stockholders of record on May 28, 1999.
Q. Which Thermaltec stockholders will receive Panama Industries shares in the
spin-off?
A. Only stockholders of record of Thermaltec at the close of business on
May 28, 1999 will receive shares of Panama Industries in the spin-off.
Q. If I bought shares of Thermaltec after May 28, 1999, what will I hold after
the spin-off?
A. Assuming you still own such shares on the date the merger is
consummated, you will still hold shares of Thermaltec, which immediately
thereafter will become the surviving corporation in the merger with Camanco
Communications. Thermaltec will own all of the assets, subject to the
liabilities, of Camanco Communications. Thermaltec will then be engaged in
the Internet access and telecommunications industries and not in the
metallurgical coatings industry.
Q. How many Panama Industries shares will Thermaltec stockholders receive?
A. Each share of Thermaltec common stock held as of the close of business
on May 28, 1999 entitles the holder thereof to receive one share of Panama
Industries common stock when the spin-off is completed.
Q. Will the spin-off occur if the merger does not occur?
A. The completion of the spin-off is conditioned upon the completion of the
merger and will occur immediately prior thereto. If the merger is not
completed, management of Thermaltec will consider whether or not to proceed
with the spin-off. If the merger is not completed, management of Thermaltec
will have to obtain new stockholder approval if they elect to proceed with
the spin-off independent of the merger.
Q. When will the spin-off occur?
A. The spin-off will occur immediately prior to the completion of the
merger.
Q. Will I be able to trade or transfer my Panama Industries shares?
A. Unless and until Panama Industries becomes a "reporting company" under
the Exchange Act, you will only be able to dispose of your shares in very
limited circumstances. See "Panama Industries Common Stock -- Restrictions
on Transferability", for further information.
Q: What are the tax consequences of the spin-off of Panama Industries to a
Thermaltec stockholder?
A: 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. No appraisal of the
fair market value of the shares of Panama Industries will be obtained by
either Panama Industries 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.
3
<PAGE>
SUMMARY
This summary highlights selected information from this joint proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger and the spin-off of Panama
Industries fully, and for more complete descriptions of the legal terms of the
merger and the spin-off of Panama Industries, you should read this entire
document carefully.
The Companies
Thermaltec International, Corp.
Panama Industries, Ltd.
68A Lamar Street
West Babylon, New York 11704
(516) 643-2285
Thermaltec was formed in 1994 and has been engaged in the metallurgical
coatings business in North America and Central and South America since 1995. In
preparation for the merger with Camanco Communications, Thermaltec has
transferred substantially all of its assets and all of its ongoing business
operations and liabilities to a wholly-owned subsidiary, Panama Industries,
Ltd. Immediately prior to the merger, all of the outstanding shares of Panama
Industries will be distributed, on a pro rata basis, to the Thermaltec
stockholders of record on May 28, 1999.
Camanco Communications, Inc.
1100 Coombs Road
Millville, New Jersey 08332
(856) 327-7100
Camanco Communications (formerly known as Solar Communications Group, Inc.) was
formed in 1996 to provide quality communications alternatives to the business
community. Camanco Communications is presently a development stage company and
has not generated any operating revenues. The company has developed an Internet
access solution, known as PCRoomLink(TM), for the hospitality industry.
PCRoomLink's computer-equipped rooms permit a hotel patron, with or without a
laptop computer, to obtain high-speed Internet access in the privacy of his/her
hotel room. PCRoomLink is still in development and the system has not been
installed for commercial use in any hotel.
PCRoomLink(TM) is a trademark of Camanco Communications.
The Merger
The merger agreement, entitled "Agreement and Plan of Reorganization," is
attached as Annex A to this joint proxy statement/prospectus. We encourage you
to read the merger agreement carefully since it is the legal document that
governs the terms of the merger. As a result of the merger, the following
things will happen:
(1) Each outstanding share of Camanco Communications common stock will be
exchanged for 10,000 shares of Thermaltec common stock. A total of
59,500,000 shares of Thermaltec common stock will be issued.
(2) The stockholders of Camanco Communications will own 95.8% of the
outstanding shares of Thermaltec common stock. As a result, Thermaltec
stockholders, at the time the merger is completed, will own only a 4.2%
interest in the surviving company.
(3) Thermaltec will conduct only the business conducted by Camanco
Communications immediately prior to the merger.
(4) Thermaltec will change its name to "Camanco Communications, Inc."
(5) Thermaltec will be managed by the current officers and directors of
Camanco Communications.
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The Spin-Off of Panama Industries
In preparation for the merger, on May 17, 1999, Thermaltec transferred
substantially all of its assets, and all of its ongoing business operations and
liabilities, to Panama Industries, Ltd., its wholly-owned subsidiary. The only
assets retained by Thermaltec were (1) $300.00 in cash, (2) $58,200.00 on
deposit with Thermaltec's transfer agent representing proceeds received by
Thermaltec pursuant to the exercise of outstanding common stock purchase
warrants previously issued by Thermaltec, and (3) a net operating loss
carry-forward of approximately $1.13 million.
Immediately prior to the completion of the merger, all of the outstanding
shares of Panama Industries common stock will be distributed, on a pro rata
basis, to the Thermaltec stockholders of record on May 28, 1999. Completion of
the spin-off of Panama Industries is a condition to the completion of the
merger. Completion of the merger is a condition to the completion of the
spin-off. Thermaltec stockholders who did not own any shares of Thermaltec
common stock on May 28, 1999 will not receive any shares of Panama Industries
common stock in the spin-off.
Approval of the Merger
By Thermaltec stockholders:
The affirmative vote of the holders of a majority of the shares of
Thermaltec common stock entitled to vote on the merger is required to approve
the merger. The sole director and officer of Thermaltec, Andrew B. Mazzone, the
President of Panama Industries, Thomas Klein, and their affiliates, who
collectively own 60.1% of the outstanding shares of Thermaltec common stock,
have indicated that they intend to vote in favor of the proposed merger. Thus,
approval of the merger by Thermaltec's stockholders is assured.
By Camanco Communications stockholders:
The affirmative vote of a majority of the votes cast by the holders of
Camanco Communications common stock is required to approve the merger. The
directors and executive officers of Camanco Communications, and their
affiliates, who collectively own 67.3% of the outstanding shares of Camanco
Communications common stock, have indicated that they intend to vote in favor
of the proposed merger. Thus, approval of the merger by Camanco Communications
stockholders is assured.
Our Reasons for the Merger
Thermaltec's Reasons:
After consultation with Thermaltec's management team and advisors, the
board of directors of Thermaltec concluded that the merger would further the
interests of Thermaltec and its stockholders by giving Thermaltec and its
stockholders an opportunity to participate in the potential growth of the
surviving company. The merger will permit Thermaltec's stockholders to
diversify their existing investment in the metallurgical coatings industry and
expand into the Internet access and telecommunications industries. Thermaltec
stockholders who owned shares of Thermaltec common stock on May 28, 1999,
through ownership of shares in Panama Industries, will retain their respective
pro rata interests in the metallurgical coatings business operations conducted
by Thermaltec. In addition, stockholders who own shares of Thermaltec common
stock on the date the merger is completed will retain a 4.2% interest in
Thermaltec which will, following the merger, operate in the telecommunications
and Internet industries.
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In approving the merger, management of Thermaltec carefully considered the
fact that Camanco Communications is a development stage company which has
incurred significant losses and has not generated any operating revenues to
date. While the risk of failure for the surviving company is high, management
of Thermaltec believes that the structure of the transaction minimizes this
risk by transferring the existing business and assets of Thermaltec to a
separate entity. If the surviving company does not succeed, Thermaltec
stockholders who owned shares of Thermaltec common stock on May 28, 1999 will
still own their shares of the common stock of Panama Industries which, as a
separate legal entity, will not be responsible for the liabilities of the
surviving company.
Camanco Communications' Reasons:
After consultation with Camanco Communications' management team and
advisors, the board of directors of Camanco Communications concluded that the
merger would further the interests of Camanco Communications and its
stockholders through the increased liquidity of shares of Thermaltec common
stock. While the shares of Thermaltec common stock are thinly traded at the
present time, they are listed on the OTC Bulletin Board and are more liquid
than the shares of Camanco Communications common stock. While there can be no
assurances, management of Camanco Communications believes that such increased
liquidity will make it easier for Camanco Communications to raise additional
capital in the future and to acquire other businesses in exchange for stock.
In approving the merger, management of Camanco Communications carefully
considered that, as a result of the merger, the assets of Camanco
Communications may become subject to the claims of creditors of Thermaltec for
liabilities and obligations incurred by Thermaltec prior to the merger. To
minimize this risk, all of the liabilities of Thermaltec have been transferred
to Panama Industries which has agreed to be legally responsible for such
obligations. Where possible, the consent of Thermaltec's creditors to such
transfer has been obtained. In addition, the principal stockholder of
Thermaltec, Andrew B. Mazzone, has agreed to indemnify Camanco Communications
for up to $2 million in liabilities related to the operations of Thermaltec
prior to the merger. This indemnification is secured by the shares of
Thermaltec common stock owned by Mr. Mazzone and real estate or marketable
securities having a total fair market value of at least $250,000. To review the
terms of this indemnification obligation in greater detail, see "The Merger
Agreement -- Indemnification," beginning on page 40.
To review the reasons for the merger in greater detail, as well as the
risks of the merger, see "Risk Factors," beginning on page 9, and "The Plan of
Merger and Related Transactions -- Reasons for the Merger," beginning on page
27.
Our Recommendations to Stockholders
To Thermaltec stockholders:
The sole director of Thermaltec believes that the merger and the spin-off
of Panama Industries is in your best interest and recommends that you vote FOR
the proposal to approve the merger.
To Camanco Communications stockholders:
The Camanco Communications board believes that the merger is in your best
interest and unanimously recommends that you vote FOR the proposal to approve
the merger.
Conditions to the Merger
The completion of the merger depends upon the satisfaction or waiver of a
number of conditions. These conditions include among other things, that:
o the merger shall have been approved by Thermaltec's and Camanco
Communications' stockholders;
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o no lawsuit, judgment or new law shall exist which seeks to or does
prohibit or restrain the merger or which seeks damages as a result of
the merger;
o Camanco Communications shall have received a confirming opinion from
its legal counsel regarding the material federal income tax
consequences of the merger;
o Thermaltec shall have received a confirming opinion from its legal
counsel regarding the material federal income tax consequences of the
merger and the spin-off;
o the representations and warranties of the parties cannot be false or
misleading in any material respect; and
o the absence of any material adverse change or material casualty loss
affecting either Thermaltec or Camanco Communications or their
respective business, assets or financial condition.
Any of these conditions, other than the requirement for stockholder
approval, may be waived by the parties. However, if any material condition is
waived by the parties following the receipt of stockholder approval for the
merger, we would resolicit stockholder approval for the merger.
Termination of the Merger Documents
We can agree to terminate the merger documents without completing the
merger, and either of us can terminate the merger documents if the merger is
not completed by December 31, 1999. In addition, the merger may be terminated:
(a) by either Camanco Communications or Thermaltec if there has been a
material breach of any representation, warranty, covenant or agreement on
the part of the other set forth in the merger documents which is not cured
within any applicable cure period;
(b) by either Camanco Communications or Thermaltec if any permanent
injunction or other order of a court or other competent authority
preventing the consummation of the merger has become final and
non-appealable; or
(c) by either Camanco Communications or Thermaltec if any required
approval of the stockholders of Thermaltec or Camanco Communications has
not been obtained at a duly called meeting.
Regulatory Approvals
The merger must satisfy the requirements of federal and certain state
securities laws.
Accounting Treatment
The merger will be treated as a reverse merger whereby, for accounting
purposes, Camanco Communications will be treated as the acquirer in the
transaction.
Material Federal Income Tax Consequences
The merger has been structured so that, as a general matter, neither
Thermaltec nor Camanco Communications, nor the stockholders of either company,
will recognize any gain or loss for federal income tax purposes, except for
those Thermaltec or Camanco Communications stockholders who exercise their
dissenters' rights. Legal opinions confirming the federal income tax
consequences of the merger have been obtained by both companies.
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As a result of the spin-off of Panama Industries, Thermaltec stockholders
may recognize a taxable capital gain for federal income tax purposes.
Thermaltec has received an opinion from its legal counsel as to the tax effects
of the spin-off. See "The Plan of Merger and Related Transactions -- Material
Federal Income Tax Consequences -- Thermaltec," beginning on page 30.
Listing of Thermaltec Common Stock
Thermaltec will use its best efforts to cause the shares of Thermaltec
common stock to be issued in connection with the merger, and the shares of
Thermaltec common stock to be reserved for issuance upon the exercise of
outstanding Camanco Communications stock options assumed by Thermaltec as part
of the merger, to be approved for listing on the OTC Bulletin Board under the
symbol "THRM". In connection with the merger, Thermaltec's corporate name will
be changed to "Camanco Communications, Inc." and it is anticipated that its
trading symbol will be changed to "CAMC" following the merger. Management of
the surviving company also intends to apply for listing of all outstanding
shares of the surviving company's common stock on the Nasdaq SmallCap Market.
However, there can be no assurance that such listing will be approved.
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RISK FACTORS
In considering whether to approve the merger and whether or not to
exercise your dissenters' rights under Delaware or New Jersey law (as
applicable), you should consider carefully the risks associated with the merger
and with ownership of the surviving company's common stock following the
merger. These risks are described in detail below.
The risk factors focus on the business and operations of Thermaltec
following the merger. The risk factors also focus on the financial status,
business plans and management of Camanco Communications since, following the
merger, Thermaltec will be managed by the current officers and directors of
Camanco Communications and conduct only the business conducted by Camanco
Communications.
Risks relating to the ownership of Panama Industries common stock are also
included for the benefit of those individuals who owned shares of Thermaltec
common stock on May 28, 1999 since those individuals will be entitled to
receive shares of Panama Industries common stock when the spin-off is
completed. These risks should not be considered by Camanco Communications
stockholders or Thermaltec stockholders who did not own shares of Thermaltec
common stock on May 28, 1999, in considering whether to approve the merger, and
whether or not to exercise your dissenters' rights. Such persons will have no
ownership interest in Panama Industries following the merger.
Risk Factors Related to the Merger and the Surviving Company
Camanco Communications is a development stage company and has not
generated any operating revenues.
Camanco Communications was formed in 1996 but is still a development stage
company. To date, Camanco Communications has not produced any operating
revenues or shown a profit in its operations. Camanco Communications' limited
operating history may make it more difficult for you to evaluate its business
and prospects.
Since Camanco Communications is still in the development stage, its
business model is untested. To date, Camanco Communications has only installed
Version 1.0 of its PCRoomLink Internet access system in two hotel pilot sites.
It may take Camanco Communications longer than anticipated to implement its
business model, and some components of Camanco Communications' business model
may not prove to be feasible or possible.
Camanco Communications' operations are subject to all of the risks
inherent in the development of a new business, including but not limited to
marketing and staffing difficulties, competition, and unanticipated costs and
expenses. We cannot assure you that unanticipated expenses, problems or
technical difficulties will not result in material delays in the commercial
acceptance of PCRoomLink products and services. There also can be no assurance
that the marketing efforts of Camanco Communications will generate the
sufficient end-user interest in its products and services necessary to make the
company profitable.
Camanco Communications has incurred losses since its inception and
anticipates continuing losses. As a result, the company's independent auditors
have expressed doubt as to its ability to continue as a going concern.
As of June 30, 1999, Camanco Communications' accumulated deficit was
approximately $1,852,774. Camanco Communications anticipates that it will
continue to incur significant losses until, at the earliest, it generates
sufficient revenues to offset the substantial expenditures and operating costs
associated with developing and commercializing its proposed products and
services.
The independent auditors for Camanco Communications have included an
explanatory paragraph in their report on the company's financial statements to
the effect that the ability of Camanco Communications to continue as a going
concern is in substantial doubt. This concern arises from the fact that Camanco
Communications is a development stage company which has suffered recurring
losses and net cash outflows from operations since its inception. As noted by
the auditors in their report, Camanco Communications' ability to continue
operating is dependent upon future capital infusions from existing and/or new
investors.
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If, after the merger, the surviving company is unable to continue as a
going concern, you may lose all or substantially all of your investment.
Camanco Communications currently only has enough funds to satisfy its
anticipated obligations through November 30, 1999. To achieve its business plan
for the next 18 months, it is estimated that the surviving company will have to
raise $560 million in additional capital and/or financing proceeds.
Based on currently proposed plans and assumptions, it is anticipated that
the surviving company will have sufficient capital to satisfy its contemplated
cash requirements only through November 30, 1999. The surviving company will
then require substantial additional funding. To carry out its business plan, as
presently structured, the surviving company will need to complete, prior to
December 31, 2000, 1,425 hotel installations (136,584 rooms), at an anticipated
cost (without furniture) of approximately $400,000 per hotel. To achieve this
goal, the surviving company will need additional funding of approximately $560
million, subject to increase or decrease as a result of the surviving company's
actual operating cash flows. To date, Camanco Communications has been able to
raise approximately $12 million in a private placement of shares of its common
stock.
Potential sources of funding which have been identified by management
include vendor lines of credit, vendor leasing programs, bank financing and
additional sales of securities by the surviving company. We have no current
arrangements with respect to sources of additional financing. We have no
current relationship with any of the identified types of financing sources. New
relationships would have to be established by the surviving company to secure
additional funding. When needed by the surviving company, additional financing
may not be available on acceptable terms, or at all. The inability to obtain
additional financing, when needed, would have a material negative effect on the
surviving company, including possibly requiring it to curtail or cease
operations.
If any future financing involves a sale of the surviving company's equity
securities, the shares of the surviving company's common stock held by its
stockholders would be substantially diluted. If the surviving company incurs
indebtedness or otherwise issues debt securities, it will be subject to risks
associated with indebtedness, including the risk that interest rates may
fluctuate and the possibility that the surviving company may not be able to pay
principal and interest on the indebtedness.
PCRoomLink is a new concept for providing Internet access and related
computer services to business travelers and other hotel guests. Acceptance and
use of PCRoomLink products and services by the hospitality industry and the
traveling public is uncertain.
PCRoomLink represents a new business concept which will be marketed to
both the hospitality industry and to the ultimate end-user, the business and
other frequent traveler. Achieving market acceptance among hotel properties and
end-users for the PCRoomLink concept, by getting hotel owners to agree to have
PCRoomLink rooms available at their property and end-users to agree to become
PCRoomLink members, is critical to the surviving company's success. Achieving
such acceptance will require significant marketing efforts and expenditures by
the surviving company. There can be no assurance that the surviving company's
strategy for developing hotel property and end-user awareness of, and loyalty
to, PCRoomLink products and services, will result in initial or continued
market acceptance for such products or services. Any lack of interest on the
part of hotel properties to have PCRoomLink installed, or lack or lessening of
demand by end-users for PCRoomLink products or services, would have a material
adverse effect on the surviving company's business, financial condition and
assets as a result of reduced or insufficient operating revenues.
The surviving company is dependent upon continued growth in the use of the
Internet since its operating revenues will be dependent upon the desire of
business travelers and other hotel guests to have high speed Internet access
available in their hotel rooms.
The PCRoomLink concept relies on demand for access to the Internet, and
for products and services related to the Internet, by members of the traveling
public. The Internet has experienced rapid growth in recent years, but demand
and market acceptance for newly introduced Internet-related products and
services are subject to a high level of uncertainty.
Reliability, speed, data capacity, ease of use, accessibility and security
will all play a role in the continued growth and development of the Internet
for commercial use. The Internet has experienced, and it is expected to
continue to experience, significant growth in the number of users. The current
Internet infrastructure may not be able to support the demands placed on it by
this continued growth in use.
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If the market for Internet access services fails to develop, develops more
slowly than expected or becomes saturated with competitors, or if the Internet
access and related products and services the surviving company plans to offer
are not broadly accepted, the surviving company's projected revenues may not be
realized and its business, operating results and financial condition will be
negatively affected.
The surviving company will face significant competition from other
companies engaged in the Internet connectivity business.
The Internet connectivity business is highly competitive, and there are no
substantial barriers to entry. We believe that competition will intensify.
Currently, our primary competitors include:
o companies that provide in-room PCs (such as Integrated Network
Technologies, 4th Communications Network, Inc., and Guest-Tek
Services);
o companies that provide cable modems (such as On Command Corporation,
Suitesurfer Communications, Inc., MagiNet Corporation and LodgeNet
Entertainment Corporation); and
o companies that provide "plug and play" jacks (such as Wayport, Inc.,
OverVoice by CAIS Internet, Darwin Networks, Viator Networks and ATCOM,
Inc.).
Many of our current and potential competitors have substantially greater
human and financial resources, name recognition, market presence and operating
experience than Camanco Communications. They may also have significant
competitive advantages through other lines of business and existing business
relationships. The surviving company's future growth and profitability will
depend, in part, upon consumer and commercial acceptance of its technology,
products and services. However, our competitors may develop products or
services that are superior to ours or achieve greater market acceptance than
our products and services.
The surviving company must keep pace with rapidly changing technology in
the Internet access industry.
Our future success will depend, in part, on our ability to: (1) offer
products and services that address the increasingly sophisticated and varied
needs of business travelers and other hotel guests, and (2) respond to
technological advances and emerging industry standards and practices on a
timely and cost-effective basis. The Internet access market in which we will
compete is characterized by:
o rapidly changing technology;
o evolving industry standards;
o changes in user needs;
o numerous competitive services and product offerings; and
o frequent new service and product introductions.
This could result in product obsolescence or short product life cycles.
The surviving company's success will depend, in part, on its ability to (1) use
new technologies effectively, (2) continue to develop its technical expertise,
(3) enhance its existing products and services, and (4) develop new products
and services to meet changing user needs on a timely and cost-effective basis.
The surviving company's ability to compete successfully also depends upon the
continued compatibility of its products and services with other products and
architectures utilized in the Internet access market. Although the surviving
company intends to support emerging standards in the market for Internet
access, there can be no assurance that industry standards will be established
or, if they become established, that the surviving company will be able to
conform to these new standards in a timely fashion and maintain a competitive
position in the market. In addition, the surviving company cannot assure you
that services or technologies developed by others (such as satellite delivery
of Internet access) will not render the surviving company's products, services
or technology noncompetitive, unnecessary or obsolete.
PCRoomLink services are susceptible to disruptive problems due to
mechanical problems, theft, vandalism and computer viruses. As a result of such
problems, the surviving company will need to
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provide support and maintenance services for the hardware and software
components of the PCRoomLink system. While we intend to use a combination of
in-house staff and third parties for the provision of such services, we have
not yet entered into any such third party contracts or agreements.
Despite implementation of security measures, the hardware and software
components of the PCRoomLink system will be vulnerable to computer viruses,
physical or electronic break-ins, theft, vandalism and similar disruptive
problems. Computer viruses, break-ins or other problems caused by the
accidental or intentional actions of PCRoomLink users, current and former
employees, and others could lead to interruptions, delays or a cessation in
service to users of the PCRoomLink system. Any of these risks could result in
decreased use of PCRoomLink products and services by end-users and decreased
acceptance of the concept by hotel owners. Any such decreased use or acceptance
would reduce the surviving company's operating revenues and would have a
negative effect on the surviving company's business, results of operations and
financial condition. We do not carry insurance against these risks because it
is unavailable at a reasonable cost.
The surviving company presently intends to subcontract with reputable
third party organizations to provide service, support and maintenance services
for the PCRoomLink hardware and software components. However, to date, we have
not yet entered into any type of service, support or maintenance agreement for
the PCRoomLink system. There can be no assurance that the surviving company
will be able to enter into any such service, support or maintenance arrangement
on favorable terms, if at all. The inability of the surviving company to be
able to subcontract out certain support, service and maintenance obligations
for the PCRoomLink hardware and software components on favorable terms would
result in the surviving company having to provide such support and maintenance
services in-house and could have a material adverse effect on the surviving
company's business, financial condition and assets.
Internet security concerns could hinder the transaction of business over
the Internet, also known as electronic commerce, and the demand for the
surviving company's products and services. In addition, we may be held liable
for security breaches in the PCRoomLink network.
A significant barrier to electronic commerce and communications over the
Internet has been the need for the secure transmission of confidential
information. Despite the implementation of network security measures, security
breaches may occur as a result of the accidental or intentional actions of
PCRoomLink users, current or former employees, or others.
Although management is not aware of any attempts by programmers or
"hackers" to penetrate Camanco Communications' current security systems, these
actions could occur in the future. A party who is able to penetrate such
security systems could misuse a PCRoomLink user's personal information or
credit card information and the user might sue the surviving company or bring
claims against the surviving company. Concerns over the security of Internet
transactions and the privacy of users may also inhibit the growth of the
Internet generally, particularly as a means of conducting commercial
transactions.
Security breaches or the inadvertent transmission of computer viruses
could expose the surviving company to a risk of loss or litigation and possible
liability. The surviving company's business, results of operations, and
financial condition could be negatively affected if contractual provisions
attempting to limit its liability in these areas are not successful or
enforceable, or if other parties do not accept these contractual provisions as
part of the surviving company's agreements with them.
The surviving company's operations are subject to risks of system failure.
Our operations depend upon our ability to protect the PCRoomLink network
against damage from acts of nature, power failures, telecommunications failures
and similar events. Because we lease our lines from long-distance
telecommunications companies, Internet backbone providers, regional Bell
operating companies and competitive local exchange carriers, we depend upon
those companies for physical repair and maintenance of those lines. Despite the
precautions we and our telecommunications providers take, the occurrence of a
natural disaster, fire, electrical outage or other unanticipated problem at one
of our telecommunications providers' facilities or PCRoomLink locations may
cause interruptions in the services we provide. Such interruptions in
operations could have a material adverse effect on our business, financial
condition or results of operations.
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We may be held liable for information sent through the PCRoomLink network.
Materials may be downloaded and distributed to others through the
PCRoomLink network. The law relating to the liability of Internet service
providers and on-line services companies for information carried on, stored on
or disseminated through their network is unsettled, even with the recent
enactment of the Digital Millennium Copyright Act. We believe that it is
currently also unsettled as to whether the Telecommunications Act of 1996
prohibits and imposes liability for any of the services we provide should the
content of information transmitted be subject to the statute.
While no one has ever filed a claim against us relating to this issue
since we have not yet commenced doing business, someone may file a claim of
that type in the future and may be successful in imposing liability on us. If
that happens, we may have to spend significant amounts of money to defend
ourselves against these claims and, if we are not successful in our defense,
the amount of damages that we will have to pay may be significant. Any costs
that we incur as a result of defending these claims, or the amount of liability
that we may suffer if our defense is not successful, could materially adversely
affect our profitability.
If, as the law in this area develops, we become liable for information
carried on, stored on, or disseminated through our network, we may decide to
take steps to reduce our exposure to this type of liability. This may require
us to spend significant amounts of money for new equipment and may also require
us to discontinue offering certain of our products or services.
Due to the increasing popularity and use of the Internet, it is possible
that additional laws and regulations may be adopted with respect to the
Internet, covering issues such as content, privacy, access to adult content by
minors, pricing, bulk e-mail (spam), encryption standards, consumer protection,
electronic commerce, taxation, copyright infringement and other intellectual
property issues. We cannot predict the impact, if any, that future regulatory
changes or developments may have on our business, financial condition, or
results of operation.
We rely on other companies to supply our network infrastructure, some of
which may compete directly with us or enter into arrangements with our
competitors.
We rely on other companies to supply our network infrastructure (including
telecommunications services and networking equipment) which, in the quantities
and quality we require, is available only from sole or limited sources. We are,
therefore, vulnerable to the possibility that our suppliers may:
o compete directly with us;
o enter into exclusive arrangements with our competitors; or
o stop selling their products or components to us at commercially
reasonable prices, or at all.
We also depend substantially on telecommunications services providers to
provide the Internet access component of the PCRoomLink system and we are
unable to control the prices for these services. For example, in order to
provide Internet access and other on-line services to our customers, we lease
long distance fiber optic telecommunications lines from national
telecommunications services providers.
Certain of our suppliers, including AT&T and regional Bell operating
companies, are currently subject to various price constraints, including tariff
controls, which may change in the future. In addition, pending regulatory
proposals may affect the prices they charge us. These regulatory changes could
result in increased prices for the products and services they provide to us.
This could reduce the profit margin for our services or require us to increase
the prices which we charge our customers, which could reduce the demand for our
services.
We also do not manufacture any of the computer hardware components or
other equipment to be utilized in the PCRoomLink system, such as furniture,
computers, flat screens, etc. We depend on third parties to manufacture and
supply each of these items to us. Any interruption in these manufacturers'
operations could adversely affect our ability to meet our customers'
requirements, which could cause them to use our competitors' services.
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The surviving company's business plan calls for PCRoomLink products and
services to be installed in a minimum of 188,244 hotel rooms (with a 50%
occupancy/use rate for such installed rooms) before the surviving company may
be able to operate profitably.
Currently, Camanco Communications has thirteen hotels (with a total of
1,698 installed rooms) in various stages of the contract negotiation and
execution process under contract (of which two are pilot hotel properties who
have entered into contracts with Camanco Communications). There are an
additional 64 hotels which have submitted applications to Camanco
Communications and are currently being approved by Camanco Communications for
their eligibility to become PCRoomLink member hotels. The surviving company's
present business plan indicates that PCRoomLink products and services must be
installed in a minimum of 188,244 hotel rooms (which is projected under Camanco
Communications' current business plan to be achieved in March, 2001), with a
50% occupancy/use rate realized for such rooms, before profitability may be
achieved.
There can be no assurance that the surviving company will be able to
establish relationships with a sufficient number of targeted hotel properties,
install a sufficient number of rooms at those properties, or achieve the
required occupancy/use rate to ever operate at a profit.
Most of the directors and executive officers of Camanco Communications
have recently joined the company and have little experience with development
stage companies or companies in the Internet access or hospitality industries.
As a development stage company, Camanco Communications' growth to date has
placed, and the planned growth of the surviving company following the merger
will continue to place, a significant strain on its managerial, operational and
financial resources. The surviving company will need to:
o improve its financial and management controls, reporting systems and
procedures;
o expand, train and manage its work force for marketing, sales and
support, product development, site design, and network and equipment
repair and maintenance; and
o manage multiple relationships with various customers, strategic
partners and other third parties.
Many of the directors and executive officers of Camanco Communications are
new to the company and do not have any significant experience with the unique
challenges faced by development stage companies. They also do not have a great
deal of experience in the Internet access or hospitality industries, which are
the industries in which the surviving company will compete. Managing the
development of the surviving company's products and services, and the growth of
its business, will require a significant amount of management time and skill.
There can be no assurance that the directors and executive officers of Camanco
Communications, in light of their limited experience, will be effective in
managing the surviving company's growth and development.
Management of Camanco Communications will have substantial control over
the surviving company and other stockholders of the surviving company may have
no effective voice in its management.
Upon completion of the merger, the current directors and executive
officers of Camanco Communications (who will be all of the directors and
executive officers of the surviving company following the merger), and their
affiliates, will own approximately 64.5% of the then outstanding shares of the
surviving company's common stock. Accordingly, these stockholders will possess
substantial control over its operations. This control may allow them to amend
corporation filings, elect all of the surviving company's board of directors,
and substantially control all matters requiring approval by the surviving
company's stockholders, including approval of significant corporate
transactions. Management will also have the ability to delay or prevent a
change in control of the surviving company and to discourage a potential
acquirer of the surviving company or its securities. Other stockholders of the
surviving company may have no effective voice in its management.
Unless a public market develops for the surviving company's securities,
you may not be able to sell your shares.
Prior to the date of this joint proxy statement/prospectus, there has been
only a limited trading market for Thermaltec's common stock. Although
management intends to apply for listing of Thermaltec's common stock on the
Nasdaq SmallCap Market following the merger, there can be no assurance that an
active trading market will develop or be maintained. If Nasdaq refuses to list
Thermaltec's common stock on the Nasdaq SmallCap Market, management of the
surviving company will attempt to have the Thermaltec common stock continue to
14
<PAGE>
trade on the OTC Bulletin Board or in the over-the-counter market on the
so-called "pink sheets". A failure by the surviving company to develop or
maintain an active trading market could negatively affect the price of the
surviving company's securities, as well as adversely affect your ability to
sell your shares, by limiting the number of potential purchasers interested in
the stock.
The share exchange ratio in the merger is fixed and, if the market price
of Thermaltec common stock decreases before the merger is completed, the dollar
value of what Camanco Communications stockholders will receive in the merger
also will decrease.
The share exchange ratio in the merger is fixed. This means that, if the
market price of Thermaltec common stock decreases before the merger is
completed, the dollar value of what Camanco Communications stockholders will
receive in the merger also will decrease. Some of the reasons why the market
price of Thermaltec common stock may be volatile are discussed in the next
paragraph. Camanco Communications stockholders are advised to obtain recent
market quotations for Thermaltec common stock. We cannot assure you as to the
market price of Thermaltec common stock at any time. See "Description of
Thermaltec's Securities -- Price Ranges of Thermaltec Common Stock."
The number of shares of Thermaltec's common stock that is traded daily on
the OTC Bulletin Board averages less than 1% of the outstanding Thermaltec
common stock. As a result, the market price of Thermaltec common stock may be
volatile.
As a result of Thermaltec's low trading volume, the market price for
Thermaltec common stock may be volatile and may be affected by many factors,
including the following:
o actual or anticipated variations in Thermaltec's quarterly operating
results and net income;
o announcements of technological innovations by Thermaltec or its
competitors;
o changes in financial estimates by securities analysts;
o conditions or trends in the Internet industry which affect the ability
of Thermaltec to market PCRoomLink products and services; and
o announcements by Thermaltec or its competitors of significant
acquisitions, strategic partnerships or joint ventures.
After the merger, approximately 11,452,950 or 18.4% of the surviving
company's outstanding shares of common stock will be available for resale in
the public market without restriction. The sale of a large number of these
shares could also adversely affect the surviving company's stock price and
could impair the surviving company's ability to raise capital through the sale
of equity securities or make acquisitions for stock. See "The Plan of Merger
and Related Transactions -- Restrictions on Resale of Thermaltec Common Stock."
Failure of the surviving company's computer systems and software products
to be Year 2000 compliant could cause an interruption in, or failure of, its
normal business activities or operations. Management of Camanco Communications
has not done any Year 2000 compliance testing with respect to any of its
current software products or internal operating systems.
The "Year 2000" problem arises from the fact that many currently installed
computer systems and software products are coded to accept only two digit
entries in the date code field. As a result, software that records only the
last two digits of the calendar year may not be able to distinguish whether
"00" means 1900 or 2000. This may result in software failures or the creation
of erroneous results.
While management believes that Camanco Communications' current products
and internal systems are Year 2000 compliant, since they are recent purchases
of the most up-to-date systems available, management has not done any Year 2000
compliance testing with respect to any such product or system. When purchasing
products from third party vendors, management intends to obtain representations
from such third party vendors of their products' Year 2000 compliance.
Management also intends to review with Camanco Communications' key vendors and
suppliers, the compliance of their systems with Year 2000 processing
requirements.
The failure of products or systems maintained by third parties or the
surviving company's products and systems to be Year 2000 compliant could cause
the surviving company to incur significant expenses to remedy
15
<PAGE>
any problems, or cause system failures which may seriously damage the surviving
company's reputation and business prospects. Camanco Communications currently
believes that its most reasonably likely worst case scenario related to the
Year 2000 is associated with its suppliers' Internet operations. The failure of
such parties to ensure Year 2000 compliance would lead to decreased Internet
usage and a delay in or inability to obtain necessary data communication and
telecommunication capacity.
As of the date hereof, Camanco Communications has not expended any
significant sums on its Year 2000 compliance efforts.
The surviving company's directors are not personally liable for breaches
of fiduciary duties.
As permitted by the Delaware General Corporation Law, Thermaltec's
certificate of incorporation includes a provision eliminating the personal
liability of our directors for monetary damages for breach or alleged breach of
their fiduciary duties as directors, subject to certain exceptions. In
addition, pursuant to Thermaltec's by-laws, the surviving company will have to
indemnify its officers and directors under certain circumstances, including
those circumstances in which indemnification would otherwise be discretionary.
The surviving company will also be required to advance to its officers and
directors expenses incurred in connection with proceedings against them for
which they may be indemnified. We are not currently aware of any pending or
threatened litigation or proceeding involving any of Camanco Communications' or
Thermaltec's directors, officers, employees or agents in which indemnification
would be required or permitted.
The surviving company may be liable for debts and obligations arising as a
result of Thermaltec's operations prior to the merger.
As part of the spin-off, Thermaltec has transferred all of its debts,
liabilities and obligations to Panama Industries. Panama Industries has agreed
to assume responsibility for all debts, liabilities and obligations incurred by
Thermaltec prior to the merger. However, there can be no assurance that a
creditor will not be successful in holding the surviving company liable for any
such pre-merger debt, liability or obligation.
To minimize the surviving company's exposure to any debts, liabilities or
obligations arising from the operations of Thermaltec prior to the merger,
Andrew B. Mazzone has agreed to indemnify the surviving company for up to $2
million of any such liabilities. Mr. Mazzone has also agreed to provide the
surviving company with limited collateral to secure such indemnification
obligations. See "The Merger Agreement -- Indemnification." However, there can
be no assurance that such indemnification will be available or sufficient to
satisfy any Thermaltec obligation for which the surviving company may be found
to be liable. If the indemnification being provided by Mr. Mazzone is
insufficient to satisfy any Thermaltec obligation which the surviving company
is found to be liable for, the surviving company's financial condition could be
negatively affected.
Risk Factors Related to Panama Industries and the Spin-Off
Panama Industries has not yet operated at a profit.
Thermaltec was formed in 1994, and commenced operations in 1995, but has
not yet shown a profit in its operations. Following the spin-off, there can be
no assurance that Panama Industries will be able to manage its business
properly and generate sufficient marketplace interest in its products and
services to operate at a profit.
Thermaltec has incurred losses since its inception and Panama Industries
anticipates incurring continuing losses. As a result, Panama Industries,
following the spin-off, may not be able to generate the operating cash flows
necessary to continue operations.
As of June 30, 1999, Panama Industries' accumulated deficit was
approximately $60,695. Panama Industries will continue to incur significant
losses until, at the earliest, it generates sufficient revenues to offset the
substantial expenditures and operating costs associated with developing and
commercializing its metallurgical coatings products and services. As a result,
Panama Industries may need additional funds to carry out its proposed
operations.
16
<PAGE>
Potential sources of funding which have been identified by Panama
Industries include vendor and bank lines of credit, bond financing and
additional sales of securities by Panama Industries. There can be no assurance
that any additional funding required by Panama Industries will be available on
commercially reasonable terms, or at all. The inability to obtain additional
financing, when needed, would have a material negative effect on Panama
Industries, including possibly requiring it to curtail or cease operations.
If any future financing involves the sale of equity securities by Panama
Industries, the shares of Panama Industries common stock held by its
stockholders would be substantially diluted. If Panama Industries incurs
indebtedness or otherwise issues debt securities, it will be subject to the
risks associated with indebtedness, including the risk that interest rates may
fluctuate and the possibility that Panama Industries may not be able to pay
principal and interest on the indebtedness.
Compliance with environmental laws and regulations may adversely affect
the growth of Panama Industries and its financial condition.
Panama Industries' operations are subject to federal, state, local and
foreign laws and regulations relating to the storage, handling, generation,
treatment, emission, release, discharge and disposal of certain substances and
wastes. As a result, Panama Industries may be involved from time to time in
administrative or legal proceedings relating to environmental matters. To
management's knowledge, Panama Industries has conducted its operations in
compliance will all material environmental laws, rules and regulations. Panama
Industries has never been cited by any governmental authority or agency for any
environmental violation. Panama Industries does not reserve any monies for any
potential costs incurred in connection with any environmental claim or
proceeding.
Liability under environmental laws may be imposed on current and prior
owners and operators of property or businesses without regard to fault or to
knowledge about the condition or action causing the liability. Panama
Industries may be required to incur costs relating to the remediation of
properties, including properties at which Panama Industries disposes of waste,
and environmental conditions at such properties could lead to claims for
personal injury, property damage or damages to natural resources.
There can be no assurance that any costs Panama Industries may incur
relating to environmental matters will not have a material adverse effect on
its business, financial condition or its result of operations.
Panama Industries faces significant competition in the thermal spraying
industry, and it may not have the financial resources, management experience
and business contacts necessary for it to compete successfully.
Panama Industries' principal competitors include all of the traditional
manufacturers of thermal spray equipment and supplies. In addition, the
processes utilized by Panama Industries in its business operations are not
protected by patents or any other proprietary rights. Accordingly, there can be
no assurance that Panama Industries will not face additional competition from
parties whom Panama Industries has trained.
Many of Panama Industries' current and potential competitors have greater
financial resources, operating experience, and existing business relationships.
Panama Industries' future growth and profitability will depend, in part, upon
its ability to locate qualified local partners in developing countries to
establish stand-alone thermal spray shops and to provide such local parties
with on-going training and technical support. There can be no assurance that
Panama Industries will be successful in achieving these goals or competing
successfully in the thermal spray coating industry.
Management of Panama Industries will have substantial control over its
operations and other stockholders of the surviving company may have no
effective voice in its management.
The directors and executive officers of Panama Industries, and their
affiliates, will own approximately 60.1% of its outstanding stock following
completion of the spin-off. Accordingly, these individuals will possess
substantial control over its operations. This control may allow them to amend
corporation filings, elect all of the directors of Panama Industries, and
substantially control all matters requiring approval by the stockholders of
Panama Industries.
17
<PAGE>
The shares of stock to be issued by Panama Industries in the spin-off are
subject to substantial restriction on transferability and you may not be able
to sell those shares for an extended period of time, if at all.
The holders of Panama Industries common stock following completion of the
spin-off will only be able to transfer the securities in specific limited
situations (as described below). The certificates evidencing the spun-off
shares will bear a restrictive legend, and the transfer books of Panama
Industries will include stop transfer instructions that indicate the transfer
limits.
The shares of Panama Industries common stock to be received in the
spin-off by Thermaltec stockholders who owned shares of Thermaltec common stock
on May 28, 1999 will be subject to the following transfer restrictions:
(a) Prior to the time, if any, upon which Panama Industries becomes a
"reporting company" under the Securities Exchange Act of 1934, such shares
may not be sold, transferred, pledged or otherwise disposed of except for:
(1) transfers to Panama Industries;
(2) transfers to existing Panama Industries stockholders;
(3) transfers by gift, bequest or operation of the laws of descent,
provided that the common stock in the hands of the transferee
remain subject to the same restrictions on transfer as when they
were held by the transferor;
(4) transfers to an entity unaffiliated with Panama Industries
pursuant to a merger, consolidation, stock for stock exchange or
similar transaction involving Panama Industries;
(5) transfers by a partnership to its partners, provided that the
Panama Industries common stock in the hands of the transferee
remains subject to the same restrictions on transfer as the shares
were subject to when they were held by the transferor; or
(6) transfers which would be exempt from the registration requirements
of Section 5 of the Securities Act of 1933 by virtue of the
exemption provided by Section 4(2) of such Act if the transferor
were the issuer of the Panama Industries common stock, provided
that the transferee is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act of 1933 and the Panama
Industries common stock in the hands of such transferee remains
subject to the same restrictions on transfer as the shares were
subject to when they were held by the transferor, or a transfer
pursuant to an effective registration under the Securities Act of
1933 simultaneously with a registration of the Panama Industries
common stock under Section 12 of the Securities Exchange Act of
1934.
Pursuant to applicable SEC rules and interpretations, these restrictions
are intended to ensure that no active trading market in Panama Industries
common stock develops prior to the time Panama Industries has registered its
common stock under Section 12 of the Securities Exchange Act of 1934.
Such restrictions on transfer will apply not only to Panama Industries
common stock issued in the spin-off, but also any shares transferred to
subsequent holders and any shares subsequently issued as a result of any stock
split, stock distribution or similar distribution with respect to such shares.
In addition, no public trading market presently exists for shares of
Panama Industries common stock. Panama Industries does not anticipate that any
such market will develop or, if developed, that it will continue to be
maintained. Because of the restrictions on transferability and the absence of a
trading market, a Panama Industries stockholder may be unable to sell any of
his or her Panama Industries shares even though financial circumstances may
make such sale desirable.
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<PAGE>
The distribution of the shares of Panama Industries to a Thermaltec
stockholder in the spin-off may result in the stockholder recognizing taxable
gain for federal income tax purposes without receiving any cash to pay the
resulting tax liability.
The pro rata distribution of shares of Panama Industries to Thermaltec
stockholders in the spin-off will be treated, for federal income tax purposes,
as a return of capital. If the fair market value of the shares of Panama
Industries received by a Thermaltec stockholder is greater than the
stockholder's basis in his shares of Thermaltec stock as of the date of
distribution, the difference generally 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.
Neither Thermaltec nor Panama Industries will obtain an appraisal of the
fair market value of the shares of Panama Industries to be issued in the
spin-off. If the United States Internal Revenue Service, in an audit of a
Thermaltec stockholder, asserts a fair market value for the Panama Industries'
stock which would result in a significant tax liability being imposed on the
stockholder, the stockholder will have to use his personal resources to obtain
an expert appraisal of the shares of Panama Industries received by the
stockholder in the spin-off. There can be no assurance that the appraised value
of such shares will be lower than the stockholder's basis in his shares of
Thermaltec stock.
Panama Industries will not pay cash dividends for the forseeable future.
There can be no assurance that the operations of Panama Industries will
result in significant revenues or any level of profitability. Any earnings
which may be generated by Panama Industries will be used, for the foreseeable
future, to finance the growth of Panama Industries business. Accordingly, while
the payment of dividends rests within the discretion of Panama Industries'
board of directors, no cash dividends on any of Panama Industries' stock has
been declared or paid to date, and management does not presently intend to pay
any such cash dividends for the foreseeable future.
Failure of Panama Industries', or its customers' or suppliers', computer
systems to be Year 2000 compliant could cause an interruption in, or failure
of, Panama Industries' normal business activities or operations. Management of
Panama Industries has not done any Year 2000 compliance testing of any of its
internal operating systems, or any such system utilized by any customer or
supplier.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the computer
programs utilized by Panama Industries that have time sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
Panama Industries believes that its internal systems are Year 2000 compliant or
will be upgraded or replaced in connection with previously planned changes to
information systems prior to the need to comply with Year 2000 requirements.
However, Panama Industries is uncertain as to the extent its customers and
vendors may be affected by Year 2000 issues that require commitment of
significant resources and may cause disruptions in the customers' and vendors'
businesses.
19
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Thermaltec has filed a registration statement on Form S-4 with the SEC to
register the shares of Thermaltec common stock to be issued in the merger under
the Securities Act of 1933. This joint proxy statement/prospectus is a part of
the registration statement and constitutes a prospectus of Thermaltec in
addition to being a proxy statement of each of Thermaltec and Camanco
Communications for their special meetings. As allowed by SEC rules, this joint
proxy statement/prospectus does not contain all the information you can find in
the registration statement or the exhibits to the registration statement.
You should rely only on the information contained or incorporated by
reference in this joint proxy statement/prospectus to vote on the proposed
merger. Neither Camanco Communications nor Thermaltec has authorized anyone to
provide you with information that is different from what is contained in this
document. This joint proxy statement/prospectus is dated November ____, 1999.
You should not assume that the information contained in this document is
accurate as of any date other than that date.
FORWARD-LOOKING STATEMENTS
Both Camanco Communications and Thermaltec have made forward-looking
statements in this document that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Thermaltec, Camanco Communications or
the surviving company, including those set forth or referenced in "The Plan of
Merger and Related Transactions -- Background of the Merger," "-- Thermaltec's
Reasons for the Merger," and "-- Camanco Communications' Reasons for the
Merger". Also, when we use words such as "believes," "expects," "anticipates"
or similar expressions, we are making forward-looking statements. You should
note that many factors, some of which are discussed below and elsewhere in this
document, could affect the future financial results of Thermaltec, Camanco
Communications or the surviving company and could cause those results to differ
materially from those expressed or implied in our forward-looking statements
contained or incorporated by reference in this document.
<PAGE>
THERMALTEC SELECTED CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial information of
Thermaltec is qualified by reference to and should be read in conjunction with
the financial statements and notes thereto included elsewhere in this joint
proxy statement/prospectus. The selected consolidated financial information set
forth below for the period from November 17, 1994 (inception) through September
30, 1995 and the fiscal years ended September 30, 1996, 1997 and 1998 is
derived from the audited consolidated financial statements of Thermaltec. The
selected consolidated financial for the nine months ended June 30, 1998 and
1999 is derived from unaudited consolidated financial statements of Thermaltec,
which are also included elsewhere in this joint proxy statement/prospectus.
Unaudited financial statements include all adjustments which Thermaltec
considers necessary for a fair presentation. The results of operations for the
nine months ended June 30, 1999 are not necessarily indicative of results to be
expected for any future period.
Consolidated Statement of Operations Data:
<TABLE>
<CAPTION>
Inception Nine Months Ended
Through Fiscal Year Ended September 30, ----------------------------
September 30, ------------------------------------------- June 30, June 30,
1995 1996 1997 1998 1998 1999
--------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sales ........................... $ 1,735 $ 200,709 $ 442,264 $ 275,846 $ 247,463 $ 204,950
Costs of Sales .................. 904 174,177 250,176 154,511 142,650 145,170
Gross Profit .................... 831 26,532 192,088 121,335 104,813 59,780
General and Admin. Expenses ..... 44,382 537,544 450,840 523,060 444,145 345,382
Loss before Income Taxes ........ (43,551) (511,012) (258,752) (401,725) (339,332) (285,602)
Income Taxes .................... 325 88 967 959 -- --
Net Loss ........................ ($ 43,876) ($ 511,100) $ 259,719) ($ 402,684) ($ 339,332) ($ 285,602)
========= ========= ========= ========= ========= =========
Net Loss per Share .............. $ 0.03) $ 0.26) $ 0.13) $ 0.19) $ 0.16) $ 0.12)
========= ========= ========= ========= ========= =========
Weighted Average Number of
Shares Outstanding ............. 1,523,865 1,977,327 2,046,750 2,105,489 2,073,251 2,455,791
</TABLE>
Consolidated Balance Sheet Data:
<TABLE>
<CAPTION>
September 30, June 30,
----------------------------------------------------------- --------------
1995 1996 1997 1998 1999
----------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Working Capital .............. $469,430 $118,665 ($ 170,832) ($ 177,924) ($ 230,611)
Total Assets ................. 505,840 423,560 308,002 272,206 346,288
Long-Term Debt ............... -- -- 40,745 20,764 25,636
Stockholders' Equity ......... $501,124 $217,276 ($ 18,104) ($ 67,962) ($ 151,719)
</TABLE>
20
<PAGE>
CAMANCO COMMUNICATIONS SELECTED FINANCIAL DATA
The following selected historical financial information of Camanco
Communications is qualified by reference to and should be read in conjunction
with the financial statements and notes thereto included elsewhere in this
joint proxy statement/prospectus. The selected financial information set forth
below for the period from October 7, 1996 (inception) through September 30,
1997 and the fiscal year ended September 30, 1998 is derived from the audited
financial statements of Camanco. The selected financial information for the
nine months ended June 30, 1999 is derived from unaudited financial statements
of Camanco which are also included elsewhere in this joint proxy
statement/prospectus. Unaudited financial statements include all adjustments
which Camanco considers necessary for a fair presentation. The results of
operations for the nine months ended June 30, 1999 are not necessarily
indicative of results to be expected for any future period.
<TABLE>
<CAPTION>
October 6, 1996
(Date of Inception)
through
September 30, 1997
---------------------
<S> <C>
Statement of Operations Data:
Sales ................................................. $ --
Cost of Sales ......................................... --
Gross Profit .......................................... --
General and Administration Expense .................... 200
Loss Before Income Taxes .............................. (200)
Income Taxes .......................................... --
Net Loss .............................................. $ (200)
=======
Net Loss Per Share .................................... $ (0.05)
=======
Weighted Average Number of Shares Outstanding ......... 4,284
<CAPTION>
Fiscal Nine Months Nine Months
Year Ended Ending Ending
September 30, 1998 June 30, 1998 June 30, 1999
-------------------- --------------- ----------------
<S> <C> <C> <C>
Statement of Operations Data:
Sales ................................................. $ -- $ -- $ --
Cost of Sales ......................................... -- -- --
Gross Profit .......................................... -- -- --
General and Administration Expense .................... 73,962 49,175 1,778,612
Loss Before Income Taxes .............................. (73,962) (49,175) (1,778,612)
Income Taxes .......................................... -- -- --
Net Loss .............................................. $ (73,962) $ (49,175) $ (1,778,612)
========= ========= ============
Net Loss Per Share .................................... $ (17.26) $ (11.48) $ (376.90)
========= ========= ============
Weighted Average Number of Shares Outstanding ......... 4,284 4,284 4,719
</TABLE>
<TABLE>
<CAPTION>
October 6, 1996
(Date of Inception) Fiscal Nine Months
through Year Ended Ending
September 30, 1997 September 30, 1998 June 30, 1999
--------------------- -------------------- --------------
<S> <C> <C> <C>
Balance Sheet Data:
Working Capital ............. $ (200) $ (73,912) $7,592,880
Total Assets ................ -- 250 9,263,160
Long-Term Debt .............. -- -- --
Stockholders Equity ......... (200) (73,912) 8,318,211
</TABLE>
<PAGE>
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Thermaltec common stock has been traded on the OTC Bulletin Board of the
NASD, Inc. under the symbol "THRM" since July, 1995. There is only limited
trading in the Thermaltec common stock.
There is no established trading market for the Camanco Communications
common stock.
The information stated in the table below presents the high and low bid
prices on the OTC Bulletin Board for the Thermaltec common stock on December
11, 1998 and September 7, 1999. December 11, 1998 was the last day on which
trading in the Thermaltec common stock occurred prior to public announcement of
the intention of Camanco Communications and Thermaltec to merge. November 10,
1999 was the last practicable trading day for which information was available
prior to the date of this joint proxy statement/prospectus.
The information in the table below also presents the sales prices for the
most recent sale of Camanco Communications common stock occurring prior to
December 11, 1998 and November 10, 1999.
The most recent sale of Camanco Communications common stock occurring
prior to December 11, 1998 occurred on October 8, 1996. On such date, 1,000
shares of Camanco Communications common stock were sold to the founders of
Camanco Communications, James and Alisa Rossi, in a private placement at a
price of $0.25 per share.
21
<PAGE>
The most recent sale of Camanco Communications common stock occurring
prior to November 10, 1999 occurred on July 7, 1999. On such date, 1,200 shares
of Camanco Communications common stock were sold to accredited investors in a
private placement. These shares were sold at a price of $10,000 per share.
<TABLE>
<CAPTION>
Most Recent
Sale Price
Historical Camanco Communications
Thermaltec Common Stock Common Stock
--------------------------- -----------------------
High Low
------------ ------------
<S> <C> <C> <C>
December 11, 1998 ......... $ 5.25 $ 2.375 $ 0.25
November 10, 1999 ......... $ 7.0625 $ 6.5625 $ 10,000.00
</TABLE>
Camanco Communications and Thermaltec stockholders are urged to obtain a
current market quotation for Thermaltec common stock. No assurance can be given
as to the future prices of, or markets for, Thermaltec common stock.
On November 10, 1999, there were 61 recordholders of Thermaltec common
stock, although Thermaltec knows that there are other persons who are
beneficial owners of shares of Thermaltec common stock held in street name. As
of November 10, 1999, Thermaltec's transfer agent reported that there were 675
total holders of Thermaltec common stock.
On November 10, 1999, there were 82 recordholders of Camanco
Communications common stock.
SPECIAL MEETINGS OF STOCKHOLDERS
We are sending you this in order to provide you with important information
regarding the merger and to solicit your proxy for use at the special meetings
and at any adjournments or postponements of the special meetings. The special
meetings are scheduled to be held at the times and places described below.
Thermaltec Special Meeting
General. The Thermaltec special meeting is scheduled to be held on
December ___, 1999 at 9:00 a.m., local time, at ______________________________.
At the Thermaltec special meeting, Thermaltec stockholders will have the
opportunity to consider and vote upon the proposed merger.
The sole director of Thermaltec has approved the proposed merger and
recommends that Thermaltec stockholders vote "for" the proposed merger.
Record Date. The close of business on November ____, 1999, has been fixed
by the sole director of Thermaltec as the record date for the determination of
holders of shares of Thermaltec common stock entitled to notice of and to vote
at the Thermaltec special meeting.
Stock Entitled to Vote. At the close of business on the Thermaltec record
date, Thermaltec had ____________ shares of Thermaltec common stock outstanding
(held by ____ persons of record). Each holder of Thermaltec common stock will
have the right to one vote with respect to the matters to be acted upon at the
Thermaltec special meeting for each share registered in the holder's name on
the books of Thermaltec as of the close of business on the record date.
Quorum; Required Vote. 1,289,059 shares of Thermaltec common stock,
present in person or represented by proxy, at the Thermaltec special meeting
will constitute a quorum. All shares of Thermaltec common stock present in
person or represented by proxy and entitled to vote at the Thermaltec special
meeting, no matter how they are voted or whether they abstain from voting, will
be counted in determining the presence of a quorum. If the Thermaltec special
meeting is adjourned for one or more periods aggregating at least 15 days
because of the absence of a quorum, those stockholders entitled to vote who
attend the reconvened Thermaltec special meeting, if less than a quorum as
determined under applicable law, will nevertheless constitute a quorum for the
purpose of acting upon any matter stated in the Notice of Special Meeting.
Under Delaware law, the affirmative vote of the holders of at least a majority
of the outstanding shares of Thermaltec common stock on the Thermaltec record
date is required for approval of the proposed merger.
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Stock Ownership. As of the close of business on the Thermaltec record
date, the sole director and executive officer of Thermaltec, the President of
Thermaltec's wholly-owned subsidiary, and their affiliates, beneficially owned
and had the right to vote, in the aggregate, 1,550,400 shares of Thermaltec
common stock, representing approximately 60.1% of the total votes entitled to
be cast at the Thermaltec special meeting. It is currently expected that
members of the management of Thermaltec and its subsidiary, and their
affiliates, will vote the shares of Thermaltec common stock that they are
entitled to vote in favor of the proposed merger. Accordingly, the affirmative
vote of no other holder of shares of Thermaltec common stock is required to
approve the merger.
Voting and Revocation of Proxies. All shares of Thermaltec common stock
represented by a proxy properly signed and received at or prior to the
Thermaltec special meeting, unless subsequently revoked, will be voted in
accordance with the instructions on the proxy. If a proxy is signed and
returned without indicating any voting instructions, the shares of Thermaltec
common stock represented by the proxy will be voted "for" the proposed merger.
You may revoke your proxy and reclaim your right to vote your shares by giving
written notice of revocation to the Secretary of Thermaltec at any time before
it is voted, by submitting to Thermaltec a duly executed, later-dated proxy or
by voting the shares subject to the proxy by written ballot at the Thermaltec
special meeting. All written notices of revocation and other communications
with respect to revocation of Thermaltec proxies should be addressed to:
Thermaltec International, Corp., 68A Lamar Street, West Babylon, New York
11704, Attention: Andrew B. Mazzone, President. Attendance at the Thermaltec
special meeting will not in and of itself constitute a revocation of a proxy.
The sole director of Thermaltec is not aware of any business to be acted
upon at the Thermaltec special meeting other than as described in this joint
proxy statement/prospectus. If, however, other matters are brought before the
Thermaltec special meeting, including, among other things, a motion to adjourn
or postpone the Thermaltec special meeting to another time or place for the
purpose of soliciting additional proxies or otherwise, the persons appointed as
proxies will have discretion to vote or act on the matters according to their
best judgment. However, no proxy which is voted against the proposed merger
will be voted in favor of any adjournment or postponement. The grant of a proxy
will also confer discretionary authority on the persons named in the proxy to
vote on matters incident to the conduct of the Thermaltec special meeting.
Abstentions and "broker non-votes," explained below, will be counted as
shares present for purposes of determining whether a quorum is present but will
not be voted for or against the proposed merger. Abstentions and broker
non-votes also will not be counted as votes cast for purposes of determining
whether sufficient votes have been received to approve the proposed merger.
Accordingly, abstentions and broker non-votes will have no effect on the
outcome of the vote with respect to the proposed merger. Broker non-votes are
shares held in the name of a broker or nominee for which an executed proxy is
received, but are not voted on the proposal because the voting instructions
have not been received from the beneficial owner or persons entitled to vote
and the broker or nominee does not have the discretionary power to vote.
Solicitation of Proxies. Proxies are being solicited on behalf of the
Thermaltec board of directors. The solicitation of proxies may be made by
directors, officers and regular employees of Thermaltec or its subsidiaries in
person or by mail, telephone, facsimile or telegraph without additional
compensation payable for that solicitation. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
proxy soliciting materials to the beneficial owners of Thermaltec common stock
held of record by these persons, and Thermaltec will reimburse them for
reasonable expenses incurred by them in so doing. The cost of the solicitation
will be borne by Thermaltec.
Rights of Dissenting Thermaltec Stockholders. Except as otherwise
described in this joint proxy statement/prospectus, each Thermaltec stockholder
who delivers to Thermaltec a written demand for appraisal of the stockholder's
shares before the Thermaltec special meeting and who otherwise complies with
the applicable procedures under Delaware law will be entitled to receive the
fair value of his or her shares of Thermaltec common stock in cash if the
merger is completed.
Camanco Communications Special Meeting
General. The Camanco Communications special meeting is scheduled to be
held on December _____, 1999 at 9:00 a.m., local time, at
___________________________. The purpose of the Camanco Communications special
meeting is to consider and vote upon the proposed merger.
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The Camanco Communications board of directors has unanimously approved the
proposed merger and recommends that Camanco Communications stockholders vote
"for" the proposed merger.
Record Date. The close of business on November ___, 1999 has been fixed by
the Camanco Communications board of directors as the record date for the
determination of holders of shares of Camanco Communications common stock
entitled to notice of and to vote at the Camanco Communications special
meeting. Only holders of record of Camanco Communications common stock as of
the close of business on the record date are entitled to notice of, and to vote
at, the Camanco Communications special meeting.
Stock Entitled to Vote. As of the close of business on the Camanco
Communications record date, there were 5,950 shares of Camanco Communications
common stock outstanding. Holders of Camanco Communications common stock will
be entitled to one vote for each share of Camanco Communications common stock
that they held on the Camanco Communications record date. Accordingly, the
holders of Camanco Communications common stock are entitled to cast, in the
aggregate, 5,950 votes.
Quorum; Required Vote. 2,975 shares of Camanco Communications common
stock, present in person or represented by proxy, at the Camanco Communications
special meeting will constitute a quorum. The presence in person or by proxy of
a majority of the outstanding shares of Camanco Communications common stock
will constitute a quorum for purposes of conducting business at the Camanco
Communications special meeting. Under New Jersey law and Camanco
Communications' charter, the affirmative vote of a majority of the votes cast
by the holders of Camanco Communications common stock at the Camanco
Communications special meeting is necessary to approve the proposed merger.
Stock Ownership. As of the close of business on the Camanco Communications
record date, the directors and executive officers of Camanco Communications,
and their affiliates, collectively held 4,001.8 shares of the outstanding
Camanco Communications common stock, representing approximately 67.3% of the
total votes entitled to be cast at the Camanco Communications special meeting.
It is currently expected that members of the management of Camanco
Communications, and their affiliates, will vote the shares of Camanco
Communications common stock that they are entitled to vote in favor of the
proposed merger. Accordingly, the affirmative vote of no other holder of shares
of Camanco Communications common stock is required to approve the proposed
merger.
Voting and Revocation Proxies. Shares of Camanco Communications common
stock represented by a proxy properly signed and received at or prior to the
Camanco Communications special meeting, unless subsequently revoked, will be
voted in accordance with the instructions on the proxy. If you sign and return
your proxy without indicating any voting instructions, the shares of Camanco
Communications common stock represented by the proxy will be voted "for" the
proposed merger. You may revoke your proxy and reclaim your right to vote at
any time by giving written notice of revocation to the Secretary of Camanco
Communications at any time before it is voted, by submitting to Camanco
Communications a duly executed, later-dated proxy or by voting the shares
subject to the proxy by written ballot at the Camanco Communications special
meeting. You should send all written notices of revocation and other
communications with respect to revocation of Camanco Communications proxies to:
Camanco Communications, Inc., 1100 Coombs Road, Millville, New Jersey 08332,
Attention: Alisa A. Rossi, Secretary. Attendance at the Camanco Communications
special meeting will not, in and of itself constitute a revocation of a proxy.
The failure to either return your proxy card or attend the Camanco
Communications special meeting in person and vote in favor of the proposed
merger will have the same effect as a vote against the proposed merger.
The Camanco Communications board of directors is not aware of any business
to be acted upon at the Camanco Communications special meeting other than as
described in this joint proxy statement/prospectus. If, however, other matters
are brought before the Camanco Communications special meeting, including, among
other things, a motion to adjourn or postpone the Camanco Communications
special meeting to another time or place for the purpose of soliciting
additional proxies or otherwise, the persons appointed as proxies will have
discretion to vote or act on the matters according to their best judgment.
However, no proxy which is voted against the proposed merger will be voted in
favor of any adjournment or postponement. The grant of a proxy will also confer
discretionary authority on the persons named in the proxy to vote on matters
incident to the conduct of the Camanco Communications special meeting.
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Abstentions will be counted as shares present for purposes of determining
whether a quorum is present but will not be voted for or against the proposed
merger. Abstentions effectively will be a vote against the proposed merger.
Similarly, the failure to either return your proxy card or attend the Camanco
Communications special meeting in person and vote in favor of the proposed
merger will count as a vote against the proposed merger.
Solicitation of Proxies. The proxies are being solicited on behalf of the
Camanco Communications board of directors. The solicitation of proxies may be
made by directors, officers and regular employees of Camanco Communications in
person or by mail, telephone, facsimile or telegraph without additional
compensation payable for that solicitation. The cost of the solicitation will
be borne by Camanco Communications.
Rights of Dissenting Camanco Communications Stockholders. Except as
otherwise described in this joint proxy statement/prospectus, each Camanco
Communications stockholder who delivers to Camanco Communications a written
notice of exercise of dissenters' rights before the Camanco Communications
special meeting and who otherwise complies with the applicable procedures under
New Jersey law will be entitled to receive the fair value of his or her shares
of Camanco Communications common stock in cash if the merger is completed.
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THE PLAN OF MERGER AND RELATED TRANSACTIONS
This section of the joint proxy statement/prospectus describes the
material aspects of the proposed merger. A copy of the merger agreement is also
attached to this joint proxy statement/prospectus as Annex A. You are urged to
read the merger agreement carefully.
Background of the Merger
Late in the summer of 1998, James M. Rossi, Chairman of the Board and CEO
of Camanco Communications, and Andrew B. Mazzone, President of Thermaltec,
engaged in a series of general business discussions. The discussions were
initiated by Mr. Mazzone, who was looking for new opportunities to expand his
company's existing products and services. Thermaltec's business was focused in
the slow growing, but stable metallurgical coatings industry. Mr. Mazzone was
looking to diversify Thermaltec's business by expanding into a faster growing
industry. Mr. Mazzone was particularly interested in expanding into the
Internet or telecommunications industries. The discussions between Messrs.
Rossi and Mazzone continued through November, 1998. During this time period,
Mr. Rossi assisted Mr. Mazzone in evaluating several available opportunities
for Thermaltec to expand into the Internet and telecommunications fields,
including a potential transaction with an Internet service provider, a paging
services provider, and a low-powered television services provider. Mr. Rossi
was not paid by either Mr. Mazzone or Thermaltec for providing such services.
Mr. Mazzone did not elect to pursue any of the other potential transactions
because none of the other opportunities, in Mr. Mazzone's opinion, appeared to
be as potentially rewarding as a merger with Camanco Communications. As Mr.
Mazzone became more acquainted with Camanco Communications and its business
plan, he began to concentrate on convincing Mr. Rossi that a merger of the two
companies would be in the best interests of both Thermaltec and Camanco
Communications.
In December of 1998, Mr. Rossi and Mr. Mazzone began to seriously explore
the possibility of merging their two companies. They both believed that there
was enough business knowledge and contacts between the management of the two
companies to make Camanco Communications a commercially viable enterprise and
to introduce its potential product and service offerings to a wider market.
Andrew Mazzone also hoped to establish a Latin American presence for Camanco
Communications, based upon his existing contacts in that area, upon further
commercial development of Camanco Communications' PCRoomLink product line.
In mid-December, 1998, Mr. Mazzone and Mr. Rossi executed a letter of
intent, which outlined the general terms for the proposed merger of Camanco
Communications with and into Thermaltec. It was decided that Thermaltec would
be the surviving company in the merger to maintain its listing on the OTC
Bulletin Board and its net operating loss carry-forwards.
It was also decided that, prior to the merger, Thermaltec would spin-off
substantially all of its assets and all of its ongoing business operations to a
wholly-owned subsidiary. This decision was made for the following reasons:
(1) The business of Camanco Communications and the business of
Thermaltec were in unrelated industries and would be best managed in
separate entities;
(2) Thermaltec wanted to protect the existing investment made by its
stockholders in the metallurgical coatings industry;
(3) Thermaltec wanted to protect, to the greatest extent possible, the
assets and ongoing operations of its metallurgical coatings business
from the liabilities and creditors of Camanco Communications; and
(4) Camanco Communications wanted to protect, to the greatest extent
possible, the assets and ongoing operations of its Internet access
business from the liabilities and creditors of Thermaltec's
metallurgical coatings business.
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Consummation of the merger was made subject to a number of conditions
precedent, including without limitation completion of satisfactory due
diligence by both companies, the receipt of all necessary regulatory and third
party approvals, and execution and delivery of a definitive merger agreement by
Camanco Communications and Thermaltec.
From the time that the letter of intent was signed until the definitive
merger agreement was signed on June 16, 1999, the parties worked to complete
the necessary due diligence with respect to both companies, obtain audited
financial statements for both companies, raise additional equity capital for
Camanco Communications, and negotiate the terms and provisions of the
definitive merger agreement, including the terms of the indemnification to be
provided by Mr. Mazzone, the treatment of outstanding Camanco Communications
stock options and the representations and warranties to be provided by both
companies. During this time, both Mr. Rossi and Mr. Mazzone continued to
explore unrelated opportunities in the telecommunications and Internet
industries.
The definitive merger agreement, known as the Agreement and Plan of
Reorganization, was executed by Camanco Communications, Thermaltec and Mr.
Mazzone on June 16, 1999.
Reasons for the Merger
Certain statements made in the following paragraphs regarding the
potential benefits that could result from the merger are forward-looking
statements based on current expectations and entail various risks and
uncertainties that could cause actual results to differ materially from those
expressed in such forward-looking statements. The anticipated potential
benefits of the merger may not be realized. Such risks and uncertainties are
set forth under "Risk Factors" and elsewhere in this joint proxy
statement/prospectus.
Thermaltec's Reasons for the Merger
The sole director of Thermaltec, Andrew Mazzone, has determined that the
terms of the merger documents and the merger are fair to, and in the best
interests of, Thermaltec and its stockholders. In reaching his determination,
Mr. Mazzone consulted with Thermaltec's management, as well as its legal
counsel, accountants and financial advisors and gave significant consideration
to a number of factors bearing on his decision. The following are the reasons
Mr. Mazzone believes the merger will be beneficial to Thermaltec and its
stockholders:
o The merger will provide Thermaltec with an opportunity to expand its
current technology base into the telecommunications and Internet
industries;
o The management staff of Camanco Communications is much larger and is
more experienced in developing technologies and applications in the
telecommunications and Internet industries than Thermaltec's
management;
o The merger will provide the stockholders of Thermaltec who own shares
of Thermaltec common stock on the date the merger is completed with an
opportunity to participate in the growing telecommunications and
Internet industries while permitting the stockholders of Thermaltec
who owned shares of Thermaltec common stock on May 28, 1999 to retain
their respective pro rata interests in Thermaltec's former business
operations (through their ownership of the capital stock of Panama
Industries following the completion of the spin-off); and
o Andrew Mazzone will be able to use his existing business contacts in
Latin America to promote PCRoomLink products and services in Latin
America, where Camanco Communications does not currently have any
established presence.
In addition to the reasons stated above, in the course of his
deliberations concerning the merger, Mr. Mazzone consulted with Thermaltec's
management, legal counsel, accountants and financial advisors and reviewed a
number of other factors relevant to the merger, including:
o Information concerning the business, assets, operations, management
financial condition, operating results, competitive position and
prospects of Thermaltec and Camanco Communications;
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o The expected tax and accounting treatment of the merger; and
o Reports from legal counsel on specific terms of the merger documents.
Mr. Mazzone also considered a number of potentially negative factors in
his deliberations concerning the merger, including:
o The possibility of management disruption associated with the merger
and the risk that key technical and management personnel of Camanco
Communications might not continue with the surviving company following
the merger;
o The possibility that the merger might adversely affect Camanco
Communications' and Thermaltec's relationship with their respective
customers;
o The risk that Camanco Communications is a development stage company
that may never generate a profit; and
o The possibility that the distribution of Panama Industries shares to
Thermaltec stockholders in the spin-off might result in federal income
tax liabilities for certain Thermaltec stockholders.
Mr. Mazzone concluded, however, that the benefits of the transaction to
Thermaltec and its stockholders outweighed the risk associated with these
negative factors. As a result of his analysis, Mr. Mazzone concluded that the
merger presented Thermaltec's stockholders as of May 28, 1999 with an
opportunity to invest in an Internet company at no cost since their existing
investment would be maintained, as a result of the spin-off, in an unrelated
entity. While there is a significant risk that the surviving company will not
achieve profitability, existing Thermaltec stockholders as of May 28, 1999
would not suffer any loss as a result of such failure.
Camanco Communications' Reasons for the Merger
The Camanco Communications board of directors unanimously believes that
the stockholders of Camanco Communications will benefit by becoming
stockholders of the combined enterprise on the basis stated in the merger
documents, and that the proposed merger is advisable and in the best interests
of, and that the terms are fair and equitable to, the Camanco Communications
stockholders. The terms of the proposed merger, including the amount of
Thermaltec common stock to be received by the Camanco Communications
stockholders, are the result of arm's length negotiations between
representatives of Camanco Communications and Thermaltec.
On December 7, 1998, the Camanco Communications board of directors held a
meeting at which it considered the proposed merger and the transactions
contemplated by the proposed merger. During its deliberations with respect to
the merits of the proposed merger, the Camanco Communications board of
directors considered both business and financial reasons for pursuing a
combination with Thermaltec in contrast to other potential opportunities as an
independent company or in combination with another company. Among the factors
considered were:
o Camanco Communications' growth capital needs;
o Camanco Communications' need for better name recognition in the
investment communities, both in the United States and abroad;
o Camanco Communications' need to have the ability to offer incentive
stock options and other forms of stock-based compensation to attract
and retain qualified employees in a highly competitive market; and
o Camanco Communications' future financing prospects.
In the course of its deliberations concerning the merger, the Camanco
Communications board of directors also considered the significant transaction
costs to be incurred by Camanco Communications in connection with the merger.
The board concluded that the costs to be incurred were reasonable in light of
the increased
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liquidity to be afforded to Camanco Communications' stockholders as a result of
the merger and the company's enhanced ability to access the public capital
markets following the merger because the company would be a reporting company
and intended to apply to Nasdaq for a listing on the SmallCap Market. In
addition Thermaltec had established market makers.
The other negative factor considered by the Camanco Communications board
of directors when considering the merger was the potential that the surviving
company would be liable for debts, liabilities and obligations incurred by
Thermaltec prior to the merger. It was determined that this risk would be
minimal due to the assumption of such liabilities and obligations by Panama
Industries and the indemnification to be provided by Mr. Mazzone. See "The
Merger Agreement -- Indemnification."
In unanimously approving the merger documents and the transactions
contemplated by the merger documents, the Camanco Communications board of
directors determined that:
o The amount of Thermaltec common stock to be paid in the merger to
holders of Camanco Communications capital stock (approximately 95.8%
of the outstanding shares of Thermaltec common stock) was fair in view
of the fact that Camanco Communications is a development stage company
that has yet to generate any operating revenues;
o The Thermaltec common stock afforded greater liquidity to Camanco
Communications' stockholders since it is currently traded on the OTC
Bulletin Board and Camanco Communications' common stock is not listed
for trading anywhere; and
o The amount of Thermaltec common stock to be paid in the merger was
determined through arm's length negotiations between representatives
of Thermaltec and Camanco Communications, based upon the perceived
market values of each company and the market capitalization of
different Internet-related businesses at the time of negotiation.
The foregoing discussion of the information and factors considered and
given weight by the Camanco Communications board of directors in considering
the proposed merger and the transactions contemplated by the proposed merger is
not intended to be exhaustive. In view of the wide variety of factors
considered in connection with its evaluation of the proposed merger, the
Camanco Communications board of directors did not find it practicable to, and
did not, quantify or otherwise assign relative weights to the specific factors
considered in making its determination nor did it evaluate whether these
factors were of equal weight. In addition, individual members of the board of
directors of Camanco Communications may have given different weight to
different factors.
Material Federal Income Tax Consequences -- Camanco Communications
The following is a description of the material United States federal
income tax consequences of the merger to Camanco Communications and the Camanco
Communications stockholders who receive Thermaltec common stock in the merger
or perfect dissenters' rights. This summary does not address tax considerations
which may affect the treatment of special status taxpayers such as financial
institutions, broker-dealers, life insurance companies, tax-exempt
organizations, investment companies and foreign taxpayers or of Camanco
Communications stockholders who do not hold their Camanco Communications stock
as a capital asset at the date the merger is completed. In addition, no
information is provided with respect to the tax consequences of the merger
either under applicable foreign, state or local laws or to persons who acquired
Camanco Communications common stock under employee stock options or otherwise
as compensation.
The following discussion is based on the Internal Revenue Code of 1986, as
in effect on the date of this joint proxy statement/prospectus, without
consideration of the particular facts or circumstances of any particular holder
of Camanco Communications stock. Camanco Communications and Thermaltec have not
sought and will not seek any rulings from the Internal Revenue Service, with
respect to any of the matters discussed in this summary. Archer & Greiner, A
Professional Corporation, as legal counsel to Camanco Communications, has
delivered an opinion to Camanco Communications confirming that:
o the merger will constitute a statutory merger under the corporate laws
of the State of New Jersey;
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o the merger will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of
1986;
o no gain or loss will be recognized by Camanco Communications
stockholders upon the exchange of their Camanco Communications stock
solely for Thermaltec common stock;
o the basis of Thermaltec common stock received by Camanco
Communications stockholders in the merger will be the same as the
basis of their Camanco Communications stock surrendered in exchange
therefor; and
o for capital gains purposes, the holding period of Thermaltec common
stock received by Camanco Communications stockholders in the merger
will include the period during which the Camanco Communications stock
surrendered in exchange therefor was held, provided that the Camanco
Communications stock is held as a capital asset at the date the merger
is completed.
A Camanco Communications stockholder who perfects dissenters' rights with
respect to his or her shares of Camanco Communications stock, and who does not
withdraw his or her rights, will, in general, treat the difference between (a)
the tax basis of the shares of Camanco Communications stock held by the
stockholder with respect to which dissenters' rights are perfected, and (b) the
amount received in payment therefor, as capital gain or loss.
The foregoing is a general discussion of the material federal income tax
consequences of the merger for Camanco Communications and Camanco
Communications stockholders and is included for general information only. The
foregoing discussion does not take into account the particular facts and
circumstances of each Camanco Communications stockholder's tax status and
attributes. Accordingly, each Camanco Communications stockholder should consult
his or her own tax advisor regarding the specific tax consequences of the
merger, including the application and effect of federal, state, local and other
tax laws and the possible effects of changes in these tax laws.
Material Federal Income Tax Consequences -- Thermaltec
The following is a description of the material United States federal
income tax consequences of the merger and distribution of the shares of Panama
Industries to Thermaltec and the Thermaltec stockholders. This summary does not
address tax considerations which may affect the treatment of special status
taxpayers such as financial institutions, broker-dealers, life insurance
companies, tax-exempt organizations, investment companies and foreign
taxpayers.
The following discussion is based on the Internal Revenue Code of 1986, as
in effect on the date of this joint proxy statement/prospectus, without
consideration of the particular facts or circumstances of any particular holder
of Thermaltec stock. Camanco Communications and Thermaltec have not sought and
will not seek any rulings from the Internal Revenue Service, with respect to
any of the matters discussed herein. Aitken Irvin Lewin Berlin Vrooman & Cohn,
LLP, as legal counsel to Thermaltec, has delivered an opinion to Thermaltec
that:
o the merger will constitute a statutory merger under the corporate laws
of the State of Delaware;
o no gain or loss will be recognized by Thermaltec as a result of the
prior transfer of its assets and liabilities to Panama Industries;
o no gain or loss will be recognized by Thermaltec upon the distribution
of all of the outstanding shares of Panama Industries to the
Thermaltec stockholders;
o the merger will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of
1986;
o no gain or loss will be recognized by Thermaltec upon the exchange of
Camanco Communications stock solely in exchange for Thermaltec common
stock; and
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o taxable gain will be recognized by a Thermaltec stockholder upon his
receipt of the shares of Panama Industries common stock in the
spin-off if the fair market value of such Panama Industries shares on
the date of distribution exceeds the stockholder's basis in his
Thermaltec stock.
A Thermaltec stockholder who perfects dissenters' rights with respect to
his or her shares of Thermaltec stock, and who does not withdraw his or her
rights, will, in general, treat the difference between (a) the tax basis of the
shares of Thermaltec stock held by the stockholder with respect to which
dissenters' rights are perfected, and (b) the amount received in payment
therefor, as capital gain or loss.
Thermaltec does not have any current or accumulated earning or profits for
federal income tax purposes. As a result, the pro rata distribution in the
spin-off of the shares of Panama Industries to the noncorporate Thermaltec
stockholders will be treated first as a return of capital, which is not taxed,
but will reduce a shareholder's basis for the Thermaltec stock. If the fair
market value of the Panama Industries stock, as of the date of distribution, is
in excess of the basis, then it will result in a capital gain. If the
stockholder has held the 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. A stockholder's basis for determining
gain or loss in the event that the Panama Industries stock is sold in the
future is the fair market value of the Panama Industries stock on the date of
distribution.
Thermaltec and Panama Industries will not obtain an appraisal of the fair
market value of the shares of Panama Industries as of the date of distribution.
A corporate shareholder of Thermaltec will consider as the amount of the
distribution of Panama Industries shares the lesser of its fair market value
when distributed, or Thermaltec's adjusted basis of the stock of Panama
Industries immediately prior to the distribution. Otherwise, a corporate
stockholder will treat the distribution of the Panama shares the same as a
noncorporate stockholder.
Thermaltec will not realize any gain or loss on the distribution of the
Panama Industries shares.
The foregoing is a general discussion of the material federal income tax
consequences of the merger and the spin-off for Thermaltec and Thermaltec
stockholders and is included for general information only. The foregoing
discussion does not take into account the particular facts and circumstances of
each Thermaltec stockholder's tax status and attributes. Accordingly, each
Thermaltec stockholder should consult his or her own tax advisor regarding the
specific tax consequences of the merger and the spin-off, including the
application and effect of federal, state, local and other tax laws and the
possible effects of changes in these tax laws.
Accounting Treatment
The merger will be treated as a reverse merger whereby, for accounting
purposes, Camanco Communications will be treated as the acquirer in the
transaction.
Restrictions on Resale of Thermaltec Common Stock
The shares of Thermaltec common stock issuable to stockholders of Camanco
Communications upon consummation of the merger have been registered under the
Securities Act of 1933. Unless restricted by the terms of lock-up agreements
entered into between Camanco Communications and such stockholder, such shares
may be freely traded without restriction by a former stockholder of Camanco
Communications who is not deemed to be an "affiliate" of Thermaltec or Camanco
Communications, as that term is defined under the Securities Act of 1933.
Shares of Thermaltec common stock received by those stockholders of
Camanco Communications who are deemed to be affiliates of Camanco
Communications or Thermaltec may be resold without registration under the
Securities Act only as permitted under the Securities Act of 1933. Each person
deemed to be an affiliate of Camanco Communications or Thermaltec has agreed
not to offer, sell, pledge, transfer or otherwise dispose of any shares of
Thermaltec common stock distributed to them pursuant to the merger, except (a)
in compliance with Rule 145 under the Securities Act of 1933, (b) in a
transaction that is otherwise exempt from
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the registration requirements of the Securities Act of 1933 and provided that
an opinion of counsel, satisfactory to the surviving company, has been provided
to the surviving company to the effect that no such registration is required in
connection with the proposed transaction, or (c) in an offering that is
registered under the Securities Act of 1933. In general, Rule 145, as currently
in effect, imposes restrictions on the manner in which affiliates of Camanco
Communications may resell Thermaltec common stock received in the merger and
the amount of Thermaltec common stock that such affiliates (including persons
with whom the affiliates act in concert) may sell within any three-month
period. These restrictions will generally apply for at least one year after the
merger (assuming such person is not then an affiliate of Thermaltec).
Nasdaq Listing
Thermaltec will use its best efforts to have the shares of Thermaltec
common stock to be issued in connection with the merger, and the shares of
Thermaltec common stock to be reserved for issuance upon the exercise of
outstanding Camanco Communication's stock options assumed by Thermaltec as part
of the merger, listed on the OTC Bulletin Board under the symbol "THRM." In
connection with the merger, Thermaltec's corporate name will be changed to
"Camanco Communications, Inc." and it is anticipated that its trading symbol
will be changed to "____" following the merger. The surviving company will also
use reasonable efforts to have all of the shares of Thermaltec common stock
outstanding following the merger listed on the Nasdaq SmallCap Market. However,
there can be no assurance that such listing will be approved. If Nasdaq refuses
to list Thermaltec's common stock on the Nasdaq SmallCap Market, the surviving
company will attempt to have the Thermaltec common stock continue to trade on
the OTC Bulletin Board or in the over-the-counter market on the so-called "pink
sheets". See "Risk Factors -- Unless a public market develops for the surviving
company's securities, you may not be able to sell your shares".
Governmental and Regulatory Matters
The merger must satisfy the requirements of all applicable federal and
state securities laws.
Dissenters' Rights for Thermaltec Stockholders
The following discussion is not a complete statement of the law pertaining
to dissenters' or appraisal rights under Section 262 of the Delaware General
Corporation Law. Section 262 is reprinted in its entirety as Annex B to this
joint proxy statement/prospectus. Any Thermaltec stockholder who desires to
exercise his or her appraisal rights should review carefully Section 262 and is
urged to consult a legal advisor before electing or attempting to exercise
their rights. All references in Section 262 to a "stockholder" and in this
summary to a "Thermaltec stockholder" or a "holder of Thermaltec stock" are to
the record holder of shares as to which appraisal rights are asserted.
Subject to the exceptions stated below, holders of record of Thermaltec
common stock who comply with the applicable procedures summarized below will be
entitled to appraisal rights under Section 262. Voting against, abstaining from
voting, or failing to vote on approval and adoption of the proposed merger will
not constitute a demand for appraisal within the meaning of Section 262. A
person having a beneficial interest in Thermaltec stock held of record in the
name of another person, such as a broker or nominee, must act promptly to cause
the record holder to follow the steps summarized below properly and in a timely
manner to perfect appraisal rights.
Thermaltec stockholders electing to exercise appraisal rights under
Section 262 must not vote for approval of the proposed merger. A vote by a
Thermaltec stockholder against approval of the proposed merger is not required
in order for such stockholder to exercise appraisal rights. However, if a
Thermaltec stockholder returns a signed proxy but does not specify a vote
against approval and adoption of the proposed merger or a direction to abstain,
the proxy, if not revoked, will be voted for approval of the proposed merger,
which will have the effect of waiving such stockholder's appraisal rights.
Under Section 262, except as described below, holders of Thermaltec stock
who follow the procedures stated in Section 262 will be entitled to have their
shares appraised by the Delaware Court of Chancery and to receive payment in
cash of the "fair value" of their shares, exclusive of any element of value
arising from the accomplishment or expectation of the merger, together with a
fair rate of interest, if any, as determined by the court.
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Under Section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior the
meeting, most notify each of its stockholders who was a stockholder on the
record date for the meeting with respect to shares for which appraisal rights
are available, that appraisal rights are so available and must include in the
notice a copy of Section 262. This joint proxy statement/prospectus constitutes
such a notice to the holders of Thermaltec stock and a copy of Section 262 is
attached as Annex B to this joint proxy statement/prospectus. Any Thermaltec
stockholder who wishes to exercise his or her appraisal rights or who wishes to
preserve his or her right to do so should review the following discussion and
Annex B carefully because failure to timely and properly comply with the
procedures specified will result in the loss of their appraisal rights.
A holder of Thermaltec stock wishing to exercise his or her appraisal
rights must:
(1) not vote in favor of approval of the proposed merger;
(2) deliver to Thermaltec, prior to the vote on the proposed merger at
the Thermaltec special meeting, a written demand which reasonably
informs Thermaltec of the identity of the Thermaltec stockholder and
that the Thermaltec stockholder intends to demand appraisal of his or
her Thermaltec stock;
(3) be the record holder of the Thermaltec stock on the date the written
demand for appraisal is made; and
(4) continue to hold his or her Thermaltec stock of record until the
date the merger is completed.
A holder of Thermaltec stock who is the record holder of shares on the
date the written demand for appraisal is made, but who thereafter transfers his
or her Thermaltec stock prior to the date the merger is completed, will lose
any right to appraisal in respect of his or her Thermaltec stock.
Only a holder of record of Thermaltec stock is entitled to assert
appraisal rights for the Thermaltec stock registered in the holder's name. A
demand of appraisal should be executed by or on behalf of the holder of record,
fully and correctly, as the holder's name appears on the holder's stock
certificates. If the Thermaltec stock is owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the demand
should be made in that capacity. If the Thermaltec stock is owned of record by
more than one person, as in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all joint owners. An authorized agent,
including an agent for two or more joint owners, may execute a demand for
appraisal on behalf of a holder of record. The agent must identify the record
owner or owners and expressly disclose the fact that in executing the demand,
the agent is agent for the owner or owners. A record holder, such as a broker,
who holds Thermaltec stock as nominee for several beneficial owners, may
exercise appraisal rights with respect to Thermaltec stock held for one or more
beneficial owners while not exercising the rights with respect to the
Thermaltec stock held for other beneficial owners. In such a case, the written
demand should state the number of shares of Thermaltec stock as to which
appraisal is sought. Where no number of shares of Thermaltec stock is expressly
mentioned the demand will be presumed to cover all Thermaltec stock held in the
name of the record owner. Stockholders who hold their Thermaltec stock in
brokerage accounts or other nominee forms and who wish to exercise appraisal
rights are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by the nominee.
All written demands for appraisal should be sent or delivered to Thermaltec
at:
Thermaltec International, Corp.
68A Lamar Street
West Babylon, New York 11704
Attention: Andrew B. Mazzone, President
Thermaltec will, within ten days after the date the merger is completed,
notify each Thermaltec stockholder who has complied with the statutory
requirements summarized above that the merger has become effective. Within 120
days after the date the merger is completed, but not thereafter, Thermaltec or
any Thermaltec stockholder who has complied with the statutory requirements
summarized above may file a
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petition with the Delaware Court of Chancery demanding a determination of the
value of the Thermaltec stock. Thermaltec is under no obligation to and has no
present intention to file a petition with respect to the appraisal of the fair
value of the Thermaltec stock. Accordingly, it is the obligation of the
Thermaltec stockholders to initiate all necessary action to perfect their
appraisal rights within the time prescribed in Section 262.
Within 120 days after the date the merger is completed, any Thermaltec
stockholder who has complied with the requirements of exercise of appraisal
rights will be entitled, upon written request, to receive from Thermaltec a
statement setting forth the aggregate number of shares of Thermaltec stock not
voted in favor of adoption of the proposed merger and with respect to which
demands for appraisal have been received and the aggregate number of holders of
the shares. These statements must be mailed within ten days after a written
request for these statements has been received by Thermaltec or ten days after
expiration of the aforementioned period for delivery of demands for appraisal,
whichever is later.
If a petition for an appraisal is timely filed, after a hearing on the
petition, the Delaware Court of Chancery will determine the Thermaltec
stockholders entitled to appraisal rights and will appraise the "fair value" of
their Thermaltec stock, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
The Delaware Court of Chancery will determine the amount of interest, if any,
to be paid upon the amounts to be received by persons whose Thermaltec stock
has been appraised.
The costs of the appraisal action may be determined by the Delaware Court
of Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable. The Delaware Court of Chancery may also order that all or a portion
of the expenses incurred by any Thermaltec stockholder in connection with an
appraisal action, including, without limitation, reasonable attorneys' fees and
the fees and expenses of experts utilized in the appraisal proceeding, be
charged pro rata against the value of all the Thermaltec stock entitled to
appraisal.
Any holder of Thermaltec stock who has duly demanded an appraisal in
compliance with Section 262 will not, after the date the merger is completed,
be entitled to vote the Thermaltec stock subject to the demand for any purpose
or be entitled to the payment of dividends or other distributions on the
Thermaltec stock. That holder will be entitled, however, to dividends or other
distributions payable to holders of record of Thermaltec stock as of a record
date prior to the date the merger is completed.
If any Thermaltec stockholder who properly demands appraisal of his or her
Thermaltec stock under Section 262 fails to perfect, or effectively withdraws
or loses, his or her right to appraisal as provided in Section 262, the
stockholder will continue to own his/her shares of Thermaltec common stock. A
Thermaltec stockholder will fail to perfect, or effectively lose or withdraw,
his or her right to appraisal if, among other things, no petition of appraisal
is filed within 120 days after the date the merger is completed, or if the
Thermaltec stockholder delivers to Thermaltec a written withdrawal of his or
her demand for appraisal. Any attempt to withdraw an appraisal demand more than
60 days after the date the merger is completed will require the written
approval of Thermaltec.
Failure to follow the steps required by Section 262 for perfecting
appraisal rights may result in the loss of appraisal rights.
In view of the complexities of the foregoing provisions of the Delaware
appraisal rights statute, stockholders of Thermaltec who are considering
pursuing their dissenter's rights may wish to consult legal counsel before
electing to exercise such rights.
Rights of Dissenting Camanco Communications Stockholders
The following discussion is not a complete statement of the law pertaining
to dissenters' rights under Chapter 11 of the New Jersey Business Corporation
Act, as amended. Chapter 11 is reprinted in its entirety as Annex C to this
joint proxy statement/prospectus. Any Camanco Communications stockholder who
desires to exercise his or her dissenters' rights should review carefully
Chapter 11 and is urged to consult a legal advisor
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before electing or attempting to exercise their rights. All references in
Chapter 11 to a "shareholder" and in this summary to a "Camanco Communications
stockholder" or a "holder of Camanco Communications stock" are to the record
holder of shares of Camanco Communications common stock as to which dissenters'
rights are asserted.
Subject to the exceptions stated below, holders of record of Camanco
Communications common stock who comply with the applicable procedures
summarized below will be entitled to payment of the fair value of such shares
under Chapter 11. Voting against, abstaining from voting or failing to vote on
approval and adoption of the proposed merger will not constitute a notice of
dissent or a demand for payment of fair value within the meaning of Chapter 11.
A person having a beneficial interest in Camanco Communications stock held of
record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect dissenters' rights.
Camanco Communications stockholders electing to exercise dissenters'
rights under Chapter 11 must not vote for approval of the proposed merger. A
vote by a Camanco Communications stockholder against approval of the proposed
merger is not required in order for such stockholder to exercise dissenters'
rights. However, if a Camanco Communications stockholder returns a signed proxy
but does not specify a vote against approval and adoption of the proposed
merger or a direction to abstain, the proxy, if not revoked, will be voted for
approval of the proposed merger, which will have the effect of waiving such
stockholder's dissenters' rights.
Under Chapter 11, except as described below, holders of Camanco
Communications stock who follow the procedures stated in Chapter 11 will be
entitled to receive payment in cash of the "fair value" of their shares,
exclusive of any element of value arising from the accomplishment or
expectation of the merger. Camanco Communications stockholders who properly
perfect their rights will not be entitled to surrender their Camanco
Communications stock for the shares of Thermaltec common stock that they would
otherwise have received for their stock in the merger.
Under Chapter 11, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, most notify each of its stockholders who was a stockholder on the
record date for the meeting with respect to shares for which dissenters' rights
are available, that such rights are so available and must include in the notice
a copy of Chapter 11. This joint proxy statement/prospectus constitutes such a
notice to the holders of Camanco Communications stock and a copy of Chapter 11
is attached as Annex C to this joint proxy statement/prospectus. Any Camanco
Communications stockholder who wishes to exercise his or her dissenters'
rights, or who wishes to preserve his or her right to do so, should review the
following discussion and Annex C carefully because failure to timely and
properly comply with the procedures specified will result in the loss of
dissenters' rights under Chapter 11.
A holder of Camanco Communications stock wishing to exercise his or her
dissenters' rights must:
(1) not vote in favor of approval of the proposed merger;
(2) deliver to Camanco Communications, prior to the vote on the proposed
merger at the Camanco Communications special meeting, a written
notice which reasonably informs Camanco Communications of the
identity of the Camanco Communications stockholder and that the
Camanco Communications stockholder intends to demand payment of the
fair value for all, but not less than all, of his or her shares; and
(3) be the record holder of the Camanco Communications stock on the date
the written notice of dissent is made.
Only a holder of record of Camanco Communications stock is entitled to
assert dissenters' rights for the Camanco Communications stock registered in
the holder's name. A notice of dissent should be executed by or on behalf of
the holder of record, fully and correctly, as the holder's name appears on the
holder's stock certificates. If the Camanco Communications stock is owned of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
execution of the notice of dissent should be made in that capacity. If the
Camanco Communications stock is owned of record by more than one person, as in
a joint tenancy or tenancy in common, the notice should be executed by or on
behalf of all joint owners. An authorized agent, including
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an agent for two or more joint owners, may execute a notice of dissent on
behalf of a holder of record. The agent must identify the record owner or
owners and expressly disclose the fact that in executing the notice, the agent
is agent for the owner or owners. A record holder, such as a broker, who holds
Camanco Communications stock as nominee for several beneficial owners may
exercise dissenters' rights with respect to such stock held for one or more
beneficial owners while not exercising the rights with respect to the stock
held for other beneficial owners. In that case, the written notice should state
the number of shares of Camanco Communications stock as to which dissenters'
rights are asserted. Where no number of shares of Camanco Communications stock
is expressly mentioned, the notice will be presumed to cover all Camanco
Communications stock held in the name of the record owner. Stockholders who
hold their Camanco Communications stock in brokerage accounts or other nominee
forms and who wish to exercise dissenters' rights are urged to consult with
their brokers to determine the appropriate procedures for the giving of a
notice of dissent by the nominee.
All written notices of dissent should be sent or delivered to Camanco
Communications at:
Camanco Communications, Inc.
1100 Coombs Road
Millville, New Jersey 08332-8217
Attention: Alisa A. Rossi, Secretary
Thermaltec will, within ten days after the date the merger is completed,
notify by certified mail each Camanco Communications stockholder who has
complied with the statutory requirements summarized above that the merger has
become effective. Within 20 days after such notice is mailed, any Camanco
Communications stockholder who has received such notice and who wishes to
dissent must make a written demand on Thermaltec for payment of the fair value
of his Camanco Communications shares. Such written demand should be sent to
Alisa A. Rossi at the Camanco Communications address listed above.
The dissenting stockholder must deliver his Camanco Communications stock
certificate(s) to Thermaltec not later than 20 days after making such demand.
Thermaltec will endorse the certificate(s) with a legend to the effect that the
stockholder has demanded the fair cash value of the shares represented by the
certificate(s) before returning the certificate(s) to the stockholder. Such
dissenting stockholder will then immediately cease to have any of the rights of
a stockholder of Camanco Communications except the right to be paid the fair
value of his shares and any other rights of a dissenting stockholder under
Chapter 11.
Within ten days of the expiration of the period within which Camanco
Communications stockholders may make written demand to be paid the fair value
of their shares, Thermaltec will mail to each dissenting stockholder, the
latest available Camanco Communications 12-month profit and loss statement and
a balance sheet and surplus statement of Camanco Communications, as of the
close of the 12-month period. The close of the profit and loss statement and
the balance sheet will be as of a date within 12 months prior to the mailing.
Thermaltec may, but need not, accompany the mailing with a written offer to pay
each dissenting stockholder for his shares at a specified price deemed by
Camanco Communications to be the fair value thereof.
Unless the dissenting stockholder and Thermaltec agree on the fair cash
value per share of the Camanco Communications common stock, within 30 days
after the ten day period described above, the stockholder may serve a written
demand on Thermaltec to commence an action in the Superior Court of New Jersey
for the determination of the fair value of his Camanco Communications shares.
The Camanco Communications stockholder's demand to commence an action must be
served not later than 30 days after the expiration of the 30-day period
stockholders have in which to agree upon a price with Thermaltec.
Thermaltec has 30 days after receipt of the Camanco Communications
stockholder's demand to commence a proceeding in the New Jersey Superior Court.
If Thermaltec fails to institute such proceeding, such stockholder may
institute the proceeding in the name of Thermaltec within 60 days after the
expiration of Thermaltec's 30-day period.
If the New Jersey Superior Court finds that the stockholder is entitled to
be paid the fair cash value of his or her Camanco Communications common stock,
the court may appoint an appraiser to receive evidence
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and to recommend a decision on the amount of the fair cash value. The court
will make a finding as to the fair cash value of a share of Camanco
Communications common stock and render judgment against Thermaltec for its
payment with interest at a rate the court finds to be equitable, from the date
of the dissenting stockholder's demand for payment to the date of payment. The
costs and expenses of the proceedings shall be assessed or apportioned as the
court considers equitable.
The rights of any dissenting stockholder will terminate if:
(a) the dissenting stockholder has failed to present his certificate(s)
for notation within the time period specified in Chapter 11, unless a
court having jurisdiction, for good and sufficient cause shown, shall
otherwise direct;
(b) the dissenting stockholder withdraws his demand for payment with the
written consent of Thermaltec;
(c) Thermaltec and the dissenting stockholder have not agreed upon the
fair cash value per share of the Camanco Communications common stock
and neither has timely filed or joined in a petition in the New
Jersey Superior Court for a determination of the fair cash value of
the Camanco Communications common stock;
(d) the New Jersey Superior Court determines that the stockholder is not
entitled to payment for his shares;
(e) Camanco Communications abandons or rescinds the merger agreement; or
(f) a court having jurisdiction permanently enjoins or sets aside the
merger.
Failure to follow the steps required by Chapter 11 for perfecting
dissenters' rights may result in the loss of dissenters' rights. In that event
a Camanco Communications stockholder will be entitled to receive the number of
shares of Thermaltec common stock receivable with respect to his Camanco
Communications stock in accordance with the terms of the proposed merger.
In view of the complexities of the foregoing provisions of the New Jersey
dissenters' rights statute, stockholders of Camanco Communications who are
considering pursuing their dissenters' rights may wish to consult legal counsel
before electing to exercise such rights.
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THE MERGER AGREEMENT
The following is a brief summary of the material terms of the merger
agreement which will govern the proposed merger between Camanco Communications
and Thermaltec. A complete copy of the merger agreement, which is entitled
"Agreement and Plan of Reorganization," is attached to this joint proxy
statement/prospectus as Annex A. You are urged to read the merger agreement
carefully.
The Merger
The merger agreement provides that Camanco Communications will be merged
with and into Thermaltec. Thermaltec will operate under the name "Camanco
Communications, Inc." Following the merger, Thermaltec will conduct only the
business conducted by Camanco Communications immediately prior to the merger.
At the time the merger is completed, the current officers and directors of
Thermaltec will resign and the surviving company will be managed by the current
officers and directors of Camanco Communications.
Following approval of the merger by the stockholders of both companies and
the satisfaction of certain other conditions set forth in the merger agreement,
Camanco Communications and Thermaltec will complete the merger. This will be
done by filing (a) a Certificate of Merger with the Delaware Secretary of
State, and (b) a Certificate of Merger with the New Jersey Department of
Revenue. The completion of the merger is anticipated to occur on or before
December 31, 1999.
Conversion of Shares; No Fractional Amounts
At the time the merger is completed, each share of Camanco Communications
common stock, other than shares owned by stockholders who perfect their
dissenters' rights under New Jersey law, will automatically be converted into
10,000 shares of Thermaltec common stock. A total of 59,500,000 shares of
Thermaltec common stock will be issued. The stockholders of Camanco
Communications will own 95.8% of the outstanding shares of Thermaltec common
stock following the merger.
No fractional shares of Thermaltec common stock will be issued in the
merger and no cash will be paid for fractional shares. In lieu of the issuance
of fractional shares, the number of shares of Thermaltec common stock to be
issued to each Camanco Communications stockholder will be rounded off to the
nearest whole number. Fractional shares of less than one-half of one share will
be rounded down to the nearest whole number. Fractional shares of one-half or
more will be rounded up to the nearest whole number.
Following the merger, Thermaltec, acting through Manhattan Transfer
Registrar Co. as its exchange agent, will deliver to each Camanco
Communications stockholder of record as of such date a letter of transmittal
with instructions to be used by such stockholder in surrendering their Camanco
Communications certificates. Certificates should not be surrendered by the
holders of Camanco Communications common stock until such holders receive the
letter of transmittal from the exchange agent.
Treatment of Camanco Communications Stock Options
Under the merger agreement, all outstanding options to acquire shares of
Camanco Communications common stock issued pursuant to the Camanco
Communication 1999 Stock Option Plan will be converted into options to purchase
Thermaltec common stock. Following the merger, each outstanding Camanco
Communications stock option will be automatically adjusted to provide that:
o the number of shares of Thermaltec common stock which will be issued
upon the exercise of the option will be equal to the number of shares
of Camanco Communications common stock which would have been issued
upon exercise of the option immediately before the completion of the
merger, multiplied by 10,000 (rounded off to the nearest whole number);
o the exercise price per share of Thermaltec common stock under the
option will be equal to the exercise price per share of Camanco
Communications common stock under the option immediately before the
completion of the merger, divided by 10,000 (rounded up to the nearest
whole cent); and
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o the option will be governed by the terms and provisions of the
Thermaltec 1999 Stock Option Plan.
The terms and provisions of the Camanco Communications 1999 Stock Option
Plan are identical to the terms and provisions of the Thermaltec 1999 Stock
Option Plan.
Conduct Following the Merger
Once the merger is completed, Camanco Communications will cease to exist
as a corporation. All of the business, assets, liabilities and obligations of
Camanco Communications will be merged into Thermaltec, with Thermaltec
remaining as the surviving company. Following the merger, Thermaltec will
continue to operate the business conducted by Camanco Communications prior to
the merger and will change its corporate name to "Camanco Communications Group,
Inc." The stockholders of Camanco Communications will become stockholders of
Thermaltec, and their rights as stockholders will be governed by the Thermaltec
Certificate of Incorporation and the laws of the state of Delaware. See
"Comparison of Stockholders Rights."
Pursuant to the merger agreement, the certificate of incorporation of
Thermaltec in effect immediately prior to the merger will govern the operations
of the surviving company (subject to the change in the name of Thermaltec to
"Camanco Communications, Inc.") and the by-laws of Thermaltec will be the
by-laws of the surviving company. Following the merger, the board of directors
of the surviving company will consist of the five directors who were serving as
directors of Camanco Communications immediately prior to the merger, until
their respective successors are duly elected or appointed and qualified. The
officers of Camanco Communications immediately prior to the merger will serve
as officers of the surviving company, until their successors are duly
appointed. Immediately following the completion of the merger, the sole
director and officer of Thermaltec, Andrew B. Mazzone, will resign.
Conduct of Business Pending the Merger
The merger agreement contains various provisions which govern the actions
of Thermaltec and Camanco Communications until the merger is completed or the
merger agreement is terminated. These provisions require each of Thermaltec and
Camanco Communications to take actions or to refrain from taking actions with
respect to various matters including:
o Camanco Communications conducting its business in the ordinary course
consistent with past practices;
o Thermaltec conducting its business in the ordinary course consistent
with past practices; and
o the parties using their reasonable best efforts to complete the merger
at the earliest practicable date.
To completely understand all of the various covenants and agreements
contained in the merger agreement, you should carefully read the merger
agreement which is attached to this joint proxy statement/prospectus as Annex
A.
Representations and Warranties
The merger agreement contains statements and promises made by Thermaltec
about itself called representations and warranties. In addition, the merger
agreement contains representations and warranties made by Camanco
Communications. You can review the representations and warranties contained in
the merger agreement attached to this joint proxy statement/prospectus as Annex
A.
Conditions to the Merger
The completion of the merger depends upon the satisfaction or waiver of a
number of conditions, including, among other things, that:
o the merger shall have been approved by Thermaltec's and Camanco
Communications' stockholders;
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o no lawsuit, judgment or new law shall exist which seeks to or does
prohibit or restrain the merger or which seeks damages as a result of
the merger;
o Camanco Communications shall have received a confirming opinion from
its legal counsel regarding the material federal income tax
consequences of the merger;
o Thermaltec shall have received a confirming opinion from its legal
counsel regarding the material federal income tax consequences of the
merger and the spin-off;
o the representations and warranties of the parties may not be false or
misleading in any material respect; and
o the absence of any material adverse change or material casualty loss
affecting either Thermaltec or Camanco Communications or their
respective business, assets or financial condition.
Any of these conditions, other than the requirement for stockholder
approval, may be waived by the parties. However, if any material condition is
waived by the parties following the receipt of stockholder approval for the
merger, we would resolicit stockholder approval for the merger.
To review all of the conditions to the merger, you should read the merger
agreement which is attached to this joint proxy statement/prospectus as Annex A.
Termination of the Merger Documents
At any time before the merger is completed, whether or not the proposed
merger has been approved by Camanco Communications' stockholders or
Thermaltec's stockholders, the merger documents may be terminated and the
merger abandoned by:
o the mutual written consent of Thermaltec and Camanco Communications,
authorized by their respective boards of directors;
o written notice from Thermaltec to Camanco Communications, or from
Camanco Communications to Thermaltec, if it becomes certain, for all
practical purposes, that any of the conditions to the closing
obligations of the party giving the notice cannot be satisfied on or
before December 31, 1999, for any reason other than the party's
default, and the party is not willing to waive the satisfaction of the
condition; or
o written notice from Thermaltec to Camanco Communications, or from
Camanco Communications to Thermaltec, if the closing does not occur on
or before December 31, 1999 for any reason other than a breach of the
merger agreement by the party giving the notice.
Indemnification
Under the terms of the merger agreement, neither Camanco Communications
nor the surviving company will assume, be subject to, or otherwise be
responsible for any of the debts, liabilities or obligations of Thermaltec
existing or arising at or prior to the time the merger is completed. Andrew B.
Mazzone, as the sole officer and director and principal shareholder of
Thermaltec, has agreed, subject to certain limitations, to personally indemnify
and hold harmless Camanco Communications and the surviving company, and their
respective officers, directors, shareholders, employees, agents,
representatives, successors and assigns.
The indemnification being provided by Mr. Mazzone covers any loss, cost,
damage or expense (including reasonable attorneys' fees) arising from or
related to any claim, litigation, lawsuit or proceeding relating to or arising
from any of the following:
(1) any misrepresentation or breach of any covenant, warranty or
agreement made by Thermaltec or Mr. Mazzone in the merger agreement
or any document delivered in connection with the merger;
(2) the conduct of Thermaltec's business at or prior to the time the
merger is completed; or
(3) any debt, liability or obligation of Thermaltec existing or arising
at or prior to the time the merger is completed.
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<PAGE>
Mr. Mazzone, at or prior to the merger, will provide Camanco
Communications with collateral, consisting of:
(1) either real estate or marketable securities (other than securities
issued by Thermaltec) having a fair market value of not less than
$250,000.00 (after deducting the aggregate outstanding balance of all
indebtedness or other obligations the repayment or performance of
which is secured by a lien on or security interest in such real
estate or marketable securities) and otherwise acceptable to Camanco
Communications in its sole discretion, and
(2) a pledge of all of the outstanding securities issued by Thermaltec
and owned by Mr. Mazzone on the date the merger agreement was
executed. The pledged Thermaltec securities must consist of at least
1,425,000 shares of Thermaltec common stock.
The collateral will secure the payment and performance of Mr. Mazzone's
indemnification obligations with respect to any claim for which Thermaltec,
Camanco Communications or the surviving company first receives notice prior to
the second anniversary of the date on which the merger is completed. The
aggregate amount for which Mr. Mazzone is liable with respect to all claims for
which indemnification may be sought under the merger agreement is $2 million.
Ownership of Thermaltec Following the Merger
As a result of the merger, the holders of Camanco Communications common
stock, other than those who exercise their statutory dissenters' rights, will
become stockholders of Thermaltec. Upon completion of the merger, each
outstanding share of Camanco Communications stock, except for shares owned by
Camanco Communications stockholders who perfect their statutory dissenters'
rights, will be converted into the right to receive 10,000 shares of Thermaltec
common stock.
Thermaltec will issue approximately 59,500,000 shares of Thermaltec common
stock to Camanco Communications stockholders in connection with the merger.
Based upon the number of shares of Thermaltec common stock issued and
outstanding on the Thermaltec record date and the number of shares of
Thermaltec common stock anticipated to be issued in the merger, the shares of
Thermaltec common stock issued to Camanco Communications stockholders in the
merger will constitute approximately 95.8% of the outstanding shares of common
stock of Thermaltec after the merger.
As previously noted, holders of outstanding Camanco Communications
options, at the time the merger is completed, will receive options to purchase
up to 5,000,000 shares of Thermaltec common stock. Assuming the exercise of all
of these Thermaltec stock options after the merger, Camanco Communications
stockholders will own approximately 96.2% of the fully diluted common stock of
Thermaltec.
As a result of the merger, James M. Rossi and Alisa A. Rossi will
collectively beneficially own 27,550,000 shares of Thermaltec common stock,
representing approximately 44.4% of the shares of Thermaltec common stock to be
outstanding following the merger. As a result of the merger, Monty S. August
will beneficially own 14,000,000 shares of Thermaltec common stock,
representing approximately 22.6% of the shares of Thermaltec common stock to be
outstanding following the merger. James and Alisa Rossi are directors and
executive officers of Camanco Communications and they will be directors and
executive officers of Thermaltec following the merger. Monty S. August is a
director of Camanco Communications and will be a director of Thermaltec
following the merger.
Management of Thermaltec Upon Consummation of the Merger
When the merger is completed, Thermaltec will be managed by the current
directors and officers of Camanco Communications. See "Management of Camanco
Communications." At the time the merger is completed, the current sole director
and officer of Thermaltec, Andrew B. Mazzone, will resign.
Regulatory Approvals
The merger must satisfy the requirements of all applicable federal and
state securities laws.
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<PAGE>
Affiliate Agreements
It is a condition to the closing obligation of Thermaltec that it receive
from each affiliate of Camanco Communications an affiliate agreement stating,
among other things, that the affiliate acknowledges the resale restrictions
imposed by Rule 145 under the Securities Act of 1933 on the shares of
Thermaltec common stock to be received by them in the merger. See "The Plan of
Merger and Related Transactions -- Restrictions on Resale of Thermaltec Common
Stock."
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<PAGE>
THE SPIN-OFF
The spin-off of Panama Industries consists of the transfer of the entire
current metallurgical coatings business (subject to all liabilities) of
Thermaltec to its stockholders. Following the spin-off, Thermaltec will be a
shell corporation which conducts no ongoing business operations. Upon the
completion of the spin-off and the merger, Thermaltec will be engaged solely in
the Internet access and telecommunications businesses formerly conducted by
Camanco Communications.
Each share of Thermaltec common stock outstanding on the record date for
the spin-off, May 28, 1999, will entitle the holder thereof on such date to
receive one share of the common stock of Panama Industries. No shares of Panama
Industries common stock will be issued to Thermaltec stockholders who acquired
their shares of Thermaltec common stock after May 28, 1999. Each warrant issued
by Thermaltec will entitle the holder thereof to also acquire one share of
Panama Industries common stock.
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<PAGE>
INFORMATION CONCERNING THERMALTEC
Business
Thermaltec's sole business activities at this time consist of the
management of its wholly-owned subsidiary, Panama Industries. Thermaltec
transferred substantially all of its assets, and all of its ongoing business
operations and liabilities on May 17, 1999, to Panama Industries. See
"Information Concerning Panama Industries -- Business." The only assets
retained by Thermaltec were (1) $300.00 in cash, (2) $58,000.00 on deposit with
Thermaltec's transfer agent representing proceeds received by Thermaltec
pursuant to the exercise of certain outstanding common stock purchase warrants,
and (3) a net operating loss carry-forward of approximately $1.13 million.
Immediately prior to the completion of the merger, Thermaltec will
distribute all of the shares of Panama Industries common stock which it
currently owns to those holders of Thermaltec common stock as of the close of
business on May 28, 1999. The distribution will be made on a pro-rata basis.
Following the completion of such distribution, Thermaltec will not engage in
any business operations until the merger is consummated. Upon the consummation
of the merger, Thermaltec will be engaged solely in the Internet access and
telecommunications businesses formerly conducted by Camanco Communications.
Each share of Thermaltec common stock outstanding on the record date for
the spin-off, May 28, 1999, will entitle the holder thereof on such date to
receive one share of the common stock of Panama Industries. No shares of Panama
Industries common stock will be issued to Thermaltec stockholders who acquired
their shares of Thermaltec common stock after May 28, 1999. Each warrant issued
by Thermaltec which was outstanding on May 28, 1999 will entitle the holder
thereof to also acquire one share of Panama Industries common stock.
Employees
Thermaltec does not presently have any employees. All previous employees
of Thermaltec have been transferred to Panama Industries. See "Information
Concerning Panama Industries -- Employees."
Properties
Thermaltec does not presently own or lease any properties. Thermaltec
maintains its principal executive offices at 68A Lamar Street, West Babylon,
New York 11704, in space leased by Panama Industries. Following the competition
of the merger, it is contemplated that Thermaltec's principal executive offices
will be moved to Camanco Communications' offices located at 1100 Coombs Road,
Millville, New Jersey 08332.
Legal Proceedings
Thermaltec is not a party to any legal proceedings which, if adversely
decided, would reasonably be expected to have a material adverse effect on the
financial condition of Thermaltec.
DESCRIPTION OF THERMALTEC'S SECURITIES
Thermaltec Common Stock
Thermaltec has authorized capital stock consisting of 100,000,000 shares
of common stock, par value $.0001 per share. As of the date of this joint proxy
statement/prospectus, 2,578,118 shares of Thermaltec common stock are issued
and outstanding, 193,400 shares are reserved for issuance upon the exercise of
outstanding Thermaltec common stock purchase warrants, and 10,000,000 shares
are reserved for issuance pursuant to Thermaltec's 1999 Stock Option Plan. No
options have been granted, as of the date hereof, under the Thermaltec 1999
Stock Option Plan.
The following is a description of the material terms of the Thermaltec
common stock. The rights of the holders of shares of Thermaltec's common stock
are established by Thermaltec's certificate of incorporation, Thermaltec's
by-laws and Delaware law.
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<PAGE>
The holders of Thermaltec's common stock have no preemptive or
subscription rights in later offerings of Thermaltec common stock. The holders
of Thermaltec's common stock are entitled to share ratably (a) in such
dividends as may be declared by the board of directors out of funds legally
available for such purpose, and (b) upon liquidation, in all assets of
Thermaltec remaining after payment in full of all debts and obligations of
Thermaltec and any preferences granted in the future to any holder of preferred
stock.
Holders of Thermaltec common stock are entitled to one vote for each share
held and have no cumulative voting rights. Accordingly, the holders of more
than 50% of the issued and outstanding shares of Thermaltec common stock
entitled to vote for the election of directors can elect all the directors of
Thermaltec if they choose to do so.
All shares of Thermaltec common stock now outstanding, including the
shares of Thermaltec common stock to be issued to the Camanco Communications
stockholders in connection with the merger, are (or will be upon issuance)
fully paid and nonassessable. The board of directors of Thermaltec is
authorized to issue additional shares of Thermaltec common stock within the
limits authorized by Thermaltec's certificate of incorporation without
shareholder action.
Holders of Thermaltec common stock are entitled to receive such dividends
as may be declared from time to time by the Thermaltec board of directors out
of funds legally available therefor, subject to the terms of any existing or
future agreements between Thermaltec and its debtholders. Thermaltec has never
declared or paid cash dividends on its capital stock, expects to retain future
earnings, if any, for use in the operation and expansion of its business, and
does not anticipate paying any cash dividends in the foreseeable future.
Shares Available For Future Sale
Thermaltec currently has 2,578,118 shares of common stock outstanding (up
to 2,771,518 shares if all the currently outstanding warrants are exercised).
Of these shares, 860,350 shares are freely tradeable without restriction or
further registration under the Securities Act of 1933, except for any shares
purchased by an "affiliate" of Thermaltec (in general, a person who has a
control relationship with Thermaltec) which will be subject to the limitations
of Rule 144 adopted under the Securities Act of 1933. All other outstanding
shares of Thermaltec common stock are "restricted securities" and have not been
registered under the Securities Act of 1933. These "restricted securities" may
not be sold unless registered under the Securities Act of 1933 or sold pursuant
to an exemption from registration, such as the exemption provided by Rule 144.
Under Rule 144 as currently in effect, a person, including an affiliate of
Thermaltec (or persons whose shares are aggregated with an affiliate of
Thermaltec), who has owned restricted shares of Thermaltec common stock
beneficially for at least one year is entitled to sell within any three-month
period, a number of shares that does not exceed the greater of:
(a) 1% of the total number of outstanding shares of the same class
(approximately 25,781 shares assuming only the presently issued
shares of Thermaltec are outstanding); or
(b) the average weekly trading volume of Thermaltec's common stock on
all exchanges and/or reported through the automated quotation system
of a registered securities association during the four calendar weeks
preceding the date on which notice of the sale is filed with the SEC.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of public information
about Thermaltec. A person who has not been an affiliate of Thermaltec for at
least the three months immediately preceding the sale, and who has beneficially
owned his shares of Thermaltec common stock for at least two years, is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.
Thermaltec has reserved 193,400 shares of Thermaltec common stock for
issuance pursuant to the exercise of outstanding Thermaltec common stock
purchase warrants. See "Description of Thermaltec's Securities -- Thermaltec
Warrants" for further information.
Thermaltec has also reserved 10,000,000 shares of Thermaltec common stock
for issuance pursuant to the exercise of options granted under the Thermaltec
1999 Stock Option Plan. No options have been granted, as
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<PAGE>
of the date hereof, pursuant to the Thermaltec 1999 Stock Option Plan. Pursuant
to the terms and provisions of the merger agreement, following the merger,
Thermaltec will assume all options outstanding under the Camanco Communications
1999 Stock Option Plan. There are 5,000,000 options (adjusted to reflect the
conversion ratio in the merger) outstanding under the Camanco Communications
1999 Stock Option Plan as of the date hereof. Thermaltec intends to register
the 10,000,000 shares reserved for issuance upon exercise of stock options
granted pursuant to the Thermaltec 1999 Stock Option Plan.
Transfer Agent
The transfer agent for the Thermaltec common stock is Manhattan Transfer
Registrar Co., 58 Dorchester Road, Lake Ronkonkoma, New York 11779.
Thermaltec Warrants
As of the date of this joint proxy statement/prospectus, there were
193,400 Thermaltec common stock purchase warrants outstanding, held of record
by 11 persons. Each warrant entitles the registered holder thereof to purchase
one share of Thermaltec common stock, at a price of $1.00 per share, subject to
adjustment in certain circumstances, on or before June 2, 2000. Any share of
Thermaltec common stock issued pursuant to the exercise of a warrant would be a
restricted security. Such shares may not be sold unless registered under the
Securities Act of 1933 or sold pursuant to an exemption from registration, such
as the exemption provided by Rule 144.
Each Thermaltec common stock purchase warrant outstanding as of the close
of business on May 28, 1999 will also entitle the holder thereof upon exercise,
to receive one share of Panama Industries common stock. As of the close of
business on May 28, 1999, there were 193,400 Thermaltec common stock purchase
warrants outstanding, held of record by 11 persons. Any shares of Panama
Industries common stock issued upon the exercise of a Thermaltec common stock
purchase warrant will be subject to substantial restrictions on
transferability. See "Panama Industries Common Stock--Restrictions on
Transferability" for a complete description of such restrictions.
Price Ranges of Thermaltec Common Stock
Thermaltec's common stock is quoted on the OTC Bulletin Board under the
symbol "THRM." The following table sets forth the range of the high and low bid
quotations of the Thermaltec common stock on the OTC Bulletin Board for the
periods indicated:
High Low
-------- ---------
THREE MONTHS ENDED
December 31, 1996 .......... $ 1.500 $ 1.245
March 31, 1997 ............. 1.563 .494
June 30, 1997 .............. 1.000 .347
September 30, 1997 ......... .874 .500
December 31, 1997 .......... 1.248 .688
March 31, 1998 ............. .968 .341
June 30, 1998 .............. 1.063 .500
September 30, 1998 ......... .751 .247
December 31, 1998 .......... 4.926 .235
March 31, 1999 ............. 5.770 2.509
June 30, 1999 .............. 17.465 6.015
September 30, 1999 ......... 8.625 7.625
The above quotations represent prices between dealers and do not include
retail markup, markdown or commission. They do not necessarily represent actual
transactions.
PRINCIPAL STOCKHOLDERS OF THERMALTEC
The following table provides information regarding the beneficial
ownership of Thermaltec's capital stock as of November 10, 1999 and following
the merger by:
o each person who is known by Thermaltec to beneficially own 5% or more of
any class of Thermaltec's capital stock;
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<PAGE>
o each of Thermaltec's directors;
o Thermaltec's chief executive officer and each of the other four most
highly compensated executive officers of Thermaltec; and
o all of Thermaltec's directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
as of November 10, 1999 following the Merger
----------------------- --------------------------
Name and Address of Beneficial Owner No. Percent No. Percent
- -------------------------------------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Andrew B. Mazzone, 1,098,500 42.4% 1,098,500 1.8%
Sole Director and Officer
c/o Thermaltec International, Corp.
68A Lamar Street
West Babylon, New York 11704
Thomas Klein 465,300 18.0% 465,300 0.7%
c/o Thermaltec International, Corp.
68A Lamar Street
West Babylon, New York 11704
All Directors and Officers 1,098,500 42.4% 1,098,500 1.8%
as a Group (1 person)
</TABLE>
In the preceding table, percentage ownership following the merger assumes
that Thermaltec will issue 59,500,000 shares in the merger, and that no
outstanding options or warrants will be exercised prior to the merger.
The shares listed as being beneficially owned by Mr. Mazzone include
12,000 shares which may be acquired upon the exercise of certain common stock
purchase warrants issued by Thermaltec to Mr. Mazzone. The shares listed as
being beneficially owned by Mr. Klein include 1,400 shares which may be
acquired upon the exercise of certain common stock purchase warrants issued by
Thermaltec to Mr. Klein, and 450,000 shares owned by Mr. Klein's two adult
children (as to which Mr. Klein disclaims beneficial ownership). Mr. Klein is
the President and Treasurer, as well as a Director, of Panama Industries.
INFORMATION CONCERNING PANAMA INDUSTRIES
General
Panama Industries was incorporated on March 2, 1998 under the laws of the
State of Delaware. It is engaged in the thermal spray coating industry and its
primary business objective is to establish and support thermal spray coating
shops throughout Latin America. As of May 17, 1999, it became the direct
successor to, and continued in every way the thermal spray business of
Thermaltec, in both operations and policies.
Thermaltec opened four pilot thermal coating shops respectively in New
York, Costa Rica (the main pilot plant), Puerto Rico and the Dominican
Republic. The Puerto Rican pilot plant (which operated through a wholly-owned
subsidiary) was closed in 1998. It was a majority-owned joint venture with
Felipe Hernandez, a citizen of Puerto Rico. The Dominican plant, closed in
1998, was a majority-owned joint venture with Bernal and Nunez SA. Thermaltec
closed its plants in Puerto Rico and the Dominican Republic based upon its
determination that its financial and management services were necessary to
support its major operation in Costa Rica. Panama Industries' New York
operation is wholly-owned and has always been a small technical support and
research and development center. Its purpose was to support the company's Latin
American operations and not as a base of expansion in the United States. There
has been no substantial change in Thermaltec's and Panama Industries' method of
operation from its inception to the present.
Company Specific
Panama Industries develops its business primarily by training a sales
force of mechanical or metallurgical engineers, and having them call on leading
industrial companies in the countries where its thermal spray shops are
located. At the present time, Costa Rica is the main prototype installation. In
Costa Rica, Panama Industries does business with over 300 industrial customers
in Central America. A typical marketing tactic
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would be to have an engineer call on a customer who uses industrial machinery.
Industrial equipment is subject to wear. Panama Industries' 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 a 24 hour turnaround can be achieved. The Panama Industries
subsidiary in Costa Rica maintains a full complement of coating devices
(thermal spray guns), and metal working finishing equipment. The use of this
service is valuable 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, and (3) the inventory of customers' spare
replacement parts can be minimized by the accessibility to the thermal spray
process.
The thermal spray business is subject to mild seasonal effects in Costa
Rica. Planting and harvesting in the sugar mills determine their repair cycles.
Repairs are normally focused in this industry toward the last four months of
the calendar year. Sugar mills account for 15% of the business conducted by
Panama Industries in Costa Rica.
Plan of Expansion
The plan of expansion recited as follows is tentative and is contingent
upon raising at least $500,000 of new funding. There is no assurance that
Panama Industries can raise those monies, which would seriously curtail its
activities, and possibly cause the company to cease operations. Panama
Industries does not plan to expand its business until its Costa Rican facility
reaches what management views as "critical mass." This is expected to take one
year from the date of securing new financing. It is the intention to staff and
support Latin American expansion through Costa Rica engineers, accountants, and
marketing support will come from Costa Rica. It is important that the Costa
Rican operation be "state of the art" in equipment, technology, and marketing,
and administration in order to serve as a demonstration site to prospective
customers. The company cannot guarantee that it will reach this state, because
it may not raise adequate monies to fund the operation in the required way.
Panama Industries intends to expand its operations in Latin America only
if the company is in a positive cash position. The current preferred method of
expansion would be to purchase a small but active machine or metal working shop
in a key industrial city. The company would then have a base of established
local customers to contact when introducing thermal spraying. The company would
deploy thermal spraying equipment and materials allowing instant capability to
thermal spray for the new facility. The company would send personnel from its
Costa Rican facility to assist the launching of the thermal spraying process at
the new facility. The method of operation would be the same as that of the
Costa Rican pilot plant from that point on.
The purchase of an existing machine shop, and adding a functional thermal
spraying capability to it would cost, according to management's current
estimates, approximately $250,000 per location. There can be no assurance that
a prospective machine shop owner would sell to Panama Industries on favorable
terms. There can be no assurance that the requisite financing for funding new
locations will be available to the company, and if so, on terms that would be
favorable to the company.
In the opinion of Panama Industries' management, there is a substantial
need for thermal spray technology in developing countries. Such countries
typically lack a developed industrial infrastructure and due to economic
considerations, equipment is used for relatively extended periods of time, and
needs to be refurbished from time to time. South American, Asian, and other
developing areas are best suited for the company's stand-alone thermal spray
shop concept.
Panama Industries anticipates using one of the following three
arrangements to market its thermal spray coating products and services in Latin
America and other developing areas:
1. Panama Industries, or a wholly owned subsidiary, will lease space,
purchase the necessary equipment, hire and train employees, and provide
thermal spray coating services directly to customers. (This is how the
Company operates at its New York and Costa Rica locations).
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2. Panama Industries, or a wholly owned subsidiary, will lease the
necessary facilities and equipment to a local partner for an annual fee.
Panama Industries would provide the local partner with all necessary
training regarding the thermal spray coating technology.
3. Panama Industries, or a wholly owned subsidiary, will enter into a joint
venture relationship with, or acquire a local partner. Panama Industries
or its subsidiary would provide the necessary technology and equipment.
The other joint venture partner or the acquired local partner, as
applicable, would provide the necessary facility and employees.
The Company currently has no arrangement with any third party of a type
described in 2 or 3 above.
Technology
Thermal spraying is a technology used by Panama Industries 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 Panama Industries 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,
such as propane or acetylene, to form the coating. The air flammable gases and
coating are brought together in a flame in the nozzle of a thermal spray
heating torch (gun) where the material 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 surface. The coating may then be machined or ground
to the original tolerance.
Thermal spray coating technology can be utilized in many 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, pumps, and print rolls.
Thermal spraying is a generic term used to describe a number of different
sub-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 equipment and materials, technicians
can apply a thick or thin metal or ceramic coating on top of a metal surface.
The coating is bonded strongly to the surface because the process projects
molten particles onto the targeted surface at sometimes hypersonic velocities.
The coatings are thus applied with a combination of thermal (heat) and kinetic
(velocity) 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 with exotic and expensive materials can be utilized
at limited cost on parts made with inexpensive materials.
The process is technically accepted in the technologically advanced
socicties such as Western Europe, North America and Japan. Although accepted it
has been commercially exploited on an uneven basis. In less developed
countries, it has not yet been widely used. There remains some untapped
potential in the United States market, but in third world countries where the
need for parts overhaul is the greatest, businesses have not yet begun to
exploit the technology to any great extent.
Sub Technologies of Thermal Spraying
Wire Flame Spraying
The coating material in wire form is fed into an oxygen-fuel gas (propane)
combustion flame spray device, and then atomized and projected by a hot gas
stream onto a prepared surface (the object to be sprayed
49
<PAGE>
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 5500oF. The
process is simple to use and is employed heavily in industry for rebuilding
lightly worn surfaces, anticorrosion and mild wear resistant applications.
Powder Flame Spraying
The coating material in powder form is fed into an oxygen-fuel combustion
flame spray device, melted, and projected by the hot gas stream onto a prepared
surface. 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 chemical formulations.
Electric Are Spraying
The 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 protects it onto a prepared surface. This process
allows for higher deposition rates, and higher quality coatings than
traditional flame spraying.
Plasma Spraying
The 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 elate
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 various industries and, in
particular, the aerospace industry where total sales are over $1,000,000,000
worldwide.
HVOF (HIGH Velocity Oxygen/Fuel)--HVAF (High Velocity Air/Kerosene)
The coating material in either wire or powder form 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 latest development in thermal spray technology. The
extremely high particle velocity achieved in this process causes the particles
to flatten upon impact with the surface, resulting in high density, high bond
strength coatings that are essentially stress free and of very low porosity.
Industries Using Thermal Sprayed Coatings
<TABLE>
<CAPTION>
Industry Key Applications
- -------- ----------------
<S> <C>
Chemical Processing Solving corrosion problems in processing equipment.
Textiles Used on mill components such as guides and pins in textile
machinery.
Medical/Dental Prostheses Titanium and hydroxyapatite coatings on medical and dental implants
to prolong life and reliability.
Iron and Steel making Protecting rolls, conveyors and melting furnaces.
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 farm
machine equipment.
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 for oxygen sensors.
Railroad Housing for traction motors.
</TABLE>
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Some other industrial uses are found in the petrochemical industries,
pumps, paper and pulp manufacturing, power plants, electric motor repair, food
handling, and diesel engines.
Competition
Panama Industries may experience competition from a few different sources.
First, competition may come from the traditional manufacturers of thermal spray
equipment and materials, such as Sulzer Metco, Westbury, New York, Eutectic
Corporation, Flushing, New York, and Praxair Inc., Danbury, Connecticut.
Although primarily engaged in selling equipment and supplies, they may
ultimately shift their strategy to become prime suppliers also of the process.
Economic trends have caused the manufacturers of equipment and supplies to
lose profits to the contractors of the thermal spray process, who, in turn, use
such equipment and supplies to apply a coatings service for their customers.
Panama Industries is a coatings contractor, not a manufacturer of thermal spray
equipment and materials.
Competition also comes from alternative coating processes such as brazing
and welding.
The competitors cited are significantly larger than Panama Industries, in
both money and technical resources. Therefore, as a defensive strategy, the
company operates in niche markets not currently attractive to larger
competitors, such as Latin America.
Suppliers
Panama Industries anticipates obtaining most of its equipment and coating
materials from several separate sources. The loss of any supplier would be
unlikely to have a long term adverse affect on the company's operations.
Employees
As of November 10, 1999, Panama Industries employed 18 full-time
employees. None of these employees are covered by a collective bargaining
agreement. Management of Panama Industries believes that its employee relations
are satisfactory.
Executive Compensation
No officer or director of Panama Industries (currently limited to Andrew
Mazzone and Thomas Klein) has been compensated with salaries or any other form
of remuneration. Panama Industries does not intend to pay executive
compensation until new financing is secured. There can be no assurance that
such financing will be available to Panama Industries.
Officers and directors are reimbursed for any out-of-pocket expenses
incurred in the performance of their duties for Panama Industries.
Facilities
Panama Industries presently maintains two facilities which are described
below. The company has not targeted any other specific location at which to
conduct operations to be set up at this time.
USA
Panama Industries' executive offices and shop are located at 68A Lamar
Street, West Babylon, New York 11704. Such space consists of 2,000 square feet,
of which 300 square feet are devoted to office use and 1,700 square feet are
devoted to the spray shop. The rent is on a month-to-month basis for $1,000 per
month. The company maintains a complete spray facility at this location
including five wire guns, two powder guns, one blast booth and a one station
spray room. It does no machining and grinding (finishing) at this location. It
subcontracts out its machining or grinding needs when required.
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San Jose, Costa Rica
Panama Industries maintains a wholly-owned subsidiary, Thermaltec de Costa
Rica, at Pavas, 75 Oeste del Liceo, Antiqua Fab Rosago, Ultima Bodega, San
Jose, Costa, Rica, Telephone 011-506-290-7591. The facility contains 8,000
square feet, 900 square feet of which is office space and 7,100 square feet
dedicated to spray and machine shop areas. The lease is for five years, which
commenced in January, 1997, with a monthly rent of $1,500. Cost of living
increases are built into the lease agreement. The location has four large
machining lathes, four medium machining lathes, three large grind finish
machines, three milling machines, four drilling macbines and other
miscellaneous machine tools. There are two blast containers for cleaning parts,
a three-station spray room, 15 thermal spray guns, and miscellaneous work
handling equipment.
Legal Proceedings
Panama Industries is not a party to any legal proceedings which, if
adversely decided, would reasonably be expected to have a material adverse
effect on the financial condition of Panama Industries.
Significant Customers
Panama Industries' largest customer in the United States is the New York
State Energy Research and Development Authority. In Costa Rica the largest
customers are the National Power and Light Company and La Nacion, the leading
newspaper in Costa Rica. The loss of the New York State Energy Research and
Development Authority would seriously jeopardize operations in the United
States However, the company does not contemplate any expansion in the United
States and would still maintain its staff of four people in the United States
to aid in its expansion in Latin America. If financing were not available the
company would operate solely out of Costa Rica. Loss of any one major customer
in Costa Rica would not seriously jeopardize Panama Industries' operation in
Costa Rica.
Latin American Government Regulations
In Costa Rica, the laws regulating the Panama Industries' operations are
similar to that of the United States. Since the company's industrial processes
are self-contained, there are no material environmental exposure or hazards
created by the company. The company is subject to the same hazards that a
typical metal working company might encounter, such as injury to an employee
from improper use of equipment. To management's knowledge, there has been no
violation of any regulation by the company in Latin America. There have been no
warnings or citations given in Latin America to the company by any governmental
agency.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
THERMALTEC INTERNATIONAL, CORP. AND PANAMA INDUSTRIES, LTD.
The Operations of Thermaltec and Panama Industries
Thermaltec's activities are currently limited to acting as a holding
company for Panama Industries. The revenues of the company primarily arise from
the providing of industrial overhaul services to manufacturing, transportation,
electric power and agricultural customers. The majority of the work performed
has involved machine element repair, requiring welding, thermal spray and
machining functions to be performed. In addition, corrosion protection coatings
have, from time to time, been applied to bridges and other structures. In the
case of funded research projects where the company provides the same services
which it offers for sale in the regular course of business and on a time and
materials basis, the company derives revenue to the extent of the amount
invoiced.
The cost of sales represents the costs associated with the provision of
all coatings and machining services: the cost of metal wires and powders
consumed, the cost of utilities, consumable gases, operating supplies, direct
and indirect labor and other costs of the production process. General and
administrative expenses include all period costs and costs not directly
associated with the production process: marketing labor, administrative labor,
rent, insurance, travel costs and professional fees.
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Results of Operations
June 1999 vs. June 1998
For the nine months ended June 30, 1999, Thermaltec had $205,000 of
consolidated sales, compared to $247,000 in the prior years' comparative
period. The operating deficit for the period was $285,000, a reduction of 8%
from the deficit of the same period of 1998.
A resumption in March, 1999 of the funded research project for the New
York State Energy Research & Development Authority and increased sales to
customers in South Carolina partially offset reduced sales in the New York
region commercial market and lost business in Costa Rica. The latter was due to
an earlier than expected onset of the rainy season in Central America in June,
1999; the company expects to recoup most of that shortfall in the near future.
The company lowered its operating deficit, primarily due to a reduction of
22% in expenses. This reflected across-the-board reductions in marketing costs
and in administrative costs in both the United States and Costa Rica and the
closing of the company's pilot operations in Puerto Rico and the Dominican
Republic. The company continued to build its customer list in Central America
by expanding coverage to the west coast of Costa Rica; the company has begun to
extend its coverage into the Republic of Panama, although cumulative sales to
this market are nominal at this time.
On April 16, 1999 the company declared its intention to transfer
substantially all of its assets and liabilities to a wholly-owned subsidiary,
Panama Industries Ltd. The Company effected the transfer on May 17, 1999 and
established May 28, 1999 as the record date for the transfer of the shares of
Panama Industries, via a spin-off, to the stockholders of the company on a pro
rata basis, effective immediately before the merger. After the spin-off, Panama
Industries will continue to engage in the metallurgical coatings business. The
operations of the Company at this time remain essentially unaffected by the
announced spinning off to its stockholders of the shares of Panama Industries
and the consequent name change in the United States. The change in the name of
the firm has not had any discernible effect on the business in the United
States. In Central America, the company continues to operate through its
wholly-owned subsidiary, Thermaltec de Costa Rica, S.A., whose name will remain
unchanged. The company anticipates that the change in ownership will have no
effect in the Central American market.
1998 vs. 1997
During 1998, sales declined by 38% from the prior years' level to
$276,000, primarily reflecting the winding down of the first phase of a funded
research project for the New York State Energy Research & Development Authority
(NYSERDA), begun in February 1996. The NYSERDA project called for Thermaltec to
develop alternative metallurgical coating processes to chrome plating. The
latter process, used for both high-hardness coatings and for decorative
purposes (but not used by Thermaltec or Panama Industries in their operations),
is highly toxic and presents industry with severe problems of air pollution,
ground water contamination and toxic waste disposal. Thermaltec's assigned goal
was to investigate existing technologies that had a potential for replacing the
technology of chrome plating and to work with technology partners to develop
new equipment and operating parameters. The project funds are released upon the
presentation by the company of completed progress reports, with accompanying
documentation of actual costs incurred. By agreement with NYSERDA, the company
is reimbursed for 50% of all costs incurred, plus an allowance for
administrative burden. Upon presentation of the company's invoice for work done
and reported to NYSERDA, the company receives 90% of the amount invoiced; the
remainder is to be paid to the company upon successful completion of the entire
contract. Phase I of the project was completed in December, 1997, for a project
total of $298,000 in billings; the second phase of the project, with a total
funding of $89,000, did not begin until March, 1999, resulting in a one year
depression in Thermaltec's sales. The company has no potential liability for
financial risk involved with its research and development project and, pursuant
to the terms of the contract, is not obligated to refund any of the payments
received.
Offsetting the decline in the United States, revenues in Costa Rica
expanded by $79,000 as Thermaltec expanded its penetration of the industrial,
agricultural, and power generation markets.
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Operating expenses during 1998 increased by 16%, despite the overall
decline in sales, as the company continued to invest in the building of its
infrastructure in Costa Rica. The company continued to carry the expenses of
its operations in the Dominican Republic and in Puerto Rico until they were
terminated in February and May, 1998, respectively. The total cost of closure,
including the removal and relocation of fixed assets and inventory, was not
material. Operating expenses at Thermaltec de Costa Rica were reduced for the
year by $17,000, reflecting the non-repetition of one-time moving costs in the
prior year of the Costa Rican operation to a larger facility.
Liquidity and Financial Resources
The company has not achieved profitability since its inception in 1994. As
a result, it is limited in the amount of debt it can or would wish to incur;
instead, it has relied on the sale of equity to fund its development to date.
Debt outstanding as of June 30, 1999 consisted primarily of $25,000 of bank
financing and the remainder in equipment financing. All of such debt has been
obtained with personal guarantees by Thermaltec's president, Andrew Mazzone.
Since inception, Thermaltec has received an aggregate of $1.1 million from the
sale of equity.
A close review of business operations at June 30, 1999 indicates that,
despite past losses, the company remains viable, with good prospects for
expansion in both the United States and in Central America. The company
anticipates contracts for applying corrosion protection coatings on two bridges
for the New York State Department of Transportation and is installing improved
quality control and cost accounting systems at Thermaltec de Costa Rica.
The operations of the company carry with them the same basic potential for
injury and contamination of the environment as other industrial processes. As a
result, the company closely monitors the industrial safety and environmental
protection performance of its operations. Management is not aware of any
injuries or environmentally adverse events and has not been named as a
potentially responsible party with respect to any such event. As a result, no
liability has been recorded.
Year 2000 Compliance
The operations of the company are not highly vulnerable to disruption due
to the "Y2K" problem. The company is in the process of replacing entirely its
computer hardware and accompanying software and expects that to be completed
before the end of 1999. In the opinion of management, all reasonable steps have
been or will have been taken, to insulate the company from "Y2K" disruption.
The management of the company has been advised that the financial institutions
upon which it relies for banking and insurance services have also taken all
appropriate steps to protect their respective service delivery capability.
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
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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.
PANAMA INDUSTRIES COMMON STOCK
General
Panama Industries has authorized capital stock consisting of 10,000,000
shares of common stock, par value $.0001 per share. As of the date of this
joint proxy statement/prospectus, 2,578,118 shares of Panama Industries common
stock are issued and outstanding. All of such shares are owned by Thermaltec
and will be distributed, on a pro rata basis, to Thermaltec's stockholders of
record as of May 28, 1999 in the spin-off immediately prior to the completion
of the merger. In addition, Panama Industries has reserved 193,400 shares of
its common stock for issuance pursuant to the exercise of the Thermaltec common
stock purchase warrants which were outstanding as of the close of business on
May 28, 1999. Panama Industries will not receive any type of consideration for
the issuance of such shares.
The following is a description of the material terms of the Panama
Industries common stock. The rights of the holders of shares of Panama
Industries common stock are established by Panama Industries' certificate of
incorporation, Panama Industries' by-laws and Delaware law.
The holders of Panama Industries common stock have no preemptive or
subscription rights in later offerings of Panama Industries common stock. The
holders of Panama Industries common stock are entitled to share ratably (a) in
such dividends as may be declared by the board of directors out of funds
legally available for such purpose, and (b) upon liquidation, in all assets of
Panama Industries remaining after payment in full of all debts and obligations
of Panama Industries and any preferences granted in the future to any holder of
preferred stock.
Holders of Panama Industries common stock are entitled to one vote for
each share held and have no cumulative voting rights. Accordingly, the holders
of more than 50% of the issued and outstanding shares of Panama Industries
common stock entitled to vote for the election of directors can elect all the
directors of Panama Industries if they choose to do so.
All shares of Panama Industries common stock now outstanding, including
the shares of Panama Industries common stock to be issued to Thermaltec
stockholders in connection with the spin-off, are (or will be upon issuance)
fully paid and nonassessable. The board of directors of Panama Industries is
authorized to issue additional shares of Panama Industries common stock within
the limits authorized by Panama Industries' certificate of incorporation
without shareholder action.
Holders of Panama Industries common stock are entitled to receive such
dividends as may be declared from time to time by the Panama Industries board
of directors out of funds legally available therefor, subject to the terms of
any existing or future agreements between Panama Industries and its
debtholders. Panama Industries has never declared or paid cash dividends on its
capital stock, expects to retain future earnings, if any, for use in the
operation and expansion of its business, and does not anticipate paying any
cash dividends in the foreseeable future.
Restrictions on Transferability
Panama Industries currently has 2,578,118 shares of common stock
outstanding (up to 2,771,518 shares if all the currently outstanding Thermaltec
common stock purchase warrants are exercised). All outstanding shares of Panama
Industries common stock, including the shares to be issued to Thermaltec
stockholders in the spin-off, are "restricted securities" and have not been
registered under the Securities Act of 1933.
The holders of Panama Industries common stock following completion of the
spin-off will only be able to transfer the securities in specific limited
situations (as described below). The certificates evidencing the spun-off
shares will bear a restrictive legend, and the transfer books of Panama
Industries will include stop transfer instructions that indicate the transfer
limits.
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The shares of Panama Industries common stock to be received (a) in the
spin-off by Thermaltec stockholders who owned shares of Thermaltec common stock
on May 28, 1999, and (b) following the completion of the spin-off by persons
who owned Thermaltec common stock purchase warrants on May 28, 1999 and who
subsequently exercised such warrants, will be subject to the following transfer
restrictions:
Prior to the time, if any, upon which Panama Industries becomes a
"reporting company" under the Securities Exchange Act of 1934, such shares
may not be sold, transferred, pledged or otherwise disposed of except for:
(1) transfers to Panama Industries;
(2) transfers to existing Panama Industries stockholders;
(3) transfers by gift, bequest or operation of the laws of descent,
provided that the common stock in the hands of the transferee
remain subject to the same restrictions on transfer as the shares
were subject to when they were held by the transferor;
(4) transfers to an entity unaffiliated with Panama Industries
pursuant to a merger, consolidation, stock for stock exchange or
similar transaction involving Panama Industries;
(5) transfers by a partnership to its partners, provided that the
Panama Industries common stock in the hands of the transferee
remains subject to the same restrictions on transfer as the shares
were subject to when they were held by the transferor; or
(6) transfers which would be exempt from the registration requirements
of Section 5 of the Securities Act of 1933 by virtue of the
exemption provided by Section 4(2) of such Act if the transferor
were the issuer of the Panama Industries common stock, provided
that the transferee is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act of 1933 and the Panama
Industries common stock in the hands of such transferee remains
subject to the same restrictions on transfer as the shares were
subject to when they were held by the transferor, or a transfer
pursuant to an effective registration under the Securities Act of
1933 simultaneously with a registration of the Panama Industries
common stock under Section 12 of the Securities Exchange Act of
1934.
Pursuant to applicable SEC rules and interpretations, these restrictions
are intended to ensure that no active trading market in Panama Industries
common stock develops prior to the time Panama Industries has registered its
common stock under Section 12 of the Securities Exchange Act of 1934.
Such restrictions on transfer will apply not only to Panama Industries
common stock issued in the spin-off or in connection with the exercise of a
Thermaltec common stock purchase warrant, but also any shares transferred to
subsequent holders and any shares subsequently issued as a result of any stock
split, stock distribution or similar distribution with respect to such shares.
In addition, no public trading market presently exists for shares of
Panama Industries common stock. Panama Industries does not anticipate that any
such market will develop or, if developed, that it will continue to be
maintained. Because of the restrictions on transferability and the absence of a
trading market, a Panama Industries stockholder may be unable to sell any of
his/her Panama Industries shares even though financial circumstances may make
such sale desirable.
Transfer Agent
The transfer agent for the Panama Industries common stock is Manhattan
Transfer Registrar Co., 58 Dorchester Road, Lake Ronkonkoma, New York 11779.
PRINCIPAL STOCKHOLDERS OF PANAMA INDUSTRIES
All of the outstanding shares of the capital stock of Panama Industries
are currently owned by Thermaltec. The following table provides pro forma
information regarding the beneficial ownership of Panama Industries' capital
stock following the completion of the spin-off by:
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o each person who, to the knowledge of Panama Industries, will
beneficially own 5% or more of any class of Panama Industries' capital
stock;
o each of Panama Industries' directors;
o Panama Industries' chief executive officer and each of the other four
most highly compensated executive officers of Panama Industries; and
o all of Panama Industries' directors and executive officers as a group:
Shares Beneficially Owned
following the Spin-Off
Name and Address ------------------------
of Beneficial Owner No. Percent
- ------------------- ----------- ----------
Andrew B. Mazzone, 1,098,500 42.7%
Chairman of the Board and Director
c/o Panama Industries, Ltd.
68A Lamar Street
West Babylon, New York 11704
Thomas Klein 465,300 18.1%
President, Secretary, Treasurer and Director
c/o Panama Industries, Ltd.
68A Lamar Street
West Babylon, New York 11704
All Directors and Officers 1,563,800 60.3%
as a Group (2 persons)
The shares listed as being beneficially owned by Mr. Mazzone include
12,000 shares which may be acquired upon the exercise of certain common stock
purchase warrants issued by Thermaltec to Mr. Mazzone. The shares being listed
as beneficially owned by Mr. Klein include 1,400 shares of Panama Industries
common stock which may be acquired upon the exercise of certain common stock
purchase warrants issued by Thermaltec to Mr. Klein, and 450,000 shares owned
by Mr. Klein's two adult children (as to which Mr. Klein disclaims beneficial
ownership).
INFORMATION CONCERNING CAMANCO COMMUNICATIONS
Business
General. Camanco Communications is headquartered in Millville, New Jersey.
Camanco Communications is a New Jersey corporation which was organized on
October 7, 1996 under the name "Solar Communications Group, Inc." The company
recently changed its name to "Camanco Communications, Inc." after learning that
another entity holds a federal trademark registration for the mark "Solar
Communications" in connection with certain direct mailing, printing and bindery
services.
Camanco Communications is in the process of developing a proprietary group
of products and services known as "PCRoomLink." PCRoomLink will connect
travelers worldwide through a system of personal computers with high-speed
Internet access that will be installed in hotel rooms worldwide. Targeted
primarily at business travelers, in an effort to increase their productivity
and enhance their lifestyle and "workstyle" while on the road, PCRoomLink's
Version 1.0 allows hotel guests to either use an in-room personal computer or
plug in their own personal laptop to access the system's high-speed network.
Once connected, users are able to send and receive web-based e-mail and
navigate the Internet for business or personal use. PCRoomLink Version 1.1,
released from its initial quality assurance testing phase on October 28, 1999,
adds Microsoft(R) Office Suite 2000, Microsoft(R) games, 18 national
advertisers, access to local advertisers, PCRoomLink-based e-mail, and local
disk storage to the system's capabilities.
Camanco Communications intends to install PCRoomLink in member hotels free
of charge. In the future, guests at PCRoomLink properties, will be able to
utilize the system's complimentary opening interface to access hotel services,
such as room service and virtual concierge, and make purchases, or access
specialized
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services from key national advertisers who have entered into agreements with
Camanco Communications. Guests may also choose to have a daily fee ($17.95
initially) conveniently added to their hotel bill to access popular software
applications, send, receive and check web-based e-mail, and navigate the
Internet via the high-speed PCRoomLink network.
Background. With industry consolidation and globalization being two of the
dominant business themes of the late 1990's, business travel among multiple
sites and clients is becoming more prevalent than ever. While business travel
is obviously critical to the success of many companies, technology has not kept
pace with the increasing demands of the time-pressed business traveler.
While upwards of two-thirds of all business travelers presently carry
laptop computers, the hotels in which these travelers stay are ill-equipped to
handle their technological needs. Studies show that only 7% of hotels across
the United States have some type of in-room Internet connectivity, mostly in
the form of a rudimentary phone jack. While these jacks offer basic Internet
access, they require the traveler to wrestle with a variety of cords, cables,
connectors and computer configurations, and to endure the boredom and
frustration associated with having their data sluggishly navigate through
standard telephone lines that were never designed to perform such a function.
Add to that the additional headache of carrying around the laptop to start with
and the risks associated with theft, loss or damage en route, and it is clear
that the current technological options for the business traveler are less than
ideal.
In fact, it is the tedious nature and inconvenience associated with
laptops that is in part driving the computer industry's development of the PDA
(Personal Digital Assistant). Industry insiders predict that, as they become
more advanced, PDAs will replace laptops in performing basic mobile computing
tasks.
Recognizing the present inconveniences faced by business travelers,
management of Camanco Communications believes that providing fully functional
personal computers with high-speed Internet access in hotel rooms is the
logical solution. By creating a national, and eventually international, network
of PCRoomLink member hotels, Camanco Communications will provide business
travelers with a convenient solution to their desire to remain connected and to
have computing ability directly in their room or suite -- either by plugging in
their own laptop or by using the in-room personal computer. Since the
PCRoomLink network will bypass the standard hotel PBX (telephone switchboard)
system, sluggish data and slow-loading web pages will no longer a problem. As
PDAs become more accepted and sophisticated, a full-fledged in-room personal
computer will allow for quick data transfer through connecting cradles or
infrared readers.
PCRoomLink Products and Services. PCRoomLink is an innovative solution to
the problem of Internet access while traveling. PCRoomLink's software Version
1.0 is currently installed in 75 hotel rooms at its first pilot hotel, The
Holiday Inn, Runnemede, New Jersey. An additional 100 rooms have been installed
with Version 1.0 at the Houstonian Hotel in Houston, Texas. Both contracts
provide equipment at no cost and have a clause that provides for removal of
equipment if the hotel is not satisfied. Additionally, the contracts provide
for extending the agreement for three years if satisfied. PCRoomLink Version
1.1 will be installed in the near future at both pilot hotel properties.
Following such installation, guests at The Holiday Inn, Runnemede, New Jersey,
will pay a daily fee ($17.95) for such service. The service will continue to be
provided free of charge to guests at the Houstonian Hotel for six months
following such installation.
PCRoomLink's service contains a complimentary opening interface to access
the Internet with high-speed T-1 connectivity at speeds of 1.2 megabits per
second, or approximately 20 times faster than today's standard 56.6K modems.
The system incorporates the commercially available Tut Express GS Access System
manufactured by Tut Systems, Inc. This highly scalable platform, amplifies the
hotel's current standard copper telephone lines to achieve "instant on"
Internet access. Each PCRoomLink room is installed with the following items:
o 15 inch LCD flat screen monitor
o A small desktop computer with 400 mhz processor, 6.4 GB hard drive and
64 MB RAM
o Speakers
o Mouse
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o Keyboard
o Tut Expresso MDU Home Run Adapter Card (this connects the computer to
a standard local area network jack and uses existing telephone wire to
share voice and data on the same line)
o Customized wall-mounted desk unit
o Local area network jack to enable laptop connectivity
By installing a fully functional personal computer and local area network jack
in each room, PCRoomLink's system allows for simultaneous use of the personal
computer, laptop and telephone.
With respect to the hardware installed in each member hotel, PCRoomLink's
two pilot sites are configured as follows:
o two or three servers (dependent on the configuration) located in the
hotel's telecommunications room for hosting the operating system,
applications, firewall requirements and billing
o Tut Systems chassis which houses the Tut Expresso GS System
o Back-up power supply
o Network component storage cabinet
PCRoomLink Version 1.0 is free to guests at the two pilot hotel properties
and is supported twelve hours per day, seven days per week, by a customer
service help desk staffed by Camanco Communications employees.
Camanco Communications released PCRoomLink Version 1.1 on October 28,
1999. This version will replace Version 1.0 in the Holiday Inn, Runnemede, New
Jersey and the Houstonian Hotel, Houston, Texas. In addition to the features
and hardware incorporated in Version 1.0, PCRoomLink Version 1.1 includes more
extensive complimentary opening interface with access to Microsoft(R) Office
Suite 2000, 18 national advertisers, access to local advertisers, Microsoft(R)
games, web based e-mail and local disk storage. This version also incorporates
Intel LANDesk(R), which allows for remote management of desktop units by
Camanco Communications. Each hotel will be supported by a 24 hour per day,
seven day a week, customer service help desk staffed by Camanco Communications
employees.
Camanco Communications has approved the following eleven additional
hotels, totaling 1,519 installed rooms, to become PCRoomLink members and is in
various stages of contract negotiation and execution with such properties:
Property Rooms
------
Trump International ........................ 175
New York, NY 10023
Admiral Fell Inn ........................... 80
Baltimore, MD 21231
Excelsior .................................. 120
New York, NY 10022
Fitzpatrick Manhattan ...................... 92
New York, NY 10022
Fitzpatrick Grand Central .................. 140
New York, NY 10017
Maxwell Hotel .............................. 153
San Francisco, CA 94102
Marietta Conference Resort ................. 125
Marietta, GA 30064
Yarrow Resort & Conference Center .......... 120
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Rooms
Property ------
Park City, UT 84060
Sheraton Eatontown Hotel & Conference Center ......... 208
Eatontown, NJ 07724
Holiday Inn Select ................................... 142
Fairfield, CA 94533
Palm Springs Marquis ................................. 164
Palm Springs, CA 92262
Many of these hotels are currently in the site survey and equipment
selection process of the installation. Additionally, 64 applications have been
received by Camanco Communications from hotels applying to become PCRoomLink
members. These applications are currently under review by management of Camanco
Communications.
Once developed, the most innovative aspect of PCRoomLink will be the broad
variety of services that are included in the system. Located in either a
custom-made fold down desk/cabinet unit that is designed to match the decor of
the hotel room, or placed on the room's desk or work station, the PCRoomLink
monitor is continually on, with the welcome screen discreetly highlighting
numerous services available to the guest free of charge.
Included on the PCRoomLink welcome screen are on-line hotel services, such
as room service and concierge, as well as links to key national advertisers
that have partnered with Camanco Communications to provide enhanced services to
PCRoomLink users. To date, Camanco Communications has reached agreement with
nine national companies, such as FTD Florist, Gameworks Corporation, and the
Golf Network, to advertise free of charge through December 31, 1999.
Additionally, five airlines have agreed to allow Camanco Communications to
place a customized airline icon on the PCRoomLink website that, when clicked,
will connect the user directly to the airlines' individual websites without
leaving the PCRoomLink network.
Unlike other services that simply charge hotels to install jacks in their
rooms, PCRoomLink is a complete system that is provided to the hotel free of
charge and is designed to make business travel easier, more comfortable and
more efficient. If a guest reserves the use of a PCRoomLink hotel room, he/she
is billed for the service daily, whether it is used or not. If a guest does not
reserve a PCRoomLink room but is assigned to one by the hotel, he/she can
simply click on the PCRoomLink logo on their screen. Here, they will be
informed of the daily fee for the service that will be added to their hotel
bill if they log on to the PCRoomLink network. The services provided through
the PCRoomLink welcome screen will still be accessible free of charge if the
guest chooses not to log on to the PCRoomLink network. Once logged on, guests
can use PCRoomLink's Internet connection or e-mail to conveniently perform a
variety of beneficial tasks, such as:
o surfing the web to research a client;
o editing a contract to secure a deal before they leave town;
o e-mailing their family a special message;
o revising a presentation to take advantage of new information; and
o e-mailing their offices with key updates from the road.
Guests do not need to become PCRoomLink members to use the service.
However, by signing up for complimentary PCRoomLink membership, guests are able
to utilize the convenient PCRoomLink services, including sending and receiving
e-mail, from any PC with Internet access by logging on to www.pcroomlink.net.
In addition, members are also able to select other personalized services, such
as the addition of links to their most-used vendors or clients.
Business Strategy. Camanco Communications is creating an international
network of member hotels and end-users by providing personal computers and
high-speed Internet access to the hospitality industry both in the United
States and abroad through its branded product, PCRoomLink. Beginning with its
two pilot hotels,
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Camanco Communications will furnish dedicated T1 circuit(s), which are digital
transmission lines with a total speed of 1,544 megabytes per second, to each of
its member hotels. Through use of a third party technology, Camanco
Communications will provide high-speed Internet access within its member hotels
via existing copper wiring, allowing the simultaneous transmission of data and
voice traffic while avoiding traffic bottlenecks at the hotel PBX (telephone
switchboard).
In Version 1.0 of the PCRoomLink software, Camanco Communications is
equipping rooms with wall-or desk-mounted personal computers that are
interconnected via on-site servers. This configuration will allow end-users
Internet connectivity to access their web-based e-mail accounts and surf the
Internet. In addition, Camanco Communications will provide an Ethernet jack in
each room for laptop connectivity. It is Camanco Communications belief that
many travelers, once presented with an alternative to bringing their laptops
with them, will elect to leave them at home knowing they will have access to
personal computers and the Internet while on the road.
Camanco Communications launched Version 1.1 of its software and interface
on October 29, 1999. This version will allow guests not only access to the
Internet but allow guests to use PCRoomLink's computers complete with the
Microsoft(R) Office 2000 software suite, PCRoomLink web-based e-mail, games and
local storage.
Each PCRoomLink computer's local storage will be divided into three
partitions. The first partition will house the active applications. The second
partition will be blank. The third partition will house the operating system.
In the event a computer locks-up during use, Camanco Communications can
effectively restart the computer and protect all saved data remotely using a
combination of Intel LANDesk(R) and HPOpenview(R). After a guest checks out,
the partition which hosts the guest's documents will be wiped clean along with
the history of what sites the guest visited. Additionally, Camanco
Communications has developed software which will allow it to monitor all
essential internal components of the hardware -- such as the monitor, keyboard
and mouse.
Hotels have been receptive to Camanco Communications' proposed business
model because PCRoomLink addresses the desire of the hospitality industry to
provide additional ways to increase revenue. Camanco Communications has
structured its business model in such a way as to make PCRoomLink risk-free
from the hotel's perspective, while augmenting the hotel's existing revenue
streams through commissions and increased occupancy rates. In addition, the
hospitality industry has been responsive to Camanco Communications' products
and services because of the additional opportunities they afford hotels to
attract business travelers, a coveted market segment. One of these
opportunities is a customized web interface, allowing for an attractive and
effective presentation of hotel specific information (i.e. room service menus,
convention information, etc.) and local points of interest (i.e. sight seeing,
local events, etc.). As part of its development plans, Camanco Communications
also intends to affiliate with a variety of advertisers, both on the national
and local levels, to present on-line games, retailing, business services, gift
products, etc. to travelers.
Toward accomplishing its objectives, Camanco Communications has aligned
itself with selected industry leaders as follows.
o AT&T Corporation: AT&T and Camanco Communications have entered into a
preferred vendor agreement whereby AT&T will supply dedicated T-1
circuits to connect each PCRoomLink member hotel to the Internet
backbone. Additionally AT&T will provide web hosting, network
monitoring and bandwidth management. AT&T has verbally agreed to a
master discount structure based upon a per megabyte bandwith usage
factor. AT&T has also agreed to provide Camanco Communications with
limited IP Network Services consulting at no charge and has granted
Camanco Communications a limited right to use AT&T's brand logo in
PCRoomLink's marketing literature.
o Compaq Computer Corporation: Compaq has agreed to provide significant
discounts and a 3% rebate on all Compaq items purchased by Camanco
Communications. Additionally, Compaq has granted Camanco Communications
a limited right to use Compaq's brand logo in PCRoomLink's marketing
literature. In return, Camanco Communications will give Compaq a right
of first refusal on all personal computers purchased for itself or for
its member hotels.
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o Critical Path, Inc.: Under the terms of its agreement with Critical
Path, Camanco Communications has sub-contracted the management and
maintenance of its e-mail system including Camanco Communications' web
mail page, which is included in Version 1.1 of PCRoomLink's mailbox
software, at a cost of $.25 per month per mailbox. The package includes
five megabytes of storage per mailbox, standard web mail features, and
support.
o Proximity Systems, Inc.: Proximity Systems has agreed to design and
manufacture all of Camanco Communication's requirements for customized
wall-mounted and stand alone desks that incorporate the personal
computer supplied by Camanco Communications to its member hotels. The
agreement has no termination date and provides that Proximity Systems
will not design and manufacture wall-mounted or stand alone desks for
any competitor of Camanco Communications.
Maintenance. Despite implementation of security measures, the hardware and
software components of the PCRoomLink system will be vulnerable to computer
viruses, physical or electronic break-ins, theft, vandalism and similar
disruptive problems. Computer viruses, break-ins or other problems caused by
the accidental or intentional actions of PCRoomLink users, current and former
employees, and others could lead to interruptions, delays or a cessation in
service to users of the PCRoomLink system. Camanco Communications intends to
subcontract with reputable third party organizations to provide certain
service, support and maintenance services for the PCRoomLink hardware and
software components. However, to date, Camanco Communications has not yet
entered into any type of service, support or maintenance agreement for the
PCRoomLink system.
Target Market. It is Camanco Communications strategy to focus on four
targeted groups: the hospitality industry, the end-user, strategic alliance
partners (advertisers), and local alliance partners (advertisers).
o Hospitality Industry: Toward acquiring member hotels, Camanco
Communications has implemented two sales channels initially consisting
of 14 direct sales executives and three agent-based organizations with
multiple sales executives. It is anticipated that an Internet-based
sales channel will be supported by the end of 1999.
o End-Users: Camanco Communications intends to develop a network of
end-users who will require PCRoomLink's services. This network of
end-users will be developed through traditional end-user marketing
programs designed to attract the business traveler. Additionally,
Camanco Communications has employed ten business development sales
executives who will work directly with Fortune 100 companies that
maintain a large staff of business travelers. These sales executives
will educate target companies on PCRoomLink services and benefits.
Additionally, in PCRoomLink Version 1.2, these sales executives will
identify and set up the security measures necessary to allow business
travelers access to their "internal intranet".
o Strategic Alliance Partners: The strategic relationships formed with
key national and regional advertisers will not only bring additional
revenue to Camanco Communications, but also enhance the Internet
purchasing options available for PCRoomLink users and members.
Currently, Camanco Communications employs two sales executives in this
area and has reached agreements with nine national advertisers to
participate in its opening hotel interface.
o Local Alliance Partners: Camanco Communications intends to develop a
national sales force that concentrates on selling advertising space on
an individual hotel's website. This group currently employs five sales
executives and two sales directors and targets, as advertisers, local
vendors such as boutiques and restaurants. Each individual hotel
website can house approximately 80 advertisers. To date, 19 advertisers
have signed up for the Holiday Inn, Runnemede, New Jersey pilot hotel
site. Sales efforts for the additional hotels under contract have just
commenced. The design of these individual advertisers websites will be
subcontracted to a third party design firm. The cost for each design is
charged back to the local advertiser.
Promotional strategies to these groups include the design of specific
Internet advertising tools to list hot links of member hotels for reservations,
the development of a strategy for hosting and being hosted on various related
websites and browsers, and the inclusion of advertising banners on Camanco
Communications website.
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Pricing. Research reveals two important characteristics about the
hospitality industry. The first is a resistance to risk and the second is a
limited capital budget. Camanco Communications has designed a revenue share
pricing program to respond to these concerns, as outlined below:
o The hotel is offered a share of the revenue, which varies dependent
upon whether the hotel requires furniture provided by PCRoomLink, in
exchange for entering into a 72 month agreement with Camanco
Communications.
o Under the hotel agreement, Camanco Communications determines the
retail rate, the number of rooms deployed, the hotel's percentage of
revenue, and the limits on the amount of charge-backs to the hotel.
Hotels regard this strategy as minimally risky because the hotels do not
pay Camanco Communications anything unless they "rent" the PCRoomLink equipped
rooms and are themselves realizing revenue from the transaction.
Competition
Within the hospitality industry, market demand for high-speed Internet
service continues to rapidly escalate. In the past six years, at least 30
companies have offered some type of in-room Internet access to the hospitality
industry, typically through installing data jacks in guest rooms for laptop
connectivity. Some of these companies have been successful in installing trials
at selected high-profile hotel properties across the country, with brand name
hotels such as Holiday Inn, Hyatt, Marriott, Hilton, and Wingate beginning to
consider in-room, high-speed Internet connectivity more seriously.
Camanco Communications has categorized its competitors as (1) direct
competitors, (2) indirect competitors, and (3) international competitors.
o Direct competitors are defined as companies offering comparable
computer-based services to those of Camanco Communications. The
following three direct competitors have been identified:
o 4th Communications Network, Inc.: Based in San Jose CA, 4th
Communications Network, Inc. provides Internet and interactive
applications through either an in-room PC or a TV in a hotel lobby
area. With PC installations in less than five hotel properties to
date, 4th Communications Network's emphasis has been on installing
in-room jacks. The biggest advantage Camanco Communications has,
when compared to 4th Communications Network, is Camanco
Communications' end-user focus and frequent user program. Camanco
Communications is designing these vehicles to build a loyal,
growing community of Internet-savvy travelers who will choose
PCRoomLink hotels over 4th Communications Network hotels because of
convenience and the program attributes of Camanco Communications'
user program. 4th Communications Network has focused its efforts
strictly on its deployment partner, the hotel.
o Integrated Network Technologies (IntXX): Locally focused in
Minnesota, IntXX has installations in two hotels.
o Guest-Tek Services: This company was established three years ago as
a division of Guest-Tek Interactive Entertainment Ltd., a Canadian
services company which specializes in providing computer services
to hotels and their guests. Guest-Tek has no installations
currently in the United States, but does have a proven track record
with a well-known Vancouver luxury hotel, the Pan Pacific.
Guest-Tek recently made its American debut at the HITEC show in
Atlanta, Georgia. Guest-Tek currently offers services and equipment
that PCRoomLink does not provide, such as in-room digital cameras
and video conferencing capabilities.
o Indirect competitors are defined as companies that offer Internet
access without associated computer hardware, thereby requiring
travelers to use their own laptops to access the Internet. Camanco
Communications predicts that travelers, when presented with a viable
alternative, will elect to leave their laptop computers at home,
knowing they will have access to the necessary
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hardware and software while on the road. Camanco Communications
believes this fact, along with Camanco Communications focus on
end-user marketing and retention programs, will provide an effective
means to position it against these indirect competitors. Toward
accomplishing this, Camanco Communications expects to commit to a
multimillion dollar advertising campaign on the Internet, on TV and
in publications targeted to the business traveler. Although their
installations are not as complete as those proposed by Camanco
Communications, indirect competitors currently have installations
with several major chains. These competitors include:
o LodgeNet Entertainment Corporation, OnCommand Corporation, and
Suitesurfer Communications, Inc. All of these competitors utilize
coaxial cable to deliver their signal to in-room televisions.
Installation and space limitations are the major advantages, as is
the fact that many of these vendors have existing relationships
with hotels. From a competitive perspective, LodgeNet's bandwidth
allocation, customer acceptance and potential loss of revenue
(through non-access to in-room movies by travelers) are detriments
to this method and work to the advantage of Camanco Communications.
o ATCOM, Inc., Business Anywhere USA, OverVoice by CAIS Internet,
Wayport, Inc., Darwin Networks, and Viator Networks. Each of these
indirect competitors offers a service that is not as complete as
PCRoomLink, with most providing only in-room "plug and play" jacks.
o International competitors are those who are currently marketing
their services in locations other than in the United States and
include Aford (London, England), Connectotel (London, England),
Logic Communications Ltd. (Bermuda), NetGame Cable (Israel), and
SuiteSurfer (Canada).
While recognizing the competitive landscape in which it operates, Camanco
Communications believes that its solution is differentiated from those of its
competitors in several key ways, as described below:
o The offering of a complete turnkey solution that includes the
necessary in-room hardware and software in addition to an
Ethernet jack connection.
o The intent to create and maintain a growing Internet community of
frequent users who will be offered member benefits.
o The intent to create a web interface that is customized and
systematically updated for each member hotel allowing for the
communication of hotel and area specific information. This will
be accomplished using a standard platform. These will be designed
by Camanco Communication web designers with input from hotel
management. In most cases, this will be linked to the existing
hotel. As to the local advertisers, these web sites will be
subcontracted to third parties for design if an existing web site
does not exist.
o The intent to create a multi-faceted multimillion dollar
marketing program that targets groups of Internet end-users in
addition to member hotels. To date, Camanco Communications'
competitors focus their marketing efforts strictly on the
hospitality industry without creating demand among travelers.
o The creation of the Local Area Network (LAN) based advantages
that a collection of networked personal computers offers hotels
and guests including:
o The ability of hotels to communicate hotel-related information to
their guests;
o The ability of hotel guests to transact with hotel restaurants and
concierge services, among others, via local hotel web sites or
e-mail.
o The ability of guests to obtain site-specific information regarding
local points of interest and events, directions to the airport, and
transportation options; and
o The ability of guests to conduct area specific, as well as
nationally focused, electronic commerce transactions for ordering
food, gifts, apparel, and other merchandise.
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Employees
As of November 10, 1999, Camanco Communications had 144 employees. None of
Camanco Communications employees is represented by a union. Management believes
that Camanco Communications' relationship with its employees is good.
Properties
Camanco Communications' executive offices are located in 31,609 square
feet of executive office space at 1100 Coombs Road, Millville, New Jersey.
Camanco Communications' lease for this space extends through December 31, 1999
at a monthly rental of $36,219.
Management of Camanco Communications believes that its current facilities
are adequate to meet its needs through the end of the year.
Legal Proceedings
Camanco Communications is not a party to any legal proceedings which, if
adversely decided, would reasonably be expected to have a material adverse
effect on the financial condition of Camanco Communications.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF CAMANCO COMMUNICATIONS
The following discussion of the financial condition and results of
operations of Camanco Communications should be read in conjunction with the
Financial Statements and the Notes thereto included elsewhere in this joint
proxy statement/prospectus. This joint proxy statement/prospectus contains, in
addition to historical information, forward-looking statements that involve
risks and uncertainties. Camanco Communications actual results could differ
materially from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include those
discussed below, as well as those discussed elsewhere in this joint proxy
statement/prospectus. See "Risk Factors."
Overview
Camanco Communications is a development stage enterprise and, accordingly,
has had no revenue through June 30, 1999. Since inception, Camanco
Communications has suffered losses and net cash outflows from operations.
Camanco Communications' product, PCRoomLink, is a system of personal
computers with high-speed Internet access that Camanco Communications is
planning to install in hotel rooms in the United States and abroad. Targeted
primarily at business travelers, in an effort to increase their productivity
and enhance their lifestyle and "workstyle" while on the road, PCRoomLink
allows hotel guests to either use an in-room personal computer or plug in their
own personal laptop to access the system's high-speed network. Once connected,
users of PCRoomLink Version 1.0 will be able to send and receive e-mail
messages and navigate the Internet for business or personal use. By utilizing
PCRoomLink Version 1.1, released on October 29, 1999, hotel guests will also
have access to the Microsoft(R) Office 2000 Software Suite, PCRoomLink's
web-based e-mail, games, and local data storage.
Camanco Communications will install PCRoomLink in member hotels at no
charge to the hotel. Guests in PCRoomLink equipped rooms may utilize the
system's complimentary opening interface, without charge, to access hotel
services, such as room service and virtual concierge, and make purchases, or
access specialized services, from key national companies. Guests in PCRoomLink
equipped rooms, for a daily fee ($17.95 initially), will have the ability to
access popular software applications, send, receive and check web-based e-mail,
and navigate the Internet via the high-speed PCRoomLink network. The daily fee
will be automatically added to a guest's hotel bill by the hotel if the guest
requests a PCRoomLink equipped room. If the guest is assigned to a PCRoomLink
equipped room by the hotel, the daily fee will be charged only if the guest
actually accesses the PCRoomLink network.
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Camanco Communications also intends to derive revenues from the sale of
advertising space to local and national advertisers.
Statement of Operations
Camanco Communications had an accumulated deficit of $1,852,774 through
June 30, 1999. Of this deficit, $1,778,612 relates to the interim period for
the nine months ended June 30, 1999 and was largely attributable to salaries,
advertising and product development expenses. Of the total amount,
approximately $266,000 related to interface, software and product development.
Camanco Communications presently has 105 employees and expects to increase
that number to 198 by June of 2000. The increase in employees will be primarily
in Camanco Communications 24 hours a day, seven days a week, customer help
center and in its operations, engineering and design staff.
In July, 1999, Camanco Communications consolidated two previous office
locations into 31,609 square feet of office space located at 1100 Coombs Road,
Millville, New Jersey. As a result, Camanco Communications incurred moving
expenses of less than $10,000. However, the company's rent expense increased
from $4,850 per month to $36,219 per month.
Liquidity and Capital Resources
Camanco Communications' future capital requirements will relate
principally to the installation of PCRoomLink hardware and related software at
member hotels. Camanco Communications business plan provides for the
installation of 650 hotels through June of 2000. Camanco Communications will
require approximately $260,000,000 in capital to complete such installations.
The initial cost to Camanco Communications is approximately $400,000 per hotel,
or $3,175 per room, if 126 rooms are deployed and no furniture is required. An
additional $900 per room will be expended if furniture is required. The
furniture cost is partially offset by a 5% reduction in the hotel's revenue
sharing percentage. Camanco Communications believes that a portion of the funds
required for PCRoomLink installations will come from vendor financing and bank
financing, with the balance coming from future equity offerings.
In July, 1999 Camanco Communications sold 1,200 shares of its common
stock, at a price of $10,000 per share, in a private placement pursuant to Rule
506 of the Securities Act of 1933. Additionally, in August, 1999, Camanco
Communications issued 10 shares of stock in return for services rendered by an
employment recruiter during the period from April 1, 1999 to June 30, 1999. For
purposes of its financial statements, the transaction was valued at $10,000 per
share. Based on currently proposed plans and assumptions, it is anticipated
that Camanco Communications will have sufficient capital to satisfy its
contemplated cash requirements through November 30, 1999. Camanco
Communications will then require substantial additional funding. Therefore,
Camanco Communications continuing viability is dependent upon its ability to
continue to raise additional funds.
Potential sources of funding which have been identified by management
include vendor lines of credit, vendor leasing programs, bank financing and
additional sales of securities by Camanco Communications. Camanco
Communications has no current arrangements with respect to sources of
additional financing and, when needed by Camanco Communications, such
additional financing may not be available on commercially reasonable terms, or
at all. The inability to obtain additional financing, when needed, would have a
material negative effect on Camanco Communications, including possibly
requiring it to curtail or cease operations.
Certain Factors that may Affect Future Results
Camanco Communications' future results may be subject to substantial risks
and uncertainties. Camanco Communications' future revenue streams will come
from daily access fees and local and strategic advertising. Camanco
Communications' profitability will be dependent upon the number of advertisers
it can secure and the percentage occupancy and utilization of its PCRoomLink
installed rooms.
Camanco Communications' quarterly and annual operating results are
impacted by a variety of factors that could materially adversely affect
revenues and profitability, including the percentage occupancy and
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utilization of its PCRoomLink installed rooms, or anticipated changes in
economic conditions. Because Camanco Communications' operating expenses are
relatively fixed, an unanticipated shortfall in revenue in a quarter may have
an adverse impact on Camanco Communications' results of operations for that
quarter. As a result of the foregoing and other factors, Camanco Communications
may experience material fluctuations in future operating results on a quarterly
or annual basis which could materially and adversely affect its business,
financial condition, operating results and stock price.
Year 2000 Readiness Disclosure
Background. In the past, many computer software programs were written
using two digits rather than four to define the applicable year. As a result,
date-sensitive computer software may recognize a date using "00" as the year
1900 rather than the year 2000. This is generally referred to as the Year 2000
issue. If this situation occurs, the potential exists for computer system
failures or miscalculations by computer programs, which could disrupt
operations.
Risks Associated with the Year 2000 Problem. Camanco Communications
utilizes computer systems in many aspects of its business. Year 2000 problems
in Camanco Communications computer systems could disrupt operations and have a
material adverse impact upon Camanco Communications operating results.
Camanco Communications is also exposed to the risk that one or more of its
vendors or service providers could experience Year 2000 problems that adversely
impact the ability of the vendor or service provider to provide goods and
services. This is not considered a significant risk with respect to the
suppliers of goods, due to the availability of alternative suppliers. However,
disruption of other services, such as telephone service, could, depending upon
the extent of the disruption, have a material adverse impact on Camanco
Communications operations. To date, Camanco Communications is not aware of any
vendor or service provider Year 2000 issue that would have a material adverse
impact on Camanco Communications operations. However, Camanco Communications
has no means of ensuring that its vendors or service providers will be Year
2000 compliant. The inability of vendors or service providers to complete their
Year 2000 resolution process in a timely fashion could have a material adverse
impact on Camanco Communications. The effect of non-compliance by vendors or
service providers is not determinable at this time.
Widespread disruptions in the national or international economy resulting
from Year 2000 issues, or in specific industries, such as commercial or
investment banks, could also have a material adverse impact on Camanco
Communications. The likelihood and effect of these disruptions is not
determinable at this time.
Approach. Camanco Communications is in the process of coordinating its
response to the Year 2000 problem, and of implementing Year 2000 compliance
procedures at Camanco Communications' offices and properties consisting of the
following:
o compiling information as to the information technology, referred to as
IT, and non-IT systems that may be sensitive to the Year 2000 problem;
o identifying and prioritizing critical systems;
o inquiring of third parties with whom Camanco Communications does
significant business, i.e., vendors, service providers and customers,
as to the state of their Year 2000 readiness;
o analyzing critical systems to determine which systems are not Year
2000 compliant and evaluating the costs to repair or replace those
systems; and
o repairing or replacing noncompliant systems and testing those systems
for which representation as to Year 2000 compliance has not been
received or for which representation was received but has not been
confirmed.
Status. Based upon the analysis conducted to date, Camanco Communications
believes its major critical systems are currently compliant or will be
compliant by December 31, 1999.
Costs. Based on internal estimates, as to which it has received no
independent verification, the total cost to Camanco Communications of making
its systems Year 2000 compliant is estimated to be insignificant.
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MANAGEMENT OF CAMANCO COMMUNICATIONS
Executive Officers and Directors
The current executive officers and directors of Camanco Communications are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- ----- --------
<S> <C> <C>
James M. Rossi ............... 47 Chairman of the Board and Chief Executive Officer; Director
Alisa A. Rossi ............... 33 Chief Administrative Officer and Secretary; Director
Monty S. August .............. 55 Director
Domenic J. Romano ............ 59 Director
Raymond T. Brown ............. 51 President and Chief Operating Officer; Director
Raymond J. Romano ............ 48 Sr. Vice President, Finance and Chief Financial Officer
Susan D. Schneider ........... 56 Sr. Vice President, Marketing
Wallace Rogers, Jr. .......... 33 Chief Technical Officer
Daniel P. Finley ............. 34 Vice President, Business Development
Barbara O'Gara ............... 45 Vice President, Sales and Hotel Alliances
Joseph C. Sandora ............ 39 Vice President, Strategic Partnerships
Charles G. Parker ............ 34 Vice President, Local Alliances
Yuriy R. Porytko ............. 30 Vice President, Operations
Alex P. Furda ................ 35 Vice President, Travel Services
Louis E. Brigante ............ 52 Vice President, Vendor Relations
</TABLE>
Biographical Information
James M. Rossi is a co-founder of Camanco Communications and has been a
director and Chairman and Chief Executive Officer of Camanco Communications
since October, 1996. Mr. Rossi has served as a director of JMR Marketing
Corporation, a telecommunication consulting firm, since 1971, as a director of
Cam-Comm, Inc., a data fiber optics reseller, since 1997, and as a director of
Camanco, Inc., a consulting firm, since 1997. Mr. Rossi also served as Chairman
and Chief Executive Officer of JMR Marketing Corporation from 1971 to July,
1999, as Chairman and Chief Executive Officer of Cam-Comm, Inc. from 1977 to
July, 1999, and as a President of Camanco, Inc. from 1997 to July 1999. Mr.
Rossi resigned as an officer of each of these companies to devote his full
working time and attention to Camanco Communications. Mr. Rossi also serves as
Chairman of the Board for U.S. Wats, Inc., a telecommunications company.
Alisa A. Rossi is a co-founder of Camanco Communications and has served as
a director and Secretary and Chief Administrative Officer of Camanco
Communications since October, 1996. In addition. Ms. Rossi has served as a
director of JMR Marketing Corporation since 1989, as a director of Cam-Comm,
Inc. since 1997, and as a director of Camanco, Inc., since 1997. Ms. Rossi also
served as Vice President of JMR Marketing Corporation from 1989 through July,
1999, as Vice President of Cam-Comm, Inc. from 1997 to July, 1999, and as a
Vice President of Camanco, Inc. from 1997 to July, 1999. Ms. Rossi resigned as
an officer of each of these companies to devote her full working time and
attention to Camanco Communications.
Monty S. August has been a member of the Board of Directors of Camanco
Communications since October, 1998. Since 1991, he has served as Chief
Executive Officer and Chairman of the Board of UK Paper, PLC, the largest
printing and writing paper company in the United Kingdom.
Domenic J. Romano has been a member of the Board of Directors of Camanco
Communications since November, 1998 and has served as the managing partner of
Romano, Hearing & Testa, a Certified Public Accounting firm located in
Vineland, New Jersey, since 1967. Mr. Romano also serves as a director of U.S.
Wats, Inc., a telecommunications company.
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Raymond T. Brown has been President and Chief Operating Office of Camanco
Communications since May, 1999 and a member of its Board of Directors since
November, 1998. Prior to joining Camanco Communications, Mr. Brown served in a
number of senior management roles with PSE&G's nuclear power generation
facility in Salem, New Jersey from March, 1994 to January, 1998, including
positions as Outage Shift Manager, member of the Management Oversight Group and
Manager of Strategic Planning.
Raymond J. Romano has been Vice President of Finance and Chief Financial
Officer of Camanco Communications since May, 1999. Prior to joining Camanco
Communications, Mr. Romano served from 1990 to 1999 as Vice President of
Operations of Lodging Concepts, Inc., a hotel amenity distributor. Mr. Romano
currently serves as Chairman of the Board of Transpirator Technologies, Inc., a
medical device company.
Wallace Rogers, Jr. has been Chief Technical Officer of Camanco
Communications since January, 1999. Prior to joining Camanco Communications,
Mr. Rogers served as President of Xpress Electronic Services, Inc., a Vineland,
New Jersey-based networking and integration company, from 1991 to 1998. Mr.
Rogers has also served as a member of the Board of Directors of three
additional technology-based companies, including Xpress Electronic Services,
Inc. (from 1998 to present), Express Web Services, Inc. (from 1997 to present),
and Delaware Valley Net Connect, an Internet service provider (from 1996 to
present).
Daniel P. Finley has served as Vice President, Business Development for
Camanco Communications since April, 1999. A 1993 graduate of the Wharton School
of Business' Executive MBA program, Mr. Finley's career includes a variety of
senior management roles within General Electric, including that of Vice
President of GE LogistiCom, a satellite and wireless data subsidiary of GE
Capital from June, 1996 to March, 1998. Most recently, he served as CFO and
VP/Business Development for American Digital Networks and the Telephone Company
of Central Florida from March, 1998 to March, 1999.
Barbara O'Gara joined Camanco Communications in June, 1999 as Vice
President of Sales and Hotel Alliances. Prior to joining Camanco
Communications, Ms. O'Gara spent a year operating her own company, "Amenity
Works," which provides brand name amenities to the high-end luxury hotel and
resort market. From 1996 to 1998, Ms. O'Gara served as a Marketing Consultant
for Bath & Body Works. From 1996 to 1998, she served as Vice President of Hotel
Marketing and Sales for Neutrogena Corporation.
Joseph C. Sandora has been Vice President, Strategic Partnerships for
Camanco Communications since March, 1999. Prior to assuming his current role,
Mr. Sandora served as Vice President of Sales and Corporate Sales Manager of
Dupli Envelope and Graphics of Syracuse, New York from July, 1997 to March,
1999. Prior to that, he worked as Sales Manager, Fine Papers, for ResourceNet
International, a division of International Paper Corporation, from April, 1996
to May, 1997. From July, 1982 to April, 1996, Mr. Sandora served as a Sales
Representative for Alling and Cory Paper Company.
Susan D. Schneider joined Camanco Communications in April, 1999 as Vice
President, Marketing. Previously, she served in the same capacity for Harrah's
Atlantic City, the flagship property for the nation's largest casino
entertainment company, from 1993 to 1999.
Charles G. Parker has been Vice President, Local Alliances for Camanco
Communications since June, 1999. Prior to joining Camanco Communications,
Parker served as Manager, Marketing & Sales for Allegheny Plastics, from
October, 1994 to May, 1999.
Yuriy R. Porytko has served as Vice President of Operations for Camanco
Communications since June, 1999. From October, 1998 to June, 1999, Mr. Porytko
worked in Business Development for Network Visions, Inc., a communications
transport integration company. Mr. Porytko was Regional Director with
Metromedia International Telecommunications, Inc. from November, 1997 to
October 1998. From January, 1996 to November, 1997, Mr. Porytko served as
President and Chief Executive Officer of Suburban Connect, a paging and
wireless messaging company. From May, 1993 to January, 1996, Mr. Porytko was
first General Manager, then Vice President, of Beyond Beepers Delaware Valley,
Inc., a paging and telecommunications reseller.
Alex P. Furda has been has been Vice President of Travel Services for
Camanco Communications since June, 1999. From September 1998 to June 1999. Mr.
Furda consulted for a variety of on-line travel companies. Mr. Furda was Vice
President of Ultramac Travel Management from March 1997 to September 1998. From
July 1993 to March 1997 Mr. Furda served as Vice President and General Manager
of Travel One.
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Louis E. Brigante has been Vice President, Vendor Relations since August,
1999. Prior to joining Camanco Communications, Mr. Brigante served as District
Sales Vice President of the Middle Market Group at the U.S. Fleet Leasing
Division of Associates First Capital Corporation from January 1993 to July
1999. Mr. Brigante also served as East Coast Regional Manager for GE Capital
Corporation from January 1987 to December 1992.
James M. Rossi and Alisa A. Rossi are married. There are no other family
relationships among the directors and executive officers of Camanco
Communications.
Members of the board of directors of Camanco Communications have one year
terms. Officers are appointed by the board of directors and serve at the
pleasure of the Board.
Executive Compensation
The following table sets forth certain information with respect to
compensation paid by Camanco Communications for the years ended September 30,
1999 and September 30, 1998 and for the period from October 7, 1996 (date of
inception) to September 30, 1997 to Camanco Communications' chief executive
officer, James M. Rossi:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------- All Other
Name and Principal Position Year Salary Bonus Compensation
- ----------------------------- ------ --------------- ------- -------------
<S> <C> <C> <C> <C>
James M. Rossi, CEO ......... 1999 $ 87,500.00 -- --
1998 -0- -0- -0-
1997 -0- -0- -0-
</TABLE>
In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted from the table because
the aggregate amount of such perquisites and other personal benefits
constitutes less than the lesser of (a) $50,000, or (b) 10% of the total of
annual salary bonuses for the officer for such year.
No stock options have been granted to Mr. Rossi by Camanco Communications.
Certain Transactions
James M. and Alisa A. Rossi co-founded Camanco Communications in October,
1996. At the time of incorporation, they were issued 1,000 shares of Camanco
Communications common stock for an initial capital contribution of $250. In
October, 1998, James M. and Alisa A. Rossi were issued an additional 3,284.4
shares of Camanco Communications common stock, as founder's stock, for no
additional consideration.
In December, 1998, JMR Marketing Corporation was issued 250 shares of
Camanco Communications common stock to satisfy a $98,349 obligation owed by
Camanco Communications to JMR Marketing Corporation. This obligation
represented amounts owed by Camanco Communications to JMR Marketing Corporation
for office space, telephone and computer equipment, and other office supplies
furnished by JMR Marketing Corporation to Camanco Communications, and
reimbursement of certain other business-related expenses paid by JMR Marketing
Corporation on behalf of Camanco Communications. James M. and Alisa A. Rossi
own 60% of the outstanding capital stock of JMR Marketing Corporation.
CAMANCO COMMUNICATIONS COMMON STOCK
General
Camanco Communications has authorized capital stock consisting of 10,000
shares of common stock, no par value per share. As of the date of this joint
proxy statement/prospectus, 5,950 shares of Camanco Communications common stock
are issued and outstanding.
The following is a description of the material terms of the Camanco
Communications common stock. The rights of the holders of shares of Camanco
Communications common stock are established by Camanco Communications'
certificate of incorporation, Camanco Communications' by-laws and New Jersey
law. The following statements do not purport to be complete or give full effect
to statutory or common law, and are subject in all respects to the applicable
provisions of the Camanco Communications' certificate of incorporation, Camanco
Communications' by-laws and New Jersey law.
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The holders of Camanco Communications common stock have no preemptive or
subscription rights in later offerings of Camanco Communications common stock
and are entitled to share ratably (i) in such dividends as may be declared by
the board of directors out of funds legally available for such purpose, and
(ii) upon liquidation, in all assets of Camanco Communications remaining after
payment in full of all debts and obligations of Camanco Communications and any
preferences granted in the future to any preferred stock. Camanco
Communications has not paid, prior to the date hereof, any dividends on the
Camanco Communications common stock.
Holders of Camanco Communications common stock are entitled to one vote
for each share held and have no cumulative voting rights. Accordingly, the
holders of more than 50% of the issued and outstanding shares of Camanco
Communications common stock entitled to vote for the election of directors can
elect all the directors if they choose to do so. All shares of Camanco
Communications common stock now outstanding, are fully paid and nonassessable.
The board of directors of Camanco Communications is authorized to issue
additional shares of Camanco Communications common stock within the limits
authorized by Camanco Communications' certificate of incorporation without
shareholder action.
Shares Available For Future Sale
Camanco Communications currently has 5,950 shares of common stock
outstanding (up to 6,450 shares if all the stock options currently outstanding
under the Camanco Communications 1999 Stock Option Plan are exercised). Of
these shares, 1,000 shares owned by James M. Rossi and Alisa A. Rossi are
freely tradeable without restriction or further registration under the
Securities Act of 1933, subject to compliance with the limitations imposed by
Rule 144 adopted under the Securities Act of 1933 (since both James M. Rossi
and Alisa A. Rossi are affiliates of Camanco Communications).
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
Camanco Communications (or persons whose shares are required to be added to
those sold by an affiliate of Camanco Communications), who has owned restricted
shares of common stock beneficially for at least one year is entitled to sell
within any three-month period, a number of shares that does not exceed the
greater of;
(a) 1% of the total number of outstanding shares of the same class
(approximately 59.5 shares, assuming only the existing shares of
Camanco Communications are outstanding); or
(b) the average weekly trading volume of Camanco Communications' common
stock on all exchanges and/or reported through the automated
quotation system of a registered securities association during the
four calendar weeks preceding the date on which notice of the sale is
filed with the SEC.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of public information
about Camanco Communications. A person who has not been an affiliate of Camanco
Communications for at least the three months immediately preceding the sale and
who has beneficially owned the shares of Camanco Communications common stock
for at least two years is entitled to sell such shares under Rule 144 without
regard to any of the limitations described above.
PRINCIPAL STOCKHOLDERS OF CAMANCO COMMUNICATIONS
The following table provides information regarding the beneficial
ownership of Camanco Communications capital stock as of November 10, 1999 by:
o each person who is known by Camanco Communications to own beneficially
5% or more of any class of Camanco Communications' capital stock;
o each of Camanco Communications' directors;
o Camanco Communications' chief executive officer; and
o all of Camanco Communications' directors and executive officers as a
group:
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Shares Beneficially Owned
-------------------------
Name of Beneficial Owner No. Percent
------------------------ ------- ------------
James M. Rossi ................................ 2,755 46.3%
Alisa A. Rossi ................................ 2,755 46.3%
Monty S. August ............................... 1,400 23.5%
Raymond T. Brown .............................. 55.3 0.9%
Domenic S. Romano ............................. 30 0.5%
Raymond J. Romano ............................. 17.5 0.3%
Wallace Rogers, Jr. ........................... 37.5 0.6%
Susan D. Schneider ............................ 10 0.2%
Louis E. Brigante ............................. 46.5 0.8%
All directors and executive officers as a group
(11 persons) ................................ 4,001.8 67.3%
------- ----
The address for all beneficial owners is c/o Camanco Communications, Inc.,
1100 Coombs Road, Millville, New Jersey 08332.
The shares owned by James M. Rossi and Alisa A. Rossi include:
(a) 2,100 shares of Camanco Communications common stock which James M.
Rossi and Alisa A. Rossi own as joint tenants,
(b) 100 shares of Camanco Communications common stock owned by their
minor children,
(c) 205 shares of Camanco Communications common stock owned by Camanco,
Inc., all of the outstanding stock of which is owned by James M. and
Alisa A. Rossi,
(d) 100 shares of Camanco Communications common stock owned by Cam-Comm,
Inc., 38% of the outstanding stock of which is owned by James M. and
Alisa A. Rossi, and
(e) 250 shares of Camanco Communications common stock owned by JMR
Marketing Corporation, 60% of the outstanding stock of which is owned
by James M. and Alisa A. Rossi.
The shares owned by Monty S. August include:
(a) 100 shares of Camanco Communications common stock owned by Cam-Comm,
Inc., 19% of the outstanding stock of which is owned by Patrixbourne,
Inc. (all of the outstanding stock of which is owned by Mr. August),
and
(b) 250 shares of Camanco Communications common stock owned by JMR
Marketing Corporation, 30% of the outstanding stock of which is owned
by Patrixbourne, Inc.
The shares reported as being owned by all the directors and executive
officers of Camanco Communications, as a group, include:
(a) 15 shares of Camanco Communications common stock owned by Mr.
Romano's wife (as to which he disclaims beneficial ownership), and
(b) 2.5 shares of Camanco Communications common stock owned by SR&L
Partners, of which Mr. Romano owns one-third of the outstanding
partnership interests.
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COMPARISON OF STOCKHOLDERS RIGHTS
The rights of Thermaltec stockholders are governed by Thermaltec's
certificate of incorporation, by-laws and the Delaware General Corporation Law.
The rights of Camanco Communications stockholders are governed by Camanco
Communications' certificate of incorporation, by-laws and the New Jersey
Business Corporation Act. After the date the merger is completed, the rights of
Camanco Communications stockholders who become Thermaltec stockholders will be
governed by Thermaltec's certificate of incorporation, by-laws and the Delaware
General Corporation Law.
The following is a summary of the material differences between the rights
of Thermaltec stockholders and the rights of Camanco Communications
stockholders.
Comparison of the Delaware General Corporation Law and the New Jersey Business
Corporation Act
Appraisal rights in merger or consolidation. Under New Jersey law, unless
the certificate of incorporation otherwise provides, a dissenting shareholder
of a New Jersey corporation which is a party to a consolidation, or which is
not the surviving corporation in a merger, or which is the surviving
corporation in a merger requiring shareholder approval, has appraisal rights
with respect to any shares other than:
(1) shares listed on a national securities exchange or held of record by
not less than 1,000 holders, and
(2) in exchange for which, pursuant to the plan of merger of
consolidation, the shareholder will receive cash and/or securities
which will be listed on a national securities exchange or held of
record by not less than 1,000 holders. The Camanco Communications
Certificate of Incorporation does not modify these statutory appraisal
rights.
Under Delaware law, shareholders of a Delaware corporation have appraisal
rights in a merger or consolidation, except for certain mergers and
consolidations not requiring any vote by shareholders of the corporation, with
respect to any shares other than:
(1) shares listed on a national securities exchange, or
(2) held of record by more than 2,000 holders. However, even with respect
to shares so listed or held, appraisal rights exist if, pursuant to
the plan of merger, the shareholder is to receive, in exchange for his
shares, anything other than stock of the surviving corporation listed
on a national securities exchange or held of record by more than 2,000
holders or cash in lieu of fractional shares.
Appraisal rights on disposition of assets. Under New Jersey law, a
dissenting shareholder in a New Jersey corporation has appraisal rights in the
case of any sale, lease, exchange or other disposition of substantially all of
the assets of the corporation not in the usual or regular course of business as
conducted by the corporation, except with respect to:
(1) shares listed on a national securities exchange or held of record by
not less than 1,000 holders,
(2) a transaction pursuant to a plan of dissolution of the corporation
which provides for the distribution of substantially all of its net
assets to shareholders according to their interests within one year,
where such transaction is wholly for cash and/or securities which will
be listed on a national securities exchange or held of record by not
less than 1,000 holders, or
(3) a sale pursuant to court order.
Delaware law does not provide for appraisal rights in connection with a
disposition of assets.
Vote required to authorize certain changes. In general, under New Jersey
law, in the case of corporations organized after 1969 (such as Camanco
Communications), a disposition of all or substantially all of the assets other
than in the regular course of business, a charter amendment or a merger or
consolidation must be authorized by the affirmative vote of a majority of the
votes cast, and by such vote of each class entitled to vote as a class, with
respect to any such matter.
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In general, under Delaware law, a sale, lease or exchange of all or
substantially all of the assets, a charter amendment or merger or consolidation
must be authorized by the affirmative vote of a majority of the outstanding
shares entitled to vote thereon.
Class voting on merger or consolidation. Under New Jersey law, any class
or series of shares shall be entitled to vote as a class if the plan of merger
or consolidation contains any provision which, if contained in a proposed
charter amendment, would entitle the class or series to vote as a class on the
amendment.
Delaware law does not provide for a class vote on a plan of merger or
consolidation.
Source of dividends. Under New Jersey law, dividends may not be paid if,
after giving effect to the dividend, either (1) the corporation would be unable
to pay its debts as they become due in the ordinary course of its business, or
(2) the corporation's total assets would be less than its total liabilities.
Under Delaware law, dividends may be paid out of surplus or, in the
absence thereof, out of the net profits of the current and/or next preceding
fiscal year, except where capital represented by stock enjoying a preference
upon the distribution of assets thereby would be impaired.
Power to adopt, amend or repeal by-laws. Under New Jersey law, the power
to adopt, amend and repeal by-laws of a corporation is vested in the board of
directors unless such power is reserved to the stockholders in the certificate
of incorporation. However, by-laws made by the board of directors may be
amended and/or repealed and new by-laws adopted by the stockholders. The
stockholders may prescribe in such by-laws that the board may not amend or
repeal by-laws approved by stockholders. The Camanco Communications by-laws may
be amended by the board of directors or by the stockholders.
Under Delaware law, the power to adopt, amend or repeal by-laws of a
corporation is vested in the corporation's stockholders, although the
corporation's certificate of incorporation may also vest such power in the
corporation's board of directors. The Thermaltec certificate of incorporation
provides that the Thermaltec by-laws may be adopted, amended or repealed by the
Thermaltec board of directors.
Action by stockholders by written consent in lieu of a meeting. Under New
Jersey law, except as otherwise provided in a corporation's certificate of
incorporation, any action (other than the election of directors) required or
permitted to be taken at a meeting of the corporation's stockholders, may be
taken without a meeting upon the written consent of stockholders who would have
been entitled to cast the minimum number of votes which would have been
necessary to take such action at a meeting at which all shares entitled to vote
thereon were present and voted (except that the election of directors requires
the unanimous written consent of all stockholders). The corporation must give
all stockholders advance notice of such proposed action if the proposed action
involves a merger, consolidation or sale of substantially all of the assets of
a corporation.
Under Delaware law, except as otherwise provided in a corporation's
certificate of incorporation, any action required or permitted to be taken at a
meeting of a corporation's stockholders may be taken without a meeting if a
written consent, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
have been necessary to take such action at a meeting at which all stockholders
entitled to vote thereon were present and voted.
Removal of directors. Under New Jersey law, one or more or all directors
of a corporation may be removed for cause or, unless otherwise provided in the
certificate of incorporation, without cause by stockholders by the affirmative
vote of a majority of the votes cast by the holders of shares entitled to vote
thereon.
The provisions of Delaware law are similar to New Jersey law in this
respect, except with respect to corporations with classified boards of
directors. If the board of directors is classified, a director may be removed
only for cause unless the corporation's certificate of incorporation provides
otherwise.
Special meetings of stockholders. Under New Jersey law, holders of not
less than 10% of a corporation's voting stock may apply to the New Jersey
Superior Court for an order directing a special meeting of stockholders to be
held. The Camanco Communications by-laws provide that a special meeting of
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stockholders for any purpose or purposes may be called by the board of
directors, Chairman of the Board or President, and shall be called by the
Chairman of the Board, President or Secretary at the request in writing by
stockholders owning not less than a majority of the entire capital stock of the
corporation issued and outstanding and entitled to vote.
Under Delaware law, special meetings of stockholders may be called by the
board of directors or by such person or persons as may be authorized by a
corporation's certificate of incorporation or by-laws. The provisions in the
Thermaltec by-laws relating to special meetings of the stockholders allow
special meetings to be called at anytime by the President, or the board of
directors, or stockholders entitled to cast at least one-fifth of the votes
which all stockholders are entitled to cast at the particular meeting being
called.
De facto merger. Under New Jersey law, stockholders have the same voting
and dissent and appraisal rights as if they were stockholders of a surviving
corporation in a merger, if (1) voting shares outstanding or issuable after the
transaction exceed by more than 40% voting shares outstanding before the
transaction, or (2) shares entitled to participate without limitation in
distributions outstanding or issuable after the transaction exceed by more than
40% such shares outstanding before the transaction.
Delaware law does not contain a comparable provision.
Guaranty. Under New Jersey law, a corporation may give a guaranty not in
furtherance of its direct or indirect business interests only when authorized
at a meeting of stockholders by the affirmative vote of all of the votes cast
by the holders of each class and series of shares entitled to vote thereon. If
authorized by such a vote, the guaranty may be secured by the corporation's
property.
Under Delaware law, a Delaware corporation may guaranty obligations of a
third party, whether or not in furtherance of a specific corporate purpose,
without stockholder approval.
Shareholders' derivative actions. New Jersey law contains certain
provisions which have the effect of discouraging derivative actions.
Specifically, New Jersey law authorizes the court to award reasonable expenses
and attorneys' fees to the successful defendants in a derivative action upon a
finding that the action was brought without cause. In addition, the corporation
may require the plaintiff or plaintiffs to give security for the reasonable
expenses, including attorneys' fees, that may be incurred by the corporation or
by other named defendants for which the corporation may become legally liable
if the plaintiff or plaintiffs are holders of less than 5% of the outstanding
shares of any class or series of such corporation (or voting trust certificates
therefor) unless the shares or trust certificates so held have a market value
in excess of $25,000.
Delaware law does not contain comparable provisions.
Proxies. Under New Jersey law, a proxy is valid for no longer than eleven
months unless a longer period is specified. In addition, a proxy is revocable
at will unless coupled with an interest. The death or incapacity of a
stockholder does not revoke a proxy and it will continue in force until
revocation by the stockholder's personal representative.
Under Delaware law, a proxy is not valid beyond three years from its date
unless it so provides for a longer period. In addition, for a proxy to be
irrevocable it must so state and be coupled with an interest in the stock
itself or in the corporation generally. In the case of a revocable proxy, death
or incapacity will revoke the proxy.
Inspection of books and records. Under New Jersey law, a stockholder of
record for at least six months immediately preceding his demand, or any holder
(or a person authorized on behalf of such holder) of at least 5% of the
outstanding shares of any class or series, shall have the right to examine for
any proper purpose the corporation's books and records.
Under Delaware law, any stockholder upon written demand under oath stating
the purpose thereof has the right during usual business hours to inspect for
any proper purpose the stock ledger, list of shareholders and other books and
records of the corporation, and to make copies or abstracts therefrom.
Anti-takeover statute. New Jersey has adopted a type of anti-takeover
statute known as a "business combination" statute. Subject to numerous
qualifications and exceptions, the statute prohibits an interested
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stockholder of a corporation from effecting a business combination with the
corporation for a period of five years unless the corporation's board approved
the transaction prior to the stockholder becoming an interested stockholder. An
"interested stockholder" is defined to include any beneficial owner of more
than 10% of the voting power of the outstanding voting stock of the corporation
and any affiliate of the corporation who within the prior five year period has
at any time owned 10% or more of the voting power. The term "business
combination" is defined broadly to include, without limitation, a merger of the
corporation with the interested stockholder or any corporation which after such
merger would be an affiliate of the interested stockholder, and any transfer of
10% or more of the corporation's assets to the interested stockholder or
affiliate thereof. The effect of the statue is to protect minority stockholders
from mergers in which they will be "frozen out" after the merger, by
prohibiting transactions in which an acquirer could favor itself at the expense
of minority stockholders. The New Jersey statute, however, does not apply to
companies which do not have either their principal executive offices or
significant business operations located in New Jersey.
Delaware has adopted a business combination type of anti-takeover statute
which operates in a manner similar to the New Jersey statute. Although there
are numerous differences between the Delaware statute and the New Jersey
statute, the most significant include the following:
(1) under the Delaware statute, the moratorium imposed on a business
combination with an interested stockholder is three years, as opposed
to five under the New Jersey statute;
(2) the Delaware statute defines "interested stockholder" using a 15%
ownership threshold rather than the 10% threshold under the New Jersey
statute;
(3) the Delaware statute permits an interested stockholder to avoid the
moratorium by acquiring 85% of the corporation's voting power in the
same transaction in which that stockholder becomes an interested
stockholder (the New Jersey statute does not contain a comparable
provision); and
(4) the Delaware statute applies to Delaware corporations regardless of
the locations of their offices and business operations (the law would
therefore apply to Thermaltec).
Comparison of Certificates of Incorporation and By-Laws of Thermaltec and
Camanco Communications
Authorized shares of capital stock. The Camanco Communications certificate
of incorporation, as amended, authorizes the issuance of 10,000 shares of
Camanco Communications common stock, 5,950 shares of which were issued and
outstanding as of November 10, 1999.
The Thermaltec certificate of incorporation, as amended, authorizes the
issuance of 100,000,000 shares of Thermaltec common stock, 2,578,118 shares of
which were issued and outstanding as of November 10, 1999.
Meetings. Pursuant to the Camanco Communications by-laws, annual meetings
of Camanco Communications stockholders shall be held on the second Tuesday in
October if not a legal holiday, or at such other date and at such other time as
the Camanco Communications board may determine. At each annual meeting, the
Camanco Communications stockholders entitled to vote shall elect a board of
directors, and they may transact such other corporate business as may properly
be brought before the meeting. Special meetings of Camanco Communications
stockholders may be called for any purpose by the Camanco Communications board,
the Chairman of the Board or the President. Written notice of any meeting of
Camanco Communications stockholders shall be mailed not less than ten nor more
than 60 days before such meeting to each Camanco Communications stockholder
entitled to vote at the meeting.
Special meetings of the Camanco Communications board may be called by the
President on two days' notice to each director, or such shorter period of time
before the meeting as will be sufficient for the convenient assembly of the
directors so notified. Special meeting can be called by any director in like
manner and notice on the written request of two or more directors.
Pursuant to the Thermaltec by-laws, annual meetings of Thermaltec
stockholders for the election of directors and for such other business as may
be stated in the notice of the meeting shall be held at such date
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as the Thermaltec board shall determine and as set forth in the notice of the
meeting. At each annual meeting, the Thermaltec stockholders entitled to vote
shall elect a board of directors and they may transact such other corporation
business as shall be stated in the notice of the meeting. Special meetings of
Thermaltec stockholders may be called for any purpose by the President, the
board of directors or by stockholders entitled to cast at least one-fifth of
the votes which all stockholders are entitled to cast at the particular
meeting. Written notice shall be given to each Thermaltec stockholder entitled
to vote at the meeting not less than ten nor more than 60 days before the date
of the meeting.
Special meetings of the Thermaltec board may be called by the President or
the Secretary on the written request of a majority of the directors on at least
ten days' notice to each director.
Directors and officers. Pursuant to the Camanco Communications by-laws,
the Camanco Communications board may fix the number of directors, but such
number may not be less than one. The Camanco Communications board has currently
fixed the number of directors at five. The officers of Camanco Communications
shall be a Chairman of the Board and CEO, a President, a Secretary and a
Treasurer and there may be one or more Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers as the Camanco Communications
board may elect.
Pursuant to the Thermaltec by-laws, the number of directors comprising the
Thermaltec board shall not be less than one nor more than seven persons. The
Thermaltec board has currently fixed the number of directors at one. The
officers of Thermaltec shall be a President, a Treasurer and a Secretary. In
addition, the Thermaltec board may elect a Chairman, one or more Vice
Presidents and such Assistant Secretaries and Assistant Treasurers as they may
deem proper.
LEGAL MATTERS
The validity of the shares of Thermaltec common stock offered hereby will
be passed upon for Thermaltec by Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP.
Edward A. Vrooman, a principal of such firm, is the owner of 20,000
restricted shares of Thermaltec common stock which he received in exchange for
legal services rendered on behalf of Thermaltec prior to March, 1999.
EXPERTS
The financial statements of Camanco Communications, Inc., which was known
as Solar Communications Group, Inc. at the time the audit was completed, have
been audited by Withum, Smith & Brown, independent accountants as set forth in
their report on the financial statements appearing in this joint proxy
statement/prospectus. The report contains an explanatory paragraph describing
conditions that raise doubt about Camanco Communications, Inc.'s ability to
continue as a going concern as described in Note 2 to the financial statements.
The financial statements are included in reliance upon the report of Withum,
Smith & Brown on the authority of that firm as experts in accounting and
auditing.
The financial statements of Thermaltec International, Corp. and
Subsidiaries have been audited by Capraro, Centofranchi, Kramer & Co., P.C.,
independent accountants, as set forth in their report on the financial
statements appearing in this joint proxy statement/prospectus. The financial
statements are included in reliance upon the report of Capraro, Centofranchi,
Kramer & Co., P.C. on the authority of that firm as experts in accounting and
auditing.
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INDEX TO FINANCIAL STATEMENTS
AND PRO FORMA FINANCIAL INFORMATION
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-----
<S> <C>
Financial Statements of Thermaltec International, Corp. and Subsidiaries
Independent Auditors' Report ............................................................. F-2
Consolidated Balance Sheets, September 30, 1997 and 1998 and June 30, 1999 (unaudited) ... F-3
Consolidated Statements of Operations and Comprehensive Income For the Years Ended
September 30, 1997 and 1998 and for the Nine Month Periods ended June 30, 1998 and 1999
(unaudited) ............................................................................. F-4
Consolidated Statements of Cash Flows For the Years Ended September 30, 1997 and 1998 and
for the Nine Month Periods ended June 30, 1998 and 1999 (unaudited) ..................... F-5
Consolidated Statements of Changes in Stockholders' Equity (Deficit) For the Period from
October
1, 1997 to September 30, 1998 and for the Nine Month Period ended June 30, 1999 F-6
(unaudited)
Notes to Consolidated Financial Statements ............................................... F-7
Financial Statements of Solar Communications Group, Inc. (A Development Stage Enterprise)
Independent Auditors' Report ............................................................. F-14
Balance Sheets, September 30, 1997 and 1998 and June 30, 1999 (unaudited) ................ F-15
Statements of Operations For the Period October 7, 1996 (Date of Inception) to September
30,
1997, for the Year Ended September 30, 1998, and for the Nine Month Periods ended June
30,
1998 and 1999 (unaudited) and Cumulative from Inception to June 30, 1999 (unaudited) .... F-16
Statements of Changes in Stockholders' Equity (Deficit) For the Period October 7, 1996
(Date of
Inception) to September 30, 1998 and for the Nine Month Period ended June 30, 1999
(unaudited) ............................................................................. F-17
Statements of Cash Flows For the Period October 7, 1996 (Date of Inception) to September
30,
1997, for the Year Ended September 30, 1998, and for the Nine Month Periods ended June
30,
1998 and 1999 (unaudited) and Cumulative from Inception to June 30, 1999 (unaudited) .... F-18
Notes to Financial Statements ............................................................ F-19
Unaudited Pro Forma Condensed Consolidated Financial Information ......................... F-26
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999 ............. F-27
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Year Ended
September 30, 1998 ...................................................................... F-28
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Month
Period ended June 30, 1998 .............................................................. F-29
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Month
Period ended June 30, 1999 .............................................................. F-30
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements ................. F-31
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
Thermaltec International Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Thermaltec
International Corporation and Subsidiaries as of September 30, 1998 and 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the periods then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Thermaltec
International Corporation and Subsidiaries as of September 30, 1998 and 1997,
and the results of its operations and cash flows for the periods then ended, in
conformity with generally accepted accounting principles.
/s/ Capraro, Centofranchi, Kramer & Co. P.C.
South Huntington, New York
February 12, 1999
F-2
<PAGE>
Thermaltec International Corp. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
as of as of as of
9/30/97 9/30/98 6/30/99
------------- --------------- ---------------
<S> <C> <C> <C>
Assets
- ------
Current Assets
Cash and Cash Equivalents ............................. $ 4,792 $ 5,604 $ 60,533
Trade Accounts Receivable ............................. 71,869 61,496 81,039
Inventory ............................................. 30,182 65,088 94,576
Prepaid and Other Current Assets ...................... 7,686 9,292 5,612
---------- ------------ ------------
Total Current Assets .................................. 114,529 141,480 241,760
---------- ------------ ------------
Fixed Assets
Machinery and Equipment ............................... 176,121 145,523 137,844
Leasehold Improvements ................................ 51,104 40,120 40,120
---------- ------------ ------------
Gross Fixed Assets ................................... 227,225 185,643 177,964
Less: Accumulated Depreciation ........................ (46,284) (65,926) (76,885)
---------- ------------ ------------
Net Fixed Assets ...................................... 180,941 119,717 101,079
---------- ------------ ------------
Other Assets
Organization Costs, Net of Amortization ............... 12,193 7,889 --
Other Assets .......................................... 339 3,120 3,449
---------- ------------ ------------
Total Other Assets .................................... 12,532 11,009 3,449
---------- ------------ ------------
Total Assets ............................................. $ 308,002 $ 272,206 $ 346,288
========== ============ ============
Liabilities and Stockholders' Equity (Deficit)
- ----------------------------------------------
Current Liabilities
Notes Payable ......................................... $ 42,114 $ 44,495 $ 39,617
Vendor Accounts Payable ............................... 68,067 79,958 106,496
Other Liabilities ..................................... 71,513 89,309 144,094
Shareholder Loan ...................................... 103,667 105,642 182,164
---------- ------------ ------------
Total Current Liabilities ............................... 285,361 319,404 472,371
---------- ------------ ------------
Long-Term Liabilities
Long-Term Debt Less Current Maturities ................ 40,745 20,764 25,636
---------- ------------ ------------
Total Liabilities ....................................... 326,106 340,168 498,007
---------- ------------ ------------
Common Stock (Authorized 10,000,000 shares,
$.0001 Par Value; issued & outstanding:
2,578,118) ............................................ 205 239 258
Additional Paid-In Capital .............................. 787,796 1,122,762 1,308,510
Retained Earnings (Deficit) ............................. (814,695) (1,217,379) (1,502,981)
Accumulated Other Comprehensive Income:
Foreign Currency Translation Adjustment ................ 8,590 26,416 42,494
---------- ------------ ------------
Total Stockholders' Equity (Deficit) .................... (18,104) (67,962) (151,719)
---------- ------------ ------------
Total Liabilities and Stockholders' Equity (Deficit) ..... $ 308,002 $ 272,206 $ 346,288
========== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
Thermaltec International Corp. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
For the For the For the For the
year ending year ending 9 months ending 9 months ending
9/30/97 9/30/98 6/30/98 6/30/99
------------- ------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Sales ................................................. $ 442,264 $ 275,846 $ 247,463 $ 204,950
Cost of Sales ......................................... 250,176 154,511 142,650 145,170
---------- ---------- ---------- ----------
Gross Profit .......................................... 192,088 121,335 104,813 59,780
---------- ---------- ---------- ----------
General and Administrative Expenses ................... 451,807 524,019 444,145 345,382
---------- ---------- ---------- ----------
Net Loss .............................................. (259,719) (402,684) (339,332) (285,602)
---------- ---------- ---------- ----------
Other Comprehensive Income:
Foreign Currency translation adjustments ............. 8,337 17,826 13,036 16,078
---------- ---------- ---------- ----------
Total Comprehensive Income (Loss) ..................... $ (251,382) $ (384,858) $ (326,296) $ (269,524)
========== ========== ========== ==========
Basic and Diluted Loss per Share ...................... $ (0.13) $ (0.19) $ (0.16) $ (0.12)
========== ========== ========== ==========
Weighted Average Number of Shares Outstanding ......... 2,046,750 2,105,489 2,073,251 2,455,791
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
Thermaltec International, Corp. and Subsidiaries
Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
For the year For the year For the nine For the nine
ending ending months ended months ended
9/30/97 9/30/98 6/30/98 6/30/99
-------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss ...................................... $ (259,719) $ (402,684) $ (339,332) $(285,602)
---------- ---------- ---------- ---------
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation & Amortization ................. 30,665 34,901 22,666 23,152
Common Stock Issued for Services ............ 16,001 58,000 58,000 77,567
Loss on Disposal of Assets .................. -- 19,680 19,680 3,375
(Increase) decrease in:
Receivables ................................ (19,183) 10,373 10,571 (19,543)
Inventories ................................ 23,829 (5,416) 223 (29,488)
Prepaid and other current assets ........... (7,686) (1,606) (4,833) 3,680
Other Assets ............................... (25) (2,781) 11,986 (329)
Increase (decrease) in:
Accounts Payable ............................ (9,272) 11,891 51,716 26,538
Accrued Expenses and Other Current
Liabilities ................................ 9,475 58,409 113,127 54,785
---------- ---------- ---------- ---------
Total Adjustments ........................ 43,804 183,451 283,136 139,737
---------- ---------- ---------- ---------
Net cash used in operating
activities .............................. (215,915) (219,233) (56,196) (145,865)
---------- ---------- ---------- ---------
Cash Flows from Investing Activities:
Purchases of Fixed Assets & Leasehold
Improvements ................................ (125,502) (18,543) -- --
---------- ---------- ---------- ---------
Cash Flows from Financing Activities:
Proceeds from sale of shares net of
offering costs .............................. -- 277,000 62,301 78,200
Proceeds from Issuance of Notes
Payable ..................................... 15,953 -- -- --
Repayments of Notes Payable ................... -- (17,600) (15,600) (6)
Net Proceeds (Repayments) of
Shareholder Loans ........................... 103,667 (38,638) (2,439) 106,522
---------- ---------- ---------- -----------
Net cash provided by financing
activities .............................. 119,620 220,762 44,262 184,716
---------- ---------- ---------- -----------
Effect of exchange rate on cash ................ 8,337 17,826 13,036 16,078
---------- ---------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents ................................... (213,460) 812 1,102 54,929
Cash & Cash Equivalents, Beginning of
Period ........................................ 218,252 4,792 4,792 5,604
---------- ---------- ---------- -----------
Cash & Cash Equivalents, End of Period ......... $ 4,792 $ 5,604 $ 5,894 $ 60,533
========== ========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
Thermaltec International Corp. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For the Years Ended September 30, 1997 and 1998 and
the Nine Months Ended June 30, 1999
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------- Additional Retained Other
Number of Paid-In Earnings Comprehensive
Shares Amount Capital (Deficit) Income Total
----------- -------- ------------ ---------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance ................... 2,034,750 $203 $ 771,797 $ (554,976) $ 252 $ 217,276
Net Loss for the
year ended 9/30/1997 ............. (259,719) (259,719)
Stock issued for services during
the year ended 9/30/97 ........... 16,001 2 15,999 16,001
Other Comprehensive Income:
Foreign Currency Translation
Adjustment ....................... 8,338 8,338
------- ----------
Balance September 30, 1997 .......... 2,050,751 205 787,796 (814,695) 8,590 (18,104)
Net Loss for the year ended
9/30/1998 ........................ (402,684) (402,684)
Stock sold during the year
ended 9/30/98 .................... 288,600 28 276,972 277,000
Stock issued for services .......... 58,000 6 57,994 58,000
Other Comprehensive Income:
Foreign Currency Translation
Adjustment ....................... 17,826 17,826
------- ----------
Balance September 30, 1998 .......... 2,397,351 239 1,122,762 (1,217,379) 26,416 (67,962)
--------- ---- ---------- ----------- ------- ----------
Unaudited:
Net Loss for the nine months
ended 6/30/99 .................... (285,602) (285,602)
Stock issued in lieu of cash
repayment of shareholder
loan during the nine months
ended 6/30/99 .................... 30,000 3 29,997 30,000
Warrants exercised during the
nine months ended 6/30/99 ........ 78,200 8 78,192 78,200
Stock issued for services .......... 72,567 8 77,559 77,567
Other Comprehensive Income:
Foreign Currency Translation
Adjustment ....................... 16,078 16,078
------- ----------
Balance June 30, 1999 .............. 2,578,118 $258 $1,308,510 ($ 1,502,981) $42,494 $ (151,719)
========= ==== ========== =========== ======= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
1. MERGER WITH CAMANCO COMMUNICATION GROUP, INC./DISCONTINUED OPERATIONS
On December 11, 1998 the Company entered into an agreement with Camanco
Communication Group, Inc. of Millville, New Jersey. Under the terms of this
agreement, the Company agreed to increase its number of authorized shares to
70,000,000. The Company would then acquire all of the outstanding shares of
Camanco in exchange for 59,500,000 of its shares, with the current shareholders
of the Company retaining their existing shares in the Company. The current
owners of Camanco would then become the majority shareholders of the Company;
this is a process that is sometimes referred to as a "reverse merger". The
consummation of the merger is subject to a number of conditions, including the
completion of customary due diligence, the receipt of all necessary
governmental, regulatory, shareholder and third party approvals as well as the
registration of the shares of the Company's common stock to be issued in
conjunction with the merger with the SEC and with all appropriate state
regulatory authorities.
On April 16, 1999, the Company declared its intention to transfer
substantially all of its assets and liabilities to a wholly-owned subsidiary,
Panama Industries Ltd. The Company effected the transfer on May 17, 1999 and
established May 28, 1999 as the record date for the transfer of the shares of
Panama Industries, via a spin-off, to the shareholders of the Company on a
one-for-one basis, equal to the number of shares of Thermaltec common stock
held, effective immediately before the merger. After the spin-off, Panama
Industries will continue to engage in the business of expanding its
metallurgical activities in Latin America and in acquiring existing
technologies and companies in North America and in Europe.
Panama Industries engages, and will after the spin-off continue to engage,
in the business of expanding its metallurgical activities in Latin America and
in acquiring existing technologies and companies in North America and in
Europe.
As of June 30, 1999, the Company's ability to operate as a "going concern"
for a substantial period
of time did not appear to be in substantial doubt. This conclusion was based
upon several factors,
specifically:
1. The increasing efficiency of production at Panama Industries' Costa
Rican facility, which was
moving toward break-even operations;
2. The likelihood of increased profitable work orders from the New York
State Energy Research and Development Authority; and
3. The announced willingness of Messrs. Mazzone and Klein to advance
additional funds to
Thermaltec aggregating in the hundreds of thousands of dollars;
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION/REPORTING
ENTITIES
ORGANIZATION REPORTING ENTITIES
The consolidated financial statements of Thermaltec International Corp.
and Subsidiaries (the "Company") include the following entities:
THERMALTEC INTERNATIONAL CORP.
Thermaltec International Corp. was incorporated in 1994 under the laws of
the state of Delaware. TTI was organized for the purpose of engaging in the
sale of thermal sprayed coatings to individual customers in the United States
and other countries. Thermaltec also serves as the parent company which acts as
a holding company for its subsidiaries and provides administrative support to
the operations of the Company.
F-7
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION/REPORTING
ENTITIES -- (Continued)
THERMALTEC DE COSTA RICA, S.A.
Thermaltec de Costa Rica, S.A. is a wholly-owned subsidiary located in San
Jose, Costa Rica. Thermaltec de Costa Rica began operations during fiscal 1995,
and provides thermal spray coatings to businesses and individuals throughout
Costa Rica. This entity will be spun off with Panama Industries.
METAL COATINGS, INC.
Metal Coatings, Inc. was a majority-owned subsidiary located in San Juan,
Puerto Rico. Metal Coatings began significant operations during fiscal 1997,
and provided thermal spray coatings to businesses and individuals throughout
Puerto Rico. On May 31, 1998 the operations of Metal Coatings ceased, and the
remaining assets and liabilities were assumed by Thermaltec International, the
parent corporation. No material expense was associated with the closure.
THERMALTEC DOMINICANA, S.A.
Thermaltec Dominicana, S.A. was a majority-owned subsidiary located in
Santo Domingo in the Dominican Republic. TDR began significant operations in
October 1996 and provided thermal spray coatings, as a market test, to
businesses and individuals in the Santo Domingo metropolitan area. In February
1998, the operations of TDR ceased and the assets and liabilities were assumed
by TTI.
PANAMA INDUSTRIES, LTD.
Panama Industries was incorporated in March 1998, but was not consolidated
into the group until May of 1999. This entity will be spun off with Thermaltec
de Costa Rica.
PRINCIPLES OF CONSOLIDATION
All material intercompany transactions have been eliminated in the
consolidated financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues from time-and-materials contracts are recorded as the work is
performed. Revenues from other construction contracts with terms greater than
one month are recognized on the percentage-of-completion method, measured by
the percentage of cost incurred to date to estimated total cost for each
contract. On short-term contracts with terms of less than one month, the
completed contract method is utilized as it approximates the
percentage-of-completion method. Funded research projects in which the Company
provides the same services that it offers for sale in the regular course of
business are recognized as revenue, at the time the services are provided.
F-8
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION/REPORTING
ENTITIES -- (Continued)
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, the Company includes cash
on deposit, money market funds and amounts held by brokers and funds held in
escrow in cash accounts to be cash equivalents.
ACCOUNTS RECEIVABLE
Accounts receivable have been adjusted for all known uncollectible
contracts; an allowance for doubtful contracts has not been provided, as the
amount is not considered material.
INVENTORIES
Inventories and prepaid supplies consist of various materials and supplies
utilized on construction contracts and are valued at the lower of cost
(first-in, first-out) or market.
PROPERTY, EQUIPMENT AND DEPRECIATION
Property and equipment is stated at cost. Major expenditures for property
and those which substantially increase useful lives are capitalized.
Maintenance, repairs, and minor renewals are expensed as incurred. When assets
are retired or otherwise disposed of, their costs and related accumulated
depreciation are removed from the accounts and resulting gains or losses are
included in income. Depreciation is provided by both straight-line and
accelerated methods over the estimated useful lives of the assets.
INTANGIBLE ASSETS
Organization Costs are being amortized on a straight-line basis over sixty
months.
EARNINGS (LOSS) PER SHARE
The Company has adopted SFAS No. 128, "Earnings per Share", which requires
presentation of basic earnings per share ("Basic EPS") and diluted earnings per
share ("Diluted EPS") by all publicly traded entities, as well as entities that
have made a filing or are in the process of filing with a regulatory agency in
preparation for the sale of securities in a public market.
Basic EPS is computed by dividing income or loss available to common
shareholders by the weighted average number of common shares outstanding during
the period. The computation of Diluted EPS gives effect to all dilutive
potential common shares during the period. The computation of Diluted EPS does
not assume conversion, exercise or contingent exercise of securities that would
have an antidilutive effect on earnings.
INCOME TAXES
The Company has adopted Financial Accounting Standards Board Statement No.
109, "Accounting for Income Taxes". The Company files a consolidated Federal
tax return, which includes all of the subsidiaries. Accordingly, Federal Income
taxes are provided on the taxable income of the consolidated group. State
income taxes are provided on a separate company basis, if and when taxable
income, after utilizing available carryforward losses, exceeds certain levels.
F-9
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION/REPORTING
ENTITIES -- (Continued)
DEFERRED INCOME TAXES
Deferred tax assets arise principally from net operating losses and
capital losses available for carryforward against future years' taxable income.
FOREIGN EXCHANGE
The Company and its subsidiaries treat the U.S. Dollar as their functional
currency. Accordingly, gains and losses resulting from the translation of
accounts designated in other than the functional currency are reflected in the
determination of net income and have been immaterial.
RECLASSIFICATIONS
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current-year financial statements.
INTERIM FINANCIAL INFORMATION
The financial information presented for the nine month periods ended June
30, 1998 and June 30, 1999 is unaudited but, in the opinion of management,
reflects all of the adjustments necessary for a fair presentation of such
financial statements. The results of operations for the nine month period ended
June 30, 1999 are not necessarily indicative of the operating results to be
expected for the year ended September 30, 1999.
REPORTING COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" for the nine months ended June 30, 1999;
all prior periods have been restated for purposes of comparison. This Statement
establishes standards for reporting and displaying comprehensive income and its
components in a full set of general-purpose financial statements. This
statement requires the classification of items of comprehensive income by their
nature in a financial statement and the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet.
3. SUPPLEMENTAL CASH FLOW INFORMATION
For the period Ended:
---------------------------------------
September 30
------------------------- June 30
1997 1998 1999
----------- ----------- -----------
Cash paid for:
Interest Expense ......... $ 10,070 $ 23,695 $ 22,564
Income taxes ............. $ 967 $ 959 --
During the nine month period ending June 30, 1999, the Company issued
30,000 shares of stock in lieu of cash repayment of a shareholder loan.
F-10
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
4. INVENTORY
SEPTEMBER 30
------------------------- June 30
1997 1998 1999
----------- ----------- ----------
Inventory consists of the following:
Raw Materials ..................... $ 30,182 $ 28,209 $ 46,804
Machinery held for Resale ......... -- 36,879 47,772
-------- -------- --------
Total Inventory ................ $ 30,182 $ 65,088 $ 94,576
======== ======== ========
5. PROPERTY AND EQUIPMENT
Major classes of property and equipment consist of the following:
<TABLE>
<CAPTION>
September 30
Estimated useful --------------------------- June 30
Life-years 1997 1998 1999
------------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Machinery, equipment and furniture ..................... 5-10 $ 176,121 $ 145,523 $ 137,844
Leasehold improvements ................................. 5-31.5 51,104 40,120 40,120
--------- --------- ---------
227,225 185,643 177,964
Less accumulated depreciation and amortization ......... 46,284 65,926 76,885
--------- --------- ---------
Net property and equipment ............................. $ 180,941 $ 119,717 $ 101,079
========= ========= =========
</TABLE>
Depreciation for the years ended September 30, 1998 and 1997 was $ 30,597
and $ 26,362, respectively: for the nine months ended June 30, 1999,
depreciation was $ 15,262.
6. LINE OF CREDIT
The Company has a line of credit with Fleet Bank for $ 25,000, payable on
demand. The line is secured by substantially all of the Company's assets.
7. DEBT
<TABLE>
<CAPTION>
September 30
LONG-TERM DEBT: ------------------------- June 30
1997 1998 1999
----------- ----------- ----------
<S> <C> <C> <C>
Various equipment notes with terms expiring
December, 1999 Through July, 2000. The loans
provide for monthly payments Of principal and
interest. Interest rates range from 15-18%. ......... $ 57,882 $ 40,282 $40,276
Less current maturities ........................... 17,137 19,518 14,640
-------- -------- -------
Long term debt .................................... $ 40,745 $ 20,764 $25,836
======== ======== =======
SHORT-TERM DEBT: .....................................
Current maturities of equipment notes ............. $ 17,137 $ 19,518 $14,640
Bank line of credit (Fleet Bank) .................. 24,977 24,977 24,977
-------- -------- -------
Short-term debt ................................... $ 42,114 $ 44,495 $39,617
======== ======== =======
</TABLE>
The Company has no obligation under any financial covenant pursuant to the
note payable or to the financing agreements.
8. SHAREHOLDER LOAN
This amount represents the total due to the majority shareholder of
$ 182,164, $ 105,642 and $ 103,667 as of September 30, 1999, 1998 and 1997,
respectively. This loan has no maturity and bears no interest.
F-11
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
9. SALES TO MAJOR CUSTOMERS
During 1998, one customer accounted for approximately 10% of the Company's
sales and 7% of accounts receivable. During 1997, one customer accounted for
approximately 32% of sales and 47% of the Company's accounts receivable
balance. During the nine months ended June 30, 1999, one customer accounted for
32% of sales.
10. COMMITMENTS AND CONTINGENCIES LEASES
Thermaltec de Costa Rica is currently obliged under a lease through
January 2000 for its office space and shop space in Costa Rica. The lease calls
for an annual rent of $ 12,960, due in monthly payments.
Thermaltec International was obliged under a lease for its office space in
West Babylon, NY, which expired July, 1998 for a minimum annual rental of
$ 13,200.
Total rental expense under cancellable and noncancellable operating leases
was $ 24,920 and $ 13,900 for the years ended September 30, 1998 and 1997,
respectively. For the nine months ended June 30, 1999, total rental expense was
$ 19,775.
11. COMMON STOCK
<TABLE>
<CAPTION>
September 30,
--------------------------- June 30,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Common stock is as follows:
Common stock, $.0001 par value, 10,000,000
shares authorized.
Shares issued and outstanding ............ 2,050,751 2,397,351 2,578,118
Par Value ................................ $ 205 $ 239 $ 258
</TABLE>
Common Stock:
During the year ended September 30, 1997, the company issued 16,001 shares
to outside providers of marketing services.
<TABLE>
<CAPTION>
For the Years Ended For the 9 months Ending
September 30 June 30
--------------------- ------------------------
1997 1998 1999
--------- --------- ------------------------
<S> <C> <C> <C>
The Company has issued in shares in Exchange for the
services of unaffiliated outside Consultants as follows:
Marketing Services ................................... 16,001 27,000 35,067
Technical Services ................................... -- 25,000 --
Legal Services ....................................... -- -- 21,000
Financial & Administrative Services .................. -- 6,000 16,500
------ ------ ------
Total Shares ...................................... 16,001 58,000 72,567
====== ====== ======
The charges to expense for the above-issued Shares were:
Marketing Services ................................... $16,001 $27,000 $35,067
Technical Services ................................... -- 25,000 --
Legal Services ....................................... -- -- 21,000
Financial & Administrative Services .................. -- 6,000 21,500
------- ------- -------
Total Charged to Expense .......................... $16,001 $58,000 $77,567
======= ======= =======
</TABLE>
F-12
<PAGE>
THERMALTEC INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
AND FOR THE NINE MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
11. COMMON STOCK -- (Continued)
For the year ended September 30, 1998, the Company completed the issuance
of 271,600 shares of common stock at an average price of $1.00 per share and
carried with them a warrant granting the right to purchase, for each share
purchased, an additional share of Thermaltec common stock at a price of
$ 1.00 per share. The warrants expire on June 2, 2000. At June 30, 1999 a total
of 78,200 warrants had been exercised for an equal number of shares. Of the
proceeds, $ 58,200 has been paid to an escrow agent to be paid to the Company
after the completion of the merger with Camanco Communications.
During the nine months ended June 30, 1999, the Company issued 30,000
shares of common stock in lieu of cash repayment of a shareholder loan.
On July 7, 1999 the Company approved an increase in the number of
authorized shares outstanding to 100,000,000. At the same time, the Company
also approved an option plan, under which 10,000,000 of the above shares were
reserved for issuance in exchange for options of the Camanco Communications
Group, subsequent to and contingent upon, the completion of the merger.
12. INCOME TAXES
No provision for income taxes was recorded during the years ended
September 30, 1998 and 1997 or for the nine months ended June 30, 1999, due to
net losses being incurred. At September 30, 1998, the Company had net operating
loss carryforwards for tax purposes of approximately $ 910,000, which would
expire in 2012.
The Company's effective tax rate in 1997 and 1998 and 1999 differs from
the federal statutory rate as a result of a full valuation allowance being
provided against gross deferred tax assets.
Deferred tax assets consist of the following components at:
September 30:
---------------------------
1997 1998
------------ ------------
Net operating loss carryforwards ......... $ 252,200 $ 382,000
Less: valuation allowance ................ 252,200 382,000
--------- ---------
Total deferred ........................... $ -- $ --
========= =========
At September 30, 1998 and 1997 and at June 30, 1999, the Company provided
a full valuation allowance against the gross deferred tax asset since, in
management's judgment, it is more likely than not, such benefits will not be
realized.
13. GEOGRAPHIC INFORMATION
The Company's revenues from external customers is derived from the
following geographic markets:
<TABLE>
<CAPTION>
For the nine months
For the year ended ended
September 30: June 30:
------------------------ -----------------------
1997 1998 1998 1999
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
United States (excluding Puerto Rico) ......... $341,604 $ 91,560 $ 84,787 $ 77,347
Costa Rica .................................... 100,660 179,367 157,757 127,603
Puerto Rico ................................... -- 4,919 4,919 --
Dominican Republic ............................ -- -- -- --
-------- -------- -------- --------
Total ......................................... $442,264 $275,846 $247,463 $204,950
======== ======== ======== ========
</TABLE>
F-13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Solar Communications Group, Inc.:
We have audited the accompanying balance sheets of Solar Communications Group,
Inc. (a development stage enterprise) as of September 30, 1997 and 1998, and
the related statements of operations, changes in stockholders' equity (deficit)
and cash flows for the period October 7, 1996 (Date of Inception) to September
30, 1997 and for the year ended September 30, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solar Communications Group,
Inc. as of September 30, 1997 and 1998 and the results of its operations and
its cash flows for the period October 7, 1996 (Date of Inception) to September
30, 1997 and for the year ended September 30, 1998, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage enterprise and has
suffered recurring losses and net cash outflows from operations since inception
that raise substantial doubt about its ability to continue as a going concern.
As such, the Company is dependent upon future capital infusions from existing
and/or new investors to fund operations. Management's plans with regard to
these matters are also described in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Withum, Smith & Brown
Red Bank, New Jersey
July 1, 1999
F-14
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
------------------------ --------------
1997 1998 1999
--------- ------------ --------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ................................ $ -- $ 250 $ 8,425,839
Prepaid expenses ......................................... -- -- 72,098
Due from related parties ................................. -- -- 700
Other current assets ..................................... -- -- 39,192
------ --------- ------------
Total Current Assets .................................. -- 250 8,537,829
Property and Equipment, Net ................................. -- -- 725,331
------ --------- ------------
TOTAL ASSETS .......................................... $ -- $ 250 $ 9,263,160
====== ========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable ......................................... $ -- $ -- $ 116,082
Accrued expenses ......................................... 200 400 503,367
Due to related parties ................................... -- 73,762 --
Loans payable ............................................ -- -- 215,500
Loans payable - related parties .......................... -- -- 110,000
------ --------- ------------
Total Current Liabilities ............................. 200 74,162 944,949
Commitments and Contingencies
Stockholders' Equity (Deficit):
Common stock, no par value; authorized; 1,000 shares at
September 30, 1997 and 1998 and 10,000 shares at
June 30, 1999 (unaudited), issued and outstanding;
1,000 shares at September 30, 1997 and 1998 and
4,718.40 shares at June 30, 1999 (unaudited) ............ 250 250 170,985
Common stock subscribed, 1,000 shares at June 30, 1999
(unaudited) ............................................. -- -- 10,000,000
Stock subscription receivable ............................ (250) -- --
Deficit accumulated during the development stage ......... (200) (74,162) (1,852,774)
------ --------- ------------
Total Stockholders' Equity (Deficit) .................. (200) (73,912) 8,318,211
------ --------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) ............................................ $ -- $ 250 $ 9,263,160
====== ========= ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-15
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
October 7, 1996 For the
(Date of Inception) Year Ended
to September 30, September 30,
1997 1998
--------------------- ---------------
<S> <C> <C>
Revenues ............................... $ -- $ --
Operating Expenses:
General and Administrative
Expenses ........................... 200 200
General and Administrative
Expenses-Related Parties ........... -- 73,762
------- ----------
Total Operating Expenses ......... 200 73,962
------- ----------
Net Loss ............................... $ (200) $ (73,962)
======= ==========
Basic and Diluted Net Loss Per Common
Share ................................. $ (.05) $ (17.26)
======== ==========
Weighted Average Number of Shares of
Common Stock and Common
Stock Subscribed Outstanding .......... 4,284 4,284
======== ==========
<CAPTION>
For the Nine Month Cumulative From
Periods Ended June 30, Inception to
1998 1999 June 30, 1999
------------- ---------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenues ............................... $ -- $ -- $ --
Operating Expenses:
General and Administrative
Expenses ........................... -- 1,710,811 1,711,211
General and Administrative
Expenses-Related Parties ........... 49,175 67,801 141,563
---------- ------------ ------------
Total Operating Expenses ......... 49,175 1,778,612 1,852,774
---------- ------------ ------------
Net Loss ............................... $ (49,175) $ (1,778,612) $ (1,852,774)
========== ============ ============
Basic and Diluted Net Loss Per Common
Share ................................. $ (11.48) $ (376.90)
========== ============
Weighted Average Number of Shares of
Common Stock and Common
Stock Subscribed Outstanding .......... 4,284 4,719
========== ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-16
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD OCTOBER 7, 1996 (DATE OF INCEPTION) TO SEPTEMBER 30, 1998
AND FOR THE NINE MONTH PERIOD ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
Common Stock Subscribed
Shares Amount Shares Amount
------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Balance, October 7, 1996
(Inception) ......................... -- $ -- -- $ --
Issuance of common stock to
founders for stock subscription
receivable, October 8, 1996 ......... 1,000.00 250 -- --
Net loss ............................. -- -- -- --
-------- --------- -- ------------
Balance, September 30, 1997 .......... 1,000.00 250 -- --
Collection of stock subscription
receivable .......................... -- -- -- --
Net loss ............................. -- -- -- --
-------- --------- -- ------------
Balance, September 30, 1998 .......... 1,000.00 250 -- --
Issuance of common stock to
founders, October 1998
(unaudited) ......................... 3,284.40 -- -- --
Issuance of common stock for
services rendered, December
1998, $393.04 per share
(unaudited) ......................... 184.00 72,386 -- --
Issuance of common stock for the
conversion of related party debt,
December 1998, $393.04 per
share (unaudited) ................... 250.00 98,349 -- --
Issuance of common stock
subscribed for cash, February and
March 1999, $10,000 per share
(unaudited) ......................... -- -- 30.00 300,000
Issuance of common stock
subscribed for cash, April, May
and June 1999, $10,000 per share
(unaudited) ......................... -- -- 970.00 9,700,000
Net loss (unaudited) ................. -- -- -- --
-------- --------- -------- ------------
Balance, June 30, 1999 (unaudited) 4,718.40 $ 170,985 1,000.00 $ 10,000,000
======== ========= ======== ============
<PAGE>
<CAPTION>
Deficit
Accumulated
Stock During the Total
Subscription Development Stockholders'
Receivable Stage Equity (Deficit)
-------------- ----------------- -----------------
<S> <C> <C> <C>
Balance, October 7, 1996
(Inception) ......................... $ -- $ -- $ --
Issuance of common stock to
founders for stock subscription
receivable, October 8, 1996 ......... (250) -- --
Net loss ............................. -- (200) (200)
------- ------------- ------------
Balance, September 30, 1997 .......... (250) (200) (200)
Collection of stock subscription
receivable .......................... 250 -- 250
Net loss ............................. -- (73,962) (73,962)
------- ------------- ------------
Balance, September 30, 1998 .......... -- (74,162) (73,912)
Issuance of common stock to
founders, October 1998
(unaudited) ......................... -- -- --
Issuance of common stock for
services rendered, December
1998, $393.04 per share
(unaudited) ......................... -- -- 72,386
Issuance of common stock for the
conversion of related party debt,
December 1998, $393.04 per
share (unaudited) ................... -- -- 98,349
Issuance of common stock
subscribed for cash, February and
March 1999, $10,000 per share
(unaudited) ......................... -- -- 300,000
Issuance of common stock
subscribed for cash, April, May
and June 1999, $10,000 per share
(unaudited) ......................... -- -- 9,700,000
Net loss (unaudited) ................. -- (1,778,612) (1,778,612)
------- ------------- ------------
Balance, June 30, 1999 (unaudited) $ -- $ (1,852,774) $ 8,318,211
======= ============= ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-17
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Period
October 7, 1996 For the
(Date of Inception) Year Ended
To September 30, September 30,
1997 1998
--------------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss ................................ $ (200) $ (73,962)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization ........ -- --
Common stock issued for services ..... -- --
Changes in assets and liabilities:
Prepaid expenses .................... -- --
Other current assets ................ -- --
Accounts payable .................... -- --
Accrued expenses .................... 200 200
------- ----------
Net Cash Used in Operating
Activities ....................... -- (73,762)
Cash Flows From Investing Activities:
Purchase of property and
equipment ........................... -- --
Net change in due from related
parties ............................. -- --
------- ----------
Net Cash Used in Investing
Activities ....................... -- --
Cash Flows From Financing Activities:
Collection of stock subscription
receivable .......................... -- 250
Net change in due to related parties -- 73,762
Proceeds from loans payable .......... -- --
Proceeds from loans payable --
related parties ..................... -- --
Proceeds from common stock
subscribed .......................... -- --
------- ----------
Net Cash Provided By
Financing Activities ............. -- 74,012
------- ----------
Net Increase in Cash .................... -- 250
Cash -- Beginning of Period ............. -- --
------- ----------
Cash -- End of Period ................... $ -- $ 250
======= ==========
<PAGE>
<CAPTION>
For the Nine Month
Periods Ended Cumulative from
June 30, Inception to
1998 1999 June 30, 1999
------------- ----------------- ----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss ................................ $ (49,175) $ (1,778,612) $ (1,852,774)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization ........ -- 18,947 18,947
Common stock issued for services ..... -- 72,386 72,386
Changes in assets and liabilities:
Prepaid expenses .................... -- (72,098) (72,098)
Other current assets ................ -- (39,192) (39,192)
Accounts payable .................... -- 116,082 116,082
Accrued expenses .................... -- 502,967 503,367
---------- ------------- -------------
Net Cash Used in Operating
Activities ....................... (49,175) (1,179,520) (1,253,282)
Cash Flows From Investing Activities:
Purchase of property and
equipment ........................... -- (744,278) (744,278)
Net change in due from related
parties ............................. -- (700) (700)
---------- ------------- -------------
Net Cash Used in Investing
Activities ....................... -- (744,978) (744,978)
Cash Flows From Financing Activities:
Collection of stock subscription
receivable .......................... -- -- 250
Net change in due to related parties 49,175 24,587 98,349
Proceeds from loans payable .......... -- 215,500 215,500
Proceeds from loans payable --
related parties ..................... -- 110,000 110,000
Proceeds from common stock
subscribed .......................... -- 10,000,000 10,000,000
---------- ------------- -------------
Net Cash Provided By
Financing Activities ............. 49,175 10,350,087 10,424,099
---------- ------------- -------------
Net Increase in Cash .................... -- 8,425,589 8,425,839
Cash -- Beginning of Period ............. -- 250 --
---------- ------------- -------------
Cash -- End of Period ................... $ -- $ 8,425,839 $ 8,425,839
========== ============= =============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
F-18
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 1 -- Organization, Business and Pending Merger:
Solar Communications Group, Inc. (the "Company") is a corporation involved
in the installation and implementation of computer hardware and software inside
rooms of nationwide hotels.
The Company provides quality communications alternatives to the business
community. The Company has developed an Internet access solution, known as
PCRoomLink(TM), for the hospitality industry. PCRoomLink's computer-equipped
rooms permit a hotel patron, with or without a laptop computer, to obtain
high-speed Internet access in the privacy of his/her hotel room.
The Company is a development stage enterprise, which has a very limited
history of operations and has not generated any revenues from operations. The
Company's business model is untested. It may take the Company longer than
anticipated to implement its business model, and some aspects of the Company's
business model may not prove to be feasible or possible.
On June 17, 1999, the Company executed a merger agreement with Thermaltec
International, Corp. Pursuant to the merger, the Company will be merged into
Thermaltec International, Corp. (TTI) with the shareholders of the Company
receiving over 95% of the issued and outstanding shares of TTI's common stock.
In preparation for the merger, TTI has transferred substantially all of its
assets and liabilities into a wholly owned subsidiary, Panama Industries, Ltd.
(PI). The assets not transferred will consist primarily of cash. Shares of PI
will be distributed, on a pro rata basis, to TTI shareholders of record as of
May 28, 1999, immediately prior to the closing date of the merger. TTI's
current shareholders will also retain their shares in TTI.
The completion of the merger is contingent upon the receipt by the Company
of certain regulatory approvals, approval of the merger by the shareholders of
TTI and the Company, and satisfaction of certain other customary closing
conditions.
Note 2 -- Basis of Preparation:
Since inception, the Company has suffered recurring losses and net cash
outflows from operations. The Company expects to continue to incur substantial
losses to complete the development of its business model and will also incur
substantial marketing and staffing costs in the near future. Since its
inception, the Company has funded operations through debt issuance and, more
recently, private placements of equity in order to meet its strategic
objectives. Management is actively pursuing other financing options, which
include securing additional equity financing, and believes that sufficient
funding will be available to meet its planned business objectives including
anticipated cash needs for working capital, for a reasonable period of time.
However, there can be no assurance that the Company will be able to obtain
sufficient funds to continue the development of, and if successful, to commence
the installation and implementation of its computer systems in the hotels.
As a result of the foregoing, there exists substantial doubt about the
Company's ability to continue as a going concern. These financial statements do
not include any adjustments relating to the recoverability of the carrying
amounts of recorded assets or the amount of liabilities that might result from
the outcome of this uncertainty.
F-19
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 3 -- Summary of Significant Accounting Policies:
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash equivalents are comprised of certain highly liquid investments with
original maturities of less than three months. At June 30, 1999, cash
equivalents amounted to approximately $6,472,000.
Prepaid Expenses
Prepaid expenses are comprised of certain prepaid general and
administrative expenses which will benefit future periods.
Development Stage Enterprise
The accompanying statements have been prepared in accordance with the
provision of Statement of Financial Accounting Standard (SFAS) No. 7,
"Accounting and Reporting by Development Stage Enterprises".
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is provided on the straight-line method over the estimated useful
lives of the assets which range from three to seven years. Gains and losses on
depreciable assets retired or sold are recognized in the statement of
operations in the year of disposal. Repairs and maintenance expenditures are
expensed as incurred.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes". SFAS No. 109 requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the years in which the
differences are expected to reverse. A valuation allowance is provided if it is
more likely than not that some or all of the deferred tax assets will not be
realized.
New Accounting Standards
The Company will adopt Statement of Financial Accounting Standard (FAS)
No. 130, "Reporting Comprehensive Income" in fiscal 1999. This statement
establishes standards for reporting and displaying comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. This statement requires the
classification of items of comprehensive
F-20
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 3 -- Summary of Significant Accounting Policies: -- (Continued)
New Accounting Standards -- (Continued)
income by their nature in a financial statement and the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the balance sheet. The Company
believes that adoption of this statement will not have a material effect on its
financial statements.
The Company will also adopt FAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" in fiscal 1999. This statement supersedes
FAS No. 14, "Financial Reporting for Segments of a Business Enterprise," but
retains the requirement to report information about major customers. This
statement establishes standards for reporting information about operating
segments in annual financial statements. Operating segments are defined as
components of an enterprise evaluated regularly by the Company's senior
management in deciding how to allocate resources and in assessing performance.
The Company believes that adoption of this statement will not have a material
effect on its financial statements.
In 1998, the FASB issued Statement of Financial Accounting Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No.
133). SFAS No. 133 modifies the accounting for derivative and hedging
activities and is effective for fiscal years beginning after December 15, 1999.
The Company believes that the adoption of SFAS No. 133 will not have a material
impact on the Company's financial statements.
Concentration of Credit Risk
The Company maintains cash balances, at times, with financial institutions
in excess of amounts insured by the Federal Deposit Insurance Corporation.
Management monitors the soundness of these institutions and considers the
Company's risk negligible.
Advertising Costs
All advertising costs are expensed the first time the advertising takes
place. Advertising costs were approximately $231,000 for the nine month period
ended June 30, 1999.
Financial Instruments
The carrying values of accounts payable and accrued expenses approximate
their fair values. The fair value of the Company's loans payable is assumed to
approximate its book value.
Net Loss Per Common Share
The Company has adopted SFAS No. 128, "Earnings per Share" ("FAS 128"),
which requires presentation of basic earnings per share ("Basic EPS") and
diluted earnings per share ("Diluted EPS") by all entities that have publicly
traded common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). FAS 128 also requires
presentation of earnings per share by an entity that has made a filing or is in
the process of filing with a regulatory agency in preparation for the sale of
securities in a public market.
Basic EPS is computed by dividing income (loss) available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted EPS gives effect to all dilutive
F-21
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 3 -- Summary of Significant Accounting Policies: -- (Continued)
Net Loss Per Common Share -- (Continued)
potential common shares outstanding during the period. The computation of
Diluted EPS does not assume conversion, exercise or contingent exercise of
securities that would have an antidilutive effect on earnings. Refer to Note 11
for the Company's methodology for determining net loss per share.
Stock-Based Compensation
The Company has adopted the provisions of Statement No 123, Accounting for
Stock-Based Compensation. As permitted by the Statement, the Company has chosen
to account for stock-based compensation using the intrinsic value method.
Accordingly, no compensation expense has been recognized for the Company's
stock-based compensation plans for any period.
Interim Financial Information
The financial information presented for the nine month periods ended June
30, 1998 and 1999 and the cumulative amounts from the date of inception is
unaudited but, in the opinion of management, reflects all adjustments (which
consist of normal accruals) necessary for a fair presentation of such financial
statements. The results of operations for the nine month period ended June 30,
1999 are not necessarily indicative of the operating results to be expected for
the year ended September 30, 1999.
Note 4 -- Property and Equipment, Net:
Property and equipment consist of the following:
September 30, June 30,
1997 1998 1999
------ ------ ------------
(Unaudited)
Office equipment ........................ $ -- $ -- $189,468
Hotel installations in progress ......... -- -- 554,810
---- ---- --------
-- -- 744,278
Less accumulated depreciation ........... -- -- 18,947
---- ---- --------
Property and Equipment, Net ............. $ -- $ -- $725,331
==== ==== ========
Depreciation expense amounted to $18,947 for the nine month period ended
June 30, 1999.
Note 5 -- Income Taxes:
The Company has incurred losses since inception which have generated net
operating loss carryforwards of approximately $74,000 at September 30, 1998,
which expire beginning in the year 2017. Due to the uncertainty of their
realization, no income tax benefits have been recorded by the Company for these
net operating loss carryforwards as valuation allowances have been established
for any such benefits. The use of these net operating loss carryforwards may be
subject to limitations under section 382 of the Internal Revenue Code
pertaining to changes in stock ownership.
The increase in the valuation allowance amounted to $29,600 for the year
ended September 30, 1998.
F-22
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 5 -- Income Taxes: -- (Continued)
Deferred tax assets for federal and state income taxes consist of the
following:
September 30,
1997 1998
------ ------------
Net operating loss carryforwards ......... $ -- $ 29,600
Valuation allowance ...................... -- (29,600)
---- ---------
Net deferred tax assets .................. $ -- $ --
==== =========
Note 6 -- Loans Payable:
The Company has various loans from individuals. These loans are
non-interest bearing and contain no terms of repayment. These individuals have
the option of either being repaid or converting their debt into shares of
common stock of the Company. The debt can be converted at a price of $10,000
per share of common stock. This conversion rate was based on the sale price of
the common stock at the time the debt was issued. The loans are expected to be
repaid or converted into shares of common stock of the Company at $10,000 per
share, within the current year.
Note 7 -- Related Party Transactions:
Since its inception, the Company has had related party transactions with
two related parties (Cam-Comm, Inc. and JMR Marketing Corporation). Each of
these related parties is owned in whole or in part by the Company's Chairman
and Chief Executive Officer. The Company has obtained goods and services for
these related entities, due to the inability to obtain such goods and services
on commercially viable terms.
The amounts due from (to) related parties are as follows:
<TABLE>
<CAPTION>
Due From Due to
Related Parties Related Parties
----------------- ----------------
<S> <C> <C>
Balance, October 7, 1996 (date of inception) ........................ $ -- $ --
Company expenses paid by related party .............................. -- --
---- ---------
Ending balance, September 30, 1997 .................................. -- --
Company expenses paid by a related party ............................ -- 73,762
---- ---------
Ending balance, September 30, 1998 .................................. -- 73,762
Company advances to a related party ................................. 700 --
Company expenses paid by a related party ............................ -- 24,587
Conversion of related party debt through the issuance of common stock -- (98,349)
---- ---------
Ending balance, June 30, 1999 (Unaudited) ........................... $700 $ --
==== =========
</TABLE>
In addition, the Company had loans payable to executive officers of the
Company amounting to $110,000 at June 30, 1999.
All of the above receivables, payables or loan payables are non-interest
bearing. There are no fixed terms of repayment. However, repayment is expected
to occur within the next year.
Note 8 -- Commitments:
Leases
The Company leases office space, telephone and computer equipment from
related parties (Cam Comm, Inc. and JMR Marketing Corporation) on a month to
month basis.
F-23
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 8 -- Commitments: -- (Continued)
On June 24, 1999, the Company entered into a non-cancelable lease for
office space for one six month period, which commences on July 1, 1999 and
terminates on December 31, 1999.
The above leases are classified as operating leases. Lease expense for the
nine month period ended June 30, 1999 was $ 35,797.
Note 9 -- Stockholders' Equity:
Common Stock Issued for Services Rendered
During the nine month period ended June 30, 1999, the Company issued
common stock for services received which were valued in the amount of $72,386.
These services were provided by non-related party consultants and related
primarily to computer software consulting.
Common Stock Subscribed
The Company has entered into common stock purchase and subscription
agreements, which provide for the issuance of 1,000 shares of common stock at
$10,000 per share. These stock subscription agreements were part of the
Company's overall $12,000,000 private placement equity funding, which was
completed on July 7, 1999.
Change in Authorized Shares
On June 30, 1999, the Board of Directors of the Company approved an
amendment to the Certificate of Incorporation of the Company which authorized
an increase in the number of authorized shares of common stock from 5,000 to
10,000.
Note 10 -- Stock Option Plans:
In May 1999, the shareholders of the Company adopted the 1999 Incentive
and Non-Qualified Stock Option Plan. Under the plan, 1,000 shares of common
stock are reserved and available for issuance. The plan provides for grants to
employees and non-employee consultants to purchase shares of Company common
stock at prices not less than the fair market value at the time of the grant.
Options generally become 50% exercisable six months from the date of the grant,
with an additional 50% exercisable at the end of the following six month
period, except as otherwise provided by the Stock Option Committee of the Board
of Directors. The options generally expire ten years from the date of grant.
Summarized information relative to the Company's stock option plans as of
June 30, 1999 is as follows:
Weighted
Average
Exercise
Shares Price Per Share
---------- ----------------
Outstanding at September 30, 1998 ................ -- $ --
Granted ......................................... 384.90 10,000
Exercised ....................................... -- --
Canceled ........................................ ( 2.50) 10,000
------- -------
Outstanding at June 30, 1999 (unaudited) ......... 382.40 $10,000
======= =======
F-24
<PAGE>
SOLAR COMMUNICATIONS GROUP, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (Continued)
(INFORMATION RELATING TO THE NINE MONTH PERIODS ENDED
JUNE 30, 1998 AND JUNE 30, 1999 AND CUMULATIVE FROM INCEPTION
TO JUNE 30, 1999 IS UNAUDITED)
Note 10 -- Stock Option Plans: -- (Continued)
The fair value of the stock options granted during the nine month period
ended June 30, 1999 was not material because no vesting of such options
occurred during this period.
The following table summarizes information on stock options outstanding at
June 30, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------ --------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
at Contractual Average at Average
June 30, Life Exercise June 30, Exercise
Exercise Price 1999 (years) Price 1999 Price
- ----------------- ------------- ------------- ---------- -------------------- ---------
<S> <C> <C> <C> <C> <C>
$10,000 ......... 382.40 9.9 $10,000 -- --
====== === ======= == ==
</TABLE>
Note 11 -- Net Loss Per Share:
Basic EPS and Diluted EPS for the period October 7, 1996 (Date of
Inception) to September 30, 1997, for the year ended September 30, 1998 and for
the nine month periods ended June 30, 1998 and 1999 have been computed by
dividing the net loss for each respective period by the weighted average shares
outstanding (including the shares to be issued under the common stock
subscription agreements) during that period. During all such periods, there
were no potentially diluted securities outstanding, or the effect of such
securities would be antidilutive. Hence, Basic EPS and Diluted EPS are the
same.
In addition, the weighted average share calculations reflect the 3,284.40
shares issued for nominal con-sideration as outstanding for all periods
presented in accordance with the SEC's Staff Accounting Bulletin 98.
Note 12 -- Supplemental Disclosure of Cash Flow Information:
<TABLE>
<CAPTION>
For the Period
October 7, 1996 For the For the Nine
(Date of Inception) Year Ended Month Periods Cumulative
to September 30, September 30, Ended June 30, from Inception
1997 1998 1998 1999 to June 30, 1999
--------------------- --------------- ------------- ------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash paid during the period for:
Interest ...................... $-- $-- $-- $ -- $ --
Income taxes .................. $-- $-- $-- $500 $500
</TABLE>
Disclosure of non-cash investing and financing activities:
During the period October 7, 1996 (date of inception) to September 30,
1997, the Company issued shares of common stock for a stock subscription
receivable of $250.
In December 1998, the Company issued shares of common stock to satisfy a
related party obligation in the amount of $98,349.
Note 13 -- Subsequent Events (Unaudited):
On July 7, 1999, the Company issued a majority of the shares relating to
the common stock subscribed as of June 30, 1999.
In addition, on July 7, 1999, the Company entered into a stock purchase
and subscription agreement for 200 shares at $10,000 per share. This agreement
is part of the $12,000,000 private placement equity funding.
On November 12, 1999, the stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation to change the Company's
name to Camanco Communications, Inc.
F-25
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
give effect to the proposed merger of Camanco Communications, Inc. (formerly
known as Solar Communications Group, Inc.) into Thermaltec International, Corp.
accounted for as a reverse merger. The pro forma financial statements are
presented for illustrative purposes only, and therefore, are not necessarily
indicative of the operating results and financial position that might have been
achieved had the transactions occurred as of an earlier date, nor are they
necessarily indicative of operating results and financial position which may
occur in the future.
The condensed historical statements of operations for periods presented are
derived from the historical financial statements of Camanco Communications,
Inc. and Thermaltec International, Corp., and should be read in conjunction
with their financial statements which are included elsewhere herein. The
historical financial statements have been prepared in accordance with generally
accepted accounting principles and, in the opinions of the respective
managements' of Camanco Communications, Inc. and Thermaltec International,
Corp., include all adjustments necessary for a fair presentation of financial
information for such periods.
A pro forma condensed consolidated balance sheet is provided as of June 30,
1999, giving effect to the transaction as though it had been consummated on
that date. Pro forma condensed consolidated statements of operations are
provided for the nine month period ended June 30, 1999 and 1998 and year ended
September 30, 1998 giving effect to the transaction as though it had occurred
at the beginning of the earliest period presented.
F-26
<PAGE>
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Historical Pro forma
------------------------------------------ ---------------------------------
Camanco Thermaltec
Communi- International,
cations, Inc. Corp. & Subsidiaries Adjustments Consolidated
--------------- ------------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ..................... $ 8,425,839 $ 60,533 $ (2,033) $ 8,484,339
Trade accounts receivable ..................... -- 81,039 (81,039) --
Inventory ..................................... -- 94,576 (94,576) --
Prepaid expenses .............................. 72,098 -- -- 72,098
Due from related parties ...................... 700 -- -- 700
Other current assets .......................... 39,192 5,612 (5,612) 39,192
------------ -------------- ------------- ------------
Total Current Assets ....................... 8,537,829 241,760 (183,260) 8,596,329
Property and Equipment, Net .................... 725,331 101,079 (101,079) 725,331
Other Assets ................................... -- 3,449 (3,449) --
------------ -------------- ------------- ------------
TOTAL ASSETS ................................... $ 9,263,160 $ 346,288 $ (287,788) $ 9,321,660
============ ============== ============= ============
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable .............................. $ 116,082 $ 106,496 $ (106,496) $ 116,082
Accrued expenses .............................. 503,367 -- -- 503,367
Notes payable -- bank ......................... -- 39,617 (39,617) --
Loans payable ................................. 215,500 -- -- 215,500
Loans payable -- related parties .............. 110,000 182,164 (182,164) 110,000
Other Current liabilities ..................... -- 144,094 (144,094) --
------------ -------------- ------------- ------------
Total Current Liabilities .................. 944,949 472,371 (472,371) 944,949
Long Term Debt Less Current Maturities ......... -- 25,636 (25,636) --
Stockholders' Equity (Deficit):
Common stock .................................. 170,985 258 (B) (165,293) 5,950
Common stock subscribed ....................... 10,000,000 -- (B) (10,000,000) --
Additional paid in capital .................... -- 1,308,510 (B) 8,915,025 10,223,535
Retained earnings (accumulated deficit) ....... (1,852,774) (1,502,981) (B) 1,502,981 (1,852,774)
Accumulated Other Comprehensive Income:
Foreign currency translation adjustment ..... -- 42,494 (42,494) --
------------ -------------- ------------- ------------
Total Stockholders' Equity (Deficit) ....... 8,318,211 (151,719) 210,219 8,376,711
------------ -------------- ------------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) ................ $ 9,263,160 $ 346,288 $ (287,788) $ 9,321,660
============ ============== ============= ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-27
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------------------------- -----------------------------
Camanco Thermaltec
Communi- International,
cations, Inc. Corp. & Subsidiaries Adjustments Consolidated
--------------- ---------------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales ............................... $ -- $ 275,846 (A) $ (275,846) $ --
Cost of Sales ....................... -- 154,511 (A) (154,511) --
--------- ------------ ---------- ----------
Gross Profit ........................ -- 121,335 (121,335) --
Operating Expenses:
General and Administrative
Expenses ......................... 200 524,019 (A) (524,019) 200
General and Administrative
Expenses-Related Parties ......... 73,762 -- -- 73,762
--------- ------------ ---------- ----------
Total Operating Expenses ......... 73,962 524,019 (524,019) 73,962
--------- ------------ ---------- ----------
Net Loss ............................ $ (73,962) $ (402,684) (A) $ (402,684) $ (73,962)
========= ============ ========== ==========
Basic and Diluted Loss Per
Common Share ....................... $ (17.26) $ (0.19) $ NIL
========= ============ ==========
Weighted Average Number of
Shares of Common Stock and
Common Stock Subscribed Out-
standing ........................... 4,284 2,105,489 59,500,000
========= ============ ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-28
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------------------------- -----------------------------
Camanco Thermaltec
Communi- International,
cations, Inc. Corp. & Subsidiaries Adjustments Consolidated
--------------- ---------------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales ............................... $ -- $ 247,463 (A) $ (247,463) $ --
Cost of Sales ....................... -- 142,650 (A) (142,650) --
--------- ------------ ---------- ----------
Gross Profit ........................ -- 104,813 (104,813) --
Operating Expenses:
General and Administrative
Expenses ......................... -- 444,145 (A) (444,145) --
General and Administrative
Expenses-Related Parties ......... 49,175 -- -- 49,175
--------- ------------ ---------- ----------
Total Operating Expenses ......... 49,175 444,145 (444,145) 49,175
--------- ------------ ---------- ----------
Net Loss ............................ $ (49,175) $ (339,332) (A) $ 339,332 $ (49,175)
========= ============ ========== ==========
Basic and Diluted Loss Per
Common Share ....................... $ (11.48) $ (0.16) $ NIL
========= ============ ==========
Weighted Average Number of
Shares of Common Stock and
Common Stock Subscribed
Outstanding ........................ 4,284 2,073.251 59,500,000
========= ============= ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-29
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
---------------------------------------- --------------------------------
Camanco Thermaltec
Communi- International,
cations, Inc. Corp. & Subsidiaries Adjustments Consolidated
--------------- ---------------------- ------------- ----------------
<S> <C> <C> <C> <C>
Sales ............................... $ -- $ 204,950 (A) $ (204,950) $ --
Cost of Sales ....................... -- 145,170 (A) (145,170) --
------------ ------------ ---------- ------------
Gross Profit ........................ -- 59,780 (59,780) --
Operating Expenses:
General and Administrative
Expenses ......................... 1,710,811 345,382 (A) (345,382) 1,710,811
General and Administrative
Expenses-Related Parties ......... 67,801 -- -- 67,801
------------ ------------ ---------- ------------
Total Operating Expenses ......... 1,778,612 345,382 (345,382) 1,778,612
------------ ------------ ---------- ------------
Net Loss ............................ $ (1,778,612) $ (285,602) (A) $ 285,602 $ (1,778,612)
============ ============ ========== ============
Basic and Diluted Net Loss Per
Common Share ....................... $ (376.90) $ (0.12) $ 0.03
============ ============ ============
Weighted Average Number of
Shares of Common Stock and
Common Stock Subscribed
Outstanding ........................ 4,719 2,455,791 59,500,000
============ ============ ============
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-30
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -- Proposed Merger with Camanco Communications, Inc.:
On June 17, 1999, Thermaltec International, Corp. (TTI) executed a merger
agreement with Camanco Communications, Inc., formerly known as Solar
Communications Group, Inc. (CCI) of Millville, New Jersey.
Pursuant to the merger, CCI will be merged into TTI with the shareholders
of CCI receiving over 95% of the issued and outstanding shares of TTI common
stock. In preparation for the merger, TTI has transferred substantially all of
its assets and liabilities into a wholly-owned subsidiary, Panama Industries,
Ltd. (PI). Shares of PI will be distributed, on a pro rata basis, to TTI
shareholders of record as of May 28, 1999, immediately prior to the closing
date of the merger. TTI's current shareholders will also retain their shares in
TTI. It is anticipated that TTI will issue 59,500,00 shares of TTI common stock
to CCI stockholders.
Completion of the merger is contingent upon the receipt by CCI of certain
regulatory approvals, approval of the merger by the shareholders of TTI and
CCI, and satisfaction of certain other customary closing conditions.
Note 2 -- Basis of Presentation:
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only, giving effect to the consolidation of
Thermaltec International, Corp. and Camanco Communications, Inc. as accounted
for as a reverse merger, whereby, for accounting purposes, Camanco
Communications, Inc. will be treated as the acquirer in the transaction.
The pro forma periods are dated in terms of Thermaltec International,
Corp.'s historical financial reporting periods. A pro forma condensed
consolidated balance sheet is provided as of June 30, 1999, giving effect to
the merger transaction as though it had been consummated on that date. Pro
forma condensed consolidated statements of operations are provided for the year
ended September 30, 1998 and for the nine month periods ended June 30, 1998 and
1999.
Note 3 -- Pro Forma Adjustments:
The pro forma condensed consolidated financial statements have been
adjusted for the items set forth below, the amounts of which are noted in the
adjustment column of the pro forma condensed consolidated financial statements:
(A) To eliminate the income statement accounts of Thermaltec
International, Corp. for all periods presented. Because the transaction is
being accounted for as a reverse merger, the historical financial statements of
Camanco Communications, Inc. prior to the merger are deemed to be the
historical financial statements of Thermaltec International, Corp.
(B) Adjustment to reflect the proposed merger between Camanco
Communications, Inc. and Thermaltec International, Corp. The merger is being
accounted for as a reverse merger and will involve the issuance by Thermaltec
International, Corp. of 59,500,000 shares to Camanco Communications Group, Inc.
stockholders.
(C) The computation of Diluted Earnings Per Share does not assume
conversion, exercise or contingent exercise of securities that would have an
anti-dilutive effect on earnings. The options to acquire shares of Camanco
Communication, Inc. are not considered in the calculation of basic and diluted
loss per shares as they would be anti-dilutive.
F-31
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 16, 1999, by and
between CAMANCO COMMUNICATIONS GROUP, INC., a New Jersey corporation ("Solar
Communications Group"), THERMALTEC INTERNATIONAL, CORP., a Delaware corporation
("Thermaltec"), and ANDREW B. MAZZONE, the principal stockholder of Thermaltec
("Mazzone").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Solar Communications Group and
Thermaltec deem it advisable and in the best interests of their respective
stockholders to consummate, and have approved, the transaction provided for
herein in which Solar Communications Group would merge with and into
Thermaltec, with Thermaltec being the surviving corporation (the "Merger"); and
WHEREAS, the parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date (as defined
in Section 1.02), (i) a certificate of merger (the "DE Certificate of Merger")
shall be duly prepared and executed by Thermaltec (and, if required, executed
by Camanco Communications Group) and thereafter delivered to the Secretary of
State of the State of Delaware for filing, as provided in the Delaware General
Corporation Law, as amended (the "GCL"), and (ii) a certificate of merger (the
"NJ Certificate of Merger") shall be duly prepared and executed by Solar
Communications Group (and, if required, executed by Thermaltec) and thereafter
delivered to the Department of Revenue of the State of New Jersey for filing,
as provided in the New Jersey Business Corporation Act (the "BCA"). The Merger
shall become effective upon the filing of the DE Certificate of Merger with the
Secretary of State of the State of Delaware and the filing of the NJ
Certificate of Merger with the Department of Revenue of the State of New Jersey
or at such later time as may be agreed to in writing by Thermaltec and Solar
Communications Group (the "Effective Time"). The DE Certificate of Merger and
the NJ Certificate of Merger are, at times, collectively referred to herein as
the "Merger Filings."
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 AM, Philadelphia local time, on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Sections
7.01, 7.02 (other than the delivery of the officers' certificate referred to
therein) and 7.03 (other than the delivery of the officers' certificate
referred to therein) (the "Closing Date"), at the offices of Archer & Greiner,
A Professional Corporation, One Centennial Square, Haddonfield, NJ 08033,
unless another date or place is agreed to in writing by the parties hereto.
SECTION 1.03 Effects of the Merger.
(a) At the Effective Time (i) the separate corporate existence of Solar
Communications Group shall cease and Solar Communications Group shall be
merged with and into Thermaltec (Solar Communications Group and Thermaltec
are sometimes referred to herein as the "Constituent Corporations" and
Thermaltec, as the surviving corporation after the Merger, is sometimes
referred to herein as the "Surviving Corporation"), (ii) the Certificate of
Incorporation of Solar Communications Group as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until thereafter amended, and (iii) the Bylaws of
Solar Communications Group as in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation, until thereafter
amended.
A-1
<PAGE>
(b) At the Effective Time, the effect of the Merger shall be as provided
in this Agreement and the applicable provisions of the GCL and the BCA.
Without limiting the generality of the foregoing and subject thereto, at
and after the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, powers and franchises and be subject to all the
restrictions, disabilities and duties of each of the Constituent
Corporations; and all rights, privileges, powers and franchises of each of
the Constituent Corporations, and all property, real, personal and mixed,
and all debts due to either of the Constituent Corporations on whatever
account, as well as for stock subscriptions and all other things in action
or belonging to each of the Constituent Corporations, shall be vested in
the Surviving Corporation, and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectively the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any real estate vested by deed
or otherwise, in either of the Constituent Corporations, shall not revert
or be in any way impaired; but all rights of creditors and all liens upon
any property of either of the Constituent Corporations existing as of the
Effective Time shall be preserved unimpaired, and all debts, liabilities
and duties of the Constituent Corporations existing as of the Effective
Time shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts and liabilities had
been incurred by it.
SECTION 1.04 Directors and Officers of the Surviving Corporation. The
directors and officers of Solar Communications Group at the Effective Time
shall, from and after the Effective Time, be the directors and officers of the
Surviving Corporation, until their respective successors have been duly elected
or appointed (as applicable) and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of the Common Stock, no par value per share, of Solar Communications
Group (the "Solar Communications Group Common Stock"):
(a) Exchange Ratio for Existing Solar Communications Group Common Stock.
Subject to Section 2.02(d), each issued and outstanding share of Solar
Communications Group Common Stock (other than shares to be canceled in
accordance with Section 2.01(b) and any Dissenting Shares (as defined and
to the extent provided in Section 2.04)) shall be converted into the right
to receive, from Thermaltec, that number (the "Conversion Number") of fully
paid and nonassessable shares of the Common Stock, par value $.0001 per
share, of Thermaltec (the "Thermaltec Common Stock") obtained by dividing
(i) 64,500,000 by (ii) the sum of (A) the difference between (1) the number
of shares of Solar Communications Group Common Stock then outstanding and
(2) the aggregate number of shares to be canceled pursuant to Section
2.01(b) hereof and Dissenting Shares, plus (B) the number of shares of
Solar Communications Group Common Stock then reserved for issuance pursuant
to options issued and then outstanding under the 1999 Option Plan (as such
term is defined in Section 2.03 hereof). The shares of Thermaltec Common
Stock to be issued in the Merger are sometimes hereinafter referred to as
the "Conversion Shares." All such shares of Solar Communications Group
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the Conversion
Shares.
(b) Cancellation of Treasury Stock and Thermaltec-Owned Stock. All
shares of Solar Communications Group Common Stock that are owned by Solar
Communications Group as treasury stock and any shares of Solar
Communications Group Common Stock owned by Thermaltec, or any direct or
indirect wholly-owned subsidiary of Thermaltec or Solar Communications
Group, immediately prior to the Effective Time shall be canceled and
retired and shall cease to exist and no stock of Thermaltec or other
consideration shall be delivered in exchange therefor.
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SECTION 2.02 Exchange of Certificates.
(a) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Thermaltec shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Solar Communications Group Common Stock
(the "Certificates") whose shares were converted pursuant to Section 2.01
into the right to receive shares of Thermaltec Common Stock from the
Surviving Corporation (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to Thermaltec and shall
be in such form and have such other provisions as Solar Communications
Group and Thermaltec may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing the Conversion Shares. Upon surrender of a Certificate for
cancellation to Thermaltec or to such other agent or agents as may be
appointed by Thermaltec, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Thermaltec Common Stock representing the Conversion Shares which such
holder has the right to receive pursuant to the provisions of this Article
II, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Solar Communications Group Common Stock
which is not registered in the transfer records of Solar Communications
Group, a certificate representing the proper number of shares of Thermaltec
Common Stock may be issued to a transferee if the Certificate representing
such Solar Communications Group Common Stock is presented to Thermaltec,
accompanied by all documents required to evidence and effect such transfer
and by evidence that any applicable stock transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender a certificate representing the
appropriate number of Conversion Shares.
(b) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Thermaltec Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect
to the Conversion Shares represented thereby. Subject to the effect of
applicable abandoned property, escheat or similar laws, following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole Conversion Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount
of dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole Conversion Shares, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole Conversion Shares.
(c) No Further Ownership Rights in Solar Communications Group Common
Stock. All Conversion Shares issued upon the surrender for exchange of
shares of Solar Communications Group Common Stock, all in accordance with
the terms hereof (together with any dividends or distributions paid
pursuant to Section 2.02(b)), shall be deemed to have been issued and
conferred in full satisfaction of all rights pertaining to such shares of
Solar Communications Group Common Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Solar Communications Group Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) No Fractional Conversion Shares. No certificate or script
representing fractional Conversion Shares of Thermaltec Common Stock shall
be issued upon the surrender for exchange of Certificates. Fractional
Conversion Shares of Thermaltec Common Stock issuable upon the surrender
for exchange of Certificates shall be rounded to the nearest whole number.
SECTION 2.03 Stock Options. At the Effective Time, all options to purchase
Solar Communications Group Common Stock then outstanding under Solar
Communications Group's 1999 Stock Option Plan (the "1999 Option Plan") shall be
assumed by Thermaltec in accordance with Section 6.14 hereof (each an "Solar
Communications Group Option" and, collectively, the "Solar Communications Group
Options").
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SECTION 2.04 Solar Communications Group Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of Solar Communications Group Common Stock held by a holder who has
demanded and perfected appraisal rights for such shares in accordance with
the BCA and who, as of the Effective Time, has not effectively withdrawn or
lost such appraisal rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive Thermaltec Common Stock pursuant to
Section 2.01, but the holder thereof shall only be entitled to such rights
as are granted by the BCA.
(b) Notwithstanding the provisions of subsection (a), if any holder of
shares of Solar Communications Group Common Stock who demands appraisal of
such shares under the BCA shall effectively withdraw or lose (through
failure to perfect or otherwise) the right to appraisal, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
shares of Solar Communications Group Common Stock shall automatically be
converted into and represent only the right to receive, upon surrender of
the certificate representing such shares of Solar Communications Group
Common Stock, shares of Thermaltec Common Stock issuable pursuant to
Section 2.01 in exchange for such outstanding shares of Solar
Communications Group Common Stock and any dividends or other distributions
pursuant to Section 2.02(b).
(c) Solar Communications Group shall give Thermaltec (i) prompt notice
of any written demands for appraisal of any shares of Solar Communications
Group Common Stock, withdrawals of such demands, and any other instruments
served pursuant to the BCA and received by Solar Communications Group and
(ii) the opportunity to participate in all negotiations and proceedings
with respect to demands for appraisal under the BCA. Solar Communications
Group shall not, except with the prior written consent of Thermaltec,
voluntarily make any payment with respect to any demands for appraisal of
Solar Communications Group Common Stock or offer to settle or settle any
such demands.
SECTION 2.05 Thermaltec Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the contrary, any
shares of Thermaltec Common Stock held by a holder who has demanded and
perfected appraisal rights for such shares in accordance with the GCL and
who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Thermaltec Dissenting Shares"), shall entitle the holder
thereof only to such rights as are granted by the GCL.
(b) Notwithstanding the provisions of subsection (a), if any holder of
shares of Thermaltec Common Stock who demands appraisal of such shares
under the GCL shall effectively withdraw or lose (through failure to
perfect or otherwise) the right to appraisal, then, as of the later of the
Effective Time or the occurrence of such event, such holder's shares of GCL
Common Stock shall remain outstanding.
(c) Thermaltec shall give Solar Communications Group (i) prompt notice
of any written demands for appraisal of any shares of Thermaltec Common
Stock, withdrawals of such demands, and any other instruments served
pursuant to the GCL and received by Thermaltec and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under the GCL. Thermaltec shall not, except with the prior
written consent of Solar Communications Group, voluntarily make any payment
with respect to any demands for appraisal of Thermaltec Common Stock or
offer to settle or settle any such demands.
SECTION 2.06 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368- 3(a) of
the United States Income Tax regulations.
SECTION 2.07 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Constituent Corporations, the officers and
directors of the Constituent Corporations are fully authorized in the names of
their respective corporations to take, and will take, all such lawful and
necessary action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THERMALTEC AND MAZZONE
As used in this Agreement, any reference to any event, change or effect
being material or having a material adverse effect on or with respect to
Thermaltec or Solar Communications Group, means such event, change or effect is
materially adverse to the consolidated condition (financial or otherwise),
properties, assets (including intangible assets), liabilities (including
contingent liabilities), businesses or results of operations of Thermaltec or
Solar Communications Group, as the case may be, and its Subsidiaries taken as a
whole. As used in this Agreement, the word "Subsidiary" or "Subsidiaries"
means, with respect to any party, any corporation(s) or other organization(s),
whether incorporated or unincorporated, in which such party, directly or
indirectly, holds an equity, partnership or other ownership interest.
Thermaltec and Mazzone hereby jointly and severally represent and warrant
to Solar Communications Group that, except as set forth in this Agreement:
SECTION 3.01 Organization; Subsidiaries.
(a) Thermaltec is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as now being conducted. Thermaltec is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary.
(b) Thermaltec does not have any Subsidiaries, other than Panama
Industries, Ltd., a Delaware corporation. All of the stock of Panama
Industries Ltd. owned by Thermaltec will be transferred to Thermaltec's
shareholders, as a dividend, on or before the Effective Time.
(c) Thermaltec has made available to Solar Communications Group a true
and correct copy of its Certificate of Incorporation and Bylaws, each as
amended to date, and each such instrument is in full force and effect.
Thermaltec is not in violation of any provision of its Certificate of
Incorporation or Bylaws or other governing instrument.
SECTION 3.02 Capitalization.
(a) As of the date hereof, the authorized capital stock of Thermaltec
consists of 10,000,000 shares of Thermaltec Common Stock. The Board of
Directors of Thermaltec has approved an amendment to the Certificate of
Incorporation of Thermaltec (the "Proposed Thermaltec Amendment") which
would authorize an increase in the number of authorized shares of
Thermaltec Common Stock from 10,000,000 to 100,000,000 and is currently
seeking shareholder approval of such Proposed Thermaltec Amendment. As of
the date hereof, 2,578,118 shares of Thermaltec Common Stock are issued and
outstanding. All the outstanding shares of Thermaltec Common Stock are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereto. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities
having the right to vote) ("Voting Debt") of Thermaltec is issued or
outstanding. Other than as described in this Section 3.02, as of the date
hereof, there are no existing options, warrants, calls, subscriptions or
other rights or other agreements or commitments of any character relating
to the issued or unissued capital stock or Voting Debt of Thermaltec or
obligating Thermaltec to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interests in, Thermaltec or securities convertible into or
exchangeable for such shares or equity interests or obligating Thermaltec
to grant, extend or enter into any such option, warrant, call, subscription
or other right, agreement or commitment. There are no outstanding
contractual obligations of Thermaltec to repurchase, redeem or otherwise
acquire any shares of capital stock of Thermaltec.
(b) As of the date hereof, Thermaltec has issued and outstanding
warrants to purchase a total of 193,400 shares of Thermaltec Common Stock
(collectively, the "Warrants"). The certificates for the Warrants, in the
form attached hereto as Exhibit 3.02, constitute the entire agreement
between Thermaltec
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and the holders of the Warrants with respect to the Warrants, and there has
been no change in or modification or alteration of such terms, nor has
there been any amendment, modification or entering into of any other
agreement which would affect the terms of the Warrants or the related
rights and obligations of the holders of the Warrants or the Company. Among
other terms, the Warrants are currently exercisable at a price of $1.00 per
share and currently expire on June 2, 2000. The issuance of the Warrants
and/or the issue and sale of shares of Thermaltec Common Stock upon
exercise thereof complied or will comply with all applicable federal and
state securities laws.
(c) All outstanding shares of Thermaltec Common Stock, all outstanding
securities exchangeable or convertible into or exerciseable for Thermaltec
Common Stock, and any other outstanding securities of Thermaltec were
issued in compliance with all applicable state and federal securities laws.
(d) As of the date of this Agreement, no person or entity holds the
right to require the registration or qualification under applicable
securities laws of any securities of Thermaltec, and there is no voting
trust, proxy, rights plan, antitakeover plan, or other agreement or
understanding to which Thermaltec is a party or by which it is bound with
respect to any class of equity security of Thermaltec.
(e) The Thermaltec Common Stock to be issued pursuant to the Merger has
been duly authorized and will, when issued and delivered in accordance with
this Agreement, be validly issued, fully paid and non-assessable and will
not be subject to any restrictions on resale under the Securities Act of
1933, as amended (the "Securities Act").
SECTION 3.03 Authority. Thermaltec has all requisite corporate power and
corporate authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the Merger and of the other transactions
contemplated hereby (including authorization by the Board of Directors to
solicit stockholder vote on such transactions) have been duly authorized by all
necessary corporate action on the part of Thermaltec and no other corporate
proceedings on the part of Thermaltec are necessary to authorize this Agreement
or to consummate the transactions so contemplated (other than, with respect to
the Merger, the approval and adoption of this Agreement and the Merger by the
holders of Thermaltec Common Stock pursuant to the GCL). The vote required by
Thermaltec's stockholders to approve and adopt this Agreement and approve the
Merger is a majority of the outstanding shares of Thermaltec Common Stock.
Thermaltec's Board of Directors has unanimously approved this Agreement and the
Merger. This Agreement has been duly executed and delivered by Thermaltec and
constitutes a valid and binding obligation of Thermaltec, enforceable against
Thermaltec in accordance with its terms.
SECTION 3.04 Consents and Approvals; No Violations.
(a) Neither the execution, delivery or performance of this Agreement by
Thermaltec nor the consummation by Thermaltec of the transactions
contemplated hereby nor compliance by Thermaltec with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of
the Certificate of Incorporation or Bylaws of Thermaltec, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which
Thermaltec is a party or by which it or any of its properties or assets may
be bound, or (iii) violate any order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to Thermaltec or any of its
properties or assets.
(b) No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other federal, state, county, local, or foreign
governmental authority or instrumentality ("Governmental Entity") or any
third party, is required to be obtained or made by Thermaltec in connection
with the execution and delivery of this Agreement or the consummation of
the Merger, except for (i) the Merger Filings with the Secretary of State
of the State of Delaware and the Department of Revenue of the State of New
Jersey; (ii) the filing of the Proxy Statement/Prospectus (as defined in
Section 3.19) with the Securities and Exchange Commission (the "SEC") in
accordance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), if
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required by the terms and provisions of the Exchange Act; (iii) the filing
of a Registration Statement (the "Registration Statement") on Form S-4 (or
any similar successor form thereto) with the SEC in accordance with the
Securities Act; and (iv) such consents, approvals, orders, authorizations,
registrations, declarations, and filings as may be required under
applicable federal, foreign, and state securities (or related) laws, and
the securities or antitrust laws of any foreign country.
SECTION 3.05 Financial Statements. Thermaltec has delivered to Solar
Communications Group a true and complete copy of Thermaltec's audited financial
statements as of and for the periods ended September 30, 1998 (the "Balance
Sheet Date") and September 30, 1997, including the notes thereto, and
Thermaltec's unaudited financial statements as of and for the period ended
March 31, 1999, including the notes thereto (such audited and unaudited
financial statements are referred to collectively herein as the "Thermaltec
Documents"). The Thermaltec Documents, at the time delivered, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Thermaltec Documents have been prepared on a consistent basis
during the periods involved and fairly present the financial position of
Thermaltec as at the dates thereof and the results of its operations and cash
flows for the periods then ended.
SECTION 3.06 Absence of Certain Changes. Since the Balance Sheet Date,
except as expressly contemplated herein, there has been no adverse change in
the business, operations, condition (financial or otherwise), results of
operations, assets or liabilities of Thermaltec. Since the Balance Sheet Date,
except as expressly contemplated herein or with respect to the transactions
contemplated hereby, Thermaltec has conducted its business consistent with past
practices and Thermaltec has not (a) incurred loss of, or significant injury
to, any assets of Thermaltec as a result of any fire, explosion, flood,
windstorm, earthquake, labor trouble, riot, accident, act of God or public
enemy or armed forces, or other occurrence; (b) issued or committed to issue
any capital stock, bonds or other corporate securities or debt instruments, or
granted any options, warrants or other rights calling for the issuance thereof;
(c) borrowed any funds; (d) incurred or, to Thermaltec's knowledge, become
subject to, any obligation or liability (absolute or contingent, matured or
unmatured); (e) declared or made payment of, or set aside for payment, any
dividends or distributions of any assets, or purchased, redeemed or otherwise
acquired any of its capital stock, any securities convertible into capital
stock, or any other securities; (f) mortgaged, pledged or subjected to any
liens, mortgages, security interests or encumbrances of any kind, other than
for taxes not yet due and payable, any of its assets; (g) sold, exchanged,
transferred or otherwise disposed of any of its assets, or canceled any debts
or claims, except in each case in the ordinary course of business; (h) acquired
any assets except in the ordinary course of business; (i) written down the
value of any assets or written off as uncollectible any notes or accounts
receivables, except write-downs and write-offs in the ordinary course of
business, none of which, individually or in the aggregate, are material; (j)
entered into any transactions other than in the ordinary course of business;
(k) increased the rate of compensation payable, or to become payable, by it to
any of its officers, employees, agents, or independent contractors over the
rate being paid to them on the Balance Sheet Date, except for increases in the
ordinary course of business consistent with past practices; (l) made or
permitted any amendment or termination of any agreement to which it is a party;
(m) through negotiation or otherwise, made any commitment or incurred any
liability to any labor organization; (n) made any accrual or arrangement for or
payment of bonuses or special compensation of any kind to any director, officer
or employee; (o) made any material change in any method of accounting or
accounting practice; or (p) entered into any binding obligation to do any of
the foregoing.
SECTION 3.07 No Liabilities. As of the Closing Date, Thermaltec shall not
have any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of
Thermaltec (including the notes thereto).
SECTION 3.08 Assets. As of the Closing Date, Thermaltec will not own any
assets of any nature, except for those assets required to be retained by
Thermaltec pursuant to Section 6.12 hereof.
SECTION 3.09 Employee Benefit Plans.
(a) Definitions. For purposes of this Section 3.09, the following terms
shall have the meanings set forth below:
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(i) "Affiliate" shall mean any person or entity under common control
with Thermaltec within the meaning of Section 414(b), (c), (m) or (o) of
the Code and the regulations issued thereunder;
(ii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iii) "DOL" shall mean the United States Department of Labor;
(iv) "Employee" shall mean any current, former, or retired employee,
officer, or director of Thermaltec or any Affiliate;
(v) "Employee Agreement" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas,
work permit or similar agreement or contract between Thermaltec or any
Affiliate and any Employee or consultant;
(vi) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended;
(vii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(viii) "International Employee Plan" shall mean each Thermaltec
Employee Plan that has been adopted or maintained by Thermaltec, whether
informally or formally, for the benefit of Employees outside the United
States;
(ix) "IRS" shall mean the Internal Revenue Service;
(x) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xi) "PBGC" shall mean the Pension Benefit Guaranty Corporation;
(xii) "Pension Plan" shall mean each Thermaltec Employee Plan which
is an "employee pension benefit plan," within the meaning of Section
3(2) of ERISA; and
(xiii) "Thermaltec Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit
plan," within the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by
Thermaltec or any Affiliate for the benefit of any Employee;
(b) Schedule. Schedule 3.09 attached hereto contains an accurate and
complete list of each Thermaltec Employee Plan and each Employee Agreement.
Except as expressly provided herein, Thermaltec does not have any plan or
commitment to establish any new Thermaltec Employee Plan, to modify any
Thermaltec Employee Plan or Employee Agreement, or to enter into any
Thermaltec Employee Plan or Employee Agreement, nor does it have any
intention or commitment to do any of the foregoing.
(c) Documents. Thermaltec has provided to Solar Communications Group (i)
correct and complete copies of all documents embodying each Thermaltec
Employee Plan and each Employee Agreement, including all amendments thereto
and written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each Thermaltec Employee Plan; (iii) the
three (3) most recent annual reports (Form Series 5500 and all schedules
and financial statements attached thereto), if any, required under ERISA or
the Code in connection with each Thermaltec Employee Plan or related trust;
(iv) if the Thermaltec Employee Plan is funded, the most recent annual and
periodic accounting of Thermaltec Employee Plan assets; (v) the most recent
summary plan description together with the summary of material
modifications thereto, if any, required under ERISA with respect to each
Thermaltec Employee Plan; (vi) all IRS determination, opinion, notification
and advisory letters, and rulings relating to Thermaltec Employee Plans and
copies of all applications and correspondence to or from the IRS or the DOL
with respect to any Thermaltec Employee Plan; (vii) all material written
agreements and contracts
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relating to each Thermaltec Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group
insurance contracts; (viii) all communications material to any Employee or
Employees relating to any Thermaltec Employee Plan and any proposed
Thermaltec Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events which would
result in any material liability to Thermaltec; (ix) all COBRA forms and
related notices; and (x) all registration statements and prospectuses
prepared in connection with each Thermaltec Employee Plan.
(d) Employee Plan Compliance. (i) Thermaltec has performed all
obligations required to be performed by it under, is not in default or
violation of, and has no knowledge of any default or violation by any other
party to each Thermaltec Employee Plan, and each Thermaltec Employee Plan
has been established and maintained in accordance with its terms and in
compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to ERISA and the Code; (ii) each
Thermaltec Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code
has either received a favorable determination letter from the IRS with
respect to each such Plan as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986
and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for
such a determination letter and make any amendments necessary to obtain a
favorable determination; (iii) no "prohibited transaction," within the
meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and
not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Thermaltec Employee Plan; (iv) there are no actions, suits or claims
pending, or, to the knowledge of Thermaltec, threatened or reasonably
anticipated (other than routine claims for benefits) against any Thermaltec
Employee Plan or against the assets of any Thermaltec Employee Plan; (v)
each Thermaltec Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms, without
liability to Solar Communications Group, Thermaltec or any of its
Affiliates (other than ordinary administration expenses typically incurred
in a termination event); (vi) there are no audits, inquiries or proceedings
pending or, to the knowledge of Thermaltec or any Affiliates, threatened by
the IRS or DOL with respect to any Thermaltec Employee Plan; and (vii)
neither Thermaltec nor any Affiliate is subject to any penalty or tax with
respect to any Thermaltec Employee Plan under Section 402(i) of ERISA or
Sections 4975 through 4980 of the Code.
(e) Pension Plans. Thermaltec does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension
Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Company contributed to or
been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Thermaltec Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statutes,
and Thermaltec has never represented, promised or contracted (whether in
oral or written form) to any Employee (either individually or to Employees
as a group) or any other person that such Employee(s) or other person would
be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
(h) FMLA. Neither Thermaltec nor any Affiliate has, prior to the
Effective Time violated any of the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Employees.
(i) Effect of Transaction.
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Thermaltec Employee Plan, Employee Agreement, trust or loan
that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any Employee.
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(ii) No payment or benefit which will or may be made by Thermaltec or
its Affiliates with respect to any Employee as a result of the
transactions contemplated by this Agreement will be characterized as an
"excess parachute payment," within the meaning of Section 28OG(b)(1) of
the Code.
(j) Employment Matters. Thermaltec (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules
and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to
be withheld from the wages, salaries and other payments to Employees; (iii)
is not liable for any arrears of wages or any taxes or any penalty for
failure to comply with any of the foregoing; and (iv) is not liable for any
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social
security or other benefits or obligations for Employees. There are no
pending, threatened or reasonably anticipated claims or actions against
Thermaltec under any worker's compensation policy or long-term disability
policy. To Thermaltec's knowledge, no employee of Thermaltec has violated
any employment contract, nondisclosure agreement or noncompetition
agreement by which such employee is bound due to such employee being
employed by Thermaltec and disclosing to Thermaltec or using trade secrets
or proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Thermaltec is
pending, threatened or reasonably anticipated. Thermaltec does not know of
any activities or proceedings of any labor union to organize any Employees.
There are no actions, suits, claims, labor disputes or grievances pending,
or, to the knowledge of Thermaltec, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters involving any
Employee, including, without limitation, charges of unfair labor practices
or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any liability to Thermaltec.
Thermaltec has not engaged in any unfair labor practices within the meaning
of the National Labor Relations Act. Thermaltec is not presently, nor has
it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees, and no collective
bargaining agreement is being negotiated by Thermaltec.
(l) International Employee Plans. Each International Employee Plan has
been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance
or fully accrued. Except as required by law, no condition exists that would
prevent Solar Communications Group or Thermaltec from terminating or
amending any International Employee Plan at any time for any reason.
SECTION 3.10 Litigation. There is no suit, claim, action, proceeding,
claim, arbitration, or investigation pending or, to the best knowledge of
Thermaltec, threatened against, Thermaltec (or any of its officers, directors
or employees in their capacity as such) before any Governmental Entity.
Thermaltec is not aware of any basis for any such action, suit, proceeding,
claim, arbitration or investigation. Thermaltec has never been subject to an
audit, compliance review, investigation, or like contract review by the GSA
office of the Inspector General or other Governmental Entity or agent thereof
in connection with any government contract (a "Government Audit"). To the best
of Thermaltec's knowledge, no Government Audit is threatened or reasonably
anticipated, and in the event of such Government Audit, to the best of
Thermaltec's knowledge, no basis would exist for a finding of noncompliance
with any provision of any government contract or a refund of any amounts paid
or owed by any Governmental Entity pursuant to such government contract.
Thermaltec is not subject to any outstanding order, writ, judgment, injunction
or decree.
SECTION 3.11 Compliance with Applicable Law. Thermaltec currently holds,
and at all relevant times has held, all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of its business (the "Thermaltec Permits"). Thermaltec has
complied, and currently is in compliance, with all the terms of each Thermaltec
Permit. The business of Thermaltec is not
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being, and has never been, conducted in violation of any law, ordinance or
regulation of any Governmental Entity. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to Thermaltec
is pending or, to the best knowledge of Thermaltec, threatened, nor has any
Governmental Entity indicated an intention to conduct the same.
SECTION 3.12 Proprietary Information of Third Parties. To the best of
Thermaltec's knowledge, no third party has claimed that any person employed by
Thermaltec has (a) violated or may be violating any of the terms or conditions
of his or her employment, non-competition or non-disclosure agreement or
utilized or may be utilizing any trade secret or proprietary information or
documentation of such third party, or (b) interfered or may be interfering in
the employment relationship between such third party and any of its present or
former employees. No third party has requested information from Thermaltec
which suggests that such a claim might be contemplated. To the best of
Thermaltec's knowledge, (i) no person employed by Thermaltec has employed or
proposes to employ any trade secret or any information or documentation
proprietary to any former employer, (ii) no person employed by Thermaltec has
violated any confidential relationship which such person may have had with any
third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of Thermaltec, and (iii) there is no reason to believe there
will be any such employment or violation.
SECTION 3.13 Title to Properties. Thermaltec has good, clear and
marketable title to all of its properties and assets, and all such properties
and assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances (including without
limitation, easements and licenses), except for liens for or current taxes not
yet due and payable. To the best of Thermaltec's knowledge, there are no
condemnation, environmental, zoning or other land use regulation proceedings,
either instituted or planned to be instituted, which would adversely affect the
use or operation of any of such properties and assets for Solar Communications
Group's intended uses and purposes, or the value of such properties, and
Thermaltec has not received notice of any special assessment proceedings which
would affect such properties and assets.
SECTION 3.14 Leasehold Interests. Thermaltec is not a lessee of any
property, real or personal.
SECTION 3.15 Taxes. Thermaltec has filed all tax returns, Federal, state,
county and local, required to be filed by it, those returns accurately and
completely reflect Thermaltec's tax obligations with respect to the periods
covered thereby, and Thermaltec has paid all taxes shown to be due by such
returns as well as all other taxes, interest, penalties, assessments and other
amounts asserted to be due or payable by any taxing authority, including
without limitation all taxes which Thermaltec is obligated to withhold from
amounts paid or owing to employees, creditors and third parties. Adequate
reserves have been established by Thermaltec for all taxes accrued but not yet
payable. The tax returns of Thermaltec have never been audited by the Internal
Revenue Service or any other taxing authority. No deficiency assessment with
respect to, or proposed adjustment of, Thermaltec's Federal, state, county or
local taxes is pending or, to the best of Thermaltec's knowledge, threatened.
There is no tax lien, whether imposed by any Federal, state, county or local
taxing authority, outstanding against any assets, properties or business of
Thermaltec.
SECTION 3.16 Other Agreements. Thermaltec is not a party to or otherwise
bound by any written or oral contract or instrument or other restriction.
Thermaltec is not a party to or otherwise bound by any written or oral:
(a) distribution, joint marketing, dealer, manufacturer's representative
or sales agency contract or agreement;
(b) sales contract which entitles any customer to a rebate or right of
set-off, to return any product to Thermaltec after acceptance thereof or to
delay the acceptance thereof;
(c) development agreement;
(d) contract or other commitment with any supplier;
(e) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment;
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(f) agreement or indenture relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest
on, any asset of Thermaltec;
(g) any agreement of indemnification or guaranty;
(h) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights
agreement relating to any securities of Thermaltec;
(i) agreement, or group of related agreements with the same party or any
group of affiliated parties, under which Thermaltec has advanced or agreed
to advance money or has agreed to lease any property as lessee or lessor;
(j) agreement or obligation (contingent or otherwise) to issue, sell or
otherwise distribute or to repurchase or otherwise acquire or retire any
share of Thermaltec capital stock or any of Thermaltec's other equity
securities (other than pursuant to an exercise of the Warrants in
accordance with the terms thereof);
(k) assignment, license or other agreement with respect to any form of
intangible property;
(l) agreement under which it has granted any person any registration
rights;
(m) agreement under which it has limited or restricted Thermaltec's
right to compete with any person in any respect;
(n) other contract or group of related contracts with the same party
involving more than $500; or
(o) other contract, instrument, commitment, plan or arrangement, a copy
of which would be required to be filed with the SEC as an exhibit to a
registration statement on Form S-1 if Thermaltec were registering
securities under the Securities Act.
Thermaltec, and to the best of Thermaltec's knowledge, each other party thereto
have in all material respects performed all the obligations required to be
performed by them to date, have received no notice of default and are not in
material default (with due notice or lapse of time or both) under any
agreement, contract, instrument or commitment to which Thermaltec is or was a
party. Thermaltec has no present expectation or intention of not fully
performing all its obligations under each current agreement, contract,
instrument or commitment to which it is a party, and Thermaltec has no
knowledge of any breach or anticipated breach by the other party to any such
agreement, contract, instrument or commitment. Thermaltec is in full compliance
with all of the terms and provisions of its Articles of Incorporation and
Bylaws, as amended.
SECTION 3.17 SEC Filings. Thermaltec has filed all forms, reports, and
documents required to be filed by Thermaltec with the SEC and has made
available to Solar Communications Group such forms, reports, and documents in
the form filed with the SEC. All such required forms, reports and documents
(including those that Thermaltec may file subsequent to the date hereof) are
referred to herein as the "Thermaltec SEC Reports." As of their respective
filing dates, the Thermaltec SEC Reports (a) complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
Thermaltec SEC Reports and (b) did not at the time they were filed (or if
amended or superceded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 3.18 Change of Control Payments. Thermaltec is not a party to any
plan or agreement pursuant to which any amounts may become payable (whether
currently or in the future) to any person, including without limitation any
current or former officer or director of Thermaltec, as a result of or in
connection with the Merger.
SECTION 3.19 Statements; Proxy Statement/Prospectus. The information
supplied by Thermaltec for inclusion in the Registration Statement (as defined
in Section 3.04) shall not at the time the Registration Statement is filed with
the SEC and at the time it becomes effective under the Securities Act contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary
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in order to make the statements therein, in light of the circumstances under
which they are made, not false or misleading. The information supplied by
Thermaltec for inclusion in the proxy statement/prospectus (such proxy
statement/prospectus as amended or supplemented being referred to herein as the
"Proxy Statement/Prospectus") to be sent to (a) the stockholders of Thermaltec
in connection with the meeting of Thermaltec's stockholders to consider the
approval and adoption of this Agreement and the approval of the Merger (the
"Thermaltec Stockholders' Meeting") and (b) to the stockholders of Solar
Communications Group in connection with the meeting of Solar Communications
Group's stockholders to consider the approval and adoption of this Agreement
and the approval of the Merger (the "Solar Communications Group Stockholders'
Meeting") shall not, on the date the Proxy Statement/Prospectus is first mailed
to Solar Communications Group's stockholders or Thermaltec's stockholders or at
the time of the Thermaltec Stockholders' Meeting or Solar Communications Group
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Thermaltec Stockholders' Meeting or the Solar
Communications Group Stockholders' Meeting which has become false or
misleading. The Proxy Statement/Prospectus will, to the extent required by
applicable law, comply as to form in all material respects with the provisions
of the Securities Act, the Exchange Act, and the rules and regulations
thereunder. If, at any time prior to the Effective Time, any event relating to
Thermaltec or any of its affiliates, officers, or directors should be
discovered by Thermaltec which is required to be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement/Prospectus,
Thermaltec shall promptly inform Solar Communications Group.
SECTION 3.20 Environmental Matters. Thermaltec has not caused or allowed,
or contracted with any party for, the generation, use, transportation,
treatment, storage or disposal of any Hazardous Substances (as defined below)
in connection with the operation of its business or otherwise. Thermaltec, the
operation of its business, and any real property that Thermaltec owns, and to
the best of Thermaltec's knowledge, any real property which Thermaltec leases
or otherwise occupies or uses (collectively, the "Premises") are in compliance
in all material respects with all applicable Environmental Laws (as defined
below) and orders or directives of any governmental authorities having
jurisdiction under such Environmental Laws, including, without limitation, any
Environmental Laws or orders or directives with respect to any cleanup or
remediation of any release or threat of release of Hazardous Substances.
Thermaltec has not received any citation, directive, letter or other
communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and Thermaltec is not aware of any
basis therefor. Thermaltec has obtained and is maintaining in full force and
effect all necessary permits, licenses and approvals required by all
Environmental Laws applicable to the Premises and the business operations
conducted thereon (including operations conducted by tenants on the Premises),
and is in compliance in all respects with all such permits, licenses and
approvals. Thermaltec has not caused or allowed a release, or a threat of
release, of any Hazardous Substance unto, at or near the Premises, and, to the
best of Thermaltec's knowledge, neither the Premises nor any property at or
near the Premises has ever been subject to a release, or a threat of release,
of any Hazardous Substance. For the purposes of this Agreement, the term
"Environmental Laws" shall mean any Federal, state or local law or ordinance or
regulation pertaining to the protection of human health or the environment,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq.,
and the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.
For purposes of this Agreement, the term "Hazardous Substances" shall include
oil and petroleum products, asbestos, polychlorinated biphenyls, urea
formaldehyde and any other materials classified as hazardous or toxic under any
Environmental Laws.
SECTION 3.21 Foreign Corrupt Practices Act. Thermaltec has not taken any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any rules and regulations thereunder. To the best
of Thermaltec's knowledge, there is not now, and there has never been, any
employment by Thermaltec of, or beneficial ownership in Thermaltec by, any
governmental or political official in any country in the world.
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SECTION 3.22 Products. Thermaltec has no knowledge of any defects in the
design of, or technology embodied in, any product which Thermaltec currently
markets or has marketed in the past that impairs or is likely to impair the
stated use of the product or, in connection with such stated use, is reasonably
likely to injure any consumer of the product or any third party.
SECTION 3.23 Intellectual Property. Thermaltec owns all right, title and
interest in or has license rights to all patents, trademarks, service marks,
trade names, mask works, copyrights, trade secrets, know-how, technology and
other intellectual property and proprietary rights material to the conduct of
its business as presently and previously conducted (the "Thermaltec
Intellectual Property"). Thermaltec is not aware of any infringement of the
Thermaltec Intellectual Property by any third party. Thermaltec has not
received any claim or notice stating that it has infringed upon or violated any
of the patents, trademarks, service marks, trade names, mask works, copyrights,
trade secrets, proprietary rights or other intellectual property of any other
person. Thermaltec has taken all reasonable measures to protect the secrecy,
confidentiality, and value of the Thermaltec Intellectual Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SOLAR COMMUNICATIONS GROUP
The representations and warranties of Solar Communications Group in this
Article IV, together with the information contained in the Solar Communications
Group Disclosure Schedule, are being made and given as of the date hereof.
Solar Communications Group represents and warrants to Thermaltec that,
except as set forth in this Agreement:
SECTION 4.01 Organization. Solar Communications Group is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has all requisite corporate power and corporate
authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority, and governmental approvals would not have a material
adverse effect on Solar Communications Group. Solar Communications Group is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not in the aggregate have a material adverse effect on
Solar Communications Group. Solar Communications Group does not have any
Subsidiaries.
SECTION 4.02 Capitalization. As of the date hereof, the authorized capital
stock of Solar Communications Group consists of 5,000 shares of Solar
Communications Group Common Stock of which 4,532.65 shares are issued and
outstanding. The Board of Directors of Solar Communications Group has approved
an amendment to the Certificate of Incorporation of Solar Communications Group
(the "Proposed Amendment") which would authorize an increase in the number of
authorized shares of Solar Communications Group Common Stock from 5,000 to
10,000 and is currently seeking shareholder approval of such Proposed
Amendment. As of the date hereof, 1,000 shares of Solar Communications Group
Common Stock are reserved for issuance under the 1999 Option Plan, of which
options to purchase 426.5 shares of Common Stock are outstanding. All the
outstanding shares of Solar Communications Group's capital stock are, and all
shares of Solar Communications Group Common Stock which may be issued pursuant
to the 1999 Option Plan will be, when issued in accordance with the respective
terms thereof, duly authorized, validly issued, fully paid and non-assessable
and free of any preemptive rights in respect thereto. As of the date hereof, no
Voting Debt of Solar Communications Group is issued or outstanding.
Except as set forth above, the issuance of options or shares of Solar
Communications Group Common Stock pursuant to the 1999 Option Plan, and the
planned issuance by Solar Communications Group of up to 1,417.35 additional
shares of Solar Communications Group Common Stock prior to the Merger, and
except for this Agreement, as of the date hereof, there are no existing
options, warrants, calls, subscriptions or other rights or other agreements or
commitments of any character relating to the issued or unissued capital stock
or Voting Debt of Solar Communications Group or obligating Solar Communications
Group to issue, transfer or
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sell or cause to be issued, transferred or sold any shares of capital stock or
Voting Debt of, or other equity interests in, Solar Communications Group, or
securities convertible into or exchangeable for such shares or equity interests
or obligating Solar Communications Group to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement or
commitment. There are no outstanding contractual obligations of Solar
Communications Group to repurchase, redeem or otherwise acquire any shares of
capital stock of Solar Communications Group.
SECTION 4.03 Authority. Solar Communications Group has the requisite
corporate power and corporate authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Solar Communications Group and no
other corporate proceedings on the part of Solar Communications Group are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (except for the approval of Solar Communications Group's
stockholders required pursuant to the provisions of the BCA). This Agreement
has been duly executed and delivered by Solar Communications Group, and,
assuming this Agreement constitutes a valid and binding obligation of
Thermaltec and Mazzone, constitutes a valid and binding obligation of Solar
Communications Group, enforceable against it in accordance with its respective
terms.
SECTION 4.04 Consents and Approvals; No Violations.
(a) Except as contemplated by this Agreement, neither the execution,
delivery or performance of this Agreement by Solar Communications Group nor
the consummation by Solar Communications Group of the transactions
contemplated hereby nor compliance by Solar Communications Group with any
of the provisions hereof will (i) conflict with or result in any breach of
any provision of the certificate of incorporation or by-laws of Solar
Communications Group, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Solar Communications Group is a party or
by which it or any of its properties or assets may be bound, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Solar Communications Group or any of its properties or
assets, except in the case of (ii) and (iii) for violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on Solar Communications Group
(b) No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity or any
third party, is required to be obtained or made by Solar Communications
Group in connection with the execution and delivery of this Agreement or
the consummation of the Merger, except for (i) the Merger Filings with the
Secretary of State of the State of Delaware and the Department of Revenue
of the State of New Jersey; and (ii) such other consents, authorizations,
filings, approvals, and registrations which if not obtained or made would
not be material to Solar Communications Group or Thermaltec or adversely
effect the ability of the parties hereto to consummate the Merger.
SECTION 4.05 Absence of Certain Changes. Since September 30, 1998 (the
"Reference Date"), there has been no material adverse change in the business,
operations, condition (financial or otherwise), results of operations, assets
or liabilities of Solar Communications Group Since the Reference Date, except
as described herein or with respect to the transactions contemplated hereby,
Solar Communications Group has conducted its business consistent with past
practices and there has been no material change other than in the ordinary
course of business, and Solar Communications Group has not (a) as of the date
hereof, incurred loss of, or significant injury to, any assets of Solar
Communications Group as a result of any fire, explosion, flood, windstorm,
earthquake, labor trouble, riot, accident, act of God or public enemy or armed
forces, or other occurrence materially adversely affecting the property or
business of Solar Communications Group; (b) issued any capital stock, bonds or
other corporate securities or debt instruments, or granted any options,
warrants or other rights calling for the issuance thereof (other than as
disclosed in Section 4.02 hereof); (c) other than in the ordinary
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course of business, borrowed any funds in an aggregate amount exceeding
$50,000; (d) incurred or, to Solar Communications Group's knowledge, become
subject to, any material obligation or liability (absolute or contingent,
matured or unmatured), except for current liabilities incurred in the ordinary
course of business; (e) declared or made payment of, or set aside for payment,
any dividends or distributions of any assets, or purchased, redeemed or
otherwise acquired any of Solar Communications Group capital stock, any
securities convertible into capital stock, or any other securities; (f)
mortgaged, pledged or subjected to any material liens, mortgages, security
interests or encumbrances of any kind, other than for taxes not yet due and
payable or liens or encumbrances that are not material to Solar Communications
Group, any of its assets; (g) sold, exchanged, transferred or otherwise
disposed of any of its material assets, or canceled any material debts or
claims, except in each case in the ordinary course of business; (h) acquired a
material amount of assets except in the ordinary course of business; (i)
written down the value of any assets or written off as uncollectible any notes
or accounts receivables, except write-downs and write-offs in the ordinary
course of business, none of which, individually or in the aggregate, are
material; (j) entered into any material transactions other than in the ordinary
course of business; (k) increased the rate of compensation payable, or to
become payable, by it to any of its officers, employees, agents, or independent
contractors over the rate being paid to them on the Reference Date, except for
increases in the ordinary course of business consistent with past practices;
(l) made or permitted any material amendment or termination of any material
agreement to which it is a party; (m) through negotiation or otherwise, made
any commitment or incurred any liability to any labor organization; (n) made
any accrual or arrangement for or payment of bonuses or special compensation of
any kind to any director, officer or employee; (o) made any material change in
any method of accounting or accounting practice; or (p) entered into any
binding obligation to do any of the foregoing.
SECTION 4.06 No Undisclosed Liabilities. Except as and to the extent set
forth in Solar Communications Group's audited financial statements as of, and
for the two (2) years ended September 30, 1998, Solar Communications Group did
not have any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of Solar
Communications Group (including the notes thereto). Since the Reference Date,
Solar Communications Group has not incurred any liabilities outside of the
ordinary course of business of any nature, whether or not accrued, contingent
or otherwise, which would have, individually or in the aggregate, a material
adverse effect on Solar Communications Group
SECTION 4.07 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of Solar Communications Group,
threatened against Solar Communications Group before any Governmental Entity
which, individually or in the aggregate, is reasonably likely to have a
material adverse effect on Solar Communications Group or a material adverse
effect on the ability of Solar Communications Group to consummate the
transactions contemplated by this Agreement. Solar Communications Group is not
subject to any outstanding order, writ, injunction or decree which, insofar as
can be reasonably foreseen, individually or in the aggregate, in the future
would have a material adverse effect on Solar Communications Group or a
material adverse effect on the ability of Solar Communications Group to
consummate the transactions contemplated hereby.
SECTION 4.08 Compliance with Applicable Law. Solar Communications Group
holds all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of Solar Communications
Group business (the "Solar Communications Group Permits"), except for failures
to hold such permits, licenses, variances, exemptions, orders and approvals
which would not, individually or in the aggregate, have a material adverse
effect on Solar Communications Group Solar Communications Group is in
compliance with the terms of the Solar Communications Group Permits, except
where the failure so to comply would not have a material adverse effect on
Solar Communications Group. The business of Solar Communications Group is not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which individually or in
the aggregate do not, and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on Solar Communications Group. As of
the date of this Agreement, no investigation or review by any Governmental
Entity with respect to Solar Communications Group is pending or, to the best
knowledge of Solar Communications Group, threatened, nor has any Governmental
Entity indicated an intention to conduct the same.
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SECTION 4.09 Vote Required. The affirmative vote of the Board of Directors
of Solar Communications Group and a majority of the outstanding shares of the
Solar Communications Group Common Stock are the only votes by Solar
Communications Group necessary to approve the transactions contemplated hereby.
SECTION 4.10 Taxes. Solar Communications Group has filed all tax returns,
Federal, state, county and local, required to be filed by it, those returns
accurately and completely reflect Solar Communications Group's tax obligations
with respect to the periods covered thereby, and Solar Communications Group has
paid all taxes shown to be due by such returns as well as all other taxes,
interest, penalties, assessments and other amounts asserted to be due or
payable by any taxing authority, including without limitation all taxes which
Solar Communications Group is obligated to withhold from amounts paid or owing
to employees, creditors and third parties. Adequate reserves have been
established by Solar Communications Group for all taxes accrued but not yet
payable. The tax returns of Solar Communications Group have never been audited
by the Internal Revenue Service or any other taxing authority. No deficiency
assessment with respect to or proposed adjustment of Solar Communications
Group's Federal, state, county or local taxes is pending or, to the best of
Solar Communications Group's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of Solar Communications
Group.
SECTION 4.11 No Reliance on Forecasts. In the negotiation and
consideration of the transactions contemplated by this Agreement, Thermaltec
and Thermaltec's Board of Directors have not relied on any information or
documents concerning Solar Communications Group and its business or financial
results except: (a) representations and warranties made by Solar Communications
Group in this Agreement, and (b) disclosure of financial results made pursuant
to this Agreement. In the course of negotiations, Solar Communications Group
and Thermaltec exchanged information concerning hypothetical situations, based
on various assumptions, of the results of operations of the combined companies
and possible market prices for the Thermaltec Common Stock following the
Effective Time. Solar Communications Group makes no representation or warranty
regarding any such hypothetical situations provided by it, including those that
may contain forecasts or projections of Solar Communications Group's future
operating results, and Thermaltec disclaims reliance on any such hypothetical
situations provided by Solar Communications Group or third parties.
ARTICLE V
COVENANTS
Section 5.01 Covenants of Thermaltec and Solar Communications
Group. During the period from the date of this Agreement and continuing until
the Effective Time, Thermaltec and Solar Communications Group each agree
(except as expressly contemplated or permitted by this Agreement, or to the
extent that the other party shall otherwise consent in writing):
(a) Ordinary Course. Except as contemplated by this Agreement, each
party shall carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted
and use commercially reasonable efforts to preserve intact their present
business organizations, keep available the services of their present
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that
their goodwill and ongoing business shall not be impaired in any material
respect at the Effective Time.
(b) Dividends; Changes in Stock. No party shall, nor shall any party
propose to, (i) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) repurchase, redeem or otherwise
acquire any shares of capital stock of such party. Notwithstanding anything
to the contrary contained herein, Thermaltec shall prior to the Effective
Time, as contemplated by Section 6.12 hereof, declare and pay a dividend to
the Thermaltec shareholders of record (with an adequate reserve to be
established pursuant to the terms and provisions of the Warrants) of all of
the outstanding stock of the entity which is the transferee of Thermaltec's
assets and liabilities pursuant to Section 6.12 hereof.
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(c) Issuance of Securities. Except for the issuance of shares of
Thermaltec Common Stock pursuant to the exercise of a Warrant, Thermaltec
shall not issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class, any
Voting Debt or any securities convertible into, or any rights, warrants,
calls, subscriptions or options to acquire, any such shares, Voting Debt or
convertible securities.
(d) Governing Documents. Except for the Proposed Amendment and the
Proposed Thermaltec Amendment, neither Thermaltec nor Solar Communications
Group shall amend or propose to amend its Certificate of Incorporation or
By-laws.
(e) No Dispositions. Other than transactions in the ordinary course of
business consistent with prior practice, no party shall sell, lease,
license, encumber or otherwise dispose of, or agree to sell, lease,
license, encumber or otherwise dispose of, any of its assets which are
material, individually or in the aggregate, to Thermaltec or to Solar
Communications Group.
(f) Indebtedness. No party shall incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of such
party or guarantee any debt securities of others, other than in each case
in the ordinary course of business consistent with prior practice.
(g) Other Actions. Notwithstanding the fact that such action might
otherwise be permitted pursuant to this Section 5.01, no party shall take
any action, or by inaction permit an event to occur, which would or is
reasonably likely to result in any of its representations and warranties
set forth in this Agreement being untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied. Solar Communications
Group or Thermaltec, as the case may be, shall promptly give written notice
to the other party upon becoming aware of any fact which, if known on the
date hereof would have been required to be set forth or disclosed pursuant
to this Agreement, and any impending or threatened breach in any material
respect of any of the representations and warranties contained in this
Agreement and with respect to the latter shall use all reasonable efforts
to remedy the same.
(h) Advice on Changes; Filings. Each of Solar Communications Group and
Thermaltec shall confer on a regular and frequent basis with the other,
report on operational matters and promptly advise the other orally and in
writing of any change or event having, or which, insofar as can reasonably
be foreseen, could have, a material adverse effect on such party. Each of
Solar Communications Group and Thermaltec shall promptly provide the other
(or its counsel) copies of all filings made by such party with any Federal,
state or foreign Governmental Entity in connection with this Agreement or
the transactions contemplated hereby.
(i) Benefit Plans; Employment Arrangements. Except as contemplated by
this Agreement, Thermaltec shall not enter into, adopt, amend (except as
may be required by law) or terminate any Thermaltec Benefit Plan, or other
employee benefit plan or any compensatory or benefit agreement,
arrangement, plan or policy between Thermaltec and one or more of its
directors or officers. Thermaltec shall not, except for normal increases in
the ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense, increase in any manner the compensation or fringe benefits of any
director, officer, employee or consultant or pay any benefit not required
by any plan and arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock appreciation rights or
performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(j) No Solicitations. No party shall nor shall any party authorize or
permit any of their respective officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by them to solicit, initiate or encourage
submission of proposals or offers from any person relating to any
acquisition or purchase of all or a substantial portion of the assets of,
or any material equity interest in, such party or any merger,
consolidation, amalgamation or other business combination with such party.
Section 5.02. Additional Covenants of Thermaltec. During the period from
the date of this Agreement and continuing until the Effective Time, Thermaltec
agrees that it will not, without the prior written consent of
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Solar Communications Group, acquire or agree to acquire, in consideration for
the payment of any Thermaltec Common Stock or other capital stock of
Thermaltec, by merger or consolidating with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets, in each case which are material, individually or in the
aggregate, to Thermaltec.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Access to Information. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released),
Thermaltec and Solar Communications Group shall each afford to the officers,
employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, each of Thermaltec and Solar Communications Group shall furnish
promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws, if applicable, and
(ii) all other information concerning its business, properties and personnel as
such other party may reasonably request. Unless otherwise required by law, the
parties will hold any such information which is nonpublic in confidence until
such time as such information otherwise becomes publicly available through no
wrongful act of either party, and in the event of termination of this Agreement
for any reason each party shall promptly return all nonpublic documents
obtained from any other party, and any copies made of such documents, to such
other party.
SECTION 6.02 Thermaltec Stockholders Meeting. As soon as reasonably
practicable following the date of this Agreement, Thermaltec shall take all
action reasonably necessary in accordance with the GCL, its Certificate of
Incorporation and By-laws, to cause its stockholders, by resolution, a meeting
or otherwise, to approve and adopt this Agreement and the Merger.
SECTION 6.03 Solar Communications Group Stockholders Meeting. As soon as
reasonably practicable following the date of this Agreement, Solar
Communications Group shall take all action reasonably necessary in accordance
with the BCA, its Certificate of Incorporation and By-laws, to cause its
stockholders, by resolution, a meeting or otherwise, to approve and adopt this
Agreement and the Merger.
SECTION 6.04 Legal Conditions to Merger. Each of Thermaltec and Solar
Communications Group will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
the Merger (which actions shall include, without limitation, approvals or
filings with any Governmental Entity) and will promptly cooperate with and
furnish information to each other in connection with any such requirements
imposed upon either of them in connection with the Merger. Each of Thermaltec
and Solar Communications Group will promptly take all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained by Solar Communications Group and Thermaltec in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
SECTION 6.05 Affiliates. Solar Communications Group will advise all
persons who are, at the time this Agreement is submitted for approval to the
stockholders of Solar Communications Group, "affiliates" of Solar
Communications Group for purposes of Rule 145 under the Securities Act ("Rule
145") of resale restrictions imposed by the federal securities laws, including
Rule 145, on shares of Thermaltec Common Stock received by them pursuant to the
Merger. Solar Communications Group shall obtain from each such person a letter
stating that such persons are aware of such restrictions.
SECTION 6.06 Employee Benefit Plans. Thermaltec shall, as soon as
reasonably practicable following the date of this Agreement, terminate each of
its Employee Benefit Plans.
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SECTION 6.07 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
SECTION 6.08 Brokers or Finders. Each of Solar Communications Group and
Thermaltec represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement, and
each of Solar Communications Group and Thermaltec agree to indemnify and hold
the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliate.
SECTION 6.09 Indemnification. From and after the Effective Time, neither
Solar Communications Group nor the Surviving Corporation shall assume, be
subject to or otherwise responsible for any of the debts, liabilities or
obligations of Thermaltec existing or arising at or prior to the Effective
Time. Mazzone, as the chief executive officer and principal shareholder of
Thermaltec, hereby agrees to personally indemnify and hold harmless Solar
Communications Group and the Surviving Corporation, and their respective
officers, directors, shareholders, employees, agents, representatives,
successors and assigns (collectively, the "Indemnified Persons"), from and
against, any loss, cost, damage or expense (including reasonable attorneys'
fees) arising from or related to any Covered Claim. For purposes of this
Agreement, the term "Covered Claim" shall mean any claim, litigation, lawsuit
or proceeding relating to or arising from (i) any misrepresentation or breach
of any covenant, warranty or agreement made by Thermaltec or Mazzone in this
Agreement or any document delivered in connection with the Merger, (ii) the
conduct of Thermaltec's business at or prior to the Effective Time, or (iii)
any debt, liability or obligation of Thermaltec existing or arising at or prior
to the Effective Time.
Mazzone shall, at or prior to the Effective Time, provide Solar
Communications Group with collateral (collectively, the "Collateral"),
consisting of (a) either real estate or marketable securities (other than
securities issued by Thermaltec) having a fair market value of not less than
$250,000.00 (after deducting the aggregate outstanding balance of all
indebtedness or other obligations the repayment or performance of which is
secured by a lien on or security interest in such real estate or marketable
securities) and otherwise acceptable to Solar Communications Group in its sole
discretion, pursuant to the terms and provisions of a mortgage and security
agreement or pledge and security agreement, as appropriate, in form and
substance acceptable to Solar Communications Group in its sole discretion (the
"Security Documents"), and (b) a pledge of all of the outstanding securities
issued by Thermaltec and owned by Mazzone on the date hereof (the "Pledged
Thermaltec Securities"), pursuant to the terms and provisions of a pledge and
security agreement in form and substance acceptable to Solar Communications
Group in its sole discretion (the "Pledge Agreement"). The Pledged Thermaltec
Securities shall consist of at least 1,425,000 shares of TI Common Stock. The
Collateral shall secure the payment and performance of Mazzone's
indemnification obligations hereunder with respect to any Covered Claim for
which Thermaltec, Solar Communications Group or the Surviving Corporation first
receives notice prior to the second anniversary of the Effective Time
(hereinafter, a "Timely Covered Claim").
Notwithstanding anything to the contrary contained herein, at any time
after the first anniversary of the Effective Time but prior to the second
anniversary of the Effective Time, Mazzone may submit a written request to the
Surviving Corporation for the release of a portion of the Collateral and, if at
the time such request is submitted the Surviving Corporation has previously
completed a Public Offering (as such term is defined hereinafter) and there is
no Timely Covered Claim which is then outstanding and unresolved, the Surviving
Corporation shall be obligated to release one-half of the Pledged Thermaltec
Securities to Mazzone. Such released shares shall be subject, in all respects,
to the terms and provisions of the Lock-up Agreement required to be delivered
by Mazzone pursuant to Section 7.02(p) hereof. If there is no Timely Covered
Claim outstanding and unresolved on the second anniversary of the Effective
Date, all Pledged Thermaltec Securities then being held pursuant to the
provisions of this Agreement shall be released to Mazzone.
For purposes of this Agreement, the term "Public Offering" shall mean the
consummation of an underwritten public offering of the common stock and/or the
preferred stock of the Surviving Corporation, registered under the Securities
Act, which results in receipt by the Surviving Corporation of proceeds of at
least Ten Million Dollars ($10,000,000.00).
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Furthermore, notwithstanding anything to the contrary contained herein,
the aggregate amount for which Mazzone shall be liable with respect to all
Covered Claims is Two Million Dollars ($2,000,000.00).
SECTION 6.10 Further Assurances. Solar Communications Group and Thermaltec
agree to execute and deliver all such other instruments and take all such other
action as any party may reasonably request from time to time, before the
Effective Time and without payment of further consideration, in order to
effectuate the transactions provided for in this Agreement. The parties shall
cooperate fully with each other and with their respective counsel and
accountants in connection with any steps required to be taken as part of their
respective obligations under this Agreement.
SECTION 6.11 Additional Agreements; Best Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of the stockholders of
Thermaltec and Solar Communications Group described herein.
SECTION 6.12 Transfer of Assets and Liabilities. Prior to the Effective
Time, Thermaltec shall take all necessary steps to transfer all of its assets
and liabilities to another entity, except for (a) cash in an amount of not less
than $100.00 plus an amount equal to (i) $1.00, multiplied by (ii) the
difference between 251,600 and the number of Warrants outstanding at the
Effective Time, and (b) certain net operating loss tax carryforwards
in an amount of not less than $800,000.00. It is the intention of the parties
that, at the Effective Time, Thermaltec shall be a corporate shell only, with
no assets (other than the cash and net operating loss tax carryforwards
described in the immediately preceding sentence) and no liabilities.
SECTION 6.13 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations. As promptly as practicable after the execution
of this Agreement, Solar Communications Group and Thermaltec will prepare, and
file with the SEC (if required by the provisions of the Securities Act), the
Proxy Statement/Prospectus, and Solar Communications Group and Thermaltec will
prepare and file with the SEC the Registration Statement in which the Proxy
Statement/Prospectus will be included as a prospectus (if required by the
provisions of the Securities Act). Each of Solar Communications Group and
Thermaltec will respond to any comments of the SEC, will use its respective
commercially reasonable efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after such
filing, and each of Thermaltec and Solar Communications Group will cause, if
required by the provisions of the Securities Act, the Proxy
Statement/Prospectus to be mailed to its stockholders at the earliest
practicable time after the Registration Statement is declared effective by the
SEC. As promptly as practicable after the date of this Agreement, each of Solar
Communications Group and Thermaltec will prepare and file any other filings
required to be filed by it under the Exchange Act, the Securities Act or any
other federal, foreign or Blue Sky or related laws relating to the Merger and
the transactions contemplated by this Agreement (the "Other Filings"). Each of
Solar Communications Group and Thermaltec will notify the other promptly upon
the receipt of any comments from the SEC or its staff or any other government
officials and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Registration Statement, the
Proxy Statement/Prospectus, or any Other Filing or for additional information
and will supply the other with copies of all correspondence between such party
or any of its representatives, on the one hand, and the SEC, or its staff or
any other government officials, on the other hand, with respect to the
Registration Statement, the Proxy Statement/Prospectus, the Merger or any Other
Filing. Each of Solar Communications Group and Thermaltec will cause all
documents that it is responsible for filing with the SEC or other regulatory
authorities under this Section 6.13 to comply in all material respects with all
applicable requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement/Prospectus, the Registration
Statement or any Other Filing, Solar Communications Group or Thermaltec, as the
case may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of Thermaltec and/or Solar Communications Group, such
amendment or supplement.
SECTION 6.14 Stock Options and Employee Benefits.
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(a) At the Effective Time, the Surviving Corporation will assume the
1999 Option Plan, including without limitation, to the extent required by
the Board of Directors of Solar Communications Group, any options reserved
for future issuance thereunder. At the Effective Time, each option
outstanding under the 1999 Option Plan (the "Solar Communications Group
Options"), whether or not exercisable, will be assumed by the Surviving
Corporation. Each Solar Communications Group Option so assumed by the
Surviving Corporation under this Agreement will continue to have, and be
subject to, the same terms and conditions set forth in the 1999 Option Plan
immediately prior to the Effective Time (including, without limitation, any
repurchase rights or vesting provisions), except that (i) each Solar
Communications Group Option will be exercisable (or will become exercisable
in accordance with its terms) for that number of whole shares of Thermaltec
Common Stock equal to the product of the number of shares of Solar
Communications Group Common Stock that were issuable upon exercise of such
Solar Communications Group Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number
of shares of Thermaltec Common Stock and (ii) the per share exercise price
for the shares of Thermaltec Common Stock issuable upon exercise of such
assumed Solar Communications Group Option will be equal to the quotient
determined by dividing the exercise price per share of Solar Communications
Group Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent.
(b) It is intended that each Solar Communications Group Option assumed
by the Surviving Corporation shall qualify following the Effective Time as
an incentive stock option, as defined in Section 422 of the Code, to the
extent such Solar Communications Group Option qualified as an incentive
stock option immediately prior to the Effective Time, and the provisions of
this Section 6.14 shall be applied consistent with such intent.
(c) Notwithstanding anything to the contrary in this Section 6.14, in
lieu of assuming outstanding options under the 1999 Option Plan, the
Surviving Corporation may, at its election, cause such outstanding options
to be replaced by issuing substantially equivalent replacement stock
options therefor.
SECTION 6.15 Solar Communications Group Affiliate Agreement. Solar
Communications Group will use its commercially reasonable efforts to deliver or
cause to be delivered to Thermaltec, prior to the Effective Time, from each
person who may be deemed to be, in Solar Communications Group's reasonable
judgement, affiliates of Solar Communications Group with the meaning of Rule
145 promulgated under the Securities Act (each an "Solar Communications Group
Affiliate") an executed affiliate agreement in form acceptable to Solar
Communications Group and Thermaltec in their reasonable discretion (the
"Affiliate Agreements"), each of which will be in full force and effect as of
the Effective Time. Thermaltec will be entitled to place appropriate legends on
the certificates evidencing any Thermaltec Common Stock to be received by an
Solar Communications Group Affiliate pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
the Thermaltec Common Stock, consistent with the terms of the Affiliate
Agreements.
SECTION 6.16 Tax-free Reorganization. No party shall take any action
either prior to or after the Effective Time that could reasonably be expected
to cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code.
ARTICLE VII
CONDITIONS
SECTION 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the stockholders of Thermaltec in accordance with the applicable
provisions of the GCL and by the stockholders of Solar Communications Group
in accordance with the applicable provisions of the BCA.
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(b) Other Approvals. Other than the Merger Filings, all authorizations,
consents, orders or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity required
to consummate the Merger shall have been filed, occurred or been obtained
or shall have been waived.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect; there shall not be
pending any action, proceeding or investigation before any court or
administrative agency by any Governmental Entity and any other person which
has a reasonable likelihood of success, challenging or seeking material
damages in connection with, or material changes in the terms of, the
Merger.
(d) Registration Statement. The SEC shall have declared the Registration
Statement effective. No stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the
Proxy Statement/Prospectus, shall have been initiated or threatened by the
SEC.
(e) Tax Opinions. Solar Communications Group shall have received from
Archer & Greiner, P.C., and Thermaltec shall have received from Aitken,
Irvin, Lewin, Berlin, Vrooman & Cohn, LLP, written opinions to the effect
that the Merger will constitute a reorganization within the meaning of
Section 368 of the Code. In rendering such opinions, counsel may rely on
(and to the extent reasonably required, the parties shall make) reasonable
representations related thereto.
SECTION 7.02 Conditions of Obligations of Solar Communications Group. The
obligations of Solar Communications Group to effect the Merger are subject to
the satisfaction of the following conditions unless waived by Solar
Communications Group:
(a) Representations and Warranties. The representations and warranties
of Thermaltec and Mazzone set forth in this Agreement shall be true and
correct in all material respects as of the date hereof and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, and Solar
Communications Group shall have received a certificate signed on behalf of
Thermaltec by the chief executive officer and the chief financial officer
of Thermaltec, and by Mazzone, to such effect.
(b) Performance of Obligations of Thermaltec. Thermaltec shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Solar
Communications Group shall have received a certificate signed on behalf of
Thermaltec by the chief executive officer and the chief financial officer
of Thermaltec to such effect.
(c) No Amendments to Resolutions. Neither the Board of Directors of
Thermaltec nor any committee thereof shall have amended, modified,
rescinded or repealed the resolutions adopted by such Board on May 19, 1999
(accurate and complete copies of which have been provided to Solar
Communications Group) and shall not have adopted any other resolutions in
connection with this Agreement and the transactions contemplated hereby
inconsistent with such resolutions.
(d) Opinion of Counsel. Solar Communications Group shall have received
the opinion of Aitken, Irvin, Lewin, Berlin, Vrooman & Cohn, LLP, counsel
to Thermaltec, dated the Closing Date, with respect to such matters as
Solar Communications Group may reasonably request.
(e) Material Adverse Change. Except as expressly contemplated by this
Agreement, no material adverse change shall have occurred subsequent to the
Balance Sheet Date in the financial position, results of operations,
assets, liabilities or prospects of Thermaltec, nor shall any event or
circumstance have occurred which would result in a material adverse change
in the financial position, results of operations, assets, liabilities or
aspects of Thermaltec.
(f) Uniform Commercial Code Searches. Thermaltec shall have delivered to
Solar Communications Group certified copies of Requests for Information or
Copies (Form UCC-11) or equivalent reports,
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federal and state tax lien searches, judgment searches and pending suit
searches from such jurisdictions as may be requested by Solar
Communications Group, listing all effective financing statements,
judgments, tax liens, judgments and pending suits which name Thermaltec
(under its present name or any previous name or any trade name) as debtor,
together with copies of such financing statements, judgments, tax liens,
etc. Such searches shall indicate the existence of no liens, claims,
judgments or security interests, or pending suits.
(g) Closing Balance Sheet. Solar Communications Group shall have
received a balance sheet (the "Closing Balance Sheet")from Thermaltec,
dated as of the date of Closing, and certified as being true, complete and
accurate in all respects by the chief financial officer of Thermaltec,
which shows that the total liabilities of Thermaltec do not exceed $-0- in
the aggregate.
(h) Completion of Due Diligence. Solar Communications Group shall
satisfactorily complete a due diligence audit of the business, financial
condition and affairs of Thermaltec, including without limitation
confirmation that the September 30, 1998 year-end results of Thermaltec
previously provided by Thermaltec to Solar Communications Group are true
and correct in all material respects.
(i) Audited Financial Statements. Solar Communications Group shall
receive audited financial statements for the last two (2) fiscal years of
Thermaltec, prepared by Caprarao, Centofranchi, Kramer & Co. P.C., at
Thermaltec's sole cost and expense, in accordance with generally accepted
accounting principles and otherwise in form and substance acceptable to
Solar Communications Group in its reasonable discretion.
(j) Thermaltec Common Stock. The shares of Thermaltec Common Stock to be
issued to holders of Solar Communications Group Common Stock in the Merger
shall be validly issued, fully paid, nonassessable, free of preemptive
rights and free and clear of any liens, claims, encumbrances, security
interests, equities, charges and options of any nature whatsoever.
(k) Capitalization. At the Closing Date, Thermaltec shall have (i) not
more than 2,578,118 shares of Thermaltec Common Stock issued and
outstanding (plus any shares of Thermaltec Common Stock issued pursuant to
an exercise of the Warrants between the date hereof and the Effective
Date), and (ii) not granted any options or warrants to purchase, or issued
any other securities convertible into, or entered into any agreements
(other than this Agreement and the certificates evidencing the Warrants) to
issue, any of its securities, other than as disclosed or provided in this
Agreement. Thermaltec shall immediately notify Solar Communications Group
in writing of the exercise of any Warrant occurring between the date hereof
and the Effective Date.
(l) Security Documents. Solar Communications Group shall receive a fully
executed copy of each Security Document.
(m) Pledge Agreement. Solar Communications Group shall receive a fully
executed copy of the Pledge Agreement, together with all instruments
required to be delivered to Solar Communications Group pursuant to the
terms and provisions of the Pledge Agreement.
(n) Reporting Company Status. Thermaltec shall have taken all steps
necessary to become a "reporting company" within the meaning of the
Exchange Act.
(o) Equity Contributions. Solar Communications Group shall have received
equity contributions of at least Two Million Dollars ($2,000,000) from or
through Thermaltec and/or Mazzone, or their respective affiliates, in form
and substance satisfactory to Solar Communications Group in its reasonable
discretion.
(p) Lock-Up Agreements. Mazzone, and such of his affiliates or
affiliates of Thermaltec as may be designated by Solar Communications
Group, prior to the Effective Time, shall have executed and delivered to
Solar Communications Group a Lock-Up Agreement, in form and substance
satisfactory to Solar Communications Group in its reasonable discretion,
whereby Mazzone and each such affiliate agrees not to sell, encumber or
otherwise transfer (i) more than twenty percent (20%), in the aggregate, of
the shares of common stock or other securities of Thermaltec owned by
Mazzone or such affiliate at the Effective Time prior to the first
anniversary of the Effective Time, or (ii) more than twenty percent
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(20%) in the aggregate, of the shares of common stock or other securities
of Thermaltec owned by Mazzone or such affiliate at the Effective Time at
any time after the first anniversary of the Effective Time but prior to the
second anniversary of the Effective Time. Any transfer permitted under the
terms of any such Lock-Up Agreement shall only be made in compliance with
all applicable securities laws.
(q) Completion of Other Filings. Solar Communications Group shall have
received evidence of the completion of all recordings and filings of the
Security Documents as may be necessary or, in the opinion of Solar
Communications Group, desirable to perfect the security interests and liens
created or to be created by the Security Documents. Solar Communications
Group shall have also received evidence of all other actions necessary or,
in the opinion of Solar Communications Group, desirable to create, perfect
and protect the security interests and liens intended to be created by the
Security Documents.
SECTION 7.03 Conditions of Obligations of Thermaltec. The obligation of
Thermaltec to effect the Merger is subject to the satisfaction of the following
conditions unless waived by Thermaltec:
(a) Representations and Warranties. The representations and warranties
of Solar Communications Group set forth in this Agreement shall be true and
correct in all material respects as of the date hereof and (except to the
extent such representations speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and Thermaltec shall
have received a certificate signed on behalf of Solar Communications Group
by its chief executive officers and chief financial officers to such
effect.
(b) Performance of Obligations of Solar Communications Group. Solar
Communications Group shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and Thermaltec shall have received a certificate
signed on behalf of Solar Communications Group by its chief executive
officers and chief financial officers to such effect.
(c) No Amendments to Resolutions. Neither the Board of Directors of
Solar Communications Group nor any committee thereof shall have amended,
modified, rescinded or repealed the resolutions adopted by such Board by
unanimous written consent dated May 21, 1999 (accurate and complete copies
of which have been provided to Thermaltec), and shall not have adopted any
other resolutions in connection with this Agreement and the transactions
contemplated hereby which are inconsistent with such resolutions.
(d) Capitalization. At the Closing Date, Solar Communications Group
shall have (i) (including any shares issuable pursuant to the exercise of
options issued under the 1999 Option Plan) not more than 6,450 shares of
Solar Communications Group Common Stock issued and outstanding, and (ii)
not granted any options or warrants to purchase, or issued any other
securities convertible into, or entered into any agreements (other than
this Agreement) to issue, any of its securities, other than as disclosed or
provided in this Agreement.
(e) Material Adverse Change. No material adverse change shall have
occurred subsequent to the Reference Date in the financial position,
results of operations, assets, liabilities or prospects of Solar
Communications Group, nor shall any event or circumstance have occurred
which would result in a material adverse change in the financial position,
results of operations, assets, liabilities or aspects of Solar
Communications Group.
(f) Opinion of Counsel. Thermaltec shall have received the opinion of
Archer & Greiner, A Professional Corporation, counsel to Solar
Communications Group, dated the Closing Date, with respect to such matters
as Thermaltec may reasonably request.
(g) Equity Contributions. Solar Communications Group shall have received
commitments for equity contributions of at least Three Million Dollars
($3,000,000), which commitments shall be subject only to consummation of
the Merger and otherwise in form and substance satisfactory to Thermaltec
in its reasonable discretion.
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<PAGE>
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of Thermaltec or
Solar Communications Group:
(a) by mutual consent of the Boards of Directors of Solar Communications
Group and Thermaltec; or
(b) (i) by either Solar Communications Group or Thermaltec if there
shall have been a material breach of any representation, warranty, covenant
or agreement on the part of the other set forth in this Agreement which
breach shall not have been cured, in the case of a representation or
warranty, prior to the Closing or, in the case of a covenant or agreement,
within two (2) business days following receipt by the breaching party of
notice of such breach, or (ii) by either Solar Communications Group or
Thermaltec if any permanent injunction or other order of a court or other
competent authority preventing the consummation of the Merger shall have
become final and non-appealable; or
(c) by either Solar Communications Group or Thermaltec if the Merger
shall not have been consummated before December 31, 1999, other than as a
result of a breach by the party attempting to terminate this Agreement; or
(d) by either party if any required approval of the stockholders of
Thermaltec or Solar Communications Group shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a
duly held meeting of stockholders or otherwise or at any adjournment of
such meeting; or
(e) by Solar Communications Group if any of the conditions specified in
Sections 7.01 or 7.02 has not been met or waived at such time as such
conditions can no longer be satisfied; or
(f) by Thermaltec if any of the conditions specified in Sections 7.01 or
7.03 has not been met or waived at such time as such conditions can no
longer be satisfied.
SECTION 8.02 Effect of Termination. In the event of a termination of this
Agreement by either Thermaltec or Solar Communications Group as provided in
Section 8.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Solar Communications Group or Thermaltec
or their respective officers or directors, except (i) with respect to the last
sentence of Section 6.01, and Sections 6.07 and 6.08 and (ii) to the extent
that such termination results from the willful breach by a party hereto of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Merger by the stockholders of Thermaltec or of Solar Communications
Group, but, after any such approval, no amendment shall be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. Notwithstanding the foregoing, and except
as otherwise provided by law, any amendment, waiver, consent or approval
contemplated by this Agreement to be granted or delivered by Solar
Communications Group or Thermaltec, shall be deemed to have been so granted or
delivered if given or approved by the President or Chief Executive Officer of
such party.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
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<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties. Except as
otherwise specifically provided herein, the representations and warranties
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time.
SECTION 9.02 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
personally delivered, or on the day specified for delivery when deposited with
a courier service such as Federal Express for delivery to the intended
addressee, or two days following the day when deposited in the United States
mails, by registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
(a) if to Solar Communications Group, to
Solar Communications Group, Inc.
21 East Main Street
Suite 205
Millville, New Jersey 08332
Attention: James M. Rossi, President
Telecopy No.: (609) 825-5959
with a copy to:
Deborah A. Hays, Esquire
Archer & Greiner, A Professional Corporation
One Centennial Square
Haddonfield, New Jersey 08033
Telecopy No.: (609) 795-0574
and
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<PAGE>
(b) if to Thermaltec or Mazzone, to
Thermaltec International, Corp.
68A Lamar Street
West Babylon, New York 11704
Attention: Andrew B. Mazzone, President
Telecopy No.: (516) 643-2514
with a copy to
Edward A. Vrooman, Esquire
Aitken, Irvin, Lewin, Berlin, Vrooman & Cohn, LLP
2 Gannett Drive
White Plains, New York 10604
Telecopy No.: (914) 694-1647
or to such other address as may be designated by a party to the other parties
hereto in accordance with the notice provisions of this Section 9.02.
SECTION 9.03 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrases, "the date of this
Agreement," "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the first
paragraph of this Agreement.
SECTION 9.04 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 9.05 Schedules and Exhibits. All Schedules and Exhibits referred
to herein or attached hereto constitute a part of this Agreement. Disclosure on
any Schedule shall be deemed to satisfy the disclosure requirements of any
other Schedule to which such information may also be applicable, without any
necessity to reference such Schedule in any other Schedule.
SECTION 9.06 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 9.07 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof; provided that issues involving the corporate governance of any
of the parties hereto shall be governed by their respective jurisdictions of
incorporation. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any state or federal court within the District of New Jersey,
in connection with any matter based upon or arising out of this Agreement or
the matters contemplated herein, other than issues involving the corporate
governance of any of the parties hereto, agrees that process may be served upon
them in any manner authorized by the laws of the State of New Jersey for such
persons, and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction and such process.
SECTION 9.08 Severability. If any term or other provision of this
Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination
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<PAGE>
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the maximum extent possible.
SECTION 9.09 Publicity. Except as otherwise required by law or the rules
of the SEC or the NASD, for so long as this Agreement is in effect, neither
Thermaltec nor Solar Communications Group shall issue or cause the publication
of any press release or other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
party. Any such press release or public announcement shall be subject to the
prior review of the other party, which shall not be unreasonably delayed.
SECTION 9.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
SECTION 9.11 Waiver of Jury Trial. Each of Thermaltec, Solar
Communications Group and Mazzone hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this agreement or the actions
of Thermaltec, Solar Communications Group or Mazzone in the negotiation,
administration, performance and enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, Solar Communications Group, Thermaltec and Mazzone
have caused this Agreement to be duly executed as of the date first written
above.
Attest: CAMANCO COMMUNICATIONS GROUP, INC.
- ------------------------------------- By----------------------------------
Name: Name:
Title: Secretary Title:
Attest: THERMALTEC INTERNATIONAL, CORP.
- ------------------------------------- By----------------------------------
Name: Name:
Title: Secretary Title:
Witness:
- ------------------------------------- ------------------------------------
Name: ANDREW B. MAZZONE
A-30
<PAGE>
SCHEDULE 3.09
THERMALTEC EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS
None.
A-31
<PAGE>
ANNEX B
DELAWARE CODE
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER OR CONSOLIDATION
Section 262 Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251 (other than a merger effected pursuant to ss.
251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to ss.ss. 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
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<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall include
in such notice a copy of this section. Each stockholder electing to demand the
appraisal of such stockholder's shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do so
by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228 or ss.
253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constitutent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.
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(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of
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uncertificated stock forthwith, and the case of holders of shares represented
by certificates upon the surrender to the corporation of the certificates
representing such stock. The Court's decree may be enforced as other decrees in
the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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ANNEX C
NEW JERSEY STATUTES
TITLE 14A. CORPORATIONS, GENERAL
CHAPTER 11. RIGHTS OF DISSENTING SHAREHOLDERS
14A:11-1. Right of shareholders to dissent
(1) Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions
(a) Any plan of merger or consolidation to which the corporation is a
party, provided that, unless the certificate of incorporation otherwise
provides
(i) a shareholder shall not have the right to dissent from any plan of
merger or consolidation with respect to shares
(A) of a class or series which is listed on a national securities exchange
or is held of record by not less than 1,000 holders on the record date fixed to
determine the shareholders entitled to vote upon the plan of merger or
consolidation; or
(B) for which, pursuant to the plan of merger or consolidation, he will
receive (x) cash, (y) shares, obligations or other securities which, upon
consummation of the merger or consolidation, will either be listed on a
national securities exchange or held of record by not less than 1,000 holders,
or (z) cash and such securities;
(ii) a shareholder of a surviving corporation shall not have the right to
dissent from a plan of merger, if the merger did not require for its approval
the vote of such shareholders as provided in section 14A:10-5.1 or in
subsection 14A:10-3(4), 14A:10-7(2) or 14A:10-7(4); or
(b) Any sale, lease, exchange or other disposition of all or substantially
all of the assets of a corporation not in the usual or regular course of
business as conducted by such corporation, other than a transfer pursuant to
subsection (4) of N.J.S. 14A:10-11, provided that, unless the certificate of
incorporation otherwise provides, the shareholder shall not have the right to
dissent
(i) with respect to shares of a class or series which, at the record date
fixed to determine the shareholders entitled to vote upon such transaction, is
listed on a national securities exchange or is held of record by not less than
1,000 holders; or
(ii) from a transaction pursuant to a plan of dissolution of the
corporation which provides for distribution of substantially all of its net
assets to shareholders in accordance with their respective interests within one
year after the date of such transaction, where such transaction is wholly for
(A) cash; or
(B) shares, obligations or other securities which, upon consummation of
the plan of dissolution will either be listed on a national securities exchange
or held of record by not less than 1,000 holders; or
(C) cash and such securities; or
(iii) from a sale pursuant to an order of a court having jurisdiction.
(2) Any shareholder of a domestic corporation shall have the right to
dissent with respect to any shares owned by him which are to be acquired
pursuant to section 14A:10-9.
(3) A shareholder may not dissent as to less than all of the shares owned
beneficially by him and with respect to which a right of dissent exists. A
nominee or fiduciary may not dissent on behalf of any beneficial owner as to
less than all of the shares of such owner with respect to which the right of
dissent exists.
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<PAGE>
(4) A corporation may provide in its certificate of incorporation that
holders of all its shares, or of a particular class or series thereof, shall
have the right to dissent from specified corporate actions in addition to those
enumerated in subsection 14A:11-1(1), in which case the exercise of such right
of dissent shall be governed by the provisions of this Chapter.
14A:11-2. Notice of dissent; demand for payment; endorsement of certificates
(1) Whenever a vote is to be taken, either at a meeting of shareholders or
upon written consents in lieu of a meeting pursuant to section 14A:5-6, upon a
proposed corporate action from which a shareholder may dissent under section
14A:11-1, any shareholder electing to dissent from such action shall file with
the corporation before the taking of the vote of the shareholders on such
corporate action, or within the time specified in paragraph 14A:5-6(2)(b) or
14A:5-6(2)(c), as the case may be, if no meeting of shareholders is to be held,
a written notice of such dissent stating that he intends to demand payment for
his shares if the action is taken.
(2) Within 10 days after the date on which such corporate action takes
effect, the corporation, or, in the case of a merger or consolidation, the
surviving or new corporation, shall give written notice of the effective date
of such corporate action, by certified mail to each shareholder who filed
written notice of dissent pursuant to subsection 14A:11-2(1), except any who
voted for or consented in writing to the proposed action.
(3) Within 20 days after the mailing of such notice, any shareholder to
whom the corporation was required to give such notice and who has filed a
written notice of dissent pursuant to this section may make written demand on
the corporation, or, in the case of a merger or consolidation, on the surviving
or new corporation, for the payment of the fair value of his shares.
(4) Whenever a corporation is to be merged pursuant to section 14A:10-5.1
or subsection 14A:10-7(4) and shareholder approval is not required under
subsections 14A:10-5.1(5) and 14A:10-5.1(6), a shareholder who has the right to
dissent pursuant to section 14A:11-1 may, not later than 20 days after a copy
or summary of the plan of such merger and the statement required by subsection
14A:10-5.1(2) is mailed to such shareholder, make written demand on the
corporation or on the surviving corporation, for the payment of the fair value
of his shares.
(5) Whenever all the shares, or all the shares of a class or series, are
to be acquired by another corporation pursuant to section 14A:10-9, a
shareholder of the corporation whose shares are to be acquired may, not later
than 20 days after the mailing of notice by the acquiring corporation pursuant
to paragraph 14A:10-9(3)(b), make written demand on the acquiring corporation
for the payment of the fair value of his shares.
(6) Not later than 20 days after demanding payment for his shares pursuant
to this section, the shareholder shall submit the certificate or certificates
representing his shares to the corporation upon which such demand has been made
for notation thereon that such demand has been made, whereupon such certificate
or certificates shall be returned to him. If shares represented by a
certificate on which notation has been made shall be transferred, each new
certificate issued therefor shall bear similar notation, together with the name
of the original dissenting holder of such shares, and a transferee of such
shares shall acquire by such transfer no rights in the corporation other than
those which the original dissenting shareholder had after making a demand for
payment of the fair value thereof.
(7) Every notice or other communication required to be given or made by a
corporation to any shareholder pursuant to this Chapter shall inform such
shareholder of all dates prior to which action must be taken by such
shareholder in order to perfect his rights as a dissenting shareholder under
this Chapter.
14A:11-3. "Dissenting shareholder" defined; date for determination of fair
value
(1) A shareholder who has made demand for the payment of his shares in the
manner prescribed by subsection 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) is
hereafter in this Chapter referred to as a "dissenting shareholder."
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<PAGE>
(2) Upon making such demand, the dissenting shareholder shall cease to
have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights of a dissenting shareholder under this
Chapter.
(3) "Fair value" as used in this Chapter shall be determined
(a) As of the day prior to the day of the meeting of shareholders at which
the proposed action was approved or as of the day prior to the day specified by
the corporation for the tabulation of consents to such action if no meeting of
shareholders was held; or
(b) In the case of a merger pursuant to section 14A:10-5.1 or subsection
14A:10-7(4) in which shareholder approval is not required, as of the day prior
to the day on which the board of directors approved the plan of merger; or
(c) In the case of an acquisition of all the shares or all the shares of a
class or series by another corporation pursuant to section 14A:10-9, as of the
day prior to the day on which the board of directors of the acquiring
corporation authorized the acquisition, or, if a shareholder vote was taken
pursuant to section 14A:10-12, as of the day provided in paragraph 14A:11-
3(3)(a).
In all cases, "fair value" shall exclude any appreciation or depreciation
resulting from the proposed action.
14A:11-4. Termination of right of shareholder to be paid the fair value of his
shares
(1) The right of a dissenting shareholder to be paid the fair value of his
shares under this Chapter shall cease if
(a) he has failed to present his certificates for notation as provided by
subsection 14A:11-2(6), unless a court having jurisdiction, for good and
sufficient cause shown, shall otherwise direct;
(b) his demand for payment is withdrawn with the written consent of the
corporation;
(c) the fair value of the shares is not agreed upon as provided in this
Chapter and no action for the determination of fair value by the Superior Court
is commenced within the time provided in this Chapter;
(d) the Superior Court determines that the shareholder is not entitled to
payment for his shares;
(e) the proposed corporate action is abandoned or rescinded; or
(f) a court having jurisdiction permanently enjoins or sets aside the
corporate action.
(2) In any case provided for in subsection 14A:11-4(1), the rights of the
dissenting shareholder as a shareholder shall be reinstated as of the date of
the making of a demand for payment pursuant to subsections 14A:11-2(3), 14A:11-
2(4) or 14A:11-2(5) without prejudice to any corporate action which has taken
place during the interim period. In such event, he shall be entitled to any
intervening preemptive rights and the right to payment of any intervening
dividend or other distribution, or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu
thereof, at the election of the board, the fair value thereof in cash as of the
time of such expiration or completion.
14A:11-5. Rights of dissenting shareholder
(1) A dissenting shareholder may not withdraw his demand for payment of
the fair value of his shares without the written consent of the corporation.
(2) The enforcement by a dissenting shareholder of his right to receive
payment for his shares shall exclude the enforcement by such dissenting
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in subsection 14A:11-4(2) and
except that this subsection shall not exclude the right of such dissenting
shareholder to bring or maintain an appropriate action to obtain relief on the
ground that such corporate action will be or is ultra vires, unlawful or
fraudulent as to such dissenting shareholder.
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<PAGE>
14A:11-6. Determination of fair value by agreement
(1) Not later than 10 days after the expiration of the period within which
shareholders may make written demand to be paid the fair value of their shares,
the corporation upon which such demand has been made pursuant to subsections
14A:11-2(3), 14A:11- 2(4) or 14A:11-2(5) shall mail to each dissenting
shareholder the balance sheet and the surplus statement of the corporation
whose shares he holds, as of the latest available date which shall not be
earlier than 12 months prior to the making of such offer and a profit and loss
statement or statements for not less than a 12-month period ended on the date
of such balance sheet or, if the corporation was not in existence for such
12-month period, for the portion thereof during which it was in existence. The
corporation may accompany such mailing with a written offer to pay each
dissenting shareholder for his shares at a specified price deemed by such
corporation to be the fair value thereof. Such offer shall be made at the same
price per share to all dissenting shareholders of the same class, or, if
divided into series, of the same series.
(2) If, not later than 30 days after the expiration of the 10-day period
limited by subsection 14A:11-6(1), the fair value of the shares is agreed upon
between any dissenting shareholder and the corporation, payment therefor shall
be made upon surrender of the certificate or certificates representing such
shares.
14A:11-7. Procedure on failure to agree upon fair value; commencement of action
to determine fair value
(1) If the fair value of the shares is not agreed upon within the 30-day
period limited by subsection 14A:11-6(2), the dissenting shareholder may serve
upon the corporation upon which such demand has been made pursuant to
subsections 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) a written demand that it
commence an action in the Superior Court for the determination of the fair
value of the shares. Such demand shall be served not later than 30 days after
the expiration of the 30-day period so limited and such action shall be
commenced by the corporation not later than 30 days after receipt by the
corporation of such demand, but nothing herein shall prevent the corporation
from commencing such action at any earlier time.
(2) If a corporation fails to commence the action as provided in
subsection 14A:11-7(1), a dissenting shareholder may do so in the name of the
corporation, not later than 60 days after the expiration of the time limited by
subsection 14A:11-7(1) in which the corporation may commence such an action.
14A:11-8. Action to determine fair value; jurisdiction of court; appointment of
appraiser In any action to determine the fair value of shares pursuant to this
Chapter:
(a) The Superior Court shall have jurisdiction and may proceed in the
action in a summary manner or
otherwise;
(b) All dissenting shareholders, wherever residing, except those who have
agreed with the corporation upon the price to be paid for their shares, shall
be made parties thereto as an action against their shares quasi in rem;
(c) The court in its discretion may appoint an appraiser to receive
evidence and report to the court on the question of fair value, who shall have
such power and authority as shall be specified in the order of his appointment;
and
(d) The court shall render judgment against the corporation and in favor
of each shareholder who is a party to the action for the amount of the fair
value of his shares.
14A:11-9. Judgment in action to determine fair value
(1) A judgment for the payment of the fair value of shares shall be
payable upon surrender to the corporation of the certificate or certificates
representing such shares.
(2) The judgment shall include an allowance for interest at such rate as
the court finds to be equitable, from the date of the dissenting shareholder's
demand for payment under subsections 14A:11-2(3), 14A:11-2(4)
C-4
<PAGE>
or 14A:11-2(5) to the day of payment. If the court finds that the refusal of
any dissenting shareholder to accept any offer of payment, made by the
corporation under section 14A:11-6, was arbitrary, vexatious or otherwise not
in good faith, no interest shall be allowed to him.
14A:11-10. Costs and expenses of action
The costs and expenses of bringing an action pursuant to section 14A:11-8
shall be determined by the court and shall be apportioned and assessed as the
court may find equitable upon the parties or any of them. Such expenses shall
include reasonable compensation for and reasonable expenses of the appraiser,
if any, but shall exclude the fees and expenses of counsel for and experts
employed by any party; but if the court finds that the offer of payment made by
the corporation under section 14A:11-6 was not made in good faith, or if no
such offer was made, the court in its discretion may award to any dissenting
shareholder who is a party to the action reasonable fees and expenses of his
counsel and of any experts employed by the dissenting shareholder.
14A:11-11. Disposition of shares acquired by corporation
(1) The shares of a dissenting shareholder in a transaction described in
subsection 14A:11-1(1) shall become reacquired by the corporation which issued
them or by the surviving corporation, as the case may be, upon the payment of
the fair value of shares.
(2) (Deleted by amendment, P.L.1995, c. 279.)
(3) In an acquisition of shares pursuant to section 14A:10-9 or section
14A:10-13, the shares of a dissenting shareholder shall become the property of
the acquiring corporation upon the payment by the acquiring corporation of the
fair value of such shares. Such payment may be made, with the consent of the
acquiring corporation, by the corporation which issued the shares, in which
case the shares so paid for shall become reacquired by the corporation which
issued them and shall be cancelled.
C-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
For information regarding provisions under which a director or officer of
the Registrant may be insured or indemnified in any manner against any liability
which such person may incur in such person's capacity as such, reference is made
to the Registrant's Certificate of Incorporation and Bylaws, copies of which are
incorporated herein by reference, which provide in general that the Registrant
shall indemnify its officers and directors to the fullest extent authorized by
law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization dated June 16, 1999 among Solar Communications
Group, Inc., Thermaltec International, Corp., and Andrew B. Mazzone, filed herewith as
Annex A to the joint proxy statement/prospectus
3.1 Certificate of Incorporation, as amended
3.2 Bylaws, as amended
4.1 Specimen Stock Certificate
4.2 Specimen Warrant Certificate
5.1* Opinion of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP concerning legality of shares
8.1* Opinion of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP concerning tax matters
8.2* Opinion of Archer & Greiner, P.C. concerning tax matters
10.1 Thermaltec 1999 Stock Option Plan
21.1 Subsidiaries of Thermaltec International, Corp.
23.1 Consent of Withum, Smith & Brown
23.2 Consent of Capraro, Centofranchi, Kramer & Co. P.C.
23.3* Consent of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP (included in Exhibit 5.1)
23.4* Consent of Archer & Greiner, P.C. (included in Exhibit 8.2)
27.1 Financial Data Schedule for Camanco Communications, Inc. (formerly known as Solar
Communications Group, Inc.)
27.2 Financial Data Schedule for Thermaltec International, Corp. and Subsidiaries
99.1* Thermaltec Proxy Card
99.2* Camanco Communications Proxy Card
99.3* Consent of James M. Rossi to Become a Director of Thermaltec Following the Merger
99.4* Consent of Alisa A. Rossi to Become a Director of Thermaltec Following the Merger
99.5* Consent of Monty S. August to Become a Director of Thermaltec Following the Merger
99.6* Consent of Domenic J. Romano to Become a Director of Thermaltec Following the Merger
99.7* Consent of Raymond T. Brown to Become a Director of Thermaltec Following the Merger
</TABLE>
- ------------
*To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any other material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(b) (1) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person
or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (b)(1) immediately preceding or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933, as
amended, and is used in connection with an offering of securities subject to
Rule 415, will be filed as part of an amendment to the registration
statement and will not be used until such amendment is effective, and that,
for purposes of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one (1) business day of
receipt of such request, and to send the incorporated documents by
first-class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
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<PAGE>
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duty caused this Pre-Effective Amendment No. 2 to the Registration Statement
on Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in West Babylon, New York, as of November 15, 1999.
THERMALTEC INTERNATIONAL, CORP.
By: /s/ Andrew B. Mazzone
------------------------------------
Andrew B. Mazzone, President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement on Form S-4 has been
signed by the following persons as of November 15, 1999 in the capacities
indicated:
Signatures Title Date
---------- ----- -----
/s/ Andrew B. Mazzone President and Sole Director November 15, 1999
- ----------------------------- (Chief executive officer and
ANDREW B. MAZZONE chief accounting officer)
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization dated June 16, 1999 among Solar Communications
Group, Inc., Thermaltec International, Corp., and Andrew B. Mazzone, filed herewith as
Annex A to the joint proxy statement/prospectus
3.1 Certificate of Incorporation, as amended
3.2 Bylaws, as amended
4.1 Specimen Stock Certificate
4.2 Specimen Warrant Certificate
5.1* Opinion of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP concerning legality of shares
8.1* Opinion of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP concerning tax matters
8.2* Opinion of Archer & Greiner, P.C. concerning tax matters
10.1 Thermaltec 1999 Stock Option Plan
21.1 Subsidiaries of Thermaltec International, Corp.
23.1 Consent of Withum, Smith & Brown
23.2 Consent of Capraro, Centofranchi, Kramer & Co. P.C.
23.3* Consent of Aitken Irvin Lewin Berlin Vrooman & Cohn, LLP (included in Exhibit 5.1)
23.4* Consent of Archer & Greiner, P.C. (included in Exhibit 8.2)
27.1 Financial Data Schedule for Camanco Communications, Inc. (formerly known as
Solar Communications Group, Inc.)
27.2 Financial Data Schedule for Thermaltec International, Corp. and Subsidiaries
99.1* Thermaltec Proxy Card
99.2* Camanco Communications Proxy Card
99.3* Consent of James M. Rossi to Become a Director of Thermaltec Following the Merger
99.4* Consent of Alisa A. Rossi to Become a Director of Thermaltec Following the Merger
99.5* Consent of Monty S. August to Become a Director of Thermaltec Following the Merger
99.6* Consent of Domenic J. Romano to Become a Director of Thermaltec Following the Merger
99.7* Consent of Raymond T. Brown to Become a Director of Thermaltec Following the Merger
</TABLE>
- ------------
*To be filed by amendment.
<PAGE>
CONSENT OF INDEPENDENT
AUDITORS
We hereby consent to the use in the Registration Statement of Thermaltec
International Corp. on Form S-4, Amendment #2, of our report dated July 1, 1999,
on the financial statements of Camanco Communications, Inc. (formerly known as
Solar Communications Group, Inc.) as of September 30, 1998 and 1997 and for the
year ended September 30, 1998 and for the period October 7, 1996 (date of
inception) to September 30, 1997, which financial statements appear in the
Registration Statement. We also consent to the references to us under the
headings "Experts" in such prospectus.
/s/ Withum, Smith & Brown
- --------------------------
Withum, Smith & Brown
Red Bank, New Jersey
November 16, 1999
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm, Capraro, Centofranchi, Kramer &
Co., P.C., under the caption "Experts", and to the use of our report dated
February 12, 1999, on the consolidated balance sheet of Thermaltec International
Corp. and Subsidiaries, as of September 30, 1998 and 1997 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended September 30, 1998 and 1997, in its Registration Statement on
Form S-4 dated November 16, 1999.
/s/ Capraro, Centofranchi, Kramer & Co., P.C.
---------------------------------------------
Capraro, Centofranchi, Kramer & Co., P.C.
South Huntington, New York
November 16, 1999
