Technical Ventures, Inc (TEVT) - Description of business
Technical Ventures Inc. (TVI) is a New York State corporation formed on June 14, 1985 to raise capital for the purpose of seeking business acquisition possibilities throughout North America. The primary objective was to search for a business which in the opinion of its management, demonstrated long-term growth potential that would warrant involvement. On April 14, 1986, TVI acquired all the issued and outstanding shares of common stock of Mortile Industries Ltd. (Mortile) a Canadian corporation.
Technical Ventures Inc.'s subsidiary Mortile Industries Ltd., deals in the design, development, and manufacturing of proprietary polymers, composite and specialty compounds; additionally Mortile compounds proprietary formulations of the customer. The application of TVI's products expands into every area of plastics. Repetitive business is constant, because of the technical complexity of the various products and loyalty to TVI by it's customers.
Prior to April 1992, TVI had been considered to be in development.
Since inception, $ 3,514,457US has been expended in the development of products, including $114,512 in fiscal 2004, $117,812 in 2003 and $68,894 during fiscal 2002.
Present operations, assets and employees are primarily those of Mortile. At June 30, 2004 there were twelve full time employees, all being employees of Mortile.
Having built a background in technology, coupled with management's expertise, customers support, future planning strategies and with financial backing; Technical Ventures and its subsidiary Mortile Industries, Ltd. is poised for rapid growth.
Product & Service Description:
The development of the products and service has been a lengthy process. However, the management believes the market potential of the products will justify the time and costs. The products have the means to lower their client's cost of raw materials while maintaining the product's performance. This has led to several reputable firms taking notice of the Company's achievements
Subsidiary, Mortile Industries Ltd., deals in proprietary polymer/thermoplastic compounds, composite compounds (a composition of plastic with other powdered materials), and specialty compounds which it produces by mixing and pelletizing proprietary formulations specified by its customers. It is engaged in the design, development and manufacture of highly engineered specially formulated, high performance polymer materials. Products and services are sold to end-use manufacturers in the industrial equipment, transportation, electronics, munitions and process industries markets.
Some of the Company's keys to success are:
Success rate and performance of the Company's products
Technical expertise and background of scientists and engineers
Technical support provided for customers
Global patents and licenses on the technologies
Strategic alliances with large multinational firms
Timing in a market where change is needed.
Efforts have focused on the development of proprietary thermoplastic compounds (plastics mixed with other solid materials) and specialty compounding services provided by mixing and pelletizing proprietary formulations specified by its customers.
A polymer consists of chains of molecules, called monomers, that combine or polymerize (normally with help from a catalyst) to form large molecular structures. Polymers are very versatile materials. For example, they can be cast into molds to create intricate structures, extruded through a spinneret to make fibers, or blended with liquids - including water - to make coatings, adhesives and thickeners. As a result, polymers have replaced, and continue to replace, natural products such as metal, wood, paper, cotton and glass in a broad range of applications. Moreover, the substitution is not driven primarily by cost, but by the increasing desirability of polymers based on their versatility and performance characteristics.
In light of growing environmental pollution concerns, It is expected that the plastics industry will be forced by legislation to develop and manufacture plastics that are recyclable or to include recycled content. The plastics industry has undertaken extensive research to develop cost-effective products that are both durable and flame-retardant.
The object of composite technology is to mix plastic binders with powder materials of choice, and to prove specified strength and durability designed for use In a variety of plastics and foaming processes including injection, molding and extruding. The end result is a material that is both strong and durable, yet has flexible design options so it can be used in injection molding applications.
Injection molding is a process by which a compound is heated to a fluid state and injected into a cavity mold in the shape or form and density required. The fluid compound flows to the shape of the mold and is cooled to a solid state and then removed. Injection molding is a significantly less expensive alternative to machining and die casting.
This process reduces the cost of machining and die casting significantly . By applying existing technology to new ideas, TVI can successfully produce, for example, metal/plastic compounds suited to meet demand for the replacement of lead and other metals in many applications. Opportunities to market these compounds exist in a variety of industries including automotive and munitions.
Specialty Compounds Technology:
Specialty compounding may be defined as the compounding and enhancement of the customer's proprietary formulation(s) into pellet form, which is a semi-manufactured form. This process involves the customer's presentation of required mix components, the physical mixing of the components, and then pelletizing the compound. Component raw materials for this process may be supplied by the customer or purchased on behalf of the customer.
One aspect of this service is what is known as master batches. This is the pre-dispersion of highly concentrated powders, which are to be mixed and diluted by "letdown" with resins in the final stages of manufacture. The predisposed powders are added to the resins at the end-user extruder or molder. Typical master batches are: foaming agents, sulfur, zinc oxide, flame retardants, curing agents, processing aids, antioxidant stabilizers and slip and anti block agents.
A large portion of TVI's revenue for fiscal year end 2002, and the majority of efforts have been concentrated on specialty compounding. The customers need to enhance and compound their proprietary formulations into a pellet form. With the assistance of the customer, TVI formulates the most effective and efficient method to mix the components.
Customers who retain TVI for specialty compounding are manufacturers of end-use plastics and plastic products. Generally, many manufacturers of these products do not compound component materials into a pelletized form themselves prior to manufacturing end products. However, an increasing number of manufacturers prefer this process because it provides for a more perfect dispersion of component materials which are often in powder form, thereby streamlining their thermoforming systems.
Specialty compounding is particularly useful when manufacturing components are reactive. For example, reactive components are used In the curing or cross-Inking of rubber or plastic. Additionally , because powder components are difficult to work with, manufacturers prefer to work with pelletized master batches, as there are less environmental risks. TVI is fully capable of providing their customers with this pelletized form for ease of use and safety .
Research and Development
The research and development of the aforementioned technologies is targeted to establish as much technical and test data information needed to provide the technical sales staff and potential customers with technical sales information. Product technical sales brochures are developed in order to inform potential customers and employees of the comparative benefits of TVI products and services.
Future development of products will focus on specific problems experienced in the marketplace and attempt to solve these problems with potential customers. There are thousands of injection molders and extruders operating with many different polymer and die configurations. The trained technical staff will be called upon to satisfy the customers' needs. Research and development will also continue to add additional products to meet the market requirements.
TVI sold significant patented and proprietary technologies to the Dow Chemical Company in 1998, but retained certain licenses and rights to use these. It also has developed other proprietary technology and trade secrets. Since all manufacturing is "in-house" it is able to protect its technology and quality while continually improving the product to maintain the customer loyalty.
Technical Ventures, Inc. establishes a very close relationship with its customers and their needs, which allows it to identify areas of opportunity that may be exploited. It has developed a range of materials, having broad applications such as fillers, foaming agents, and pigment extenders. This product group delivers unique user benefits, such as smaller consistent cell size, which produces a stronger product and/or higher foaming capability . This translates into a lower raw material cost, which in turn reduces cost for the end-use manufacturer. The market for the product is large with a potentially large application in the automotive and construction market worldwide.
TVI has developed, conducted extensive research and testing in the construction and transportation industries; manufactured and sold one type of flame retardant, nontoxic, thermoplastic compound, which minimizes the hazards of fire and can be easily processed into end-use products. Additionally, the products possess anti-combustion, low toxicity attributes.
Although the sale of TVI's thermoplastic products has not represented a significant portion of revenues to date, it is believed that these products have significant market potential.
Using composite compounds, TVI has successfully produced metal/plastic materials that can be used in many applications as a replacement for lead and other metals. Presently, supplies this product for bushings in copiers and fax machines, and is expected to market metal replacement compounds in the automotive, construction and firearms markets.
Many laws constraining use of lead are currently being reviewed by governments around the globe. A replacement will be needed for lead in munitions, fishing sinkers and lures, and various other lead based products. TVI can provide this replacement material with their composite compounds with none of the hazards that lead poses to the environment.
TVI has been selling a reinforcing agent used to increase the stiffness of plastics used for crates and component parts. The product has been thoroughly tested in incubator trays for the poultry industry and will now be offered to the industry at large.
The development of a specialty compound called Morfoam which acts as a chemical foaming agent, nucleating agent and processing aid, which undergoes an endothermic chemical reaction at processing temperatures. This reaction produces a gas resulting in fine cell structures in extrusion and molded parts. The Morfoam technology combines a chemical foaming agent, nucleating agent and processing aid into one easy to use master batch. Morfoam is a multi-component chemical concentrate encapsulated in a polyolefin carrier. Morfoam is produced in pellet form in order for customers to easily blend or meter into a wide range of polymer products.
As a foaming agent Morfoam produces a uniform cell structure that can reduce part densities by 40% or more. The fine foam structure also increases opacity, which allows for lower titanium dioxide levels in film and sheet The inherent fine particles in Morfoam also act as an efficient nucleating agent generating large quantities of fine closed cells. Morfoam also improves cell structures and reduces voids when nitrogen is used as the primary foaming agent. Morfoam can be used as a processing aid in extrusion and injection molding for improved output rates, reduced cycle times and enhanced surface appearance. Morfoam also reduces part stresses, sink marks, pinholes and furthermore acts as an efficient purging/cleaning agent.
During fiscal 2003 the company finished developing it's HSF type foaming compound. HSF is a cross-linkable - expandable plastic compound made for direct injection processes. During a 'direct inject' process a granular, expandable compound is being transformed with a specialized injection molding machine into a finished foamed part, which combines several features, such as fine and closed cell structure, soft skin, profiled and color surface, flexibility, buoyancy and light weight. HSF is based on ethylene and propylene (co)polymers blends which can be processed into a finished foamed part with commercially available injection-molding machines. The flow properties of the HSF foaming material have been adjusted in such a manner that these machines are able to process it without any modification. The most significant attribute of HSF foams is heat stability. The heat stability has been quantified as a % of shrinkage of a foam specimen after a 24 hr. treatment at 105 Celsius (221 F). The shrinkage of HSF foams typically is 4% - highly competitive with industry standards.
During fiscal year 2004, TVI continued to work closely with three customers developing all types of compounding methodology for each customer's proprietary component formulations; providing compounding services for Shaw Industries formulation for an industrial pipe wrap and coating, compounding services for MLPC International's formulation for various proprietary rubber curing compounds were provided and additionally, Fin Project's proprietary formulation for the footwear industry.
The pricing structure of existing competitors has been evaluated and the products and compounding services are priced at the median. Since our products do not form a major part in the pricing of the finished goods, therefore performance and product support will contribute most in the buying decision. TVI has more to offer customers with respect to product performance and the technical support staff that can assist customers applications.
Warranties & Service Contracts
Products are supplied with a certificate of analysis confirming that it meets the required specifications, which is one mandatory requirement of ISO 9000 companies. No warranties are attached since TVI cannot monitor the processing conditions of use. There are no service contracts necessary, however, the Company's technical staff will assist customers if requested to do so.
The market in which Technical Ventures operates has had increased demand for products that meet certain requirements whether by companies or government legislation. These demands are met with TVI's products and services, and has entered into a unique market niche that allows specialization in the production of the products to meet clients needs and provide the technical support that may be needed. Working closely with its client base in order to maintain good customer relations and help fully satisfy their needs, and is set apart from the others in the industry due to the technical support staff and direct distribution of the products. The area of applications for the new HSF[Heat Stable Foam] compounds is unlimited, but first of all has to be recommended for industrial applications where heat stability is important, such as the furniture and automotive industries. To comply with specific requirements, besides a standard, colored form it can be made light-UV stabilized, flame retarded, and/or resistant to chemicals and microorganisms.
TVI has positioned itself to pursue niche markets where the following standards are essential:
1. The ability to achieve superior dispersion of powders into the resins.
2. Use of air-cooled heads for moisture sensitive materials.
3. Use of nitrogen blankets for cooling in high humidity .
4. Fast turn around of small orders.
5. Equipment designed for ease of cleaning with minimum downtime and wastage.
In this market there are three distinct advantages: equipment, personnel, and size. The equipment was selected to achieve good dispersion in the proprietary polymer and composite technology. Company personnel, consulting scientists and chemists enable it to work closely and cooperatively with customers to meet their specific needs. The Company's size allows it to direct immediate attention to existing and potential customers in a cost-effective and timely manner.
Market research has been concentrated on the endothermic foaming agents business and it was established that this represented the fastest growing segment of the market. Further marketing research pertaining to customer needs and competition is discussed later in this section.
The results of our pre-marketing survey established that the market was not well served. This information was obtained by test marketing reports and meetings with potential customers. This has convinced TVI that their timing in this market is opportune.
Research was also conducted on product performance with specific attention pertaining to competition, our products out perform the competitors in most aspects. These factors give TVI the ability to leap the barriers to entry and penetrate this market. TVl's customer base will grow with direct proportion to the rate can grow to suit the needs of those customers.
Market review indicates that growth in plastic consumption is solid over the five years researched. The market size data shows the diversity of the market potential as well as the size of the opportunity.
Many competitive products have been evaluated in our laboratory and in the field by potential customers, and TVI's performance surpassed the competition's. TVI's products will have the competitive edge of performance and price, with special attention being paid to our technical support program, which builds brand loyalty amongst customers.
The research and development effort has been geared toward a superior product at a competitive price. The Company's own manufacturing controls the processing cost. Therefore, as the business becomes further developed, lower overheads and less costly distribution channels are anticipated for TVI. Furthermore, during test marketing it was found that the large competitors were relying on distributors and agents that had limited technical experience in plastics. Once again, TVI will have the advantage over the competitors building long-term relationships and customers directly.
Corporations such as Exxon, DuPont, Union Carbide, Raychem and Megalon represent the most widely recognized competition with our polymer technology; all are substantially larger in terms of financial, marketing and research and development resources. Dow Chemical purchased some of TVI's technology in 1998. Lucent Technologies assigned the product the highest quality rating, after subjecting the product to a five year rating program. The application of the polymer technology in wallboard is still the only plastic in its field to pass certain fire codes for high rise buildings. Additionally, in other applications where the product is being tested, customers observed that TVI's polymer technology out performs the competition.
In regard of composite technology; TVI has been able to achieve the highest filler levels to obtain maximum specific gravity and has no competition. There is patent protection through a licensing agreement with duping Canada, as it pertains to fishing sinkers and lures. The Company's composite for bushings for copiers and fax machines provides the scenario that is extremely difficult if not impossible to reverse engineer. However, as the product becomes more technical compounders such as L&P and others exist and continue to develop, as does the company.
Compounding, Specialty (Contract); in this market there are three distinct advantages, equipment, personnel and size. The equipment was selected to affect good dispersion in the proprietary polymer technology and composite technology. Company personnel and associations with consulting scientists and chemist enables it to work closely and cooperatively with customers to meet their needs. The Company's size allows it to direct immediate attention to existing and potential customers in a cost effective and timely manner.
Efforts are directed to "niche" markets where the following criterion is essential: fast turn around of small orders, equipment designed for ease of cleaning at minimum downtime and wastage, air cooled die heads for moisture sensitive materials, excellent dispersion of powders into the resins and nitrogen blankets for cooling in high humidity.
At June 30, 2004 the backlog of orders totaled $141,361 US.