U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2
REGISTRATION STATEMENT UNDER the Securities Act of 1933
TOUPS TECHNOLOGY LICENSING, INC.
(Name of small business issuer in its charter)
Florida 3990 59-3462501
(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Identification No.)
organization) Classification
Code Number)
7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777 (813)-548-0918
(Address and telephone number of principal executive offices)
Mark Clancy, Corporate Secretary
7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777
(813)-548-0918 (Name, address and telephone number
of agent for service)
Approximate date of proposed sale to the public:
As soon as practicable after the registration statement becomes effective.
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 under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement of
the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box ( )
CALCULATION OF REGISTRATION FEE
Title of each Dollar Proposed Proposed
class of Amount maximum maximum Amount of
securities to be offering aggregate registration
to be registered price offering fee(2)
registered(1) per share(2) price
- ------------- ---------- ----------- -------- -------------
Common $5,896,541 $1.875 $5,896,541 $570
$.001 par value
(1) A portion of the Shares registered pursuant to this Registration Statement
were issued between June and September, 1998 pursuant to a Private Offering
made in reliance on Section 4(2) or 3(b) of the Securities Act of 1933, as
amended (the "Act") according to the Rules contained in Regulation D, Rule
506 of that Act.
(2) Calculated pursuant to Rule 457(c). The closing "bid" price of the shares
of common stock being registered hereby on the over-the-counter market
through the NASD OTC Electronic Bulletin Board was $1.875 on September 30,
1998
(3) See page 44 "Other expenses of the 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
CROSS-REFERENCE
REGISTRATION STATEMENT LOCATION OR CAPTION
ITEM NUMBER AND HEADING IN PROSPECTUS
1.Front of Registration Statement and Outside Front Cover Page of Prospectus--4
2.Inside Front and Outside Back Cover Pages of Prospectus---------------------5
3.Summary Information and Risk Factors----------------------------------------6
4.Use of Proceeds------------------------------------------------------------10
5.Determination of Offering Price--------------------------------------------10
6.Selling Security Holders---------------------------------------------------10
7.Plan of Distribution-------------------------------------------------------13
8.Legal Proceedings----------------------------------------------------------14
9.Directors, Executive Officers, Promoters and Control Persons---------------14
10.Security Ownership of Certain Beneficial Owners and Management------------15
11.Description of Securities-------------------------------------------------16
12.Interest of Named Experts and Counsel-------------------------------------16
13.Description of Business---------------------------------------------------16
14.Management's Discussion and Analysis or Plan of Operation-----------------20
15.Description of Property---------------------------------------------------23
16.Certain Relationships and Related Transactions----------------------------23
17.Market for Common Equity and Related Stockholder Matters------------------23
18.Executive Compensation----------------------------------------------------24
19.Financial Statements------------------------------------------------------25
20.Changes in and disagreements of Accountants on accounting-----------------44
or financial disclosure
Part II - Information not required in Prospectus
1.Indemnification of Directors & Officers------------------------------------44
2.Other Expenses of Issuance and Distribution--------------------------------44
3.Recent sales of unregistered securities------------------------------------44
4.Exhibits-------------------------------------------------------------------46
5.Undertakings---------------------------------------------------------------46
6.Signatures-----------------------------------------------------------------48
<PAGE>
PROSPECTUS
TOUPS TECHNOLOGY LICENSING, INC.
3,144,822 SHARES OF COMMON STOCK
OFFERED BY CERTAIN SELLING SECURITY HOLDERS
----------------------------------
This Prospectus relates to the sale of 3,144,822 shares of common stock,
$.001 par value (the "Common Stock"), of Toups Technology Licensing, Inc., (the
"Company"), all of which are offered by the holders thereof identified as
"Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS."
The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Security Holders. Sales of shares of Common Stock may be
made from time to time (in transactions which may include block transactions) by
or for the account of the Selling Security Holders in the over-the-counter
market or in negotiated transactions, or otherwise, at market prices prevailing
at the time of sale or at negotiated prices. The Company has informed the
Selling Security Holders that the anti-manipulative rules under the Securities
Exchange Act of 1934, Regulation M, may apply to their sales and has furnished
each of the Selling Stockholders with a copy of these Rules. The Company has
also informed the Selling Security Holders of the need for delivery of copies of
this Prospectus. See "SELLING SECURITY HOLDERS" and "PLAN OF DISTRIBUTION."
------------------------
THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OR FISK.
SEE "RISK FACTORS"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ALL OF THE 3,144,822 COMMON SHARES REGISTERED HEREIN ARE BEING OFFERED BY
SELLING SECURITY HOLDERS. THE COMPANY WILL NOT RECEIVE ANY PROCEEDS FROM THE
SALE OF SHARES BY THE SELLING SECURITY HOLDERS. SEE PAGE 6 RELATING TO THE RISKS
INVOLVED IN THIS OFFERING.
PROCEEDS TO
PROPOSED UNDERWRITING PROCEEDS TO THE SELLING
CLASS OF SECURITY OFFERING PRICE DISCOUNTS THE COMPANY SECURITY HOLDERS
- ---------------- -------------- ------------ ----------- ----------------
$.001 par value $1.875(1) $0(2) $0 $5,896,541
Common Stock
(1) Represents the anticipated sale price by the Selling Security Holders at
$1.875 the closing bid price on September 30, 1998. There can be no
assurances that the Selling Security Holders will be able to sell their
shares of Common Stock at this price, or that a liquid market will exist
for the Company's Common Stock.
(2) Does not give effect to ordinary brokerage commissions or to the costs of
sale that will be borne solely by the Selling Security Holders.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
The date of this Prospectus is September 30, 1998.
<PAGE>
INSIDE FRONT COVER
Available Information
The Company is subject to the reporting requirements of the Securities and
Exchange Act of 1934, as amended, and provides quarterly and annual reports to
the Securities and Exchange Commission. The Company's annual report on Form
10-KSB contains audited financial statements. The reports and other information
filed by the Company may be inspected and copied at the public reference
facilities of the Securities and Exchange Commission (SEC) in Washington, D. C.,
and at some of its Regional Offices, and copies of such material can be obtained
from the Public Reference Section of the SEC, Washington, DC20549 at prescribed
rates. The Company is an electronic filer and the SEC maintains a Web site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically. The SEC Web site address is
http://www.sec.gov.
The Company will provide a report to stockholders, at least annually, which
report will include audited financial statements of the Company.
Incorporation of Documents by Reference.
All materials incorporated by reference throughout this Prospectus are
available (not including exhibits to the information that is incorporated by
reference unless the exhibits are themselves specifically incorporated by
reference) without charge from the Company to each person who receives a
Prospectus, upon written or oral request of such person. Any request for such
material should be directed to the Corporate Secretary, if in writing, to 7887
Bryan Diary Road, Suite 105, Largo, Florida 33777, or, if by phone, (813)
548-0918.
The Registrant is subject to the informational and reporting requirements
of Sections 13(a), 13(C) and 14 and 15(d) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). The following documents, which are on file with the SEC are
incorporated in this Registration Statement by reference:
(a) The Registrant's Securities and Exchange Commission Forms 10-SB and
10-QSBs which contain, either directly or by incorporation by reference,
audited financial statements of the Registrant's latest fiscal year for
which such statements have been filed.
(b) The description of the Common Stock which are contained in registration
statements filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
<PAGE>
Prospectus SUMMARY
The following Summary is qualified in its entirety by other more detailed
information throughout this Registration Statement. Statements in this document
which are not purely historical facts, including statements regarding
anticipations, beliefs, expectations, hopes, intentions or strategies for the
future, may be forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21.E of the Securities
Exchange Act of 1934, as amended. All forward-looking statements within this
document are based upon information available to the Company on the date of this
Registration Statement. Any forward-looking statements involve risks and
uncertainties that could cause actual events or results to differ materially
from the events or results described in the forward-looking statements,
including the timing and nature of independent test results; the nature of
changes in laws and regulations that govern various aspects of the Company's
business; the market acceptance of the Company's licensed technologies;
retention and productivity of key employees; the availability of acquisition
candidates and proprietary technologies at prices the Company believes to be
fair market; the direction and success of competitors; management retention; and
unanticipated market changes. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements.
The Company
Toups Technology Licensing, Inc., was incorporated in the state of Florida
on July 28, 1997 ("Toups Technology" "TTL" the "Issuer" or the "Company"). The
Company was formed to commercialize late-stage technologies primarily in the
energy, environmental and natural resource market segments. TTL enters worldwide
exclusive license agreements for developed technologies which are at the
market-entry stage. The Company also makes acquisitions of existing companies
which add to or compliment TTL's technology mix. The Company intends to pursue
its business purpose through acquisition of existing companies; joint ventures;
strategic alliances; sub-licenses; through the manufacture and sale of products
and provision of services.
The Company currently has worldwide exclusive license agreements for
commercialization of technologies referred to as AquaFuel(TM), Balanced Oil
Recovery System Lift(TM) (BORS(TM)); Smokeless, Scrap Tire Processing(TM)
(SSTP(TM)); Tunnel Bat(TM), and Balanced Piston Valves(TM) (BP Valves(TM)). In
April 1998, the Company acquired Advanced Micro Welding, a seven-year old metal
fabrication company specializing in high precision micro welding. During
September, 1998, the Company acquired Brounley Engineering & Associates, Inc., a
five year old engineering firm specializing in the design and manufacture of
Radio Frequency (RF) and related circuits, particularly in the field of solid
state power generation.
The Company's principal executive offices are located at the Pinellas
Science Technology and Research Center, 7887 Bryan Dairy Road, Suite 105, Largo,
Florida 33777. The Company's voice telephone number is (813)-548-0918 and
facsimile number is (813)-549-8138. The Company maintains a Web site at
http//:toupstech.com which site provides links to each of the Company's
technologies and to the Company's SEC Form 10-SB and Forms 10-QSB for the
periods ending March 31 and June 30, 1998.
<PAGE>
THE OFFERING
Securities Being Offered: This Prospectus relates to the
sale of 3,144,822 shares of Common
Stock by the holders hereof,
identified as "Selling Security
Holders" in this Prospectus. See
"SELLING SECURITY HOLDERS."
The shares of Common Stock
offered by the Selling Security
Holders may be offered for sale from
time to time by the holders in
regular brokerage transactions,
either directly or through brokers
or to dealers, in private sales or
negotiated transactions, or
otherwise, at prices related to then
prevailing market prices.
The Company will not receive
any proceeds from the sale of shares
of Common Stock by the Selling
Security Holders. All expenses of
the registration of such securities
are, however, being borne by the
Company.
The Selling Security Holders,
and not the Company, will pay or
assume such brokerage commissions as
may be incurred in the sale of their
securities.
The Common Stock is traded on
the over-the-counter market through
the NASD OTC Bulletin Board under
the symbol "TOUP". On September 30,
1998, the closing bid price was
$1.875.
Total number of shares of
Common Stock
outstanding 16,495,454
Total number of shares of
Common Stock being
Offered by Selling
Security Holders 3,144,822
Risk Factors The Common Stock offered hereby
involves a high degree of risk and
prospective investors should
consider carefully the factors
specified under "Risk Factors"
before electing to invest.
See "RISK FACTORS."
Trading Symbol Common Stock "TOUP"
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk and each
prospective investor should consider certain risks and speculative features
inherent in and affecting the business of the Company before purchasing any of
the securities offered hereby. In considering the following risk and speculative
factors, a prospective purchaser should realize that there is a substantial risk
of losing his entire investment. Among these speculative factors which
management considers pose the greatest risk to prospective investors include the
following.
Risks relating to the Offering
Limited, early-stage public trading market for the Company's Common Shares. The
Company's Shares have recently started trading through the NASD OTC Electronic
Bulletin Board under the symbol TOUP. Accordingly, there can be no assurance
that a trading market will continue. Each purchaser should view their investment
in these securities for long-range investment purposes only and not with a view
to resell or otherwise dispose of their shares in the near future. If and when a
registration statement becomes effective relating to the Shares sold herein,
purchasers who desire to liquidate their shares may have difficulty selling them
considering the early stage nature of the Company's public market, should any
such market develop. Accordingly, shares should only be purchased as a long-term
investment.
Shares Eligible for Future Sale May Adversely Affect the Market. Should the
Company be successful in the registration of the Shares described herein, such
an event may have a depressive effect on the then trading price of the Company's
common shares. Further, the Company's business purpose is the licensing of
rights relating to patents or otherwise protected devices and processes in part
with the Company's Common Shares that, upon issuance, would be unregistered
securities and, in the future, may be sold upon compliance with Rule 144,
adopted under the Act of 1933. Further, in SEC Release No. 33-7390 Revision of
Holding Period Requirements in Rules 144 and 145 the SEC amended the holding
period contained in Rule 144 to permit the resale of limited amounts of
restricted securities by qualified persons after a one-year, rather than a
two-year, holding period. Also, the amendments permit unlimited resales of
restricted securities held by non-affiliates of the Company after a holding
period of two years, rather than three years. In the future, the Company intends
to enter into licensing and other agreement(s) which may provide for an exchange
of the Company's Common Shares. Accordingly, there is the possibility that sales
of Common Shares issued in such a manner may, in the future, have a depressive
effect on the price of the Company's Common Stock in any market which may
develop.
Risks relating to Toups Technology
Recent Organization. The Company was organized during July 1997 and has no
meaningful revenues to date and should be considered as still in the development
and promotional stage. The Company's initial success is predicated on the
success of AquaFuel, BORS Lift, AMW Metal Fabricators, BP Valves, Tunnel Bat and
SSTP, in the manner set forth throughout this Prospectus. The Company has not
relied upon anything other than the opinion of management in developing the
business plan for AquaFuel, BORS Lift, AMW Metal Fabricators, BP Valves, Tunnel
Bat and SSTP. The Company is, therefore, subject to all the risks inherent in
any start-up venture, many of which are beyond the control of management.
Concentration of Stock Ownership. Upon completion of this Offering, the present
directors and officers will beneficially own approximately 50.5% of the
outstanding Common Stock. As a result, current management will be substantially
able to exercise significant influence over all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions.
Risks relating to the Company's proposed operations
Reliance on Future Licensing Agreements. The Company's long-term growth strategy
envisions licensing a continual flow of products, processes or devices which are
derived from patents or other similarly protected intellectual properties.
Accordingly, once a particular patent-use is determined, the Company must
negotiate a License Agreement on terms and under conditions which are favorable
to profitable operations. In the course of such activities, a number of factors
can contribute to a lack of success, including a lack of availability of
patents, inability of management to successfully negotiate a favorable license
or, if negotiated, an inability to profitably deliver the intended device or
process to the market. Further, until such time as the Company obtains
sufficient assets to offset any potential loss, the failure of any one of the
Company's technologies could result in an inability to continue as a going
concern. Toups Technology business strategy is equivalent to a continual cycle
of operating start-up or development stage entities with all the risks inherent
to any start-up or development stage entity. Accordingly, there can be no
assurance that the Company can initially accomplish its business objectives or,
if accomplished, that the Company can continue profitable operations.
Competition and No formal feasibility or marketing studies. Numerous firms, also
located in South Florida as well as throughout the United States, compete or
will compete vigorously with the Company for the licensing of patented or other
intellectually protected processes and devices. The Company will be at a
competitive disadvantage in the pursuit of possible target licensing agreements
because of the inexperience of the Company. No independent feasibility or
marketing studies have been performed to determine the demand for the Company's
services. Accordingly, there can be no assurance that any market exists or will
develop for the Company's services or, if any market does develop, there can be
no assurance that the Company can successfully complete its business purpose.
Vulnerability to fluctuation in economy. Demand for technologies to be
commercialized by the Company is dependent upon, among other things, general
economic conditions which are historically cyclical in nature.
Prolonged recessionary periods may be damaging to the Company.
No assurance of commercial success. Even if the Company is successful in
conducting its affairs in the manner described herein as it relates to AquaFuel,
BORS Lift, AMW Metal Fabricators, BP Valves, Tunnel Bat and SSTP, market
acceptance and the ability to expand market penetration of these products and
related services is driven by the demand for such products or services. As such,
there can be no assurance that the AquaFuel, BORS Lift, AMW Metal Fabricators,
BP Valves, Tunnel Bat and SSTP product/service line will either achieve initial
market acceptance or, if achieved, will maintain sufficient market share to
conduct profitable operations.
<PAGE>
USE OF PROCEEDS
The Company will not realize any proceeds from the sale of shares of
Common Stock by the Selling Security Holders. See "SELLING SECURITY
HOLDERS."
DETERMINATION OF OFFERING PRICE
The offering price of the securities described herein was calculated
pursuant to Rule 457(c) of the Act and was not computed based on the assets,
historical operating performance or other conventional means and should not be
construed to indicate any relationship thereto. In establishing the offering
price, the Company relied on the closing "bid" price as reflected in the
over-the-counter (OTC) marketplace. On June 16, 1998, the Company's Common
Shares were cleared for trading through the OTC under the symbol TOUP. Since
that date, the Company's Common Shares have traded at prices ranging from $2-$3.
On September 30, 1998, the closing "bid" price of the Company's securities was
$1.875.
SELLING SECURITY HOLDERS
The shares of Common Stock of the Company offered by this Prospectus are
being sold for the account of the Selling Security Holders identified in the
table indicated below (the "Selling Security Holders"). The Selling Security
Holders are offering for sale an aggregate of 3,144,822 shares of the Company's
Common Stock.
The following table sets forth the number of Shares being held of record or
beneficially (to the extent known by the Company) by such Selling Security
Holders and provides (by footnote reference) any material relationship between
the Company and such Selling Security Holders, all of which is based upon
information currently available to the Company.
Number of
Number of Shares of Number of
Shares of Percentage Common Stock Shares of Percentage
Common Stock Before to be Sold in Common Stock After
Name Before Offering Offering Offering After Offering Offering
George T. Fritze 23,505 .142 21,505 2,000 .012
Steven Kurland 7,600 .046 7,600 0 0
Kenneth Roden 5,747 .034 5,747 0 0
Leslie Reagin 366,425 2.22 178,162 188,263 1.14
Michael Scrogham 10,215 .061 10,215 0 0
Richard L. Wilso 10,000 .060 10,000 0 0
Paul Kurland 7,600 .046 7,600 0 0
Giorgia Aristo 7,369 .044 7,369 0 0
Dennis Walters 1,000 .006 1,000 0 0
Richard Rausch, Jr 2,000 .012 2,000 0 0
Jimmy Yarter 1,000 .006 1,000 0 0
Carolyn Brisson 10,700 .064 6,200 4,500 .027
Susan R. Johnson 3,448 .020 3,448 0 0
Elliott Smith 8,561 .051 6,561 2,000 .012
Larry and Sharon Rice 4,000 .024 4,000 0 0
Helmut Ziehe 1,305 .007 1,305 0 0
Nicholas Sears 45,000 .272 45,000 0 0
H. Melvyn Streets 1,124 .006 1,124 0 0
Art Barker Jr 4,719 .028 3,226 1,493 .009
Lawrence Boisvert 6,876 .041 5,376 1,500 .009
Robert J. Puccinelli 1,075 .006 1,075 0 0
Thomas O'Bryant 7,000 .042 5,000 2,000 .012
Cynthia E. Walker 600 .003 600 0 0
Lee Stutzman 1,042 .005 1,042 0 0
L&G Resources, Inc. 5,000 .030 5,000 0 0
Gregory O'Donnell 3,000 .018 3,000 0 0
Humphrey Associates 2,000 .012 2,000 0 0
Paul A. DeMasi 2,500 .015 2,500 0 0
Joseph Orzechowski 1,200 .007 1,200 0 0
Fran L. Houston 200 .001 200 0 0
Marcelo A. Zapatero 1,000 .005 1,000 0 0
Gerardo Gallejas 1,000 .005 1,000 0 0
Xiomara Harris 400 .001 400 0 0
Sara Zimmerman 100 .001 100 0 0
James D. Belson 30,000 .181 30,000 0 0
John D. Belson, Jr 10,000 .060 10,000 0 0
Joshua D. Belson 5,240 .031 5,240 0 0
Royce Chadwick 7,500 .045 7,500 0 0
Finley Development 311,008 1.88 12,500 298,508 1.80
Mark Clifton 5,000 .030 5,000 0 0
CCE, Inc. 5,000 .030 5,000 0 0
Mahar Grantor Trust 5,000 .030 5,000 0 0
Rebecca Potter 13,000 .078 11,500 1,500 .009
Elizabeth A. Lindfors 77,500 .469 37,500 40,000 .242
Johnny Jackson 1,076 .006 1,076 0 0
James Devine 63,000 .381 3,000 60,000 .363
Katherine Knott 20,000 .121 20,000 0 0
Robert J. O'Keefe 1,090 .006 1,090 0 0
Charles Schwender 1,000 .006 1,000 0 0
Steven Heckler 2,000 .012 2,000 0 0
Edward Heckler 1,500 .009 1,500 0 0
Dennis Walters 1,000 .006 1,000 0 0
Charles Gibson 1,000 .006 1,000 0 0
John S. Brown 1,076 .006 1,076 0 0
Burton Shryock 3,000 .018 3,000 0 0
Christopher Shryock 3,000 .018 3,000 0 0
L. E. Carbaugh 1,000 .006 1,000 0 0
Lenwood Sapp, Sr. 2,500 .015 2,500 0 0
Jacob F. Yarter 1,050 .006 1,050 0 0
Gary Eschenroeder 50,000 .303 50,000 0 0
Charles Poland 38,000 .230 38,000 0 0
Robert A. Lanier 2,500 .015 2,500 0 0
Steven Mathieson 12,000 .072 12,000 0 0
Irene Greenberg 1,000 .006 1,000 0 0
Larry Laurich 10,000 .060 10,000 0 0
Victoria Shaeffer 20,000 .121 20,000 0 0
Paul Myers, Jr. 1,000 .006 1,000 0 0
Stephen Benson 5,000 .030 5,000 0 0
Robert Bossard 2,000 .012 2,000 0 0
Robert Estrada 7,484 .045 7,484 0 0
Irving Solomon 10,000 .060 10,000 0 0
Winfred Wong 33,708 .204 33,708 0 0
Steve Ungar 56,180 .340 56,180 0 0
Aurora Zeal, Inc. 20,000 .121 20,000 0 0
Rhonda Bartolacci 50,000 .303 50,000 0 0
Rafael Sabag 25,000 .151 25,000 0 0
Mehdi Belhassan 10,000 .060 10,00 0 0
David E. Green 5,000 .030 5,000 0 0
Eric Littman(1) 225,000 1.36 200,000 25,000 .151
Leon H. Toups(2) 3,850,000` 23.33 500,000 3,350,000 20.3
Mark C. Clancy(2) 2,250,000 3.64 500,000 1,750,000 10.6
Michael Toups(2) 2,250,000 13.64 500,000 1,750,000 10.6
Hadronic Press(3) 47,632 .288 47,632 0 0
Louisa Santilli(3) 5,000 .030 5,000 0 0
H2000, Intl, Ltd(3) 52,631 .319 52,631 0 0
David Richardson(4) 150,000 .909 150,000 0 0
Tim & Kim Rice(5) 550,000 3.33 50,000 500,000 3.03
Mack Greever(6) 280,000 1.69 50,000 230,000 1.39
Gerold Allen(6) 280,000 1.69 50,000 230,000 1.39
James Doulgeris 100,000 .606 50,000 50,000 .303
Gary Eschenroeder(7)461,700 2.79 20,000 441,700 2.67
Richard Brounley(7) 222,300 1.34 20,000 202,300 1.22
Chuck Herold(7) 45,000 .272 45,000 0 0
Robert Brounley(7) 85,500 .518 10,000 75,500 .457
Lynn M. Dort (7) 85,500 .518 10,000 75,500 .457
Michelle Goldstein 2,600 .015 600 2,000 .012
----- ---- ------ --------- -----
Total 12,428,586 75.24% 3,144,822 9,283,764 56.21%
========== ====== ========= ========= ======
(1) Eric Littman has served as securities counsel to the issuer since
inception, July 28, 1997.
(2) Messrs. Leon Toups, Mark Clancy and Michael Toups have served as the
Company's Chairman and Chief Executive, Director and Vice President, Sales
and Marketing and Director and Vice President, Finance, respectively, since
inception July 28, 1997. All three individuals will be significantly
restricted in their ability to sell their shares and must provide advance
notice of any proposed transactions.
(3) Shares issued in fulfillment of the Company's Magnetion(TM) License
Agreement.
(4) Shares issued in fulfillment of the Company's Tunnel Bat License Agreement
(5) Tim & Kim Rice serve as the Company's Manufacturing Chief and Purchasing
Agent.
(6) Shares issued in fulfillment of the Company's BORS License Agreement
(7) Shares issued in fulfillment of the Company's acquisition of Brounley
Engineering & Associates
<PAGE>
PLAN OF DISTRIBUTION
SELLING SECURITY HOLDERS
The Selling Security Holders are offering shares of Common Stock for their
own account and not for the account of the Company. The Company will not receive
any proceeds from the sale of the shares of Common Stock by the Selling Security
Holders.
Each Selling Security Holder will, prior to any sales, agree (a) not to
effect any offers or sales of the Common Stock in any manner other than as
specified in this Prospectus, (b) to inform the Company of any sale of Common
Stock at least one business day prior to such sale and (c) not to purchase or
induce others to purchase Common Stock in violation of Regulation M under the
Exchange Act.
The shares of Common Stock may be sold from time to time to purchasers
directly by any of the Selling Security Holders acting as principals for their
own accounts in one or more transactions in the over-the-counter market or in
negotiated transactions at market prices prevailing at the time of sale or at
prices otherwise negotiated. Alternatively, the shares of Common Stock may be
offered from time to time through agents, brokers, dealers or underwriters
designated from time to time, and such agents, brokers, dealers or underwriters
may receive compensation in the form of commissions or concessions from the
Selling Security Holders or the purchasers of the Common Stock.
Under the Exchange Act, and the regulations thereunder, any person engaged
in a distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the Common Stock of the Company during the applicable "cooling off"
periods prior to the commencement of such distribution. In addition, and without
limiting the foregoing, each Selling Security Holder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of Common Stock by the Selling Security
Holder. There are possible limitations upon trading activities and restrictions
upon broker-dealers effecting transactions in certain securities which may also
materially affect the value of, and an investor's ability to dispose of, the
Company's securities.
The Company will use its best efforts to file, during any period in which
offers or sales are being made, one or more post-effective amendments to the
Registration Statement, of which this Prospectus is a part, to describe any
material information with respect to the plan of distribution not previously
disclosed in this Prospectus or any material change to such information in this
Prospectus.
LEGAL PROCEEDINGS
The Company is not subject to any legal proceedings. The Company is unaware
of any governmental authority that is contemplating any procedure to which the
Company is a participant.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following Directors and Executive Officers have served in their
respective capacities since July 28, 1997 (date of inception). The Directors
were re-elected for the current term at a Meeting of Shareholders conducted
January 5, 1998. None of the Directors hold similar positions in any other
reporting company.
Chairman of the Board of Directors, President and Chief Executive Officer:
Leon H. Toups (59). Mr. Toups' past professional experiences include, from 1980
to present, that of President and Chairman of the Board of Directors of DMV,
Inc., Clearwater, Florida. Prior thereto, from 1973 to 1980, Mr. Toups served as
President and Chief Operating Officer, as a Member, of the Board of Directors
and as a Member of the Executive Committee of Chromalloy American Corporation,
St. Louis, Missouri, and as President of Chromalloy Natural Resources Company,
Houma, Louisiana. Chromalloy American was an international conglomerate with
sales of approximately $2.0 billion which employed 45,000 people world-wide and
traded its capital stock on the New York Stock Exchange. Mr. Toups holds the
following degrees: M.S. Aerospace Engineering, University of Florida; M.S.
Mechanical Engineering, Georgia Tech; B.S. Mechanical Engineering, Georgia Tech.
From 1968 to 1969, Mr. Toups attended M.I.T. on a NASA Hugh Dryden Fellowship.
Director, Vice-President, Finance, Chief Financial Officer: Michael P.
Toups (32). Mr. Toups' past professional experiences include, from 1996 to
present: a Director and Vice-President, Finance for InterSource Health Care,
Inc., Clearwater, Florida; 1992 through the present: Vice-President, Finance and
Operations, DMV, Inc., Clearwater, Florida. Mr. Toups holds an MBA, University
of Notre Dame with concentrations in finance and marketing and a BA degree in
Business Administration from Texas Christian University.
Director, Corporate Secretary and Vice President, Sales and Marketing: Mark
Clancy (42). Mr. Clancy's past business experiences include: from 1993 to
present: Compliance Officer, DMV, Inc., Largo, Florida; 1996 to present:
President, Total Kids, Incorporated, Tampa, Florida. Total Kids, Inc., is a
service corporation which intends to engage in the operation of child-care
centers. Prior thereto, Mr. Clancy served as General Sales Manager of WRCC FM
Radio, Cape Coral, Florida, and as Sales Consultant to WIZD FM Radio, West Palm
Beach, Florida. Mr. Clancy holds an AA from Hillsborough Community College,
Tampa, Florida and currently attends the University of South Florida.
The Company's Chief Financial Officer, Vice President, Finance and
Director, Michael Toups, is the son of the Company's President, Chief Executive
Officer and Chairman of the Board of Directors, Leon H. Toups.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company has 16,495,454 shares of its Common Stock issued and
outstanding. The following table sets forth, as of September 30, 1998, the
beneficial ownership of the Company's Common Stock (i) by the only persons who
are known by the Company to own beneficially more than 5% of the Company's
Common Stock; (ii) by each director of the Company; and (iii) by all directors
and officers as a group.
Beneficial ownership of the Company's Common Stock:
(1) (2)
Name and Amount and
Address of Nature of
Beneficial Beneficial (3)
Title of Class Owner Owner Percent of Class
Common Leon H. Toups 3,850,000 23.3%
418 Harbor View Lane
Largo, Florida 33770
Common Mark Clancy 2,250,000 13.6%
4706 Barrett Court
Tampa, Florida 33617
Common Michael Toups 2,250,000 13.6%
400 Palm Drive
Largo, Florida 33770
Common Officers and Directors 8,350,000 50.5%
(three persons)
Common Jerry Kammerer 1,750,000 10.6%
1421 Water View Drive
Largo, Florida 33771
(1) Mr. L. Toups serves as the Company's President, Chief Executive Officer and
Chairman of the Board of Directors. Mr. Clancy serves as a Director and as
the Corporate Secretary and Vice President, Sales and Marketing. Mr. M.
Toups serves as a Director and as the Company's Chief Financial Officer and
Vice President, Finance.
(2) None of the named persons or Officer and Directors are holders of any
options, warrants, right conversion privileges or similar items.
(3) The Company has not granted any options, warrants, rights conversion
privileges or similar items. There are no provisions which allow for a
change in control of the issuer beyond the annual election of Directors.
The Company is unaware of any voting trusts or similar agreements among its
Shareholders.
DESCRIPTION OF SECURITIES
The Company is authorized to issue up to 20,000,000 shares of Common Stock,
par value $.001 per share, and 10,000,000 shares of Preferred Stock, par value
$1.00 per share. As of the date hereof, none of the Preferred Shares were
outstanding and there were 16,495,454 Common Shares outstanding.
At the conclusion of this Offering of the 16,495,454 Common Shares issued
and outstanding, 11,742,414 Common Shares are unregistered securities, and, in
the future, said unregistered shares may only be sold upon compliance with Rule
144, adopted under the Securities Act of 1933. In Securities and Exchange
Commission (SEC) Release No. 33-7390, Revision of Holding Period Requirements in
Rules 144 and 145, the SEC amended the holding period contained in Rule 144 to
permit the resale of limited amounts of restricted securities by qualified
persons after a one-year, rather than a two-year, holding period. Also, the
amendments permit unlimited resales of restricted securities held by
non-affiliates of the Company after a holding period of two years, rather than
three years. There are no promoters, underwriters or persons or firms acting in
any similar capacity associated with the Company.
Holders of Common Shares are entitled to one vote per Common Share on all
matters to be voted on by Shareholders. The Common Shares do not have cumulative
voting rights. Holders of a majority of the Common Shares are also members of
the Board of Directors. A majority vote is sufficient for most other actions
requiring the vote or concurrence of Shareholders. The Company's Officers and
Directors as a group (three persons) own directly approximately 50.5% of the
Issuer's capital stock. As such, these individuals will be in a position to
constitute a majority of the Shareholders at any vote of shareholders, including
the election of Directors.
All Shares are entitled to share equally in dividends when and if declared
by the Board of Directors out of funds legally available therefor. It is
anticipated that the Company will not pay cash dividends on its Shares in the
foreseeable future. In the event of liquidation or dissolution of the Company,
whether voluntary or involuntary, holders of the Shares are entitled to share
equally in all assets of the Company legally available for distribution to
Shareholders. The holders of Shares have no preemptive or other subscription
rights to acquire authorized but unissued capital stock of the Company, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such Shares. All of the outstanding Shares and those Shares issued in
accordance with this offering will be fully paid and non- assessable.
INTEREST OF NAMED EXPERTS AND COUNSEL
No such interest.
DESCRIPTION OF BUSINESS.
Toups Technology Licensing, Incorporated, was incorporated in the state of
Florida on July 28, 1997 ("Toups Technology", "TTL" or the "Company"). The
Company's business plan is to pursue the commercialization of late-stage
technologies, primarily in the energy, environmental and natural resource market
segments.
TTL enters world-wide exclusive license agreements for developed
technologies which are near or at the market-entry stage. The Company also makes
acquisitions of existing companies which add to or compliment TTL's technology
mix. TTL commercializes the developed technologies by combining a seasoned,
entrepreneurial-minded infrastructure and state-of-the-art manufacturing
facility with an inventor's unique on-the-job insight. The combination results
in a turn-key process wherein emerging technologies can mature into marketable
products or services and the Company's shareholders can participate in a
multi-technology approach at the development/market introduction stage.
The Company intends to pursue its business purpose through acquisition of
existing companies; joint-ventures; strategic alliances; sub-licenses; providing
services; and through the manufacture and sale of products. As of September 30,
1998, the Company has five technologies under license and has made two
acquisitions. The Company has funded its activities exclusively through equity
and has no debt except normal trade payables.
The Company's management team is led by President, Chief Executive Officer
and Chairman of the Board, Leon H. Toups. Mr. Toups' past associations include
ten years serving as President and Chief Executive Officer of Chromalloy
American. Prior to its sale and during the period of Mr. Toups' association,
Chromalloy American was a 600 company international conglomerate serving six
major market segments and employing approximately 45,000 persons world-wide,
with revenues of approximately $2 billion.
At the staff level, to support all technologies, the Company has an
Engineering Coordinator, Vice-President, Sales and Marketing, Chief Financial
Officer, Vice-President, Business Development and Purchasing Coordinator. At the
line level, the Company typically engages the technology inventor as Project
Manager. This structure preserves the single-minded, entrepreneurial spirit of
each inventor while providing managerial support in matters relating to
operations, sales and marketing, finance and business development.
Technology Summary
The BORS(TM) Lift is an equipment designed to replace traditional oil patch
pump jacks. The BORS(TM) Lift is a device developed in response to the current
high cost/low production of stripper wells (oil wells that produce 10 barrels or
less per day) which contribute to a flat-lining of the annual domestic oil
production. The unit is comprised of hardware that is both positioned above
ground and downhole, as well as a programmable logic controller.
From February through September, 1998, the Company manufactured and
installed eight BORS(TM) Lift pumps at well sites located in Texas and Oklahoma.
The Company-sponsored field tests demonstrated that the BORS(TM) Lift device was
able to increase production by approximately four-times, decrease electric costs
from $3.50 per barrel to $0.035 per barrel, and was able to extract oil with an
insignificant quantity of water, thereby eliminating a need for the process of
separation.
During August, 1998 the Company executed an agreement with Crude Petroleum
Technologies for the purchase of 430 BORS(TM) Lift pumps during a 36 month
period beginning with 50 BORS(TM) Lifts during 1998, 200 during 1999, and 180
during 2000. In addition, the Company has orders for an additional 27 BORS(TM)
Lift pumps. The Company intends to continue the manufacture and assembly of the
BORS(TM) device at its headquarters facility in Largo, Florida. TTL intends to
continue the direct sale of the BORS device.
Brounley Engineering & Associates ("Brounley") was formed to engage in the
design and manufacture of RF (radio frequency) and related circuits,
particularly in the field of solid state power generation. Brounley's integrated
and modular design concepts competitively differentiate their product line of
high powered RF generators in small packages. In 1993, Brounley added production
facilities to build a new line of generators for Lasers and for the Plasma
Etching & Sputtering industry. In addition to Integrated RF Generators, Brounley
offers clients a full range of services from an original design to a final
product, including: Transmitters: AM, FM, SSB, Switching, Pulsed; Filters;
Switching Regulators, Modulators, Power Factor Correction; VSWR Characterization
of Power Amplifiers and Protection; TTL Logic Control Circuits; Crystal, LC
Oscillators and VCO's; Frequency Multipliers; Receiver Designs: HF, VHF, UHF,
AM, FM, SSB, Pulsed.
Brounley's unaudited financial statements for the period January 1, -
August 31, 1998 reflect revenues of $816,000 and net before tax income of
$154,900.
AquaFuel(TM) is a non-fossil combustible gas produced by an electric
discharge of carbon arcs within distilled, fresh, salt or other types of water,
thus being essentially composed of Hydrogen, Oxygen, Carbon and their compounds.
AquaFuel(TM) is competitive with respect to Hydrogen for cost, easiness and
rapidity of production and energy content. AquaFuel(TM) is manufactured using
off-the-shelf equipment and requires no fossil fuel in any form. The materials
used in the AquaFuel(TM) manufacturing process include water, carbon and an
electric arc.
The Company recently completed its first certification report relating to
AquaFuel(TM) and intends to publish the results of its second certification
report prior to October 31, 1998. Once the second certification report is
distributed, the Company will have completed all preliminary research necessary
to begin meaningful commercialization of the various proposed AquaFuel(TM)
products and services.
The Company intends to commercialize its AquaFuel(TM) technology through
joint-ventures, strategic alliances, and the direct sale of products and
services. At present TTL has not entered into any agreements for the sale of its
AquaFuel(TM) technology. TTL has entered into four agreements with persons and
entities which have been engaged to market AquaFuel throughout the world.
BP Valves(TM) is a unit of TTL Flow Control, an engineering-oriented
division dedicated to the design of critical flow control products for the
industrial, power, process and many other industries. The BP Valve(TM) operates
using a new balanced design concept. A movable plug and a movable seat are
connected to each other by a common linkage attached to a rotary shaft. The seat
and plug have an equal area facing the inlet pressure which causes a balanced
force on the rotary shaft. Consequently, the only force to overcome during
operation is that of friction and not those due to pressure. A low actuation
torque on the rotary shaft allows the plug and seat to move easily in opposite
directions, thereby opening and closing the valve.
Variations of the BP Valve are divided between the actuators and the
actuation mechanisms. Various seat/plug linkage types include designs of a pin &
clevis, a cam shaft and a spline shaft. The low actuation force can be supplied
by an air cylinder, motor, solenoid, image drive or manually. The numerous
versions and variations of this technology offer the flexibility to adapt to
many different system applications and requirements.
TTL's Flow Control division is staffed by direct sales representatives. TTL
intends to continue the direct sale of custom valves and to enter sub-licensing
agreements. TTL's BP Valve(TM) technology was awarded a $50,000 Department of
Energy technology grant.
To date, TTL has received seven purchase orders for prototype valves. In
each case, the successful delivery of each prototype is contemplated to result
in volume sales. The Company is currently negotiating its first BP valve
sub-license agreement with a 94-year-old manufacturer specializing in the
refrigeration/air-conditioning industries.
Advanced Micro Welding (AMW). On April 29, 1998, TTL acquired
seven-year-old AMW and relocated AMW within TTL's 35,000 square-foot facilities
in Largo, Florida. AMW brings in-house both a highly specialized manufacturing
capability and also allows TTL to offer products and services in the marketplace
of industrial/specialized welding and metal fabrication. The combination of
AMW's equipment and expertise, combined with TTL's state-of-the-art facilities,
engineers and draftsmen, equipment and operational experiences, result in an
extensive range of services including:
Custom Metal Fabricator - TTL's AMW can "build-to-print" products for a
wide range of industrial and business needs. Machine Shop - AMW's shop is
equipped to do prototype, custom work or production work. Precision micro
welding - AMW's equipment and expertise also supports the tool and die, plastic
injection molding and other industries with welding requiring filler wire sizes
from .005 to .020 inch in diameter. Laser and Electron Beam Welders - AMW is one
of the few Florida-based companies able to support assemblies that require
detailed welding to specific tolerances, such as the electronic, medical,
defense, aircraft and research and development industries.
AMW is a, seven-year-old entity with a demonstrated marketing program.
TTL's equipment and facilities allow AMW to now accept a substantially larger
number of jobs and to provide significantly more advanced services.
The SSTP(TM) technology was developed by inventor Jack Hansen to recover
the oil, steel and carbon black that was utilized in the manufacture of tires.
The process is self-contained, using scrap tires as the feed-source, fed in
through the SSTP(TM) equipment as a means to reduce the tires to their basic
elements.
The SSTP(TM) technology differentiates from competition because there are
no emissions and, therefore, no residue from combustion. The SSTP(TM) technology
is further differentiated from competition in its modular design which allows
for a tire "plant" to be a single unit, estimated to cost under $20,000 up
through a full-scale, multi-unit plant. The final stage of the plant is the
conversion of the gas and oil into electricity (or sold as feed stock). The
SSTP(TM) equipment reclaims the original elements that went into making the
tires, including oil, steel and carbon black, in near virgin form. The entire
tire recycling process is a closed system. There are no emissions, which means
there is no release of pollutants into the atmosphere.
TTL intends to commercialize its SSTP(TM) technology through
joint-ventures, strategic alliances, and the direct sale of products and
services. To date, the Company has not entered into any agreements for the sale
of its SSTP(TM) technology.
The Tunnel Bat technology refers to a vehicle specifically designed to
mobilize the removal of silt, debris, vegetation, soil, rock, and other types of
blockage from inside a box culvert. Box culverts relate to sewer or drain
running under a road or embankment. Invented by Dave Richardson in 1994, the
Tunnel Bat vehicle represents a tested solution to the growing problem of
removing blockage from box culverts.
Prior to the invention of the Tunnel Bat, box culverts were manually
cleaned by crawling into the box culvert with a small wagon and shovel, filling
the wagon with blockage, crawling back out to empty the wagon and then repeating
the process until the box culvert was cleaned. In addition to being a slow and
difficult manual process, many box culverts are found to have snakes and other
creatures living among the blockage material, making it possibly unsafe for
personnel.
The Tunnel Bat equipment is able to turn a slow, unpleasant job into a
reliable, thorough professional approach to desilting box culverts. The
equipment is fully mobilized, allowing for the maximum removal of blockage while
providing a safe working environment. Toups Technology is unaware of any other
product on the market that is designed to address the thousands of box culverts
throughout the United States.
Mr. Dave Richardson has been engaged by the Company as Tunnel Bat
technology advisor. The Company intends to offer the Tunnel Bat vehicle directly
as a service and to market the vehicles throughout the United States.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Three Months Ended June 30, 1998, Compared to Three Months Ended June 30, 1997:
For the three months ended June 30, 1998, the Company reported revenues
from operations of $109,143, a 73% increase over 1997 second quarter revenues of
$62,971. Second quarter revenues for both periods were generated by the
Company's wholly-owned subsidiary, Advanced Micro Welding, Inc. ("AMW"). TTL
acquired AMW on April 29, 1998, in a business combination, accounted for as a
pooling of interest. AMW, a company specializing in micro-welding and custom
metal fabrication, grew through an increased emphasis on its metal fabrication
business. AMW gives TTL production capacity and expertise in micro-welding,
metal fabrication, and machining which provides infrastructure and complements
the Company's emphasis on developing market applications for its technologies.
Cost of goods sold in the second quarter of 1998 was $65,018 or 60% of
revenues, which compared to the same percentage of revenues for the second
quarter of 1997. The cost of goods sold for both periods relate only to AMW.
The Company's selling and administrative expenses of $549,580 were
comprised of salaries, consulting fees, and other operating costs in the second
quarter of 1998, up from $51,149 during the second quarter of 1997. This 974%
increase in operating expenses was primarily the result of increased personnel
expenses incurred by the Company in building its infrastructure, assembling a
team of engineers, scientists and other professionals, and preparing its
technologies for market applications. Selling and administration expenses for
the 1997 period relate only to AMW. TTL had no operations during the second
quarter of 1997. During the second quarter of 1998, the Company completed an
initial independent testing for AquaFuel, developed applications for Flow
Control Valves, field-tested BORS lift units, licensed and developed
applications for its Smokeless Scrap-Tire Process, technology, and executed a
world-wide exclusive license for the Tunnel-Bat.
As a result of these activities, the Company had a 1998 second quarter
operating loss of $503,960, an increase from an operating loss of $25,691 for
the same period of 1997. Interest income during the second quarter period was
generated from excess cash balances, resulting from the Company's private common
stock offering in 1998.
As of June 30, 1998, the Company had purchase orders for 29 BORS Lift
Pumps, with $6,000 on deposit towards a purchase price of $207,194. The Company
had inventory on hand in the amount of $69,388 related to these orders in
various stages of production. Subsequently, the Company signed a Letter of
Intent with open purchase orders for an additional 430 BORS units, with a
minimum purchase of 50 units in 1998, 200 during 1999, and 180 during 2000. The
Company is currently working on its first order against this purchase order for
five units, with $12,500 on deposit towards a purchase price of $40,300. The
Company does not recognize a sale until the unit is shipped.
The Company has entered into Letters of Intent or is negotiating for
licensing fee arrangements for its other technologies, including AquaFuel, Flow
Control Valves, SSTP, and Tunnel-Bats. (See Footnotes to Financial Statements: 8
- - Other Significant Events, and 9 - Subsequent Events). The Company expects to
generate revenues from these activities in the third quarter of 1998.
Six Months Ended June 30, 1998, Compared to Six Months Ended June 30, 1997:
For the six months ended June 30, 1998, the Company reported revenues from
operations of $274,040, a 143% increase over 1997 six month revenues of
$112,581. Revenues for both six-month periods were generated by the Company's
wholly-owned subsidiary, AMW.
Cost of goods sold for the first six months of 1998 was $137,139, or 50% of
revenues, compared to $61,358, or 55% of revenues, for the six-month period in
1997. The decrease in the cost of goods sold as a percentage of revenues in 1998
was the result of larger, more efficient production runs for jobs in the first
quarter of 1998.
The cost of goods sold figures for both periods relate only to AMW.
The Company's selling and administrative expenses of $795,829 were
comprised of salaries, consulting fees and other operating costs in the second
quarter of 1998, up from $94,928 during the second quarter of 1997. This 738%
increase in operating expenses was primarily the result of increased personnel
expenses incurred by the Company in building its infrastructure, assembling a
team of engineers, scientists, and other professionals, and preparing its
technologies for market applications. Selling and administration expenses for
the 1997 period relate only to AMW. TTL had no operations for the first six
months of 1997.
As a result of these activities, the Company had a 1998 six-month operating
loss of $658,928, an increase from an operating loss of $43,705 for the same
period of 1997. Interest income during the six- month period was generated from
excess cash balances, resulting from the Company's private common stock offering
in 1998.
Liquidity and Capital Resources
Net cash used by operating activities (of $763,592) related primarily to
the Company's operating loss. The Company, however, had a net working capital
surplus of $409,768, an increase of $338,051from December 31, 1997. The increase
in working capital was principally the result of an increase in financing
activities through the issuance of $1 million in common stock through a private
equity offering.
As of June 30,1998, the Company has no bank financing or other debt
obligations outstanding other than trade payables, accrued expenses, and
capitalized lease obligations due from the normal course of business.
Through the acquisition of AMW and the utilization of capital equipment
available under its facility lease, the Company has significant production
capabilities available without the requirement for large capital expenditures.
This equipment remains from the facility's former tenant, Lockheed Martin, and
includes computers, milling equipment and lathes, shelving and storage units,
electron beam welders, laser welders, and other production machinery. This
equipment, combined with AMW's resources, will allow TTL to fully utilize its
development and production capabilities during the second half of 1998.
In June 1998, the Company was approved for a $50,000 grant from the US
Department of Energy, administered by the Technology Deployment Center, for the
development of market applications of its Flow Control Valves. The Company has
also commenced on a second private equity offering. The proceeds of the sale of
this equity offering will be available for future acquisitions, working capital,
and general corporate purposes.
The Company believes that its existing cash, together with projected cash
flows from operations and the availability of future equity offerings, will be
sufficient to meet the Company's cash requirements for at least the next twelve
months.
Management is unaware of any known trends, events or uncertainties that
have or are reasonably likely to have a material impact on the small business
issuer's short-term or long-term liquidity, net sales or revenues or income from
continuing operations which are not disclosed in this Prospectus.
DESCRIPTION OF PROPERTY
The Company's headquarters and manufacturing facility occupies
approximately 50,000 (fifty-thousand) square-feet within the 96-acre Pinellas
Science Technology and Research Center ("STAR Center") located at 7887 Bryan
Diary Road, Largo, Florida.
Formerly used by Lockheed Martin Specialty Components, Inc. as a provider
for the Department of Energy ("DOE"), the STAR Center has been converted into a
technology incubator for engineering firms and specialty manufacturers. The STAR
Center is a 739,873 square-foot complex, comprised of 17 separate buildings; a
150,000 square-foot, 16-foot high bay manufacturing area, and approximately 100
separate areas, including laboratories, production space and offices. The STAR
Center contains world class analytical laboratory facilities for chemical,
metallurgical, ceramic, polymer and environmental analysis ... distributed
computer networks throughout the facility and full manufacturing machine shop
capability, including several CNC lathes, 4-axis machine centers, automatic CNC
screw machines and wire EDM facilities.
The Company does not invest in real estate or real estate mortgages, nor
does the Company invest in the securities of or interests in persons primarily
engaged in real estate activities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Michael Toups, who serves as the Company's Chief Financial Officer and
as a Director, is the son of the Company's President and Chairman of the Board,
Leon H. Toups.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since June 16, 1998, the Company shares have been traded through the
over-the-counter market through the NASD OTC Electronic Bulletin Board ("OTCBB")
marketplace under the symbol TOUP. Since that date, the Company's shares have
traded between $2-$3. However, there can be no assurance that the Company's
shares will continue to trade within this range given the effect of the shares
being registered hereby. Quotations on the OTCBB reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not represent actual
transactions.
As of the date of this Prospectus, none of the Company's securities are
eligible for sale pursuant to Rule 144.
As of April 29, 1998, the Company has been listed under Company
Descriptions in Standard and Poor's Corporation Records, Page 8153. As of
September 30, 1998, Company had 283 Shareholders of Record.
Holders of the Company's Common Stock are entitled to dividends when, as
and if declared by the Board of Directors, out of funds legally available
therefor. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the development
and expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, the Company's financial condition, capital requirements,
general business conditions and other factors. Therefore, there can be no
assurance that any dividends of any kind will ever be paid.
The Company's registrar and transfer agent is Continental Stock Transfer
&Trust Company.
EXECUTIVE COMPENSATION
The following table depicts all-plan and non-plan compensation awarded to,
earned by or paid to the named executive officer of the Company for the period
indicated:
Annual Long Term
Compensation Compensation
(a) (b) (c) (d) (e)
Restricted
Stock Total
Name and Principal Salary Bonus award(s) Compensation
Position Year ($) ($) ($) ($)
Leon H. Toups 1997 $2,000 $0 $3,200 $5,200
President
Chief Executive Officer
Mark Clancy 1997 $2,000 $0 $1,600 $3,600
Corporate Secretary
Vice President, Sales
& Marketing
Michael Toups 1997 $2,000 $0 $1,600 $3,600
Vice President, Finance
(a) All named executive Officers have served in their respective capacities
since formation of the Company during July 1997.
(b) The Company was incorporated during July 1997.
(c) Any increase in Officer compensation would be predicated on prevailing
industry standards and the existing financial situation of the Company. The
Board of Directors may authorize an increase in the compensation of the
Company's executive officers without a vote of Shareholders.
(d) The Company did not make any bonus cash payments to its executive officers
since inception. However, the Company may, in the future, develop programs
which may include bonus payments.
(e) Each Officer received his shares upon incorporation, at par value, in lieu
of cash compensation. During the course of 1998, the Company has issued
650,000 unregistered common shares to each of its Officers.
The Company does not compensate its Directors for their participation. The
Company does not provide for agreements with any of its executive officers.
However, the Company may, in the future, need to compete for the services of its
executive officers, at which time, the Board of Directors may adopt and require
its executive officers to execute employment agreements.
FINANCIAL STATEMENTS
The following are the unaudited Pro Forma Consolidated financial statements
for the six moth period ended June 30, 1998 which give effect to the acquisition
of Brounley which was effective September 30, 1998.
Pro Forma Consolidated Balance Sheet
Pro Forma Consolidated Statement of Operations
The following are the unaudited financial statements of Toups Technology
Licensing, Inc., for the six-month period ended June 30, 1998 (unaudited) and
for the six-month period ended June 30, 1997 (unaudited)
Statement of Operations
Balance Sheet
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to unaudited Financial Statements
The following is the Auditor's Report and accompanying audited balance
sheets of Toups Technology Licensing, Inc. (A Development Stage Company) as of
December 31, 1997, and January 31, 1998, and the related statements of
operations, stockholders' equity and cash flows for the period from July 28,
1997 (Date of Inception) through December 31, 1997, for the month ended January
31, 1998, and for the period from July 28, 1997 (Date of Inception) through
January 31, 1998:
Auditor's Report
Balance Sheets
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
Toups Technology Licensing, Inc.
PRO FORMA BALANCE SHEET
June 30, 1998 (Unaudited)
(Unaudited)
June 30
1998
Assets:
Cash $ 297,193
Accounts Receivable, net of allowance
for doubtful accounts of $5,000 231,582
Notes Receivable 32,000
Inventory, at cost 264,151
Prepaid expenses-other 4,307
Prepaid royalty expenses 71,000
Deferred charges -
Property and equipment, net of
accumulated depreciation of $87,840 258,056
-----------------
Total Assets $ 1,158,288
=================
Liabilities:
Accounts Payable and accrued liabilities 192,635
Deposits 14,250
Notes Payable 84,320
Capital Lease Obligation 188,473
-----------------
Total Liabilities $ 479,679
-----------------
Stockholders' equity:
Common Stock 12,077
Additional paid-in capital 1,152,225
Retained Earnings (40,423)
Deficit accumulated during development stage (445,270)
-----------------
Total Stockholders' equity $ 678,609
-----------------
Total liabilities and stockholders' equity $ 1,158,288
=================
Pro Forma Consolidated Unaudited Financial Statement
Toups Technology Licensing, Inc.
PRO FORMA STATEMENT OF OPERATIONS
For the six-month period ended June 30, 1998 (Unaudited)
(Unaudited)
Six-month
Period ended
June 30,
1998
Sales $ 869,427
Cost of Goods Sold 527,015
Gross Profit 342,412
Expenses:
Salaries 293,626
Consulting fees 158,143
Other operating costs 444,358
------------------
Total expenses 896,127
Net Operating Loss (553,715)
Other Income:
Interest Income 2,937
Net loss $ (550,778)
==================
Weighted average number of
shares outstanding 16,495,454
Net loss per share $ 0.0334
==================
Pro Forma Consolidated Unaudited Financial Statement
<PAGE>
Toups Technology Licensing, Inc
STATEMENTS OF OPERATIONS
for the six-month period ended June 30, 1998
(Unaudited) and for the six-month period ended June
30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Six-Month Six-Month
Period ended Period ended
June 30, June 30
1998 1997
------------------ -----------
Sales .................................. $ 274,040 $ 112,581
Cost of Goods Sold ..................... 137,139 61,358
------------ ------------
Gross Profit ........................... 136,901 51,223
------------ ------------
Expenses:
Salaries ............................... 256,700 36,574
Consulting fees ........................ 158,143 1,569
Other operating costs .................. 380,986 56,785
------------ ------------
Total expenses ......................... 795,829 94,928
------------ ------------
Net Operating Loss ..................... (658,928) (43,705)
------------ ------------
Other Income:
Interest Income ........................ 2,937 --
------------ ------------
Net Loss ............................... $ (655,991) $ (43,705)
============ ============
Weighted average number of
shares outstanding ..................... 11,077,232 8,881,751
Net loss per share ..................... $ (0.0592) $ (0.0049)
============ ============
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
BALANCE SHEETS
June 30, 1998 (Unaudited) and December 31, 1997 (Restated)
(Unaudited)
Restated
Unaudited (Note 5)
June 30, June 30
1998 1997
---- -----
Assets:
Cash ......................................... $ 277,454 $ 74,636
Accounts Receivable, net of
Allowance for doubtful accounts of $5,000 .... 64,960 27,147
Notes Receivables ............................ 32,000 --
Inventory at cost ............................ 85,785 --
Prepaid expenses-other ....................... 3,457 --
Prepaid royalty expenses ..................... 71,000 11,000
Deferred charges ............................. -- 5,075
Property and equipment, net of
Accumulated depreciation of $56,885 .......... 240,592 21,117
----------- -----------
Total Assets ................................. $ 775,248 $ 138,975
=========== ===========
Liabilities: ................................. 118,888 46,141
Deposits ..................................... 6,000 --
Capital lease obligations .................... 188,473 --
----------- -----------
Total liabilities ............................ $ 313,361 $ 46,141
----------- -----------
Stockholders' equity
Common stock ................................. 11,077 9,010
Additional paid-in capital ................... 1,147,224 148,547
Retained Earnings ............................ (40,423) (71,137)
Deficit accumulated during
development stage ............................ (655,991) 8,414
----------- -----------
Total stockholders' equity ................... $ 461,887 $ 92,834
----------- -----------
Total liabilities and
stockholders' equity ......................... $ 775,248 $ 138,975
=========== ===========
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the six-month period ended June 30, 1998
(Unaudited) and for the period from July 28, 1997
(Date of Inception)
through December 31, 1997
Deficit
Accumulated
Common Additional During
Number Stock Paid-In Development
of shares (At Par) Capital Stage Total
-------- ------- ------- -------- -------
Issuance of common
stock from inception ..... 8,250,000 $8,250 $ -- $ -- $ 8,250
Stock Issued for:
Services ................. 100,000 100 -- -- 100
Cash ..................... 160,000 160 99,840 -- 100,000
Rent ..................... 120,000 120 -- -- 129
Deficit accumulated during
development stage through
December 31, 1997 ........ -- -- -- (40,413 (40,413)
---------- ----- ------- ------- ---------
Balance:
December 31, 1997 ........ 8,630,000 8,630 99,840 (40,413) 68,057
Stocks issued for:
Cash ..................... 1,661,232 1,661 997,791 -- 999,452
Services ................. 286,000 286 -- -- 286
Acquisition of AMW
(Note 5) ................. 500,000 500 49,593 -- 50,093
Deficit accumulated during
development stage-
January 1, 1998 through
June 30, 1998 ............ -- -- -- (655,991) (655,991)
---------- ------ ----- --------- --------
Balance:
June 30, 1998 ............ 11,077,232 $11,077 $1,147,224 $(696,414) $461,887
========== ======= ========== ========= ========
See Notes to Financial Statements
Toups Technology Licensing, Inc.
STATEMENTS OF CASH FLOWS
for the six-month period ended June 30, 1998
(Unaudited) and for the six-month period ended June
30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Six-month Six-month
Period ended Period ended
June 30, June 30
1998 1997
---- ----
Cash flows from operating activities:
Net loss .................................... $ (655,991) $ (43,705)
Add (deduct) items not affecting cash:
Depreciation ................................ 16,574 0
Amortization ................................ 623 0
Cash provided (used) due to changes in
assets and liabilities
(increase) in inventory .................. (85,785) 0
(Increase) decrease in accounts receivable (64,960) 1,205
(Increase) in notes receivable ........... (32,000) 0
(Increase) in prepaid royalty expense .... (60,000) 0
(Increase) in prepaid expenses ........... (3,457) 0
(Increase) decrease in deferred charges .. 5,075 0
Increase (decrease) accounts payable ..... 110,329 15,107
Increase (decrease) in deposits .......... 6,000 0
----------- -----------
Net cash used by operating activities ....... (763,592) (27,393)
----------- -----------
Cash flows from investing activities:
Acquisition of equipment .................... (45,551) 0
----------- -----------
Net cash used by investing activities ....... (45,551) 0
----------- -----------
Cash flows from financing activities:
Proceeds from sale of capital stock ......... 1,029,870 0
Distribution to owners ...................... (7,593) 0
Principal payments on
capital lease obligations .................. (10,316) 0
----------- -----------
Net cash provided by financing activities ... 1,011,961 0
----------- -----------
Net increase in cash ........................ 202,818 (27,393)
----------- -----------
Cash, beginning of period ................... 74,636 30,674
----------- -----------
Cash, end of period ......................... $ 227,454 $ 3,281
=========== ===========
Supplemental Cash Flows Disclosures
Non-Cash items
Equipment acquired under capital lease ...... $ 124,666 $ 0
=========== ===========
Common stock issued for consulting
services and rent ........................... $ 286 $ 0
=========== ===========
See Notes to Financial Statements
Toups Technology Licensing, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
and December 31, 1997 (Restated)
1. Summary of Significant Accounting Policies
(a) Company - Toups Technology Licensing, Incorporated (Company), a
Florida Corporation, was formed on July 28, 1997, and activated its
start-up operations on November 1, 1997, to facilitate market
applications, through the licensing of late-stage technologies,
primarily in the energy, environmental and natural resources market
segments. The Company selects proprietary products or devices within
market segments which management perceives are not subject to rapid
change and can be delivered to the marketplace within a three- to
six-month period. The Company is in the development stage of
operations.
(b) Receivables - The Company's trade receivables include amounts due
from business predominantly in the Tampa Bay geographic area, but
include customers throughout the Southeast United States. Management
believes that receivables are stated at their net realizable values.
(c) Notes Receivable - The Company's note receivable is a 60-day note with
no stated interest.
(d) Inventories - Inventories consist of work-in-process and parts held
for manufacturing and are valued at cost, using the first-in,
first-out method.
(e) Property and Equipment - Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over their
estimated useful lives. At June 30, 1998, property and equipment
consisted of machinery and equipment.
(f) 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.
(g) Deposits - As of June 30, 1997, management has purchase orders and
$6,000 in deposits for the sale of the first Balanced Oil Recovery
System Lift Pumps. These pumps are expected to be installed in the
third quarter of 1998 at a total sales price of $207,194. Inventory,
in the amount of $69,388, relating to this equipment is recorded in
the June 30, 1998, financial statements.
(h) Income Taxes - Deferred income taxes are reported using the liability
method. Deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are differences between
the reported amount of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
(i) Basis of Presentation - Six Months Ended June 30, 1998 - The
unaudited interim financial statements for the six months ended June
30, 1998, included herein, have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission and, in the opinion of the Company, reflect all
adjustments (consisting only of normal recurring adjustments) and
disclosures which are necessary for a fair presentation. The results
of operations for the six months ended June 30, 1998, are not
necessarily indicative of the results of the full year.
2. Capital Stock
(a) Common. The Company is authorized to issue 20 million shares of
common stock, with a par value of $0.001 (one, one-thousandth dollar)
per share. As of June 30, 1998, there were 11,077,232 shares issued
and outstanding. Of the 11,077,232 shares issued and outstanding, at
June 30, 1998, 9,469,014 shares are restricted as to the sale to
other parties, and 1,608,218 are unrestricted. Each share of common
stock has one vote on all matters acted upon by the shareholders.
(b) Preferred. The Company is authorized to issue 10,000,000 million
shares of preferred stock, having a par value of $1 per share. There
were no preferred shares issued or outstanding at June 30, 1998.
3. Employment and Services Agreements-Stock Commitments
(a) The Company entered into a series of one-year employment contracts.
Within those contracts, 85,000 shares of stock were issued to certain
employees. These shares have been recorded in the accompanying
balance sheet. Additionally, there are incentive clauses in these
contracts that allow up to another 270,000 shares of common stock to
be issued to employees if certain goals are met. None of these shares
are scheduled to be issued to officers, directors, or holders of more
than 5% of the outstanding stock. The additional 270,000 shares have
not been recorded in the accompanying financial statements.
(b) On June 17, 1998, the Company entered a consulting agreement with
Great Britain-based, Global Resource Management, Inc. ("Global") to
take steps necessary for the Company's shares to be listed on the
London stock exchange and to represent the Company's technology
offering within the European community. The Agreement requires that
the Company compensate Global at the rate of 10,000 unregistered
common shares per month plus $3,000 cash payment per month.
4. Licensing Agreement Commitments
(a) The Company entered into two licensing agreements in November 1997, whereby
the Company has exclusive rights to make, use, lease, market and sell these
product lines. In January 1998, the Company executed a five-year
manufacturing agreement with a third licensor. In June 1998, the Company
executed an additional license agreement, as disclosed in Footnote 8: Other
Significant Events, Note (B). In exchange for these rights, under the four
agreements, the Company has committed to pay the Licensor a 6% royalty, as
computed by those agreements. The Company agreed to pay a minimum of
$176,000 of royalties in 1998, of which $71,000 has been paid as of June
30, 1998. The remaining royalty payments for the initial licensing term
will be paid as follows:
Year Ending:
1998 $ 105,000
1999 96,000
2000 96,000
------
$ 297,000
(b) The Company can offset these advanced payments against the royalties
earned in 1998 through the year 2000.
(c) In addition to the above, if the Company exercised its option to
renew the licenses, it would have future minimum royalties as
follows:
Year Ending
2001 $200,000
2002 $250,000
2003 $300,000
2004 $400,000
5. Acquisition of Advanced Micro Welding
(a) On April 29, 1998, Toups Technology Licensing, Incorporated (TTL)
acquired Advanced Micro Welding, Inc. (AMW) in a business combination,
accounted for as a pooling of interests. AMW, a company specializing
in micro-welding and custom metal fabrication, became a wholly-owned
subsidiary of TTL through the exchange of 500,000 shares of restricted
common stock of TTL's common stock for all the outstanding stock of
AMW. The statement of stockholders' equity reflects a restatement of
$49,593 to additional paid-in capital as a result of the acquisition.
The restatement includes $9,500 and $40,093, respectfully, for the
disposition of AMW stock and adjustment of retained earnings for the
pooling.
(b) The restated balance sheet as of December 31, 1997, reflects the
acquisition of AMW. The restated financial statements are based on
the historical financial statements of TTL and AMW accounting for the
combination as a pooling of interest. Both companies were audited
independently on December 31, 1997. The restated balance sheet, as of
December 31, 1997, reflects the unaudited combination of these
numbers.
(c) The restated financial statements have been prepared based upon the
historical financial statements of TTL and AMW. These restated
financial statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on
the dates indicated or which may be obtained in the future.
6. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carry-forward has been reduced by a valuation account to zero, due to
uncertainties regarding the utilization of the deferred asset. The deferred tax
asset and the corresponding valuation allowance were approximately $64,000 as of
June 30, 1998.
The net operating loss of $40,423 will expire in 2012.
Deferred tax asset:
Net operating loss carryforward $64,000
Less valuation allowance ( 64,000)
---------
Net deferred taxes $ -
==========
7. Capital Lease
(a) In March 1998, the Company acquired machinery and equipment under the
provisions of a capital lease. The lease expires in December 1999.
The machinery and equipment has [have?] a cost of $11,146 and a net
book value of $11,146 at June 30, 1998. In addition, a wholly-owned
subsidiary of the Company acquired equipment, totaling $191,493 under
three capital lease agreements. Amortization of these capital leases,
included in depreciation expense amounted to $11,100 for the six
months ended June 30, 1998. Accumulated amortization amounted to
$9,800 as of June 30, 1998, as of June 30, 1998, and is included in
accumulated depreciation.
(b) The future minimum lease payments under capital lease and net present
value of the future minimum lease payments at June 30, 1998, are as
follows:
Total minimum lease payments $ 246,091
Amount representing interest (57,618)
------------
Present value of net minimum lease payments $ 178,944
============
(c) Future minimum lease payments under capital leases as of June 30,
1998, are as follows:
1998 $30,649
1999 51,048
2000 51,048
2001 47,037
2002 45,329
After 10,181
------
$235,292
8. Other Significant Events
(a) The Company received a $50,000 grant from the U.S. Department of
Energy and administered by the Technology Deployment Center for the
development of its BP Valve(TM) technology.
(b) On May 20, 1998, the Company entered into a world-wide exclusive
license agreement (the "License") for the commercialization of the
Smokeless, Scrap Tire Processing Technology (SSTP). Under the terms
of the License, the Company receives the right to design,
manufacture, sell or otherwise commercialize the SSTP technology. The
License obligates the Company to pay a 6% royalty fee on all
SSTP-related sales and granted a one-time issuance of 60,000
unregistered common shares.
9. Subsequent Events
(a) On July 1, 1998, the Company entered into a world-wide exclusive
license agreement for a patent-pending technology, referred to as
"Tunnel Bat" technology. Under the terms of the License, the Company
receives the right to design, manufacture, sell or otherwise
commercialize the Tunnel Bat technology on a worldwide, exclusive
basis for an initial period of three years, after which, the Tunnel
Bat License may be extended for additional three-year periods. The
Tunnel Bat License obligates the Company to pay a six percent (6%)
royalty on gross revenues derived from the Tunnel Bat technology. In
addition, the Company made a one-time issuance of 150,000 of its
restricted $.001 par value Common Shares and undertook to register at
least 50,000 of the foresaid Shares no later than six months after
June 15, 1998. The Company also retained Tunnel Bat technology
inventor/patent-pending owner, David Richardson, to act as Technical
Assistant, Tunnel Bat Technology.
(b) On July 6, 1998, the Company entered into a Letter of Intent and
Purchase Order for the sale of 430 Balanced Oil Recovery System
(BORS) lift pumps with CMT, Inc. Under the terms of the Letter of
Intent, CMT has been given exclusivity for the sale of the BORS pumps
throughout Kansas and Oklahoma, and has agreed to a minimum purchase
of 50 pumps during 1998, 200 pumps during 1999, and 180 pumps during
2000. The Company is scheduled to ship the first five pumps from its
manufacturing facility in Florida during August 1998.
(c) On July 7, 1998, the Company entered into a Letter of Intent relating
to licensing the commercialization of the Company's Smokeless,
Scrap-Tire Processing Technology (SSTP) with a Vienna, Virginia-based
US company ("proposed Licensee"). Under the terms of the Letter of
Intent, the proposed Licensee desires to license the rights to
construct the first industrial-size SSTP facility, capable of
recycling two hundred waste tires per hour. In addition to requiring a
negotiated License Fee and royalties, the proposed Licensee would
thereafter be entitled to exclusive use of the SSTP technology within
North America, and TTL would manufacture the SSTP equipment for their
exclusive use within the licensed area. The Company anticipates
entering into the development portion of the Letter of Intent during
August 1998. Thereafter, the Company would enter into a formal license
agreement with the proposed Licensee.
(d) On July 9, 1998, the Company entered into a License Agreement with an
entity, wherein TTL grants exclusive rights to the entity to sell,
market, and distribute products relating to the AquaFuel technology.
Under the terms of the License Agreement, the entity shall cause for
sales to commence during the third quarter of 1998 and continue
thereafter for a period of three years. The License Agreement grants
the entity the rights to market AquaFuel category one - "Fuel";
AquaFuel category 2 "Public and private services", and AquaFuel
category 3 - "processing and research and development."
(e) On July 9, 1998, the Company proposed four Letters of Intent with an
international provider of various gaseous materials. The proposed
Letters of Intent include: (1) a proposed License Agreement for the
purpose of commercializing AquaFuel system for the elimination of
biological waste in commercial use applications; (2) a proposed sale
of Electric Power Generation equipment; (3) a proposed License
Agreement for the purpose of marketing AquaFuel and the construction
of AquaFuel-related plants, and (4) a proposed Joint-Venture relating
to development of certain aspects relating to AquaFuel .
(f) Subsequent to June 30, 1998, the Company sold 28,732 shares of its
restricted Common Shares to accredited investors for an aggregate of
$25,440.
<PAGE>
lNDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Toups Technology Licensing, lncorporated
(A Development Stage Company)
Largo, Florida
We have audited the accompanying balance sheets of Toups Technology
Licensing, Incorporated (a Development Stage Company) as of December 31, 1997,
and January 31, 1998, and the related statements of operations, stockholders'
equity, and cash flows for the period from July 28, 1997 (Date of Inception)
through December 31, 1997, for the month ended January 31, 1998, and for the
period from July 28, 1997 (Date of Inception) through January 31, 1998.
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 Toups Technology Licensing,
Incorporated (a Development Stage Company) as of December 31, 1 997, and January
31, 1998, and the results of its operations and its cash flows for the period
from July 28, l997 (Date of Inception) through December 31, 1997, for the month
ended January 31, 1998, and for the period from July 28, 1997 (Date of
Inception) through January 31, 1998.
February 12, 1998 (except for Notes 4 and 7 as to which the date is May 13, 1998
Harper, Van Scoik & Company, L. L. P.
A WORLDWlDE ORGANIZATION OF ACCOUNTlNG FlRMS AND BUSlNESS ADVlSORS Clearwater,
Florida
<PAGE>
Toups Technology Licensing Incorporated
(A Development Stage Company)
BALANCE SHEETS
December 31, 1997 and January 31, 1998
December 31 January 31
1997 1998
--------- ---------
Assets:
Cash ........................................ $ 60,421 $ 185,920
Prepaid royalty expenses .................... 11,000 31,000
Property and equipment ...................... -- 3,433
Deferred Charges ............................ 5,195 8,825
--------- ---------
Total assets .......................... $ 76,616 $ 229,178
========= =========
Liabilities:
Accounts payable and ........................ $ 8,559 $ 1,694
--------- ---------
accrued liabilities
Total liabilities ..................... 8,559 1,694
Stockholders' equity:
Common stock ................................ 8,630 9,099
Additional paid-in capital .................. 99,840 284,026
Deficit accumulated during
development stage ......................... (40,413) (65,641)
--------- ---------
Total stockholders' equity ........... 68,057 227,484
--------- ---------
Total liabilities and
stockholders' equity ......................... $ 76,616 $ 229,178
========= =========
See Notes to Financial Statements
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month ended
January 31, 1998, and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, July 28,
1997 1997
(inception) Month (Inception)
through Ended through
December January 31 January 31,
1997 1998 1998
---------- ---------- ----------
Interest Income ....... $ 543 $ 327 $ 870
Expenses:
Salaries ............ 17,902 6,227 24,129
Consulting fees ..... 14,209 6,536 20,745
Other operating costs 8,845 12,792 21,637
---------- ---------- ----------
Total expenses ........ 40,956 25,555 66,511
---------- ---------- ----------
Net loss .............. $ 40,413 $ 25,228 $ 65,641
========== ========== ==========
Weighted average number
of shares outstanding 8,381,751 8,852,799 8,456,687
Net loss per share .... $ .005 $ .003 $ .008
See Notes to Financial Statements
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
Deficit
Accumulated
Common Additional During
Number Stock Paid-i Development
of Shares (At Par) Capital Stage Total
Issuance of common
stock upon inception 8,250,000 $8,250 $-0- $-0- $8,250
Stock issued for:
Services ........... 100,000 100 -- -- 100
Cash ............... 160,000 160 99,840 -- 100,000
Rent ............... 120,000 120 -- -- 120
Deficit accumulated
during development
stage through
December 31, 1997 .. -- -- -- (40,413) (40,413)
------- ------ -------- ------- ---------
Balance
December 31, 1997 .. 8,630,000 8,630 99,840 (40,413) 68,057
Stock issued for:
Cash ............... 278,714 279 184,186 -- 184,465
Services ........... 190,000 190 -- -- 190
Deficit accumulated
during development
stage January 1,
1998 through January
31, 1997 ........... -- -- -- (25,228) (25,228)
------- ------ ------- -------- -------
Balance
January 31, 1998 ... 9,098,714 $9,099 $284,026 $(65,641) $227,484
========= ======= ======== ========= =========
See Notes to Financial Statements
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, 1997 July 28, 1997
(Inception) Month (Inception)
through Ended through
December January 31, January 31,
1997 1998 1998
--------- --------- ---------
Cash flows from operating activities:
Net loss ............................. $ (40,413) $ (25,228) $ (65,641)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Capital stock issued
for services and rent ............. 8,470 190 8,660
(increase prepaid expenses ........... (11,000) (20,000) (31,000)
Increase in deferred charges ......... (5,195) (3,630) (8,825)
Increase (decrease) in
accounts payable ..................... 8,559 (6,865) 1,694
-------- --------- ---------
Net cash used by
operating activities .............. (39,579) (55,533) (95,112)
Cash flows from investing activities:
Acquisition of equipment .......... -- (3,433) (3,433)
--------- --------- ---------
Net cash used
by investing activities ........... -- (3,433) (3,433)
--------- --------- ---------
Cash flows from
financing activities:
Proceeds from sale of
capital stock ..................... 100,000 184,465 284,465
--------- --------- ---------
Net cash provided by
financing activities ............. 100,000 184,465 284,465
Cash, beginning of period ........ -- 60,421 --
--------- --------- ---------
Cash, end of period .............. $ 60,421 $ 185,920 $ 185,920
========= ========= =========
See Notes to Financial Statements
TOUPS TECHNOLOGY LICENSING, lNCORPORATED
(A Development Stage Company)
NOTES TO FlNANClAL STATEMENT
December 31, 1997 and January 31, 1998
1. Summary of Significant Accounting Policies
Company - Toups Technology Licensing, Incorporated (Company), a Florida
Corporation, was formed on July 28, l997, and activated its start-up
operations on November 1, 1997, to facilitate market applications through
the licensing of late-stage technologies, primarily in the energy,
environmental and natural resources market segments. The Company selects
proprietary products or devices within market segments which management
perceives are not subject to rapid change and can be delivered to the
marketplace within a three- to six-month period. The Company is in the
development stage of its operations and has not realized any revenues from
its product lines (see subsequent event note 7). The Company's intended
market will be world-wide.
Machinery and Equipment - Machinery and equipment are recorded at cost.
Depreciation is computed on an accelerated method over seven years.
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.
Income Taxes - Deferred income taxes are reported using the liability
method. Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are differences between the
reported amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Restricted Common Stock - Restricted common stock is subject to the
resale provisions of SEC Rule 144. Due to the uncertainty of the future of
the Company, restricted stock is recorded at its par value ($.001) per
share.
2. Capital Stock
Common
The Company is authorized to issue 20 million shares of common stock with a
par value of $0.001 (one, one-thousandth dollar) per share. As of December 31,
l997, and January 31, 1998, there were 8,630,000 and 9,098,714 shares issued and
outstanding, respectively. Each share of common stock has one vote on all
matters acted upon by the shareholders. Of the 9,098,714 shares issued and
outstanding at January 31, 1998, 438,714 shares are unrestricted and 8,660,000
shares are restricted as to the sale to other parties.
Preferred
The Company is also authorized to issue 10 million shares of preferred
stock having a par value of $i per share. There were no preferred shares issued
outstanding at either December 31, 1997 or January 31, 1998,
3. Employment Agreements Stock Commitments
The Company entered into a series of one-year employment contracts. Within
those contracts, 85,000 shares of stock were issued to certain employees. These
shares have been recorded in the accompanying balance sheet. Additionally, there
are incentive clauses in these contracts that allow up to another 270,000 shares
of common stock to be issued to employees if certain goals are met. None of
these shares are scheduled to be issued to officers, directors, or holders of
more than 5% of the outstanding stock. The additional 270,000 shares have not
been recorded in the accompanying financial statements.
4, Licensing Agreement Commitments
The Company entered into two licensing agreements in November 1997,
whereby, the Company has the exclusive rights to make, use, lease, market and
sell these product lines. In January 1998, the Company executed a five-year
manufacturing agreement with a third licensor. In exchange for these rights
under the three agreements, the Company has committed to pay the Licensor a 6%
royalty, as computed by those agreements. The Company agreed to pay a minimum of
$176,000 of royalties in 1998, of which $31,000 has been paid as of January 31,
1998. The remaining royalty payments for the initial licensing term will be paid
as follows:
Year Ending
1998 $145,000
1999 96,000
2000 96,000
$337,000
The Company can offset these advanced payments against the royalties earned
in 1998 through the year 2000.
In addition to the above, if the Company exercised its option to renew the
licenses it would have future minimum royalties as follows:
Year Ending
2001 $200,000
2002 $250,000
2003 $300,000
2004 and every year thereafter $400,000
5. Non-Cash Disclosures
The following transactions were excluded from the statement of cash flows
because they were not cash transactions.
At inception, the Company issued 8,250,000 shares to its organizers. These
shares of stock were recorded at a total of $8,250.
In addition to the commitments described in the "licensing agreement
commitment" note, the Company issued 165,000 shares of stock to the licensors of
the Company's three technologies. These shares of stock were recorded at a total
of $115.
The Company issued 125,000 shares of stock to consultants and employees.
These shares were recorded at $125.
The Company issued 120,000 shares of stock for the use of operating
facilities for one year. These shares of stock were recorded at $120.
6. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carry-forward has been reduced by a valuation account to zero, due to
uncertainties regarding the utilization of the deferred asset. The deferred tax
asset and the corresponding valuation allowance were approximately $8,085 as of
December 31, 1997.
The net operating loss of $40,423 will expire in 2012.
Deferred tax asset:
Net operating loss carryforwards $8,085
Less valuation allowance 8,085
-----
Net deferred taxes $ -
========
7. Subsequent Event
A. Management has a signed purchase order and a $6,000 deposit for the
sale of the first Balanced Oil Recovery System Lift Pumps. These pumps
are expected to be installed in the second quarter of 1998 at a total
sales price of $180,000.
B. The Company has raised an additional $565,966 in equity from the sale
of 849,725 shares of common stock subsequent to January 31, 1998.
C. The Company entered into a two-year agreement with the Pinellas County
Industrial Council for the lease of machinery and equipment with an
original cost of $1,700,000 for $1 per year. Additionally, the Company
has an option to purchase the equipment at under 10% of the original
cost of the equipment at the end of the lease.
D. The Company received a $50,000 grant from the U. S. Department of
Energy and administered by the Technology Deployment Center for the
development of one of its technologies.
E. On April 29, 1998, Toups Technology Licensing Incorporated (TTL)
acquired Advanced Micro Welding, Inc. (AMW) in a business combination
accounted for as a pooling of interests. AMW, a company specializing in
micro-welding and custom metal fabrication, became a wholly-owned
subsidiary of TTL, through the exchange of 500,000 shares of restricted
common stock of TTL's common stock for all of the outstanding stock of
AMW.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The Company has never had any disagreement with its accountants.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article III of the Company's by-laws provide for the indemnification of
directors, in that Directors of the Company shall not be personally liable for
monetary damages to the Company or any other person for any statement, vote,
decision or failure to act, regarding corporate management or policy, by a
director, unless the director breached or failed to perform his duties as
director.
Article VI of the Company's by-laws provide for the indemnification of
officers, directors, employee and agents of the Company. Such indemnification is
available to any person who was or is a party to any proceeding (other than an
action by, or in the right of, the Company), by reason of the fact that he or
she is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy, as expressed in the Act and is, therefore, unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration fees $ 570
Transfer agents' fees $ 1,500
Legal $ 15,000
-------------
Total $ 17,070
=============
RECENT SALES OF UNREGISTERED SECURITIES
The Company issued "unregistered" securities to various persons and firms
as specified below and all such securities were acquired directly from the
Company in transactions not involving any public offering. All such securities
may only be resold upon compliance with Rule 144, adopted under the Act of 1933.
All securities were sold in reliance upon Section 4(2) of the Securities Act of
1933. All purchasers were either "accredited" or sophisticated. All purchasers
executed a Subscription Agreement indicating they have such knowledge and
experience in financial and business matters that, either alone or with a
purchasers representative, are capable of evaluating the merits and risks of the
investment. All purchasers were provided with access to information about the
Company.
Further, throughout these transactions specified in paragraph four here
following, the Company relied on Section 4(2) of the Act of 1933, as amended and
all purchasers executed a Subscription Agreement indicating (i) they meet the
definition of "Accredited Investor" as that term is specified in Regulation D,
Rule 502, and; (ii) they have such knowledge and experience in financial and
business matters that either alone or with a purchasers representative, are
capable of evaluating the merits and risks of the investment.
Subsequent to June 30, 1998, the Company issued 96,000 unregistered Common
Shares to employees and consultants including Steve Vandenberg 1000, Richard
Hungate 500, Bob Green 400, Joseph Bollent 2,000, Jason Bollent 100, Carl
Simmons 10,000; Mary Slaughter 2,000; Greg Jewell 50,000; David DeCara 10,000;
Ken Lindfors 10,000 and David McKena 10,000.
On July 19, 1998, the Company issued 510,000 unregistered Common Shares to
employees, consultants and vendors including Eric Littman 200,000; Hare &
Company 250,000; David DeCara 50,000, and; Mike Reilly 10,000.
On August 19, 1998, the Company issued 45,000 unregistered Common Shares to
employees and vendors including Jack Hansen 10,000; Ken Lindfors 10,000; Nelson
Flint 15,000, and; Ed Carlson 10,000. Further on August 19, 1998, the Company
acquired the license rights to the patent-pending Magnetion(TM) technology for
which it issued 105,263 unregistered Common Shares. Further on August 19, 1998,
the Company issued 600,000 unregistered Common Shares to officers and directors
including Leon Toups 150,000; Mark Clancy 150,000; Jerry Kammerer 150,000, and;
Michael Toups 150,000.
Between June - September, 1998, the Company sold 883,959 Shares of its
$.001 par value Common Stock at prices ranging from $0.89 - $1.25 per Common
Share for an aggregate of approximately $769,000 exclusively to accredited
investors as that term is defined in Regulation D, Rule 502. There were no
underwriters involved in the Private Offering and no commissions were paid nor
discounts given to any individual. The Company relied on Section 4(2) of 3(b) of
the Securities Act of 1933, as amended, pursuant to Regulation D, Rule 506 of
said Act in the sale of its securities. All purchasers executed a Subscription
Agreement indicated they have such knowledge and experience in financial and
business matters that either alone or with a purchasers representative, they are
capable of evaluating the merits and risks of the investment. None of the
Company's Officers, Directors, 10% owners or affiliates participated in the
aforesaid sale of securities.
On September 15, 1998, the Company issued 2,278,000 unregistered common
shares to finalize its Balanced Oil Recovery System (BORS) lift license
agreement and to various employees and consultants. As it relates to the BORS
license, the Company issued 250,000 unregistered shares to Gerold Allen and
250,000 unregistered shares to Mack Greever. The remainder of the September 15,
1998 issuance of unregistered common shares includes Dave DeCara 50,000; Jeffrey
Gardner 5,000; William Phillips 3,000; Tim Rice 50,000; A. R. Hardy 70,000, and;
Ruggero Santilli 100,000. Further on September, 15, 1998, the Company issued
unregistered shares to its officers and directors including Leon Toups 500,000;
Mark Clancy 500,000 and Michael Toups 500,000.
On September 30, 1998, the Company issued 900,000 unregistered common in
exchange for 100% of the issued and outstanding shares of Brounley Engineering &
Associates, Inc.
EXHIBITS
Table of Exhibits
The following Exhibits are incorporated by reference:
EX-3.(i) Articles of Incorporation
EX-3.(ii) By-laws
EX-5.(i) Opinion re: legality
EX-5.(ii) Opinion re: legality
EX-10.(i) BPV License Agreement (BP Valves)
EX-10.(ii) WAFT License Agreement (AquaFuel)
EX-10.(iii) BORS Lift Manufacturing License Agreement
EX-10.(iv) AMW Acquisition Agreement
EX-20 AquaFuel Certification Report
EX-23 Auditor's Consent
The following Exhibits are a part of this Registration
EX-10((v) Amended BORS Lift License Agreement
EX-10(vi) Magnetion(TM) License Agreement
EX-10(vii) Tunnel Bat License Agreement
EX-10(viii) Exchange of Share Agreement, re: Brounley Engineering
UNDERTAKINGS
The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and 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 the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the undersigned of expenses incurred or paid by a
director, officer or controlling person of the undersigned 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 undersigned 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 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Toups Technology Licensing, Inc.
(Registrant).
.
Leon H. Toups, President and Chief Executive Officer
By (Signature and Title)
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Leon H. Toups,
(Signature)
President and Chief Executive Officer
(Title)
(Date): September 30, 1998
Exhibit 10(v) Amended BORS Lift License Agreement
THE BALANCED OIL RECOVERY SYSTEM LIFT LICENSE AGREEMENT
THIS AGREEMENT, effective this 19th day of June 1998, made I between
Lift-Pump, L. L. C., an Oklahoma Limited Liability Company located at I 104
South Missouri, Suite 200. Claremore, Rogers County, Oklahoma, 74017 ("LLC") by
its Manager Mack Greever;
And
Toups Technology Licensing Incorporated, Suite 105, 7887 Bryan Dairy I
Road, Largo, Florida 33777, (" TTL"), by its President and Chief Executive
Officer, Leon H, Toups;
WlTNESSETH THAT
WHEREAS Gerold Allen, one of the principals of the LLC has developed a process
of producing oil with minimal water production. The principals of the LLC in the
past have been investigating a pumping device for oil wells to complement the
production process and together with TTL, are now improving a pumping device for
oil wells that is referred to as the Balanced Oil Recovery System Lift ("BORS
Lift") and desires to grant an exclusive, world-wide license to commercialize
the balanced oil recovery system and the BORS Lift; AND
WHEREAS TTL is engaged in the business of developing market-ready technological
products and services protected by intellectual property rights, especially
patents, by application of a systems approach to identifying, funding,
developing, and marketing technological products and services; AND
WHEREAS LLC and TTL are jointly interested in undertaking together a joint
effort at designing, manufacturing, selling or otherwise commercializing BORS
Lift, as by a License Agreement that provides for the LLC to introduce TTL to
the technology within the limits of this Agreement and to authorize TTL to make
and to commercialize BORS Lift equipment at an agreed royalty, so long as both
parties perform in accordance with this Agreement;
NOW, THEREFORE, LLC and TTL, intending to be legally bound, agree to
undertake designing, manufacturing, and selling or otherwise I commercializing
THE BORS LlFT upon the following terms and conditions:
1. Definitions
a. "Licensed Know-how" means unpatented proprietary technical, professional, or
commercial information disclosed to TTL by LLC. and useful in designing. making.
or using Licensed i Products or performing Licensed Services.
b. "Licensed Patent" means any patent (or disclosed patent application) licensed
to TTL herein and containing a claim defining the composition, design, machine,
process, manufacturing, structure, operation, or use THE BORS LlFT subject
matter, insofar as owned or licensable by LLC and so licensed to TTL in or for
the License Territory.
c. "Licensed Product" means by-product or related composition whose production,
structure, or use embodies any Licensed Know-how, is defined by a claim of a
Licensed Patent or disclosed patent application and/or would infringe a Licensed
Patent in the absence of this License Agreement, or displays or is
commercialized by a Licensed Trademark.
d. "Licensed Service" means any designing, making, specifying. or any
instruction, leasing, or performance of other services relating to any License
Product for, to, or with a customer or other party, whether for compensation or
not.
e. "Licensed Specification" means any requirement or standard identified by LLC
to TTL relating to composition, design, manufacturing method, structure,
workmanship and/or resulting appearance, form, identity, quality, or
presentation of a Licensed Product or a Licensed System,
f. "Licensed System" means any apparatus, assembly, device, or structure for
producing or using a Licensed Product, with or for use with (or without) other
accessories.
g. "Licensed Trademark" Balanced Oil Recovery System Lift, BORS Lift or other
word and/or design, used with or without any other word and/or design, in or as
a brand name for Licensed Products or Licensed Services or Licensed Systems.
h. "improvement" means any substantial change in any foregoing o~ defined item
(a to g) during this Agreement, whether made by ~ LLC or by TTL.
I. "License Term" means the duration of this Agreement, as follows: (i) an
Initial Period, beginning on the aforesaid effective date with a Startup Time
ending on exactly twelve months thereafter, and continuing, if TTL so elects, to
the end of the' year 2001; and (ii) further continuing (at TTL's advance notice
of election to do so) for one or more successive Renewal Periods of three (3)
calendar years, noted further below.
j. "License Territory" means worldwide.
k. "Startup Time" means the time period from the beginning of the Initial Period
of this Agreement on the identified effective date. to end exactly twelve months
thereafter.
License and Sublicenses
a. LLC hereby grants to TTL, for the License Term only, an indivisible,
non-assignable right and license to make, use, lease, sell, and otherwise
practice commercially the defined Licensed subject matter. TTL recognizes and
agrees that the LLC will analyze all wells that are to receive BORS Lifts and
will determine the proper setting for each application and such information as
may be required to install the BORS Lifts. Notwithstanding anything to the
contrary contained in this paragraph 2.a or otherwise in this Agreement, TTL
recognizes and agrees that the LLC and its principals and employees shall not be
required to disclose to TTL any data, information, specifications, formulas or
know how of the LLC or its principals or employees used to obtain balanced
production of oil with minimal water production. Both the LLC and ~TTL recognize
and agree that the Licensed Know-how and the knowledge to obtain balanced oil
production with minimal water production is and shall remain the property of the
LLC and its principals.
b. So long as TTL is in good standing under this Agreement, this grant is to be
exclusive, meaning that LLC will not grant any third party a similar license in
the License Territory.
c. TTL shall have the right to apply any Licensed Trademark to Licensed Products
and other components approved by LLC and sold by TTL for construction of
Licensed Systems, but TTL. shall use Licensed Trademarks only in accordance with
acceptable trademark practice and subject to the provisions of this Agreement.
d. TTL customers will have an implied sub license to assemble Licensed Products
into Licensed Systems, with or without other components.
e. TTL will not license, sell or market any other product or technology under
the "BORS" name or trademark without the prior written consent of the LLC.
License Term
a. The Initial Period begins on the effective date of this Agreement
will extend at least to the end of the Startup Time, when it will terminate if
TTL fails to notify LLC in writing at least thirty (30) days theretofore that
TTL elects to continue for the rest of the Initial Period. Such notice would
extend the Initial Period to end on the anniversary of the License Agreement in
the year 2001.
b. Unless sooner terminated, the License Term may continue for a succeeding
Renewal Period, from the end of the Initial Period or of any Renewal Period, at
the election of TTL if then in good standing; such election to be made by TTL
giving written notice to LLC within the last calendar quarter of any Period, of
intention to continue this Agreement for a succeeding Renewal Period, beginning
on the first day of January of the next year and continuing for three (3) more
years.
c. The License Term shall continue from Period to Period so long as TTL timely
renews, or until LLC gives TTL notice that TTL is no longer in good standing
because of a specified breach or default of one or more of TTL's obligations
under this Agreement; TTL shall have the right to remedy any such breach or
default within forty-five (45) days thereafter to return to good standing as to
such breach or default. Likewise, if LLC should be in breach or default of one
or more of LLC's obligations under this Agreement, LLC shall have the right to
remedy any such breach or default within forty-five (45) days to return to good
standing as to such breach or default.
d. Obligations of this Agreement that are indicated as surviving beyond the end
of a Period or of the License Term shall continue for such time period as may be
lawful, despite notice by either party to the other of an election to
discontinue either party's participation in or under this Agreement.
e. The Term of this Agreement, if not sooner ended by the act of a party or the
operation of law, shall end upon expiration of the last to expire of the
Licensed Patents, if any, except as TTL is using a THE BORS LlFT trademark, or
otherwise as noted below.
4. Confidentiality
a. To the extent that TTL receives Licensed Know-how, or either party becomes
aware of other proprietary information from the other party via their
relationship pursuant to this Agreement, each recipient of such information will
hold it in confidence so long as the other party effectively treats it as
confidential, except as specific information becomes public knowledge otherwise
than by or from TTL
b. The foregoing obligation to keep proprietary information confidential and to
safeguard it within the organization of a party will survive any termination of
this Agreement to the extent that such information is not common trade
knowledge.
c. TTL shall require all of its employees to sign a confidentiality and
non-disclosure agreement that will prevent its employees from disclosing any
information regarding the Licensed Knowhow and any information learned by any
employee by or through contact with the LLC or its principals or employees.
d. ~TL shall require all of its employees to disclose to ~TL and the LLC any
improvements to or invention that arises from or is related to the Licensed
Know-how or the BORS Lifts.
5. Startup Time
a. TTL will provide facilities, equipment, and resources for the BORS LlFT
design, development, and marketing purposes during the Startup Time in order to
enable the equipment and I~ resultant products to be analyzed, tested, and (as
soon as to be demonstrated to prospective customers, and other interested
persons. The facilities, equipment and resources set forth above shall be
provided in a timely fashion and in sufficient amounts to accomplish the purpose
of this Agreement and upon consultation and agreement with the LLC.
b. LLC will provide THE BORS LlFT Licensed Know-how to TTL from time to time as
may be appropriate and will participate regularly as a technical consultant upon
THE BORS LIFT~ design, development, testing, and marketing, as TTL deems
desirable.
feasible) investors.
6. Royalties
a. An advance first year Running Royalty payment of eighty thousand and no1100
dollars ($80,000) shall be paid to the LLC in four equal installments of twenty
thousand and no1100 dollars ($20.000) each, with the first payment being made
upon the execution of this agreement. The second payment shall be made no later
than 90 days thereafter; the third payment shall be made no later than six
months thereafter and the fourth and final payment shall be made no later than
nine-months thereafter. All advance Running Royalty payments !hereafter be
applied toward any amounts due the pursuant to this License Agreement
b. The Running Royalty rate for Licensed Product, Licensed Services, and
Licensed Systems is Six Percent (6%) of all that TTL receives in money or other
thing of value for leasing, servicing, selling, or otherwise commercializing the
same.
c. Running Royalty accrues upon invoice, lease, sale, or service by TTL but
shall not be payable until thirty (30) days thereafter or upon TTL's receipt of
payment therefor (whichever occurs first), and shall be without any deduction
from TTL's actual total revenue therefrom, except for customers' related costs
(such as insurance, shipping, or taxes) and then only if so itemized on TTL's
invoices to them.
d. Running Royalty payable for any given month becomes due at the end of the
then current calendar quarter, and shall be paid by the 15th of the next month
following said calendar quarter.
e. As a part of LLC's Royalties hereunder, upon signing this Agreement,TTL shall
issue to LLC 500,000 of its restricted $.001 par value Common Shares. Said
Shares shall be fully vested upon receipt. These Shares shall be considered to
be a guaranteed performance amount for the Startup Period (19891999), but shall
not be applied against the Running Royalty:
Payments and Reports
a. TTL will report to LLC, all Running Royalty for each calendar quarter of the
License Term during the first month of the next ensuing calendar quarter and
will include with each such report full payment of royalty due for (and reported
for) the preceding quarter's operations.
b. Quarterly and annual royalty reports will be signed and be certified as
accurate and complete by an authorized officer of TTL.
c. TTL will keep accurate and complete records of all business done pursuant to
this Agreement and will make such records available to LLC, no more than two (2)
persons at once-for inspection during regular business hours, upon at least
three (3) business days' advance notice, to determine Royalties accrued and paid
or unpaid, and any other information due hereunder.
d. LLC may cause an audit to be made of the applicable records in order to
verify statement for Running Royalties made hereunder Any audits shall be
conducted by an independent certified public accountant, acceptable to both
parties, and shall be conducted during regular business hours at TTL's offices.
e. LLC shall bear the expenses of any such audit unless such audit reveals that
the Royalties paid by TTL under this Agreement for the Period subject to the
audit are less than ninety-five percent (95%) of the amount owed by TTL for such
period. In such event, the costs of the audit shall be borne by TTL, in addition
and without limitation to any right of remedy LLC may have. TTL agrees to pay
the balance of such royalties due LLC within forty-five (45) days after written
notice from LLC of TTL's understatement of Royalties due. Furthermore. TTL shall
pay interest on all understated Royalties at a rate of 1.5% per month or lesser
amount as mandated by law, computed from the day on which said Royalties were
due and owing to
f. Refusal by TTL to report or to pay Royalty, or to maintain or make available
records of business done hereunder, will forfeit TTL's good standing under this
Agreement, if not remedied within thirty (30) days, unless limited to nonpayment
of money, which may be remedied within forty-five (45) days.
8. improvements
a. Any new composition, design, product, or service conducive to third party
competition with Licensed Product or Licensed Services or Licensed Systems,
invented or otherwise coming under the control of either party during the
License Term, is deemed an "Improvement" and such party will disclose the same
to the other party promptly and in enough detail to enable the LLC to elect
whether to have such Improvement included hereunder.
b. As to any such Improvement by either party, the LLC may elect to have such
Improvement included hereunder, within three (3) months after first knowledge
thereof, without change in Royalty, by promptly notifying ~TL of an election to
do so.
c In the event ~L is the originating party of an improvement that appears
possibly patentable after a competent prior art search, TTL will disclose such
improvement to the LLC and the LLC will file and prosecute a patent application
thereon in the name of the LLC as the inventor and originating party, and may
discontinue prosecuting it or maintaining any resulting patent.
d. If the LLC elects to have in improvement included under this Agreement, the
LLC will pay the expense of undertaking to patent it with the License Territory
9. Infringement Rights
a. TTL acknowledges that the exclusive ownership of the Licensed Know-How, the
Licensed Patents and the Licensed Trademarks and any improvements thereof or
thereto during the term of this Agreement and any extensions or renewals thereof
is and shall remain in the LLC and not at all in the 7TL.
b. In the event that TTL's commercialization of any Licensed Product, Licensed
Service, or Licensed System is accused of infringing a proprietary right of any
third party, the parties will cooperate in attempting to avoid such infringement
or to prove lack of infringement, and so long as TTL's license hereunder is
exclusive to the extent set forth above, ~TL will have a right, but not an
obligation, to defend or assist in defending against any infringement action
brought by a third party, and shall have also the obligation to pay one-half
(1/2) of the costs of doing so, except as either party may voluntarily pay more
thereof incidental to participation therein.
c. Neither party will be liable to the other party if unable or unwilling to
continue this Agreement because of such infringement of third-party rights, and
in that event TTL will cease commercializing Licensed Products, Licensed
Services, and Licensed Systems, and TTL will relinquish its rights hereunder in
that event, and thereby terminate its Royalty and attendant obligations to LLC.
d. In the event that the activities of any third party are asserted (or other-
wise appear) to infringe an intellectual property right licensed to TTL
hereunder, the parties will cooperate in attempting to ascertain and to abate
such infringement. So long as TTL's license hereunder is exclusive to the extent
set forth above, TTL will have a prior right, but not an obligation, to abate
such infringement, whether by litigation or otherwise, subject to paying all the
costs of doing so other than such costs or expenses as LLC may voluntarily pay
incidental thereto or to participation therein. Any moneys recovered from a
third-party infringer will be retained by the parties, pro-rated to their
expenditures after determining what portion of moneys recovered are due LLC as
part of his Running Royalty, whose action(s) had such result.
e. If third-party infringement is not abated, ~TL may elect to continue as a
non-exclusive licensee under this Agreement as its sole remedy, or alternatively
TTL may discontinue its license and cease royalty payments as its sole remedy.
10. Assurances
a. LLC assures TTL of its origination of the inventions but LLC cannot guarantee
TTL of LLC's invention priority.
b. LLC warrants ownership of the Licensed Products and Licensed Services, in the
specific sense that LLC has no reason to believe that any third party has any
right to prevent 1 either LLC or TTL from practicing any Licensed Invention, or
d from using any Licensed Trademark, as provided in this Agreement, but LLC
cannot and does not warrant such practice or usage as non-infringing of
third-party rights.
c. LLC will instruct and/or assist TTL's personnel in design, manufacturing,
quality standards, testing, distribution, i marketing, and sale, as well as
proper marking, of Licensed Product and Licensed Systems, and LLC will provide
Licensed Know-how in doing so, as may be applicable.
d. LLC will have no liability whatever to TTL for TTL's actions or inactions
under this Agreement, and TTL will save LLC harmless against any liability to
third parties whether based upon agency, contract, negligence, product
liability, or other basis-for any claim based on action or inaction of TTL
relating to Licensed Products, Services, or Systems.
e. The LLC has disclosed that a prior license has been granted to New Lift, Inc.
who in turn has granted one sub-license. However, the LLC acknowledges that
without the know-how, which is possessed solely by the LLC, New Lift and/or its
licensees would have difficulty and be unable to effectuate a balanced oil
recovery. Further, the LLC states that its current license agreement with New
Lift, Inc., does not require that the LLC divulge any such information.
11. Product Marking
a. ~TL will mark on Licensed Products (or containers) each patent number
applicable thereto upon being advised thereof by LLC.
b. TTL will display a Licensed Trademark (if elected) on all Licensed Product
and in advertising copy, brochures, and publications by or for TTL about
Licensed Product. ~TL will not use any Licensed Trademark in or as a trade name
(i) a not elected, or (ii) if elected, after ~TL discontinues (or other
termination of) TTL's license under this Agreement.
c. TTL will provide access for LLC, at agreed times, to all Licensed Product to
enable LLC to ascertain that the nature and quality thereof meet standards
required by trademark law of products bearing a Licensed Trademark.
d. TTL will not make any material change in materials, production methods, or
otherwise that might affect the nature or quality of any THE BORS LlFT product
or service, without advance notice to LLC and ample opportunity for LLC to
confirm compliance of such product or service with applicable quality
standards-or not.
e. TTL will provide representative specimens of each Licensed Product or
Licensed Service or Licensed System label and advertising copy, and of each
product or service brochure, before publication thereof, to enable LLC to assure
that they meet accepted trademark usage standards.
f. TTL will not manufacture, sell, or distribute any Licensed Product that does
not meet LLC's quality standards, nor distribute any product literature that
does not meet accepted trademark usage standards.
g. If TTL elects to use one or more Licensed Trademark(s), TTL will display one
thereof on each container of Licensed Product made by or for it, and in all
Licensed Product advertising copy, product brochures, press releases, and
publications by or for TTL about Licensed Product plus the generic name of the
goods, together with occasional notice that such Trademark is the property of
LLC.
12. Termination
a. During the last calendar quarter of the initial or any Renewal Period, TTL
may notify LLC of TTL's election to continue the Agreement for a Renewal Period,
to begin at the end of the then current Period; or, by failing to do so, TTL
will terminate its rights under this Agreement, whereupon TTL will be obligated
to discontinue its participation in licensed activities by the end of the
existing Period, except as the parties otherwise agree in a signed written
agreement. In the event of a termination of this Agreement for any reason, TL
shall immediately return to the LLC all records, orders, works-in-progress,
blueprints, drawings, plans and specifications, sales records, billing
information and records and any other data, however, captured whether by
electronic means or on paper, documents or information which, in the opinion of
the LLC, is necessary for the continuation of the manufacturing and sales of the
BORS lift and use of licensed know-how.
b. Upon termination, ~TL will refrain from exercising thereafter any right it
had by license hereunder, such as practicing the of any previously Licensed
Patent, or using a Licensed Trademark or confusingly similar expression or using
any Licensed Know-How.
c. Whenever 7TL is not in good standing hereunder, LLC may render TTL's license
wholly non-exclusive, or if it is already non-exclusive for a prior breach or
default LLC may terminate TTL's rights hereunder, in the absence of specific
curative provisions for TTL's breach or default, or if TTL has had an
opportunity to comply such a curative provisions and failed or refused to do so.
d. If either party becomes, or would become, disabled-as by the other party's
choosing, or being subjected to, an ad or a procedure for relief of debtors from
enforcing compliance with a given executor obligation of the other party
hereunder (e.g., compliance with standards, action with regard to infringers,
offer of improvements) the thus disabled party may deem this Agreement and the
license and other rights under this Agreement terminated.
e. No inaction or overlooking by LLC of any condition or provision of this
Agreement or of any breach or default thereof by ~TL shall be deemed to imply or
to constitute a future waiver of any similar breach or default of the same or
other conditional provision.
f. LLC reserves the right to cancel this Agreement if at any time and for any
reason, the ownership or effective control of TTL is altered. This provision
includes any tender offer for the purchase of twenty-five percent (25%) or more
of the common stock of 7TL by any party. In such an event, LLC may terminate
this Agreement immediately and TTL shall promptly return to the LLC all records,
orders, works-in-progress, blueprints, drawings, plans and specifications, sales
records, billing information and records and any other data, documents or
information which, in the opinion of The LLC, is necessary for the continuation
of the manufacturing and sales of the BORS lift and use of licensed know-how.
13. Miscellaneous
a. If any one or more provision(s) or effect(s) of this Agreement should prove
to be invalid or unenforceable, and the Agreement be otherwise valid and
enforceable, the invalid or unenforceable provision or portion thereof will be
severed, and the remainder of the Agreement be and remain valid and enforceable
to the fullest extent permitted by applicable law.
b. This License Agreement is made for the benefit of the parties, their heirs,
successors, and assigns, and any other person or legal entity named in any
provision hereof, and not made to give any unnamed person or legal entity any
right of action whatever.
c. Each statement made in this Agreement is deemed material, and each party is
entitled to rely, and deemed to have relied, upon the truth and correctness
thereof in entering into this Agreement.
d. Each party acknowledges that he has received advice of independent counsel of
choice as to the inducements, provisions, and terms of this Agreement, and their
effect. whereupon entering into this License Agreement is each party's free and
independent act.
e. This Agreement is to be governed by Federal law to whatever extent a
proprietary right granted by the United States is involved, and otherwise by
Florida law, except as activities of a party in any other State render that
other State's law applicable.
f. In the event that any action or proceeding is brought to enforce any of the
terms and conditions of this Agreement, then the party in whose favor relief is
granted and/or judgment is entered shall be entitled to have and recover from
the other party or parties all costs, prejudgement interest, and reasonable
attorney's fees incurred in connection with the enforcement action.
g. Notice to be given under this Agreement will be in writing and be addressed
to the other party at the address of such party hereinabove, unless such address
has been superseded by like notice, whereupon the latest noticed address thereof
is to be used. Notice will be effective when delivered to the addressee, or-if
not a change of address-when sent by Express or Registered Mail so addressed.
h. This Agreement sets forth the entire intent and understanding of the parties
with regard to the subject matter hereof, and merges any prior negotiations or
agreements by the parties as to such subject matter, and no addition, deletion,
or other modification of the wording hereof may be made except in writing
subsequent hereto and signed by the party or parties to be bound thereby.
IN WITNESS WHEREOF the parties have caused this Agreement to be signed, sealed,
and attested by persons duly authorized so to do, as of the date first stated
hereinabove.
S/S MACK GREEVER S/S LEON H. TOUPS
Mack Greever, Manager Leon H. Toups, President
Attest: S/S GEROLD ALLEN S/S MARK CLANCY
Gerold Allen Mark Clancy, Vice President
EX-10(viii) Exchange of Share Agreement, re: Brounley Engineering
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is made this30th of September,
1998, by and among TOUPS TECHNOLOGY LICENSING, INC., Florida corporation ("TTL")
; BROUNLEY ASSOCIATES, INC.. a Florida corporation ("Brounley); and the persons
listed in Exhibit "A-l" hereof who are the owners of record of all the issued
and outstanding stock of Brounley who execute and deliver the Agreement
("Brounley Stockholders"), based on the following:
Recitals
TTL wishes to acquire all the issued and outstanding stock of Brounley
in exchange for stock of TTL in ~; transaction intended to qualify as a tax-free
exchange pursuant to section 368(a)(l)(B) of the internal Revenue Code of 1986,
as amended. The parties intend for this Agreement to represent the terms and
conditions of such tax-free reorganization, which Agreement the parties hereby
adopt.
Agreement
Based on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and agreements
hereinafter set forth, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby agreed as follows:
ARTlCLE I EXCHANGE OF STOCK
1.01 Exchange of Shares. On the terms and subject to the conditions set forth in
this Agreement; on the Closing Date (as defined in Section 1.05 hereof), the
Brounley Stockholders shall assign, transfer, and deliver.. to TTL, free and
clear of all liens, pledges, encumbrances, charges, restrictions, or claims of
any kind, nature, or description, all issued and outstanding shares of common
stock of Brounley (the "Brounley Shares") held by Brounley Stockholders which
shares shall represent all issued and outstanding shares of Brounley common
stock which total 22,222 shares, and TTL agrees to acquire such shares on such
date by issuing and delivering in exchange therefore aggregate of 900,000
unregistered shares of TTL common stock, par value $0.001 per share, (the "TTL
Common Stock"). Such shares of TTL Common Stock shall be issued pro rata based
on the number of Brounley Shares held and as set forth opposite the Brounley
Stockholder's respective names in Exhibit "A-l". All 900,000 shares of TTL
Common Stock to be issued and delivered pursuant to this Agreement shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in the TTL Common Stock
which may occur between the date of the execution of this Agreement and the
Closing Date.
1.02 Delivery of Certificates by Brounley Stockholders. The transfer of Brounley
Shares by the Brounley Stockholders shall be effected by the delivery to T7L at
the Closing (as set forth in Section 1.05 hereof) of a certificate issued to TTL
representing all of the issued and outstanding shares of Brounley.
1.03 Operation as Wholly-Owned Subsidiary. After giving effect to the
transaction contemplated hereby, TTL will own all the issued and outstanding
shares of Brounley and Brounley shall be merged with TTL.
1.04. Further Assurances . At the Closing and from time to time thereafter, the
Brounley Stockholders shall execute such additional instruments and take such
other action as TTL may reasonably request without undue cost to the Brounley
Stockholders in order to more effectively sell, transfer, and assign clear title
and assign clear title and ownership in the Brounley Shares to TTL.
1.05 Closing and Parties. The Closing contemplated hereby shall be held at the
principal office of TTL in Largo, Florida on or before 9:00 a.m. September 30,
1998, or on another date to be agreed to in writing by the parties (the "Closing
Date"). The Agreement may be closed at any time following approval by a majority
of the stockholders of TTL Common Stock as set forth in Section 4.02 hereof and
the Brounley Stockholders as set forth in Section 5.02. The Closing may be
accomplished by wire, express mail, overnight courier conference telephone call
or as otherwise agreed to by the respective parties or their duly authorized
representatives.
1.06. Closing Events.
(a) TTL Deliveries. Subject to fulfillment or waiver of the conditions set forth
in Article 1V, TTL shall deliver to Brounley at Closing all the following:
(i) A certificate of good standing from the secretary of State of Florida,
certifying that TTL is in good standing as a corporation in the State of
Florida;
(ii) Incumbency and specimen signature certificates dated the Closing Date with
respect to ; the officers of TTL executing this Agreement and any other document
delivered pursuant hereto on behalf of TTL;
(iii) Copies of the resolutions of TTL's board of directors and shareholder
minutes or consents i authorizing the execution and performance of this
Agreement and the contemplated transactions, certified by the secretary or an
assistant secretary of TTL as of the Closing Date;
(iv) The certificate contemplated by Section 4.03, duly executed by the chief
executive officer of TTL;
(vi) Certificates for 900,000 shares of TTL Common Stock in the names of the
Brounley Stockholders and in the amounts set forth in Exhibit "A-l" which shall
be issued by TTL's transfer agent immediately following Closing or as
expeditiously as possible thereafter; and
(v) The certificate contemplated by Section 4.04, dated the Closing Date, signed
by the chief executive officer of TTL
In addition to the above deliveries, TTL shall take all steps and actions as
Brounley and Brounley Stockholders I' may reasonably request or as may otherwise
be reasonably necessary to consummate the transactions contemplated 6 hereby.
(b) Brounley Deliveries. Subject to fulfillment or waiver of the conditions set
forth in Article V, Brounley and/or Brounley Stockholder's shall deliver to TTL
at Closing all the following:
(i) A certificate of good standing from the secretary of state of Florida,
issued as of a date within five days prior to the Closing Date certifying that
Brounley is in good standing as a corporation in the State of Florida;
(ii) Incumbency and specimen signature certificates dated the Closing Date with
respect to the officers of Brounley executing this Agreement and any other
document delivered pursuant hereto on behalf of Brounley;
(iii) Copies of resolutions of the board of directors and of the stockholders of
Brounley authorizing the execution and performance of this Agreement and the
contemplated transactions, certified by the secretary or an assistant secretary
of Brounley as of the Closing Date;
(iv) The certificate contemplated by Section 5.03, executed by the chief
operating officer of Brounley; and
(v) The certificate contemplated by Section 5.04, dated the Closing Date, signed
by the chief operating officer of Brounley.
In addition to the above deliveries, Brounley shall take all steps and actions
as TTL may reasonably request or as may otherwise be reasonably necessary to
consummate the transactions contemplated hereby.
Termination.
This Agreement may be terminated by the board of directors of either TTL or
Brounley at any time prior to the Closing Date if:
(i) There shall be any actual or threatened action or proceeding before any
court or any govemmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and which, in the
reasonable judgment of such board of directors, made in good faith and based
upon the advice of its' legal counsel, makes it inadvisable to proceed with the
transactions contemplated by this Agreement;
(ii) Any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such transactions
or in the reasonable judgment of such board of directors made in good faith and
based on the advice of counsel, there is substantial likelihood that any such
approval will not be obtained or will be obtained only on a condition or
conditions which would be unduly burdensome, making it inadvisable to proceed
with the exchange;
In the event of termination pursuant to this paragraph (a) of Section 1.07, no
obligation, right, or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation,
preparation, and execution of this Agreement and the transactions contemplated
hereby.
(b) This Agreement may be terminated at any time prior to the Closing Date by
action of the board of directors of TTL if(i) Brounley shall fail to comply in
any material respect with any of its covenants or agreement contained in this
Agreement or if any of the representations or warranties of Brounley contained
herein shall be inaccurate in any material respect or (ii) TTL determines that
there has been or is likely to be any material adverse change in the financial
or legal condition of Brounley. In the event of termination pursuant to this
paragraph (b) of this Section 1.07, no obligation, right, remedy, or liability
shall arise hereunder. All parties shall bear their own costs incurred in
connection with the negotiation, preparation, and execution of this Agreement
and the transactions contemplated hereby.
(c) This Agreement may be terminated at any time prior to the Closing Date by
action of the board of directors of Brounley if(i) TTL shall fail to comply in
any material respect with any of its covenants or agreement contained in this
Agreement or if any of the representations or warranties of TTL contained herein
shall be inaccurate in any material respect, or (ii) Brounley determines that
there has been or is likely to be any adverse change in the financial or legal
condition of TTL. In the event of termination pursuant to this paragraph (c) of
this Section 1.07. no obligation, right, remedy, or liability shall arise
hereunder. All parties shall each bear their own costs incurred in connection
with the negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby'
1.08 Registration of TTL Shares. Concurrent with the Closing of this Agreement,
or immediately thereafter, TTL shall file a form SB-2 registration statement to
register certain of its equity securities with the Securities and Exchange
Commission ("S.E.C") pursuant to the Securities Act of 1933, as amended ("the
1933 Act") and shall use its best efforts to have said registration statement
approved by the SEC Out of the total shares being registered, by TTL, 105,000 of
those shares shall be the TTL Common Stock being transferred to the Brounley
Stockholders pursuant to this Agreement. Thus, TTL shall submit for registration
105,000 out of the 900,000 TTL shares in total being transferred to Brounley
Stockholders (hereafter "Registered Shares"). The Registered Shares shall be
issued and held as set forth in Exhibit A-l opposite the respective Brounley
Stockholders' names.
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TTL
As an inducement to, and to obtain the reliance of Brounley, TTL represents and
warrants as follows:
2.01 Organization. TTL is, and will be on the Closing Date, a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida and has the corporate power and is and will be duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public I' authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now
being': conducted, and there are no other jurisdictions in which it is not so
qualified in which the character and location of the' assets owned by it or the
nature of the material business transacted by it requires qualification, except
where failure to do so would not have a material adverse effect on its business,
operations, properties, assets or condition. The execution " and delivery of
this Agreement does not, and the consummation of the transactions contemplated
by this Agreement in accordance with the terms hereof will not, violate any
provision of TTL's articles of incorporation or bylaws, or other agreement to
which it is a party or by which it is bound.
2.02 Approval of Agreement. TTL has full power, authority, and legal right and
has taken, or will taken all action required by law, its articles of
incorporation, bylaws, and otherwise to execute and deliver this Agreement and
to consummate the transactions herein contemplated. The board of directors of
TTL has authorized and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby; subject to the approval of
the TTL stockholders and compliance with state and federal corporate and
securities laws.
2.03 Capitalization The authorized capitalization of TTL consists of 20,000,000
shares of common stock, $0.001 par value, of which 15,595,454 shares are issued
and outstanding. All issued and outstanding shares of TTL are legally issued,
fully paid, and nonassessable and not issued in violation of the preemptive or
other right of any person. There are no dividends or other amounts due or
payable with respect to any of the shares of capital stock of TTL.
Financial Statements.
(a) Included in Schedule 2.04 are the financial statements which were filed by
TTL in connection with TTL's Form IO-SB, as well as quarterly audited financial
statements for the periods ending March 31, 1998 and June 30, 1998 (collectively
"1OQs"), which financial statements have been duly filed with the Securities and
Exchange Commission ("SEC") as required by the 1934 Act.
(b) The financial statements of TTL delivered pursuant to Section 2.04(a) have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved as6 explained in the notes
to such financial statements. The TLL financial statements present fairly, in
all material respects,: as of their respective dates, the financial position of
TTL. TTL did not have, as of the date of any such financial statements, except
as and to the extent reflected or reserved against therein, any liabilities or
obligations (absolute or contingent) which should be reflected therein in
accordance with generally accepted accounting principles, and all assets
reflected therein present fairly the assets of TTL in accordance with generally
accepted accounting principles.
(c) TTL has filed or will file as of the Closing Date all tax returns required
to be filed by it from3 inception to the Closing Date. All such returns and
reports are accurate and correct in all material respect. TTL has' no material
liabilities with respect to the payment of any federal, state, county, local, or
other taxes (including any deficiencies, interest, or penalties) accrued for or
applicable to the period ended on the date of the most recent balance sheet of
TTL, except to the extent reflected on such balance sheet and all such dates and
years and periods prior thereto and for which TTL may at said date have been
liable in its own right or as transferee of the assets of, or as successor to,
any other corporation or entity, except for taxes accrued but not yet due and
payable, and to the best knowledge of TTL, no deficiency assessment or proposed
adjustment of any such tax return is pending, proposed or contemplated. To the
best knowledge of TTL, none of such income tax returns has been examined or is
currently being examined by the Internal Revenue Service and no deficiency
assessment or proposed adjustment of any such return is pending, proposed or
contemplated. TTL has not made any election pursuant to the provisions of any
applicable tax laws (other than elections that relate solely to methods of
accounting, depreciation, or amortization) that would have a material adverse
affect on ~n, its financial condition, its business as presently conducted or
proposed to be conducted, or any of its respective properties or material
assets. There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of TTL.
2.05 Outstanding Warrants and Options. TTL has no existing warrants or options,
calls, or commitments of any nature relating to the authorized and unissued TTL
Common Stock, except as disclosed in documents which are publicly filed by TTL.
2.06. Information. The information concerning TTL set forth in this Agreement is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading. TTL shall cause the schedules delivered by it pursuant hereto
and the instruments delivered to Brounley hereunder to be updated after the date
hereof up to and including the Closing Date.
2.07 Absence of Certain Changes or Events. Except as set forth in this Agreement
or the schedules hereto: since the date of the most recent TTL balance sheet
described in Section 2.04 and included in the information referred to in Section
2.06:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or financial condition of
TTL or (ii) any damage, destruction, or loss to TTL (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or conditions o~
(b) To the best knowledge of TTL, it has not become subject to any law or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations,.
properties, assets, or condition of TTL.
2.08 Litigation and Proceedings. . There are no material actions, suits, or
administrative or other proceedings pending or, to the knowledge of TTL,
threatened by or against TTL or adversely affecting TTL or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before and arbitrator of any kind. TTL
does not have any knowledge of any default on its part with respect to any
judgment, order; writ, injunction, decree, award, rule, or regulation of any
court, arbitrator, or govemmental agency or instrumentality.
2.09 Compliance With Laws and Regulations. TTL has complied with all applicable
statutes and regulations of any federal, state, or other govemmental entity or
agency thereof, except to the extent that noncompliance (i) could not materially
and adversely affect the business, operations, properties, assets, or condition
of TTL or (ii) could not result in the occurrence of any material liability for
TTL. To the best knowledge of TTL, the consummation of this transaction will
comply with all applicable statutes and regulations, subject to the preparation
and filing of any form required by state and federal securities laws.
2.10 Compliance with Securities Laws. TTL has complied with all applicable
security statutes and regulations. of any federal, state or other govemmental
entity or agency thereof, including the filing of any required documents in
regards to all sales of TTL Stock. TTL makes the additional following securities
disclosures as a material inducements to Brounley to enter into this
transaction:
a) TTL's common stock is currently traded on the OTC Bulletin Board ("OTC" or
"Over-the Counter") and TTL is in compliance with all applicable securities
rules and regulations regarding the OTC trading of its securities; and
b) TTL voluntarily became a reporting company pursuant to section 12(g) of the
Securities Exchange Act o 1934 by virtue of filing a Form IO-SB registration
statement which was approved by the SEC and is currently effective; and
c) TTL has filed for and been approved for a manual filing exemption with
Standard & Poor's (S&P) for 1998 and to the best of TTL's knowledge, its
securities have been and are currently trading in compliance with applicable
federal and state blue sky securities laws; and
d) TTL, through its approved market maker(s), has filed a current Form 211 with
the N.A.S.D.R. pursuant to Rule 15c-211, and has otherwise maintained and
updated the Form 211 as required by applicable securities laws an:'
e) TTL has met all current reporting requirements of Rule 12(g) and any other
applicable securities law and regulation applicable to TTL's trading market.
2.11 Material Contract Defaults. TTL is not in default in any material respect
under the terms of any outstanding contract, agreement, lease, or other
commitment which is material to the business, operations, properties, assets, or
condition of TTL, and there is no event of default or other event which, with
notice or lapse of time or both, would constitute a default in any material
respect under any such contract, agreement, lease, or other commitment in,
respect of which TTL has not taken adequate steps to prevent such a default from
occurring.
2.12 No Conflict With Other Instruments. The execution of this Agreement and the
consummation of the, transactions contemplated by this Agreement will not result
in the breach of any term or provision of, or constitute an event of default
under, any material indenture, mortgage, deed of trust, or other material
contract, agreement, or instrument to which TTL is a party or to which any of
its properties or operations are subject.
2.13 TTL Schedules. TTL has delivered to Brounley the following schedules, which
are collectively referred to as the "TTL Schedules" and which consist of the
following separate schedules dated as of the date of execution of this
Agreement, all certified by a duly authorized officer of TTL as complete, true,
and accurate of the date of this Agreement;
(a) A schedule including copies of the articles of incorporation and bylaws of
TTL in effect as of the date of this agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of TTL approving this Agreement and the transactions herein
contemplated.
(c) A schedule setting forth the financial statements required pursuant to
Section 2.04(a) hereof,
(d) A schedule setting forth any other information, together with any required
copies of documents, required to be disclosed the TTL Schedules by Sections 2.01
through 2.13, TTL shall cause the TTL Schedules and the instruments delivered to
Brounley hereunder to be updated after the date hereof up to and including a
specified date not more than three business days prior to the Closing Date. Such
updated TTL Schedules, certified in the same manner as the original TTL
Schedules, shall be delivered prior to and as a condition precedent to the
obligation of Brounley to close.
ARTICLE III REPRESENTATIONS, COVENANTS, AND WARRANTIES OF BROUNLEY
As an inducement to, and to obtain the reliance of, TTL, Brounley represents and
warrants as follows:
3.01 Organization. Brounley is, and will be on the Closing Date, a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and has the corporate power and is and will be duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being;
conducted, and there are no other jurisdictions in which it is not so qualified
in which the character and location of the assets owned by it or the nature of
the material business transacted by it requires qualification, except where
failure to do so would not have a material adverse effect on its business,
operations, properties, assets or condition of Brounley the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Brounley's articles of incorporation or bylaws, or
other material agreement to which it is a party or by which it is bound.
3.02 Approval of Agreement. Brounley has full power, authority, and legal right
and has taken, or will take, all action required by law, its articles of
incorporation, bylaws, or otherwise to execute and deliver this Agreement and to
consummate the transactions herein contemplated. The board of directors of
Brounley have authorized and approved the execution, delivery, and performance
of this Agreement and the transactions contemplated hereby; subject to the
approval of the Brounley Stockholders and compliance with state and federal
corporate and securities laws.
3.03 Capitalization. The authorized capitalization of Brounley consists
of 100,000 shares of common stock $1.00 par value, of which as of the date
hereof 22,222 shares are issued and outstanding. All issued and outstanding
shares of Brounley are legally issued, fully paid, and nonassessable and not
issued in violation of the preemptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital
stock of Brounley.
Financial Statements.
(a) included in Schedule 3.04 are the federal and state
corporate tax rectums of Brounley for the fiscal years ended 1996 and 1997 as
well as the unaudited balance sheet and income statement prepared by management
~
Brounley for the period ending August 31, 1998.
(b) The financial statements of Brounley present fairly, as of
their respective dates, the financial
position of Brounley. Brounley did not have, as of the date of any such balance
sheets, except as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be reflected i~
any financial statements or the notes thereto and all assets reflected therein
present fairly the assets of Brounley.
(c) Brounley has filed or will have filed as of the Closing Date all tax returns
required to be filed by it from inception to the Closing Date. All such returns
and reports are accurate and correct in all material respect Brounley has no
material liabilities with respect to the payment of any federal, state, county,
local, or other taxes (including any deficiencies, interest, or penalties)
accrued for or applicable to the period ended on the date of the most recent
unaudited balance sheet of Brounley, except to the extent reflected on such
balance sheet and adequately provide for, and all such dates and years and
periods prior thereto and for which Brounley may at said date have been liable ~
its own right or as transferee of the assets of, or as successor to, any other
corporation or entity, except for taxes accrued: but not yet due and payable,
and to Brounley's knowledge no deficiency assessment or proposed adjustment of
any such tax return is pending, proposed or contemplated. Proper and accurate
amounts of taxes have been withheld by or on behalf of Brounley with respect to
all material compensation paid to employees of Brounley for all periods ending
on or before the date hereof, and all deposits required with respect to
compensation paid to such employees have beet made, in complete compliance with
the provisions of all applicable federal, state, and local tax and other laws.
T~ Brounley's knowledge, none of such income tax returns has been examined or is
currently being examined by the Internal Revenue Service, and no deficiency
assessment or proposed adjustment of any such return is pending, proposed or
contemplated. Brounley has not made any election pursuant to the provisions of
any applicable tax laws (other the elections that relate solely to methods of
accounting, depreciation, or amortization) that would have a material adverse
affect on Brounley, its financial condition, its business as presently conducted
or proposed to be conducted, or any of its properties or material assets. There
are no tax liens upon any of the assets of Brounley. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of Brounley.
3.05 Outstanding Warrants and Options. Brounley has no issued warrants
or options, calls, or commitments of any nature relating to the authorized and
unissued Brounley Common Stock.
3.06 Information. The information concerning Brounley set forth in this
Agreement and in the schedules delivered by Brounley pursuant hereto is complete
and accurate in all material respects and does not contain any statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
Brounley shall cause the schedules delivered by Brounly pursuant hereto to TTL
hereunder to be updated after the date hereof up to and including the Closing
Date.
3.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement since the date of the most recent Brounley balance sheet described in
Section 3.04 and included in the information referred to in Section 3.OC:
(a) There has not been (i) any material adverse change in the business,
operations, properties level of inventory, assets, or condition of Brounley or
(ii) any damage, destruction, or loss to Brounley materially adversely affecting
the business, operations, properties, assets, or conditions of Brounley; and
(b) Brounley has not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii)
waived any rights of value which in the aggregate are extraordinaly and material
considering the business of Brounley; (iv) made any material change in its
method of accounting; (v) entered into any other material transactions other
than those contemplated by this Agreement; (vi) made any material accrual or
material arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former officer or
employee; or (vii) made any material increase in any profit-sharing, bonus,
deferred compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with their officers, directors,
or employees; and
(c) Brounley has not (i) granted or agreed to grant any options, warrants, or
other rights for its stocks, bonds, or other corporate securities calling for
the issuance thereof, (ii) borrowed or agreed to borrow any funds or incurred,
or become subject to, any material obligation or liability (absolute or
contingent) except liabilities incurred in the ordinary course of business;
(iii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent Brounley
balance sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or transfer, any
of its material assets, properties, or rights, or agreed to cancel, any material
debts or claims; (v) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such amendment or
termination is material, considering the business of Brounley; or (vi) issued,
delivered, or agreed to issue or deliver any stock, bonds, or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock); and
(d) To the best knowledge of Brounley, it has not become subject to any law or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations, properties,
assets, or condition of Brounley.
3.08 Title and Related Matters. Except as provided herein or disclosed in the
most recent Brounley balance sheet of its properties, inventory, interests in
properties, technology, whether patented or unpatented and assets, which are
reflected in the most recent Brounley balance sheet or acquired after that date
(except properties, interests in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all mortgages, liens, pledges, charges, or encumbrances, except (i) statutoly
liens or claims not yet delinquent, and (ii) such imperfections of title and
easements as do not, and will not, materially detract from or interfere with,
the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business e operations on such
properties. To the best knowledge of Brounley, its technology does not infringe
on the copyright, patent, trade secret, know-how, or other proprietary right of
any other person or entity and comprises all such rights necessary to permit the
operation of the business of Brounley as now being conducted or as contemplated.
3.09 Litigation and Proceedings. There are no material actions, suits, or
proceedings pending or, to the knowledge of Brounley, threatened by or against
Brounley or adversely affecting Brounley, at law or in equity, before any court
or other govemmental agency or instrumentality domestic or foreign, or before
any arbitrator of any kind Brounley does not have any knowledge of any default
on its part with respect to any judgment, order, writ, injunction decree, award,
rule, or regulation of any court, arbitrator, or govemmental agency or
instrumentality.
3.10 Material Contract Defaults. Brounley is not in default in any material
respect under the terms of outstanding contract, agreement, lease, or other
commitment which is material to the business, operations, assets, or condition
of Brounley, and there is no event of default or other event which, with notice
or lapse of time or both, would constitute a default in any material respect
under any such contract, agreement, lease, or other commitment in respect of
which Brounley has not taken adequate steps to prevent such a default from
occuring.
3.11 No Conflict with other Instruments. The execution of this Agreement and the
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision or, or constitute an event of default
under, any material indenture, mortgage, deed of trust, or other material
contract, agreement, or instrument to which Brounley is a party or to which any
of its properties or operations are subject.
3.12 Govemmental Authorizations. Brounley has all licenses, franchises, permits,
and other govemmental authorizations that are legally required to enable it to
conduct its business in all material respects as conducted on the date of this
Agreement. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, no authorization, approval, consent,
or order of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and delivery by
Brounley of this Agreement and the consummation by Brounley of the transactions
contemplated hereby.
3.13 Compliance With Laws and Regulations. Brounley has complied with all
applicable statutes and regulations of any federal, state, or other govemmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of Brounley or except to the extent that noncompliance would not
result in the occurrence of any material liability for Brounley. To the best
knowledge of Brounley, the consummation of this transaction will comply with all
applicable statutes and regulations, subject to the preparation and filing of
any forms required by state and federal security laws.
3.14 Subsidiary. Brounley does not own, beneficially or of record, any equity
securities in any other entity.
3.15 Brounley Schedules. Brounley has delivered to TTL the following schedules,
which are collectively ~ referred to as the "Brounley Schedules" and which
consist of the following separate schedules dated as of the date of :i execution
of this Agreement, and instruments and TTL as of such date, all certified by the
chief executive officer of Brounley as complete, true, and accurate:
(a) A schedule including copies of the articles of incorporation and bylaws of
Brounley and all amendments thereto in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of Brounley approving this Agreement and the transactions herein
contemplated as referred to in Section 3.02:
(c) A Schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of Brounley
since the most recent Brounley balance sheet, required to be provided pursuant
to Section 3.04 hereof,
(d) A schedule setting forth the financial statements required pursuant to
Section 3.01al hereof,
(e) A schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the Brounley Schedules by
Sections 3.01 through 3.14.
Brounley shall cause the Brounley Schedules and the instruments
delivered to TTL hereunder to be updated after the date hereof up to and
including a specified date not more than three business days prior to the
Closing Date. Such updated Brounley Schedules, certified in the same manner as
the original Brounley Schedules, shall be delivered prior to and as a condition
precedent to the obligation of TTL to close.
ARTICLE IV CONDITIONS PRECEDENT TO OBLIGATIONS OF BROUNLEY
The obligations of Brounley under this Agreement are subject to the satisfaction
of Brounley, at or before the Closing Date, of the following conditions.
4.01 Shareholder Approval. TTL shall obtain the written consent of a majority of
its stockholders to approve the transactions contemplated by this Agreement,
including the acquisition of Brounley through the issuance of TTL common stock
for all of the issued and outstanding Shares. Said written consent shall be
provided to Brounley at closing.
4.02 Accuracy of Representations. The representations and warranties made by TTL
in this Agreement were true when made and shall be true at the Closing Date with
the same force and affect as if such representations and warranties were made at
and as of the Closing Date (except for changes therein permitted by this
Agreement), and TTL shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by TTL
prior to or at the Closing. Brounley shall be furnished with certificates,
signed by duly authorized officers of TTL and dated the Closing Date, to the
foregoing effect.
4.03 Officer's Certificates. Brounley shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
executive officer of TTL to the effect that to such officers best knowledge no
litigation, proceeding, investigation, or inquiry is pending or, to the best
knowledge of TTL threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement
Furthermore, based on certificates of good standing, representations of
government agencies, and TTL's own documents and information, the certificate
shall represent, to the best knowledge of the officer, that:
(a) This Agreement has been duly approved by TTL's board of directors and
stockholders and has been duly executed and delivered in the name and on behalf
of and by its duly authorized officers pursuant to, and in compliance with,
authority granted by the board of directors of TTL pursuant to a unanimous
consent;
(b) There have been no material adverse changes in TTL up to and including the
date of the certificate;
(c) All conditions required by this Agreement have been met, satisfied, or
performed by TTL;
(d) All authorizations, consents, approvals, registrations, and/or filings with
any govemmental body agency, or court required in connection with the execution
and delivery of the documents by 7TL have been obtained and are in full force
and effect or, if not required to have been obtained, will be in full force and
effect by such time as may be required; and TTL.
(e) There is no material action, suit, proceeding, inquily, or investigation at
law or in equity by any public board or body pending or threatened against TTL,
wherein an unfavorable decision, ruling, or finding could have an adverse effect
on the financial condition of TTL, the operation of TTL, or the acquisition and
reorganization contemplated herein, or any agreement or instrument by which TTL
is bound or in any way contests the existence of TTL.
4.04 No Material Adverse Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business, or
operations of TTL, nor shall any event have occurred which, with the lapse of
time or the giving of notice, may cause or create any material adverse change in
the financial condition, business, or operations of TTL.
4.05 Good Standing. Brounley shall have received a certificate of good standing
from the secretary of the State of Florida, certifying that TTL is in good
standing as a corporation in the State of Florida.
4.06. Other Items. Brounley shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
Brounley may reasonably request.
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF TTL
The obligations of tTL under this Agreement are subject to the satisfaction, at
or before the Closing Date, of the following conditions:
5.01 Shareholder Approval. TTL shall obtain through a majority written consent
of its stockholders authorization and approval for this Agreement and the
transactions contemplated hereby.
5.02. Brounlev Stockholders. Holders of all of the issued and outstanding
Brounley Shares shall agree to this Agreement and the exchange of shares
contemplated by this Agreement.
5.03 Accuracy of Representations. The representations and warranties made by
Brounley and the Brounley Stockholders in this Agreement were correct when made
and shall be true at the Closing Date with the same force and affect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein " permitted by this Agreement), and Brounley shall have
performed or compiled with all covenants and conditions required by this
Agreement to be performed or complied with by Brounley prior to or at the
Closing. TTL shall be! furnished with a certificate, signed by a duly authorized
officer of Brounley and dated the Closing Date, to the foregoing effect.
5.04 Officer's Certificates. TTL shall have been furnished with certificates
dated the Closing Date and signed by the duly authorized chief operating officer
of Brounley to the effect that no litigation, proceeding, investigation, or
inquiry is pending or, to the best knowledge of Brounley, threatened, which
might result in an action ~ to enjoin or prevent the consummation of the
transactions contemplated by this Agreement. Furthermore, based on; certificates
of good standing, representations of government agencies, and Brounley's own
documents, the certificate shall represent, to the best knowledge of the
officer, that:
(a) This Agreement has been duly approved by Brounley's board of directors and
stockholders; and has been duly executed and delivered in the name and on behalf
of Brounley by its duly authorized officers pursuant to, and in compliance with,
authority granted by the board of directors of Brounley pursuant to a unanimous
consent ~ of its board of directors and a majority vote of its stockholders;
(b) Except as provided or permitted herein, there hae been no material adverse
changes in Brounley up to and including the date of the certificate;
(c) All authorizations, consents, approvals, registrations, and/or filing with
any governmental, body, agency, or court required in connection with the
execution and delivery of the documents by Brounley have been obtained and are
in full force and effect or, if not required to have been obtained will i be in
full force and effect by such time as may be required; and
(d) There is no material action, suit, proceeding, inquiry, or investigation at
law or in equity by any public board or body pending or threatened against
Brounley, wherein an unfavorable decision, ruling, or finding would have an
adverse affect on the financial condition of Brounley, the operation of
Brounley, or the acquisition and reorganization contemplated herein, or any
material agreement or instrument by which Brounley is bound or would in any way
contest the existence of Brounley.
5.05 No Material Adverse Change. Prior to the Closing Date, there shall not have
occurred any material adverse change in the financial condition, business or
operations of Brounley, nor shall any event have occurred which, with the lapse
of time or the giving of notice, may cause of create any material adverse change
in the financial condition business, or operations of Brounley.
5.06 Good Standing. TTL shall have received a certificate of good standing from
the appropriate authority in the State of Florida, dated as of a date with five
days prior to the Closing Date, certifying that the Brounley is in good standing
as a corporation in the State of Florida.
5.07. Other Items. TTL shall have received such further documents certificates
or instruments relating to the transactions contemplated hereby as TTL, may
reasonably request.
ARTICLE V1 SPECIAL COVENANTS
6.01 Activities of TTL and Brounlev.
(a) From and after the date of this Agreement until the Closing Date and except
as set forth in the respective schedules to be delivered by TTL and Brounley
pursuant hereto or as permitted or contemplated by this Agreement, TTL and
Brounley will each:
(i) Carry on its business in substantially the same manner as it has heretofore;
(ii) Maintain in full force and effect insurance comparable in amount and in
scope ofcoverage to that now maintained by it;
(iii) Perform in all material respects all of the obligations under material
contracts, leases and instruments relating to or affecting its assets,
properties, and business;
(iv) Use its best efforts to maintain and preserve it business Organization
intact, to retain its key employees, and to maintain its relationships with its
material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or prior to the
Closing all federal, state, county, and local tax returns required to be filed
by or on behalf of such entity or for which such entity as may be held
responsible and shall pay, or cause to pay, all taxes required to be shown as
due and payable on such returns, as well as all installments of tax due and
payable during the period commencing on the date of this Agreement:and ending on
the Closing Date; and
(vi) Fully comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules, regulations,
and orders imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement and except as provided herein
until the Closing Date, TTL and Brounley will not:
(i) Make any change in its articles of incorporation or bylaws;
(ii) Enter into or amend any material.contracts, agreement, or other instrument
of any of the types described in such party's schedules, except that a party may
enter into or amend any contract, agreement, or other instrument in the ordinary
course of business; and Enter into any agreement far the sale of Brounley
securities without the prior approval of the other party.
6.02 Access to Properties and Records Until the Closing Date, Brounley and TTL
will afford to the other party's officers and authorized representatives full
access to the properties, books, and records of the other party in order that
each party may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of Brounley or TTL and will furnish the
other party with such additional financial and other information as to the
business and properties of Brounley or TTL as each party shall from time to time
reasonably request.
6.03 Indemnification bv Brounley. Brounley will indemnify and hold harmless
TTL and its directors and Officers, and each person, if any, who controls within
the meaning of the Securities Act, from and against any and all losses, claims,
damages, expenses, liabilities, or actions to which any of them may become
subject under applicable law (including the Securities Act and the Securities
Exchange Act) and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any claims or
actions, whether or not resulting in liability, insofar as such losses, claims,
damages, expenses, liabilities, or actions arise out of or are based upon any
untrue statement or alleged untrue statement of material fact contained in any
application or statement file with a govemmental body or arising out of or are
based upon the omission or alleged omission to state therein a material: fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
Brounley expressly for use therein. The indemnity agreement shall remain in full
force and effect, regardless of any investigation made by or on behalf of TTL
and shall survive consummation of the transactions contemplated by this
Agreement for a period of one year.
6.04 Indemnification bv TTL. . TTL will indemnify and hold harmless Brounley and
its directors and Officers, and each person, if any, who controls within the
meaning of the Securities Act, from and against any and all losses, claims,
damages, expenses, liabilities, or actions to which any of them may become
subject under applicable law (including the Securities Act and the Securities
Exchange Act) and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any claims or
actions, whether or not resulting in liability, insofar as such losses, claims,
damages, expenses, liabilities, or actions arise out of or are based upon any
untrue statement or alleged untrue statement of material fact contained in any
application or statement file with a govemmental body or arising out of or are
based upon the omission or alleged omission to state therein a material: fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
TTL expressly for use therein. The indemnity agreement shall remain in full
force and effect, regardless of any investigation made by or on behalf of
Brounley and shall survive consummation of the transactions contemplated by this
Agreement for a period of one year.
6.05 The Acauisition of TTL Common Stock. TTL and Brounley understand and agree
that the consummation of this Agreement including the issuance of the TTL Common
Stock to Brounley in exchange for the Brounley Shares as contemplated hereby,
constitutes the offer and sale of securities under the Securities Act and
applicable state statutes. TTL and Brounley agree that such transactions shall
be consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, among other items, on the
circumstances under which such securities are acquired.
(a) In order to provide documentation for reliance upon exemptions from the
registration and prospectus delivery requirements for such transactions, the
signing of this Agreement and the delivery of appropriate separate
representations shall constitute the parties acceptance of, and concurrence in,
the following representations and
(i) The Brounley Stockholders acknowledge that neither the SEC nor the
securities commission of any state or other federal agency has made any
determination as to the merits of acquiring TTL Common Stock, and that this
transaction involves certain risks.
(ii) Brounley Shareholders have such knowledge and experience in business and
financial matters that they are capable of evaluating such business risks.
(iii) All information which the Brounley Stockholders have provided to TTL or
the representatives concerning their suitability and intent to hold shares in
TTL following the transactions contemplated hereby is complete accurate and
correct.
(iv) The Brounley Stockholders understand that the TTL Common Stock has not been
registered, , but is being acquired by reason of a specific exemption under the
Securities Act as well as under certain statr statutes for transactions not
involving any public offering and that any disposition of the subject TTL Common
Stock: may, under certain circumstances, be inconsistent with this exemption and
may make Brounley or TTL an underwriter within the meaning of the Securities
Act. It is understood that the definition of "underwriter" focuses upon the
concept of "distribution" and that any subsequent disposition of the subject TTL
Common Stock can only be effected iin transactions which are not considered
distributions. Generally, the term "distribution" is considered synonymous with
"public offering" or any other offer or sale involving general solicitation or
general advertising. Under present law, in determining whether a distribution
occurs when securities are sold into the public market, under certain
circumstances one must consider the availability of public information regarding
the issuer, a holding period for the securities sufficient to assure that the
persons desiring to sell the securities without registration first bear the
economic risk of their investment, and a limitation on the number of securities
which the stockholder is permitted to sell and on the manner of sale, thereby
reducing the potential impact of the sale on the trading markets. These criteria
are set forth specifically in rule 144 promulgated under the Securities Act,
and, afer one year after the date the TTL Common Stock or Brounley Shares is
fully paid for, as calculated in accordance with rule 144(d) sales of securities
in reliance upon rule 144 can; only be made in limited amounts in accordance
with the terms and conditions of that rule. After two years from the date the
securities are fully paid for, are calculated in accordance with rule 144(d) may
can generally be sold without meeting those conditions, provided the holder is
not (and has not been for the preceding three months) an affiliate of the
issuer.;
(v) The Brounley Stockholders acknowledge that the shares of TTL Common Stock
must be held and may not be sold, transferred, or otherwise disposed of for
value unless they are subsequently registered under the Securities Act or an
exemption from such registration is available. TTL is not under any obligation
to registered the TTL Common Stock under the Securities Act except as stated in
this Agreement. If rule 144 is available after one year and prior to two years
following the date the shares are fully paid for, only routine sales of such TTL
Common Stock in limited amounts can be made in reliance upon rule 144 in
accordance with the terms and conditions of that rule TTL is not under any
obligation to make rule 144 available except as set forth in this Agreement and
in the event rule 144 is not available, compliance with Regulation A or some
other disclosure exemption may be required before Brounley Stockholders can
sell, transfer, or otherwise dispose of such TTL Common Stock without
registration under the Securities Act. Subject to compliance with federal and
state securities laws, TTL's registrar and transfer agent will maintain a stop
transfer order against the registration of transfer of the TTL Common Stock held
by Brounley; Stockholders and the certificates representing the TTL Common Stock
will bear a legend in substantially the following form so restricting the sale
of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED i UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT3 AND ARE "RESTRICTED
SECURITIES" WITHTN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR:: INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER UNDER THE SECURITlES ACT.
(vi) TTL. will require Brounley Stockholder to provide an opinion of counsel
reasonably acceptable to TTL stating that the transfer is proper. TTL agrees to
provide Brounley with assistance and cooperation in good faith when Brounley
seeks to sell any shares which are free from restrictions or exempt therefrom
(b) In connection with the transactions contemplated by this Agreement, TTL
shall file with the assistance of its legal counsel, such notices, applications,
reports, or other instruments as may be deemed by it be necessary or appropriate
in an effort to document reliance on such exemptions, and with the appropriate
regulatory authority in the states where the Brounley Stockholders reside unless
an exemption requiring no filing is available in such jurisdictions, all to the
extent and in the manner as may be deemed by TTL to be appropriate.
(c) The Brounley Stockholders acknowledge that the basis for relying on
exemptions from registration or qualifications are factual, depending on the
conduct of the various parties, and that no legal opinion order other assurance
will be required or given to the effect that the transactions contemplated
hereby are in fact exempt from registration or qualification.
6.06 Securities Filings. TTL shall be responsible for the preparation and filing
of any required forms, or documents, deemed necessary by TTL and its legal
counsel, with the Securities and Exchange Commission and in jurisdiction which
would require a filing with a govemmental agency as a result of the transactions
contemplated in this Agreement.
6.07 Sales of Securities Under Rule 144 if Applicable.
(a) TTL will use its best efforts to at all times satisfy the current public
information requirements of rule 144 promulgated under the Securities Act so
that its stockholders can sell restricted securities that have been held for one
year or more or such other restricted period as required by rule 144 as it is
from time to time amended.
(b) Upon being informed in writing by any person holding restricted stock of TTL
as of the date of this Agreement that such person intends to sell any shares
under rule 144 promulgated under the Securities Act (including any rule adopted
in substitution or replacement thereof), TTL will certify in writing to such
person that it is in compliance with rule 144 current public information
requirements to enable such person to sell such person's restricted stock under
rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted stock is presented to
TTL's transfer agent for registration or transfer in connection with any sales
theretofore made under rule 144, provided such certificate is duly endorsed for
transfer by the appropriate person(s) or accompanied by a separate stock power
duly executed by the appropriate person(s) in each case with reasonable
assurances that such endorsements are genuine and effective, and is accompanied
by an opinion of counsel satisfactory to TTL and its counsel that such transfer
has complied with the requirements of rule 144, as the case may be, TTL will use
its best efforts to cooperate with the shareholder and/or transfer agent with
the registration or transfer in connection with any sales made under rule 144.
ARTICLE VII MISCELLANEOUS
7.01 Brokers. The Brounley Stockholders have agreed to issue 45,000 shares of
their TTTL Common Stock to certain finders in this transaction. Except as
provided herein, TTL and Brounley agree that there were no other finders or
brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement. Further, TTL and
Brounley each agree to indemnify the other against any claim by any third person
for any commission, brokerage, or finder's fee or other payment with respect to
this Agreement or the transactions contemplated hereby based on any alleged
agreement or understanding between such party and such third person, whether
express or implied, from the actions of such party.
The covenants set forth in this section shall survive the Closing Date and the
consummation of the transactions herein contemplated.
7.02 No Representation Regarding Tax Treatment. No representation or warranty is
being made by any party to any other regarding the treatment of this transaction
for federal or state income taxation. Each party has relied exclusively on its
own legal, accounting, and other tax adviser regarding the treatment of this
transaction for federal and state income taxes and on no representation,
warranty, or assurance from any other party or such other party's legal,
accounting, or other adviser.
7.03. Governing Law. This Agreement shall be governed by, enforced and construed
under and in accordance with the laws of the State of Florida.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently ~ given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed ~
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier addressed as follows:
If to TTL: 7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777
If to Brounley, to: 7381 114'h Avenue North, Suite 410 Largo, Florida 33773
or such other addresses as shall be furnished in writing by any party any such
notice or communication shall be deemed to have been given as of the date so
delivered or sent by facsimile or telecopy transmission or other electronic
communication, or one day after the date so sent by overnight courier.
7.05 Attorney Fees. In the event that any party institutes any action or suit to
enforce this Agreement or to secure relief from any default hereunder or breach
hereof, the breaching party or parties shall reimburse the nonbreaching party or
parties for all costs, including reasonable attomeys' fees, incurred in
connection therewith and in enforcing or collecting any judgment rendered
therein.
7.06 Schedules. Knowledge. Whenever in any section of this Agreement reference
is made to information set forth in the schedules provided by TTL or Brounley
such reference is to information specifically set forth in such I schedules and
clearly marked to identify the section of this Agreement to which the
information relates. Whenever any, representation is made to the "knowledge" of
any party, it shall be deemed to be a representation that no officer or director
of such party, after reasonable investigation, has any knowledge of such
matters.
7.07 Entire Agreement. This Agreement represents the entire agreement between
the parties relating to: the subject matter hereof All previous agreements
between the parties, whether written or oral, have been merged into, this
Agreement. This Agreement alone fully and completely expresses the agreement of
the parties relating to the subject matter hereof. There are no other courses of
dealing, understandings, agreements, representations, or warranties, written or
oral, except as set forth herein.
7.08 Survival: Termination. The representations, warranties, and covenants of
the respective parties shall survive the Closing Date and the consummation of
the transactions herein contemplated for a period of six months from the Closing
Date, unless otherwise provided herein.
7.09 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and all of which taken together shall be
but a single instrument.
7.10 Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and such remedies may be enforced concurrently, and no waiver by
any party of the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein and any term or condition of this Agreement may be waived
or the time for performance thereof may be extended by a writing signed by the
party or parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first above written.
TOUPS TECHNOLOGY LICENSING, INC. BROUNLEY ASSOCIATES, INC.
a Florida Corporation a Florida Corporation
By: S/S LEON H. TOUPS By: S/S ROBERT W. BROUNLEY
Leon H. Toups Robert W. Brounley
President Vice President
executed September 30, 1998
