SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (date of earliest event reported) September 30, 1998
TOUPS TECHNOLOGY LICENISNG, INC.
(Exact name of registrant as specified in its charter)
Florida 000-23897 59-3462501
State or other jurisdiction Commission (IRS Employer
of incorporation) File Number) Identification No.)
7887 Bryan Diary Road, Suite 105, Largo, Florida 33777
(address of principal executive offices)
Registrant's telephone number, including area code: (813)-548-0918
<PAGE>
ITEM 1 Not applicable
ITEM 2 Not applicable
Item 3 Not applicable.
Item 4 Not applicable.
Item 5 Not applicable
Item 6 Not applicable.
Item 7 Attached are the audited financial statements for balance sheets of
Brounley Associates, Inc. as of December 31, 1997 and 1996, and the
related statements of income, stockholders' equity and cash cash flows
for the years then ended. The Company has previously provided
unaudited Pro Forma Consolidated Financial statements for the six month
period ended June 30, 1998 which give effect to the acquisition of
Brounley.
Item 8 Not applicable.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Toups Technology Licensing, Inc.
(Registrant)
Date: June 22, 1999 Leon H. Toups, President
------------------------
(Signature)
Board of Directors
Brounley Associates, Inc.
7381 114th Avenue North
Suite 409
Largo, Florida 33773
We have audited the accompanying balance sheets of Brounley Associates,
Inc. as of December 31, 1997 and 1996, and the related statements of income,
stockholders' equity and cash cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
Except as discussed in the following paragraph, we conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
We did not observe the taking of the physical inventories at December 31,
1997 and 1996 (stated at $237,682 and $183,279, respectively), since those dates
were prior to the time we were initially engaged as auditors for the Company. We
were unable to satisfy ourselves about inventory quantities by means of other
auditing procedures.
In our opinion, except for the effects of such adjustments, if any, as
might have been determined to be necessary had we been able to observe the
physical inventories taken as of December 31, 1997 and 1996, the financial
statements referred to in the first paragraph present fairly, in all material
respects, the financial position of Brounley Associates, Inc. as of December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
As discussed in Note 9 to the financial statements, certain errors
resulting in understatement of the previously reported common stock and
additional paid in capital accounts as of December 31, 1997 and December 31,
1996, were discovered by management of the Company subsequent to
October 19,1998. Accordingly, an adjustment has been made to retained earnings
as of December 31, 1997 and December 31, 1996, to correct the error.
October 19, 1998
(Except for Note 9, as to
which the date is March 2, 1999)
BROUNLEY ASSOCIATES, INC.
Balance Sheets
December 31, 1997 and 1996
ASSETS 1997 1996
CURRENT ASSETS
Cash $ 29,944 $ 15,122
Accounts receivable, net 5,444 58,848
Inventories 237,682 183,279
Other current assets 800 -0-
Total current assets 273,870 257,249
FIXED ASSETS, NET 11,873 18,068
OTHER ASSETS 700 700
Total assets $286,443 $276,017
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion long-term liabilities $ 15,325 $ 4,685
Accounts payable - trade 63,607 100,072
Customer deposits 73,540 30,145
Other current liabilities 5,691 2,239
Total current liabilities 158,163 137,141
LONG-TERM LIABILITIES, less current portion 27,490 42,815
Total liabilities 185,653 179,956
STOCKHOLDERS' EQUITY
Common stock 24,444 24,444
Treasury stock (29,000) -0-
Additional paid in capital 47,156 47,156
Retained earnings 58,190 24,461
Total stockholders' equity 100,790 96,061
Total liabilities and
stockholders' equity $286,443 $276,017
The accompanying notes are an integral part of these statements.
-4-
BROUNLEY ASSOCIATES, INC.
Statements of Earnings
December 31, 1997 and 1996
1997 1996
Sales $852,020 $687,663
Cost of goods sold 619,681 469,644
Gross profit 232,339 218,019
General and administrative expenses 189,262 205,566
Total operating earnings 43,077 12,453
Other income:
Other income 155 -0-
Total other income 155 -0-
Other expenses:
Other expense 325 614
Interest expense 1,207 649
Total other expenses 1,532 1,263
Earnings before income taxes 41,700 11,190
Income taxes 7,971 2,081
Net earnings $ 33,729 $ 9,109
The accompanying notes are an integral part of these statements.
-5-
BROUNLEY ASSOCIATES, INC.
Statements of Stockholders' Equity
December 31, 1997 and 1996
Additional
Common Treasury Paid In Retained
Stock Stock Capital Earnings Total
Balance, December 31, 1995 $24,444 $-0- $47,156 $ 15,352 $ 86,952
Net earnings for the year -0- -0- -0- 9,109 9,109
Balance, December 31, 1996 24,444 -0- 47,156 24,461 96,061
Treasury Stock -0- (29,000) -0- -0- (29,000)
Net earnings for the year -0- -0- -0- 33,729 33,729
Balance December 31, 1997 $24,444 $(29,000) $47,156 $ 58,190 $100,790
The accompanying notes are an integral part of these statements.
-6-
BROUNLEY ASSOCIATES, INC.
Statements of Cash Flows
December 31, 1997 and 1996
CASH FLOWS FROM OPERATING ACTIVITIES 1997 1996
Net earnings $ 33,729 $ 9,109
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 11,131 8,980
Decrease in receivables and prepaid items 52,604 12,610
(Increase) in inventory (54,403) (67,002)
Increase in payables and accrued items 10,382 53,848
Gain on sale of assets (155) -0-
NET CASH PROVIDED BY
OPERATING ACTIVITIES 53,288 17,545
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of building, land & equipment (5,531) (385)
Proceeds from sale of equipment 750 -0-
NET CASH (USED BY)
INVESTING ACTIVITIES (4,781) (385)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt (822) -0-
Repayment of long-term debt (3,863) -0-
Purchase of Treasury Stock (29,000) -0-
NET CASH PROVIDED BY/(USED BY)
FINANCING ACTIVITIES (33,685) -0-
NET INCREASE (DECREASE) IN CASH 14,822 17,160
CASH AT BEGINNING OF YEAR 15,122 (2,038)
CASH AT END OF YEAR $ 29,944 $ 15,122
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 1,207 $ 649
Cash paid during the year for income taxes $ 4,481 $ -0-
The accompanying notes are an integral part of these statements.
-7-
NOTES TO
FINANCIAL STATEMENTS
BROUNLEY ASSOCIATES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
Brounley Associates, Inc. is located in Pinellas County, Florida. The
Company is engaged in the design, manufacture and sale of radio frequency (RF)
generators to customers located throughout the United States and abroad.
Substantially all sales are to nationally or internationally based concerns in
high technology industries.
Method of Accounting
The Company uses the accrual basis of accounting in accordance with
generally accepted accounting principles.
Fixed Assets
Major purchases of property and equipment having a life of more than one
year are stated at cost and capitalized. Repair and maintenance items are
charged against earnings. The Company uses tax depreciation lives and methods
for both financial reporting and tax purposes which does not differ materially
from generally accepted accounting principles and is calculated based on the
following:
Asset Category Method* Estimated Lives
Computer equipment SL/DDB 5 years
Furniture and fixtures SL/DDB 5 - 8 years
Machinery and equipment manufacturing SL/DDB 5 - 8 years
* SL - straight line
DDB - double declining balance
-9-
BROUNLEY ASSOCIATES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
Cash Equivalents
For purposes of the statements of cash flows, cash equivalents consist of
money market and municipal bond funds with a maturity of three months or less
when purchased. The Company does not consider any of its assets to meet the
definition of cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly
actual results could differ from those estimates.
Accounts Receivable
The company has not established an allowance for uncollectible accounts,
since all amounts are deemed collectible.
NOTE 2 -- ACCOUNTS RECEIVABLE
Details of accounts receivable are: 1997 1996
Accounts receivable - trade $ 5,444 $ 58,848
Allowance for doubtful accounts -0- -0-
Accounts receivable, net $ 5,444 $ 58,848
NOTE 3 -- INVENTORIES
Details of inventories are: 1997 1996
Raw materials $ 99,278 $103,658
Work-in-process 131,554 72,821
Finished goods 6,850 6,800
Total inventories $237,682 $183,279
Raw materials are stated at the lower of cost or market. Cost is determined
by the first-in, first-out method, and market represents the lower of
replacement cost or estimated net realizable value.
Work in process valuation is based on a labor rate applied to the total
hours accumulated at December 31, 1997 and 1996.
-10-
BROUNLEY ASSOCIATES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 4 -- FIXED ASSETS
Details of fixed assets are: 1997 1996
Manufacturing equipment $30,434 $26,122
Computer equipment 6,524 7,925
Office equipment 1,070 -0-
Accumulated depreciation (26,155) (15,979)
Fixed assets, net $11,873 $18,068
Depreciation and amortization expense for the years ended December 31, 1997
and December 31, 1996 was $11,131 and $8,980 respectively.
NOTE 5 -- OTHER CURRENT LIABILITIES
Details of other current liabilities are: 1997 1996
Income taxes payable $ 5,571 $ 2,119
Accrued expenses 120 120
Total other current liabilities $ 5,691 $ 2,239
There has been no accrual of vacation benefits earned but unused as
employees are not allowed to carry this over from one year to the next and any
amounts due at December 31, 1997 and 1996, were not material to the payroll
expense as a whole.
NOTE 6 -- LONG-TERM LIABILITIES
The balance reflected as long-term liabilities on the December 31, 1997 and
1996 relates to a note payable with an original principal balance of $47,500 and
interest rate of 8% to a shareholder dating back to 1994 when the corporation
was formed. No payments were made on this note prior to 1997.
Maturities of this note are as follows:
Years Ending
December 31, Amount
1998 $15,325
1999 16,555
2000 10,935
Thereafter -0-
Total $42,815
-11-
BROUNLEY ASSOCIATES, INC.
Notes to Financial Statements
December 31, 1997 and 1996
NOTE 7 -- COMMON STOCK
The Company has 100,000 shares authorized, 24,444 shares issued and
outstanding of $1 par value common stock as of December 31, 1997 and 1996.
During 1997 the Company purchased 2,222 shares from a shareholder. The
stock was valued at $29,000.
NOTE 8 -- SUBSEQUENT EVENTS
On September 30, 1998 a share exchange agreement was made by and among
Toups Technology Licensing, Inc. and the owners at that time of Brounley
Associates. Inc. Brounley Associates, Inc. combined with Toups Technology
Licensing, Inc. through the exchange of 900,000 shares of Toups Technology
Licensing, Inc. common stock for all the issued and outstanding common stock of
Brounley Associates, Inc. It was the intention of all parties involved that this
combination satisfy all the requirements of, and be accounted for, as a pooling
of interests.
NOTE 9 -- CORRECTION OF AN ERROR
On September 30, 1998, 2,222 shares valued at $31,600 of Brounley
Associates, Inc. common stock was issued to one of the principals of the
Company. These shares were issued to compensate the principal for providing
expertise, engineering services and the liberal use of his equipment and
reputation during the years of 1994 and 1995. This transaction was initially
recorded in 1998, but it was determined that in order to accurately reflect the
timing of this transaction, the statements needed to be corrected to reflect
these prior period transactions. The result of this transaction is to increase
the common stock and additional paid in capital account balances at December 31,
1997 and December 31, 1996 to $47,156 and $24,444 respectively and to decrease
the retained earnings account balance to $58,190 at December 31, 1997 and
$24,461 at December 31, 1996.
-12-
ADDITIONAL INFORMATION
BROUNLEY ASSOCIATES, INC.
Additional Information
Analysis of Cost of Goods Sold
December 31, 1997 and 1996
COST OF GOODS SOLD
1997 1996
Direct costs:
Beginning inventory $ 183,279 $ 116,277
Materials 388,808 312,835
Labor 149,597 135,510
Subcontracted services 20,796 15,577
Ending inventory (237,682) (183,279)
Total direct costs 504,798 396,920
Indirect costs:
Office expense 614 675
Depreciation 11,131 8,980
Discounts earned (436) (75)
Freight 17,949 9,918
Repairs and maintenance 858 2,839
Supplies 29,375 3,354
Taxes -0- 342
Outside Engineering Services 55,392 46,691
Total indirect costs 114,883 72,724
Total cost of goods sold $619,681 $469,644
See auditors' report on additional information.
-15-
BROUNLEY ASSOCIATES, INC.
Additional Information
Analysis of General and Administrative Expenses
December 31, 1997 and 1996
GENERAL AND ADMINISTRATIVE EXPENSES 1997 1996
Advertising $ 1,104 $ 1,390
Auto and truck 183 70
Bad debts -0- 4,092
Bank charges 26 1,953
Compliance testing 22,241 -0-
Insurance - general 5,178 3,788
Insurance - group 9,890 8,794
Miscellaneous 839 283
Office/expense 2,059 1,468
Office salaries 3,248 3,663
Officers' salaries 53,883 75,208
Payroll taxes 16,683 18,639
Professional fees 3,171 5,123
Rent 24,434 23,181
Repairs and maintenance 710 175
Royalties 25,890 25,000
Taxes and licenses 1,724 1,208
Telephone 5,813 7,061
Trade show 3,361 5,935
Travel 5,366 15,183
Utilities 3,459 3,352
Total general and administrative
expenses $189,262 $205,566
See auditors report on additional information.
-16-
INDEPENDENT AUDITOR'S REPORT
ON ADDITIONAL INFORMATION
Board of Directors
Brounley Associates, Inc.
7381 114th Avenue North
Suite 409
Largo, Florida 33773
Our report on our audit of the basic financial statements of Brounley
Associates, Inc. for 1997 and 1996 appears on page 3. That audit was conducted
for the purpose of forming an opinion on the basic financial statements taken as
a whole. The analysis of cost of goods sold and the analysis of general and
administrative expenses are presented for purposes of additional analysis and
are not required parts of the basic financial statements.
We did not observe the taking of the physical inventories at December 31,
1997 and December 31, 1996 (stated at $237,682 and $183,279 respectively), since
those dates were prior to the time we were initially engaged as auditors for the
Company. We were unable to satisfy ourselves about inventory quantities by means
of other auditing procedures.
The analysis of costs of goods sold and analysis of general and administrative
expenses has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, except for the effects of
such adjustments, if any, as might have been determined to be necessary had we
been able to observe the physical inventories taken as of December 31, 1997 and
December 31, 1996, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
October 19, 1998
