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 price
- ------------- --------- --------- --------- ------
Common $6,830,600 $1.96 $6,830,600 $1,899
$.001 par value
(1) A portion of the Shares registered pursuant to this Registration Statement
were issued between October and December, 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 as quoted on the over-the-counter
Bulletin Board market was $1.96 on January 11, 1999
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
2. Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information and Risk Factors
4. Use of Proceeds
5. Determination of Offering Price
6. Selling Security Holders
7. Plan of Distribution
8. Legal Proceedings
9. Directors, Executive Officers, Promoters and Control Persons
10. Security Ownership of Certain Beneficial Owners and Management
11. Description of Securities
12. Interest of Named Experts and Counsel
13. Description of Business
14. Management's Discussion and Analysis or Plan of Operation
15. Description of Property
16. Certain Relationships and Related Transactions
17. Market for Common Equity and Related Stockholder Matters
18. Executive Compensation
19. Financial Statements
20 Changes in and disagreements of Accountants on accounting or financial
disclosure
Part II - Information not required in Prospectus
1 Indemnification of Directors & Officers
2 Other Expenses of Issuance and Distribution
3 Recent sales of unregistered securities
4 Exhibits
5 Undertakings
6 Signatures
PROSPECTUS
TOUPS TECHNOLOGY LICENSING, INC.
3,485,000 SHARES OF COMMON STOCK
OFFERED BY CERTAIN SELLING SECURITY HOLDERS
----------------------------------
This Prospectus relates to the sale of 3,485,000 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 OF RISK.
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 ___ 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 $6,830,600 (1) $0(2) $0 $6,830,600
Common Stock
(1) Represents the anticipated sale price by the Selling Security Holders at
$1.96 per share which was the closing bid price on January 11, 1999. There
can be no assurances, however, 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 proposed Prospectus is January, 1999.
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, when filed, shall contain 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, DC 20549 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 Dairy 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 8-K, 14A,
10-SB, 10-QSBs and SB-2 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
world-wide 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.
At the end of 1998, the Company was comprised of nine divisions resulting
from the internal growth of licensed technologies and the acquisition of
operating entities. At present, the Company's divisions consist of (1)
AquaFuel(a); (2) Balanced Oil Recovery System ("BORS") Lift; (3) Brounley
Engineering and Associates; (4) Precision Micro-Welding; (5) Southwest
Generators; (6) Electromagnetic Tire Recycling; (7) Tunnel Bat(a); (8)
InterSource Health Care, and; (9) AMW Manufacturing/Metal Fabrication.
Given the impact of the InterSource acquisition for the eleven month period
ended November 30, 1998, the Company's unaudited Pro Forma Statement of
Operations for the nine-month period ended September 30, 1998 reflect sales of
$4,139,142 and net income of $451,611 or $0.0244 per share. Not accounting for
the acquisition of InterSource, for the nine-month period ended September 30,
1998 the Company's unaudited Statements of Operations reflect sales of
$1,700,984 and a net loss of ($762,450) or a loss per share of ($0.056). For the
three month period ended September 30, 1998, the Company's unaudited Statements
of Operations reflect sales of ($811,822) and a net loss of ($206,757) or a loss
per share of ($0.015). See "Financial Statements."
The Company's voice telephone number is (727)-548-0918 and facsimile number
is (727)-549-8138. The Company maintains a Web site at http//:toupstech.com
which site provides links to each of the Company's technologies and SEC filings.
THE OFFERING
Securities Being Offered: This Prospectus relates to the
sale of 3,485,000 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
January 11, 1999, the closing bid
price was $1.96
Total number of shares of
Common Stock
outstanding 22,263,299
Total number of shares of
Common Stock being
Offered by Selling
Security Holders 3,485,000
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"
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 began trading through the NASD OTC Electronic Bulletin Board
under the symbol TOUP during June, 1998. 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 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, Tunnel Bat, Electromagnetic Tire Recycling, Brounley & Associates
and InterSource. The Company has not relied upon anything other than the opinion
of management in developing the business plan for of AquaFuel, BORS Lift, AMW
Metal Fabricators, Tunnel Bat, Electromagnetic Tire Recycling, Brounley &
Associates and InterSource. 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 39.3% 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.
Reliance on Forward Looking Statements. 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 release. 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.
Risks relating to the Company's proposed operations
Reliance on Future Licensing Agreements and Acquisitions. The Company's
long-term growth strategy envisions licensing or acquiring through acquisition,
a continual flow of products, processes or devices which are derived from
patents or other similarly protected intellectual properties. Accordingly, once
a particular aquisition is identified or patent-use is determined, the Company
must negotiate an acquisition or 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. Except in the case of the acquisition of an operating
entity, 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 may
compete vigorously with the Company for the licensing of patented or other
intellectually protected processes and devices and for acquisitions. The Company
will be at a competitive disadvantage in the pursuit of possible target
acquisitions or 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, Tunnel Bat, Electromagnetic Tire Recycling,
Brounley & Associates and InterSource, 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, Tunnel Bat, Electromagnetic
Tire Recycling, Brounley & Associates and InterSource product/service line will
either achieve initial market acceptance or, if achieved, will maintain
sufficient market share to conduct profitable operations.
Dependence upon key personnel. The Company's continued success will be heavily
dependent upon the services of key personnel and the Corporate Board of
Directors who founded the Company. These key personnel are expected to remain
with the Company, however the loss of one or more of these individuals could
have an adverse effect on the operations of the Company until a suitable
replacement can be found. As the Company expands, the continued success of the
business will increasingly depend on the Company's ability to retain and add to
the existing management team. At present, the Company does not provide
employment agreements for its Officers. Accordingly, there can be no assurance
given that the Company's current Officers will continue to serve in their
respective roles.
Limited liability of Officers and Directors. The Company's Certificate of
Incorporation and by-laws provide that a Director's liability to the Company for
monetary damages will be limited. In addition, the Company is obligated under
the Certificate of Incorporation and by-laws to indemnify its Directors and
Officers against certain liabilities incurred with their service in such
capacities. The Company will in the future execute indemnification agreements
which will indemnify each Director and Officer against certain liabilities which
they may incur. Each of these measures could reduce the legal remedies available
to the Company and the shareholders against such individuals.
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
$1.37-$3. On January 11, 1999, the closing "bid" price of the Company's
securities was $1.96
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 3,485,000 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 Shares of Number of
Common Stock Percentage Common Stock Common Stock Percentage
Name Before Before to be sold in After After
Offering Offering Offering Offering Offering
Doron Hill(1) 50,000 .0022% 50,000 0 0%
Ryler DeHeart(1) 2,500 .0001% 2,500 0 0%
Widelitz Family
Trust w/t/d/
4/15/94(1) 100,000 .0045% 100,000 0 0%
David E. Green(1) 10,000 .0004% 10,000 0 0%
James O'Malley(1) 5,000 .0002% 5,000 0 0%
Peter B. Dixon(1) 25,000 .0011% 25,000 0 0%
Peter B. Dixon(1) 10,000 .0004% 10,000 0 0%
Peter Soudan(1) 25,000 .0011% 25,000 0 0%
Monroe Rosenthal
and Andrea Rosenthal
Family Trust(1) 50,000 .0022% 50,000 0 0%
Robert E. O'Malley(1) 4,000 .0002% 4,000 0 0%
Gerri Farina(1) 4,000 .0002% 4,000 0 0%
Susan L. Feeney(1) 10,000 .0004% 10,000 0 0%
Joseph Hornstrom(1) 4,000 .0002% 4,000 0 0%
James Joseph
O'Malley(1) 20,000 .0009% 20,000 0 0%
Matthew Joseph
O'Malley(1) 20,000 .0009% 20,000 0 0%
Thomas Robert &
Lisa Marie
O'Malley(1) 5,000 .0002% 5,000 0 0%
Nicole Hornstrom(1) 2,000 .0001% 2,000 0 0%
Carole Hornstrom(1) 10,000 .0004% 10,000 0 0%
Susan P. Dowdy(1) 10,000 .0004% 10,000 0 0%
Daniel Kempka(1) 50,000 .0022% 50,000 0 0%
Jody Wong(1) 10,000 .0004% 10,000 0 0%
Paul Calyanis(1) 10,000 .0004% 10,000 0 0%
Meghan Hornstrom(1) 20,000 .0009% 20,000 0 0%
Craig Bramscher(1) 50,000 .0022% 50,000 0 0%
Mehdi Belhassan(1) 10,000 .0004% 10,000 0 0%
Rhonda Bartolacci(1) 50,000 .0022% 50,000 0 0%
Tiffany Bartolacci(1)50,000 .0022% 50,000 0 0%
Beth Calyanis(1) 5,000 .0002% 5,000 0 0%
Merrick Ungar(1) 20,000 .0009% 20,000 0 0%
Scott Ungar(1) 20,000 .0009% 20,000 0 0%
D. Scott Luttrell(1)100,000 .0045% 100,000 0 0%
Jason E. Wolfe(1) 2,500 .0001% 2,500 0 0%
Keith J. Nelsen(1) 26,500 .0012% 26,500 0 0%
Rafael Sabag(1) 25,000 .0011% 25,000 0 0%
Maryann Klimek(1) 10,000 .0004% 10,000 0 0%
Brian St. Aubin(1) 10,000 .0004% 10,000 0 0%
Michael R. Novak(1) 10,000 .0004% 10,000 0 0%
John Rigis(1) 100,000 .0045% 100,000 0 0%
Mary Soudan(1) 40,000 .0018% 40,000 0 0%
Bill Calyanis(1) 5,000 .0002% 5,000 0 0%
Jon Calyanis(1) 2,500 .0001% 2,500 0 0%
Bruce A. Witkov(1) 2,000 .0001% 2,000 0 0%
Greg & Carol Dowdy(1) 2,500 .0001% 2,500 0 0%
CG Capital(1) 250,000 .0113% 250,000 0 0%
Stephen R. Wood and
Diane M. Wood(2) 30,000 .0013% 30,000 0 0%
Michael W. Cianciolo(2)30,000 .0013% 30,000 0 0%
Virgil Todd & Theresa
Todd, Joint Tenant with
Right of
Survivorship(2) 30,000 .0013% 30,000 0 0%
Mark S. & Ellen Stern as
Tenants by the
Entirety(2) 30,000 .0013% 30,000 0 0%
Mark S. and Ellen Stern
Irrevocable Children's Trust
for (1/3 Elliot Benjamin Stern,
(1/3) Lennie Beth Stern, (1/3)
Zachary Adam
Stern(2) 15,000 .0007% 15,000 0 0%
Robert Kudelko(2) 15,000 .0007% 15,000 0 0%
Worldbridge
Financial Ltd(1) 500,000 .0224% 500,000 0 0%
Revocable Living Trust of
Todd and Katherine
Sider(2) 15,000 .0007% 15,000 0 0%
Gregory S. Ayers(2) 15,000 .0007% 15,000 0 0%
Carla J. Patteri, Trustee,
U. T. A., DTD
3-3-98(2) 15,000 .0007% 15,000 0 0%
George T. Fritze &
Carole J.
Fritze(2) 15,000 .0007% 15,000 0 0%
Kevin S. Rowe(2) 15,000 .0007% 15,000 0 0%
Spencer Saffron 40,000 .0018% 40,000 0 0%
Ungar Family Inter
Vivos Recovable
Trust(3) 250,834 .0113% 250,834 0 0%
Mike J. O'Malley
Trust(3) 248,333 .0112% 248,333 0 0%
Richh Limited
Partnership(3) 263,333 .0120% 263,333 0 0%
John Rivera(3) 100,000 .0045% 100,000 0 0%
Michael McBee(3) 5,000 .0002% 5,000 0 0%
Mark Trinske(3) 10,000 .0004% 10,000 0 0%
Tim & Kim Rice(4) 500,000 .0224% 100,000 400,000 .0181%
GFC Communications(5)175,000 .0079% 175,000 0 0%
CG Capital Corp(6) 250,000 .0113% 250,000 0 0%
Thomas Dudley(7) 20,000 .0009% 20,000 0 0%
Dave DeCara(7) 200,000 .0089% 50,000 150,000 .0067%
Total 4,035,000 1.812% 3,485,000 550,000 .0181%
(1) Share issued pursuant to an Accredited Investor Offering made in reliance
on Section 4(2) or 3(b) of the Act according to Regulation D, Rule 506.
(2) Shares issued as a part of the acquisition of InterSource Health Care, Inc.
(3) Shares issued as compensation for various marketing and sales consulting
services, contract coordination and technical internet support.
(4) Tim and Kim Rice were the previous owners of Advanced Micro Welding and
received their shares in the course of the Company's acquisition of same.
(5) Shares issued as compensation for marketing services.
(6) Shares previously earned between November 1997 - November 1998
(7) Mr. Dudley is engaged by the Company as technical assistant for the
Electromagnetic Tire Recycling Process and Mr. DeCara is engaged by the
Company as corporate Sales Manager.
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. The Company intends to conduct its next election of Directors
at its February 19, 1999 Annual Meeting of Shareholders.
Chairman of the Board of Directors, President and Chief Executive Officer:
Leon H. Toups (60). 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, Corporate Secretary and Executive Vice President: Mark Clancy
(43). 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. 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.
Director, Vice-President, Finance, Chief Financial Officer: Michael P.
Toups (33). 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.
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 22,263,299 shares of its Common Stock issued and
outstanding. The following table sets forth, as of January 1, 1999, 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 4,006,680 17.9%
418 Harbor View Lane
Largo, Florida 33770
Common Mark Clancy 2,383,340 10.7%
417 Barrett Court
Tampa, Florida 33617
Common Michael Toups 2,383,340 10.7%
400 Palm Drive
Largo, Florida 33770
Common Officers and Directors 8,773,360 39.3%
(three persons)
Common Jerry Kammerer 1,660,000(4) 7.4%
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 Executive Vice President. 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) 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.
(4) Mr. Jerry Kammerer is a former Director of the Company. Mr. Kammerer was
terminated as an Officer and Director of the Company on August 20, 1998. As
of January 19, 1999, of the 1,750,000 shares originally owned by Mr.
Kammerer, 180,000 were eligible for resale pursuant Rule 144.
DESCRIPTION OF SECURITIES
The Company is authorized to issue up to 50,000,000 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 22,263,299 Common Shares outstanding.
At the conclusion of this Offering of the 22,263,299 Common Shares issued
and outstanding, 12,744,247 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 39.3% of the
Issuer's capital stock.
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.
Background
Toups Technology Licensing, Inc., 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
through obtaining license agreements and acquisitions. The Company operates 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'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. Together with Executive Vice
President and Director Mr. Mark Clancy and Chief Financial Officer and Director
Mr. Michael Toups, Leon Toups co-founded Toups Technology and currently serves
as the President, Chief Executive Officer and Chairman of the Board of
Directors.
In addition to the above named Officers, at the staff level to support all
technologies, the Company has a Safety Officer, Engineering Coordinator, Sales
Manager, Compliance/Quality Control Director 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.
Results of 1998 Operations
At the end of 1998, the Company was comprised of nine divisions resulting
from the internal growth of licensed technologies and the acquisition of
operating entities. At present, the Company's divisions consist of (1)
AquaFuel(a); (2) Balanced Oil Recovery System ("BORS") Lift; (3) Brounley
Engineering and Associates; (4) Precision Micro-Welding; (5) Southwest
Generators; (6) Electromagnetic Tire Recycling ("ETR"); (7) Tunnel Bat(a); (8)
InterSource Health Care, and; (9) AMW Manufacturing/Metal Fabrication ("AMW").
During 1998, the Company derived revenues from four divisions including (1)
BORS Lift; (2) Brounley Engineering & Associates; (3) InterSource Health Care,
and; (4) AMW. During 1998, the Company did not derive revenues from five
divisions including (5) AquaFuel(a); (6) ETR; (7) Precision Micro Welding; (8)
Tunnel Bats, and; (9) Southwest Generators. The Company anticipates that all
nine divisions will generate revenues during 1999. Each division is summarized
below and each description should be read in conjunction with other material
presented throughout this Prospectus.
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
Dairy Road, Largo, Florida. The Company also has leased a 10,000 (ten thousand)
square foot stand-alone building within which to house TTL's AquaFuel(a)
Division. The Company's November, 1998 acquisition Brounley Engineering &
Associates occupies 5,000 square feet through a lease. The Company intends to
relocate Brounley Engineering to TTL's headquarters facility. The Company also
maintains an engineering/sales office in Claremore, Oklahoma to provide field
support and selling activities relating to the BORS Lift.
The Company currently has approximately 83 full-time employees dedicated to
a particular division as follows: Executive staff - 9; AquaFuel - 8; ETR - 2;
BORS - Oklahoma - 4; BORS - Largo, Fl - 4; Manufacturing/Metal
Fabrication/Precision Welding - 36; InterSource - 6; Brounley - 14. The Company
provides medical insurance, vacations, stock incentives and other, similar
employee benefit programs.
The Company estimates it will derive revenues during 1999 from all nine
current divisions. The Company intends to continue pursuing its business purpose
through acquisition of existing companies; joint-ventures; strategic alliances;
sub-licenses; providing services; and through the manufacture and sale of
products.
Divisional Summary
During 1998, the Company derived revenues from four divisions including (1)
BORS Lift; (2) Brounley Engineering & Associates; (3) InterSource Health Care,
and; (4) AMW. Each division is summarized below. During 1998, the Company did
not derive revenues from five divisions including (5) AquaFuel(a); (6) ETR; (7)
Precision Micro Welding; (8) Tunnel Bats, and; (9) Southwest Generators. The
Company anticipates that these five divisions will generate revenues during
1999. Each division is summarized below and each description should be read in
conjunction with other material presented throughout this Prospectus.
(1) The Balanced Oil Recovery System Lift. On January 15, 1998 as amended
in June, 1998 the Company executed an exclusive worldwide License
Agreement with inventor Gerold Allen for the rights to commercialize
the BORS Lift technology. The BORS Lift is not covered under any patent
or similar device. Mr. Allen now serves as the Company's Claremore,
Oklahoma-based BORS Chief Engineer.
The BORS Lift is equipment designed to replace traditional oil
patch pump jacks. The BORS(a) 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). The unit is comprised of hardware
that is both positioned above ground and downhole, as well as a
programmable logic controller.
Throughout 1998, the Company conducted field trials of the BORS
Lift in Texas and Oklahoma. Collectively, the Company-sponsored field
tests demonstrated that the BORS(a) Lift device was able to increase
production by approximately 200% - 400%, 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.
To aid in the market introduction of the BORS Lift, during October
the Company formed an in-house BORS leasing program which was funded
with $750,000. During December 1998, the Company began to make use of
out-side lease funding sources.
From January through September, 1998, the Company engaged in BORS
Lift field trials and completed a base-unit design. The first
market-ready BORS Lift device is designed to extract oil from primarily
gas-driven wells at a depth of up to 2,500 feet. During the fourth
quarter 1998, the Company manufactured, shipped and sold BORS Lift
units at a retail price of $15,000 each to parties in Texas and
Oklahoma. While the Company continues sales of the initial BORS Lift
device, it is developing two additional models (i) one of which is a
deep-well design configured to extract oil at a depth of up to 7,500
feet, and; (ii) the second is known as a "bailer" which is a pump
designed to extract the highest volume of liquid possible without
regard to water separation.
In addition to the Largo, Florida-based BORS program, The Company
currently conducts engineering and sales support through an office in
Claremore, Oklahoma staffed by Inventor Gerold Allen and attorney Mack
Greever. The Company intends to continue its direct selling efforts
relating to the BORS Lift device throughout 1999.
(2) Brounley Engineering & Associates On September 30, 1998, the Company
acquired Brounley Associates, Inc. in an exchange of common shares in
which TTL issued 900,000 unregistered common shares in exchange for
100% of the issued and outstanding common shares of Brounley. The
Company agreed to register 125,000 of the 900,000 common shares issued
in the acquisition of Brounley. Brounley is a wholly owned subsidiary
of Toups Technology.
Brounley is engaged 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.
As Brounley has always operated as a profitable entity, the
Company does not envision any significant change in their day to day
operations. Upon acquisition, the Company added a General Manager/Sales
Manager and has expanded Brounley's service capabilities. Brounley now
operates using a core/non-core client business strategy which is
designed to reinforce their strong RF reputation and standing. Further
as a result of TTL's resources primarily in areas of precision micro
welding, Brounley is now able to expand into related areas without a
significant capital outlay.
(3) InterSource Health Care. On November 30, 1998, effective December 18,
1998, the Company acquired InterSource in an exchange of common shares
agreement in which the Company issued 1,203,241 unregistered common
shares in exchange for 100% of the issued and outstanding common shares
of InterSource. The Company agreed to register 225,000 of the 1,203,241
common shares issued in the course of the acquisition. InterSource is a
wholly owned subsidiary of Toups Technology
InterSource is divided into two business activities: medical
facility development and; medical equipment sales and services. The
medical equipment division provides medical equipment management
services and sells equipment to outfit a wide range of health care
environments. The medical facility development division provides
services to medical developers, physician groups and insurers from
feasibility studies to turnkey medical malls.
InterSource maintains an interactive home page able to conduct
secured transactions through the internet. InterSource further
maintains a marketing staff which management foresee can significantly
enhance the Company's overall sales and marketing program.
(4) AMW Manufacturing/Metal Fabricators. On April 29, 1998, the Company
acquired A. M. W. Metal Fabricators, Corporation in an exchange of
common shares agreement in which the Company issued 500,000
unregistered common shares in exchange for 100% of the issued and
outstanding common shares of AMW. AMW is a wholly owned subsidiary of
Toups Technology.
AMW brought in-house a highly specialized manufacturing capability
and also allowed 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, allowed the Company to offer services such as:
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.
TTL's AMW is manufacturing the Company's BORS Lift device
providing for the lowest production cost combined with the highest
level of time and quality control possible.
The Company has now fully integrated AMW into position to support
all of TTL's divisions. AMW will manufacture the BORS Lift up to 100
units per month as well as continue providing conventional metal
fabrication and welding services.
(5) AquaFuel(a) . The Company is the worldwide exclusive licensee for
AquaFuel(a). On the 3rd of November, 1997, the Company executed a
world-wide exclusive license agreement to design, manufacture and sell
or otherwise commercialize technology based on a series of United
States patents, patents pending and trademarks, collectively known as
"AquaFuel(a)." The patents include (i) US Patent 5,435,274 titled
Electric Power Generation Without Harmful Emissions dated July 25,
1995; (ii) US Patent 5,692,459 titled Pollution-Free Vehicle Operation
dated December 2, 1997; (iii) US Patent 5,792,325 titled Electric Arc
Material Processing System US Patent 5,826,548.
AquaFuel(a) 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(a) is competitive with
respect to Hydrogen for cost, easiness and rapidity of production and
energy content. AquaFuel(a) is manufactured using off-the-shelf
equipment and requires no fossil fuel in any form. The materials used
in the AquaFuel(a) manufacturing process include water, carbon and an
electric arc.
The Company has completed its first two scientific certification
reports relating to AquaFuel(a). The certifications embody scientific
measurements, observations and narrative compiled from a worldwide body
of scientists, engineers, universities, laboratories and governmental
agencies relating to the characteristics of AquaFuel(a). The
conclusions of the research team leader Dr. Rugero Maria Santilli
state:
1 AquaFuel(a) is cost competitive, has dramatically less pollutant
in the combustion exhaust, and can be more easily and safely
produced and stored anywhere desired than any other combustible
gas, even neglecting its free production as a by product of
sewage recycling;
2 In view of the above characteristics, AquaFuel is one of the
best, if not the best fuel available at this writing for
automotive and other uses on a world-wide basis, with particular
reference to consumer, but also for municipal industrial and
military applications.
3 The AquaFuel process provides a basically novel method for
recycling liquid waste which produces AquaFuel as a usable gas,
water usable for irrigation and solids usable for fertilization;
4 AquaFuel is an excellent gas for the production of electricity,
particularly in the free form obtained from the recycling of
liquid waste from cities and municipalities;
5 Systematic scientific experimentation and theoretical studies
have identified a number of anomalies in AquaFuel which are
applicable to all other gases, thus permitting a new gas
technology with implications and applications to the entire gas
industry and consequentially vast, additional economic horizons.
Commercial Unit. The Company is engaged in the construction of the
first commercial-sized AquaFuel(a) production unit. Delivery of the
unit is scheduled for April, 1999. The device being constructed has
been designed as a continuous run system in a hi-duty cycle mode. This
AquaFuel(a) commercial apparatus makes use of off-the-shelf proven
electric arc technology with a pressurized gas production system
utilizing an eight-foot crucible with a gas hood and collection
equipment. The 3-phase-AC system will utilize 480V input voltage with
an electrical load of 135KVA. A 12-inch graphite common electrode
mantle with three 4" movable electrodes where movement will be driven
hydraulically and controlled by a programmable logic controller with
optimized parameters.
A primary consideration in making AquaFuel(a) commercially
available is to develop sophisticated production equipment able to
generate AquaFuel(a) at prices competitive with fossil fuels. The
AquaFuel(a) production apparatus being constructed is estimated to
produce in excess of 4,000 cubic feet of fuel per hour. More
importantly, the electric arc technology allows for a dramatic
reduction in the use of carbon which, together with water, comprise the
main ingredients in the production of AquaFuel(a).
Dominican Republic-based Electric Utility Joint Venture. On
December 16, 1998, the Company entered into a joint venture with
Dominican Republic-based Compania de Luz y Fuerza de las Terrenas to
construct and operate an AquaFuel(a) facility to provide fuel for the
production of electricity. Luz y Fuerza, headquartered in Santo
Domingo, Dominican Republic, is a consortium of entities organized to
privatize the delivery of electric power through the Dominican
Republic. It is the country's only non-government electric utility,
operating several power generation facilities. The Luz y Fuerza
transmission lines provide electricity to four major urban areas.
The TTL-Luz y Fuerza joint-venture estimates a 15-month schedule
from feasibility study through fully operational output required to
reach the AquaFuel production rate necessary to fulfill the agreement.
The first significant equipment is scheduled to arrive in May, 1999
which will be able to generate AquaFuel at the minimum rate of 4,000
cubic-feet per hour (see above discussion relating to the Commercial
Unit). At full capacity, the TTL-Luz y Fuerza estimates AquaFuel
production and sale in excess of $70,000,000 per year for a period of
twenty-years. As a viable alternative to fossil fuels, AquaFuel may
also be sold in the Dominican Republic for other commercial
applications including as a fuel for the operation of motor vehicles
and as a replacement for acetylene and for cooking fuels.
(6) Electro-magnetic Tire Recycling Process ("ETR Process") The Company is
the worldwide exclusive licensee for the ETR technology. On April 20,
1998, the Company acquired the worldwide exclusive license rights for
the life of ETR patents pending. The Company has made its patent
counsel available to the inventor in finalizing application. The patent
counsel had advised the Company that the ETR patent has a minimum of
three valid claims.
The ETR Process was developed to recover the oil, steel and carbon
black that were utilized in the manufacture of tires. The process is
self-contained, using scrap tires as the feed-source, fed in through
the ETR equipment as a means to reduce the tires to their basic
elements. As a percent of weight, the by-products of each tire are 10%
steel; 25% fuel gas; 25% petro-chemicals, and; 40% carbon black. The
ETR technology reclaims these products which are then offered for sale.
The ETR technology differentiates from competition because there
are no emissions and, therefore, no residue from combustion. The ETR
technology is further differentiated from competition in its modular
design which allows for a tire "plant" to be a single unit up through a
full-scale, multi-unit plant.
Commercial Scale-Up. The Company is now engaged in the
construction of a 100-tire per hour module. The remainder of the
components necessary for each ETR plant are standard, off-the-shelf
equipment such as a shredder, gas and oil collection systems and
storage tanks. TTL intends to commercialize its ETR technology through
joint ventures, strategic alliances, and the direct sale of products
and services.
(7) Precision Micro-Welding. TTL's Precision Micro-Welding division is the
result of equipment acquired by the Company such as a $1,200,000
Electron Beam Welder and the operational expertise of AMW
Manufacturing. TTL's Precision Micro-Welding equipment and expertise
supports the tool and die, plastic injection molding and other
industries with welding requiring filler wire sizes from .005 to .020
inch in diameter.
The Company's Precision Micro-Welding division offers four
specialty welding processes including Electron Beam, Laser, Plasma and
Inert Gas Welding equipment TTL's Precision Micro-Welding division is
one of the few Florida-based entities able to support assemblies that
require detailed welding to specific tolerances, such as the
electronic, medical, defense, aircraft and research and development
industries.
The Company's Precision Micro-Welding division provides an
in-house advantage to both Brounley in complimenting their RF product
line and InterSource through providing advanced resources to their used
medical equipment rehab requirements.
(8) Tunnel Bat(a) On July 1, 1998, the Company entered a worldwide
exclusive license agreement with inventor Dave Richardson for the
commercialization of the Tunnel Bat technology. The Company intends to
apply for Tunnel Bat patent(s) on behalf of Mr. Richardson. The
exclusive ownership of all such patents shall be 100% with Mr.
Richardson and none with TTL. The Company will continue to
commercialize the Tunnel Bat technology by virtue of its exclusive
worldwide license.
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. The Company is currently finalizing component design drawings
and field-testing a proto-type unit.
(9) Southwest Generators.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations for the Nine Months Ended September 30, 1998
Three Months Ended September 30, 1998, Compared to Three Months Ended
September 30, 1997
For the three months ended September 30, 1998, the Company reported
revenues from operations of $811,822, a 332% increase over 1997 third quarter
revenues of $187,950. Third quarter revenues for both periods include revenues
generated by the Company's wholly-owned subsidiaries Advanced Micro Welding,
Inc. ("AMW") and Brounley Associates, Inc. ("Brounley").
TTL acquired AMW on April 29, 1998 in a business combination accounted for
as a pooling of interest. AMW now operates as TTL Manufacturing and generates
revenues through its micro welding and custom metal fabrication activities, as
well as its primary activity of manufacturing the Company's BORS Lift. The BORS
Lift is an oil and gas industry device that replaces the traditional stripper
well with a mechanical apparatus including a programmable logic controller that
increases production and decreases operating costs.
TTL acquired Brounley on September 30, 1998 in a business combination
accounted for as a pooling of interest. Brounley is engaged in the design,
manufacture and sale of radio frequency (RF) generators.
Nine Months Ended September 30, 1998, Compared to Nine Months Ended
September 30, 1997
For the nine months ended September 30, 1998, the Company's selling and
administrative expenses of $504,894 were comprised of salaries, consulting fees,
and other operating costs in the third quarter of 1998, up from $61,647 during
the third quarter of 1997. This 719% 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.
During the third quarter of 1998, the Company completed its second round of
independent testing for AquaFuel market applications and scalability results,
completed field tests of BORS Lifts and began full-scale production, developed
applications for its Smokeless Scrap-Tire Process technology, completed design
for and began production of Tunnel-Bat units, completed the acquisition of
Brounley and entered discussions with potential acquisition candidates, as well
as candidates for technology licenses that fit with the Company's business plan.
As a result of these activities, the Company had a 1998 third quarter
operating loss of $206,757, a decrease from an operating loss of $15,338 for the
same period of 1997. For the month of September, 1998, however the Company
showed its first profitable month of operations with a profit of $63,812.
Interest income during the third quarter period was generated from excess
cash balances resulting from the Company's private common stock offering during
1998.
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.
Liquidity and Capital Resources
Net cash used by operating activities of ($1,310,915) related primarily to
the Company's $762,450 operating loss and $500,458 increase in accounts
receivable. The Company, however, had a net working capital surplus of $883,625,
an increase of $491,897 from December 31, 1997. The increase in working capital
was principally the result of an increase in financing activities through the
issuance of $1.9 million in common stock through a private equity offering.
As of September 30,1998 the Company had $4,600 drawn on a $125,000 bank
line of credit for Brounley. The Company has no other 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 Brounley along with 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 and Brounley's resources will
allow TTL to fully utilize its development and production capabilities during
the fourth quarter of 1998 and into fiscal year 1999.
The Company believes 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 following
twelve months.
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
Dairy 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 also maintains a 10,000 square-foot facility wherein is housed
its AquaFuel(a) division and has an additional 5,000 square-feet which is
occupied by Brounley. The Company also maintains an engineering, installation
and field service office in Claremore, Oklahoma relating to its BORS device.
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 $1.37-$3. However, there can be no assurance that the Company's
shares will continue to trade within this range given the effect of the shares
being registered hereby. Quotations on the OTCBB reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not represent actual
transactions.
As of April 29, 1998, the Company has been listed under Company
Descriptions in Standard and Poor's Corporation Records, Page 8153. As of
December 30, 1998, Company had 225 Shareholders of Record.
Holders of the Company's Common Stock are entitled to dividends when, as
and if declared by the Board of Directors, out of funds legally available
therefor. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the development
and expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, the Company's financial condition, capital requirements,
general business conditions and other factors. Therefore, there can be no
assurance that any dividends of any kind will ever be paid.
The Company's registrar and transfer agent is Continental Stock Transfer
&Trust Company.
EXECUTIVE COMPENSATION
The following table depicts all-plan and non-plan compensation awarded to,
earned by or paid to the named executive officer of the Company for the period
indicated:
Annual Long Term
Compensation Compensation
(a) (b) (c) (d) (e)
Restricted
Stock Total
Name and Principal Salary Bonus award(s) Compensation
Position Year ($) ($) ($) ($)
Leon H. Toups 1998 $63,666 $0 $650 $64,316
President
Chief Executive Officer
Mark Clancy 1998 $62,997 $0 $650 $63,647
Executive Vice President
Corporate Secretary
Michael P. Toups 1998 $61,958 $0 $650 $62,608
Vice President, Finance
Chief Financial Officer
Jerry Kammerer 1998(f) $48,000 $0 $0 $48,000
(a) All named executive Officers have served in their respective capacities
since formation of the Company during July 1997 except Mr. Kammerer who
served through August, 1998.
(b) The Company was incorporated during July 1997. The Company activated
operations on November 1, 1997 and all three current officers were
compensated at the rate of $3,000 per month for the months of November and
December, 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 except a Christmas bonus equal to one weeks salary which
was also given to all of the Company's employees. However, the Company may,
in the future, develop programs which may include bonus payments.
(e) During the course of 1998, the Company issued 650,000 unregistered common
shares to each of its Officers. The Company's three Officers also received
TTL unregistered shares as a part of the acquisition of InterSource Health
Care.
(f) Mr. Kammerer served as a Director and as the Company's Vice President,
Business Development from January through August, 1998.
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
Beginning on page F-1 are the unaudited financial statements of Toups
Technology Licensing, Inc., for the three-month periods ended September 30, 1997
and 1998 (unaudited) and for the nine-month periods ended September 30, 1997 and
1998 (unaudited)
Statement of Operations
Balance Sheet
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to unaudited Financial Statements
Beginning on page F-10 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
<PAGE>
Statement of Toups Technology Licensing, Inc.
Following are Management's unaudited financial statements of Toups
Technology Licensing, Inc. including Statements of Operations as of the
three-month periods ended September 30, 1997 and 1998 and the nine month periods
ended September 1997 and 1998; unaudited Balance Sheets as of September 30, 1998
and December 31, 1997 (Restated); Statements of Stockholders' Equity for the
nine-month period ended September 30, 1998 and for the period from July 28, 1997
(Date of Inception) through December 31, 1997, and; Statements of Cash Flows for
the nine-month periods ended September 30, 1997 and 1998.
The Company maintains its financial records and prepared the following
financial statements in accordance with Generally Accepted Accounting
Principals. Management believes the following financial statements present
fairly, in all material respects, the financial position of Toups Technology
Licensing, Inc. as of the periods cited above.
January 1, 1999
Toups Technology Licensing, Inc.
<PAGE>
Toups Technology Licensing, Inc.
STATEMENTS OF OPERATIONS
for the three-month period ended September 30, 1998 (Unaudited)
and for the three-month period ended September 30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Three-Month Three-Month
Period ended Period ended
September 30, September 30
1998 1997
---- ----
Sales $ 811,822 $ 187,950
Cost of Goods Sold 514,555 141,641
------------- -------------
Gross Profit 297,267 46,309
------------- -------------
Expenses:
Salaries 195,393 26,129
Consulting fees 121,144 0
Other operating costs 188,357 35,518
------------- -------------
Total expenses 504,894 61,647
------------- -------------
Net Operating Loss (207,627) (15,338)
------------- -------------
Other Income:
Interest Income 870 -
------------- -------------
Net Loss $ (206,757) $ (15,338)
============= =============
Weighted average number of
shares outstanding 13,632,283 8,881,751
Net loss per share $ (0.015) (0.002)
============= =============
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
STATEMENTS OF OPERATIONS
for the nine-month period ended September 30, 1998 (Unaudited)
and for the nine-month period ended September 30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Nine-Month Nine-Month
Period ended Period ended
September 30, September 30
1998 1997
---- ----
Sales $ 1,700,984 $ 898,803
Cost of Goods Sold 1,052,725 556,325
------------- -------------
Gross Profit 648,259 342,478
------------- -------------
Expenses:
Salaries 516,235 110,115
Consulting fees 276,166 0
Other operating costs 622,115 158,431
------------- -------------
Total expenses 1,414,516 268,546
------------- -------------
Net Operating Loss (766,257) 73,933
------------- -------------
Other Income:
Interest Income 3,807 0
------------- -------------
Net Loss $ (762,450) $ 73,933
============= =============
Weighted average number of
shares outstanding 13,632,283 8,881,751
Net loss per share $ (0.056) 0.008
============= =============
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
BALANCE SHEETS
September 30, 1998 (Unaudited) and December 31, 1997 (Restated)
(Unaudited)
Unaudited Restated (Note 5)
September 30, December 31
1998 1997
---- ----
Assets:
Cash $ 188,120 $ 104,580
Accounts Receivable, net of
Allowance for doubtful accounts
Of $5,000 588,842 32,591
Inventory at cost 342,055 237,682
Prepaid royalty expenses 104,000 11,000
Deferred charges - 5,875
Property and equipment, net of
Accumulated depreciation of $113,394 291,484 32,990
Other assets 29,700 700
------------- -------------
Total Assets $ 1,526,201 $ 425,418
============= =============
Current Liabilities:
Current portion long-term liabilities 0 19,509
Accounts payable and accrued liabilities 254,251 109,748
Notes payable 4,600 -
Customer deposits 12,083 73,540
Capital Lease Obligation 50,458 -
Other current liabilities 0 5,691
------------- -------------
Total current liabilities $ 321,392 $ 208,488
------------- -------------
Long-term liabilities,
less current portion 120,490 23,306
------------ -------------
Total Liabilities $ 441,882 $ 231,794
Stockholders' equity
Common stock 16,187 9,910
Additional paid-in capital 1,871,006 248,437
Retained Earnings (40,423) (71,137)
Deficit accumulated during
development stage (762,450) 8,414
------------- -------------
Total stockholders' equity $ 1,084,319 $ 193,624
------------- -------------
Total liabilities and
stockholders' equity $ 1,526,201 $ 425,418
============== ============
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the nine-month period
ended September 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 2,237,070 2,237 1,561,082 - 1,563,319
Services 3,920,263 3,920 - - 3,920
Acquisition of Brounley-Note5 900,000 900 160,490 161,390
Acquisition of AMW
(Note 5) 500,000 500 49,593 - 50,093
Deficit accumulated during
development stage-
January 1, 1998 through
September 30, 1998 - - - (762,450) (762,450)
- - - --------- ---------
Balance
September 30, 1998 16,187,333 16,187 1,871,005 (802,873) 1,084,319
========== ====== ========= ========= =========
See Notes to Financial Statements
<PAGE>
Toups Technology Licensing, Inc.
STATEMENTS OF CASH FLOWS
for the nine-month period ended September 30, 1998 (Unaudited) and
for the nine-month period ended September 30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Six-month Six-month
Period ended Period ended
September 30, September 30
1998 1997
---- ----
Cash flows from operating activities:
Net loss $(762,450) $(44,854)
Add (deduct) items not affecting cash:
Depreciation 47,138 0
Amortization 998 0
Cash provided (used) due to changes in
assets and liabilities
(increase) in inventory (86,373) 0
(Increase) decrease in accounts receivable (500,458) (6,855)
(Increase) in prepaid royalty expense (93,000) 0
(Increase) decrease in deferred charges 5,875 0
Increase (decrease) accounts payable
and accrued liabilities 138,812 18,712
Increase (decrease) in deposits (61,457) 0
--------------- ----------
Net cash used by operating activities (1,310,915) (32,997)
--------------- ----------
Cash flows from investing activities:
Acquisition of equipment (117,889) 0
--------------- ---------
Net cash used by investing activities (117,889) 0
--------------- -----------
Cash flows from financing activities:
Proceeds from sale of capital stock 1,566,907 0
Proceeds from line of credit 4,600 0
Payment of long term debt (42,815) 0
Principal payments on
capital lease obligations (16,348) 0
--------------- ---------
Net cash provided by financing activities 1,512,344 0
------------- ----------
Net increase in cash 83,540 (32,997)
-------------- ----------
Cash, beginning of period 104,580 30,674
--------------- ----------
Cash, end of period $188,120 $(2,323)
=============== ==========
Supplemental Cash Flows Disclosures
Noncash items
Equipment acquired under capital lease $113,520 $ 77,933
=============== ==========
Common stock issued for consulting
services $3,920 $ 0
============ ==========
See Notes to Financial Statements
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Unaudited)
and December 31, 1997 (Restated)
1. Summary of Significant Accounting Policies
Company - Toups Technology Licensing, Incorporated (Company), a Florida
Corporation, was formed on July 28, 1997, and activated its startup 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 has made strategic acquisitions that compliment its
proprietary products and devices and furthers its business purposes.
(See Note 5)
Receivables - The Company's trade receivables include amounts due from business
throughout the United States. Management believes receivables are stated at
their net realizable values.
Inventories - Inventories consist of work-in-process and parts held for
manufacturing and are valued at cost using the first-in, first-out method.
Property and Equipment - Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over their estimated
useful lives. At September 30, 1998, property and equipment consisted of
machinery and equipment.
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 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.
Restricted Common Stock - Restricted common stock is subject to the resale
provisions of SEC Rule 144. Restricted stock is recorded at par value ($.001)
per share.
Basis of Presentation - Nine Months Ended September 30, 1998 -The
unaudited interim financial statements for the nine months ended September 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 nine months ended September 30,
1998 are not necessarily indicative of the results of the full year.
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
September 30, 1998, there were 16,187,333 shares issued and outstanding. Of the
16,187,333 shares issued and outstanding, at September 30, 1998, 14,579,115
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.
Preferred - The Company is authorized to issue 10 million shares of
preferred stock having a par value of $1 per share. There were no preferred
shares issued or outstanding at September 30, 1998.
3. Licensing Agreement Commitments
The Company entered into two licensing agreements, one for AquaFuel and
one for Balanced Piston Values, 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 licensing and manufacturing agreement for
Balanced Oil Recovery System (BORS) Lifts with a third licensee. In June, 1998,
the Company executed a licensing agreement for Smokeless Scrap Tire Process and
in July, 1998 the Company executed a licensing agreement for Tunnel Bat; both
agreements are for the exclusive rights to make, use, lease, market and sell
this product line. In exchange for these rights, under the four agreements, the
Company has committed to pay the Licensee a 6% royalty as computed by those
agreements. The Company agreed to pay a minimum of $176,000 of royalties in
1998, of which $104,000 has been paid as of September 30, 1998. The remaining
royalty payments for the initial licensing term will be paid as follows:
Year Ending:
1998 $ 72,000
1999 96,000
2000 96,000
$ 264,000
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 will have future minimum royalties
as follows:
Year Ending
2001 $ 200,000
2002 $ 250,000
2003 $ 300,000
2004 $ 400,000
4. Acquisition of Advanced Micro Welding and Brounley Associates, Inc.
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.
On September 30, 1998, Toups Technology Licensing, Incorporated (TTL)
acquired Brounley Associates, Inc. (Brounley) in a business combination
accounted for as a pooling of interests. Brounley, a company specializing in the
design, manufacturing and sale of radio frequency (RF) generators, became a
wholly owned subsidiary of TTL through the exchange of 900,000 shares of
restricted common stock of TTL's common stock for all the outstanding stock of
Brounley. The statement of stockholders' equity reflects a restatement of
$160,490 to additional paid in capital as a result of the acquisition. The
restatement includes $54,982 and $105,508 respectfully, for the disposition of
Brounley stock and adjustment of retained earnings for the pooling.
The restated Balance Sheet as of December 31, 1997 reflects the
acquisition of Brounley and AMW. The restated financial statements are based on
the historical financial statements of TTL, Brounley and AMW accounting for the
combination as a pooling of interest. All three companies were audited
independently on December 31, 1997. The restated balance sheet as of December
31, 1997, reflects the unaudited combination of these numbers.
The restated financial statements have been prepared based upon the
historical financial statements of TTL, Brounley 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.
5. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carryforward 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
September 30, 1998.
6. Capital Lease
The Company has four capital equipment leases totaling $202,639 for
equipment and machinery. Amortization of these capital leases included in
depreciation expense amounted to $20,517 for the nine months ended September 30,
1998. Accumulated amortization amounted to $33,867 as of September 30, 1998 and
includes accumulated depreciation. The future minimum lease payments under
capital lease and net present value of the future minimum lease payments at
September 30, 1998, are as follows:
Total minimum lease payments $ 216,600
Amount representing interest ( 45,652)
Present value of net minimum lease payments $ 170,948
Future minimum lease payments under capital leases as of September 30, 1998
are as follows:
1998 $ 12,614
1999 50,458
2000 50,458
2001 103,070
2002 44,125
After 12,483
$ 216,600
7. Subsequent Events
A. Subsequent to September 30, 1998, the Company sold 1,760,000 shares of
its restricted Common Shares to accredited investors for an aggregate
of $1,360,000.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
TOUPS TECHNOLOGY LICENSING, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OFINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Results of Operations for the Nine Months Ended
September 30, 1998
Overview:
Toups Technology Licensing, Incorporated ("TTL" or "The Company") licenses and
facilitates the market applications of late-stage technologies in the energy,
environmental, and natural resources market segments. The Company selects
proprietary products or processes in market segments management perceives are
not subject to rapid change and which can be delivered to the marketplace within
a three to six month period.
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.
Summary of Technologies
AquaFuel(a) is a non-fossil, combustible gas which is 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. In the opinion of management, the AquaFuel technology affords a
number of prospective applications including: (1) a clean synthetic gas that
emits no harmful emissions; (2) feedstock for chemical extraction that would
allow the production of pure hydrogen and/or carbon dioxide; (3) desalination of
salt water (by product of creating gas); (4) organic or farm-animal waste
disposal; (5) industrial waste disposal; co-generation of electricity and; (6)
fuel for internal combustion engines.
Balanced Oil Recover System (BORS) Lift is designed to replace traditional
oil patch pump jacks. The BORS 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 contributed 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.
Smokeless, Scrap Tire Processing Technology (SSTP(a)) equipment reclaims
the original oil, steel and carbon black elements that went into making tires.
The entire tire recycling process is a closed system. The SSTP(a) differentiates
from competition because there are no emissions and therefore, no residue from
combustion. The SSTP(a) is further differentiated from competition in its
modular design which allow for a tire "plant" to be a single unit estimated to
cost under $20,000 up through a full-scale, multi-unit plant. The SSTP(a) devise
was developed to meet the need for an economically viable method for the
permanent disposal of tires.
Tunnel Bat Technology represents a mobilized solution to desilting and
otherwise cleaning box culverts. Prior to the invention of the Tunnel bat, box
culverts were manually cleaned by crawling into the box culvert with a small red
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, 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.
Summary of Acquisitions
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.
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.
Results of Operations
Three Months Ended September 30, 1998, Compared to Three Months Ended
September 30, 1997
For the three months ended September 30, 1998, the Company reported revenues
from operations of $811,822, a 332% increase over 1997 third quarter revenues of
$187,950. Third quarter revenues for both periods include revenues generated by
the Company's wholly-owned subsidiaries Advanced Micro Welding, Inc. ("AMW") and
Brounley Associates, Inc. ("Brounley").
TTL acquired AMW on April 29, 1998 in a business combination accounted for as a
pooling of interest. AMW now operates as TTL Manufacturing and generates
revenues through its micro welding and custom metal fabrication activities, as
well as its primary activity of manufacturing the Company's BORS Lift. The BORS
Lift is an oil and gas industry device that replaces the traditional stripper
well with a mechanical apparatus including a programmable logic controller that
increases production and decreases operating costs.
TTL acquired Brounley on September 30, 1998 in a business combination accounted
for as a pooling of interest. Brounley is engaged in the design, manufacture and
sale of radio frequency (RF) generators to the laser industry. Brounley gives
TTL additional production capacity and engineering expertise in the expanding
market segment of power generation
Cost of goods sold in the third quarter of 1998 was $514,555 or 63% of revenues,
which was down from 75% of revenues for the third quarter of 1997. The decrease
in cost of goods sold as a percentage of revenues in 1998 was the result of
larger, more efficient production runs for Brounley and TTL Manufacturing.
The Company's selling and administrative expenses of $504,894 were comprised of
salaries, consulting fees, and other operating costs in the third quarter of
1998, up from $61,647 during the third quarter of 1997. This 719% 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. During the third quarter of 1998, the Company completed
its second round of independent testing for AquaFuel market applications and
scalability results, completed field tests of BORS Lifts and began full-scale
production, developed applications for its Smokeless Scrap-Tire Process
technology, completed design for and began production of Tunnel-Bat units,
completed the acquisition of Brounley and entered discussions with potential
acquisition candidates, as well as candidates for technology licenses that fit
with the Company's business plan.
As a result of these activities, the Company had a 1998 third quarter operating
loss of $206,757, an increase from an operating loss of $15,338 for the same
period of 1997. For the month of September, 1998, however the Company showed its
first profitable month of operations with a profit of $63,812.
Interest income during the third quarter period was generated from excess cash
balances resulting from the Company's private common stock offering during 1998.
As of September 31, 1998, the Company has two Letters of Intent for open
purchase orders for 630 BORS Lifts with a minimum purchase of 250 units in 1998,
200 during 1999, and 180 during 2000. The BORS Lift end-user price is $15,000
per unit. The Company has built its monthly production capacity to 100 units
in-house and has the ability to further increase production through additional
manufacturing shifts and vendor outsourcing.
The Company has entered into Letters of Intent or is negotiating for licensing
fee arrangements for its other technologies including AquaFuel, SSTP, and
Tunnel-Bats. The Company expects to generate revenues from these activities in
the fourth quarter of 1998.
Nine Months Ended September 30, 1998, Compared to Nine Months Ended
September 30, 1997
For the nine months ended September 30, 1998, the Company reported revenues from
operations of $1,700,984, a 90% increase over 1997 nine month revenues of
$898,803. Revenues for both nine month periods were primarily generated by the
Company's wholly-owned subsidiaries.
Cost of goods sold for the first nine months of 1998 was $1,052,725 or 62%
of revenues, which compared to the same percentage of revenues for the third
quarter of 1997.
Company's selling and administrative expenses of $1,414,516 were compromised of
salaries, consulting fees and other operating costs in the third quarter of
1998, up from $268,546 during the third quarter of 1997. This 427% 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 and Brounley. TTL had no operations for the first nine months
of 1997.
As a result of these activities, the Company had a 1998 nine month operating
loss of $762,450, an increase from an operating profit of $73,933 for the same
period of 1997. For the month of September, 1998, however the Company showed its
first profitable month of operations with a profit of $63,812.
Interest income during the nine 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 ($1,310,915) related primarily to the
Company's $762,450 operating loss and $500,458 increase in accounts receivable.
The Company, however, had a net working capital surplus of $883,625, an increase
of $491,897 from December 31, 1997. The increase in working capital was
principally the result of an increase in financing activities through the
issuance of $1.9 million in common stock through a private equity offering.
As of September 30,1998 the Company had $4,600 drawn on a $125,000 bank line of
credit for Brounley. The Company has no other 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 Brounley along with 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 and Brounley's resources will
allow TTL to fully utilize its development and production capabilities during
the fourth quarter of 1998 and into fiscal year 1999.
The Company has also completed 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 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 in 1998.
<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 $ 1,899
Transfer agents' fees $ 1,500
-----
Total $ 3,399
=====
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, they 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 one 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.
During November and December, 1998, the Company completed an offering
consisting of 1,747,500 of its unregistered common shares in the manner and on
reliance of the various Sections of the Act of 1933 cited above to 43 accredited
investors. The unregistered common shares were offered and sold at the rate of
$1.00 per share for an aggregate of $1,747,500 in proceeds to the Company The
Company further agreed to conduct a registration of the shares sold in the above
described private offering and all persons participating therein are included as
a part of the registration to which this Prospectus is intended.
During November, the Company issued 1,203,241 unregistered common shares in
exchange for 100% of the issued and outstanding capital stock of InterSource
Health Care, Inc. The Company agreed to registered 225,000 of the 1,203,241
unregistered shares issued in connection with the acquisition of InterSource.
During November through December, the Company issued 838,000 unregistered
common shares to either engage consultants or had fees come due from consultants
that had previously been engaged to include Michael McBee 5,000 shares; Mark
Trinske 10,000 shares; Steven Ungar 250,834 shares; Mike O'Malley 248,333
shares; Richh Limited Partnership 263,333 shares; Michael Finley 50,000 shares;
Eugene Malove 10,000 shares, and; Daniel B. Crossman 500 shares.
During November and December, 1998, the Company issued 150,500 unregistered
shares to employees including David DeCara 90,000; John Rodgers 10,000; Michelle
Goldstein 20,000; Ronald Moore 15,000; Rebecca Bonner 3,500; Rick Gabel 6,000,
and; Cheryl McDermitt 6,000.
<PAGE>
EXHIBITS
Table of Exhibits Page No.
The following Exhibits are incorporated by reference from previously filed
material:
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-10((v) Amended BORS Lift License Agreement
EX-10(vi) Magnetion(a) License Agreement
EX-10(vii) Tunnel Bat License Agreement
EX-10(viii) Exchange of Share Agreement, re: Brounley Engineering
EX-10(ix) Exchange of Share Agreement, re: InterSource Health Care, Inc.
EX-10(x) Joint Venture Agreement by and between Toups Technology and Luz
y Fuerza Utility
EX-20 AquaFuel Certification Report
EX-23 Auditor's Consent
<PAGE>
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.
S/S LEON H. TOUPS
(Signature)
President and Chief Executive Officer
(Title)
(Date): January 12, 1999
