UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: August 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to _____
Commission file number: 000-13041
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INCORPORATED)
(Name of small business issuer in its charter)
Texas 75-1939021
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(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
3838 Oak Lawn Avenue, Dallas, Texas 75219
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(Address of principal executive offices)
(214) 520-1702
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(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
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(Title of Class)
Check whether the issuer (1) filed all reports required to be
filed by Sections 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $16,738.
The number of shares of the registrant's common stock outstanding
as of September 30, 1999 was 4,073,401. There was no established
published market for the registrant's common stock during the
last fiscal year. Although there were published bid and asked
prices, registrant believes the quotes were too sparse and varied
to be indicative of an established market value.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
None.
Transitional Small Business Disclosure Format (Check One)
Yes No X
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PART I.
ITEM 1.
DESCRIPTION OF BUSINESS
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Prior to May 6, 1998, TTI Industries, Incorporated (the
"Company") operated under the name of Environmental Plus, Inc.,
and was primarily in the business of construction and repair of
industrial cooling towers, mostly in Texas, Louisiana and
Arkansas, for electric utility companies; and the marketing of a
fire retardant foam as a fire fighting device for industrial use.
The Company had incurred operating losses in 1996, 1997 and
1998 which raised substantial doubt about the Company's ability
to continue as a going concern. Effective January 15, 1998, and
as part of management's plan to have the Company continue to
operate in the foreseeable future, a Stock Purchase Agreement was
entered into among Terminator Technologies, Inc., a Texas
corporation ("Terminator Texas"), the Company and various
shareholders of the Company (the "Agreement"). The transactions
contemplated by the Agreement closed on May 6, 1998. As a result
of the Agreement, Terminator Texas and its affiliates became the
new controlling shareholder(s) of the Company, through the
purchase of a majority of the Company's Common Stock from certain
shareholders, including past management shareholders. As part of
the Agreement, among other things, the Company consummated a 1-
for-10 reverse stock split of its Common Stock. As a result of
the reverse split and the other transactions contemplated by the
Agreement, the Company's outstanding shares decreased from
40,433,459 ($.001 par value) shares of common stock and 749,000
($1.00 par value) shares of preferred stock issued and
outstanding to zero (0) issued and outstanding shares of
preferred stock and approximately 4,032,914 ($.01 par value)
shares of common stock issued and outstanding. Terminator Texas
and its affiliates beneficially own approximately 3,536,894
shares (63.8%) of the issued and outstanding common stock of the
Company. The selling shareholders and the Company received
$105,003 and $20,000 respectively, in proceeds from the sale of
shares and a warrant to Terminator Texas.
In addition, pursuant to the Agreement, and with shareholder
approval, the Company sold substantially all of its assets to Mr.
George Davis in exchange for Mr. Davis' transfer to the Company
of 574,184 shares of preferred ($1.00 par value) stock held by
Mr. Davis. Terminator Texas also purchased from the Company a
warrant to purchase up to 1,500,000 additional common shares at
$.04445 per share.
In addition, as a result of the transactions contemplated by
the Agreement, and with shareholder approval, the Company changed
its name to TTI Industries, Incorporated.
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On May 6, 1998, at a duly convened meeting of the Company's
Board of Directors, Messrs. Davenport and White resigned as
officers and directors of the Company, Mr. Davis resigned as
President of the Company, Messrs. Frank Harrison and Joe
Nicholson were elected as directors and Mr. Harrison was elected
as President and Chief Executive Officer of the Company.
In connection with the foregoing transactions, at a duly
noticed and conducted special meeting of the shareholders of the
Company held on April 17, 1998, the shareholders approved the
following proposals:
(i) A proposal to approve and adopt amendments to the
Articles of Incorporation of the Company (a) to effect a
reverse split in which each share of common stock of the
Company currently issued and outstanding or held in the
treasury would be reclassified and exchanged into one-tenth
(1/10) of a share of new common stock of the Company thereby
reducing the number of issued and outstanding shares of
common stock of the Company from 40,433,459 to approximately
4,032,914 (adjusted from the rounding of any fractional
shares up to the nearest whole share), and the par value of
each share of the Company's Common Stock would be increased
from $0.001 to $0.01 per share, and (b) to change the name
of the Company to "TTI Industries, Incorporated"; and
(ii) A proposal to approve the Company's sale of
substantially all of its assets resulting from the sale of
the capital stock of (a) Gulf Coast Towers, Inc., a wholly
owned subsidiary of the Company ("GCT"), to George Davis,
Chairman of the Board of the Company, in exchange for all of
his 574,184 shares of Preferred Stock ($1.00 par value),
which were issued in connection with the Company's
acquisition of the assets currently operated by GCT from Mr.
Davis, and (b) FireZap, Inc., a wholly owned subsidiary of
the Company ("FZI"), to H. Wayne Franklin in exchange for
all of his outstanding shares (150,000) of Preferred Stock
($1.00 par value) which were issued in connection with the
Company's acquisition of FZI from Mr. Franklin.
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On April 30, 1998, the Company completed the transactions
regarding FZI and GCT as referenced in the proposal adopted by
the shareholders on April 17, 1998. Effective May 1, 1998 the
Company changed its name to TTI Industries, Incorporated,
effected the 1-for-10 reverse stock split, and changed its
trading symbol to TTIA.
The Company's results of operations for the year ended
August 31, 1998 were significantly affected by the Company's
discontinuation of the business of construction and repair of
industrial cooling towers ("Past Business") and the consummation
of the Agreement between certain Company shareholders and
Terminator Texas, and the sale of substantially all of its assets
to Mr. George Davis in exchange for Mr. Davis' transfer to the
Company of 574,184 shares of preferred ($1.00 par value) stock
(the "Terminator Texas Transaction"). Effective May 6, 1998, the
Terminator Texas Transaction was closed and subsequent to that
date and through the close of the year ended August 31, 1998 the
Company did not engage in any material revenue or income
producing activities.
As a result of the Terminator Texas Transaction, new
management was appointed, the Company discontinued existing
operations, changed its name to TTI Industries, Incorporated, and
commenced plans for new operations. The Company intends to focus
operations on the acquisition, production and marketing of (a)
innovative pest control products for home and garden with an
emphasis on products that (i) are safe for children, pets and
wildlife, (ii) are environmentally friendly, (iii) are low cost,
(iv) utilize attractive designs, and (v) are user friendly, and
(b) other products related to pest control and product safety.
There can be no assurance that the Company will be successful in
this effort. Virtually all of the Company's minimal revenues for
the year ended August 31, 1998 were derived from operations
discontinued during the year ended August 31, 1998 and the
consummation of the transactions contemplated by the Agreement.
The Company has two (2) full time employees who as of the
date of this filing were uncompensated.
Subsequent Events
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A. COMPANY'S BUSINESS PLAN. Since joining the Company,
Mr. Frank Harrison, newly elected president of the Company, with
the assistance of Mr. Albert Miller and Pierre Korsmoe, who were
elected as non-voting advisory members of the Company's Board of
Directors, has been developing a new operational and financial
restructuring plan for the Company. While the Company had
virtually no business operations during fiscal 1998, the new
business plan (the "Business Plan") was presented to and adopted
by the Company's Board of Directors in January 1999. While the
Business Plan was adopted in 1999, the Company has not secured
the financing to implement the Business Plan in any meaningful
manner. Thus, the Company has conducted virtually no income-
producing activity in 1999. The Business Plan requires
substantial additional financing, and there can be no assurance
that the Company can obtain such financing or that, even if such
financing is obtained, the Business Plan will be successful or
will produce any revenue or income for the Company.
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Pursuant to the Business Plan, the Company plans to operate
as a holding company, with its primary operations conducted
through subsidiaries. Effective January 19, 1999, the Company
formed Terminator Technologies, Incorporated, a Delaware
corporation, and Term Tex Corporation, a Delaware corporation.
Pursuant to the Business Plan, the Company intends to utilize
Terminator Technologies, Incorporated as a manufacturing and
marketing facility for the Company's products and Term Tex
Corporation as a research and development facility for the
Company's products. Neither the Company nor either of the
subsidiaries has obtained, or entered into any agreements or
arrangements to obtain, the financing necessary to implement the
Business Plan and there can be no assurance that such financing
can be obtained.
Pursuant to the Business Plan, the Company intends to devote
its primary focus to the retail market and the development,
production and marketing of: (a) a series of pest control
products for the home and garden, with an emphasis on products
that (i) are safe for humans (particularly children), pets and
wildlife, (ii) are environmentally friendly, (iii) are low cost,
(iv) utilize attractive designs, and (v) are user-friendly; and
(b) other products related to safety. There can be no assurance
that the Company will be able to successfully implement its
Business Plan.
B. OPTION AGREEMENT WITH AMJ. In anticipation of the
implementation of the Business Plan, on January 19, 1999 the
Company entered into an agreement (the "Option Agreement") with
AMJ Resources Corporation ("AMJ"), a shareholder of the Company,
which Agreement was amended on October 4, 1999. Pursuant to the
Agreement as originally executed, among other things, (i) the
Company acquired AMJ's rights to use, manufacture and sell three
(3) separate products (Terminator Night Owl[TM] (a flea trap),
Terminator Flower Trap[TM] (various insect traps) and Terminator
Pyramid[TM] (a fly trap) (collectively, the "Products")) when
they are market ready, on such terms as would be mutually
agreeable at a future date by and between the Company and AMJ;
(ii) the Company's rights under the Option Agreement were for a
period of twenty-four (24) months, and (iii) AMJ had the right to
assign the rights to the Products to a limited partnership for
the purpose of funding research and development, provided the
Company retains its rights to use, manufacture and sell the
Products. On October 4, 1999 the Company and AMJ agreed to amend
the Option Agreement to eliminate the condition of subsequent
pricing and to lengthen the terms to the life of existing and
pending patents and to provide for the Company reimbursing AMJ's
actual costs for the development of the Products.
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Notwithstanding AMJ's relationship to the Company as a
significant shareholder, and the relationship of Messrs. Miller
and Korsmoe as employees of AMJ and as non-voting advisory
directors to the Company (Mr. Korsmoe is also the Company's
principal financial and accounting officer), there can be no
assurance that the Option Agreement will result in any revenue or
income for the Company, that the Company will obtain financing
necessary to manufacture and distribute the Products, which are
not market ready, or that the Option Agreement will have any
ultimate realizable value to the Company.
AMJ is a Delaware corporation, the stock of which is owned
by Mr. Miller's daughter, grandson and an irrevocable trust, the
beneficiaries of which are members of Mr. Miller's family. Mr.
Miller is neither a beneficiary or trustee of the family trust
nor a shareholder, officer or director of AMJ.
C. ASSIGNMENT BY AMJ. Additionally, in anticipation of
implementation of the Business Plan, on January 19, 1999 AMJ and
the Company entered into an agreement (the "Assignment") which
was also amended on October 4, 1999. Pursuant to the Assignment
as originally executed, among other things, AMJ assigned to the
Company all of AMJ's rights under a license agreement dated
June 16, 1998 between AMJ and Terminator Turtle[TM] L.P. (the
"License Agreement"), in exchange for the Company assuming all of
AMJ's obligations under the License Agreement and the payment by
the Company to AMJ of a cashless warrant exercisable for a period
of two (2) years to purchase 1,500,000 shares of the Company's
common stock at $0.10 per share. Although the Assignment was
approved by the Company's Board of Directors, it provided that it
would not become effective until (i) the Company became current
with its filings to the Securities and Exchange Commission under
the reporting requirements of the Securities Exchange Act of
1934, as amended, and (ii) the Company had completed the sale of
certain 12-1/2% convertible preferred shares.
Under the Assignment as originally executed, among other
things, (i) Terminator Turtle[TM] L.P., a California limited
partnership ("TTLP"), assigned its rights to the Terminator
Turtle[TM] and Terminator Turtle Bait Tray[TM] (collectively,
"Terminator Turtle") to the Company. (TTLP had acquired those
rights from Albert Miller, the inventor of the Terminator
Turtle[TM]); (ii) the Company was granted until December 31,
2009, exclusive worldwide use of the patent relating to the
Terminator Turtle[TM], and (iii) the Company was granted the
right to manufacture, market, sell and distribute the Terminator
Turtle[TM], all in exchange for a royalty payable to TTLP equal
to 5% of all sales of Terminator Turtle[TM], but in no event less
than $100,000.
On October 4, 1999 the Company and AMJ agreed to amend the
Assignment so that (a) AMJ would receive a cashless warrant to
acquire 2,000,000 shares of the Company's common stock at $0.05
per share; (b) the warrant would expire on November 10, 2001 but
would not be exercisable until September 11, 2000; (c) the
conditions to effectiveness of the Assignment were eliminated;
and (d) the royalty from the Company to AMJ was eliminated.
There can be no assurance that the Company will obtain
financing necessary to manufacture and distribute the Terminator
Turtle[TM] or that the Assignment will have any ultimate
realizable value to the Company or will result in any revenue or
income to the Company.
D. THE COMPANY'S PRODUCT(S). Terminator Turtle[TM] is an
easy to use snail and slug control system which was designed as a
safe alternative to existing snail and slug killing products
which can be extremely dangerous to children, pets and wildlife.
The Terminator Turtle[TM] encompasses two products: (a) The
Terminator Turtle Bait Station[TM] - a metal turtle-shaped
enclosure that keeps the bait away from children and animals; and
(b) The Terminator Turtle Bait Tray[TM] - a disposable plastic
tray containing snail and slug bait that fits inside the steel
turtle.
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The Company believes that nearly all existing snail and slug
control products involve dispensing poisonous pesticide granules
or powder directly on the snail, thus, creating a hazard to
children, pets, wildlife and the environment, particularly when
the pesticide filters through the soil into the groundwater and
into rivers and reservoirs. Such snail and slug bait when
exposed to sun, rain and water also deteriorates quickly, thus
requiring more poison to be effective.
The snail and slug bait in the Terminator Turtle Bait
Tray[TM] is enclosed in the steel Turtle, safely isolated from
children, pets, wildlife and the elements. Protected from rain,
watering and the sun, the enclosed bait is effective for at least
three or four weeks, and because the bait does not touch the
soil, it does not effect the groundwater.
AMJ test-marketed the Terminator Turtle[TM] in the Northwest
United States in 1997, for a period of six weeks, selling all
50,000 units made available. AMJ also completed EPA registration
for the Terminator Turtle Bait Tray[TM] in all 50 states. After
the test-market, AMJ made additional modifications to the
Terminator Turtle[TM] design and completed fabrication on the
high volume tooling needed to produce the Terminator Turtles[TM]
in large quantities at a low cost. AMJ has advised the Company
that AMJ and associates have expended in excess of $2,000,000 in
the development of the Terminator Turtle[TM] and certain other
products.
The Company intends to sell the Terminator Turtle Bait
Station[TM] (including one Terminator Turtle Bait Tray[TM]) at a
suggested retail price of $9.95 per unit and replacement
Terminator Turtle Bait Trays[TM] at $4.95 per unit.
The Company intends to market its retail products directly
to retailers who will market to consumers by the use of point of
purchase displays that are strategically placed by retailers in
their outlets. The display for the Terminator Turtles[TM] and 24
Bait Tray Refill packs is a free-standing unit with a printed 4-
color promotional picture of the Turtle on top.
E. MANUFACTURE AND MARKETING. The Company presently
intends to outsource all manufacturing functions for its
product(s). At present, the Company has no facilities capable of
manufacturing its product(s) and is not a party to any formal
agreements with respect to manufacturing of its product(s). In
the past, AMJ has outsourced the manufacture of the Terminator
Turtle[TM] and has agreed to assign its rights to manufacturing
agreements to the Company. AMJ has inventory of finished and
partially finished products and parts for approximately 200,000
Terminator Turtles[TM] a portion of which were partially financed
with funds advanced by the Company in late 1998 and early 1999.
AMJ has verbally agreed to transfer the inventory to the Company
at AMJ's cost (less any amounts advanced by the Company). The
Company has not independently verified the amount of such
inventory or the cost. Moreover, the Company does not have, nor
has it made any arrangements for, the financing necessary to
manufacture product(s) or purchase the inventory from AMJ, nor is
there any assurance that it can obtain such financing.
The Company intends to market its product(s) through its
wholly owned subsidiary Terminator Technologies, Inc. Neither
the Company nor Terminator Technologies, Inc. have any
contractual commitments or arrangements relating to the marketing
or sale of product(s). Terminator Texas has agreements with
independent sales representatives on a nonexclusive basis to
market and sell the Terminator TurtleT and has verbally agreed to
assign those agreements to the Company or its subsidiary. There
can be no assurance that such assignment, if made, will result in
any revenue or income to the Company.
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Notwithstanding the foregoing agreements, the Company does
not have the financial resources to manufacture or distribute any
products and the only product that is market ready is the
Terminator Turtle[TM] and Bait Trap. The other products require
additional development. There can be no assurance that the
Company can or will obtain the financing necessary to take
advantage of the Option Agreement or the Assignment.
Since the Company has not yet obtained financing to
implement its plans with respect to the Terminator Turtle[TM] or
any other product, there can be no assurance that such financing
will be obtained and there can be no assurance that the Company's
plans for the Terminator TurtleT or any other product will be
realized or successful.
F. AGREEMENT WITH SPEED RELEASE LOCK COMPANY. On October
5, 1999, the Company entered into a Stock Purchase and Exchange
Agreement (the "Speed Release Agreement") with Speed Release Lock
Company ("Speed Release") and Mr. Steve Bedowitz. Pursuant to
the Speed Release Agreement, among other things, (i) Mr. Steve
Bedowitz, president and majority shareholder of Speed Release,
purchased an option exercisable upon 60 days prior written
notice, at a price of $40,000 paid to the Company, to purchase
165,000 shares of the Company's Common Stock at a purchase price
of $.01 per share; (ii) the Company acquired 10% of Speed
Release's Common Stock in exchange for 9.9% of the Company's
Common Stock; (iii) the Company obtained the right for a period
of 180 days to demand that Speed Release, at Speed Release's
cost, file a registration statement with the Securities and
Exchange Commission, with respect to the Speed Release shares
owned by the Company, provided however, that the Company, if such
right is exercised, is limited to distributing such Speed Release
shares only to shareholders of the Company (and may not sell such
shares in the open market); and (iv) if the Company does not
exercise its right to demand registration within 180 days from
the date of the Speed Release Agreement, Speed Release may
rescind the transaction and reacquire its shares in return for
the Company's shares acquired by Speed Release. The Company has
notified Speed Release that the Company has exercised its demand
registration rights and has requested Speed Release to file a
registration statement with respect to such shares. There can be
no assurance that the registration statement will be filed, or if
filed will become effective.
The Company and Speed Release have entered into discussions
regarding a possible business combination. However, such
discussions are preliminary in nature and there can be no
assurance that such discussions will result in any further
agreement between the Company and Speed Release or that if any
additional agreement is reached that it will add any value to the
Company.
Speed Release is engaged in the manufacture and sale of safe
and reliable firearm safety products to prevent the unauthorized
use of firearms, including unintentional discharge by children
and assailants. Speed Release's mission is to both market and
manufacture firearm safety locks that maximize the user's ability
to operate the device quickly in an emergency situation, while
prohibiting unauthorized users from using the firearm.
Speed Release manufactures and markets a keyless,
programmable, trigger lock that fits most firearms (the "Lock").
Speed Release began selling the Lock in 1997 and since then, the
Lock has been sold through a number of catalogs and retail
establishments, as well as to a number of law enforcement groups
and the military.
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The Lock is a computerized device that fits over the trigger
guard of 98% of all firearms, preventing the movement of the
trigger. As a result, the unintentional firing of the firearm is
prevented. The Lock contains five translucent buttons, which
illuminate in dark or dim light. There are 38,000 programmable
codes available for the device, making it extremely difficult to
open without knowledge of the passcode and therefore resistant to
tampering by children and other unauthorized users. It is
constructed of a high-density polymer called Celcon that is
fourteen (14) times stronger than die cast metal. As a result,
once the lock is in place, it is virtually tamper resistant and
can only be removed by entering the correct code, using extensive
force, defacing the weapon, or shipping the firearm through a
licensed firearms dealer to Speed Release's headquarters.
In the future, Speed Release hopes to employ the concepts
used in the Lock for other purposes, such as electronic bicycle
locks. The Company recently filed a patent application with the
United States Patent Office on the Lock that, if granted, will be
owned entirely by Speed Release.
Speed Release has informed the Company that Speed Release
believes that (i) no other company employs technology similar to
the Lock; (ii) Speed Release's largest competitors are gun safes
and key locks; (iii) there are several more sophisticated safety
devices that are much more expensive, making them cost
prohibitive for many gun owners, and (iv) unlike these other
devices, the Speed Release Lock is affordable, easy to operate
and makes the firearm easily accessible to its users.
Speed Release was founded in 1996 by the Company's principal
shareholder, Steve Bedowitz. In 1991, Speed Release acquired
Trigger Block, Inc., the founder of the concept of the Speed
Release Lock. Mr. Bedowitz is 57 years old and has successfully
built and managed several successful companies. In March 1980,
Mr. Bedowitz founded American Remodeling, Inc. ("AMRE"), a
company specializing in home siding, with an initial investment
of $3,000. When Mr. Bedowitz sold his interest in AMRE in 1991,
it was a multimillion dollar company traded on the New York Stock
Exchange and the most profitable home renovation company in
America.
The Lock competes with a number of products that reduce the
risk of firearm misuse. These products include other types of
gun locks and gun safes. Speed Release believes, however, that
its Lock is superior to these products in that it is easier to
use in an emergency situation. Firearm safes clearly offer a
high level of security from both theft and unauthorized use;
however, their high cost prohibits many firearm owners from using
them. Furthermore, firearm safes hinder an owner's access to
firearms in the case of an emergency, making their use
prohibitive in instances in which the firearm owner wishes to use
the weapon for personal safety. Competing gun locks, in
comparison, also hinder access to the firearm in that they
typically require a key to open and for safety reasons, the key
should be kept in a different place than the gun itself. Speed
Release's Lock, in comparison, is easy to remove through a
programmable code that only the owner of the firearm knows. This
makes access to the firearm efficient at a low cost to the
consumer. In addition to gun safes and gun locks that require a
key to unlock, there are a number of additional trigger locks on
the market. Namely, the Saf-T-Lok, which is actually installed
in the firearm and is not removed and the "Smart Gun," which is
currently in development and will only work for the owner of the
firearm. The Smart Gun has not yet been
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perfected. In addition, it is extremely expensive and cannot be
used with existing guns, since it is itself a gun.
Speed Release focuses its marketing strategy to current as
well as future firearm owners. Its advertisements are geared
toward men over 25 years old with at least a high school
education and incomes in excess of $35,000. The Lock has been
featured in a number of hunting, shooting and law enforcement
magazines such as SHOOTING TIMES, SPORTS AFIELD, CLAY SHOOTING,
BUCKMASTERS, FIELD & STREAM, GUN WORLD, SKEET SHOOTING REVIEW,
THE CHIEF OF POLICE, GUNS MAGAZINE, LAW ENFORCEMENT TECHNOLOGY
and S.W.A.T. In addition, catalogs like SHARPER IMAGE and ORVIS
have featured the product.
Due to the rise of firearm violence and in light of the
number of children engaging in violence with handguns and rifles,
there has recently been increased interest in requiring firearm
users to keep unauthorized users from using firearms. Congress
is currently considering legislation which would require that a
gun lock be sold with every new firearm sold in the United
States. In addition, a number of states have passed laws
requiring gun locks for every firearm sold within the state.
Such laws require firearm owners to safely store their firearms
and increase the need and demand for products like the Speed
Release Gun Lock. Speed Release anticipates that Congress will
pass additional laws dealing with gun control and requirements
for gun locks.
At December 31, 1998, Speed Release had total assets of
$390,507 and a shareholders' deficit of ($1,192,751). For the
years ended December 31, 1998 and 1997, Speed Release had
revenues of $217,634 and $87,192, respectively, and operating
losses of ($588,612) and ($1,214,191), respectively. Speed
Release's net losses in 1998 were ($697,359), compared to
($1,334,934) during 1997.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995
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Forward-looking statements in this report, including without
limitation, statements relating to the adequacy of the Company's
resources and any anticipated changes on the Company's business
following the consummation of the Agreement and Speed Release
Agreement, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties, including without limitation; potential quarterly
fluctuation in sales, if any; risks associated with acquisitions
and expansion, and other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and
Exchange Commission.
Year 2000 Compliance
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Many current installed computer systems and software may be
coded to accept only two-digit entries in the date code field and
cannot distinguish 21st century dates from 20th century dates.
As a result, many software and computer systems may need to
upgraded or replaced. The Company is in the process of assessing
the Year 2000 issue and expects to complete the program in the
fourth quarter of 1999. The Company has not incurred material
costs to date in the process, and does not believe that the cost
of additional actions will have a material effect on its
operating results or financial condition. The Company has
established a budget of $2,000 for the acquisition of contract
software services that will assist in the year 2000 assessment
and
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remediation activities to be completed no later than the first
quarter of fiscal year 2000. TTI's current systems and products
may contain undetected errors or defects with Year 2000 date
functions that may result in material costs. In addition, the
Company utilizes third-party equipment, software and content,
including non-information technology systems, such as security
systems, building equipment and embedded micro-controllers that
may not be Year 2000 compliant. The Company is considering
developing a plan to assess whether its internally developed
software, third-party systems and non-information technology
systems are adequately addressing the Year 2000 issue. Failure
of third-party equipment, software or content to operate properly
with regard to the Year 2000 issue could require the Company to
incur unanticipated expenses to remedy problems, which could have
a material adverse effect on its business, operating results and
financial condition.
The Company is assessing whether third parties in its
potential supply and distribution chain are adequately addressing
their Year 2000 compliance issues. The Company cannot guarantee
that the systems of suppliers or other companies on which the
Company may rely will be Year 2000 compliant. The Company is in
the process of developing a contingency plan that will address
situations that may result should year 2000 compliance for
critical operations not be fully achieved in 1999.
ITEM 2.
DESCRIPTION OF PROPERTY
-----------------------
The principal office of the Company is in Dallas, Texas and
consists of rented office space of approximately 200 sq. ft.
which the Company believes is suitable and adequate to meet the
Company's needs. The Company also occupies an office of
approximately 1,700 square feet in San Jose, California, which it
occupies rent free from AMJ.
ITEM 3.
LEGAL PROCEEDINGS
-----------------
The Company is not involved in any material legal
proceedings.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to a vote of security
holders of the Company during the fourth quarter of fiscal 1998.
PART II
ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
The common stock of the Company has traded from time to time
on the over-the-counter market. Due to the infrequency of trades
during the past three years, the Company does not believe that
there is an established public trading market for its common
stock.
-11-
<PAGE>
As of September 30, 1999, there were approximately 1200
shareholders of record of the Company's common stock. There have
been no dividends paid or declared since the inception of the
Company, and the Company's present financial condition does not
permit the payment of dividends. The Company cannot predict
when, if at all, it will commence payment of dividends.
ITEM 6.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
Overview
--------
The Company's results of operations for the year ended
August 31, 1998 were significantly affected by the Company's
discontinuation of its Past Business and the consummation of the
Terminator Texas Transaction which closed on May 6, 1998. Since
May 6, 1998 the Company has not engaged in any income producing
activities.
The Company had no material commitments for capital
expenditures as of the end of fiscal 1998, and has determined it
will not have any commitments for capital expenditures as of the
end of fiscal 1999. While the Company intends to focus future
operations on the acquisition, production, and sale of pest
control products for home and garden use, and other safety-
related products, there can be no assurance that the Company will
be successful in this effort and, without obtaining a source of
financing for such efforts, will, in all likelihood, not be
successful in such efforts.
Liquidity and Capital Resources
-------------------------------
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed below and in the opinion and footnotes of the financial
statements, the Company has discontinued its operating segments
and suffered recurring losses from operations that raise
substantial doubt about the Company's ability to continue as a
going concern. Management's plans are discussed throughout this
document and in the footnotes to the financial statements.
The Company's working capital deficit at August 31, 1998 was
$22,836 compared to $(24,798) at August 31, 1997. Cash and cash
equivalents decreased to $12 at August 31, 1998 as compared to
$19,226 at August 31, 1997, reflecting the Company's
discontinuation of its Past Business. During the year ended
August 31, 1998, available cash was used to pay the fees and
expenses related to the consummation of the Terminator Texas
Transaction.
The discontinuation of the Past Business during the year
ended August 31, 1998 also resulted in, among other things,
inventory levels being reduced to -0- at August 31, 1998 compared
to $53,128 at August 31, 1997, trade accounts receivable being
reduced to -0- at August 31, 1998 compared to $12,880 at August
31, 1998 and trade accounts payable being reduced to -0- at
August 31, 1998 compared to $71,083 at August 31, 1997.
The Company made no capital acquisitions or improvement
expenditures during the year ended August 31, 1998 but
anticipates a substantial increase in its capital needs
consistent with the implementation of the Company's Business Plan
(described herein), when implemented. See "Subsequent Events."
The Company believes that its current capital will not be
sufficient to
-12-
<PAGE>
meet its anticipated cash needs for the next 12 months. However,
any projections of future cash needs and cash flow are subject to
substantial uncertainty. While the Company intends to obtain
additional financing through the sale of equity and/or debt
securities, there can be no assurance that the Company will
obtain financing necessary to implement and undertake its
Business Plan. Moreover, the obtaining of any financing by the
Company, will, in all likelihood, involve the sale of additional
equity, debt, or convertible debt securities, which could result
in additional dilution to the Company's shareholders.
Additionally, the Company will, from time to time, consider the
acquisition of or investment in complementary businesses,
products, services and technologies, which might impact the
Company's liquidity requirements or cause the Company to issue
additional equity or debt securities. There can be no assurance
that financing will be available in amounts or on terms
acceptable to the Company, if at all, in order to implement its
Business Plan.
Results of Operations for the years ended August 31, 1997 and
1998
- -------------------------------------------------------------
Revenues.
--------
Revenue from sales and other sources in fiscal 1997 was
$44,065 compared to $16,738 in fiscal 1998. The decrease in
sales revenue in fiscal 1998 reflected the consummation of the
Terminator Texas Transaction and the discontinuation of the
Company's Past Business.
Costs and Expenses.
------------------
Costs of sales in fiscal 1997 were $8,372 compared to $1,434
in fiscal 1998 reflecting the decreased revenue. The decrease in
costs of sales in fiscal 1998 from 1997 resulted from the
decrease in revenue from sales during 1997. The General and
Administrative costs for fiscal 1997 were $226,220 compared to
$227,215 in 1998, and in both years consisted primarily of
professional fees and imputed salaries.
During 1997, the officers of the Company determined that
they would not take a salary until cash flow from operations
permitted them to pay each of the three (3) officers $50,000. No
officers' salaries were paid in fiscal 1997 or 1998. The SEC
staff has determined that the historical statement of operations
should reflect all costs of doing business. Accordingly,
officers' salaries for 1997 and 1998 were imputed based on the
actual number of months of operation during those periods. This
expense is reflected in the 1997 and 1998 statements of
operations and also as an increase to paid-in capital. As
discussed above, officers salaries and benefits for fiscal 1998
were imputed at $50,000 compared to $33,860 in fiscal 1997. The
Company also calculated losses from discontinued operations at
$17,744 in fiscal 1998 compared to $4,871 in fiscal 1997.
New Accounting Standards.
------------------------
In 1998, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share." This Statement establishes
standards for computing and presenting earnings per share and
applies to entities with publicly held common stock or potential
common stock. This Statement simplifies the previous standards
for computing earnings per share, and makes them comparable to
international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face
-13-
<PAGE>
of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. This Statement is
effective for financial statements issued for periods ending
after December 15, 1997. The Company has complied with the
disclosure requirements of SFAS 128 in its financial statements
for its fiscal year ending August 31, 1998.
In June 1997, the Financial Accounting Standards Board
issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information." SFAS 131 establishes standards for the
way that public business enterprises report information about
operating segments in annual financial statements and requires
that those business enterprises report selected financial
information about operating segments in interim reports to
shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. The disclosure requirements of SFAS Nos. 131
are effective for financial statements for financial years
beginning after December 15, 1997. The Company has complied with
the disclosure requirements of SFAS No. 131 in its financial
statements for its fiscal year ending August 31, 1998.
In July 1998, the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. In June 1999, the
FASB issued SFAS No. 137 which delayed the effective date of SFAS
No. 133 to fiscal years beginning after June 15, 2000. At this
time, the Company has not determined the impact the adoption of
this standard will have on the Company's financial statements.
Deferred Tax Assets.
-------------------
At August 31, 1998 and 1997, the Company had deferred tax
assets totaling $169,000 and $91,000, respectively. The deferred
tax assets are the result of net operating losses and have been
fully reserved by valuation allowances because it is more likely
than not that the deferred tax assets will not be realized based
on the weight of available evidence.
ITEM 7.
FINANCIAL STATEMENTS
---------------------
Index to Financial Statements F-1
Report of Independent Certified Public
Accountants (BDO Seidman, LLP) F-2
Consolidated balance sheets at August 1998
and 1997 F-3
Consolidated statements of loss for the years
ended at August 31, 1998 and 1997 F-4
Consolidated statements of changes in stockholders'
(capital deficit) equity for the years ended
August 31, 1998 and 1997 F-5
Consolidated statements of cash flows for the
years ended August 31, 1998 and 1997 F-6
Notes to consolidated financial statements F-8
-14-
<PAGE>
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
---------------------------------------------
None.
PART III
ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
-------------------------------------------------------
The following table contains information regarding the
Company's directors and executive officers.
Name (and Age) Position(s) Held
- ------------------------ ------------------------------------
Frank Harrison (62) President and Director
George Davis (69) Secretary, Treasurer and Chairman of
the Board of Directors
Joe Nicholson (65) Director
Pierre Korsmoe (54) Advisory Director and principal
financial and accounting officer
Albert Miller (69) Advisory Director
Frank Harrison, Sr. has been President and a Director of the
Company since May 6, 1998. From 1995 and up until this time, he
served as President and Director of Terminator Technologies, Inc.
Prior to that , he was responsible for marketing and investment
services for Beechwood Corporation. From 1985 to 1993, Mr.
Harrison was President of International Research Securities,
Inc., an investment banking firm in Dallas, Texas. Mr. Harrison
is licensed by the National Association of Securities Dealers,
Inc. as a Series 7 investment advisor and principal. Mr.
Harrison is a 1957 graduate of the University of Notre Dame with
a B.S. in Marketing.
-15-
<PAGE>
George Davis has been a Director of the Company since 1996,
and since 1976 has served as President and Chief Executive
Officer of Gulf Coast Cooling Tower Service, Inc.
Joe Nicholson has been a Director of the Company since
May 6, 1998. During the past five years, Mr. Nicholson has been
president and principal owner of Joe Nicholson & Associates,
Inc., a company which represents Dale Carnegie of North Texas.
Mr. Nicholson is a graduate of the University of Nebraska where
he received his Bachelor of Arts degree in 1957.
Pierre Korsmoe has been an advisory, nonvoting Director of
the Company and its Chief Financial Officer since May 6, 1998.
Mr. Korsmoe is a Certified Public Accountant and has been engaged
in the private accounting practice for more than 20 years. Mr.
Korsmoe is a graduate of both UCLA, where he received his
bachelors degree in accounting, and Golden Gate University at San
Francisco, where he received his MBA in taxation. Mr. Korsmoe is
an employee of AMJ Resources, Inc., with together with
affiliates, holds a majority of the Company's common stock.
Albert Miller has been an advisory, nonvoting Director of
the Company since May 6, 1998. Prior to that, Mr. Miller was
employed by Terminator Technologies, Inc. and also acted as a
business consultant to various companies in the finance,
manufacturing, engineering, construction and marketing sectors
both in the U.S. and abroad. Mr. Miller attended San Jose State
University and Santa Clara University. Mr. Miller is an employee
of AMJ Resources, Inc., which, together with affiliates, hold a
majority of the common stock of the Company.
None of the officers or directors of the Company had
directorships of any other reporting companies.
None of the officers or directors are involved in any legal
proceedings.
Under the Company's Bylaws, each Director serves until the
next succeeding annual meeting and until his successor is elected
and qualified or until his death, resignation or removal. Annual
meetings of shareholders and directors are held at such time and
place as the Board of Directors may from time to time determine.
Mr. George Davis was elected as a director on July 9, 1997 and
Messrs. Harrison and Nicholson were appointed on May 6, 1998.
ITEM 10.
EXECUTIVE COMPENSATION
----------------------
During 1997, the officers of the Company determined that
they would not take a salary until cash flow from operations
permitted them to pay each of its three (3) officers at the time
$50,000. No officers' salaries were paid in fiscal 1998 or 1997.
The SEC staff has determined that the historical statement of
operations should reflect all costs of doing business.
Accordingly, officers' salaries for 1998 were imputed based on
the actual number of months of operation during 1998. This
expense is reflected in the 1998 statement of operations and also
as an increase to paid-in capital. As discussed above, salaries
and benefits for fiscal 1997 were imputed at $50,000 compared to
$33,860 in fiscal 1998.
-16-
<PAGE>
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
---------------------
The following table sets forth certain information with
respect to each person known by the Company to be the beneficial
owner of five percent (5%) or more of the Company's Common Stock.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
- -------------------- ------------------------ ----------------
George Davis 475,520(2) 11.59
Route 1, Box 41
Overton, TX 75684
AMJ Resources 3,536,894(3) 63.80
Corporation
2902 D Almaden Expwy.
San Jose, CA 95125
Cede & Company 259,302 6.41
P.O. Box 222
New York, NY 10274
CB Porter & Jannette 207,800 5.14
B. Porter, CB Porter
& Bruce Porter
1802 Bunker Hill Dr.
Van Buren, AR 72901
___________________________________
(1) The beneficial owner listed has the sole power to vote and
dispose of the shares owned of record by it, subject to
applicable community property laws.
(2) Includes 60,000 shares issuable upon conversion of Mr.
Davis' preferred stock.
(3) Includes 400,000 shares held of record by AM Resources
Corporation and 400,000 shares held of record by Sytek
Resources Corporation, wholly-owned subsidiaries of AMJ
Resources Corporation. Also includes 1,500,000 shares that
may be acquired under a currently exercisable warrant.
The following table sets forth certain information with
respect to the shares of the Company's common stock beneficially
owned by each director of the Company and all directors and
executive officers of the Company as a group.
-17-
<PAGE>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Title of Class Beneficial Ownership(1) Class
- ------------------- -------------- ----------------------- -------------
Frank Harrison Common 200,000 4.95
3838 Oak Lawn Preferred -- --
Avenue, Ste. 1000
Dallas, TX 75219
George Davis Common 475,520(2) 11.59
Route 1, Box 41 Preferred 600 20.34
Overton, TX 75684
Joe Nicholson Common 27,500(3) *
2025 Oak Meadow Dr Preferred 250 8.47
Bedford, TX 76021
All directors and Common 703,020 17.03
executive officers Preferred 850 28.81
as a group (5
persons)
_____________________________
*Less than 1% of class
(1) The beneficial owner listed has the sole power to vote and
dispose of the shares owned of record by it, subject to
applicable community property laws.
(2) Includes 60,000 shares issuable upon conversion of Mr. Davis'
preferred stock.
(3) Includes 25,000 shares issuable upon conversion of Mr.
Nicholson's preferred stock.
ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
See Item 1, "Description of Business," in this report.
-18-
<PAGE>
ITEM 13.
EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) 1. Financial Statements.
The financial statements and schedule listed in the
accompanying index to financial statements were delivered to
the Company on November 4, 1999, and are filed as part of
this annual report.
2. Exhibits.
No. Exhibit
---- -------
3.1 Amended and Restated Articles of Incorporation of the
Registrant, as filed with the Secretary of State of
Texas on April 23, 1998 (filed herewith)
3.2 Bylaws of Registrant (filed herewith)
4.1 Form of Common Stock Certificate of Registrant (filed
herewith)
10.1 Stock Purchase Agreement, dated as of January 15, 1998,
by and among the Company, certain of its shareholders
and Terminator Technologies, Inc. (incorporated by
reference to the Registrant's Annual Report on Form 10-
K for the Year Ended August 31, 1997)
11.1 Statement regarding computation of per share earnings
21.1 Subsidiaries of the registrant
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the last quarter of
the period covered by this Annual Report.
-19-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TTI INDUSTRIES, INCORPORATED
By: /s/ FRANK HARRISON November 5, 1999
------------------------------
Frank Harrison, President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Signature Title Date
/s/ GEORGE DAVIS Secretary, Treasurer and November 5, 1999
- -------------------- Chairman of the Board
George Davis
/s/ FRANK HARRISON President and Chief November 5, 1999
- -------------------- Executive Officer and
Frank Harrison Director (Principal
Executive Officer)
Director November ___, 1999
- --------------------
Joe Nicholson
/s/ PIERRE KORSMOE Principal Accounting and November 5, 1999
- -------------------- Financial Officer
Pierre Korsmoe
-20-
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Contents
=================================================================
Report of independent certified public accountants F-2
Consolidated financial statements
Balance sheets F-3
Statements of loss F-4
Statements of stockholders' equity (capital deficit) F-5
Statements of cash flows F-6
Notes to consolidated financial statements F-8
F-1
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholders
TTI Industries, Incorporated (F/K/A Environmental Plus, Inc.) and
Subsidiaries
We have audited the accompanying consolidated balance sheets of
TTI Industries, Incorporated (F/K/A Environmental Plus, Inc. )
and Subsidiaries, (the "Company") as of August 31, 1998 and 1997
and the related consolidated statements of loss, stockholders'
equity (capital deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of the Company and Subsidiaries as of August 31, 1998
and 1997, and the results of their operations and their cash
flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Notes 1 and 12 to the financial statements, the
Company has discontinued its operating segments and has suffered
recurring losses from operations that raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans in regard to this matter are also described in
Note 12. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ BDO SEIDMAN, LLP
BDO Seidman, LLP
Dallas, Texas
March 31, 1999
F-2
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Consolidated Balance Sheets (Note 1)
=================================================================
<TABLE>
<CAPTION>
August 31, 1998 1997
- --------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Assets
Current
Cash $ 12 $ 19,226
Accounts receivable - trade - 12,880
Notes receivable, current portion - 55,210
Inventory - 53,128
Other - 9,495
- --------------------------------------------------------------------- ----------- -----------
Total current assets 12 149,939
- --------------------------------------------------------------------- ----------- -----------
Notes receivable, less current portion - 195,184
Property, plant and equipment - net - 136,059
- --------------------------------------------------------------------- ----------- -----------
12 481,182
===================================================================== =========== ===========
Liabilities and Stockholders' Equity (Capital Deficit)
Current liabilities
Accounts payable $ 16,985 $ 71,083
Accrued expenses 863 5,605
Line of credit and term notes - 60,240
Notes payable and due to related party 5,000 37,809
- --------------------------------------------------------------------- ----------- -----------
Total current liabilities 22,848 174,737
- --------------------------------------------------------------------- ----------- -----------
Commitments and contingencies
- --------------------------------------------------------------------- ----------- -----------
Stockholders' equity (capital deficit)
Preferred stock, (100,000,000 authorized; $1.00 par, 1,024,000
shares issued and outstanding - 1997) - 466,600
Common stock, (100,000,000 shares authorized, $0.01 par,
724,184 shares issued and outstanding) 40,328 40,328
Additional paid-in capital 1,011,058 644,084
Accumulated deficit (1,074,222) (844,567)
- --------------------------------------------------------------------- ----------- -----------
Total stockholders' equity (capital deficit) (22,836) 306,445
- --------------------------------------------------------------------- ----------- -----------
$ 12 $ 481,182
===================================================================== =========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-3
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Consolidated Statements of Loss (Note 1)
=================================================================
<TABLE>
<CAPTION>
Years ended August 31, 1998 1997
- -------------------------------------------------- ----------- -----------
<S> <C> <C>
Revenue:
Sales $ 2,593 $ 12,514
Other 14,145 31,551
- -------------------------------------------------- ----------- -----------
Total 16,738 44,065
- -------------------------------------------------- ----------- -----------
Cost of Sales 1,434 8,372
- -------------------------------------------------- ----------- -----------
Impairment of goodwill and organization costs - 46,269
- -------------------------------------------------- ----------- -----------
General and Administrative:
Professional fees 87,114 96,401
Bad debts 69,083 63,000
Salaries and benefits 57,031 56,500
Other administrative expenses 9,953 154
Taxes and licenses 2,396 182
Interest and bank charge 1,338 2,338
Utilities and telephone 300 461
Amortization - 5,263
Supplies - 1,921
- -------------------------------------------------- ----------- -----------
Total General and Administrative 227,215 226,220
- -------------------------------------------------- ----------- -----------
Loss from Continuing Operations (211,911) (236,796)
- -------------------------------------------------- ----------- -----------
Loss from Discontinued Operations (Note 1) (17,744) (4,871)
- -------------------------------------------------- ----------- -----------
Net Loss (229,655) (241,667)
- -------------------------------------------------- ----------- -----------
Per Share Data Basic and Diluted (Note 1):
Loss from continuing operation $ (.05) $ (.06)
Loss from discontinued operations (.01) -
Net loss per share (.06) (.06)
Weighted average shares outstanding 4,032,914 4,032,914
================================================== =========== ===========
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-4
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Consolidated Statements of Stockholder's Equity (Capital Deficit)
Years Ended August 31, 1998 and 1997 (Note 1)
=================================================================
<TABLE>
<CAPTION>
Preferred Stock Common Stock Total
$1.00 Par Value $.01 Par Value Additional Stockholders'
-------------------- ------------------- Paid-In Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Capital Deficit)
--------- --------- --------- -------- --------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1996 1,024,184 $ 466,600 4,032,914 $ 40,328 $ 610,224 $ (602,900) $ 514,252
Cancellation of certain
shares related to
Fire Zap Acquisition (300,000) - - - - - -
Imputed officers'
salary (Note 6) - - - - 33,860 - 33,860
Net loss - - - - - (241,667) (241,667)
- --------------------------------------------------------------------------------------------------------------------
Cancellation of all
outstanding shares
issued related to
Gulf Coast and
Fire Zap Acquisitions)
due to sale of Gulf
Coast and Fire Zap
(Note 1) and
adjustment for
excess cost of
cancelled
preferred shares
over net assets
value of sold
subsidiaries (Note 1) (724,184) (466,600) - - 266,482 - (200,118)
Imputed officer's
Salary (Note 6) - - - - 50,000 - 50,000
Sale of common stock
warrants - - - - 20,000 - 20,000
Expenses paid by
shareholders - - - - 30,492 - 30,492
Net loss - - - - - (229,655) (229,655)
- ------------------------------------------------------------------------------------------------------------------
Balance, August 31, 1998 - $ - 4,032,914 $ 40,328 $1,011,058 $(1,074,222) $ (22,836)
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-5
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Note 1)
=================================================================
<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Years ended August 31, 1998 1997
- ------------------------------------------------------- ----------- -----------
<S> <C> <C>
Cash Flows from Continuing Operating Activities:
Loss from operations $ (229,655) $ (241,667)
Adjustments to reconcile loss from operations to
Cash used in operating activities:
Loss from discontinued operations 17,744 4,871
Amortization - 5,263
Imputed officers' salaries 50,000 33,860
Reserve for bad debts 69,083 63,000
Impairment of goodwill and organizations cost - 46,269
Change in assets and liabilities:
Accounts receivable - trade 9,585 (12,514)
Note receivable 45,186 19,185
Inventory 218 (218)
Other assets (4,707) 13,386
Accounts payable and accrued expenses (11,235) 14,967
- ------------------------------------------------------- ----------- -----------
Net cash flows used in operating activities of
continuing operations (53,781) (53,698)
- ------------------------------------------------------- ----------- -----------
Cash Flows from Investing Activities -
Shareholder contributions to capital 30,492 -
- ------------------------------------------------------- ----------- -----------
Net cash flows provided by investing activities 30,492 -
- ------------------------------------------------------- ----------- -----------
Cash Flows from Financing Activities:
Retirement of debt (36,779) -
Sale of stock warrants 20,000 -
Proceeds from notes payable - affiliate 5,000 23,779
- ------------------------------------------------------- ----------- -----------
Net cash flows provided by (used in) financing (11,779) 23,779
activities
- ------------------------------------------------------- ----------- -----------
</TABLE>
F-6
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Note 1)
=================================================================
<TABLE>
<CAPTION>
Increase (Decrease) in Cash and Cash Equivalents
Years ended August 31, 1998 1997
- ---------------------------------------- -------- --------
<S> <C> <C>
Discontinued Operations:
Net cash provided by operating 21,437 19,638
activities
Net cash used in investing activities (2,618) (4,323)
Net cash provided by (used in) (2,965) 23,269
financing activities
Net cash provided by discontinued 15,854 38,584
operations
Increase (decrease) in cash (19,214) 8,665
Cash, beginning of year 19,226 10,561
Cash, ending of year $ 12 $ 19,226
Supplemental Cash Flow Information:
Noncash activities:
Transfer of net assets to
shareholder (Note 1) $ 200,118 $ -
Retirement of preferred shares $ 466,600 $ -
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
F-7
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
1. SUMMARY OF ACCOUNTING POLICIES
NATURE OF BUSINESS, DISCONTINUED OPERATIONS AND BASIS OF
PRESENTATION The accompanying consolidated financial statements
include the accounts of TTI Industries, Inc. (F/K/A Environmental
Plus, Inc.) and its formerly wholly-owned subsidiaries Fire Zap,
Inc. and Gulf Coast Towers, Inc. through the date of disposition,
as discussed below. All material intercompany transactions and
balances have been eliminated in consolidation.
Prior to the acquisition of majority shares (fifty-eight percent)
of the Company by a new controlling shareholder group effective
May 1, 1998, the Company operated as Environmental Plus, Inc., a
Texas Corporation, and was primarily in the business of
construction and repair of industrial cooling towers, primarily
in Texas, Louisiana and Arkansas for electric utility companies;
and marketing of fire retarding foam for industrial use. During
1998 and as part of management's plan to have the Company
continue to operate in the foreseeable future, a Stock Purchase
Agreement (the "Agreement") was entered into among Terminator
Technologies, Inc. ("TTI"), a Texas corporation, AMJ Resources,
Inc. ("AMJ"), a Delaware corporation, EPI and its various
shareholders. As a result of the Agreement, TTI, AMJ and their
respective assigns have become the new controlling shareholder(s)
and control group of the Company.
As part of the Agreement, the Company approved and adopted an
amendment to the articles of incorporation to consummate a
reverse stock split of its common shares of 1 for 10, effective
May 1, 1998. For periods presented in the financial statements
prior to the effective date of the stock split, outstanding
shares and per share data have been retroactively restated to
reflect the impact of the split.
DISCONTINUED OPERATIONS Just prior to and as a condition of
the Agreement, the Company sold its wholly-owned subsidiaries,
Fire Zap, Inc. and Gulf Coast
F-8
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
Towers, Inc. to individuals/shareholders from whom the Company
originally purchased them in 1996. According to the provisions
of the Agreement, the Company sold its investment in the capital
stock of its wholly-owned subsidiaries in exchange for all of the
outstanding shares of the Company's Series A convertible
preferred stock which was issued in connection with the Company's
acquisition of such subsidiaries. The capital stock of the
wholly-owned subsidiaries was exchanged at the net book value of
the assets of the respective companies. No gain or loss was
recognized by the Company.
The Company retires shares acquired in this transaction totaling
$150,000 and $574,184 of its Series A Preferred Stock for Fire
Zap, Inc. and Gulf Coast Towers, Inc., respectively.
The revenue and net loss from operations of discontinued segments
is as follows:
Year ended August 31, 1998 1997
------------------------- ---------- ----------
Revenues $ 18,301 $ 484,587
(Loss) from discontinued
operations (17,744) (4,871)
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclose of
contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS Certain consolidated financial statement
amount have been reclassified from the previously reported
financial statements in order to conform with the current
presentation.
F-9
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
REVENUE RECOGNITION Service and sales revenue are recognized
when services are rendered and products are shipped.
INVENTORIES Inventories are valued at the lower of cost
(first-in, first-out) or market.
PROPERTY AND EQUIPMENT Property and equipment are stated
at cost. Depreciation is computed using accelerated and straight-
line methods over the estimated useful lives of the assets.
Leasehold improvements are amortized over the estimated useful
lives of the improvements or the length of the lease, including
anticipated renewal periods, whichever is shorter.
INCOME TAXES Income taxes are provided for the tax effects
of transactions reported in the financial statements and consist
of taxes currently due plus deferred taxes related primarily to
differences between the basis of property, plant and equipment,
inventory, and accounts and notes receivable for financial and
income tax reporting. The net deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled.
CASH AND CASH EQUIVALENTS For purposes of the consolidated
statements of cash flows, the Company considers all highly liquid
debt instruments purchased with an initial maturity of three
months or less to be cash equivalents.
EARNINGS PER SHARE In 1997, the Financial Accounting
Standards Board issued Statement No. 128, Earnings per Share.
Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per
share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the
Statement 128 requirements. The Company experiences net
F-10
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
losses for fiscal 1998 and 1997, therefore common stock
equivalents are not considered as their effect would be
antidilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of
Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments, "requires that the Company
disclose the estimated fair values for its financial instruments
for which it is practicable to estimate their values. The
following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
Notes receivable - Certain of the notes receivable
have a carrying value which approximates fair value
because of the short maturity of those instruments.
For the long-term note receivable, the carry value
approximates fair value based on bank loans held by the
debtor with similar terms and maturity.
Line of credit and term notes - Based on the rates
currently available to the Company for bank loans with
similar terms and average maturities, the fair value of
the line of credit and terms notes approximate the
carrying value.
Notes payable to related party - The carrying
value of notes payable to related party approximates
fair value because of the short-maturity of those
instruments.
NEW ACCOUNTING STANDARDS In July 1998, the FASB issued SFAS
No. 133 "Accounting for Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. In June 1999, the FASB issued SFAS No. 137
which delayed the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. At this time, the Company has not
determined the impact the adoption of this standard will have on
the Company's financial statements.
F-11
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
2. INVENTORIES Inventories at August 31, 1997 consist
primarily of parts for construction of cooling towers and
trailers totaling $53,128. At August 31, 1998, the Company had
no inventory.
3. NOTES RECEIVABLE Notes receivable at August 31, 1997 and
prior to the Agreement (see Note 1) were unsecured and consisted
of the following:
August 31, 1997
------------------------------------------------------------
12.5% note due from Lewis Industries,
principal and interest payable on or
before December 15, 2005 $ 183,798
Prime plus 1% note due from Tri-State,
principal and interest payable on or
before June 2, 2000 74,386
12.5% note due from Lewis Industries
principle and interest payable on or
before October 8, 1997 25,000
12.0% note due from Fire Response Systems
Inc., principle and interest payable on
or before August 30, 1998 - Fire Zap Inc. 30,210
-----------
313,394
Less reserve for doubtful accounts 63,000
-----------
$ 250,394
===========
The notes receivable in the amount of $25,000 and $30,210 as
of August 31, 1997 were transferred to the subsidiaries prior to
their sale (see Note 1). The Company transferred the Lewis and
Tri State notes receivable to Gulf Coast Towers, Inc., one of its
subsidiary, prior to the Agreement. The Tri State note is
assumed to be fully collectible. However, the Company wrote the
Lewis note and accrued interest down to its net realizable value
of $54,870. The write-down resulted in $66,153 charge to bad
debt expense for the current period and $63,000 write-off of bad
debt reserve.
F-12
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
4. PROPERTY AND EQUIPMENT Property and equipment at August
31, 1997 consisted of the following:
Land $ 21,500
Building and improvements 75,633
Machinery and equipment 29,646
Transportation equipment 29,819
----------------------------------------- --------
156,598
Accumulated depreciation (20,539)
----------------------------------------- --------
$136,059
As part of the Agreement the Company sold all property and
equipment; accordingly the Company has no fixed assets as of
August 31, 1998.
5. LINE OF CREDIT AND NOTES PAYABLE TO RELATED PARTIES As
part of the Agreement, the Company paid in full all its debts
outstanding at that time. The line of credit was canceled in
fiscal 1998.
Notes payable to related parties consist of the following:
August 31, 1997
------------------------------------------ -----------
10% unsecured note payable to GCCTS, due
July 31, 1998 $ 22,000
10% unsecured note payable to shareholder,
due July 31, 1998 14,779
Other 1,030
------------------------------------------ -----------
$ 37,809
========================================== ===========
As August 31, 1998, $5,000 was due a related party. The terms
of repayment were not specified.
F-13
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
6. TRANSACTIONS WITH RELATED PARTIES During fiscal 1997 the
Company contracted with an affiliate to perform certain services
on the cooling tower related sales. Costs to the Company and
cash disbursements to the affiliate totaled $176,885. No such
cost was incurred in 1998.
As part of the Agreement, TTI, AMJ and their respective assigns
became the new control group through the purchase of the majority
shares of EPI and it's various shareholders. However, no
transaction occurred between the new control group and the
Company in the current period, except for a $5,000 advance.
During 1997 and 1998, the officers of the Company determined that
they would not take a salary until cash flow from operations
permitted them to pay each of three officers $50,000. Therefore,
no salaries were paid in fiscal 1997 and 1998. The SEC staff has
determined that the historical statement of operations should
reflect all costs of doing business (SAB 79). Accordingly,
officers' salaries for 1997 and 1998 were imputed. This expense
is reflected in the 1997 and 1998 statements of loss with an
increase to paid-in capital.
7. INCOME TAXES As of August 31, 1998 and 1997, management
established a 100 percent valuation allowance since it is more
likely than not that the deferred tax assets will not be realized
based on the weight of available evidence.
In accordance with the Internal Revenue Code, the availability to
carry forward net operating losses incurred prior to 1987 are
limited due to a significant change in ownership during that
year. If not utilized, these net operating losses will begin to
expire in 2006. The remaining net operating losses for tax
purposes, are approximately $330,000. However, during fiscal
1996 and 1998 there were two separate significant changes in
ownership which further limit the availability of those net
operating losses. The extent of the limitation has not been
determined.
F-14
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
The net deferred tax asset in the accompanying balance sheets
includes the following at August 31,:
1998 1997
----------- ---------
Deferred tax asset $ 169,000 $ 91,000
Less valuation allowance (169,000) (91,000)
----------- ---------
Net deferred tax asset $ - $ -
=========== ==========
The valuation allowance activity for the years ended August 31,
consists of the following:
1998 1997
--------- ---------
Balance, beginning of $ 91,000 $ 28,000
year
Current year net
operating
loss 78,000 63,000
--------- ---------
Balance, end of year $ 169,000 $ 91,000
========= =========
8. PREFERRED STOCK The Series A Preferred Stock was issued
in conjunction with the Fire Zap and Gulf Coast Towers
acquisitions. During fiscal 1997, the sellers of Fire Zap
returned for cancellation 300,000 shares of the Series A
preferred stock at the request of management. No consideration
was exchange for the cancelled shares.
Prior to the Agreement, as further discussed in Note 1, the
Company exchanged all capital stock of its wholly-owned
subsidiaries in exchange for all of the outstanding shares of
these Series A convertible preferred stock. The transaction
resulted in a $466,600 charge to the preferred stock account and
$266,482 credit to additional paid-in capital. All preferred
shares were canceled.
9. STOCK PURCHASE WARRANTS As part of the Agreement, the
Company issued a 1.5 million Stock Purchase Warrant to TTI for
$20,000. The valuation of these
F-15
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
shares is consider de minimus. The warrants are initially
exercisable at $0.04445 per share and expire prior to May 6,
2000. The transaction resulted in a $20,000 credit to additional
paid-in capital.
10. COMMITMENTS AND CONTINGENCIES The Company is
generally self-insured for losses and liabilities related
primarily to workers' compensation, health and welfare claims,
physical damage to property, business interruption resulting from
certain events, and comprehensive general, product and vehicle
liability.
11. SUPPLEMENTAL CASH FLOW INFORMATION During the
year ending August 31, 1998 and 1997 there was no cash paid for
interest or income taxes.
12. GOING CONCERN AND SUBSEQUENT EVENTS The accompanying
consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1
and below to the financial statements, the Company has
discontinued its operating segments and has suffered recurring
losses from operations that raise substantial doubt about the
Company's ability to continue as a going concern. Management's
plans in regard to this matter are described in the following
paragraphs. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Since joining the Company in May 1998, the new Chief Executive
Officer, along with the rest of the Company's management team has
been developing a broad operational and financial restructuring
plan. That plan was presented to the Company's Board of
Directors in January 1999. TTI Industries, Inc. had virtually no
business operations during fiscal 1998. The Company plans to
operate as a holding-owned subsidiaries. One subsidiary,
Terminator Technologies, Inc., will be formed as a Manufacturing
and Marketing subsidiary and TermTex Corporation will be formed
as a Research and Development subsidiary. The Company's primary
focus in the retail market will be the production and sale of a
series of pest control products for the
F-16
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
home and garden, with an emphasis on products that (1) are safe
for children, pets and wildlife, (2) are environmentally
friendly, (3) are low cost and (4) utilize attractive animal-
shaped designs. In January 1999, the Company concluded the
purchase of the two subsidiary companies, Terminator
Technologies, Inc. and Term Tex Corporation from AMJ Resources,
Inc., which consisted of the purchase of all of the 1,000 issued
and outstanding shares of each Company's common stock for a total
purchase price of $5,000 ($2,500 each). The transfer of the
operating responsibilities described above will be completed in
the next few months as contracts are finalized and manufacturing
schedules are approved.
Going forward, significant amounts of additional cash will be
needed to pay the costs to implement the proposed business plan
and to fund losses until the Company has achieved profitability.
Based on management's proposed plan, the Company estimates that
at least $1.5 million will be required to fund the Company's
restructuring costs and operations through the end of fiscal 2000
and that additional amounts could be required thereafter.
While there is no assurance that funding will be available to
execute the plan, the Company is continuing to seek financing
exploring a number of alternatives in this regard. The Company
believes that this additional financing, along with its current
credit facilities, will be sufficient to support the Company's
liquidity requirements through the end of 1999 depending on
operating results.
In the absence of long-term financial support from investors,
there can be no assurance that additional financing can be
obtained from conventional sources. Management is exploring
alternatives that include seeking strategic investors, or
pursuing other transactions that could result in diluting
existing shareholders. There can be no assurance that
management's efforts in this regard will be successful.
F-17
<PAGE>
TTI INDUSTRIES, INCORPORATED
(F/K/A ENVIRONMENTAL PLUS, INC.)
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
=================================================================
Management believes that, despite the financial hurdles and
funding uncertainties going forward, it has under development a
business plan that, if successfully funded and executed can
significantly improve operating results. The support of the
Company's vendors, customers, lenders, stockholders and employees
will continue to be key to the Company's future success.
F-18
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF ENVIRONMENTAL PLUS, INCORPORATED
ARTICLE I
---------
Pursuant to the provisions of Article 4.07 of the Texas
Business Corporation Act, the undersigned corporation hereby
adopts the following Amended and Restated Articles of
Incorporation which accurately copy the Amended and Restated
Articles of Incorporation and all amendments thereto that are in
effect to date and as further amended by such Amended and
Restated Articles of Incorporation as are hereinafter set forth
which contain no other change in any provisions thereof.
ARTICLE II
----------
The following amendments to the Articles of Incorporation
were adopted by the shareholders of the corporation on April
17th, 1998, in conformity with the provisions of the Texas
Business Corporation Act:
1. The name of the corporation was changed to TTI
Industries, Incorporated.
2. A ten-to-one reverse stock split was effected.
3. The par value of the common stock was changed to $0.01.
4. The principal and registered office and registered
agent were changed.
The amendments alter or change Article I of the Amended and
Restated Articles of Incorporation. Article XIV has been added
to the Amended and Restated Articles of Incorporation. The
following accurately copies the Articles of Incorporation and all
amendments thereto that are in effect as of the date hereof and
as further amended by these Amended and Restated Articles of
Incorporation and the following contains no other changes in any
provision thereof:
ARTICLE I
---------
The name of the corporation is TTI Industries,
Incorporated.
ARTICLE II
----------
The principal and registered office of the
corporation in the State of Texas is located at 3838
Oak Lawn Avenue, Suite 1000, Dallas, Texas 75219. The
name and address of its registered agent is Frank
Harrison, Sr.
ARTICLE III
-----------
The corporation may engage in any lawful act,
activity and/or business for which corporation may be
organized under the corporation laws of the State of
Texas. The Corporation will not commence business
until it has received consideration of $1,000 for the
issuance of its shares.
ARTICLE IV
----------
The total number of shares of common stock which
the Corporation shall have the authority to issue is
one hundred million (100,000,000), each of which shall
have a par value of $0.01. The Corporation's authority
to issue shares of preferred stock is set forth in
Article XIII below.
<PAGE>
ARTICLE V
---------
Pre-emptive rights are expressly denied. No
shareholder shall have the right to cumulate his votes
at any election for directors of this Corporation.
ARTICLE VI
----------
The members of the governing board shall be styled
directors and the number thereof shall be fixed as
provided in the Bylaws of the Corporation. The number
so fixed by the Bylaws may be increased or decreased
from time to time as provided therein.
The name and post office address of the current
Board of Directors, which shall consist of at least one
member, are as follows:
NAME POST OFFICE ADDRESS
George Davis Route 1, Box 41
Farm Road 2089
Overton, Texas 75684
J. D. Davenport Route 1, Box 41
Farm Road 2089
Overton, Texas 75684
Charles White Route 1, Box 41
Farm Road 2089
Overton, Texas 75684
ARTICLE VII
-----------
The Company shall have perpetual existence.
ARTICLE VIII
------------
Section 1. The Board of Directors is expressly
authorized to make, alter or amend the Bylaws of the
Corporation.
Section 2. Authority is hereby expressly granted
to and vested in the Board of Directors to issue (i)
notes, bonds, debentures, warrants and other
obligations of the Corporation which may be convertible
into stock of any class or classes of securities as the
Board of Directors may approve and (ii) such warrants
or other evidence of optional rights to purchase and/or
subscribe to stock of any such class or classes of
securities; all of which to be so issued and
convertible upon such terms and conditions and in such
manner as may be fixed and stated by the resolution or
resolutions of the Board of Directors from time to time
adopted providing for the issuance thereof.
-2-
<PAGE>
Section 3. The Board of Directors shall be
authorized to exercise all such powers and do all
things and acts as may be exercised or done by the
Corporation, subject to the provisions of the laws of
the State of Texas, of these Articles of Incorporation
and of the Bylaws of the Corporation.
ARTICLE IX
----------
No contract or other transaction between the
Corporation and any other corporation and no other act
of the Corporation shall, in the absence of fraud, be
invalidated or in any way affected by the fact that any
of the stockholders, directors or officers of the
Corporation are pecuniarily or otherwise interested in
such contract, transaction, or other act, or are
stockholders, directors or officers of such
Corporation. Any stockholder, director or officer of
the Corporation, individually, or any firm or
association is so interested shall be disclosed or
shall have been known to the Board of Directors or a
majority of such members thereof as shall be present at
any meeting of the Board of Directors at which action
upon any such contract or transaction shall be taken;
and any director of the Corporation who is a
stockholder, director or officer of such other
corporation or who is so interested may be counted in
determining the existence of a quorum at any meeting of
the Board of Directors which shall authorize any such
contract or transaction and may vote thereat to
authorize any such contract or transaction with like
force and effect as if he were not such stockholder,
director or officer of such other corporation or not so
interested; every stockholder, director or officer of
the Corporation being hereby relieved from any
disability which might otherwise prevent him from
carrying out transactions with or contracting with the
Corporation for the benefit of himself or any firm or
corporation, association, trust or organization in
which or with which he may be in any wise interested or
connected.
ARTICLE X
---------
The Corporation shall indemnify its officers and
directors and may indemnify its other employees or
agents to the full extent permitted by law if any such
person was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the
request of the corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or
proceeding. Such right of indemnification shall not be
deemed exclusive of any other rights to which such
person may be entitled under any bylaw, agreement, vote
of shareholders or otherwise.
ARTICLE XI
----------
No director of the Corporation shall be liable to
the Corporation or any of its shareholders or member
for monetary damages for an act or omission in the
director's capacity as a director provided, however,
that the limitation of liability contained in this
Article XI shall not eliminate or limit the liability
of a director for:
1. A breach of a director's duty of loyalty to the
Corporation or its shareholders or members;
-3-
<PAGE>
2. An act or omission not in good faith or that
involves intentional misconduct or a knowing
violation of the law;
3. A transaction from which a director received an
improper benefit, whether or not the benefit
resulted from an action taken within the scope of
the director's office;
4. An act or omission for which the liability of a
director is expressly provided for by statute; or
5. An act related to an unlawful stock repurchase or
payment of a dividend.
ARTICLE XII
-----------
The Corporation reserves the right to amend,
alter, change or repeal any provision contained in the
Articles of Incorporation, in the manner now or
hereafter prescribed by statue, and all rights
conferred upon stockholders herein are created subject
to these reservations.
ARTICLE XIII
------------
The total number of shares of preferred stock
which the Corporation shall have the authority to issue
is one hundred million (100,000,000), each of which
shall have a par value of $1.00.
Authority is expressly granted to and vested in
the Board of Directors of the Corporation to provide
for the issuance of the preferred stock in one or more
series and in connection therewith to fix by
resolutions providing for the issue of such series the
number of shares to be included in such series and the
designations and such voting powers, full or limited,
or no voting powers, and such of the preferences and
relative, participating, option or special rights, and
the qualifications, limitations or restrictions
thereof, of such series of preferred stock, to the full
extent now or hereafter permitted by the laws of the
State of Texas.
ARTICLE XIV
-----------
Each ten (10) shares of previously authorized
common stock of the corporation, par value 0.001 per
share, issued and outstanding immediately prior to the
time of the filing and recording of these Amended and
Restated Articles of Incorporation (the "Amendment")
with the Office of the Secretary of State of the State
of Texas shall thereby and thereupon automatically be
combined without any further action into one (1)
validly issued, fully paid and nonassessable share of
common stock of the corporation, par value $0.01 per
share. Further, every right, option and warrant to
acquire ten (10) shares of common stock of the
corporation, outstanding immediately prior to the time
of filing and recording of the Amendment in the Office
of the Secretary of State of the State of Texas, shall
thereby and thereupon automatically be converted
without any further action into the right to acquire
one (1) share of common stock of the corporation, upon
the terms of the right, option or warrant, except that
the purchase price of the common stock, upon exercising
the right, option or warrant, shall be proportionately
increased. The corporation shall not issue fractional
shares with respect to the combination or conversion.
To the extent that a shareholder holds a number of
shares of common stock immediately prior to the filing
and recording of the Amendment that is not evenly
divisible by ten (10), such shareholder shall receive
one additional share of common stock for each
fractional share otherwise issuable. The number of
shares of authorized common stock of the corporation
will remain at 100,000,000 and will not be affected by
the Amendment.
-4-
<PAGE>
ARTICLE III
-----------
The number of shares of the Corporation outstanding at the
time of such adoption was 40,371,873 shares of common stock and
749,000 shares of preferred stock; and the number of shares
entitled to vote thereon was 40,371,873 shares of common stock
and 749,000 shares of preferred stock. The holders of shares of
common stock and preferred stock were each entitled to vote on
the amendments as a class.
ARTICLE IV
----------
The number of shares voted for such amendments, and the
number of shares voted against such amendments, were as follows:
CLASS SHARES VOTED FOR SHARES VOTED AGAINST
Common stock 33,842,837 29,280
Preferred stock 749,000 0
Executed to be effective as of May 1, 1998.
/s/ GEORGE DAVIS
------------------------------
George Davis,
Chairman of the Board and
Chief Executive Officer
-5-
BY-LAWS
OF
TTI INDUSTRIES, INCORPORATED
ARTICLE I
Offices
Section 1.1 Registered Office. The initial registered
office of the corporation in the State of Texas shall be in the
City of Dallas, Texas, at 6350 LBJ Freeway, Suite 148, Dallas,
Texas, 75240, and the name of its initial registered agent shall
be David C. Spivey.
Section 1.2 Other Offices. The corporation may also have
offices at such other places both within and without the state of
Texas as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II
Meeting of Stockholders
Section 2.1 Place of Meeting. All meetings of
stockholders for the election of directors shall be held at such
place, either within or without the State of Texas, as shall be
designated from time to time by the Board of Directors and stated
in the notice of the meeting.
Section 2.2 Annual Meeting. The annual meeting of
stockholders shall be held at such date and time as shall be
designated from time to time by the Board of Directors and stated
in the notice of the meeting.
Section 2.3 Voting List. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at
least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any
stockholder who is present. the stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by this Section 2.3 or the books
of the corporation, or to vote in person or by proxy at any
meeting of stockholders.
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Section 2.4 Special Meeting. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may
be called by the President and shall be called by the President
or Secretary at the require in writing of a majority of the Board
of Directors, or at the request in writing of stockholders owning
a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. The
person so calling any such meeting shall fix the time and any
place, either within or without the State of Texas, as the place
for holding such meeting.
Section 2.5 Notice of Meeting. Written notice of each
meeting of stockholders, stating the place, date and hour of the
meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given to each
stockholder entitled to vote thereat not less than ten (10) nor
more than sixty (60) days before the meeting. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice.
Section 2.6 Quorum. The holders of a majority of the
shares of capital stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders for the
transaction of business, except as otherwise provided by statute
or by the Certificate of Incorporation. Notwithstanding the
other provisions of these By-Laws, the holders of a majority of
the shares of capital stock entitled to vote thereat, present in
person or represented by proxy, whether or not a quorum is
present, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum shall be present or represented. If the
adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting. At such
adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been
transacted at the original meeting.
Section 2.7 Voting. When a quorum is present at any
meeting of the stockholders, the vote of the holders of a
majority of the shares of capital stock entitled to vote thereon,
present in person or represented by proxy, shall decide any
question brought before such meeting, unless the question is one
upon which, by express provision of the statutes, of the
Certificate of Incorporation or of these By-Laws, a different
vote is required, in which case such express provision shall
govern and control the decision of such question. Every
stockholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by an instrument in writing
subscribed by such stockholder, bearing a date not more than
three (3) years prior to voting, unless such instrument provides
for a longer period, and filed with the Secretary of the
corporation before, or at the time of, the meeting. If
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such instrument shall designate two or more persons to act as
proxies, unless such instrument shall provide the contrary, a
majority of such persons present at any meeting at which their
powers thereunder are to be exercised shall have and may exercise
all the powers of voting or giving consents thereby conferred, or
if only one be present, then such powers may be exercised by that
one; or, if an even number attended and a majority do not agree
on any particular issue, each proxy so attending shall be
entitled to exercise such powers in respect of the shares
proportionately.
Section 2.8 Voting of Stock of Certain Holders. Shares
standing in the name of another corporation, domestic or foreign,
may be voted by such officer, agent or proxy as the By-Laws of
such corporation may prescribe, or in the absence of such
provision, as the Board of Directors or a duly authorized
managing director of such corporation may determine. Shares
standing in the name of a deceased person may be voted by the
executor or administrator of such deceased person, either in
person or by proxy. Shares standing in the name of a guardian,
conservator or trustee may be voted by such fiduciary, either in
person or by proxy, but no such fiduciary shall be entitled to
vote shares held in such fiduciary capacity without a transfer of
such shares into the name of such fiduciary. Shares standing in
the name of a receiver may be voted by such receiver. A
stockholder whose shares are pledged shall be entitled to vote
such shares, unless in the transfer by the pledgor on the books
of the corporation he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may
represent the stock and vote thereon.
Section 2.9 Treasury Stock. The corporation shall not
vote, directly or indirectly, shares of its own stock owned by
it; and such shares shall not be counted in determining the total
number of issued and outstanding shares for the purpose of
determining the presence of a quorum at any meeting of
stockholders.
Section 2.10 Fixing Record Date. In order that the
corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days
prior to any other action, for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any
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other lawful action. If the Board of Directors fix, in advance,
a record date as herein provided, then, in such case, such
stockholders, and only such stockholders, as shall be
stockholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, any such meeting or any
adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, as the case may be, notwithstanding any transfer
of any stock on the books of the corporation after any such
record date is fixed as aforesaid.
ARTICLE III
Board of Directors
Section 3.1 Powers. The business and affairs of the
corporation shall be managed by or under the direction of its
Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-
Laws directed or required to be exercised or done by the
stockholders.
Section 3.2 Number, Selection and Term. The number of
directors which shall constitute the whole Board shall from time
to time be fixed and determined by resolution adopted by the
Board of Directors, but in no event shall the number of Directors
be less than one. Each director's term of office shall expire at
the annual meeting of stockholders. At each annual election,
directors shall be chosen for a full term to serve until the next
annual meeting of stockholders. The number to be elected at any
meeting of stockholders shall be set forth in the notice of any
meeting of stockholders held for such purpose. Directors need
not be residents of Texas or stockholders of the corporation.
Section 3.3 Vacancies, Additional Directors and Removal
From Office. If any vacancy occurs in the Board of Directors
caused by death, resignation, retirement, disqualification or
removal from office of any director, or otherwise, or if any new
directorship is created by an increase in the authorized number
of directors, a majority of the directors then in office, though
less than a quorum, or a sole remaining director, may choose a
successor to fill such vacancy or the newly created directorship;
and a director so chosen shall hold office until the term of the
director whose vacancy is filled expires and until his successor
shall be duly elected and shall qualify, or until his earlier
death, resignation, retirement, disqualification or removal.
Except as otherwise provided by law, any director may be removed
from office, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors
at any special meeting of stockholders duly called and held for
such purpose.
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Section 3.4 Resignation. Any director may resign at any
time by written notice to-the corporation. Any such resignation
shall take effect at the date of receipt of such notice or at any
later time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective. Any director who does not, for
any reason whatsoever, stand for election at any meeting of
stockholders called for the purpose of election his class of
directors shall be conclusively deemed to have resigned,
effective as of the date of such meeting, for the purposes of
these By-Laws, and the corporation need not receive any written
notice to evidence such resignation.
Section 3.5 Regular Meeting. A regular meeting of the
Board of Directors shall be held each year, without notice other
than this By-Law, at the place of, and immediately following, the
annual meeting of stockholders; and other regular meetings of the
Board of Directors shall be held each year, at such time and
place as the Board of Directors may provide, by resolution,
either within or without the State of Texas, without other notice
than such resolution.
Section 3.6 Special Meeting. A special meeting of the
Board of Directors may be called by the President and shall be
called by the President or Secretary upon the written request of
two (2) directors. The person so calling any such meeting shall
fix the time and place, either within or without the State of
Texas, as the place for holding such meeting.
Section 3.7 Notice of Special Meeting. Written notice of
special meetings of the Board of Directors shall be given to each
director at least twenty-four (24) hours prior to the time of
such meeting. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a
meeting solely for the purpose of objecting to the transaction of
any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
purpose of, any special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting,
except that notice shall be given with respect to any matter to
be acted upon at such special meeting where notice is required by
statute.
Section 3.8 Quorum. A majority of the Board of Directors
shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and the act of a majority of
the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute, by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be
present at any meeting of the Board of Directors, a majority of
the directors present thereat, though less than a quorum, MAY
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
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Section 3.9 Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these By-Laws,
any action required or permitted to be taken at any meeting of
the Board of Directors, or of any committee thereof as provided
in Article IV of these By-Laws, may be taken without a meeting,
if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or
committee.
Section 3.10 Compensation. Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of
Directors or a fixed amount for each meeting or a stated salary
as director. No provision of these By-Laws shall be construed to
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV
Committee of Directors
Section 4.1 Designation, Powers and Name. The Board of
Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each such committee to
consist of two or more of the directors of the corporation. Such
committee shall have and may exercise such of the powers of the
Board of Directors in the management of the business and affairs
of the corporation as may be provided in such resolution;
provided, however, that no such committee shall have the power or
authority in reference to amending the Certificate of
Incorporation, adopting an agreement (,f merger or consolidation,
recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the By-
Laws of the corporation; and, provided further, that, unless the
resolution establishing such committee expressly so provides, no
such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock. The committee
may authorize the seal of the corporation to be affixed to all
papers which may require it. The Board of Directors may
designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at
any meeting.
Section 4.2 Minutes. Each committee of directors shall
keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
Section 4.3 Compensation. Members of special or standing
committees may be allowed compensation for attending committee
meetings, if the Board of Directors shall so determine.
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ARTICLE V
Notice
Section 5.1 Methods of Giving Notice. Whenever under the
provisions of any Certificate of Incorporation or these By-Laws
notice is required to be given to any director member of any
committee or stockholder, such notice shall be in writing and
delivered personally or mailed to such director, member or
stockholder; provided, however, that in the case of a director or
a member of any committee, such notice, unless required by
statute, the Certificate of Incorporation or these By-Laws to be
in writing, may be given by telegram. If mailed, notice to a
director, member of a committee or stockholder shall be deemed to
be given when deposited in the United States mail first class in
a sealed envelope, with postage thereon prepaid, addressed, in
the case of a stockholder, to the stockholder at the
stockholder's address as it appears on the records of the
corporation or, in the case of a director or a member of a
committee, to such person at his business address. If sent by
telegraph, notice, to a director or member of a committee shall
be deemed to be given when the telegram, so addressed, is
delivered to the telegraph company.
Section 5.2 Written Waiver. Whenever any notice is
required to be given under provisions of any statute, the
Certificate of Incorporation or these By-Laws, a waiver thereof
in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE VI
Officers
Section 6.1 Officers. The officers shall be a Chairman
of the Board, a President, one or more Vice Presidents (any one
or more of whom may be designated Executive Vice President or
Senior Vice President and any one of whom may also be designated
as the Chief Financial Officer), a Secretary and a Treasurer.
The Board of Directors may appoint a Chief Executive Officer, a
Chief Operating Officer, and such other officers and agents,
including Assistant Vice Presidents. Assistant Secretaries and
Assistant Treasurers, as it shall deem necessary, who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined by the Board. Any two
or more officers, other than the offices of President and
Secretary, may be held by the same person. No officer shall
execute, acknowledge, verify or countersign any instrument on
behalf of the corporation in more than one capacity, if such
instrument is required by law, by these By-Laws or by any act of
the corporation to be executed, acknowledged, verified or
countersigned by two or more officers. The Chairman of the
Board, Chief Executive Officer (if such, office be created by the
Board) and the President shall be elected from among the
directors. With the foregoing exceptions, none of the other
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officers need be a director, and none of the officers need be a
stockholder of the corporation.
Section 6.2 Election and Term of Office. The officers of
the corporation shall be elected annually by the Board of
Directors at its first regular meeting held after the annual
meeting of stockholders or as soon thereafter as conveniently
practicable. Each officer shall hold office until his successor
shall have been elected or appointed and shall have qualified or
until his death or the effective date of his resignation or
removal, or until he shall cease to be a director in the case of
the Chairman of the Board, Chief Executive Officer or the
President.
Section 6.3 Removal and Resignation. Any officer or
agent elected or appointed by the Board of Directors may be
removed without cause by the affirmative vote of a majority of
the Board of Directors whenever, in its judgment, the best
interests of the corporation shall be served thereby, but such
removal shall be without prejudice to the contractual rights, if
any, of the person so removed. Any officer may resign at any
time by giving written notice to the corporation. Any such
resignation shall take effect at the date of the receipt of such
notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6.4 Vacancies. Any vacancy occurring in any
office of the corporation by death, resignation, removal or
otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
Section 6.5 Salaries. The salaries of all officers and
agents of the corporation shall be fixed by the Board of
Directors or pursuant to its direction; and no officer shall be
prevented from receiving such salary by reason of his also being
a director.
Section 6.6 Chairman of the Board. The Chairman of the
Board (who may also hold the office of Chief Executive Officer,
if such office is created by the Board, President or other
offices) shall preside at all meetings of the Board of Directors
and of the stockholders of the corporation. In the Chairman's
absence, such duties shall be attended to by the President or
such other person as the Board shall designate. The Chairman
shall formulate and submit to the Board of Directors matters of
general policy for the corporation and shall perform such other
duties as usually appertain to the office and such other duties
as may be prescribed by the stockholders or the Board of
Directors from time to time. The Chairman of the Board may sign,
with the Secretary or any other officer of the corporation
thereunto authorized by the Board of Directors, certificates for
shares of the corporation and any deed, bonds, mortgages,
contracts, checks, notes, drafts or other instruments the issue
or execution of which shall have been authorized by resolution of
the Board of Directors, except in cases where the signing and
execution thereof has been expressly delegated by these
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By-Laws or by the Board of Directors to some other officer or
agent of the corporation, or shall be acquired by law to be
otherwise executed.
Section 6.7 President. In the absence of the Chairman of
the Board, or in the event of his inability or refusal to act,
the President shall preside at all meetings of the Board of
Directors and of the stockholders. The President may also
preside at any such meeting attended by the Chairman of the Board
if so designated by the Chairman. The President shall keep the
Board of Directors fully informed and shall consult them
concerning the business -of the corporation. The President may
sign, with the Secretary or any other officer of the corporation
thereunto authorized by the Board of Directors, certificates for
shares of the corporation and any deeds, bonds, mortgages,
contracts, checks, notes, drafts or other instruments the issue
or execution of which shall have been authorized by resolution of
the Board of Directors, except in cases where the signing and
execution thereof has been expressly delegated by these By-Laws
or by the Board of Directors to some other officer or agent of
the corporation, or shall be required by law to be otherwise
executed. The President shall vote, or give a proxy to any other
officer of the corporation to vote, all shares of stock of any
other corporation standing in the name of the corporation. In
general, the President shall perform all other duties normally
incident to or as usually appertain to the office of President
and such other duties as may be prescribed by the stockholders or
the Board of Directors from time to time.
Section 6.8 Chief Executive Officer; Chief Operating
Officer. The Board of Directors may create the offices of Chief
Executive Officer and Chief Operating Officer and may designate
either the Chairman of the Board or the President to fill either
or both such offices. If a Chief Executive Officer be so
designated, he shall perform such duties and exercise such powers
as usually appertain to such title and such other duties as may
be prescribed by the Board of Directors from time to time,
including, without limitation, the power to appoint and remove
subordinate officers, agents and employees, except that the Chief
Executive Officer may not remove those elected or appointed by
the Board of Directors. If a Chief Operating Officer shall be
designated, he shall perform such duties and exercise such powers
as usually appertain to such title and such other duties as may
be prescribed by the Board of Directors from time to time.
Section 6.9 Vice Presidents. The Vice Presidents in the
order of their seniority, unless otherwise determined by the
Board of Directors, shall, in the absence or disability of the
President, perform the duties and exercise the powers of the
President. They shall perform such other duties and have such
other powers as the Board of Directors may from time to time
prescribe.
Section 6.10 Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of the
stockholders and record
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all the proceedings of the meetings of the corporation and of the
Board of Directors in a book to be kept for that purpose and
shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose
supervision he shall be. He shall keep in safe custody the seal
of the corporation and, when authorized by the Board of
Directors, affix the same to any instrument requiring it and,
when so affixed, it shall be attested by his signature or by the
signing of the Treasurer or an Assistant Secretary.
Section 6.11 Assistant Secretaries. The Assistant
Secretaries in the order of their seniority, unless otherwise
determined by the Board of Directors, shall, in the absence or
disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.
Section 6.12 Treasurer. The Treasurer shall have the
custody of the corporate funds and-securities and shall keep full
and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the
Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the
President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of the
corporation. If required by the Board of Directors, he shall
give the corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the corporation.
Section 6.13 Assistant Treasurers. The Assistant
Treasurers in the order of their seniority, unless otherwise
determined by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. They shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.
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ARTICLE VII
Contracts, Checks and Deposits
Section 7.1 Contracts. Subject to the provisions of
Section 6.1, the Board of Directors may authorize any officer,
officers, agent or agents, to enter into any contract or execute
and deliver any instrument for and in the name of and on behalf
of the corporation, and such authority may be general or confined
to specific instances.
Section 7.2 Checks, etc. All checks, demands, drafts or
other orders for the payment of -money, notes or other evidences
of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers or such agent or agents of -
the corporation, and in such manner, as shall be determined by
the Board of Directors.
Section 7.3 Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may select.
ARTICLE VIII
Certificates of Stock
Section 8.1 Issuance. Each stockholder of this
corporation shall be entitled to a certificate or certificates
showing the number of shares of stock registered in such
stockholder's name on the books of the corporation. The
certificates shall be in such form as may be determined by the
Board of Directors, shall be issued in numerical order and shall
be entered in the books of the corporation as they are issued.
They shall exhibit the holder's name and number of shares and
shall be signed by the Chairman of the Board, the President or a
Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary. Any or all of the
signatures on the certificate may be a facsimile. If the
corporation shall be authorized to issue more than one class of
stock or more than one series of any class. the powers,
designations, preferences and relative, participating, optional
or other special rights or each class of stock or series thereof
and the qualifications, limitations or restrictions of such
preferences and rights shall be set forth in full or summarized
on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock; provided,
however, that, except as other provided by statute, in lieu of
the foregoing requirements, there may be set forth on the face or
back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who
so requests a copy of the powers, designations, preferences and
relative, participating, optional or other special rights of each
class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
All certificates surrendered to the corporation for
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transfer shall be canceled and no new certificate shall be issued
until the former certificate for a like number of shares shall
have been surrendered and canceled, except that in the case of a
lost, stolen destroyed or mutilated certificate a new one may be
issued therefor upon such terms and with such indemnity, if any,
to the corporation as the Board of Directors may prescribe. '
Certificates shall not be issued representing fractional shares
of stock.
Section 8.2 Lost Certificates. The corporation may issue
a new certificate or certificates in place of any certificate or
certificates theretofore issued by the corporation alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. The corporation may in
its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require or to give
the corporation a bond sufficient to indemnify it against any
claim that may be made against the corporation with respect to
the certificate or certificates alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
Section 8.3 Transfers. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made
only on the books of the corporation by the registered holder
thereof, or by such holder's attorney thereunto authorized by
power of attorney and filed with the Secretary of the corporation
or the transfer agent.
Section 8.4 Registered Stockholders. The corporation
shall entitled to treat the holder of record of any share or
shares of stock as the holder in fact thereof and, accordingly
shall not be bound recognize any equitable or other claim to or
interest in such share shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Texas.
ARTICLE IX
Dividends
Section 9.1 Declaration. Dividends upon the capital
stock of the corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in
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cash, in property or in shares of capital stock, subject to the
provisions of the Certificate of Incorporation.
Section 9.2 Reserve. Before payment of any dividend,
there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the Board of
Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies or for
equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interests of the
corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
Indemnification
Section 10.1 Third Party Actions. The corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a
director, trustee, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a
director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and
in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable
cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contenders or its
equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
Section 10.2 Derivative Actions. The corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment
in the corporation's favor by reason of the fact that such person
is or was a director, trustee, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) and
-13-
<PAGE>
amounts paid in settlement actually and reasonably incurred by
such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to amounts
paid in settlement the settlement of the suit or action was in
the best interests of the corporation; provided, however, that-no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable for gross negligence or willful misconduct in the
performance of such person's duty to the corporation unless and
only to the extent that, the court In which such action or suit
was brought shall determine upon application that, despite the
adjudication of such liability, but in view of all the
circumstances of the case, such person-is fairly and reasonably
entitled to indemnity for such expenses as such Court shall deem
proper. The termination of any action or suit by judgment or
settlement shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best
interests of the corporation.
Section 10.3 Successful Defense. To the extent that a
director, trustee, officer, employee-or agent of the corporation
has been successful on the merits or otherwise, in whole or in
part, in defense of any action, suit or proceeding referred to in
Sections 10. 1 and 10. 2. or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually incurred by such person in
connection therewith.
Section 10.4 Authorization. Any indemnification under
Sections 10.1 and 10.2 (unless so ordered by a Court) shall be
made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director,
trustee, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard
of conduct set forth above in Section 10.1 and 10.2. Such
determination shall be made (a) by the Board of Directors of the
corporation by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, by a
majority vote of directors who were not parties to such action,
suit or proceeding, or (c) by independent legal counsel (selected
by one or more of the directors, whether or not a quorum and
whether or not disinterested) in a written opinion, or (d) by the
stockholders. Anyone making such a determination under this
Section 10.4 may determine that a person has met the standard
therein set forth as to some claims, issues or matters but not as
to others, and may reasonably prorate amounts to be paid as
indemnification.
Section 10.5 Advances. Expenses incurred in defending a
civil or criminal action, suit or proceeding shall be paid by the
corporation, at any time or from time to time in advance of the
final disposition of such action, suit or proceeding as
authorized in the manner provided in
-14-
<PAGE>
Section 10.4 upon receipt of an undertaking by or on behalf of
the director, trustee, officer, employee or agent to repay such
amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in
this Article X.
Section 10.6 Non-Exclusivity. The indemnification
provided by this Article X shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any
law, By-Law, agreement, vote of stockholders of disinterested
directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be a director, trustee, officer, employee or agent and
shall inure to the benefit of their heirs, executors, and
administrators of such a person.
Section 10.7 Insurance. The corporation shall have the
power to purchase and maintain insurance on behalf of any person
who is or was a director, trustee, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against such person
and incurred by such person in any such capacity or arising out
of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such
liability.
Section 10.8 "Corporation" Defined. For purposes of this
Article X, references to the "corporation" shall include, in
addition to the corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its
directors, trustees, officers, employees or agents, so that any
person who is or was a director, trustee, officer, employee or
agent of such constituent corporation or of any entity a majority
of the voting stock of which is owned by such constituent
corporation, or is or was serving at the request of such
constituent corporation as a director, trustee, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under
the provisions of this Article X with respect to the resulting or
surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had
continued.
ARTICLE XI
Miscellaneous
Section 11.1 Seal. The corporate seal shall have
inscribed thereon the name of the corporation, and the word
"Texas" The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or otherwise reproduced.
-15-
<PAGE>
Section 11.2 Books. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside
the State of Texas at the offices of the corporation in such
state, or at such other place or places as may be designated from
time to time by the Board of Directors.
ARTICLE XII
Amendment
These By-Laws may be altered, amended, repealed at any
regular or special meeting of the Board of Directors, without
prior notice, by resolution adopted thereat.
-16-
<TABLE>
<CAPTION>
<S> <C> <C>
TTI INDUSTRIES INCORPORATED
COMMON STOCK INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS COMMON STOCK
NUMBER AUTHORIZED: 100,000,000 COMMON SHARES, $0.01 PAR VALUE SHARES
C-
SEE REVERSE FOR CERTAIN
DEFINITIONS
CUSIP 873951 10 6
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES, OF THE COMMON
STOCK $0.01 PAR VALUE EACH, OF
TTI Industries (hereinafter called the "Corporation") transferable only on the
books of the Corporation by the holder hereof, in person or by attorney, upon
surrender of this Certificate properly endorsed. This Certificate is not valid
until countersigned by the Transfer Agent.
IN WITNESS WHEREOF the Corporation has caused this Certificate to be
signed by the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile of the Corporation.
Dated:
/s/ Pierre Korsmoe /s/ Frank Harrison, Sr.
- ------------------------------------ ----------------------------------
Controller and Assistant Secretary President
[SEAL]
COUNTERSIGNED:
Corporate Stock Transfer, Inc.
TRANSFER AGENT AND REGISTRAR
BY:
Transfer Agent and Registrar Authorized Officer
</TABLE>
<PAGE>
TTI Industries Incorporated
<TABLE>
<S> <C>
1. Preferred
(a) In the event of liquidation of the Company for any reason, and
the Company's assets are available for distributions in accordance
with all applicable Federal and Texas Laws, the preferred shares shall
take preference over any common shares in such distribution on the
basis of each preferred share calculated @ $100 per share.
(b) The preferred shall be entitled to receive a preferential
dividend equal to 12.5% of each shares imputed value of $100 per share
before any dividends are distributed to the holders of the Company's
common shares. Such amounts shall be paid semi-annually based upon
the Company's Fiscal Year and can only be paid from Company earnings.
Preferential dividend shall be cumulative.
2. Convertibility.
Each preferred share may be converted into 100 shares of the Company's
Common Stock at any time by the Holder of record thereof, upon 30 days
written notice to the Company.
3. Redemption.
The Company may redeem the preferred shares at any time upon 45 days
written notice by certified or registered mail. Upon receipt of such
redemption notice, the holder of the preferred shares shall have 15
days during which to advise the Company of the Holder's election to
convert as per Clause #2 of these Preferences and Conditions. The
redemption price shall be $100 per share plus 10% bonus per 12 month
period since issuance plus any accumulated dividends.
4. Voting Rights.
1 vote per share.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT
MIN ACT -- Custodian
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right
under Uniform Gifts to Minors
of survivorship and not as
tenants in common
- --------------------------
(State)
Additional abbreviations may also be used though not in the above list.
For value received,___________________________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated,_______________________
X __________________________________
NOTICE: (SIGNATURE)
THE SIGNATURE(S) TO
THIS ASSIGNMENT MUST
CORRESPOND WITH THE
NAME(S) AS WRITTEN
UPON THE FACE OF THE
CERTIFICATE IN EVERY
PARTICULAR, WITHOUT
ALTERATION OR ENLARGE- X __________________________________
MENT OR ANY CHANGE (SIGNATURE)
WHATSOEVER.
THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS)
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM, PURSUANT TO S.E.C. RULE
17Ad-15.
------------------------------------
SIGNATURE(S) GUARANTEED BY:
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF TTI INDUSTRIES, INCORPORATED FOR THE YEAR ENDED AUGUST
31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 12
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12
<CURRENT-LIABILITIES> 22,848
<BONDS> 0
0
0
<COMMON> 40,328
<OTHER-SE> (63,164)
<TOTAL-LIABILITY-AND-EQUITY> 12
<SALES> 2,593
<TOTAL-REVENUES> 16,738
<CGS> 1,434
<TOTAL-COSTS> 1,434
<OTHER-EXPENSES> 227,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,338
<INCOME-PRETAX> (211,911)
<INCOME-TAX> 0
<INCOME-CONTINUING> (211,911)
<DISCONTINUED> (17,744)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (229,655)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
