UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 130R 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1999
[ ] 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
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(Exact name of small business issuer as specified in its charter)
Texas 75-1939021
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification 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)
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]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
4,169,414 as of June 30, 2000
Transitional Small Business Disclosure Format (Check One)
Yes ; No X
---- ----
<PAGE>
PART I.
Item 1. Financial Statements
TTI INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Consolidated Balance Sheets
November 30, 1999 (Unaudited), November 30, 1998 (Unaudited) and
August 31, 1999 (Audited)
<TABLE>
November 30 November 30 August 31
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
CURRENT
Cash $ 256 $ 138 $ 166
Advances receivable (affiliates) - 111,000 -
---------- ------------ ----------
Total current assets $ 256 $ 111,138 $ 166
INVESTMENT IN SUBSIDIARIES 5,000 - 5,000
---------- ----------- ----------
$ 5,256 $ 111,138 $ 5,166
========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 79,832 $ 16,986 $ 47,477
Notes payable and due to related parties 13,765 5,000 7,400
--------- ---------- ----------
Total current liabilities $ 93,597 $ 21,986 $ 54,877
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock ($1.00 par; 100,000,000
authorized; 1475, 2950, and 2950
issued and outstanding at November 30, 1998
and 1999 and August 31, 1999, respectively) 2,950 1,475 2,950
Common stock (100,000,000 shares
authorized, $.01 par, 4,068,401, 4,068,914 and
4,068,914 shares issued and outstanding
at November 30, 1998 and 1999 and
August 31, 1999, respectively) 42,128 41,628 42,128
Additional Paid-in Capital 1,382,928 1,142,023 1,342,928
Accumulated deficit (1,516,347) (1,095,974) (1,437,717)
Total Stockholders' Equity (88,341) 89,152 (49,711)
----------- ---------- ----------
$ 5,256 $ 11,138 $ 5,166
=========== ========== ==========
</TABLE>
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<PAGE>
TTI INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
Three months ended November 30
1999 1998
--------- ---------
REVENUES:
Sales -- --
Interest -- --
Total -- --
COST OF SALES $ 18,000 --
GENERAL AND ADMINISTRATIVE
Salaries (Allocated) $ 39,201 --
Interest and bank charges 10 71
Equipment rental 1,200 --
Computer lease 4,350 --
Office expense 981 --
Printing and reproduction 1,512 --
Professional fees 7,661 20,000
Insurance 782 --
Rent 1,881 --
Registration fees -- 1,669
Travel and related 3,152 --
Other Administrative Expenses -- 12
--------- ---------
Total General and Administrative 60,730 21,752
NET INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY ITEM (78,630) (21,752)
INCOME TAXES -- --
NET INCOME (LOSS) (78,630) (21,752)
PER SHARE DATA:
Net income (loss) per share -
basic ($.02) ($.01)
Net income (loss) per share -
diluted ($.01) ($.00)
Weighted Average shares
outstanding - basic 4,068,914 4,033,189
Weighted Average shares
outstanding - diluted 5,568,914 5,533,189
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<PAGE>
TTI INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Three months ended November 30
1999 1998
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from operations $ (78,630) $ (21,752)
Adjustments to reconcile income
(loss) from operations to cash
provided by (used in) operating
activities:
Depreciation and amortization -- --
Imputed officers' salaries -- --
Change in assets and
liabilities:
Increase in accounts
receivable - trade -- --
(Increase) decrease in
advances receivable -- (111,000)
Increase due to affiliates 6,365 --
Increase in accounts
payable and
accrued expenses 32,355 (862)
--------- ---------
Net cash flows used in operating
activities (39,910) (133,614)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of Preferred Stock net of
offering costs -- 132,640
Sale of Common Stock net of
offering costs -- 1,100
Sale of Common Stock option 40,000 --
--------- ---------
Net cash flows provided by investing
activities 40,000 133,740
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash flows provided by financing
activities
Increase (Decrease) in Cash 90 126
Cash, beginning of period 166 12
--------- ---------
Cash, end of period $ 256 $ 138
========= =========
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<PAGE>
TTI INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Consolidated Statements of Stockholders'
Equity (Capital Deficit)
Three Months Ended November 30, 1999 (Unaudited)
<TABLE>
Total
Preferred Stock Common Stock Stockholders
$1.00 Par Value $.01 Par Value Additional Equity
---------------- ---------------------- Paid-In Accumulated (Capital
Shares Amount Shares Amount Capital Deficit Deficit)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1999
(Adjusted) 2,950 2,950 4,068,914 $42,128 $1,342,928 ($1,437,717) ($49,711)
Sale of Common Stock
Option 40,000 40,000
Net Loss for Period (78,630) (78,630)
------ ------ --------- ------- ---------- ---------- ----------
Balance November 30, 2,950 $2,950 4,068,401 $42,128 $1,382,928 ($1,516,347) ($88,341)
1999 ====== ====== ========= ======= ========== ========== ==========
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements
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<PAGE>
TTI INDUSTRIES, INCORPORATED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
November 30, 1999
1. SUMMARY OF ACCOUNTING POLICIES
Unaudited Interim Financial Information
---------------------------------------
The financial statements as of November 30, 1999 and 1998
have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC")
and are unaudited. These statements are unaudited and, in the
opinion of management, include all adjustments (consisting of
normal recurring adjustments and accruals) necessary to present
fairly the results for the periods presented. The balance sheet
at August 31, 1999 has been derived from the audited financial
statements at that date. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been omitted pursuant to such SEC rules and regulations.
Operating results for the quarter ended November 30, 1999 are not
necessarily indicative of the results that may be expected for
the year ending August 31, 2000. These financial statements
should be read in conjunction with the audited financial
statements and the accompanying notes included in the Company's
Annual Report on Form 10-KSB for the year ended August 31, 1999.
Certain prior period balances have been reclassified to conform
to the current period presentation.
Nature of Business and Basis of Presentation
--------------------------------------------
The accompanying consolidated financial statements include
the accounts of TTI Industries, Inc. and its wholly-owned
subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation.
Business Combinations and Investments
-------------------------------------
For business combinations which have been accounted for
under the purchase method of accounting, the Company includes the
results of operations of the acquired business from the date of
acquisition. Net assets of the companies acquired are recorded
at their fair value at the date of acquisition. The excess of
the purchase price over the fair value of net assets acquired is
included in goodwill and other purchased intangibles in the
accompanying consolidated balance sheets.
Other investments, for which the Company does not have the
ability to exercise significant influence, are accounted for
under the cost method of accounting. Dividends and other
distributions of earnings from other investees, if any, are
included in income when declared. The Company periodically
evaluates the carrying value of its investments accounted for
under the cost method of accounting and as of November 30, 1999
such investments were recorded at the lower of cost or estimated
net realizable value.
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<PAGE>
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 discloser 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.
Revenue Recognition
-------------------
The Company recognizes revenue from sales, net of discounts
when services are rendered and products are shipped.
Reclassifications
-----------------
Certain consolidated financial statement amounts were
reclassified from the previously reported financial statements in
order to conform with current presentation.
Income Taxes
------------
Income taxes are provided for the tax effect 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 deducible when the
assets and liabilities are recovered or settled.
Product Development
-------------------
Product development expenses consist principally of
personnel and consultants, patents and cost of acquired products.
To date, all product development costs have been expensed as
incurred.
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
------------------
Basic EPS is computed by dividing net income (loss)
available for common shareholders, as well as other applicable
items in the Consolidated Statement of Loss, by the weighted
average number of common shares outstanding during the respective
periods. Diluted EPS gives effect to potential common shares
outstanding during the respective periods and related adjustments
to net income (loss) available for common shareholders and other
reportable items as applicable.
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<PAGE>
No potential common shares shall be included in the
computation of any diluted per share amount when a loss from
continuing operations exists, even if the entity reports net
income. Accordingly, earnings per share assuming dilution on the
face of the income statement reflects the same earnings per share
and weighted average shares outstanding as for the basic EPS.
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 payable to related party -
The carrying value of notes payable
to related party approximate fair
value because of the short-maturity
of those instruments.
New Accounting Standards
------------------------
In July 1998, the Financial Accounting Standards Board
(FASB) issued SFAS No. 133 "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging
activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the balance sheet and measure
those instruments at fair value. Management does not believe
this will have a material effect on the operations.
Implementation of this standard has recently been delayed by the
FASB for a 12-month period through the issuance of SFAS No. 137
"Accounting for Derivative Instruments and Hedging Activities -
deferral of the effective date of FASB Statement No. 133." The
Company will now adopt SFAS 133 as required for its first
quarterly filing of fiscal year 2001.
2. NOTES PAYABLE AND DUE TO RELATED PARTIES
Notes payable and due to related parties consist of $13,765
and $7,500 due AMJ at November 30, 1999 and August 31, 1999,
respectively.
3. TRANSACTIONS WITH RELATED PARTIES AND SUBSEQUENT EVENTS
During 1999 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 1999 and 1998. The SEC staff has
determined that the historical statement of operations should
reflect all costs of doing business. Accordingly, officers'
salaries for 1999 and 1998 were imputed. This expense is
reflected in the 1999 and 1998 statements of loss with an
increase to paid-in capital. In addition, certain other
operating expenses absorbed by related parties were charged to
expense and credited to additional paid in capital or accrued
expenses to be reimbursed.
Options Agreement with AMJ
--------------------------
In connection with the Company's Business Plan adopted in
January, 1999 (the "Business Plan"), on January 19, 1999 the
Company entered into an agreement (the "Option Agreement") with
AMJ which Agreement was amended on October 4, 1999. Pursuant to
the Agreement as originally executed, among other things, (1) the
Company acquired AMJ's rights
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<PAGE>
to use, manufacture and sell three separate 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 amended the Option Agreement
to eliminate the condition of subsequent pricing and to lengthen
the terms of the agreement to the life of existing and pending
patents and to provide for the Company's reimbursement of AMJ's
actual costs for the development of the products. On January 7,
2000, AMJ agreed to eliminate and cancel the reimbursement
provision of the Option Agreement.
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, or that the Option Agreement will have any ultimate
realizable value to the Company.
Assignment by AMJ
-----------------
In connection with the Business Plan, on January 19, 1999
AMJ and the Company entered into an Assignment Agreement (the
"Assignment") which was also amended on October 4, 1999.
Pursuant to the Assignment, 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 TurtleTM L.P. ("TTLP")
(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 2,000,000 shares of the
Company's common stock at $0.05 per share. Although the
Assignment was approved by the Company's Board of Directors, it
provided that it would not become effective until (1) 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, among other things, (1) TTLP, assigned
its rights to certain products to the Company, (ii) the Company
was granted until December 31, 2009, exclusive worldwide use of
the patent relating to certain products, and (ii) the Company was
granted the right to manufacture, market, sell and distribute
these products, all in exchange for a royalty payable to TTLP
equal to 5% of all related sales, but in no event less than
$100,000. On October 4, 1999 the Company and AMJ amended the
Assignment so that (a) AMJ would receive a cashless warrant to
acquire 2,000,000 shares of the Company's common stock
exercisable 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 these products
or that the Assignment will have any ultimate realizable value to
the Company or will result. in any revenue or income to the
Company.
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<PAGE>
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, purchase 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 $.0l per share; (ii) the Company agreed to
acquire 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. Speed Release has filed a registration
statement on May 1, 2000 with respect to such shares. Such
registration statement has not yet become effective.
4. INCOME TAXES
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
ability 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. During fiscal 1996 and 1998 there
were two separate significant changes in ownership, which limit
the availability of the net operating losses. The extent of the
limitation has not been determined.
The net deferred tax asset in the accompanying balance
sheets includes the following at:
Year ended August 31, 1999 .
---------------------------------------------
Deferred tax asset $ 293,000
Less valuation allowance (293,000)
Net deferred tax asset $ --
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The valuation allowance activity for the year ended August 31,
Year ended August 31, 1999
---------------------------------------------
Balance, beginning of year $ 169,000
Current year net operating
loss $ 124,000
Balance, end of year $ 293,000
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<PAGE>
5 . PREFERRED STOCK
The preferred stock has following features:
a. $ 100 par value
b. Preferred as to liquidation of assets
C. Carries a dividend rate of 12.5% per annum, payable
semi-annually
d. Voting rights of 1 vote per share
e. Convertible into 67 common shares upon 30 day notice
f. Redeemable at any time at par plus 10% plus accrued
dividends
6. STOCK PURCHASE WARRANTS
As part of the May 1, 1998 acquisition agreement, the
Company issued a 1.5 million Stock Purchase Warrant to AMJ for
$20,000. The value of these shares is consider de minimus. The
warrants are initially exercisable at $0.04445 per share and
expire May 6, 2000. The transaction resulted in a $20,000 credit
to additional paid-in capital.
On October 5, 1999, pursuant to a Stock Purchase and
Exchange Agreement by and among the Registrant, Speed Release
Lock Company ("Speed Release") and Steve Bedowitz ("Bedowitz"),
the Registrant issued to Steve Bedowitz an option purchase 165,000
shares of the Registrant's common stock at a purchase price of $.0l
per share exercisable upon 60 days prior written notice. The purchase
price for the option was $40,000. Each issuance was made in reliance on
Section 4(2) of the Securities Act of 1933 as transactions of an issuer
not involving a public offering.
7. 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.
8. SUPPLEMENTAL CASH FLOW INFORMATION
During the year ending August 31, 1999 there was no cash
paid for interest or income taxes, and $862 paid for Texas
franchise taxes.
9. 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 to the financial statements and below, the
Company 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 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.
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<PAGE>
Since May 1998, Management developed 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 1999 and
1998. The Company plans to operate as a holding company for
certain subsidiaries. One subsidiary Terminator Technologies,
Inc., was formed as a manufacturing and marketing subsidiary and
TermTex Corporation was formed as a research and development
subsidiary. In January 1999, the Company concluded the purchase
of the two subsidiary companies, Terminator Technologies, Inc.
and TermTex Corporation from AMJ, 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 Company's primary focus in the retail market
will be the production and sale of a series of pest control
products for the 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.
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 fiscal 2000 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.
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.
10. YEAR 2000 COMPLIANCE (UNAUDITED)
Like other companies, the Company could be adversely
affected if the computer systems the Company, its suppliers or
customers use do not properly process and calculate date-related
information and data from the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" or
"Y2K" issue. Additionally, this issue could impact non-computer
systems and devices such as production equipment, elevators, etc.
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<PAGE>
While the Company's project to assess and correct Y2K
related issues regarding the year 2000 has been completed, and
the Company has not experienced any significant Y2K related
events, interactions with other companies' systems make it
difficult to conclude there will not be future effects.
Consequently, at this time, management cannot provide assurances
that the Year 2000 issue will not have any impact on the
Company's future operations. Since January 11, 2000 through May
31, 2000, the Company has had no material impact from the Y2K
issue.
Item 2. Management's Discussion and Analysis or Plan of
Operation
General
-------
The Company conducted no operational revenue or income-
producing activities during the quarter ended November 30, 1999.
During the quarter ended November 30, 1999, the Company did
obtain private financing in the amount of $40,000 as the result
of the sale of an option to purchase 165,000 shares of common
stock ($.01 par value) at an exercise price of $0.01 per share.
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 safety. There can be no assurance that the Company
will be successful in this effort.
Liquidity and Capital Resources
-------------------------------
At November 30, 1999, the Company's principal sources of
liquidity consisted of $256 of cash compared to $138 of cash at
November 30, 1998, and $166 of cash at August 31, 1999. Working
capital at November 30, 1999 was ($93,311) compared to $89,152 at
November 30, 1998, and ($54,711) at August 31, 1999.
The Company obtained $40,000 from the private placement of
securities during the quarter ended November 30, 1999 and used
$39,910 in operating activities for the quarter ended
November 30, 1999, as compared to $133,614 for the quarter ended
November 30, 1998.
The Company made no capital acquisitions or improvement
expenditures during the quarter ended November 30, 1999
(similarly for the quarter ended November 30, 1998), but
anticipates a substantial increase in its capital needs
consistent with the implementation of the Company's Business Plan
when implemented. The Company believes that its current capital
will not be sufficient to meet its anticipated cash needs for the
next 12 months. However, any projections of future cash needs
and the cash flow are subject to substantial uncertainty. While
the Company intends to seek additional financing, there can be no
assurance that the Company will obtain financing necessary to
fully 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
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<PAGE>
amounts or on terms acceptable to the Company, if at all, in
order to implement its Business Plan.
Results of Operations
---------------------
The Company conducted no revenue producing activity in the
quarter ended November 30, 1999 and similarly conducted no
revenue producing activity for the quarter ended November 30,
1998 and the year ended August 31, 1999.
Other than continuing development of the Business Plan, the
Company had virtually had no operations during the quarter ended
November 30, 1999 and similarly, had no operations during the
quarter ended November 30, 1998.
Without revenue for the quarter ended November 30, 1999, the
Company incurred an operating loss of ($78,630) as compared to
an operating loss of ($21,752) for the comparable period in 1998.
The loss for the quarter ended November 30, 1999 was principally
the result of imputed salaries to officers in the amount of
$39,201 as compared to $0 for the quarter ended November 30, 1998
and cost of sales in the amount of $18,000 as compared to $0 for
the comparable period in 1998.
While the Company's Business Plan was adopted in January
1999, the Company does not have, and has not secured, the
financing to implement the Business Plan in any meaningful
manner. 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.
PART II
Item 2. Changes in Securities
On October 5, 1999, pursuant to a Stock Purchase and
Exchange Agreement by and among the Registrant, Speed Release
Lock Company ("Speed Release") and Steve Bedowitz ("Bedowitz"),
the Registrant issued to Steve Bedowitz an option purchase 165,000
shares of the Registrant's common stock at a purchase price of $.0l
per share exercisable upon 60 days prior written notice. The purchase
price for the option was $40,000. Each issuance was made in reliance on
Section 4(2) of the Securities Act of 1933 as transactions of an issuer
not involving a public offering.
Item 5. Other Information.
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
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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. Speed Release filed a registration
statement with respect to such shares on May 1, 2000. There can
be no assurance that the registration statement will become
effective.
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.
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
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<PAGE>
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 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, 1999, Speed Release had total assets of
$698,898 and a shareholders' deficit of ($913,318). For the
years ended December 31, 1999 and 1998, Speed Release had
revenues of $175,027 and $217,634, respectively, and operating
losses of ($827,849) and ($588,612), respectively. Speed
Release's net losses in 1999 were ($981,349), compared to
($697,359) during 1998.
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"Safe Harbor" Statement under the Private Securities Litigation
---------------------------------------------------------------
Reform Act of 1995
------------------
Forward-looking statements in this report, including without
limitation, statements relating to the adequacy of the Company's
resources and any anticipated changes in 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 and revenues, 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.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
No. Description
--- -----------
3.1(1) Articles of Incorporation of the Registrant.
3.2(1) Amendment to the Registrant's Articles of
Incorporation changing the name of the Registrant
from HAS Acquisition Company to HAS Oil & Gas,
Inc.
3.3(1) Amendment to the Registrant's Articles of
Incorporation changing the name of the Registrant
from HAS Oil & Gas, Inc. to Kinlaw Energy Partners
Corporation
3.4(1) Amendment to the Registrant's Articles of
Incorporation changing the name of the Registrant
from Kinlaw Energy Partners Corporation to
Environmental Plus, Inc.
3.5(1) Amendment to the Registrant's Articles of
Incorporation changing the name of the Registrant
to TTI Industries, Incorporated and effecting a 1-
for-10 reverse stock split of the Registrant's
Common Stock.
3.6(1) Amendment to Registrant's Articles of
Incorporation changing the name of the Registrant
from Environmental Plus, Inc. to TTI Industries,
Inc.
3.7(1) Bylaws of Registrant
4.1(1) Form of Common Stock Certificate of Registrant
10.1(1) Stock Purchase Agreement, dated as of January 15,
1998, by and among the Registrant, certain of its
shareholders and Terminator Technologies, Inc.
10.2(2) Option agreement, dated as of January 19, 1999, by
and between the Registrant and AMJ Resources
Corporation
10.3(2) Amendment to Option Agreement, dated as of October
4, 1999, by and between the Registrant and AMJ
Resources Corporation
10.4(2) Stock Purchase and Exchange Agreement, dated as of
October 5, 1999, and among the Registrant, Speed
Release Lock Company and Steve Bedowitz.
(schedules omitted)
27.1(3) Financial Data Schedule
_________________
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(1) Incorporated by reference from the Registrant's Form 10-KSB
for the period ended August 31, 1998.
(2) Incorporated by reference from the Registrant's Form 10-KSB
for the period ended August 31, 1999.
(3) Filed herewith.
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed by the Company during the
quarter ended November 30, 1999.
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SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TTI INDUSTRIES, INCORPORATED
December , 2000 /s/ JESUS H. MUNIZ
------------------- --------------------------------
Date Jesus H. "Chuy" Muniz, President
December 28, 2000 /s/ ALBERT J. MILLER
-------------------- --------------------------------
Date Albert J. Miller
Principal Accounting and Financial
Officer
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