FORM 10-QSB-QUARTERLY OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly period ended October 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from to
Commission File Number: 0-25024
TITAN TECHNOLOGIES, INC.
(Exact name of small business issuer as
specified in its charter)
NEW MEXICO 85-0388759
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3206 Candelaria Road NE. Albuquerque, NM 87107
(Address of principal executive offices)
(505) 884-0272
(Issuer's telephone number)
N/A
(Former name, former address and former three-months, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [ X ] No [ ]
The number of shares of the registrant's common stock outstanding as of November
26, 1996, was:
No Par Value Common 18,236,411
Transitional Small Business Format: Yes [ ] No [X]
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Titan Technologies, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
October 31, 1996
UNAUDITED
ASSETS
Current Assets
Cash .................................................. $ 262,055
Accounts receivable - stockholder ..................... 609
-----------
Total Current Assets ............................. 262,664
Property and Equipment, at cost
Furniture and fixtures ................................ 5,737
Machinery ............................................. 2,738
-----------
8,475
Less accumulated depreciation ......................... (7,077)
-----------
Net property and equipment ....................... 1,398
$ 264,062
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note payable stockholder .............................. $ 112,000
Other accrued liabilities ............................. 4,702
-----------
Total Current Liabilities ........................ 116,702
Stockholders' Equity
Common stock - no par value; authorized,
50,000,000 shares; issued and
outstanding, 18,236,411 shares ........................ 1,160,694
Accumulated deficit ................................... (1,013,334)
-----------
147,360
-----------
$ 264,062
===========
The Accompanying notes Are An Integral Part of These Financial Statements
Titan Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended October 31
UNAUDITED
1996 1995
------------ ------------
REVENUES
Gain on sale of assets ................... $ 162,678 $ --
Other income ............................. 3,090 3,787
------------ ------------
165,768 3,787
COSTS AND EXPENSES
General and administrative ............... 111,250 65,188
Outside services ......................... 8,933 14,623
Depreciation and amortization ............ 1,352 3,365
Interest ................................. 1,862 1,107
------------ ------------
123,397 84,283
------------ ------------
Income (loss) before income taxes ........ 42,371 (80,496)
Provision for income taxes ............... -- --
------------ ------------
Net income (loss) ........................ $ 42,371 $ (80,496)
============ ============
Weighted average common shares
outstanding (Note 2) ................... 18,236,411 17,495,670
============ ============
Net income (loss) per common share .......... $ 0.00 $ 0.00
============ ============
The Accompanying notes Are An Integral Part of These Financial Statements
Titan Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended October 31
UNAUDITED
1996 1995
--------- ---------
Cash flows from operating activities
Interest received ................................. $ 3,090 $ 3,787
Cash paid for suppliers and subcontractors ........ (123,887) (77,358)
Interest paid ..................................... (1,862) (1,107)
--------- ---------
Net cash provided by (used in)
operating activities .............................. (122,659) (74,678)
Cash flows from Financing Activities
Payments on borrowing ............................. -- (893)
Proceeds from stockholder loan .................... 112,000 --
Proceeds from sale of common stock ................ -- 450,000
--------- ---------
112,000 449,107
Net increase (decrease) in cash ................... (10,659) 374,429
--------- ---------
Cash at beginning of year ......................... 272,714 169,493
--------- ---------
Cash at end of period ............................. $ 262,055 $ 543,922
========= =========
Reconciliation of Net earnings (loss) to
Cash Provided by (used in) Operating Activities
Net earnings (loss) ............................... $ 42,371 $ (80,496)
Adjustments
Gain on sale of assets ............................ (162,678) --
Depreciation and amortization ..................... 1,352 3,365
Changes in assets and liabilities
(Decrease) Increase
in accounts payable ............................. (5,093) 2,453
Increase in interest payable ...................... 518 --
Increase in accrued liabilities ................... 871 --
--------- ---------
Net cash provided by (used in)
operating activities ............................ $(122,659) $ (74,678)
========= =========
Noncash investing and financing activities:
Certain rights and patents with a net book value of approximately $75,000
were transferred to the developer in exchange for notes payable, accrued
interest and other liabilities to the developer totaling approximately
$238,000.
The Accompanying notes Are An Integral Part of These Financial Statements
Titan Technologies, Inc. and Subsidiaries
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended October 31, 1996
1) NOTES TO FINANCIAL STATEMENTS
The balance sheet at October 31, 1996, and the statements of operations and cash
flow for the three months ended October 31, 1996 and 1995 have been prepared
without audit. In the opinion of management, all adjustments, including normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows, have been made. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. It is suggested that these financial statements be read in conjunction
with the Company's audited financial statements at July 31, 1996. The results of
operations for the three months ended October 31, 1996 are not necessarily
indicative of operating results for the full year.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net income (loss) per common share is calculated using the weighted average
number of share outstanding during each period.
3) ISSUANCE OF COMMON STOCK
On October 3, 1995 the company sold 1,111,111 shares of common stock to Wolfgang
Reiger Gembh, for which it received $450,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
During the three months ended October 31, 1996 and October 31, 1995, the Company
had no licensing revenue. During the year ended July 31, 1996 the Company
granted tire recycling license rights for Europe, Australia, New Zealand and
South Africa to a company. The agreement requires the payment of licensee fees
of $1,500,000 to $2,500,000 to the Company for each plant constructed and
royalties of 3.5% of the gross sales price of by-products from the plants. No
plants are scheduled for construction at October 31, 1996. As a result of these
activities by management general and administrative expenses increased $47,312
to $112,500 and outside services decreased $5,690 to $8,933 for the three months
ended October 31, 1996 as compared to the three months ended October 31, 1995.
Financial Condition
The Company's liquidity decreased in the three months ended October 31, 1996 as
cash decreased by $10,619 since July 31, 1996. Operations used $ 122,659
compared to the same period of the prior year in which operations used $ 74,678.
Based on the results of fiscal 1996 and its prospects for 1997, management
considers the Company's liquidity position adequate with funds sufficient to
meet its operating needs.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The only legal proceedings to which the Company is a party or of which any of
its property is subject are pending or known to be contemplated is:
1. On September 12, 1994, in the Second Judicial District Court for Bernalillo
County New Mexico (Civil Action CV-94-7558), an individual sued Mr. Bruce Clark,
a Company officer and director, alleging damages to be proved at trial for
injuries sustained in an automobile accident involving an automobile driven by
Mr. Clark. The Company was also named as a defendant on the theory that at the
time of the accident Mr. Clark was acting within the scope of his employment by
the Company. The Company answered the Complaint and denied that Mr. Clark was
acting within the scope of his employment at the time of the accident. This
matter went to jury trial in August, 1996, and the jury found that Mr. Clark was
not acting within the scope of his employment and found that the Company was not
liable to the Plaintiff for any amount of money. The Judgement on Verdict was
not entered until October 11, 1996. The Plaintiff filed a notice of appeal but
the Company does not at this time know whether the appeal will be perfected.
2. On May 15, 1996, the Company filed an action in the United States District
Court for New Mexico (Civil Action 673-JP-LFG) against Floyd Wallace and Harold
Barrington alleging that certain technology purportedly developed by Mr. Wallace
which was acquired by the Company had, at the time of the sale to the Company,
been misrepresented. Mr. Wallace answered denying the allegations of the
Complaint and counterclaimed against the Company for breach of contract, an
accounting under the contract, and a prima facie tort resulting from a
stop-transfer instruction given by the Company to its transfer agent relating to
the stock given to Mr. Wallace as part of the consideration for his technology.
Mr. Barrington answered denying the allegations of the Complaint and
subsequently filed a separate action against the Company alleging breach of
contract and prima facie tort resulting from a stop-transfer instruction given
by the Company to its transfer agent relating to the stock given Mr. Barrington
as consideration for the Wallace technology (see below).
The litigation between the Company and the defendants has been settled by an
agreement through which the parties agreed to a mutual release and a dismissal
of all claims and the Company agreed to relinquish all claims it may have had to
the use of certain expired patent and catalytic regime developed by Mr. Wallace.
3. On September 15, 1996, Mr. Harold Barrington filed an action in the Second
Judicial District Court for Bernalillo County, New Mexico (Civil Action
CV-96-08824) alleging breach of contract and a prima facie tort resulting from a
stop-transfer instruction given by the Company to its transfer agent relating to
the stock given to Mr. Barrington as part of the consideration for the Wallace
technology. The Company has answered denying the allegations of the complaint.
The litigation between the Company and the defendants has been settled by an
agreement through which the parties agreed to a mutual release and a dismissal
of all claims and the Company agreed to relinquish all claims it may have had to
the use of certain expired patent and catalytic regime developed by Mr. Wallace.
4. On June 17, 1996, the Company filed an action in the Second Judicial District
Court for Bernalillo County, New Mexico (Civil Action CV-96-6134) against Robert
Aragon and Anne Trawicky for fraud or negligent misrepresentation by them at the
time they issued a license to Aegis Technologies, a Company subsidiary, in
exchange for Company shares. At the time the Company shares were issued to Mr.
Aragon and Ms. Trawicky they represented to the Company that a license
previously issued to Aegis Technologies was in full force and effect. Subsequent
to the issuance of the Company shares to them, they informed the Company that
the license had expired prior to the date that Aegis Technologies was acquired
by the Company. Aegis' only business at the time of its acquisition by the
company was the ownership of the license. The defendants have denied the
allegations of the complaint and Ms. Trawicky has filed a counterclaim against
the Company seeking the removal of a stop-transfer instruction given by the
Company to its transfer agent relating to Ms. Trawicky's shares.
No time has yet been set for discovery in this matter. It is anticipated
that unless the matters can be settled by a mutually agreed release, discovery
will take place during fiscal 1997 and trial will not occur until some time
thereafter.
The Company knows of no other legal proceedings pending or threatened, or
judgement against any director or officer of the Company in their capacity as
such.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS IN SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There are no exhibits required by Item 601 of Regulation S-K
(b) Reports on Form 8-K. State whether any reports on Form 8-K have been
filed during the quarter for which this report is filed, listing the items
reported, any financial statements filed, and the dates of any such reports.
NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TITAN TECHNOLOGIES, INC. AND SUBSIDIARIES
December 4, 1996 Ronald L. Wilder
------------------------------------------------
Ronald L. Wilder, President and Chief Executive Officer
December 4, 1996 Bruce R. Clark
-------------------------------------------------
Bruce R. Clark, General Counsel, Chief Financial Officer
and Chief Accounting Officer
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