FORM 10-Q.B.-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, 1997
[ ] 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 (IRS Employer Identification No.)
of 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
February 20, 1998, was:
No Par Value Common 22,016,411
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, 1997
UNAUDITED
ASSETS
Current Assets
Cash .......................................... $ 42,108
Accounts receivable - stockholder ............. 609
-----------
Total Current Assets .................. 42,717
Property and Equipment, at cost
Furniture and fixtures ........................ 8,058
Machinery ..................................... 8,362
Automotive .................................... 23,000
-----------
39,420
Less accumulated depreciation ................. (9,551)
-----------
Net property and equipment ............ 29,869
-----------
$ 72,586
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable .............................. $ 14,453
Note payable stockholder ...................... 112,000
Other accrued liabilities ..................... 26,406
-----------
Total Current Liabilities ............. 152,859
Stockholders' Equity
Common stock - no par value; authorized,
50,000,000 shares; issued and
outstanding, 22,016,411 shares ................ 1,305,695
Accumulated deficit ........................... (1,385,968)
-----------
(80,273)
$ 72,586
===========
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
1997 1996
------------ ------------
REVENUES
Gain on sale of assets ................ $ -- $ 163,314
Other income .......................... 859 3,090
------------ ------------
859 166,404
COSTS AND EXPENSES
General and administrative ............ 75,792 111,250
Outside services ...................... 11,713 8,933
Depreciation and amortization ......... 1,310 1,988
Interest .............................. 3,360 1,862
------------ ------------
92,175 124,033
------------ ------------
Earnings (loss) before income taxes ... (91,316) 42,371
Provision for income taxes ............ -- --
------------ ------------
Net earnings (loss) ................... $ ( 91,316) $ 42,371
============ ============
Weighted average common shares
outstanding (Note 2) .......... 21,852,498 18,316,846
============ ============
Net earnings (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
1997 1996
Cash flows from operating activities
Interest received ........................ $ 859 $ 3,090
Cash paid for suppliers and
subcontractors ........................ (74,892) (123,887)
Interest paid ............................ (3,360) (1,862)
--------- ---------
Net cash provided by (used in)
operating activities .................. (77,393) (122,659)
Cash flows from investing activities
Acquisition of property
and equipment ......................... (28,624) --
Cash flows from financing activities
Payments on borrowing .................... -- --
Proceeds from stockholder loan ........... -- 112,000
Proceeds from sale of common stock ....... 145,000 --
--------- ---------
145,000 112,000
Net increase (decrease) in cash .......... 38,983 (10,659)
--------- ---------
Cash at beginning of year ................ 3,125 272,714
--------- ---------
Cash at end of period .................... $ 42,108 $ 262,055
========= =========
Reconciliation of Net earnings (loss) to
Cash Provided by (used in)
Operating Activities
Net earnings (loss) ...................... $ (91,316) $ 42,371
Adjustments
Gain on sale of assets ................... -- (163,314)
Depreciation and amortization ............ 1,310 1,988
Changes in assets and liabilities
(Decrease) increase
in accounts payable .................. 11,914 (5,093)
Increase in interest payable ............. 3,360 518
(Decrease) increase in
accrued liabilities .................. (2,661) 871
--------- ---------
Net cash provided by (used in)
operating activities ................. $ (77,393) $(122,659)
========= =========
Noncash investing and financing activities:
During the three months ending October 31,1996 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, 1997
1) NOTES TO FINANCIAL STATEMENTS
The balance sheet at October 31, 1997, and the statements of operations and cash
flow for the three months ended October 31, 1997 and 1996 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, 1997. The results of
operations for the three months ended October 31, 1997 are not necessarily
indicative of operating results for the full year.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net earnings (loss) per common share is calculated using the weighted average
number of share outstanding during each period.
3) ISSUANCE OF COMMON STOCK
In March 1997, the Company exchanged 3,000,000 shares of its common stock for a
28.5% interest in ESA Recycling GMBH ("ESA"), an Austrian company. No investment
was recorded because the estimated fair value of the net assets of ESA at the
time of the exchange were nominal. ESA has no current operations but plans to
develop a tire recycling plant in Europe.
In August 1997 the company sold 580,000 shares of common stock for which it
received $145,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
During the three months ended October 31, 1997 and October 31, 1996, 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, 1997. As a result of these
activities by management general and administrative expenses decreased $35,458
to $75,792 and outside services increased $2,780 to $11,713 for the three months
ended October 31, 1997 as compared to the three months ended October 31, 1996.
Financial Condition
The Company's liquidity increased in the three months ended October 31, 1997 as
cash increased by $38,983 since July 31, 1997. Operations used $77,393 compared
to the same period of the prior year in which operations used $122,659. The
Company did not repay a note due September 24, 1997 and is in default of the
note. The Company is attempting to renegotiate the note. Pending renegotiation
of the note and based on the results of fiscal 1997 and its prospects for 1998,
management considers the Company's liquidity position adequate with funds
sufficient to meet its operating needs.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
1. The Company has filed suit against two individuals for fraud and/or negligent
misrepresentation seeking the return of approximately 2,264,000 shares of
company stock issued to these individuals for technology and license rights. One
of these individuals subsequently filed counterclaims against the Company. In
the opinion of management, the ultimate resolution of these matters will not
have a materially adverse effect on the Company's consolidated financial
position or consolidated results of operations; however, due to the uncertainty
of the matters, it is at least reasonably possible that management's view of the
outcome will change in the near future.
In the event the Company fails to renegotiate the note referenced above in Item
2, the company has substantial offset against the claimed indebtedness and is
prepared to litigate if there is no amicable resolution of this matter.
On February 12, 1998 the Company filed a lawsuit against a stockholder for
fraud, breach of contract, conversion, and breach of oral agreement in
connection with contracts and agreements for the sale and/or licensing of the
Company's recycling technology and certain geographic marketing rights and
raising capital funds for recycling plants in Europe. The suit seeks
compensatory and punitive damages in excess of $50,000 plus attorney fees. Due
to the early stage of this litigation, management cannot estimate the likelihood
or amount of a favorable verdict.
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
February 20, 1998 Ronald L. Wilder
-------------------------------------------------------
Ronald L. Wilder, President and Chief Executive Officer
February 20, 1998 Bruce R. Clark
--------------------------------------------------------
Bruce R. Clark, General Counsel, Chief Financial Officer
and Chief Accounting Officer
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