UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 0-52415
TITANIUM GROUP LIMITED
(Exact name of registrant as specified in its charter)
British Virgin Islands (State or other jurisdiction of incorporation or organization) | Not Applicable (IRS Employer Identification No.) |
15/F, Kennedy Town Commercial Tower, 23 Belcher’s Street, Kennedy Town, Hong Kong
(Address of principal executive offices)(Zip Code)
(852) 3427 3177
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. [X]Yes[ ]No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).[ ]Yes[ ]No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer[ ] | Accelerated filer[ ] |
Non-accelerated filer[ ] | Smaller reporting company[X] |
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ]Yes [X] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 51,644,399 shares of Common Stock, $0.01 par value, as of May 15, 2009
TITANIUM GROUP LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Page | ||
Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008 | 3 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2009 and 2008 | 4-5 | |
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008 | 6 | |
Notes to Condensed Consolidated Financial Statements | 7-11 | |
2
TITANIUM GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
(Currency expressed in Hong Kong Dollars (“HK$”), except for number of shares)
March 31, | December 31, | |||||||||||
2009 | 2009 | 2008 | ||||||||||
ASSETS | US$ (Unaudited) | HK$ (Unaudited) | HK$ (Audited) | |||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 34,968 | $ | 272,750 | $ | 1,190,869 | ||||||
Restricted cash | 51,282 | 400,000 | 400,000 | |||||||||
Accounts receivable, net | 242,301 | 1,889,951 | 2,613,724 | |||||||||
Amount due from shareholder | 1,605 | 12,516 | - | |||||||||
Inventories | 8,470 | 66,067 | 38,001 | |||||||||
Deposits and other receivables | 60,032 | 468,249 | 287,928 | |||||||||
Total current assets | 398,658 | 3,109,533 | 4,530,522 | |||||||||
Non-current assets: | ||||||||||||
Plant and equipment | ||||||||||||
Cost | 612,087 | 4,774,277 | 4,774,277 | |||||||||
Less: accumulated depreciation | (330,000 | ) | (2,574,002 | ) | (2,343,817 | ) | ||||||
282,087 | 2,200,275 | 2,430,460 | ||||||||||
Intangible assets, net | 524,773 | 4,093,226 | 4,685,454 | |||||||||
Deferred tax assets | 87,633 | 683,534 | 683,534 | |||||||||
TOTAL ASSETS | $ | 1,293,151 | $ | 10,086,568 | $ | 12,329,970 | ||||||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 222,359 | $ | 1,734,390 | $ | 1,732,507 | ||||||
Deferred revenue | 6,775 | 52,846 | 57,650 | |||||||||
Income tax payable | 1,619 | 12,626 | 12,626 | |||||||||
Total current liabilities | 230,753 | 1,799,862 | 1,802,783 | |||||||||
Long-term liabilities: | ||||||||||||
Debenture payable | 1,338,409 | 10,439,593 | 10,320,066 | |||||||||
Warrants liability | 34,766 | 271,175 | 91,237 | |||||||||
Total long-term liabilities | 1,373,175 | 10,710,768 | 10,411,303 | |||||||||
Total liabilities | 1,603,928 | 12,510,630 | 12,214,086 | |||||||||
Commitments and contingencies | - | - | - | |||||||||
(Deficit) equity: | ||||||||||||
Titanium Group Limited stockholders’ (deficit) equity: | ||||||||||||
Common stock, US$0.01 (HK$0.078) par value, 100,000,000 shares authorized, 51,644,399 shares issued and outstanding | 516,444 | 4,028,263 | 4,028,263 | |||||||||
Additional paid-in capital | 876,354 | 6,835,562 | 6,835,562 | |||||||||
Accumulated other comprehensive loss | (7,185 | ) | (56,045 | ) | (27,316 | ) | ||||||
Accumulated deficit | (1,696,390 | ) | (13,231,842 | ) | (10,725,914 | ) | ||||||
Total Titanium Group Limited stockholders’ (deficit) equity | (310,777 | ) | (2,424,062 | ) | 110,595 | |||||||
Noncontrolling interests | - | - | 5,289 | |||||||||
Total (deficit) equity | (310,777 | ) | (2,424,062 | ) | 115,884 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | 1,293,151 | $ | 10,086,568 | $ | 12,329,970 |
See accompanying notes to condensed consolidated financial statements.
3
TITANIUM GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”), except for number of shares)
(Unaudited)
Three months ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
US$ | HK$ | HK$ | ||||||||||
REVENUE, NET | ||||||||||||
Projects | ||||||||||||
Products | $ | 155,343 | $ | 1,211,674 | $ | 1,449,763 | ||||||
Services | 31,319 | 244,289 | 2,367,692 | |||||||||
Total projects revenue | 186,662 | 1,455,963 | 3,817,455 | |||||||||
Maintenance services | 29,199 | 227,755 | 84,664 | |||||||||
Total revenue, net | 215,861 | 1,683,718 | 3,902,119 | |||||||||
COST OF REVENUE (inclusive of amortization) | ||||||||||||
Projects | ||||||||||||
Cost of products sold | 114,747 | 895,028 | 916,213 | |||||||||
Cost of services | 23,867 | 186,161 | 1,712,144 | |||||||||
138,614 | 1,081,189 | 2,628,357 | ||||||||||
Maintenance | ||||||||||||
Cost of services | 6,154 | 48,000 | 20,000 | |||||||||
Total cost of revenue | 144,768 | 1,129,189 | 2,648,357 | |||||||||
GROSS PROFIT | 71,093 | 554,529 | 1,253,762 | |||||||||
OPERATING EXPENSES | ||||||||||||
Impairment loss on intangible assets | 35,620 | 277,832 | - | |||||||||
Research and development expense | 82,694 | 645,013 | - | |||||||||
Selling, general and administrative | 208,309 | 1,624,812 | 2,937,506 | |||||||||
Total operating expenses | 326,623 | 2,547,657 | 2,937,506 | |||||||||
LOSS FROM OPERATIONS | (255,530 | ) | (1,993,128 | ) | (1,683,744 | ) | ||||||
OTHER INCOME (EXPENSE): | ||||||||||||
Government grant income | - | - | 42,267 | |||||||||
Interest income | - | - | 387 | |||||||||
Interest expense | (28,029 | ) | (218,624 | ) | (207,275 | ) | ||||||
Amortization on discount of convertible debenture | (15,324 | ) | (119,527 | ) | - | |||||||
(Loss) gain from change in fair value of warrant liability | (23,069 | ) | (299,465 | ) | 294,793 | |||||||
Total other (expense) income | (66,422 | ) | (518,089 | ) | 130,172 | |||||||
LOSS BEFORE INCOME TAX | (321,952 | ) | (2,511,217 | ) | (1,553,572 | ) | ||||||
Income tax benefit | - | - | - | |||||||||
NET LOSS | (321,952 | ) | (2,511,217 | ) | (1,553,572 | ) | ||||||
Less: net loss attributable to the noncontrolling interests | 678 | 5,289 | 16,464 | |||||||||
NET LOSS ATTRIBUTABLE TO TITANIUM GROUP LIMITED | $ | (321,274 | ) | $ | (2,505,928 | ) | $ | (1,537,108 | ) |
See accompanying notes to condensed consolidated financial statements.
4
TITANIUM GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(Currency expressed in Hong Kong Dollars (“HK$”), except for number of shares)
(Unaudited)
Three months ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
US$ | HK$ | HK$ | ||||||||||
NET LOSS | $ | (321,952 | ) | $ | (2,511,217 | ) | $ | (1,553,572 | ) | |||
Other comprehensive loss: | ||||||||||||
Foreign currency translation loss | (3,683 | ) | (28,729 | ) | (16,375 | ) | ||||||
COMPREHENSIVE LOSS | $ | (325,635 | ) | $ | (2,539,946 | ) | $ | (1,569,947 | ) | |||
Comprehensive loss attributable to the noncontrolling interests | 973 | 7,587 | 17,774 | |||||||||
Comprehensive loss attributable to Titanium Group Limited | $ | (324,662 | ) | $ | (2,532,359 | ) | $ | (1,552,173 | ) | |||
Net loss per common share attributable to Titanium Group Limited common – basic and diluted | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.03 | ) | |||
Weighted average shares outstanding – basic and diluted | 51,644,399 | 51,644,399 | 51,644,399 |
See accompanying notes to condensed consolidated financial statements.
5
TITANIUM GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
Three months ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
US$ | HK$ | HK$ | ||||||||||
Cash flow from operating activities: | ||||||||||||
Net loss attributable to Titanium Group Limited | $ | (321,274 | ) | $ | (2,505,928 | ) | $ | (1,537,108 | ) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||||
Depreciation and amortization | 69,818 | 544,581 | 756,162 | |||||||||
Impairment loss on intangible assets | 35,620 | 277,832 | - | |||||||||
Allowance for doubtful accounts | 29,658 | 231,330 | 99,566 | |||||||||
Noncontrolling interests | (973 | ) | (7,587 | ) | (17,774 | ) | ||||||
Stock issued for service rendered, non-cash | - | - | 81,037 | |||||||||
Loss (gain) from change in fair value of warrant liability | 38,393 | 299,465 | (294,793 | ) | ||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable | 63,134 | 492,443 | 4,695,218 | |||||||||
Amount due from shareholder | (1,605 | ) | (12,516 | ) | - | |||||||
Inventories | (3,598 | ) | (28,066 | ) | 667,704 | |||||||
Deposits and other receivable | (23,118 | ) | (180,321 | ) | 35,547 | |||||||
Accounts payable and accrued liabilities | 241 | 1,883 | (3,327,932 | ) | ||||||||
Deferred revenue | (616 | ) | (4,804 | ) | (76,867 | ) | ||||||
Net cash (used in) provided by operating activities | (114,320 | ) | (891,688 | ) | 1,080,760 | |||||||
Cash flows from investing activities: | ||||||||||||
Purchase of plant and equipment | - | - | (12,275 | ) | ||||||||
Payments relating to software development costs | - | - | (1,391,265 | ) | ||||||||
Net cash used in investing activities | - | - | (1,403,540 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Repayments on short-term bank loan | - | - | (26,347 | ) | ||||||||
Net decrease in bank overdraft | - | - | (438,237 | ) | ||||||||
Net cash used in financing activities | - | - | (464,584 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (3,388 | ) | (26,431 | ) | (15,065 | ) | ||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (117,708 | ) | (918,119 | ) | (802,429 | ) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 152,676 | 1,190,869 | 1,168,331 | |||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 34,968 | $ | 272,750 | $ | 365,902 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Cash paid for income taxes | $ | - | $ | - | $ | - | ||||||
Cash paid for interest | $ | - | $ | - | $ | 218,254 |
See accompanying notes to condensed consolidated financial statements
6
TITANIUM GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
NOTE 1 - GENERAL
Titanium Group Limited (the “Company” or “TTNUF”) was incorporated as an International Business Company with limited liability in the British Virgin Islands (“BVI”) under the International Business Companies Act (“IBC Act”) of the British Virgin Islands on May 17, 2004 and subsequently registered under the BVI Business Companies Act (“BVIBC Act”) on January 1, 2007 when the IBC Act was repealed and replaced with the BVIBC Act. The Company, through its subsidiary companies, Titanium Technology Limited and Titanium Technology (Shenzhen) Co., Ltd., mainly focus in the development of advanced biometric technology and installation and implement of advanced facial based biometric identification and security projects for law enforcement, mass transportation, and other government and private sector customers.
The accompanying financial statements present the financial position and results of operations of the Company and its subsidiary companies, Titanium Technology Limited and Titanium Technology (Shenzhen) Co., Ltd., Titanium REID Limited and Titanium Biometrics Limited (collectively known as the “Group”). The Group’s functional currency is Hong Kong Dollars (“HK$”).
NOTE 2 – BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the consolidated balance sheet as of December 31, 2008 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended March 31, 2009 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2009 or for any future period.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2008.
NOTE 3 – GOING CONCERN UNCERTAINTIES
These condensed consolidated financial statements have been prepared assuming that the Group will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As of March 31, 2009, the Group had incurred a net loss of HK$2,505,928 and an accumulated deficit of HK$13,231,842. Additionally, the Group has incurred substantive losses over the past several years and has a capital deficit of HK$2,424,062. Management has taken certain action and continues to implement changes designed to improve the Group’s financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies, including rapid promotion and marketing the new products in the People’s Republic of China (the “PRC”). Management believes that these actions will enable the Group to improve future profitability and cash flow in its continuing operations through March 31, 2010. As a result, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the Group’s ability to continue as a going concern.
7
TITANIUM GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
NOTE 4 – RECENT ACCOUNTING PRONOUNCEMENTS
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
In December 2007, the FASB issued a revision to SFAS No. 141, “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) revises the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will be required to recognize the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. Specifically, SFAS No. 141(R) will change the accounting for acquisition costs, noncontrolling interests, acquired contingent liabilities, restructuring costs associated with a combination and certain tax-related items, as well as require additional disclosures. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company is required to apply SFAS No. 141(R) to any acquisitions in 2009 or thereafter.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for noncontrolling interests in subsidiaries. This statement requires the reporting of all noncontrolling interests as a separate component of stockholders’ equity, the reporting of consolidated net income (loss) as the amount attributable to both the parent and the noncontrolling interests and the separate disclosure of net income (loss) attributable to the parent and to the noncontrolling interests. In addition, this statement provides accounting and reporting guidance related to changes in noncontrolling ownership interests. Other than the reporting requirements described above which require retrospective application, the provisions of SFAS No. 160 are to be applied prospectively in the first annual reporting period beginning on or after December 15, 2008. The Company’s adoption of SFAS No. 160 on January 1, 2009 did not have an impact on its consolidated results of operations or financial position.
In December 2008, the FASB issued Staff Position (“FSP”) No. 140-4 and FIN 46(R)-8, “Disclosures by Public Entities about Transfers of Financial Assets and Interests in Variable Interest Entities”. The purpose of this FSP is to promptly increase disclosures by public entities and enterprises until the pending amendments to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, (“SFAS No. 140”) and FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”, (“FIN 46(R)”) are finalized and approved by the FASB. The FSP is effective for reporting periods (interim and annual) ending after December 15, 2008. This adoption did not have any impact on the consolidated financial statements.
On January 12, 2009, the FASB issued FSP EITF 99-20-01, “Amendment to the Impairment Guidance of EITF Issue No. 99-20”. This FSP amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to be Held by a Transferor in Securitized Financial Assets,” to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The FSP also retains and emphasizes the objective of an other-than-temporary impairment assessment and the related disclosure requirements in SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and other related guidance. The FSP is shall be effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. Retrospective application to a prior interim or annual reporting period is not permitted. The Company does not believe this pronouncement will impact its financial statements.
NOTE 5 – PER SHARE INFORMATION
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Group. For the period ended March 31, 2009, outstanding
8
TITANIUM GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
warrants to purchase 3,000,000 shares of common stock of the Group which were issued in connection with the prior sale of common stock expired on June 30, 2008 and, hence, do not have any dilutive effect.
During the three months ended March 31, 2009, the Group did not grant any stock options to employees, directors and consultants. The effect of outstanding stock options which could result in the issuance of 4,625,000 shares of common stock as of March 31, 2009 is anti-dilutive. As a result, diluted loss per share data does not include the assumed exercise of outstanding stock options and has been presented jointly with basic loss per share.
NOTE 6 – INCOME TAXES
The Group accounts for income tax using SFAS No. 109 “Accounting for Income Taxes”, which requires the asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred income taxes are provided for the estimated future tax effects attributable to temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefits from loss carry-forwards and provisions, if any. Deferred tax assets and liabilities are measured using the enacted tax rates expected in the years of recovery or reversal and the effect from a change in tax rates is recognized in the statements of operations in the period of enactment. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.
The Group also adopts the provisions of the Financial Accounting Standards Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The adoption of FIN 48 did not have a significant impact on the Group’s consolidated financial statements.
For the three months ended March 31, 2009, the Group and its subsidiaries incurred net operating losses of approximately HK$2,511,217 for income tax purposes and no provision for income taxes is required.
As of March 31, 2009, the Group recognized a deferred tax asset of approximately HK$683,534, primarily relating to the aggregate cumulative tax losses of HK$9,941,543 for Hong Kong subsidiaries and HK$2,750,339 for PRC subsidiary are available to be carried forward to offset future taxable income and tax loss from the PRC subsidiary will begin to expire in 5 years from the year of incurrence, if unutilized. The deferred tax assets consists mainly of tax losses from differing tax regimes and for which a valuation allowance of HK$1,648,621 has been provided for the period ended March 31, 2009, as the management believes it is more likely than not that these assets will not be realized in the future.
NOTE 7 – CONVERTIBLE DEBENTURE
On April 3, 2007, the Company entered into a Securities Purchase Agreement (the “Agreement”) with several accredited investors (“the Investors”). In accordance with the Agreement, the Investors agreed to purchase in the aggregate, HK$11,310,000 (US$1,450,000) principal amount of Series A 8% Senior Convertible Debentures (“the Debenture”).
The Debenture has the following material terms:
• | Interest at 8% per annum, payable quarterly on January 1, April 1, July 1 and October 1 beginning July 1, 2007 in cash or in shares at the option of the Company, with the shares to be registered pursuant to an effective registration statement and priced at the lesser of (a) US$0.30 or (b) 90% of the volume-weighted average price for the 10 consecutive trading days immediately prior to payment; |
• | Maturity date of 36 months; |
9
TITANIUM GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
• | Convertible at any time by the holders into shares of the Company’s common stock at a price equal to US$0.30; |
• | Convertible at the option of the Company as long as there is an effective registration statement covering the shares underlying the debentures and the closing bid price of the Company’s common stock is at least US$0.75 per share; |
• | Redeemable at the option of the Company at 120% of face value, as long as there is an effective registration statement covering the shares underlying the debentures; and |
• | Anti-dilution protections to allow adjustments to the conversion price of the debentures in the event the Company sells or issues shares at a price less than the conversion price of the debentures. |
• | The holders of the Debenture and Warrants have registration rights that require the Company to file a registration statement with the Securities and Exchange Commission to register the resale of the common stock issuable upon conversion of the Debenture or the exercise of the Warrants. |
In connection with the Financing, on the same date, the Company issued warrants to investors that are exercisable for up to 4,833,333 shares of common stock of the Company with an exercise price of US$0.50 per share. The warrants are exercisable for a five-year period commencing on April 3, 2007. The Company also paid a placement fee of HK$1,131,000 (US$145,000) and issued warrants to the placement agents entitling the holders to purchase an aggregate of 483,333 shares of common stock of the Company at an exercise price of US$0.315 per share in a warrant life of seven years.
Proceeds of the financing are used for working capital and for the further development of the Company’s proprietary technology.
On April 3, 2007, the Company received HK$9,555,000 (US$1,225,000), net of expenses in relation to issuance of the Debenture of HK$1,755,000 (US$225,000) after all the closing conditions were satisfied.
The debentures were discounted for the fair value of warrants, pursuant to APB 14 “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”. The debentures were further discounted for the intrinsic value of the beneficial conversion feature, pursuant to EITF 98-5 “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios”. The discount is being amortized over the life of the debentures. For the periods ended March 31, 2009 and 2008, the Company recorded (HK$179,938 (US$23,069)) and HK$294,793 (US$37,794), respectively, as (loss) gain from change in warrant liability in the statements of operations.
As of March 31, 2009, the fair value of the warrants of HK$271,175 (US$34,766) was recorded as warrants liability in the balance sheet, as determined by the Company using the Black-Scholes option pricing model under the following assumptions:
Risk-free interest rate (%) | 4.46 |
Expected dividend yield (%) | 0 |
Expected term in years (years) | 3 |
Expected volatility (%) | 100.4 |
NOTE 8 – SEGMENT INFORMATION
The Company considers its business activities to constitute one single segment. The Group’s chief operating decision makers use consolidated results to make operating and strategic decisions. The geographic distribution of the Group’s customers is:
l Hong Kong, including the government and commercial sectors; and
l The PRC, mainly the government agencies, financial institutions and commercial sectors.
10
TITANIUM GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in Hong Kong Dollars (“HK$”))
(Unaudited)
An analysis of the Group’s long-lived assets and revenues by region are as follows:
As of | ||||||||
March 31, 2009 | December 31, 2008 | |||||||
HK$ | HK$ | |||||||
Long-lived assets: | ||||||||
- Hong Kong | $ | 6,259,671 | $ | 7,078,634 | ||||
- The PRC | 33,830 | 37,280 | ||||||
$ | 6,293,501 | $ | 7,115,914 |
Three months ended March 31, | ||||||||
2009 | 2008 | |||||||
HK$ | HK$ | |||||||
Revenue: | ||||||||
- Hong Kong | $ | 1,621,709 | $ | 3,862,209 | ||||
- The PRC | 62,009 | 39,910 | ||||||
$ | 1,683,718 | $ | 3,902,119 |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
(a) Operating lease commitments
The Company rented office space under non-cancelable operating lease agreements which run for a term of 1 to 3 years, with fixed monthly rentals, expiring in various years through May 2011. Costs incurred under these operating leases are recorded as rental expense and totaled approximately $113,337 and $101,830 for the periods ended March 31, 2009 and 2008, respectively.
As of March 31, 2009, future minimum annual operating lease payments are as follows:
Period ending March 31, | ||||
2010 | $ | 317,849 | ||
2011 | 303,996 | |||
2012 | 21,111 | |||
Total | $ | 642,956 |
(b) Capital commitments
In December 2008, the Company established a joint venture company, Titanium Biometrics Limited with 51% of equity interest in Hong Kong. This joint venture company will engage in the promotion and marketing of biometrics face recognition access control and time attendance systems in Mainland China. Total estimated investment costs are approximately HK$1,906,500. As of March 31, 2009, the Group is committed to make a contingent payment of HK$972,315 to the joint venture company for the working capital purpose.
NOTE 10 – COMPARATIVE FIGURES
Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation.
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview
As Titanium Technology is a software development company, it earns revenues primarily through license sales of its products, which utilize the proprietary technology it develops. Development of the technology requires a significant outlay of cash before a viable product is developed that utilizes the technology. After development of a product, even more cash is required to market the product before any revenues are realized. Accordingly, the challenge that faces many software development companies is being able to obtain enough cash to fund research and development and marketing expenses and sustain the company until revenues are generated. Such funds are needed fairly quickly after products are developed, as the environment in which the products are used is constantly changing. Companies face the risk of discovering that their products do not meet the needs of the potential customers or are technologically outdated after a marketing campaign is launched. If that happens, the research and development costs are never recouped.
While we have been able to develop proprietary products mainly based on proceeds from sales revenues and from subsidy income received from the Hong Kong government, we believe that external funding from investors can stimulate and accelerate product development and marketing for a number of reasons. First, the company has now achieved a certain amount of recognition in the biometrics industry, especially in Hong Kong and the surrounding region. It has also established several important marketing channels, most notably a sole distributor in Japan who brought along opportunities and major customers such as the NTT Group. Second, there is increased awareness in the personal security area in which biometric technologies are some of the most commonly used applications. We expect the global market size to grow due to concerns about identity theft and security. Third, we have developed a technology within the past year that we believe can be utilized in a one-to-many application. Based on this developed technology, management believes that the company should try to market its products and services in areas outside of Asia and compete in a larger market.
We raised net proceeds of US$517,425 (HK$4,035,915) through a private placement of securities during the third quarter of 2005. These proceeds have been used to provide the funds necessary to implement the next step in our business plan, which was becoming a publicly-held company in the United States. Our common stock commenced trading on the OTC Bulletin Board in July 2006 under the symbol “TTNUF.” Funds were used for legal, accounting, and corporate consulting services and working capital. We believe that by becoming a publicly-held company, we will enhance the visibility of our products and services and our ability to obtain additional financing in the future.
We obtained financing resulting in net proceeds of US$1,225,000 (HK$9,555,000) in April 2007. These proceeds have been used for working capital and for the further development of our proprietary technology.
In September 2007, we set up a Hong Kong joint venture, Titanium RFID Limited, in which we hold a 51% interest. This joint venture will engage in the development and marketing of radio frequency identification (RFID) solutions to complement our core biometric technology. In December 2008, we set up a Hong Kong joint venture, Titanium Biometrics Limited, in which we hold a 51% interest. This joint venture will engage in the promotion and marketing of biometrics face recognition access control and time attendance systems in Mainland China.
Critical Accounting Policies
Intangible assets. Intangible assets include (1) patent and license right registration fees and (2) product development costs.
PATENT AND LICENSE RIGHT REGISTRATION FEES. Patent and license right registration fees represents the software licenses and patent costs paid to third parties and is amortized using the straight-line method over their estimated useful lives of 20 years.
PRODUCT DEVELOPMENT COSTS. We account for developments costs related to software products to be sold, leased or otherwise marketed in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 86 “Accounting for the Costs of computer Software to be Sold, Leased, or Otherwise Marketed” (“SFAS No. 86”), Software development costs are expensed as incurred until technological feasibility has been established, at which time such costs are capitalized until the product is available for general release to customers. Costs that are
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capitalized include direct labor and related overhead. These capitalized costs are subject to an ongoing assessment of recoverability based on anticipated future revenues and changes in hardware and software technologies. For the period ended March 31, 2009, we do not incur any capitalized product development costs.
Amortization of capitalized software development costs begins when the product is available for general release to customers. Amortization is computed by the straight-line method over the estimated economic life of the products, ranging from 4 to 5 years.
In prior years, we developed our products, namely ProAccess and ProFacer, under the subsidy assistance program from the Government of the Hong Kong Special Administrative Region (“HKSAR”) in developing the innovative products. Pursuant to such program, HKSAR was required to provide funding to us for our product development, which was available up to the aggregate amount of US$256,410 (HK$2,000,000) in accordance with the milestones of the product development plan. We received such grant of an aggregate of US$244,864 (HK$1,909,938) and were not subject to any repayment. However, we were required to contribute approximately 50% of the overall project cost in accordance with the grant agreement. When the project was completed, we tendered to the Government its pro rata share of the residual funds remaining in the project account. In addition we were obligated to pay the Government a royalty fee of 5% on the gross revenue earned from any activities in connection with the project, up to an aggregate amount equal to the amount subsidized to us.
Upon the completion, the ownership of the intellectual property resulting from the project was vested in us. The royalty fee paid by us for the period ended March 31, 2009 and 2008 amounted to US$3 (HK$20) and US$3,105 (HK$24,220), respectively. As of March 31, 2009, we have an unpaid royalty fee against the subsidy grant totaling US$215,444 (HK$1,680,459).
Impairment of long-lived assets. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” all long-lived assets such as plant and equipment and intangible assets held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment in the carrying value of an asset group is recognized whenever anticipated future undiscounted cash flows from an asset group are estimated to be less than its carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. We reviewed our impairment test on certain intangible assets such as patents and trademarks and concluded that the decline in expected future benefits from certain software products of ProFacer items was sufficient to result in an impairment loss of US$35,620 (HK$277,832).
Revenue recognition. We generate revenues principally from contracts for facial-based biometric identification and security projects, which typically include outside purchased workstations and live-scan devices, bundled with our proprietary software. In all cases, the customers are granted a license to use the software in perpetuity so long as the software is installed on the hardware for which it was originally intended. The contract price of our facial-based biometric identification and security projects generally includes twelve months of free post-contract customer support. We also generate revenues from services performed under fixed-price and time-and-material agreements. To a lesser extent, we also generate revenues from sales of our proprietary biometrics products and re-sales of products sourced from outside third parties. We classify the revenues generated by these activities as either project products revenue, project services revenue, or maintenance services revenue. Maintenance services are what the customer purchases if support and software upgrades are desired after the free twelve-month period.
In accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition,” we recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.
We also apply the provisions of Statement of Position (“SOP”) 97-2, “Software Revenue Recognition,” as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” For arrangements that require significant production, modification, or customization of software, we apply the provisions of Accounting Research Bulletin (“ARB”) No. 45, “Long-Term Construction-Type Contracts,” and SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts.” We also consider the guidance of the Emerging Issues Task Force (“EITF”) Topic 00-21, “Revenue Arrangements with Multiple Deliverables” with respect to the recognition of revenue from the sale of hardware components (separate accounting units) of a multiple deliverable arrangement. While these statements govern the basis for revenue recognition, significant judgment and the use of estimates are required in connection with the determination of the amount of product, maintenance and service revenue as well as the amount of deferred revenue to be recognized in
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each accounting period. Material differences may result in the amount and timing of our revenue for any period if actual results differ from management’s judgment or estimates.
PRODUCTS REVENUE. The timing of product revenue recognition is dependent on the nature of the product sold. Product arrangements comprising multiple deliverables including software, hardware, professional services, and maintenance are generally categorized into one of the following:
· | Facial-based biometric identification and security projects that do not require significant modification or customization of our software: Revenue associated with these arrangements, exclusive of amounts allocated to maintenance, for which we have vendor-specific objective evidence of fair value (“VSOE”), is recognized upon installation and receipt of written acceptance of the project by the customer when required by the provisions of the contract, provided that all other criteria for revenue recognition have been met. Revenue resulting from arrangements for which VSOE of the maintenance element does not exist is recognized ratably over the maintenance period. To date, we have not made an allocation of contract revenue to separate accounting units since all of the products have been delivered simultaneously and no deferral of revenue would result. |
· | Facial-based biometric identification and security projects that require significant modification or customization of our software: Revenue associated with these arrangements is recognized using the percentage of completion method as described by SOP 81-1. The percentage of completion method reflects the portion of the anticipated contract revenue, excluding maintenance that has VSOE, which has been earned, equal to the ratio of labor effort expended to date to the anticipated final labor effort, based on current estimates of total labor effort necessary to complete the project. Revenue resulting from arrangements for which VSOE of the maintenance element does not exist is recognized ratably over the contractual maintenance period. |
· | Self-developed software products sales and re-sale of purchased third parties products: Revenue associated with the sale of these products, excluding maintenance when applicable, is recognized upon shipment to the customer. The amount of these revenues has historically not been significant. |
· | Sales to authorized distributors: We also use authorized distributors to sell certain of our products and only the authorized distributors are allowed to resell those products. We require the authorized distributors to purchase the products and then sell through the authorized distributors’ own distribution channels to the end customers. From our perspective, the authorized distributors are the ordinary customers and the only preferential treatment to them is that the sales prices to distributors have been predetermined in accordance with the distribution agreements, and are approximately 30% to 40% off the recommended retail prices. Once the products are delivered and the distributor has accepted the products, we bill the distributor and the distributor is obligated to settle the bill accordingly within the credit period granted. There is no right of return or other incentives given to the distributors. We are not required to provide training to authorized distributors. |
SERVICES REVENUE. Services revenue is primarily derived from computer engineering services, system design, consulting and integration and maintenance services that are not an element of an arrangement for the sale of products. These services are generally billed on a time and materials basis. The majority of our professional services are performed under time-and-materials arrangements. Revenue from such services is recognized as the services are provided.
MAINTENANCE SERVICES REVENUE. Maintenance revenue consists of fees for providing technical support and software updates, primarily to customers purchasing the primary products. We recognize all maintenance revenue ratably over the applicable maintenance period. We determine the amount of maintenance revenue to be deferred through reference to substantive maintenance renewal provisions contained in the arrangement.
INTEREST INCOME. Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.
Foreign currency translation. The consolidated financial statements are expressed in Hong Kong dollars (“HK$”). The translations of HK$ amounts into the United States dollar (“US”) are for the convenience of readers in the United States of America only and have been made at the rate of HK$7.8 to US$1, the approximate free rate of exchange at December 31, 2008 and 2007. Such translations should not be construed as representations that the HK$ amounts could be converted into US$ at that rate or any other rate.
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Results of Operations
Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008. For the three months ended March 31, 2009, projects revenues decreased by US$302,755 (HK$2,361,492) (62%) over the same period in 2008. The decrease of projects revenues was attributed primarily to the reduction of provision of services rendered as the Company’s new strategy is to focus on sales of its own proprietary products.
Our cost of projects as a percentage of projects revenues was 74% for 2009 as compared to 69% for 2008. The increase was attributed to a decrease in price of the projects.
We recognized an impairment loss on intangible assets of US$35,620 (HK$277,832) during the 2009 period as a result of the phasing out of our old product “ProFacer”. There was no impairment loss in 2008.
During the 2009 quarter, we incurred US$82,694 (HK$645,013) of research and development expenses, compared to none in 2008.
Selling, general, and administrative expenses decreased by US$168,294 (HK$1,312,694) (45%) in 2009 as compared to 2008 due mainly to a reduction in: (i) management fee of US$38,462 (HK$300,000), (ii) preliminary expense of US$64,103 (HK$500,000), which represents the business development costs relating to its product, "e-Guard" in the PRC, (iii) salaries of US$34,508 (HK$269,162) and (iv) professional fees of US$24,340 (HK$189,855).
As a result of the decreased revenues and impairment loss, our loss from operations increased from US$215,865 (HK$1,683,744) in 2008 to US$255,530 (HK$1,993,128) in 2009, despite the decrease in selling, general and administrative expenses.
We had other expense in 2009 of US$66,422 (HK$518,089), due to interest expense of US$28,029 (HK$218,624), amortization on discount of the convertible debentures of US$15,324 (HK$119,527) and loss from the change in fair value of our warrant liability of US$23,069 (HK$179,938). In contrast, we had other income of US$16,689 (HK$130,172) in 2008, due primarily to a gain from the change in warrant liability of US$37,794 (HK$294,793) and government grant income of US$5,419 (HK$42,267), offset by interest expense of US$26,574 (HK$207,275).
In summary, due to decreased revenues in the quarter ended March 31, 2009 and other expenses, we generated a net loss of US$321,274 (HK$2,505,928), as compared to a net loss of US$197,065 (HK$1,537,108) in 2008.
Going Concern
As a result of the losses incurred during the last two fiscal years and the accumulated deficit of US$1,375,117 (HK$10,725,914) at December 31, 2008, the report of our independent registered public accounting firm on the financial statements for the year ended December 31, 2008 included an explanatory paragraph indicating substantial doubt as to our ability to continue as a going concern. We incurred a net loss of US$321,274 (HK$2,505,928) for the quarter ended March 31, 2009 and had an accumulated deficit of US$1,696,390 (HK$13,231,842) at March 31, 2009. Management has taken certain actions and continues to implement changes designed to improve the Company’s financial results and operating cash flows. The actions involve certain cost-saving initiatives, continuous development of new products and growing strategies, including rapid promotion and marketing the new products in the People’s Republic of China. Management believes that these actions will enable the Company to move towards profitability and improve cash flow in its continuing operations through March 31, 2010.
Liquidity and Capital Resources
As of March 31, 2009. At March 31, 2009, we had working capital of US$167,905 (HK$1,309,671), as compared to US$349,711 (HK$2,727,739) at December 31, 2008, due primarily to the loss for the quarter. The decrease was reflected in reductions in cash of US$117,708 (HK$918,119) and accounts receivable, net of US$92,791 (HK$723,773), offset by increases in inventories of US$3,598 (HK$28,066) and deposits and other receivables of US$23,118 (HK$180,321).
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During the three months ended March 31, 2009, our operating activities used cash of US$114,320 (HK$891,688), as compared to providing cash of US$138,559 (HK$1,080,760) in 2008. The most significant adjustments to reconcile net loss to net cash were for depreciation and amortization (US$69,818 and HK$544,581), the impairment loss on intangible assets (US$35,620 and HK$277,832), our allowance for doubtful accounts (US$29,658 and HK$231,330) and the loss from change in fair value of warrant liability (US$23,069 and HK$179,938).
We did not have any cash flows from investing or financing activities in 2009. In comparison, we used US$179,941 (HK$1,403,540) in 2008 for software development costs and also used US$59,562 (HK$464,584) for a reduction in our bank overdraft and repayment of a short-term bank loan.
In light of our working capital of US$167,906 (HK$1,309,671) at March 31, 2009, we believe that we have current and available capital resources sufficient to fund planned operations for the current fiscal year. Our current fixed overhead is approximately US$64,102 (HK$500,000) per month, without giving any effect to any revenues that we generate. Fixed overhead comprises salaries, office rent and maintenance, utilities, telephone, travel, office supplies, employee benefits, insurance and licenses. We believe we will be able to fund the expenditures described above with our existing cash flow, based upon the signed contracts for orders that we have. At March 31, 2009, several backlog orders of approximately US$800,000 (HK$6,240,000) will be confirmed, as compared to approximately US$1,800,000 (HK$14,040,000) at March 31, 2008. We expect that approximately US$400,000 (HK$3,120,000) will be carried forward to the next fiscal year.
Forward-Looking Statements
This report includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” or “continue” or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove to have been correct.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceedings.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None.
Item 6. Exhibits
Regulation S-K Number | Exhibit |
3.1 | Memorandum of Association, as amended (1) |
3.2 | Articles of Association, as amended (1) |
4.1 | Form of Warrant (2) |
4.2 | Form of Subscription Agreement (2) |
10.1 | Employment agreement with Jason Ma dated January 1, 2005 (1) |
10.2 | Employment agreement with Humphrey Cheung dated January 1, 2005 (1) |
10.3 | Employment agreement with Billy Tang dated January 1, 2005 (1) |
10.4 | Office lease dated June 22, 2005 (1) |
10.5 | 2005 Stock Plan (2) |
10.6 | Technical Service Agreement with IBM China/Hong Kong Limited dated October 5, 2004 and Amendment to Supplier Agreement dated December 3, 2004 (2) |
10.7 | Technology Partnership and Research & Development Contract with China Scientific Automation Research Center dated June 15, 2005 (2) |
10.8 | Technology Research and Development Contract with Tsing Hua University dated November 4, 2005 (2) |
10.9 | Form of Distributor Agreement (3) |
10.10 | Form of Reseller Agreement (3) |
10.11 | Distributor Agreement with Elixir Group Limited dated January 1, 2004 (4) |
10.12 | Distributor Agreement with Smart Wireless Corporation dated February 1, 2005 (4) |
10.13 | Agreement with Shanghai Commercial Bank Ltd. dated February 7, 2006 (4) |
10.14 | Securities Purchase Agreement dated April 3, 2007 (5) |
10.15 | Form of Debenture (5) |
10.16 | Registration Rights Agreement dated April 3, 2007 (5) |
10.17 | Form of Warrant (5) |
10.18 | November 2007 Amendment and Waiver Agreement (6) |
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer |
31.2 | Rule 13a-14(a) Certification of Principal Financial Officer |
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer |
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Regulation S-K Number | Exhibit |
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer |
_______________
(1) | Incorporated by reference to the exhibits to the initial filing of the registration statement on Form S-1 (File No. 333-128302) on September 14, 2005. |
(2) | Incorporated by reference to the exhibits to Amendment No. 1 to the registration statement on Form S-1 (File No. 333-128302) on December 9, 2005. |
(3) | Incorporated by reference to the exhibits to Amendment No. 2 to the registration statement on Form S-1 (File No. 333-128302) on January 26, 2006. |
(4) | Incorporated by reference to the exhibits to Amendment No. 3 to the registration statement on Form S-1 (File No. 333-128302) on March 8, 2006. |
(5) | Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K dated April 3, 2007 (File No. 0-52415), filed April 4, 2007. |
(6) | Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K dated November 23, 2007 (File No. 0-52415), filed November 26, 2007. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TITANIUM GROUP LIMITED | |||
May 20, 2009 | By: | /s/ Dr. Kit Chong "Johnny" Ng | |
Dr. Kit Chong "Johnny" Ng | |||
Principal Financial Officer | |||
May 20, 2009 | By: | /s/ Wai Hung "Billy" Tang | |
Wai Hung "Billy" Tang | |||
Chief Executive Officer | |||
May 20, 2009 | By: | /s/ Jia Long Wen | |
Jia Long Wen | |||
Chief Operation Officer | |||
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