UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[XX] QUARTERLY REPORT UNDER SECTION13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2007
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
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 | 85-0206831 |
| (State or other jurisdiction | (IRS Employer |
| of incorporation or organization) | Identification No.) |
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 of 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 [X] No []
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12,13, or 15 (d) of the Exchange Act after distribution of securities under a plan confirmed by a court Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: No par common 46,627,777.
Transitional Small Business Format (Check One): Yes [] No [X]
Item 1. Financial Statements.
| Titan Technologies, Inc. | |
| BALANCE SHEET | |
| October 31, 2007 | |
| (UNAUDITED) | |
| | | | |
| ASSETS | | | |
| Current Assets | | | |
| Cash | | $ | 10,053 | |
| | | | | |
| Property and Equipment, at cost | | | | |
| Furniture and fixtures | | | 3,077 | |
| Machinery | | | 7,706 | |
| | | | 10,783 | |
| Less accumulated depreciation | | | (10,756 | ) |
| Net property and equipment | | | 27 | |
| | | | | |
| Other Assets | | | | |
| Deposits | | | 25,000 | |
| Other | | | 609 | |
| | | | 25,609 | |
| | | | | |
| | | $ | 35,689 | |
| | | | | |
| LIABILITIES AND STOCKHOLDERS' (DEFICIT) | | | | |
| Current Liabilities | | | | |
| Accounts payable | | $ | 6,492 | |
| Other accrued liabilities | | | 4,085 | |
| Deferred revenue | | | 470,000 | |
| Total Current Liabilities | | | 480,577 | |
| | | | | |
| | | | | |
| Stockholders' (Deficit) | | | | |
| Common stock - no par value; authorized, 50,000,000 shares; | | | | |
| 46,294,777 shares issued, 46,277,777 shares outstanding | | | 3,947,234 | |
| Treasury stock, 17,000 shares, at cost | | | - | |
| Accumulated (deficit) | | | (4,392,122 | ) |
| | | | (444,888 | ) |
| | | | | |
| | | $ | 35,689 | |
See the accompanying notes to the financial statements.
| Titan Technologies, Inc. | |
| STATEMENTS OF OPERATIONS | |
| For The Three Months Ended October 31, 2007 and 2006 | |
| (UNAUDITED) | |
| | | | | | | |
| | | 2007 | | | 2006 | |
| REVENUES | | $ | - | | | $ | - | |
| | | | . | | | | | |
| COSTS AND EXPENSES | | | | | | | | |
| General and administrative | | | 64,119 | | | | 53,662 | |
| Outside services | | | - | | | | 6,145 | |
| Stock compensation | | | - | | | | 24,309 | |
| Depreciation | | | 26 | | | | 26 | |
| | | | 64,145 | | | | 84,142 | |
| | | | | | | | | |
| (Loss) from operations | | | (64,145 | ) | | | (84,142 | ) |
| | | | | | | | | |
| Provision for income taxes | | | - | | | | - | |
| Net (loss) | | $ | (64,145 | ) | | $ | (84,142 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding - | | | | | | | | |
| Basic and diluted | | | 46,088,325 | | | | 44,848,576 | |
| | | | | | | | | |
| Basic and diluted (loss) per common share | | $ | (0.00 | ) | | $ | (0.00 | ) |
See the accompanying notes to the financial statements.
| Titan Technologies, Inc. | |
| STATEMENTS OF CASH FLOWS | |
| For The Three Months Ended October 31, 2007 and 2006 | |
| (UNAUDITED) | |
| | | | | | | |
| | | 2007 | | | 2006 | |
| Cash flows from operating activities | | | | | | |
| Net cash (used in) provided by operating activities | | $ | (52,024 | ) | | $ | 26,832 | |
| | | | | | | | | |
| Cash flows from Investing activities | | | - | | | | - | |
| | | | | | | | | |
| Cash flows from financing activities | | | | | | | | |
| Proceeds from sale of common stock | | | 31,494 | | | | 28,000 | |
| Net cash provided by financing activities | | | 31,494 | | | | 28,000 | |
| | | | | | | | | |
| Net (decrease) increase in cash | | | (20,530 | ) | | | 54,832 | |
| | | | | | | | | |
| Cash at beginning of period | | | 30,583 | | | | 34,902 | |
| | | | | | | | | |
| Cash at end of period | | $ | 10,053 | | | $ | 89,734 | |
See the accompanying notes to the financial statements.
Titan Technologies, Inc.
Notes to Financial Statements
October 31, 2007
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the financial statements and notes thereto, included in the Company's Form 10-KSB as of and for the year ended July 31, 2007.
Note 2. Earnings Per Share
The Company calculates net income (loss) per share as required by Statement of Financial Accounting Standards ("SFAS") 128, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods presented, common stock equivalents were not considered, as their effect would be anti-dilutive.
Note 3. Going Concern
The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has experienced losses from operations as a result of its investment necessary to achieve its operating plan, which is long-range in nature. For the three months ended October 31, 2007 the Company incurred a net loss of $64,145 and had working capital and stockholders' deficits of $470,524 and $444,888, respectively, at October 31, 2007. In addition, the Company has no revenue producing operations.
The Company's ability to continue as a going concern is contingent upon its ability to secure financing and attain profitable operations. In addition, the Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in a highly regulated industry.
Titan Technologies, Inc.
Notes to Financial Statements
October 31, 2007
(Unaudited)
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 possible inability of the Company to continue as a going concern.
Note 4. Stockholders' (Deficit)
During the three months ended October 31, 2007 the Company sold 314,938 shares of common stock for cash proceeds aggregating $31,494.
The Company has a compensatory stock option plan. Under the plan, the Company may grant options for up to 1,350,000 shares of common stock. The Board of Directors shall determine the exercise price and term of the options. The options vest on the date granted. All options outstanding at October 21, 2007 were granted to employees or directors in the fiscal year ended July 31, 2005 and expire in the year ending July 31, 2015.
Summarized information relative to the Company's stock option is as follows:
| | Number of Shares | Weighted Average Exercise Price |
| Outstanding at July 31, 2007 | 1,350,000 | $ 0.12 |
| Granted | - | - |
| Exercised | - | - |
| Forfeited | - | - |
| Outstanding at October 31, 2007 | 1,350,000 | 0.12 |
Note 5. Licensing Agreements
On April 2, 2004 and as modified on October 30, 2004, the Company entered into an Agreement with a group of investors, to provide for the construction of three tire recycling plants to be built in Mexico. During the year ended July 31, 2005 the Company received a non-refundable deposit of $180,000, which was originally recorded as deferred revenue. Under the terms of the agreement, the Company was to receive a payment of $500,000. $300,000 was to be credited to licensing fees, ($100,000 for each of the three initial recycling plants), and the remaining $200,000 for an exclusive right to license the Titan technology in Mexico. The original Agreement was extended from September 30, 2004 to March 31, 2005, whereupon it was terminated effective March 31, 2005, due to non-performance by the licensee. As more fully discussed below, the $180,000 previously paid to Titan under this agreement was recognized as revenue, and credit has been given to the successor investor, PPT Holding, Ltd. ("PPT"), in this amount.
Titan Technologies, Inc.
Notes to Financial Statements
October 31, 2007
(Unaudited)
Effective February 9, 2006, the Registrant executed a License Agreement with PPT, a Texas Limited Partnership and successor to the investor group discussed above, for the exclusive right to build recycling facilities in Mexico, utilizing Titan’s patented tire recycling technology (the “Mexican License”). The Agreement provides for the initial construction of three facilities within three years, commencing initially on or about September 15, 2006, which date has been verbally extended to the date on which PPT has obtained the necessary building permit for the first plant in Nuevo Laredo, and has secured sufficient financing to commence construction of the plant. PPT has engaged engineers and architects to start the process of obtaining the building permit. The Agreement also calls for a $200,000 payment for the exclusive right for PPT to conduct business related to the Titan technology in Mexico, which had been previously received as stated above.
The Mexican License provides for a $1,000,000 license fee for each plant, payable as follows: (i) a deposit of $100,000 paid by April 30, 2006; (ii) $300,000 payable upon commencement of construction; (iii) $300,000 upon completion of construction; and (iv) $300,000 upon reaching full capacity. During the year ended July 31, 2006, PPT and its predecessor paid Titan $320,000, and PPT received credit for the $180,000 previously paid by its predecessor. Therefore, the total initial $500,000 requirement, including the $300,000 deposit for the first three plants as well as $200,000 for the exclusive license for the Republic of Mexico, has been satisfied. An additional $50,000 was received during the fiscal year ended July 31, 2007. Since construction has not yet commenced, the entire deposit is presented as deferred revenue at October 31, 2007
The Mexican License further provides that Licensee will pay Titan royalty payments equal to $4.00 per ton of tires processed in the recycling plants in Mexico after full capacity is reached. Failure by PPT to make the required payments or commence construction of the first three plants by the designated dates, could result in Titan terminating the License Agreement and loss of the exclusive license for Mexico and all monies paid to date by PPT and its predecessor.
Additionally, Titan has agreed to purchase a seven percent (7%) ownership interest in PPT for $100,000, of which $75,000 was paid during fiscal 2005 pursuant to previous agreements that were subsequently deemed void. Titan has been given credit for its previous payments, towards the purchase of its investment in PPT. Since PPT is in the organizational stages, the final $25,000 paid in fiscal 2006 is presented as a deposit at October 31, 2007.
Effective August 23, 2006, the Company entered into another licensing agreement with an unrelated investor group, Ally Investment, LLP (“Ally”), for the use of Titan's recycling patents and technology within the states of Texas, Louisiana, Mississippi and Oklahoma, and received a non-refundable deposit in the amount of $100,000, which amount is included in deferred revenue at October 31, 2007. The licensing fee agreement provides for a licensing fee for each plant of $1,600,000 upon securing both a construction site and construction financing, and production royalties of 1.5% of gross revenues derived from the sale of all products generated using the Titan technology, upon reaching full capacity.
Titan Technologies, Inc.
Notes to Financial Statements
October 31, 2007
(Unaudited)
The license will commence upon payment of the $1,600,000. The commencement of construction of the first plant, as amended on February 23, 2007, must occur on or before December 31, 2007, and it must be completed and in operation, as amended, no later than December 31, 2008. Failure by Ally to make the required payment and meet the construction commencement and completion deadlines may result in the termination of the license agreement and resulting loss of all monies paid by Ally to Titan, unless otherwise extended by mutual written agreement.
Note 6. Subsequent Events
Subsequent to October 31, 2007 the Company issued 350,000 shares of common stock for cash proceeds of $35,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
As a result of activities by management, general and administrative expense increased $10,457 to $64,119 for the three months ended October 31, 2007 compared to the three months ended October 31, 2006, primarily due to the increase in legal and accounting.
As a result of activities of management, outside services expense decreased $6,145 to zero for the three months ended October 31, 2007 compared to the three months ended October 31, 2006.
As a result of activities of management, stock compensation expense decreased $24,309 to zero during the three months ended October 31, 2007 compared to the three months ended October 31, 2007.
Financial Condition
The Company's liquidity decreased in the three months ended October 31, 2007 as cash decreased $20,530 since July 31, 2007. Operations used $52,024 compared to the same period of the prior year in which operations provided $26,832. Proceeds from the sale of common stock were $31,494 during the three months ended October 31, 2007 compared to $28,000 for the same period in 2006.
Future financing activities of the Company include primarily the sale of common stock. The Company does not solicit purchasers of its common stock but believes past experience demonstrates that there will be sufficient unsolicited purchases of common stock to sustain the Company's cash flow needs, especially in light of the expected revenue form licensing activities in the future.
Titan Technologies, Inc.
Notes to Financial Statements
October 31, 2007
(Unaudited)
Management has taken the following steps in the past and will consider taking them again, if necessary, to address the financial and operating condition of the Company which it believes will be sufficient to provide the Company with the ability to continue in existence:
Improve marketing efforts for recycling plants and bring plastics recycling technology and coal gasification to a marketable product.
Reduce operating and administrative expenses, and issue sock and notes payable, where possible for payment of expenses.
Defer payment of officer’s salaries, if required.
Management believes that these steps, if taken, will allow the Registrant to continue as a going concern together with results of on going efforts to raise working capital through licensing agreements, and joint ventures. However, there are significant risks associated with the Registrant's business development and there can be no assurance that its efforts will be successful or that it will be able to raise sufficient working capital to survive as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
The company maintains controls and procedures designed to ensure that information required to be disclosed in this report is recorded, processed, accumulated and reported to management, including the principal executive and financial officer to allow timely decisions regarding the required disclosure.
As of the end of the period covered by this report, Company's management, with the participation of its principal executive and financial officer, performed an evaluation of the effectiveness of the design and operation of these disclosures controls and procedures. The principal executive and financial officer have concluded that such disclosure controls and procedures are effective in ensuring that required information is disclosed in the Company's reports.
(b) Changes in Internal Controls.
There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
During the three months ended October 31, 2007 the Company sold common stock to seven investors. The following table illustrates the dates of the transactions, the number of shares and the proceeds of the sale.
Date | Shares Issued | Cash Received |
| | | |
| 9/04/07 | 150,000 | $15,000 |
| 9/24/07 | 43,938 | 4,394 |
| 10/15/07 | 6,000 | 600 |
| 10/17/07 | 5,000 | 500 |
| 10/22/07 | 40,000 | 4,000 |
| 10/25/07 | 70,000 | 7,000 |
| | | |
| | 314,938 | $ 31,494 |
We relied on Section 4(2) of the Securities Act of 1933 for exemption from the registration requirements of the Securities Act. Each investor was furnished with information concerning our formation and operations, and had the opportunity to verify the information supplied and ask questions of Management. Additionally, we obtained a representation from each of the acquiring persons representing their intent to acquire the securities for the purpose of investment only, and not with a view toward the subsequent distribution thereof. Each of the certificates representing the common stock carry a legend restricting transfer of the securities represented.
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) | Exhibits: The following exhibits are filed with this report: |
| | 31.1 Certification pursuant to Rule 13(a) of 15d-14(a) under the Securities Exchange Act of 1934 as amended. |
| | 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
| (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 files, 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. | |
| | | | |
Date: December 14, 2007 | By: | /s/ Ronald L. Wilder | |
| | | Ronald L. Wilder, President, Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer | |
| | | | |
| | | | |
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