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 April 30, 2003
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-25024
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TITAN TECHNOLOGIES, INC.
(Exact name of small business issuer as
specified in its charter)
NEW MEXICO 85-0206831
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(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
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(Issuer's telephone number)
N/A
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(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
The number of shares of the registrant's common stock outstanding as of
May 31, 2003 was:
No Par Value Common 39,327,475
Transitional Small Business Format: Yes No X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Titan Technologies, Inc.
BALANCE SHEET
April 30, 2003
UNAUDITED
ASSETS
Current Assets
Cash ..................................................... $ 110,036
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Property and Equipment, at cost
Furniture and fixtures ................................... 6,729
Machinery ................................................ 7,706
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14,435
Less accumulated depreciation ............................ 12,257
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Net property and equipment .......................... 2,178
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Other Assets .............................................. 609
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$ 112,823
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable ......................................... $ 8,581
Other accrued liabilities ................................ 3,069
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Total Current Liabilities ................................ 11,650
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Stockholders' Equity
Common stock - no par value; authorized,
50,000,000 shares; issued and outstanding,
39,327,475 shares ........................................ 3,132,182
Treasury stock, 25,000 shares, at cost ................... --
Accumulated (deficit) .................................... (3,031,009)
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101,173
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$ 112,823
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Titan Technologies, Inc.
STATEMENTS OF OPERATIONS
For The Three Months Ended April 30,
UNAUDITED
2003 2002
------------ ------------
REVENUES ....................................... $ 10,000 $ --
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COSTS AND EXPENSES
General and administrative ..................... 59,900 52,603
Outside services ............................... 94,695 12,230
Depreciation ................................... 254 231
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154,849 65,064
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Net (Loss) Before Other Income (Expense) ....... (144,849) --
OTHER INCOME (EXPENSE)
Other income ................................... 6,305 9,230
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(Loss) before income taxes ..................... (138,544) (55,834)
Provision for income taxes ..................... -- --
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Net (Loss) ..................................... $ (138,544) $ (55,834)
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Weighted average common shares outstanding-
Basic and diluted .............................. 39,288,107 36,607,254
============ ============
Basic and diluted (loss) per common share ...... $ (0.00) $ (0.00)
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Titan Technologies, Inc.
STATEMENTS OF OPERATIONS
For The Nine Months Ended April 30,
UNAUDITED
2003 2002
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REVENUES ....................................... $ 10,000 $ --
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COSTS AND EXPENSES
General and administrative ..................... 177,162 169,120
Outside services ............................... 155,445 34,000
Depreciation ................................... 609 692
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333,216 203,812
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Net (Loss) Before Other Income (Expense) ....... (323,216) --
OTHER INCOME (EXPENSE)
Other income ................................... 19,955 20,640
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(Loss) before income taxes ..................... (303,261) (183,172)
Provision for income taxes ..................... -- --
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Net (Loss) ..................................... $ (303,261) $ (183,172)
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Weighted average common shares outstanding-
Basic and diluted .............................. 38,304,446 36,014,422
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Basic and diluted (loss) per common share ...... $ (0.01) $ (0.01)
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Titan Technologies, Inc.
STATEMENTS OF CASH FLOWS
For the Nine Months Ended April 30,
UNAUDITED
2003 2002
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Cash flows from operating activities ......... $(262,920) $(170,056)
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Cash flows from investing activities
Purchases of fixed assets .................... (1,322) --
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Cash flows from financing activities
Proceeds from sale of common stock ........... 361,550 183,700
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Net increase in cash ......................... 97,308 13,644
Cash at beginning of period .................. 12,728 34,375
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Cash at end of period ........................ $ 110,036 $ 48,019
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Titan Technologies, Inc.
Notes to Financial Statements
April 30, 2003
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 consolidated
financial statements and notes thereto, included in the Company's Form 10-KSB as
of and for the two years ended July 31, 2002.
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 nine months ended April 30, 2003 the Company incurred a net loss
of $303,261.
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.
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' Equity
During the period ended April 30, 2003 a stockholder of the Company returned
1,200,000 shares of common stock to the Company for cancellation. No value was
assigned to the cancelled shares.
Treasury stock, which was acquired for no consideration, consists of 25,000
shares of common stock.
During the period ended April 30, 2003 the company sold 2,827,249 shares of
common stock for cash proceeds aggregating $361,550.
During the period ended April 30, 2003 the Company issued 190,000 shares of
common stock at $0.20 per share to employees for services rendered in the
current period and compensation previously accrued. The shares were issued at
their fair market value on the date the Company agreed to issue the shares.
Note 5. Licensing Agreement
On February 20, 2003 the Company entered into a license agreement for
technology related to tire recycling covering the following territories; the
State of Texas, Austria, and Brazil. The Agreement called for payments
aggregating $1,000,000. In addition, the company was entitled to a production
royalty of $4 per ton on tires processed.
Subsequent to April 30, 2003 the terms of the agreement were modified. Under
the terms of the modified license agreement the Company is to receive payments
aggregating $2,000,000, $10,000 of which was received as of April 30, 2003;
$990,000 of which will be paid upon the licensor reaching certain construction
milestones; and $1,000,000 of which will be paid as production royalties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
During the nine months ended April 30, 2003, the Company had licensing revenue
of $10,000.
As a result of activities by management, expenses increased $129,404 to
$333,216 for the nine months ended April 30, 2003 compared to the nine months
ended April 30, 2002, primarily due to the increase in outside services for
detailed engineering for the Bay City plant.
As a result of activities by management, expenses increased $89,785 to $154,849
for the three months ended April 30, 2003 compared to the three months ended
April 30, 2002, primarily due to the increase in outside services for detailed
engineering for the Bay City plant.
With respect to existing plants constructed in Korea (not currently operating
because of financial failure of parent companies unrelated to the Company's
technology) and Taiwan (not currently operating because of the unavailability of
tires) using the Company's technology, no licensing fees or royalties have been
received by the Company. The Company is optimistic that royalties will be
received in the future from the operator/sub-licensee of the Taiwan plant, if it
should begin to operate again, but there can be no assurance that this will
occur or what the amounts will be.
On February 20, 2003 the Company entered into a License Agreement for
technology related to its tire recycling covering the following territories; the
State of Texas, Austria, and Brazil and construction of a recycling plant in Bay
City, Texas. The agreement was amended subsequent to April 30, 2003, and now
calls for licensing fee payments aggregating $2,000,000 instead of $1,000,000
for the Bay City plant, acknowledges the $10,000 already paid, and accelerates
the payment of the first $1,000,000, so that the three payments of $330,000 will
be paid at the completion of financing, commencement of construction of the
plant, and start up of the plant, respectively. Payment of the second $1,000,000
licensing fee will be made along with the royalty payments as tires are
processed. For a complete copy of the letter amendment and agreement, see
Exhibit 10.18 attached hereto.
In recent months, the Company has been concentrating its efforts on licensing
its technology in the United States because it believes that its tire recycling
technology has been proven at commercial scale through operation of the Asian
plants. Current discussions with prospective U.S. licensees involve payment of
an up-front licensing fee and on-going production royalties on a negotiated
basis, depending on the scope of the licensing agreement. Joint venture
arrangements in which the Company would be involved in operation of plants are
also under consideration. The Company is optimistic that recent results in
producing readily marketable activated carbon from tire derived carbon black
enhances the probability that one or more U.S. plants will be build using the
Company's technology, but there can be no assurance that the Company will be
successful in its U.S. licensing or joint venture effort or, if successful, what
the amount of the up-front payment or production royalties will be.
Financial Condition
The Company's liquidity increased in the nine months ended April 30, 2003 as
cash increased by $97,308 since July 31, 2002. Operations used $262,920 compared
to the same period of the prior year in which operations used $170,056. Proceeds
from the sale of common stock were $361,550 during the nine months ended April
30, 2003, compared to $187,300 for the same period in 2002.
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 to a marketable product
Reduce operating and administrative expenses, and issue stock and notes payable
where possible for payment of expenses.
Defer payment of officer 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, joint ventures or sales of
additional equity securities in private placements. 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
The Company's principal executive and financial officer has evaluated the
effectiveness of the Company's disclosure and procedures (as defined in Exchange
Act Rules 13a-14c and 15d-14c) as of a date within 90 days of the filing date
(the ""Evaluation Date"") of this quarterly report, and has concluded that as of
the Evaluation Date, the Company's disclosure controls were adequate, effective
and ensure that material information relating to the Company would be made known
to him timely by others within the entity.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect the company's disclosure controls
and procedures subsequent to the Evaluation nor were there any significant
deficiencies or material weaknesses in such disclosure controls and procedures
requiring corrective actions. As a result, no corrective action was taken.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
At the date of this report there are no known legal proceedings pending or
judgments against the Registrant or against any director or officer of the
Registrant in their capacity as such.
Item 2. Changes in Securities
During the nine months ended April 30, 2003, the Company sold common stock to
twenty four investors, each qualifying as an accredited investor within the
meaning of Rule 501(a). The following table illustrates the dates of the
transaction, the number of shares and the proceeds from the sale.
Date Shares Issued Cash Received
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08/04/02 200,000 $20,000
08/06/02 50,000 5,000
08/20/02 10,000 1,000
09/01/02 50,000 5,000
10/01/02 25,000 2,500
11/12/02 150,000 15,000
11/25/05 200,000 20,000
12/02/02 50,000 5,000
12/04/02 150,000 15,000
12/06/02 200,000 20,000
12/09/02 30,000 3,000
12/12/02 50,000 5,000
12/18/02 500,000 50,000
12/19/02 500,000 50,000
01/10/03 30,000 3,000
01/13/03 333,333 80,000
01/23/03 168,000 42,000
01/28/03 73,000 10,950
01/29/03 16,666 2,500
03/03/03 31,250 5,000
03/03/03 10,000 1,600
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2,827,249 $361,550
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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 the 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) List of Exhibits
Exhibit 10.18. Letter Agreement dated June 4, 2003 amending Agreement
and License Agreement with United States Recycling, LLC dated February 20, 2003
(previously filed as Exhibits 10.16 and 10.17 to Registrant's Report on Form
10-QSB filed for the quarter ended January 31, 2003.)
Exhibit 99.1. Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarabanes-Oxley Act of 2002, attached.
(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.
June 12, 2003 Ronald L. Wilder
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Ronald L. Wilder, President, Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer.