U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form SB-2/A
REGISTRATION STATEMENT UNDER the Securities Act of 1933
TOUPS TECHNOLOGY LICENSING, INC.
(Name of small business issuer in its charter)
Florida 3990 59-3462501
(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Identification No.)
organization) Classification
Code Number)
7887Bryan Dairy Road, Suite 105, Largo, Florida 33777
(813)-548-0918 (Address and telephone number of
principal executive offices)
Mark Clancy, Corporate Secretary
7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777 (813)-548-0918
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public:
As soon as practicable after the registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462 under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement of
the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box ( )
CALCULATION OF REGISTRATION FEE
Title of each Dollar Proposed Proposed
class of Amount maximum maximum Amount of
securities to be offering aggregate registration
to be registered price offering fee(2)
registered(1) per share(2) price
- ------------- ---------- ----------- -------- -------------
Common $6,085,527 $1.375 $6,085,527 $1,739.49
$.001 par value
(1) A portion of the Shares registered pursuant to this Registration Statement
were issued between June and September, 1998 pursuant to a Private Offering
made in reliance on Section 4(2) or 3(b) of the Securities Act of 1933, as
amended (the "Act") according to the Rules contained in Regulation D, Rule
506 of that Act.
(2) Calculated pursuant to Rule 457(c). The closing "bid" price of the shares
of common stock being registered hereby on the over-the-counter market
through the NASD OTC Electronic Bulletin Board was $1.375 on October 30,
1998
(3) See page 44 "Other expenses of the Offering."
CROSS-REFERENCE
REGISTRATION STATEMENT LOCATION OR CAPTION
ITEM NUMBER AND HEADING IN PROSPECTUS
1. Front of Registration Statement and
Outside Front Cover Page of Prospectus 4
2. Inside Front and Outside Back Cover Pages of Prospectus 5
3. Summary Information and Risk Factors 6
4. Use of Proceeds 10
5. Determination of Offering Price 10
6. Selling Security Holders 10
7. Plan of Distribution 13
8. Legal Proceedings 14
9. Directors, Executive Officers, Promoters and Control Persons 14
10. Security Ownership of Certain Beneficial Owners and Management 15
11. Description of Securities 16
12. Interest of Named Experts and Counsel 16
13. Description of Business 16
14. Management's Discussion and Analysis or Plan of Operation 20
15. Description of Property 23
16. Certain Relationships and Related Transactions 23
17. Market for Common Equity and Related Stockholder Matters 23
18. Executive Compensation 24
19. Financial Statements 25
20 Changes in and disagreements of Accountants on accounting 44
or financial disclosure
Part II - Information not required in Prospectus
1 Indemnification of Directors & Officers 44
2 Other Expenses of Issuance and Distribution 44
3 Recent sales of unregistered securities 44
4 Exhibits 46
5 Undertakings 46
6 Signatures 48
PROSPECTUS
TOUPS TECHNOLOGY LICENSING, INC.
4,425,838 SHARES OF COMMON STOCK
OFFERED BY CERTAIN SELLING SECURITY HOLDERS
----------------------------------
This Prospectus relates to the sale of 4,425,838 shares of common stock,
$.001 par value (the "Common Stock"), of Toups Technology Licensing, Inc., (the
"Company"), all of which are offered by the holders thereof identified as
"Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS."
The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Security Holders. Sales of shares of Common Stock may be
made from time to time (in transactions which may include block transactions) by
or for the account of the Selling Security Holders in the over-the-counter
market or in negotiated transactions, or otherwise, at market prices prevailing
at the time of sale or at negotiated prices. The Company has informed the
Selling Security Holders that the anti-manipulative rules under the Securities
Exchange Act of 1934, Regulation M, may apply to their sales and has furnished
each of the Selling Stockholders with a copy of these Rules. The Company has
also informed the Selling Security Holders of the need for delivery of copies of
this Prospectus. See "SELLING SECURITY HOLDERS" and "PLAN OF DISTRIBUTION."
------------------------
THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OR FISK.
SEE "RISK FACTORS"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ALL OF THE 4,425,838 COMMON SHARES REGISTERED HEREIN ARE BEING OFFERED BY
SELLING SECURITY HOLDERS. THE COMPANY WILL NOT RECEIVE ANY PROCEEDS FROM THE
SALE OF SHARES BY THE SELLING SECURITY HOLDERS. SEE PAGE 6 RELATING TO THE RISKS
INVOLVED IN THIS OFFERING.
PROCEEDS TO
PROPOSED UNDERWRITING PROCEEDS TO THE SELLING
CLASS OF SECURITY OFFERING PRICE DISCOUNTS THE COMPANY SECURITY HOLDERS
- ---------------- -------------- ------------ ----------- ----------------
$.001 par value $1.375(1) $0(2) $0 $6,085,527
Common Stock
(1) Represents the anticipated sale price by the Selling Security Holders
at $1.375 the closing bid price on October 30, 1998. There can be no
assurances that the Selling Security Holders will be able to sell
their shares of Common Stock at this price, or that a liquid market
will exist for the Company's Common Stock.
(2) Does not give effect to ordinary brokerage commissions or to the costs
of sale that will be borne solely by the Selling Security Holders.
INSIDE FRONT COVER
Available Information
The Company is subject to the reporting requirements of the Securities and
Exchange Act of 1934, as amended, and provides quarterly and annual reports to
the Securities and Exchange Commission. The Company's annual report on Form
10-KSB contains audited financial statements. The reports and other information
filed by the Company may be inspected and copied at the public reference
facilities of the Securities and Exchange Commission (SEC) in Washington, D. C.,
and at some of its Regional Offices, and copies of such material can be obtained
from the Public Reference Section of the SEC, Washington, DC20549 at prescribed
rates. The Company is an electronic filer and the SEC maintains a Web site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically. The SEC Web site address is
http://www.sec.gov.
The Company will provide a report to stockholders, at least annually, which
report will include audited financial statements of the Company.
Incorporation of Documents by Reference.
All materials incorporated by reference throughout this Prospectus are
available (not including exhibits to the information that is incorporated by
reference unless the exhibits are themselves specifically incorporated by
reference) without charge from the Company to each person who receives a
Prospectus, upon written or oral request of such person. Any request for such
material should be directed to the Corporate Secretary, if in writing, to 7887
Bryan Diary Road, Suite 105, Largo, Florida 33777, or, if by phone, (813)
548-0918.
The Registrant is subject to the informational and reporting requirements
of Sections 13(a), 13(C) and 14 and 15(d) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). The following documents, which are on file with the SEC are
incorporated in this Registration Statement by reference:
(a) The Registrant's Securities and Exchange Commission Forms 10-SB and
10-QSBs which contain, either directly or by incorporation by reference,
audited financial statements of the Registrant's latest fiscal year for
which such statements have been filed.
(b) The description of the Common Stock which are contained in registration
statements filed under the Exchange Act, including any amendment or
report filed for the purpose of updating such description.
Prospectus Summary
The following Summary is qualified in its entirety by other more detailed
information throughout this Registration Statement. Statements in this document
which are not purely historical facts, including statements regarding
anticipations, beliefs, expectations, hopes, intentions or strategies for the
future, may be forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21.E of the Securities
Exchange Act of 1934, as amended. All forward-looking statements within this
document are based upon information available to the Company on the date of this
Registration Statement. Any forward-looking statements involve risks and
uncertainties that could cause actual events or results to differ materially
from the events or results described in the forward-looking statements,
including the timing and nature of independent test results; the nature of
changes in laws and regulations that govern various aspects of the Company's
business; the market acceptance of the Company's licensed technologies;
retention and productivity of key employees; the availability of acquisition
candidates and proprietary technologies at prices the Company believes to be
fair market; the direction and success of competitors; management retention; and
unanticipated market changes. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned not to place
undue reliance on these forward-looking statements.
The Company
Toups Technology Licensing, Inc., was incorporated in the state of Florida
on July 28, 1997 ("Toups Technology" "TTL" the "Issuer" or the "Company"). The
Company was formed to commercialize late-stage technologies primarily in the
energy, environmental and natural resource market segments. TTL enters worldwide
exclusive license agreements for developed technologies which are at the
market-entry stage. The Company also makes acquisitions of existing companies
which add to or compliment TTL's technology mix. The Company intends to pursue
its business purpose through acquisition of existing companies; joint ventures;
strategic alliances; sub-licenses; through the manufacture and sale of products
and provision of services.
The Company currently has worldwide exclusive license agreements for
commercialization of technologies referred to as AquaFuel(TM), Balanced Oil
Recovery System Lift(TM) (BORS(TM)); Smokeless, Scrap Tire Processing(TM)
(SSTP(TM)); Tunnel Bat(TM). In April 1998, the Company acquired Advanced Micro
Welding, a seven-year old metal fabrication company specializing in high
precision micro welding. During September, 1998, the Company acquired Brounley
Engineering & Associates, Inc., a five year old engineering firm specializing in
the design and manufacture of Radio Frequency (RF) and related circuits,
particularly in the field of solid state power generation.
The Company's principal executive offices are located at the Pinellas
Science Technology and Research Center, 7887 Bryan Dairy Road, Suite 105, Largo,
Florida 33777. The Company's voice telephone number is (813)-548-0918 and
facsimile number is (813)-549-8138. The Company maintains a Web site at
http//:toupstech.com which site provides links to each of the Company's
technologies and to the Company's SEC Form 10-SB and Forms 10-QSB for the
periods ending March 31 and June 30, 1998.
THE OFFERING
Securities Being Offered: This Prospectus relates to the sale of
4,425,838 shares of Common Stock by
the holders hereof,identified as
"Selling Security Holders" in this
Prospectus.See "SELLING SECURITY
HOLDERS."
The shares of Common Stock
offered by the Selling Security
Holders may be offered for sale from
time to time by the holders in
regular brokerage transactions,
either directly or through brokers
or to dealers, in private sales or
negotiated transactions, or
otherwise, at prices related to then
prevailing market prices.
The Company will not receive
any proceeds from the sale of shares
of Common Stock by the Selling
Security Holders. All expenses of
the registration of such securities
are, however, being borne by the
Company.
The Selling Security Holders,
and not the Company, will pay or
assume such brokerage commissions as
may be incurred in the sale of their
securities.
The Common Stock is traded on
the over-the-counter market through
the NASD OTC Bulletin Board under
the symbol "TOUP". On September 30,
1998, the closing bid price was
$1.875.
Total number of shares of
Common Stock
outstanding 18,275,078
Total number of shares of
Common Stock being
Offered by Selling
Security Holders 4,425,838
Risk Factors The Common Stock offered hereby
involves a high degree of risk and
prospective investors should
consider carefully the factors
specified under "Risk Factors" before
electing to invest. See "RISK
FACTORS."
Trading Symbol Common Stock "TOUP"
RISK FACTORS
The securities offered hereby involve a high degree of risk and each
prospective investor should consider certain risks and speculative features
inherent in and affecting the business of the Company before purchasing any of
the securities offered hereby. In considering the following risk and speculative
factors, a prospective purchaser should realize that there is a substantial risk
of losing his entire investment. Among these speculative factors which
management considers pose the greatest risk to prospective investors include the
following.
Risks relating to the Offering
Limited, early-stage public trading market for the Company's Common Shares. The
Company's Shares have recently started trading through the NASD OTC Electronic
Bulletin Board under the symbol TOUP. Accordingly, there can be no assurance
that a trading market will continue. Each purchaser should view their investment
in these securities for long-range investment purposes only and not with a view
to resell or otherwise dispose of their shares in the near future. If and when a
registration statement becomes effective relating to the Shares sold herein,
purchasers who desire to liquidate their shares may have difficulty selling them
considering the early stage nature of the Company's public market, should any
such market develop. Accordingly, shares should only be purchased as a long-term
investment.
Shares Eligible for Future Sale May Adversely Affect the Market. Should the
Company be successful in the registration of the Shares described herein, such
an event may have a depressive effect on the then trading price of the Company's
common shares. Further, the Company's business purpose is the licensing of
rights relating to patents or otherwise protected devices and processes in part
with the Company's Common Shares that, upon issuance, would be unregistered
securities and, in the future, may be sold upon compliance with Rule 144,
adopted under the Act of 1933. Further, in SEC Release No. 33-7390 Revision of
Holding Period Requirements in Rules 144 and 145 the SEC amended the holding
period contained in Rule 144 to permit the resale of limited amounts of
restricted securities by qualified persons after a one-year, rather than a
two-year, holding period. Also, the amendments permit unlimited resales of
restricted securities held by non-affiliates of the Company after a holding
period of two years, rather than three years. In the future, the Company intends
to enter into licensing and other agreement(s) which may provide for an exchange
of the Company's Common Shares. Accordingly, there is the possibility that sales
of Common Shares issued in such a manner may, in the future, have a depressive
effect on the price of the Company's Common Stock in any market which may
develop.
Risks relating to Toups Technology
Recent Organization. The Company was organized during July 1997 and has no
meaningful revenues to date and should be considered as still in the development
and promotional stage. The Company's initial success is predicated on the
success of AquaFuel, BORS Lift, AMW Metal Fabricators, , Tunnel Bat and SSTP, in
the manner set forth throughout this Prospectus. The Company has not relied upon
anything other than the opinion of management in developing the business plan
for AquaFuel, BORS Lift, AMW Metal Fabricators, Tunnel Bat and SSTP. The Company
is, therefore, subject to all the risks inherent in any start-up venture, many
of which are beyond the control of management.
Concentration of Stock Ownership. Upon completion of this Offering, the present
directors and officers will beneficially own approximately 50.5% of the
outstanding Common Stock. As a result, current management will be substantially
able to exercise significant influence over all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions.
Risks relating to the Company's proposed operations
Reliance on Future Licensing Agreements. The Company's long-term growth strategy
envisions licensing a continual flow of products, processes or devices which are
derived from patents or other similarly protected intellectual properties.
Accordingly, once a particular patent-use is determined, the Company must
negotiate a License Agreement on terms and under conditions which are favorable
to profitable operations. In the course of such activities, a number of factors
can contribute to a lack of success, including a lack of availability of
patents, inability of management to successfully negotiate a favorable license
or, if negotiated, an inability to profitably deliver the intended device or
process to the market. Further, until such time as the Company obtains
sufficient assets to offset any potential loss, the failure of any one of the
Company's technologies could result in an inability to continue as a going
concern. Toups Technology business strategy is equivalent to a continual cycle
of operating start-up or development stage entities with all the risks inherent
to any start-up or development stage entity. Accordingly, there can be no
assurance that the Company can initially accomplish its business objectives or,
if accomplished, that the Company can continue profitable operations.
Competition and No formal feasibility or marketing studies. Numerous firms, also
located in South Florida as well as throughout the United States, compete or
will compete vigorously with the Company for the licensing of patented or other
intellectually protected processes and devices. The Company will be at a
competitive disadvantage in the pursuit of possible target licensing agreements
because of the inexperience of the Company. No independent feasibility or
marketing studies have been performed to determine the demand for the Company's
services. Accordingly, there can be no assurance that any market exists or will
develop for the Company's services or, if any market does develop, there can be
no assurance that the Company can successfully complete its business purpose.
Vulnerability to fluctuation in economy. Demand for technologies to be
commercialized by the Company is dependent upon, among other things, general
economic conditions which are historically cyclical in nature.
Prolonged recessionary periods may be damaging to the Company.
No assurance of commercial success. Even if the Company is successful in
conducting its affairs in the manner described herein as it relates to AquaFuel,
BORS Lift, AMW Metal Fabricators, , Tunnel Bat and SSTP, market acceptance and
the ability to expand market penetration of these products and related services
is driven by the demand for such products or services. As such, there can be no
assurance that the AquaFuel, BORS Lift, AMW Metal Fabricators, , Tunnel Bat and
SSTP product/service line will either achieve initial market acceptance or, if
achieved, will maintain sufficient market share to conduct profitable
operations.
Use of Proceeds
The Company will not realize any proceeds from the sale of shares of Common
Stock by the Selling Security Holders. See "SELLING SECURITY HOLDERS."
Determination of Offering Price
The offering price of the securities described herein was calculated
pursuant to Rule 457(c) of the Act and was not computed based on the assets,
historical operating performance or other conventional means and should not be
construed to indicate any relationship thereto. In establishing the offering
price, the Company relied on the closing "bid" price as reflected in the
over-the-counter (OTC) marketplace. On June 16, 1998, the Company's Common
Shares were cleared for trading through the OTC under the symbol TOUP. Since
that date, the Company's Common Shares have traded at prices ranging from $2-$3.
On October 30, 1998, the closing "bid" price of the Company's securities was
$1.375.
Selling Security Holders
The shares of Common Stock of the Company offered by this Prospectus are
being sold for the account of the Selling Security Holders identified in the
table indicated below (the "Selling Security Holders"). The Selling Security
Holders are offering for sale an aggregate of 4,425,838 shares of the Company's
Common Stock.
The following table sets forth the number of Shares being held of record or
beneficially (to the extent known by the Company) by such Selling Security
Holders and provides (by footnote reference) any material relationship between
the Company and such Selling Security Holders, all of which is based upon
information currently available to the Company.
Number of
Number of Shares of Number of
Shares of Percentage Common Stock Shares of Percentage
Common Stock Before to be Sold in Common Stock After
Name Before Offering Offering Offering After Offering Offering
George T. Fritze 23,505 .142 21,505 2,000 .012
Steven Kurland .... 7,600 .046 7,600 0 0
Kenneth Roden ..... 5,747 .034 5,747 0 0
Leslie Reagin .. 366,425 2.22 178,162 188,263 1.14
Michael Scrogham . 10,215 .061 10,215 0 0
Richard L. Wilson . 10,000 .060 10,000 0 0
Paul Kurland .... 7,600 .046 7,600 0 0
Giorgia Aristo 7,369 .044 7,369 0 0
Dennis Walters 1,000 .006 1,000 0 0
Richard Rausch, Jr. 2,000 .012 2,000 0 0
Jimmy Yarter 1,000 .006 1,000 0 0
Carolyn Brisson 10,700 .064 6,200 4,500 .027
Susan R. Johnson 3,448 .020 3,448 0 0
Elliott Smith 8,561 .051 6,561 2,000 .012
Larry and Sharon Rice 4,000 .024 4,000 0 0
Helmut Ziehe 1,305 .007 1,305 0 0
Nicholas Sears 45,000 .272 45,000 0 0
H. Melvyn Streets 1,124 .006 1,124 0 0
Art Barker Jr. 4,719 .028 3,226 1,493 .009
Lawrence Boisvert 6,876 .041 5,376 1,500 .009
Robert J. Puccinelli 1,075 .006 1,075 0 0
Thomas O'Bryant 7,000 .042 5,000 2,000 .012
Cynthia E. Walker 600 .003 600 0 0
Lee Stutzman 1,042 .005 1,042 0 0
L&G Resources, Inc. 5,000 .030 5,000 0 0
Gregory O'Donnell 3,000 .018 3,000 0 0
Humphrey Associates. 2,000 .012 2,000 0 0
Paul A. DeMasi 2,500 .015 2,500 0 0
Joseph Orzechowski 1,200 .007 1,200 0 0
Fran L. Houston 200 .001 200 0 0
Marcelo A. Zapatero 1,000 .005 1,000 0 0
Gerardo Gallejas 1,000 .005 1,000 0 0
Xiomara Harris 400 .001 400 0 0
Sara Zimmerman 100 .001 100 0 0
James D. Belson 30,000 .181 30,000 0 0
John D. Belson, Jr. 10,000 .060 10,000 0 0
Joshua D. Belson 5,240 .031 5,240 0 0
Royce Chadwick 7,500 .045 7,500 0 0
Finley Development 311,008 1.88 12,500 298,508 1.80
Mark Clifton 5,000 .030 5,000 0 0
CCE, Inc. 5,000 .030 5,000 0 0
Mahar Grantor Trust 5,000 .030 5,000 0 0
Rebecca Potter 13,000 .078 11,500 1,500 .009
Elizabeth A. Lindfors 77,500 .469 37,500 40,000 .242
Johnny Jackson 1,076 .006 1,076 0 0
James Devine 63,000 .381 3,000 60,000 .363
Katherine Knott 30,000 .121 30,000 0 0
Robert J. O'Keefe 1,090 .006 1,090 0 0
Charles Schwender 1,000 .006 1,000 0 0
Steven Heckler 2,000 .012 2,000 0 0
Edward Heckler 1,500 .009 1,500 0 0
Dennis Walters 1,000 .006 1,000 0 0
Charles Gibson 1,000 .006 1,000 0 0
John S. Brown 1,076 .006 1,076 0 0
Burton Shryock 3,000 .018 3,000 0 0
Christopher Shryock 3,000 .018 3,000 0 0
L. E. Carbaugh 1,000 .006 1,000 0 0
Lenwood Sapp, Sr. 2,500 .015 2,500 0 0
Jacob F. Yarter 1,050 .006 1,050 0 0
Gary Eschenroeder 50,000 .303 50,000 0 0
Charles Poland 38,000 .230 38,000 0 0
Robert A. Lanier 2,500 .015 2,500 0 0
Steven Mathieson 12,000 .072 12,000 0 0
Irene Greenberg 1,000 .006 1,000 0 0
Larry Laurich 10,000 .060 10,000 0 0
Victoria Shaeffer 30,000 .121 30,000 0 0
Paul Myers, Jr. 1,000 .006 1,000 0 0
Stephen Benson 5,000 .030 5,000 0 0
Robert Bossard 2,000 .012 2,000 0 0
Robert Estrada 8,000 .045 8,000 0 0
Irving Solomon 10,000 .060 10,000 0 0
Winfred Wong 243,708 .204 243,708 0 0
Steve Ungar 316,180 .340 316,180 0 0
Aurora Zeal, Inc. 30,000 .121 30,000 0 0
Rhonda Bartolacci 50,000 .303 50,000 0 0
Rafael Sabag 25,000 .151 25,000 0 0
Mehdi Belhassan 10,000 .060 10,000 0 0
David E. Green 5,000 .030 5,000 0 0
Eric Littman(1) 225,000 1.36 200,000 25,000 .151
Leon H. Toups(2) 3,850,000 23.33 500,000 3,350,000 20.3
Mark C. Clancy(2) 2,250,000 13.64 500,000 1,750,000 10.6
Michael Toups(2) 2,250,000 13.64 500,000 1,750,000 10.6
Hadronic Press(3) 47,632 .288 47,632 0 0
Louisa Santilli(3) 5,000 .030 5,000 0 0
H2000, Intl, Ltd(3) 52,631 .319 52,631 0 0
David Richardson(4) 150,000 .909 150,000 0 0
Tim & Kim Rice(5) 550,000 3.33 50,000 500,000 3.03
Mack Greever(6) 280,000 1.69 50,000 230,000 1.39
Gerold Allen(6) 280,000 1.69 50,000 230,000 1.39
James Doulgeris 100,000 .606 100,000 0 .303
Gary Eschenroeder (7461,700 2.79 20,000 441,700 2.67
Richard Brounley (7)222,300 1.34 20,000 202,300 1.22
Chuck Herold(7) 45,000 .272 45,000 0 0
Robert Brounley (7) 85,500 .518 10,000 75,500 .457
Lynn M. Dort (7) 85,500 .518 10,000 75,500 .457
Hare & Company 250,000 1.35 250,000 0 0
William C. Morgan 100,000 .606 100,000 0 0
GFC Communications 100,000 .606 100,000 0 0
A. R. Hardy 70,000 .500 70,000 0 0
David Fries 500 .003 500 0 0
Douglas Palmer 30,000 .121 30,000 0 0
Michael J. O'Malley 40,000 .151 40,000 0 0
Richard Hornstrom 40,000 .151 40,000 0 0
Michael Reilley 20,000 .150 20,000 0 0
Andres or Sharon 80,000 .060 80,000 0 0
Barcenas
Michelle Goldstein 2,600 .015 600 2,000 .012
Total 13,659,602 75.24% 4,425,838 9,233,764 56.21%
(1) Eric Littman has served as securities counsel to the issuer since
inception, July 28, 1997.
(2) Messrs. Leon Toups, Mark Clancy and Michael Toups have served as the
Company's Chairman and Chief Executive, Director and Vice President, Sales
and Marketing and Director and Vice President, Finance, respectively, since
inception July 28, 1997. All three individuals will be significantly
restricted in their ability to sell their shares and must provide advance
notice of any proposed transactions.
(3) Shares issued in fulfillment of the Company's Magnetion(TM) License
Agreement.
(4) Shares issued in fulfillment of the Company's Tunnel Bat License Agreement
(5) Tim & Kim Rice serve as the Company's Manufacturing Chief and Purchasing
Agent.
(6) Shares issued in fulfillment of the Company's BORS License Agreement
(7) Shares issued in fulfillment of the Company's acquisition of Brounley
Engineering & Associates
Plan of Distribution
SELLING SECURITY HOLDERS
The Selling Security Holders are offering shares of Common Stock for their
own account and not for the account of the Company. The Company will not receive
any proceeds from the sale of the shares of Common Stock by the Selling Security
Holders.
Each Selling Security Holder will, prior to any sales, agree (a) not to
effect any offers or sales of the Common Stock in any manner other than as
specified in this Prospectus, (b) to inform the Company of any sale of Common
Stock at least one business day prior to such sale and (c) not to purchase or
induce others to purchase Common Stock in violation of Regulation M under the
Exchange Act.
The shares of Common Stock may be sold from time to time to purchasers
directly by any of the Selling Security Holders acting as principals for their
own accounts in one or more transactions in the over-the-counter market or in
negotiated transactions at market prices prevailing at the time of sale or at
prices otherwise negotiated. Alternatively, the shares of Common Stock may be
offered from time to time through agents, brokers, dealers or underwriters
designated from time to time, and such agents, brokers, dealers or underwriters
may receive compensation in the form of commissions or concessions from the
Selling Security Holders or the purchasers of the Common Stock.
Under the Exchange Act, and the regulations thereunder, any person engaged
in a distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the Common Stock of the Company during the applicable "cooling off"
periods prior to the commencement of such distribution. In addition, and without
limiting the foregoing, each Selling Security Holder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of purchases and sales of Common Stock by the Selling Security
Holder. There are possible limitations upon trading activities and restrictions
upon broker-dealers effecting transactions in certain securities which may also
materially affect the value of, and an investor's ability to dispose of, the
Company's securities.
The Company will use its best efforts to file, during any period in which
offers or sales are being made, one or more post-effective amendments to the
Registration Statement, of which this Prospectus is a part, to describe any
material information with respect to the plan of distribution not previously
disclosed in this Prospectus or any material change to such information in this
Prospectus.
Legal Proceedings
The Company is not subject to any legal proceedings. The Company is unaware
of any governmental authority that is contemplating any procedure to which the
Company is a participant.
Directors, Executive Officers, Promoters and Control Persons.
The following Directors and Executive Officers have served in their
respective capacities since July 28, 1997 (date of inception). The Directors
were re-elected for the current term at a Meeting of Shareholders conducted
January 5, 1998. None of the Directors hold similar positions in any other
reporting company.
Chairman of the Board of Directors, President and Chief Executive Officer:
Leon H. Toups (59). Mr. Toups' past professional experiences include, from 1980
to present, that of President and Chairman of the Board of Directors of DMV,
Inc., Clearwater, Florida. Prior thereto, from 1973 to 1980, Mr. Toups served as
President and Chief Operating Officer, as a Member, of the Board of Directors
and as a Member of the Executive Committee of Chromalloy American Corporation,
St. Louis, Missouri, and as President of Chromalloy Natural Resources Company,
Houma, Louisiana. Chromalloy American was an international conglomerate with
sales of approximately $2.0 billion which employed 45,000 people world-wide and
traded its capital stock on the New York Stock Exchange. Mr. Toups holds the
following degrees: M.S. Aerospace Engineering, University of Florida; M.S.
Mechanical Engineering, Georgia Tech; B.S. Mechanical Engineering, Georgia Tech.
From 1968 to 1969, Mr. Toups attended M.I.T. on a NASA Hugh Dryden Fellowship.
Director, Vice-President, Finance, Chief Financial Officer: Michael P.
Toups (32). Mr. Toups' past professional experiences include, from 1996 to
present: a Director and Vice-President, Finance for InterSource Health Care,
Inc., Clearwater, Florida; 1992 through the present: Vice-President, Finance and
Operations, DMV, Inc., Clearwater, Florida. Mr. Toups holds an MBA, University
of Notre Dame with concentrations in finance and marketing and a BA degree in
Business Administration from Texas Christian University.
Director, Corporate Secretary and Vice President, Sales and Marketing: Mark
Clancy (42). Mr. Clancy's past business experiences include: from 1993 to
present: Compliance Officer, DMV, Inc., Largo, Florida; 1996 to present:
President, Total Kids, Incorporated, Tampa, Florida. Total Kids, Inc., is a
service corporation which intends to engage in the operation of child-care
centers. Prior thereto, Mr. Clancy served as General Sales Manager of WRCC FM
Radio, Cape Coral, Florida, and as Sales Consultant to WIZD FM Radio, West Palm
Beach, Florida. Mr. Clancy holds an AA from Hillsborough Community College,
Tampa, Florida and currently attends the University of South Florida.
The Company's Chief Financial Officer, Vice President, Finance and
Director, Michael Toups, is the son of the Company's President, Chief Executive
Officer and Chairman of the Board of Directors, Leon H. Toups.
Security Ownership of Certain Beneficial Owners and Management.
The Company has 18,275,078 shares of its Common Stock issued and
outstanding. The following table sets forth, as of Octobert 30, 1998, the
beneficial ownership of the Company's Common Stock (i) by the only persons who
are known by the Company to own beneficially more than 5% of the Company's
Common Stock; (ii) by each director of the Company; and (iii) by all directors
and officers as a group.
Beneficial ownership of the Company's Common Stock:
(1) (2)
Name and Amount and
Address of Nature of
Beneficial Beneficial (3)
Title of Class Owner Owner Percent of Class
Common Leon H. Toups 3,850,000 23.3%
418 Harbor View Lane
Largo, Florida 33770
Common Mark Clancy 2,250,000 13.6%
4706 Barrett Court
Tampa, Florida 33617
Common Michael Toups 2,250,000 13.6%
400 Palm Drive
Largo, Florida 33770
Common Officers and Directors 8,350,000 50.5%
(three persons)
Common Jerry Kammerer 1,750,000 10.6%
1421 Water View Drive
Largo, Florida 33771
(1) Mr. L. Toups serves as the Company's President, Chief Executive Officer and
Chairman of the Board of Directors. Mr. Clancy serves as a Director and as
the Corporate Secretary and Vice President, Sales and Marketing. Mr. M.
Toups serves as a Director and as the Company's Chief Financial Officer and
Vice President, Finance.
(2) None of the named persons or Officer and Directors are holders of any
options, warrants, right conversion privileges or similar items.
(3) The Company has not granted any options, warrants, rights conversion
privileges or similar items. There are no provisions which allow for a
change in control of the issuer beyond the annual election of Directors.
The Company is unaware of any voting trusts or similar agreements among its
Shareholders.
Description of Securities
The Company is authorized to issue up to 50,000,000 shares of Common Stock,
par value $.001 per share, and 10,000,000 shares of Preferred Stock, par value
$1.00 per share. As of the date hereof, none of the Preferred Shares were
outstanding and there were 18,275,078 Common Shares outstanding.
At the conclusion of this Offering of the 18,275,078 Common Shares issued
and outstanding, 11,742,414 Common Shares are unregistered securities, and, in
the future, said unregistered shares may only be sold upon compliance with Rule
144, adopted under the Securities Act of 1933. In Securities and Exchange
Commission (SEC) Release No. 33-7390, Revision of Holding Period Requirements in
Rules 144 and 145, the SEC amended the holding period contained in Rule 144 to
permit the resale of limited amounts of restricted securities by qualified
persons after a one-year, rather than a two-year, holding period. Also, the
amendments permit unlimited resales of restricted securities held by
non-affiliates of the Company after a holding period of two years, rather than
three years. There are no promoters, underwriters or persons or firms acting in
any similar capacity associated with the Company.
Holders of Common Shares are entitled to one vote per Common Share on all
matters to be voted on by Shareholders. The Common Shares do not have cumulative
voting rights. Holders of a majority of the Common Shares are also members of
the Board of Directors. A majority vote is sufficient for most other actions
requiring the vote or concurrence of Shareholders. The Company's Officers and
Directors as a group (three persons) own directly approximately 50.5% of the
Issuer's capital stock. As such, these individuals will be in a position to
constitute a majority of the Shareholders at any vote of shareholders, including
the election of Directors.
All Shares are entitled to share equally in dividends when and if declared
by the Board of Directors out of funds legally available therefor. It is
anticipated that the Company will not pay cash dividends on its Shares in the
foreseeable future. In the event of liquidation or dissolution of the Company,
whether voluntary or involuntary, holders of the Shares are entitled to share
equally in all assets of the Company legally available for distribution to
Shareholders. The holders of Shares have no preemptive or other subscription
rights to acquire authorized but unissued capital stock of the Company, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such Shares. All of the outstanding Shares and those Shares issued in
accordance with this offering will be fully paid and non- assessable.
Interest of Named Experts and Counsel
No such interest.
Description of Business.
Toups Technology Licensing, Incorporated, was incorporated in the state of
Florida on July 28, 1997 ("Toups Technology", "TTL" or the "Company"). The
Company's business plan is to pursue the commercialization of late-stage
technologies, primarily in the energy, environmental and natural resource market
segments.
TTL enters world-wide exclusive license agreements for developed
technologies which are near or at the market-entry stage. The Company also makes
acquisitions of existing companies which add to or compliment TTL's technology
mix. TTL commercializes the developed technologies by combining a seasoned,
entrepreneurial-minded infrastructure and state-of-the-art manufacturing
facility with an inventor's unique on-the-job insight. The combination results
in a turn-key process wherein emerging technologies can mature into marketable
products or services and the Company's shareholders can participate in a
multi-technology approach at the development/market introduction stage.
The Company intends to pursue its business purpose through acquisition of
existing companies; joint-ventures; strategic alliances; sub-licenses; providing
services; and through the manufacture and sale of products. As of September 30,
1998, the Company has five technologies under license and has made two
acquisitions. The Company has funded its activities exclusively through equity
and has no debt except normal trade payables.
The Company's management team is led by President, Chief Executive Officer
and Chairman of the Board, Leon H. Toups. Mr. Toups' past associations include
ten years serving as President and Chief Executive Officer of Chromalloy
American. Prior to its sale and during the period of Mr. Toups' association,
Chromalloy American was a 600 company international conglomerate serving six
major market segments and employing approximately 45,000 persons world-wide,
with revenues of approximately $2 billion.
At the staff level, to support all technologies, the Company has an
Engineering Coordinator, Vice-President, Sales and Marketing, Chief Financial
Officer, Vice-President, Business Development and Purchasing Coordinator. At the
line level, the Company typically engages the technology inventor as Project
Manager. This structure preserves the single-minded, entrepreneurial spirit of
each inventor while providing managerial support in matters relating to
operations, sales and marketing, finance and business development.
Technology Summary
The BORS(TM) Lift is an equipment designed to replace traditional oil patch
pump jacks. The BORS(TM) Lift is a device developed in response to the current
high cost/low production of stripper wells (oil wells that produce 10 barrels or
less per day) which contribute to a flat-lining of the annual domestic oil
production. The unit is comprised of hardware that is both positioned above
ground and downhole, as well as a programmable logic controller.
From February through September, 1998, the Company manufactured and
installed eight BORS(TM) Lift pumps at well sites located in Texas and Oklahoma.
The Company-sponsored field tests demonstrated that the BORS(TM) Lift device was
able to increase production by approximately four-times, decrease electric costs
from $3.50 per barrel to $0.035 per barrel, and was able to extract oil with an
insignificant quantity of water, thereby eliminating a need for the process of
separation.
During August, 1998 the Company executed an agreement with Crude Petroleum
Technologies for the purchase of 430 BORS(TM) Lift pumps during a 36 month
period beginning with 50 BORS(TM) Lifts during 1998, 200 during 1999, and 180
during 2000. In addition, the Company has orders for an additional 27 BORS(TM)
Lift pumps. The Company intends to continue the manufacture and assembly of the
BORS(TM) device at its headquarters facility in Largo, Florida. TTL intends to
continue the direct sale of the BORS device.
Brounley Engineering & Associates ("Brounley") was formed to engage in the
design and manufacture of RF (radio frequency) and related circuits,
particularly in the field of solid state power generation. Brounley's integrated
and modular design concepts competitively differentiate their product line of
high powered RF generators in small packages. In 1993, Brounley added production
facilities to build a new line of generators for Lasers and for the Plasma
Etching & Sputtering industry. In addition to Integrated RF Generators, Brounley
offers clients a full range of services from an original design to a final
product, including: Transmitters: AM, FM, SSB, Switching, Pulsed; Filters;
Switching Regulators, Modulators, Power Factor Correction; VSWR Characterization
of Power Amplifiers and Protection; TTL Logic Control Circuits; Crystal, LC
Oscillators and VCO's; Frequency Multipliers; Receiver Designs: HF, VHF, UHF,
AM, FM, SSB, Pulsed.
Brounley's unaudited financial statements for the period January 1, -
August 31, 1998 reflect revenues of $816,000 and net before tax income of
$154,900.
AquaFuel(TM) is a non-fossil combustible gas produced by an electric
discharge of carbon arcs within distilled, fresh, salt or other types of water,
thus being essentially composed of Hydrogen, Oxygen, Carbon and their compounds.
AquaFuel(TM) is competitive with respect to Hydrogen for cost, easiness and
rapidity of production and energy content. AquaFuel(TM) is manufactured using
off-the-shelf equipment and requires no fossil fuel in any form. The materials
used in the AquaFuel(TM) manufacturing process include water, carbon and an
electric arc.
The Company recently completed its first certification report relating to
AquaFuel(TM) and intends to publish the results of its second certification
report prior to October 31, 1998. Once the second certification report is
distributed, the Company will have completed all preliminary research necessary
to begin meaningful commercialization of the various proposed AquaFuel(TM)
products and services.
The Company intends to commercialize its AquaFuel(TM) technology through
joint-ventures, strategic alliances, and the direct sale of products and
services. At present TTL has not entered into any agreements for the sale of its
AquaFuel(TM) technology. TTL has entered into four agreements with persons and
entities which have been engaged to market AquaFuel throughout the world.
Advanced Micro Welding (AMW). On April 29, 1998, TTL acquired
seven-year-old AMW and relocated AMW within TTL's 35,000 square-foot facilities
in Largo, Florida. AMW brings in-house both a highly specialized manufacturing
capability and also allows TTL to offer products and services in the marketplace
of industrial/specialized welding and metal fabrication. The combination of
AMW's equipment and expertise, combined with TTL's state-of-the-art facilities,
engineers and draftsmen, equipment and operational experiences, result in an
extensive range of services including:
Custom Metal Fabricator - TTL's AMW can "build-to-print" products for a
wide range of industrial and business needs. Machine Shop - AMW's shop is
equipped to do prototype, custom work or production work. Precision micro
welding - AMW's equipment and expertise also supports the tool and die, plastic
injection molding and other industries with welding requiring filler wire sizes
from .005 to .020 inch in diameter. Laser and Electron Beam Welders - AMW is one
of the few Florida-based companies able to support assemblies that require
detailed welding to specific tolerances, such as the electronic, medical,
defense, aircraft and research and development industries.
AMW is a, seven-year-old entity with a demonstrated marketing program.
TTL's equipment and facilities allow AMW to now accept a substantially larger
number of jobs and to provide significantly more advanced services.
The SSTP(TM) technology was developed by inventor Jack Hansen to recover
the oil, steel and carbon black that was utilized in the manufacture of tires.
The process is self-contained, using scrap tires as the feed-source, fed in
through the SSTP(TM) equipment as a means to reduce the tires to their basic
elements.
The SSTP(TM) technology differentiates from competition because there are
no emissions and, therefore, no residue from combustion. The SSTP(TM) technology
is further differentiated from competition in its modular design which allows
for a tire "plant" to be a single unit, estimated to cost under $20,000 up
through a full-scale, multi-unit plant. The final stage of the plant is the
conversion of the gas and oil into electricity (or sold as feed stock). The
SSTP(TM) equipment reclaims the original elements that went into making the
tires, including oil, steel and carbon black, in near virgin form. The entire
tire recycling process is a closed system. There are no emissions, which means
there is no release of pollutants into the atmosphere.
TTL intends to commercialize its SSTP(TM) technology through
joint-ventures, strategic alliances, and the direct sale of products and
services. To date, the Company has not entered into any agreements for the sale
of its SSTP(TM) technology.
The Tunnel Bat technology refers to a vehicle specifically designed to
mobilize the removal of silt, debris, vegetation, soil, rock, and other types of
blockage from inside a box culvert. Box culverts relate to sewer or drain
running under a road or embankment. Invented by Dave Richardson in 1994, the
Tunnel Bat vehicle represents a tested solution to the growing problem of
removing blockage from box culverts.
Prior to the invention of the Tunnel Bat, box culverts were manually
cleaned by crawling into the box culvert with a small wagon and shovel, filling
the wagon with blockage, crawling back out to empty the wagon and then repeating
the process until the box culvert was cleaned. In addition to being a slow and
difficult manual process, many box culverts are found to have snakes and other
creatures living among the blockage material, making it possibly unsafe for
personnel.
The Tunnel Bat equipment is able to turn a slow, unpleasant job into a
reliable, thorough professional approach to desilting box culverts. The
equipment is fully mobilized, allowing for the maximum removal of blockage while
providing a safe working environment. Toups Technology is unaware of any other
product on the market that is designed to address the thousands of box culverts
throughout the United States.
Mr. Dave Richardson has been engaged by the Company as Tunnel Bat
technology advisor. The Company intends to offer the Tunnel Bat vehicle directly
as a service and to market the vehicles throughout the United States.
Management's Discussion and Analysis or Plan of Operation.
Three Months Ended June 30, 1998, Compared to Three Months Ended June 30, 1997:
For the three months ended June 30, 1998, the Company reported revenues
from operations of $109,143, a 73% increase over 1997 second quarter revenues of
$62,971. Second quarter revenues for both periods were generated by the
Company's wholly-owned subsidiary, Advanced Micro Welding, Inc. ("AMW"). TTL
acquired AMW on April 29, 1998, in a business combination, accounted for as a
pooling of interest. AMW, a company specializing in micro-welding and custom
metal fabrication, grew through an increased emphasis on its metal fabrication
business. AMW gives TTL production capacity and expertise in micro-welding,
metal fabrication, and machining which provides infrastructure and complements
the Company's emphasis on developing market applications for its technologies.
Cost of goods sold in the second quarter of 1998 was $65,018 or 60% of
revenues, which compared to the same percentage of revenues for the second
quarter of 1997. The cost of goods sold for both periods relate only to AMW.
The Company's selling and administrative expenses of $549,580 were
comprised of salaries, consulting fees, and other operating costs in the second
quarter of 1998, up from $51,149 during the second quarter of 1997. This 974%
increase in operating expenses was primarily the result of increased personnel
expenses incurred by the Company in building its infrastructure, assembling a
team of engineers, scientists and other professionals, and preparing its
technologies for market applications. Selling and administration expenses for
the 1997 period relate only to AMW. TTL had no operations during the second
quarter of 1997. During the second quarter of 1998, the Company completed an
initial independent testing for AquaFuel, developed applications for Flow
Control Valves, field-tested BORS lift units, licensed and developed
applications for its Smokeless Scrap-Tire Process, technology, and executed a
world-wide exclusive license for the Tunnel-Bat.
As a result of these activities, the Company had a 1998 second quarter
operating loss of $503,960, an increase from an operating loss of $25,691 for
the same period of 1997. Interest income during the second quarter period was
generated from excess cash balances, resulting from the Company's private common
stock offering in 1998.
As of June 30, 1998, the Company had purchase orders for 29 BORS Lift
Pumps, with $6,000 on deposit towards a purchase price of $207,194. The Company
had inventory on hand in the amount of $69,388 related to these orders in
various stages of production. Subsequently, the Company signed a Letter of
Intent with open purchase orders for an additional 430 BORS units, with a
minimum purchase of 50 units in 1998, 200 during 1999, and 180 during 2000. The
Company is currently working on its first order against this purchase order for
five units, with $12,500 on deposit towards a purchase price of $40,300. The
Company does not recognize a sale until the unit is shipped.
The Company has entered into Letters of Intent or is negotiating for
licensing fee arrangements for its other technologies, including AquaFuel, Flow
Control Valves, SSTP, and Tunnel-Bats. (See Footnotes to Financial Statements: 8
- - Other Significant Events, and 9 - Subsequent Events). The Company expects to
generate revenues from these activities in the third quarter of 1998.
Six Months Ended June 30, 1998, Compared to Six Months Ended June 30, 1997:
For the six months ended June 30, 1998, the Company reported revenues from
operations of $274,040, a 143% increase over 1997 six month revenues of
$112,581. Revenues for both six-month periods were generated by the Company's
wholly-owned subsidiary, AMW.
Cost of goods sold for the first six months of 1998 was $137,139, or 50% of
revenues, compared to $61,358, or 55% of revenues, for the six-month period in
1997. The decrease in the cost of goods sold as a percentage of revenues in 1998
was the result of larger, more efficient production runs for jobs in the first
quarter of 1998.
The cost of goods sold figures for both periods relate only to AMW.
The Company's selling and administrative expenses of $795,829 were
comprised of salaries, consulting fees and other operating costs in the second
quarter of 1998, up from $94,928 during the second quarter of 1997. This 738%
increase in operating expenses was primarily the result of increased personnel
expenses incurred by the Company in building its infrastructure, assembling a
team of engineers, scientists, and other professionals, and preparing its
technologies for market applications. Selling and administration expenses for
the 1997 period relate only to AMW. TTL had no operations for the first six
months of 1997.
As a result of these activities, the Company had a 1998 six-month operating
loss of $658,928, an increase from an operating loss of $43,705 for the same
period of 1997. Interest income during the six- month period was generated from
excess cash balances, resulting from the Company's private common stock offering
in 1998.
Liquidity and Capital Resources
Net cash used by operating activities (of $763,592) related primarily to
the Company's operating loss. The Company, however, had a net working capital
surplus of $409,768, an increase of $338,051from December 31, 1997. The increase
in working capital was principally the result of an increase in financing
activities through the issuance of $1 million in common stock through a private
equity offering.
As of June 30,1998, the Company has no bank financing or other debt
obligations outstanding other than trade payables, accrued expenses, and
capitalized lease obligations due from the normal course of business.
Through the acquisition of AMW and the utilization of capital equipment
available under its facility lease, the Company has significant production
capabilities available without the requirement for large capital expenditures.
This equipment remains from the facility's former tenant, Lockheed Martin, and
includes computers, milling equipment and lathes, shelving and storage units,
electron beam welders, laser welders, and other production machinery. This
equipment, combined with AMW's resources, will allow TTL to fully utilize its
development and production capabilities during the second half of 1998.
In June 1998, the Company was approved for a $50,000 grant from the US
Department of Energy, administered by the Technology Deployment Center, for the
development of market applications of its Flow Control Valves. The Company has
also commenced on a second private equity offering. The proceeds of the sale of
this equity offering will be available for future acquisitions, working capital,
and general corporate purposes.
The Company believes that its existing cash, together with projected cash
flows from operations and the availability of future equity offerings, will be
sufficient to meet the Company's cash requirements for at least the next twelve
months.
Management is unaware of any known trends, events or uncertainties that
have or are reasonably likely to have a material impact on the small business
issuer's short-term or long-term liquidity, net sales or revenues or income from
continuing operations which are not disclosed in this Prospectus.
Description of Property
The Company's headquarters and manufacturing facility occupies
approximately 50,000 (fifty-thousand) square-feet within the 96-acre Pinellas
Science Technology and Research Center ("STAR Center") located at 7887 Bryan
Diary Road, Largo, Florida.
Formerly used by Lockheed Martin Specialty Components, Inc. as a provider
for the Department of Energy ("DOE"), the STAR Center has been converted into a
technology incubator for engineering firms and specialty manufacturers. The STAR
Center is a 739,873 square-foot complex, comprised of 17 separate buildings; a
150,000 square-foot, 16-foot high bay manufacturing area, and approximately 100
separate areas, including laboratories, production space and offices. The STAR
Center contains world class analytical laboratory facilities for chemical,
metallurgical, ceramic, polymer and environmental analysis ... distributed
computer networks throughout the facility and full manufacturing machine shop
capability, including several CNC lathes, 4-axis machine centers, automatic CNC
screw machines and wire EDM facilities.
The Company does not invest in real estate or real estate mortgages, nor
does the Company invest in the securities of or interests in persons primarily
engaged in real estate activities.
Certain Relationships and Related Transactions
Mr. Michael Toups, who serves as the Company's Chief Financial Officer and
as a Director, is the son of the Company's President and Chairman of the Board,
Leon H. Toups.
Market for Common Equity and Related Stockholder Matters
Since June 16, 1998, the Company shares have been traded through the
over-the-counter market through the NASD OTC Electronic Bulletin Board ("OTCBB")
marketplace under the symbol TOUP. Since that date, the Company's shares have
traded between $2-$3. However, there can be no assurance that the Company's
shares will continue to trade within this range given the effect of the shares
being registered hereby. Quotations on the OTCBB reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not represent actual
transactions.
As of the date of this Prospectus, none of the Company's securities are
eligible for sale pursuant to Rule 144.
As of April 29, 1998, the Company has been listed under Company
Descriptions in Standard and Poor's Corporation Records, Page 8153. As of
September 30, 1998, Company had 283 Shareholders of Record.
Holders of the Company's Common Stock are entitled to dividends when, as
and if declared by the Board of Directors, out of funds legally available
therefor. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the development
and expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, the Company's financial condition, capital requirements,
general business conditions and other factors. Therefore, there can be no
assurance that any dividends of any kind will ever be paid.
The Company's registrar and transfer agent is Continental Stock Transfer
&Trust Company.
Executive Compensation
The following table depicts all-plan and non-plan compensation awarded to,
earned by or paid to the named executive officer of the Company for the period
indicated:
Annual Long Term
Compensation Compensation
(a) (b) (c) (d) (e)
Restricted
Stock Total
Name and Principal Salary Bonus award(s) Compensation
Position Year ($) ($) ($) ($)
Leon H. Toups 1997 $2,000 $0 $3,200 $5,200
President
Chief Executive Officer
Mark Clancy 1997 $2,000 $0 $1,600 $3,600
Corporate Secretary
Vice President, Sales
& Marketing
Michael Toups 1997 $2,000 $0 $1,600 $3,600
Vice President, Finance
(a) All named executive Officers have served in their respective capacities
since formation of the Company during July 1997.
(b) The Company was incorporated during July 1997.
(c) Any increase in Officer compensation would be predicated on prevailing
industry standards and the existing financial situation of the Company. The
Board of Directors may authorize an increase in the compensation of the
Company's executive officers without a vote of Shareholders.
(d) The Company did not make any bonus cash payments to its executive officers
since inception. However, the Company may, in the future, develop programs
which may include bonus payments.
(e) Each Officer received his shares upon incorporation, at par value, in lieu
of cash compensation. During the course of 1998, the Company has issued
650,000 unregistered common shares to each of its Officers.
The Company does not compensate its Directors for their participation. The
Company does not provide for agreements with any of its executive officers.
However, the Company may, in the future, need to compete for the services of its
executive officers, at which time, the Board of Directors may adopt and require
its executive officers to execute employment agreements.
Financial Statements
The following are the unaudited Pro Forma Consolidated financial statements
for the six moth period ended June 30, 1998 which give effect to the acquisition
of Brounley which was effective September 30, 1998.
Pro Forma Consolidated Balance Sheet
Pro Forma Consolidated Statement of Operations
The following are the unaudited financial statements of Toups Technology
Licensing, Inc., for the six-month period ended June 30, 1998 (unaudited) and
for the six-month period ended June 30, 1997 (unaudited)
Statement of Operations
Balance Sheet
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to unaudited Financial Statements
The following is the Auditor's Report and accompanying audited balance
sheets of Toups Technology Licensing, Inc. (A Development Stage Company) as of
December 31, 1997, and January 31, 1998, and the related statements of
operations, stockholders' equity and cash flows for the period from July 28,
1997 (Date of Inception) through December 31, 1997, for the month ended January
31, 1998, and for the period from July 28, 1997 (Date of Inception) through
January 31, 1998:
Auditor's Report
Balance Sheets
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
Toups Technology Licensing, Inc.
PRO FORMA BALANCE SHEET
June 30, 1998 (Unaudited)
(Unaudited)
June 30
1998
Assets:
Cash $ 297,193
Accounts Receivable, net of allowance
for doubtful accounts of $5,000 231,582
Notes Receivable 32,000
Inventory, at cost 264,151
Prepaid expenses-other 4,307
Prepaid royalty expenses 71,000
Deferred charges -
Property and equipment, net of
accumulated depreciation of $87,840 258,056
-----------------
Total Assets $ 1,158,288
=================
Liabilities:
Accounts Payable and accrued liabilities 192,635
Deposits 14,250
Notes Payable 84,320
Capital Lease Obligation 188,473
-----------------
Total Liabilities $ 479,679
-----------------
Stockholders' equity:
Common Stock 12,077
Additional paid-in capital 1,152,225
Retained Earnings (40,423)
Deficit accumulated during development stage (445,270)
-----------------
Total Stockholders' equity $ 678,609
-----------------
Total liabilities and stockholders' equity $ 1,158,288
=================
Pro Forma Consolidated Unaudited Financial Statement
Toups Technology Licensing, Inc.
PRO FORMA STATEMENT OF OPERATIONS For the six-month
period ended June 30, 1998 (Unaudited)
(Unaudited)
Six-month
Period ended
June 30,
1998
Sales $ 869,427
Cost of Goods Sold 527,015
Gross Profit 342,412
Expenses:
Salaries 293,626
Consulting fees 158,143
Other operating costs 444,358
------------------
Total expenses 896,127
Net Operating Loss (553,715)
Other Income:
Interest Income 2,937
Net loss $ (550,778)
==================
Weighted average number of
shares outstanding 16,495,454
Net loss per share $ 0.0334
==================
Pro Forma Consolidated Unaudited Financial Statement
Toups Technology Licensing, Inc
STATEMENTS OF OPERATIONS
for the six-month period ended June 30, 1998
(Unaudited) and for the six-month period ended June
30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Six-Month Six-Month
Period ended Period ended
June 30, June 30
1998 1997
------------------ -----------
Sales .................................. $ 274,040 $ 112,581
Cost of Goods Sold ..................... 137,139 61,358
------------ ------------
Gross Profit ........................... 136,901 51,223
------------ ------------
Expenses:
Salaries ............................... 256,700 36,574
Consulting fees ........................ 158,143 1,569
Other operating costs .................. 380,986 56,785
------------ ------------
Total expenses ......................... 795,829 94,928
------------ ------------
Net Operating Loss ..................... (658,928) (43,705)
------------ ------------
Other Income:
Interest Income ........................ 2,937 --
------------ ------------
Net Loss ............................... $ (655,991) $ (43,705)
============ ============
Weighted average number of
shares outstanding ..................... 11,077,232 8,881,751
Net loss per share ..................... $ (0.0592) $ (0.0049)
============ ============
See Notes to Financial Statements
Toups Technology Licensing, Inc.
BALANCE SHEETS
June 30, 1998 (Unaudited) and December 31, 1997 (Restated)
(Unaudited)
Restated
Unaudited (Note 5)
June 30, June 30
1998 1997
---- -----
Assets:
Cash ......................................... $ 277,454 $ 74,636
Accounts Receivable, net of
Allowance for doubtful accounts of $5,000 .... 64,960 27,147
Notes Receivables ............................ 32,000 --
Inventory at cost ............................ 85,785 --
Prepaid expenses-other ....................... 3,457 --
Prepaid royalty expenses ..................... 71,000 11,000
Deferred charges ............................. -- 5,075
Property and equipment, net of
Accumulated depreciation of $56,885 .......... 240,592 21,117
----------- -----------
Total Assets ................................. $ 775,248 $ 138,975
=========== ===========
Liabilities: ................................. 118,888 46,141
Deposits ..................................... 6,000 --
Capital lease obligations .................... 188,473 --
----------- -----------
Total liabilities ............................ $ 313,361 $ 46,141
----------- -----------
Stockholders' equity
Common stock ................................. 11,077 9,010
Additional paid-in capital ................... 1,147,224 148,547
Retained Earnings ............................ (40,423) (71,137)
Deficit accumulated during
development stage ............................ (655,991) 8,414
----------- -----------
Total stockholders' equity ................... $ 461,887 $ 92,834
----------- -----------
Total liabilities and
stockholders' equity ......................... $ 775,248 $ 138,975
=========== ===========
See Notes to Financial Statements
Toups Technology Licensing, Inc.
STATEMENTS OF STOCKHOLDERS' EQUITY
For the six-month period ended June 30, 1998
(Unaudited) and for the period from July 28, 1997
(Date of Inception)
through December 31, 1997
Deficit
Accumulated
Common Additional During
Number Stock Paid-In Development
of shares (At Par) Capital Stage Total
-------- ------- ------- -------- -------
Issuance of common
stock from inception ..... 8,250,000 $8,250 $ -- $ -- $ 8,250
Stock Issued for:
Services ................. 100,000 100 -- -- 100
Cash ..................... 160,000 160 99,840 -- 100,000
Rent ..................... 120,000 120 -- -- 129
Deficit accumulated during
development stage through
December 31, 1997 ........ -- -- -- (40,413 (40,413)
---------- ----- ------- ------- ---------
Balance:
December 31, 1997 ........ 8,630,000 8,630 99,840 (40,413) 68,057
Stocks issued for:
Cash ..................... 1,661,232 1,661 997,791 -- 999,452
Services ................. 286,000 286 -- -- 286
Acquisition of AMW
(Note 5) ................. 500,000 500 49,593 -- 50,093
Deficit accumulated during
development stage-
January 1, 1998 through
June 30, 1998 ............ -- -- -- (655,991) (655,991)
---------- ------ ----- --------- --------
Balance:
June 30, 1998 ............ 11,077,232 $11,077 $1,147,224 $(696,414) $461,887
========== ======= ========== ========= ========
See Notes to Financial Statements
Toups Technology Licensing, Inc.
STATEMENTS OF CASH FLOWS
for the six-month period ended June 30, 1998
(Unaudited) and for the six-month period ended June
30, 1997 (Unaudited)
(Unaudited) (Unaudited)
Six-month Six-month
Period ended Period ended
June 30, June 30
1998 1997
---- ----
Cash flows from operating activities:
Net loss .................................... $ (655,991) $ (43,705)
Add (deduct) items not affecting cash:
Depreciation ................................ 16,574 0
Amortization ................................ 623 0
Cash provided (used) due to changes in
assets and liabilities
(increase) in inventory .................. (85,785) 0
(Increase) decrease in accounts receivable (64,960) 1,205
(Increase) in notes receivable ........... (32,000) 0
(Increase) in prepaid royalty expense .... (60,000) 0
(Increase) in prepaid expenses ........... (3,457) 0
(Increase) decrease in deferred charges .. 5,075 0
Increase (decrease) accounts payable ..... 110,329 15,107
Increase (decrease) in deposits .......... 6,000 0
----------- -----------
Net cash used by operating activities ....... (763,592) (27,393)
----------- -----------
Cash flows from investing activities:
Acquisition of equipment .................... (45,551) 0
----------- -----------
Net cash used by investing activities ....... (45,551) 0
----------- -----------
Cash flows from financing activities:
Proceeds from sale of capital stock ......... 1,029,870 0
Distribution to owners ...................... (7,593) 0
Principal payments on
capital lease obligations .................. (10,316) 0
----------- -----------
Net cash provided by financing activities ... 1,011,961 0
----------- -----------
Net increase in cash ........................ 202,818 (27,393)
----------- -----------
Cash, beginning of period ................... 74,636 30,674
----------- -----------
Cash, end of period ......................... $ 227,454 $ 3,281
=========== ===========
Supplemental Cash Flows Disclosures
Non-Cash items
Equipment acquired under capital lease ...... $ 124,666 $ 0
=========== ===========
Common stock issued for consulting
services and rent ........................... $ 286 $ 0
=========== ===========
See Notes to Financial Statements
Toups Technology Licensing, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
and December 31, 1997 (Restated)
1. Summary of Significant Accounting Policies
(a) Company - Toups Technology Licensing, Incorporated (Company), a
Florida Corporation, was formed on July 28, 1997, and activated its
start-up operations on November 1, 1997, to facilitate market
applications, through the licensing of late-stage technologies,
primarily in the energy, environmental and natural resources market
segments. The Company selects proprietary products or devices within
market segments which management perceives are not subject to rapid
change and can be delivered to the marketplace within a three- to
six-month period. The Company is in the development stage of
operations.
(b) Receivables - The Company's trade receivables include amounts due
from business predominantly in the Tampa Bay geographic area, but
include customers throughout the Southeast United States. Management
believes that receivables are stated at their net realizable values.
(c) Notes Receivable - The Company's note receivable is a 60-day note with
no stated interest.
(d) Inventories - Inventories consist of work-in-process and parts held
for manufacturing and are valued at cost, using the first-in,
first-out method.
(e) Property and Equipment - Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over their
estimated useful lives. At June 30, 1998, property and equipment
consisted of machinery and equipment.
(f) Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(g) Deposits - As of June 30, 1997, management has purchase orders and
$6,000 in deposits for the sale of the first Balanced Oil Recovery
System Lift Pumps. These pumps are expected to be installed in the
third quarter of 1998 at a total sales price of $207,194. Inventory,
in the amount of $69,388, relating to this equipment is recorded in
the June 30, 1998, financial statements.
(h) Income Taxes - Deferred income taxes are reported using the liability
method. Deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are differences between
the reported amount of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
(i) Basis of Presentation - Six Months Ended June 30, 1998 - The
unaudited interim financial statements for the six months ended June
30, 1998, included herein, have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission and, in the opinion of the Company, reflect all
adjustments (consisting only of normal recurring adjustments) and
disclosures which are necessary for a fair presentation. The results
of operations for the six months ended June 30, 1998, are not
necessarily indicative of the results of the full year.
2. Capital Stock
(a) Common. The Company is authorized to issue 20 million shares of
common stock, with a par value of $0.001 (one, one-thousandth dollar)
per share. As of June 30, 1998, there were 11,077,232 shares issued
and outstanding. Of the 11,077,232 shares issued and outstanding, at
June 30, 1998, 9,469,014 shares are restricted as to the sale to
other parties, and 1,608,218 are unrestricted. Each share of common
stock has one vote on all matters acted upon by the shareholders.
(b) Preferred. The Company is authorized to issue 10,000,000 million
shares of preferred stock, having a par value of $1 per share. There
were no preferred shares issued or outstanding at June 30, 1998.
3. Employment and Services Agreements-Stock Commitments
(a) The Company entered into a series of one-year employment contracts.
Within those contracts, 85,000 shares of stock were issued to certain
employees. These shares have been recorded in the accompanying
balance sheet. Additionally, there are incentive clauses in these
contracts that allow up to another 270,000 shares of common stock to
be issued to employees if certain goals are met. None of these shares
are scheduled to be issued to officers, directors, or holders of more
than 5% of the outstanding stock. The additional 270,000 shares have
not been recorded in the accompanying financial statements.
(b) On June 17, 1998, the Company entered a consulting agreement with
Great Britain-based, Global Resource Management, Inc. ("Global") to
take steps necessary for the Company's shares to be listed on the
London stock exchange and to represent the Company's technology
offering within the European community. The Agreement requires that
the Company compensate Global at the rate of 10,000 unregistered
common shares per month plus $3,000 cash payment per month.
4. Licensing Agreement Commitments
(a) The Company entered into two licensing agreements in November 1997, whereby
the Company has exclusive rights to make, use, lease, market and sell these
product lines. In January 1998, the Company executed a five-year
manufacturing agreement with a third licensor. In June 1998, the Company
executed an additional license agreement, as disclosed in Footnote 8: Other
Significant Events, Note (B). In exchange for these rights, under the four
agreements, the Company has committed to pay the Licensor a 6% royalty, as
computed by those agreements. The Company agreed to pay a minimum of
$176,000 of royalties in 1998, of which $71,000 has been paid as of June
30, 1998. The remaining royalty payments for the initial licensing term
will be paid as follows:
Year Ending:
1998 $ 105,000
1999 96,000
2000 96,000
------
$ 297,000
(b) The Company can offset these advanced payments against the royalties
earned in 1998 through the year 2000.
(c) In addition to the above, if the Company exercised its option to
renew the licenses, it would have future minimum royalties as
follows:
Year Ending
2001 $200,000
2002 $250,000
2003 $300,000
2004 $400,000
5. Acquisition of Advanced Micro Welding
(a) On April 29, 1998, Toups Technology Licensing, Incorporated (TTL)
acquired Advanced Micro Welding, Inc. (AMW) in a business combination,
accounted for as a pooling of interests. AMW, a company specializing
in micro-welding and custom metal fabrication, became a wholly-owned
subsidiary of TTL through the exchange of 500,000 shares of restricted
common stock of TTL's common stock for all the outstanding stock of
AMW. The statement of stockholders' equity reflects a restatement of
$49,593 to additional paid-in capital as a result of the acquisition.
The restatement includes $9,500 and $40,093, respectfully, for the
disposition of AMW stock and adjustment of retained earnings for the
pooling.
(b) The restated balance sheet as of December 31, 1997, reflects the
acquisition of AMW. The restated financial statements are based on
the historical financial statements of TTL and AMW accounting for the
combination as a pooling of interest. Both companies were audited
independently on December 31, 1997. The restated balance sheet, as of
December 31, 1997, reflects the unaudited combination of these
numbers.
(c) The restated financial statements have been prepared based upon the
historical financial statements of TTL and AMW. These restated
financial statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on
the dates indicated or which may be obtained in the future.
6. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carry-forward has been reduced by a valuation account to zero, due to
uncertainties regarding the utilization of the deferred asset. The deferred tax
asset and the corresponding valuation allowance were approximately $64,000 as of
June 30, 1998.
The net operating loss of $40,423 will expire in 2012.
Deferred tax asset:
Net operating loss carryforward $64,000
Less valuation allowance ( 64,000)
---------
Net deferred taxes $ -
==========
7. Capital Lease
(a) In March 1998, the Company acquired machinery and equipment under the
provisions of a capital lease. The lease expires in December 1999.
The machinery and equipment has [have?] a cost of $11,146 and a net
book value of $11,146 at June 30, 1998. In addition, a wholly-owned
subsidiary of the Company acquired equipment, totaling $191,493 under
three capital lease agreements. Amortization of these capital leases,
included in depreciation expense amounted to $11,100 for the six
months ended June 30, 1998. Accumulated amortization amounted to
$9,800 as of June 30, 1998, as of June 30, 1998, and is included in
accumulated depreciation.
(b) The future minimum lease payments under capital lease and net present
value of the future minimum lease payments at June 30, 1998, are as
follows:
Total minimum lease payments $ 246,091
Amount representing interest (57,618)
------------
Present value of net minimum lease payments $ 178,944
============
(c) Future minimum lease payments under capital leases as of June 30,
1998, are as follows:
1998 $30,649
1999 51,048
2000 51,048
2001 47,037
2002 45,329
After 10,181
------
$235,292
8. Other Significant Events
(a) The Company received a $50,000 grant from the U.S. Department of
Energy and administered by the Technology Deployment Center for the
development of its BP Valve(TM) technology.
(b) On May 20, 1998, the Company entered into a world-wide exclusive
license agreement (the "License") for the commercialization of the
Smokeless, Scrap Tire Processing Technology (SSTP). Under the terms
of the License, the Company receives the right to design,
manufacture, sell or otherwise commercialize the SSTP technology. The
License obligates the Company to pay a 6% royalty fee on all
SSTP-related sales and granted a one-time issuance of 60,000
unregistered common shares.
9. Subsequent Events
(a) On July 1, 1998, the Company entered into a world-wide exclusive
license agreement for a patent-pending technology, referred to as
"Tunnel Bat" technology. Under the terms of the License, the Company
receives the right to design, manufacture, sell or otherwise
commercialize the Tunnel Bat technology on a worldwide, exclusive
basis for an initial period of three years, after which, the Tunnel
Bat License may be extended for additional three-year periods. The
Tunnel Bat License obligates the Company to pay a six percent (6%)
royalty on gross revenues derived from the Tunnel Bat technology. In
addition, the Company made a one-time issuance of 150,000 of its
restricted $.001 par value Common Shares and undertook to register at
least 50,000 of the foresaid Shares no later than six months after
June 15, 1998. The Company also retained Tunnel Bat technology
inventor/patent-pending owner, David Richardson, to act as Technical
Assistant, Tunnel Bat Technology.
(b) On July 6, 1998, the Company entered into a Letter of Intent and
Purchase Order for the sale of 430 Balanced Oil Recovery System
(BORS) lift pumps with CMT, Inc. Under the terms of the Letter of
Intent, CMT has been given exclusivity for the sale of the BORS pumps
throughout Kansas and Oklahoma, and has agreed to a minimum purchase
of 50 pumps during 1998, 200 pumps during 1999, and 180 pumps during
2000. The Company is scheduled to ship the first five pumps from its
manufacturing facility in Florida during August 1998.
(c) On July 7, 1998, the Company entered into a Letter of Intent relating
to licensing the commercialization of the Company's Smokeless,
Scrap-Tire Processing Technology (SSTP) with a Vienna, Virginia-based
US company ("proposed Licensee"). Under the terms of the Letter of
Intent, the proposed Licensee desires to license the rights to
construct the first industrial-size SSTP facility, capable of
recycling two hundred waste tires per hour. In addition to requiring a
negotiated License Fee and royalties, the proposed Licensee would
thereafter be entitled to exclusive use of the SSTP technology within
North America, and TTL would manufacture the SSTP equipment for their
exclusive use within the licensed area. The Company anticipates
entering into the development portion of the Letter of Intent during
August 1998. Thereafter, the Company would enter into a formal license
agreement with the proposed Licensee.
(d) On July 9, 1998, the Company entered into a License Agreement with an
entity, wherein TTL grants exclusive rights to the entity to sell,
market, and distribute products relating to the AquaFuel technology.
Under the terms of the License Agreement, the entity shall cause for
sales to commence during the third quarter of 1998 and continue
thereafter for a period of three years. The License Agreement grants
the entity the rights to market AquaFuel category one - "Fuel";
AquaFuel category 2 "Public and private services", and AquaFuel
category 3 - "processing and research and development."
(e) On July 9, 1998, the Company proposed four Letters of Intent with an
international provider of various gaseous materials. The proposed
Letters of Intent include: (1) a proposed License Agreement for the
purpose of commercializing AquaFuel system for the elimination of
biological waste in commercial use applications; (2) a proposed sale
of Electric Power Generation equipment; (3) a proposed License
Agreement for the purpose of marketing AquaFuel and the construction
of AquaFuel-related plants, and (4) a proposed Joint-Venture relating
to development of certain aspects relating to AquaFuel .
(f) Subsequent to June 30, 1998, the Company sold 28,732 shares of its
restricted Common Shares to accredited investors for an aggregate of
$25,440.
lNDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Toups Technology Licensing, lncorporated
(A Development Stage Company)
Largo, Florida
We have audited the accompanying balance sheets of Toups Technology
Licensing, Incorporated (a Development Stage Company) as of December 31, 1997,
and January 31, 1998, and the related statements of operations, stockholders'
equity, and cash flows for the period from July 28, 1997 (Date of Inception)
through December 31, 1997, for the month ended January 31, 1998, and for the
period from July 28, 1997 (Date of Inception) through January 31, 1998.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Toups Technology Licensing,
Incorporated (a Development Stage Company) as of December 31, 1 997, and January
31, 1998, and the results of its operations and its cash flows for the period
from July 28, l997 (Date of Inception) through December 31, 1997, for the month
ended January 31, 1998, and for the period from July 28, 1997 (Date of
Inception) through January 31, 1998.
February 12, 1998 (except for Notes 4 and 7 as to which the date is May 13, 1998
Harper, Van Scoik & Company, L. L. P.
A WORLDWlDE ORGANIZATION OF ACCOUNTlNG FlRMS AND BUSlNESS ADVlSORS Clearwater,
Florida
Toups Technology Licensing Incorporated
(A Development Stage Company)
BALANCE SHEETS
December 31, 1997 and January 31, 1998
December 31 January 31
1997 1998
--------- ---------
Assets:
Cash ........................................ $ 60,421 $ 185,920
Prepaid royalty expenses .................... 11,000 31,000
Property and equipment ...................... -- 3,433
Deferred Charges ............................ 5,195 8,825
--------- ---------
Total assets .......................... $ 76,616 $ 229,178
========= =========
Liabilities:
Accounts payable and ........................ $ 8,559 $ 1,694
--------- ---------
accrued liabilities
Total liabilities ..................... 8,559 1,694
Stockholders' equity:
Common stock ................................ 8,630 9,099
Additional paid-in capital .................. 99,840 284,026
Deficit accumulated during
development stage ......................... (40,413) (65,641)
--------- ---------
Total stockholders' equity ........... 68,057 227,484
--------- ---------
Total liabilities and
stockholders' equity ......................... $ 76,616 $ 229,178
========= =========
See Notes to Financial Statements
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month ended January
31, 1998, and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, July 28,
1997 1997
(inception) Month (Inception)
through Ended through
December January 31 January 31,
1997 1998 1998
---------- ---------- ----------
Interest Income ....... $ 543 $ 327 $ 870
Expenses:
Salaries ............ 17,902 6,227 24,129
Consulting fees ..... 14,209 6,536 20,745
Other operating costs 8,845 12,792 21,637
---------- ---------- ----------
Total expenses ........ 40,956 25,555 66,511
---------- ---------- ----------
Net loss .............. $ 40,413 $ 25,228 $ 65,641
========== ========== ==========
Weighted average number
of shares outstanding 8,381,751 8,852,799 8,456,687
Net loss per share .... $ .005 $ .003 $ .008
See Notes to Financial Statements
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
Deficit
Accumulated
Common Additional During
Number Stock Paid-i Development
of Shares (At Par) Capital Stage Total
Issuance of common
stock upon inception 8,250,000 $8,250 $-0- $-0- $8,250
Stock issued for:
Services ........... 100,000 100 -- -- 100
Cash ............... 160,000 160 99,840 -- 100,000
Rent ............... 120,000 120 -- -- 120
Deficit accumulated
during development
stage through
December 31, 1997 .. -- -- -- (40,413) (40,413)
------- ------ -------- ------- ---------
Balance
December 31, 1997 .. 8,630,000 8,630 99,840 (40,413) 68,057
Stock issued for:
Cash ............... 278,714 279 184,186 -- 184,465
Services ........... 190,000 190 -- -- 190
Deficit accumulated
during development
stage January 1,
1998 through January
31, 1997 ........... -- -- -- (25,228) (25,228)
------- ------ ------- -------- -------
Balance
January 31, 1998 ... 9,098,714 $9,099 $284,026 $(65,641) $227,484
========= ======= ======== ========= =========
See Notes to Financial Statements
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, 1997 July 28, 1997
(Inception) Month (Inception)
through Ended through
December January 31, January 31,
1997 1998 1998
--------- --------- ---------
Cash flows from operating activities:
Net loss ............................. $ (40,413) $ (25,228) $ (65,641)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Capital stock issued
for services and rent ............. 8,470 190 8,660
(increase prepaid expenses ........... (11,000) (20,000) (31,000)
Increase in deferred charges ......... (5,195) (3,630) (8,825)
Increase (decrease) in
accounts payable ..................... 8,559 (6,865) 1,694
-------- --------- ---------
Net cash used by
operating activities .............. (39,579) (55,533) (95,112)
Cash flows from investing activities:
Acquisition of equipment .......... -- (3,433) (3,433)
--------- --------- ---------
Net cash used
by investing activities ........... -- (3,433) (3,433)
--------- --------- ---------
Cash flows from
financing activities:
Proceeds from sale of
capital stock ..................... 100,000 184,465 284,465
--------- --------- ---------
Net cash provided by
financing activities ............. 100,000 184,465 284,465
Cash, beginning of period ........ -- 60,421 --
--------- --------- ---------
Cash, end of period .............. $ 60,421 $ 185,920 $ 185,920
========= ========= =========
See Notes to Financial Statements
TOUPS TECHNOLOGY LICENSING, lNCORPORATED
(A Development Stage Company)
NOTES TO FlNANClAL STATEMENT
December 31, 1997 and January 31, 1998
1. Summary of Significant Accounting Policies
Company - Toups Technology Licensing, Incorporated (Company), a Florida
Corporation, was formed on July 28, l997, and activated its start-up
operations on November 1, 1997, to facilitate market applications through
the licensing of late-stage technologies, primarily in the energy,
environmental and natural resources market segments. The Company selects
proprietary products or devices within market segments which management
perceives are not subject to rapid change and can be delivered to the
marketplace within a three- to six-month period. The Company is in the
development stage of its operations and has not realized any revenues from
its product lines (see subsequent event note 7). The Company's intended
market will be world-wide.
Machinery and Equipment - Machinery and equipment are recorded at cost.
Depreciation is computed on an accelerated method over seven years.
Estimates - The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Income Taxes - Deferred income taxes are reported using the liability
method. Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are differences between the
reported amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Restricted Common Stock - Restricted common stock is subject to the
resale provisions of SEC Rule 144. Due to the uncertainty of the future of
the Company, restricted stock is recorded at its par value ($.001) per
share.
2. Capital Stock
Common
The Company is authorized to issue 20 million shares of common stock with a
par value of $0.001 (one, one-thousandth dollar) per share. As of December 31,
l997, and January 31, 1998, there were 8,630,000 and 9,098,714 shares issued and
outstanding, respectively. Each share of common stock has one vote on all
matters acted upon by the shareholders. Of the 9,098,714 shares issued and
outstanding at January 31, 1998, 438,714 shares are unrestricted and 8,660,000
shares are restricted as to the sale to other parties.
Preferred
The Company is also authorized to issue 10 million shares of preferred
stock having a par value of $i per share. There were no preferred shares issued
outstanding at either December 31, 1997 or January 31, 1998,
3. Employment Agreements Stock Commitments
The Company entered into a series of one-year employment contracts. Within
those contracts, 85,000 shares of stock were issued to certain employees. These
shares have been recorded in the accompanying balance sheet. Additionally, there
are incentive clauses in these contracts that allow up to another 270,000 shares
of common stock to be issued to employees if certain goals are met. None of
these shares are scheduled to be issued to officers, directors, or holders of
more than 5% of the outstanding stock. The additional 270,000 shares have not
been recorded in the accompanying financial statements.
4, Licensing Agreement Commitments
The Company entered into two licensing agreements in November 1997,
whereby, the Company has the exclusive rights to make, use, lease, market and
sell these product lines. In January 1998, the Company executed a five-year
manufacturing agreement with a third licensor. In exchange for these rights
under the three agreements, the Company has committed to pay the Licensor a 6%
royalty, as computed by those agreements. The Company agreed to pay a minimum of
$176,000 of royalties in 1998, of which $31,000 has been paid as of January 31,
1998. The remaining royalty payments for the initial licensing term will be paid
as follows:
Year Ending
1998 $145,000
1999 96,000
2000 96,000
$337,000
The Company can offset these advanced payments against the royalties earned
in 1998 through the year 2000.
In addition to the above, if the Company exercised its option to renew the
licenses it would have future minimum royalties as follows:
Year Ending
2001 $200,000
2002 $250,000
2003 $300,000
2004 and every year thereafter $400,000
5. Non-Cash Disclosures
The following transactions were excluded from the statement of cash flows
because they were not cash transactions.
At inception, the Company issued 8,250,000 shares to its organizers. These
shares of stock were recorded at a total of $8,250.
In addition to the commitments described in the "licensing agreement
commitment" note, the Company issued 165,000 shares of stock to the licensors of
the Company's three technologies. These shares of stock were recorded at a total
of $115.
The Company issued 125,000 shares of stock to consultants and employees.
These shares were recorded at $125.
The Company issued 120,000 shares of stock for the use of operating
facilities for one year. These shares of stock were recorded at $120.
6. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carry-forward has been reduced by a valuation account to zero, due to
uncertainties regarding the utilization of the deferred asset. The deferred tax
asset and the corresponding valuation allowance were approximately $8,085 as of
December 31, 1997.
The net operating loss of $40,423 will expire in 2012.
Deferred tax asset:
Net operating loss carryforwards $8,085
Less valuation allowance 8,085
-----
Net deferred taxes $ -
========
7. Subsequent Event
A. Management has a signed purchase order and a $6,000 deposit for the
sale of the first Balanced Oil Recovery System Lift Pumps. These pumps
are expected to be installed in the second quarter of 1998 at a total
sales price of $180,000.
B. The Company has raised an additional $565,966 in equity from the sale
of 849,725 shares of common stock subsequent to January 31, 1998.
C. The Company entered into a two-year agreement with the Pinellas County
Industrial Council for the lease of machinery and equipment with an
original cost of $1,700,000 for $1 per year. Additionally, the Company
has an option to purchase the equipment at under 10% of the original
cost of the equipment at the end of the lease.
D. The Company received a $50,000 grant from the U. S. Department of
Energy and administered by the Technology Deployment Center for the
development of one of its technologies.
E. On April 29, 1998, Toups Technology Licensing Incorporated (TTL)
acquired Advanced Micro Welding, Inc. (AMW) in a business combination
accounted for as a pooling of interests. AMW, a company specializing in
micro-welding and custom metal fabrication, became a wholly-owned
subsidiary of TTL, through the exchange of 500,000 shares of restricted
common stock of TTL's common stock for all of the outstanding stock of
AMW.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The Company has never had any disagreement with its accountants.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article III of the Company's by-laws provide for the indemnification of
directors, in that Directors of the Company shall not be personally liable for
monetary damages to the Company or any other person for any statement, vote,
decision or failure to act, regarding corporate management or policy, by a
director, unless the director breached or failed to perform his duties as
director.
Article VI of the Company's by-laws provide for the indemnification of
officers, directors, employee and agents of the Company. Such indemnification is
available to any person who was or is a party to any proceeding (other than an
action by, or in the right of, the Company), by reason of the fact that he or
she is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy, as expressed in the Act and is, therefore, unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration fees $ 570
Transfer agents' fees $ 1,500
Legal $ 15,000
-------------
Total $ 17,070
=============
RECENT SALES OF UNREGISTERED SECURITIES
The Company issued "unregistered" securities to various persons and firms
as specified below and all such securities were acquired directly from the
Company in transactions not involving any public offering. All such securities
may only be resold upon compliance with Rule 144, adopted under the Act of 1933.
All securities were sold in reliance upon Section 4(2) of the Securities Act of
1933. All purchasers were either "accredited" or sophisticated. All purchasers
executed a Subscription Agreement indicating they have such knowledge and
experience in financial and business matters that, either alone or with a
purchasers representative, are capable of evaluating the merits and risks of the
investment. All purchasers were provided with access to information about the
Company.
Further, throughout these transactions specified in paragraph four here
following, the Company relied on Section 4(2) of the Act of 1933, as amended and
all purchasers executed a Subscription Agreement indicating (i) they meet the
definition of "Accredited Investor" as that term is specified in Regulation D,
Rule 502, and; (ii) they have such knowledge and experience in financial and
business matters that either alone or with a purchasers representative, are
capable of evaluating the merits and risks of the investment.
Subsequent to June 30, 1998, the Company issued 96,000 unregistered Common
Shares to employees and consultants including Steve Vandenberg 1000, Richard
Hungate 500, Bob Green 400, Joseph Bollent 2,000, Jason Bollent 100, Carl
Simmons 10,000; Mary Slaughter 2,000; Greg Jewell 50,000; David DeCara 10,000;
Ken Lindfors 10,000 and David McKena 10,000.
On July 19, 1998, the Company issued 510,000 unregistered Common Shares to
employees, consultants and vendors including Eric Littman 200,000; Hare &
Company 250,000; David DeCara 50,000, and; Mike Reilly 10,000.
On August 19, 1998, the Company issued 45,000 unregistered Common Shares to
employees and vendors including Jack Hansen 10,000; Ken Lindfors 10,000; Nelson
Flint 15,000, and; Ed Carlson 10,000. Further on August 19, 1998, the Company
acquired the license rights to the patent-pending Magnetion(TM) technology for
which it issued 105,263 unregistered Common Shares. Further on August 19, 1998,
the Company issued 600,000 unregistered Common Shares to officers and directors
including Leon Toups 150,000; Mark Clancy 150,000; Jerry Kammerer 150,000, and;
Michael Toups 150,000.
Between June - September, 1998, the Company sold 883,959 Shares of its
$.001 par value Common Stock at prices ranging from $0.89 - $1.25 per Common
Share for an aggregate of approximately $769,000 exclusively to accredited
investors as that term is defined in Regulation D, Rule 502. There were no
underwriters involved in the Private Offering and no commissions were paid nor
discounts given to any individual. The Company relied on Section 4(2) of 3(b) of
the Securities Act of 1933, as amended, pursuant to Regulation D, Rule 506 of
said Act in the sale of its securities. All purchasers executed a Subscription
Agreement indicated they have such knowledge and experience in financial and
business matters that either alone or with a purchasers representative, they are
capable of evaluating the merits and risks of the investment. None of the
Company's Officers, Directors, 10% owners or affiliates participated in the
aforesaid sale of securities.
On September 15, 1998, the Company issued 2,278,000 unregistered common
shares to finalize its Balanced Oil Recovery System (BORS) lift license
agreement and to various employees and consultants. As it relates to the BORS
license, the Company issued 250,000 unregistered shares to Gerold Allen and
250,000 unregistered shares to Mack Greever. The remainder of the September 15,
1998 issuance of unregistered common shares includes Dave DeCara 50,000; Jeffrey
Gardner 5,000; William Phillips 3,000; Tim Rice 50,000; A. R. Hardy 70,000, and;
Ruggero Santilli 100,000. Further on September, 15, 1998, the Company issued
unregistered shares to its officers and directors including Leon Toups 500,000;
Mark Clancy 500,000 and Michael Toups 500,000.
On September 30, 1998, the Company issued 900,000 unregistered common in
exchange for 100% of the issued and outstanding shares of Brounley Engineering &
Associates, Inc.
EXHIBITS
Table of Exhibits
The following Exhibits are incorporated by reference:
EX-3.(i) Articles of Incorporation
EX-3.(ii) By-laws
EX-5.(i) Opinion re: legality
EX-5.(ii) Opinion re: legality
EX-10.(i) BPV License Agreement (BP Valves)
EX-10.(ii) WAFT License Agreement (AquaFuel)
EX-10.(iii) BORS Lift Manufacturing License Agreement
EX-10.(iv) AMW Acquisition Agreement
EX-20 AquaFuel Certification Report
EX-23 Auditor's Consent
The following Exhibits are a part of this Registration
EX-10((v) Amended BORS Lift License Agreement
EX-10(vi) Magnetion(TM) License Agreement
EX-10(vii) Tunnel Bat License Agreement
EX-10(viii) Exchange of Share Agreement, re: Brounley Engineering
UNDERTAKINGS
The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b), if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the undersigned of expenses incurred or paid by a
director, officer or controlling person of the undersigned in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the undersigned will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Toups Technology Licensing, Inc.
(Registrant).
.
Leon H. Toups, President and Chief Executive Officer
By (Signature and Title)
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
Leon H. Toups,
(Signature)
President and Chief Executive Officer
(Title)
(Date): September 30, 1998