FORM 10-QSB - QUARTERLY OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. Securities and Exchange Commission Washington, D.C. 20549
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended April 30, 2004
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[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number: 0-25024
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TITAN TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
NEW MEXICO 85-0206831
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
3206 Candelaria Road NE, Albuquerque, NM 87107
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(Address of principal executive offices)
(505) 884-0272
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(Issuer's telephone number)
N/A
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(Former name, former address, and former
three-months, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
section 13 of 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
The number of shares of the registrant's common stock outstanding as of
June 8, 2004 was:
No Par Value Common 40,689,808
Transitional Small Business Format: Yes No X
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Titan Technologies, Inc.
BALANCE SHEET
April 30, 2004
(UNAUDITED)
ASSETS
Current Assets
Cash $ 33,845
-----------
Property and Equipment, at cost
Furniture and fixtures 3,077
Machinery 7,706
-----------
10,783
Less accumulated depreciation (9,840)
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Net property and equipment 943
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Other Assets 608
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$ 35,396
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 2,431
Other accrued liabilities 4,844
Deferred revenue 105,000
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Total Current Liabilities 112,275
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Stockholders' (Deficit)
Common stock - no par value; authorized, 50,000,000 shares;
40,706,808 shares issued and 40,689,808 shares outstanding 3,319,082
Treasury stock, 17,000 shares, at cost --
Accumulated (deficit) (3,395,961)
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(76,879)
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$ 35,396
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See the accompanying notes to the financial statements.
Titan Technologies, Inc.
STATEMENTS OF OPERATIONS
For The Three Months Ended April 30,
(UNAUDITED)
2004 2003
------------ ------------
REVENUES $ -- $ 10,000
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COSTS AND EXPENSES
General and administrative 63,012 59,900
Outside services 20,350 94,695
Depreciation 184 254
------------ ------------
83,546 154,849
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(Loss) from operations (83,546) (144,849)
Other income -- 6,305
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(Loss) before income taxes (83,546) (138,544)
Provision for income taxes -- --
------------ ------------
Net (loss) $ (83,546) $ (138,544)
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Weighted average common shares outstanding -
Basic and diluted 40,562,308 39,288,107
============ ============
Basic and diluted (loss) per common share $ (0.00) $ (0.00)
============ ============
See the accompanying notes to the financial statements.
Titan Technologies, Inc.
STATEMENTS OF OPERATIONS
For The Nine Months Ended April 30,
(UNAUDITED)
2004 2003
------------ ------------
REVENUES $ -- $ 10,000
------------ ------------
COSTS AND EXPENSES
General and administrative 202,854 177,162
Outside services 39,340 155,445
Depreciation 550 609
------------ ------------
242,744 333,216
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(Loss) From Operations (242,744) (323,216)
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Other income -- 19,955
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(Loss) before income taxes (242,744) (303,261)
Provision for income taxes -- --
------------ ------------
Net (loss) $ (242,744) $ (303,261)
============ ============
Weighted average common shares outstanding -
Basic and diluted 40,397,668 38,304,446
============ ============
Basic and diluted (loss) per common share $ (0.01) $ (0.01)
============ ============
See the accompanying notes to the financial statements.
Titan Technologies, Inc.
STATEMENTS OF CASH FLOWS
For The Nine Months Ended April 30,
(UNAUDITED)
2004 2003
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Cash flows from operating activities
Net cash (used in) operating activities $(167,634) $(262,920)
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Cash flows from investing activities
Purchases of fixed assets -- (1,322)
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Cash flows from financing activities
Proceeds from sale of common stock 89,600 361,550
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Net increase (decrease) in cash (78,034) 97,308
Cash at beginning of period 111,879 12,728
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Cash at end of period $ 33,845 $ 110,036
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See the accompanying notes to the financial statements.
Titan Technologies, Inc.
Notes to Financial Statements
April 30, 2004
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information. They do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
considered necessary for a fair presentation, have been included in the
accompanying unaudited financial statements. Operating results for the periods
presented are not necessarily indicative of the results that may be expected for
the full year. For further information, refer to the financial statements and
notes thereto, included in the Company's Form 10-KSB/A as of and for the two
years ended July 31, 2003.
Note 2. Earnings Per Share
The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings per Share." Basic
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding for the period. Diluted
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares and dilutive common stock equivalents
outstanding. During the periods presented, common stock equivalents were not
considered, as their effect would be anti-dilutive.
Note 3. Going Concern
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced losses from operations as a result of its investment
necessary to achieve its operating plan, which is long-range in nature. For the
nine months ended April 30, 2004 the Company incurred a net loss of $242,744.
The Company's ability to continue as a going concern is contingent upon its
ability to secure financing and attain profitable operations. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered in a highly
regulated industry.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Titan Technologies, Inc.
Notes to Financial Statements
April 30, 2004
(Unaudited)
Note 4. Stockholders' (Deficit)
During the nine month period ended April 30, 2004 the company sold 550,667
shares of common stock for cash proceeds aggregating $89,600.
Note 5. Licensing Agreements
On February 20, 2003 the Company entered into a license agreement for technology
related to tire recycling covering the following territories; the State of
Texas, Austria, and Brazil. The Agreement called for payments aggregating
$1,000,000. In addition, the company was entitled to a production royalty of $4
per ton on tires processed.
On June 4, 2003 the terms of the agreement were modified. Under the terms of the
modified license agreement the Company is to receive payments aggregating
$2,000,000, $10,000 of which was received as of April 30, 2003; $990,000 of
which will be paid upon the licensor reaching certain construction milestones;
and $1,000,000 of which will be paid as production royalties.
As an enticement to enter into the license agreement the Company will grant the
licensee a 5-year stock purchase warrant for 1,000,000 shares of common stock at
$0.30 per share upon the licensee remitting a payment aggregating $330,000 to
the Company from achieving certain construction milestones. As of the date of
this report the construction milestones have not been met and the warrant had
not been granted.
On April 2, 2004 an agreement was further modified with a group of investors for
three tire recycling plants to be built in Mexico. The Company has received a
non-refundable deposit of $105,000, which revenue is deferred , as discussed in
Note 6, below. Under the terms of the agreement the Company is to receive a
payment of $500,000. $300,000 will be credited to the licensing fee; $100,000
for each of the three recycling plants and the remaining $200,000 for an
exclusive license agreement for the Republic of Mexico.
Note 6. Revenue Recognition
The Company recognizes revenue from the licensing of its technology over the
term of the license agreement. In cases where a license covers a specific number
of facilities the revenue is deferred and recorded as income on a pro rata basis
at the completion of each of the licensed facilities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
As a result of activities by management, general and administrative expenses
increased $25,692 to $202,854 for the nine months ended April 30, 2004 compared
to the nine months ended April 30, 2003 primarily due to the increase in wages.
As a result of activities by management, general and administrative expenses
increased $3,112 to $63,012 for the three months ended April 30, 2004 compared
to the three months ended April 30, 2003 primarily due to the increase in wages.
As a result of activities by management, outside services expenses decreased
$116,105 to $39,340 for the nine months ended April 30, 2004 compared to the
nine months ended April 30, 2003 primarily due to the decrease in engineering
services.
As a result of activities by management, outside services expenses decreased
$74,345 to $20,350 for the three months ended April 30, 2004 compared to the
three months ended April 30, 2003 primarily due to the decrease in engineering
services.
With respect to existing plants constructed in Korea (not currently operating
because of financial failure of parent companies unrelated to the Company's
technology) and Taiwan (not currently operating because of the unavailability of
tires) using the Company's technology, no licensing fees or royalties have been
received by the Company. The Company is optimistic that royalties will be
received in the future from the operator/sub-licensee of the Taiwan plant, if it
should begin to operate again, but there can be no assurance that this will
occur or what the amounts will be.
In recent months, the Company has been concentrating its efforts on licensing
its technology in the United States because it believes that its tire recycling
technology has been proven at commercial scale through operation of the Asian
plants. Current discussions with prospective U.S. licensees involve payment of
an up-front licensing fee and on-going production royalties on a negotiated
basis, depending on the scope of the licensing agreement. Joint venture
arrangements in which the Company would be involved in operation of plants are
also under consideration. The Company is optimistic that recent results in
producing readily marketable activated carbon from tire derived carbon black
enhances the probability that one or more U.S. plants will be built using the
Company's technology, but there can be no assurance that the Company will be
successful in its U.S. licensing or joint venture effort or, if successful, what
the amount of the up-front payment or production royalties will be.
Financial Condition
The Company's liquidity decreased in the nine months ended April 30, 2004 as
cash decreased by $78,034 since July 31, 2003. Operations used $167,634 compared
to the same period of the prior year in which operations used $262,920. Proceeds
from the sale of common stock were $89,600 during the nine months ended April
30, 2004 compared to $361,550 for the same period in 2003.
Management has taken the following steps in the past and will consider taking
them again, if necessary, to address the financial and operating condition of
the Company which it believes will be sufficient to provide the Company with the
ability to continue in existence.
Improve marketing efforts for recycling plants and bring plastics recycling
technology to a marketable product.
Reduce operating and administrative expenses, and issue stock and notes payable
where possible for payment of expenses.
Titan Technologies, Inc.
Notes to Financial Statements
April 30, 2004
(Unaudited)
Defer payment of officer salaries if required.
Management believes that these steps, if taken, will allow the Registrant to
continue as a going concern together with results of on going efforts to raise
working capital through licensing agreements, joint ventures or sales of
additional equity securities in private placements. However, there are
significant risks associated with the registrant's business development and
there can be no assurance that its efforts will be successful or that it will be
able to raise sufficient working capital to survive as a going concern.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
The Company maintains controls and procedures designed to ensure that
information required to be disclosed in this report is recorded, processed,
accumulated and reported to management, including the principal executive and
financial officer to allow timely decisions regarding the required disclosure.
As of the end of the period covered by this report, Company's management, with
the participation of its principal executive and financial officer, performed an
evaluation of the effectiveness of the design and operation of these disclosures
controls and procedures. The principal executive and financial officer has
concluded that such disclosure controls and procedures are effective in ensuring
that required information is disclosed in the Company's reports.
(b) Changes in Internal Controls
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the
evaluation date.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
At the date of this report there are no known legal proceedings pending or
judgments against the Registrant or against any director or officer of the
Registrant in their capacity as such.
Item 2. Changes in Securities
During the nine months ended April 30, 2004 the Company sold common stock to ten
investors, each qualifying as an accredited investor within the meaning of Rule
501(a). The following table illustrates the dates of the transaction, the number
of shares and the proceeds from the sale.
Date Shares Issued Cash Received
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10/02/03 125,000 $ 25,000
10/31/03 15,000 2,250
11/11/03 133,333 20,000
11/19/03 10,001 1,500
11/25/03 34,000 5,100
12/01/03 15,000 2,250
01/09/04 33,333 5,000
02/03/04 20,000 3,000
03/09/04 50,000 7,500
04/21/04 15,000 3,000
04/23/04 100,000 15,000
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550,667 $ 89,600
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We relied on Section 4(2) of the Securities Act of 1933 for exemption from the
registration requirements of the Securities Act. Each investor was furnished
with information concerning our formation and operations, and had the
opportunity to verify the information supplied and ask questions of Management.
Additionally, we obtained a representation from each of the acquiring persons
representing the intent to acquire the securities for the purpose of investment
only, and not with a view toward the subsequent distribution thereof. Each of
the certificates representing the common stock carry a legend restricting
transfer of the securities represented.
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: The following exhibits are filed with this report:
31.1 Certification pursuant to Rule 13(a) or 15d-14(a) under the
Securities Exchange Act of 1934, as amended.
32 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
(b) Reports on Form 8-K. State whether any reports on Form 8-K have been
filed during the quarter for which this report is filed, listing the items
reported, any financial statements files, and the dates of any such reports.
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TITAN TECHNOLOGIES, INC.
Date June 14, 2004 /s/ Ronald L. Wilder, President
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Ronald L. Wilder, President, Chief Executive
Officer, Chief Financial Officer and Chief
Accounting Officer.