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EX-31.1 - EXHIBIT 31.1 - TITAN TECHNOLOGIES INC | titan10k73109x311_111309.htm |
EX-32.1 - EXHIBIT 32.1 - TITAN TECHNOLOGIES INC | titan10k73109x321_111309.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
[x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
fiscal year ended July 31, 2009
[
] TRANSITIION 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
TITAN TECHNOLOGIES,
INC.
(Exact
name of registrant as specified in its charter)
New Mexico
|
85-0206831
|
(State
or other jurisdiction of incorporation
|
(I.R.S.
Employer Identification No.)
|
or
other organization)
|
3206
Candelaria Road, N.E., Albuqureque, New Mexico 87107
(Address
of principal executive offices) (Zip Code)
Registrant’s telephone
number: 505-884-0272
Securities
registered pursuant to Section 12(b) of the Exchange Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Title
of each class
|
Name
of Exchange on which registered
|
No
Par Value Common Stock
|
None
|
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.
Yes X No
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.
Yes X No
Indicate by check mark whether the
registrant (1) has filled reports required to be filed by Section 13 or 14(d) of
the Securities Exchange Act of 1934 during the proceeding 12 months,
and (2) ha been subject to such filing requirements for the past 90
days X
Yes No
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in its definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form
10-K X
Indicate
by checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a small reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
Accelerated
filer
|
Non-accelerated filer
|
Smaller
reporting company X
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes X No
As of July 31, 2009 the aggregate market value of the
voting and non-voting common equity held by non-affiliates of Titan
Technologies, Inc was approximately $2,933,627 computed by reference
to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of July 31, 2009. This estimate
is based on the last price per share of $.06 in the pink sheets on July 31,
2009.
The number of shares of registrant’s common stock outstanding as of
November 13, 2009 was 49,293,877.
Table
of Contents
Page
No.
|
||
PART
I
|
||
Item1.
|
Business
|
3
|
Item
1A.
|
Risk
Factors
|
14
|
Item
2.
|
Properties
|
15
|
Item
3.
|
Legal
Proceedings
|
15
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
15
|
PART
II
|
||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder
|
|
Item
6.
|
Selected
Financial Data
|
16
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition
|
16
|
And
Results of Operations
|
17
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
Item
8.
|
Financial
Statements and Supplementary Data
|
19
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting
|
|
and
Financial Disclosure
|
36
|
|
Item
9A.
|
Controls
and Procedures
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36
|
Item
9B.
|
Other
Information
|
37
|
PART
III
|
||
Item
10.
|
Directors
and Executive Officers of the Company and
|
|
Compliance
with Section 16(a) of the Exchange Act
|
37
|
|
Item
11.
|
Executive
Compensation
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37
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and
|
|
Management
Related Stockholder Matters
|
37
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and
|
|
Director
Independence
|
38
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
38
|
PART
IV
|
||
Item
15.
|
Exhibits,
Financial Statement Schedules
|
39
|
Signatures
|
42
|
- 2 -
DOCUMENTS
INCORPORATED BY REFERENCE
The
following document is incorporated by reference herein:
Part III
– Items 5(d), 9, 10, 11, 12 and 13 – Registrant’s Definitive Proxy Statement for
the Annual Meeting of Shareholders to be held on December 23, 2009, which will
be filed with the Commission within 120 days after the end of the fiscal year
ended July 31, 2009.
FORWARD
LOOKING STATEMENTS
The
Annual Report on Form 10-K, including our “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” on page 17, contains
forward-looking statements that involve risks and uncertainties, as well as
assumptions that, if they never materialize or prove incorrect, could cause the
results of Titan Technologies, Inc. to differ materially from those expressed or
implied by such forward-looking statements. The words or phrases
“would be,” “will allow,” “intends to,” “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimate,” “project,” or similar expressions
are intended to identify “forward-looking statements.” Our operations
are subject to significant risks and uncertainties, including, but not limited
to, certain risk factors, which are described in more detail under “Risk
Factors” on page 15. All statements, other than statements of
historical fact, are statements that could be deemed forward-looking statements,
including any revenue projections, gross margin, expenses, earnings or losses
from operations, synergies or other financial items any statements of
management’s plans, strategies and objectives for future operations, and any
statement concerning developments, plans, or performance. Unless
otherwise required by applicable law, we do not undertake, and we specifically
disclaim any obligation to update, any forward- looking statements to reflect
occurrences, developments, unanticipated events or circumstances after the date
of such statements.
PART I
Unless otherwise indicated, “The
Company”, the “Registrant”, and “Titan” are used in this report to refer to the
business of Titan Technologies, Incorporated.
ITEM
I DESCRIPTION OF BUSINESS.
Summary
Titan Technologies, Incorporated was
incorporated under the laws of New Mexico on July 14, 1954. In its
early years, the Company was involved in the uranium industry under the original
name of Titan Uranium Corporation. The corporate name was changed in
1986 when Titan began to seek business opportunities in other
industries. In recent years, Titan has focused its efforts on several
recycling technologies, particularly in the area of tires and electronic
scrap. Titan believes it has reached an advanced state of development
of its tire recycling technology which was used in three plants, which were
built and operated in the Far East (South Korea and Taiwan).
- 3 -
Historically, much of Titan’s business
was performed through Tire Recycling Technologies Corporation (“TRTC”), formerly
a wholly owned subsidiary which was merged into Titan in 1999. TRTC
was directly involved in licensing the Company’s proprietary technology, as well
as construction of two plants in South Korea. Both Korean plants have
reportedly been shut down because of the insolvency of the owners, which
reportedly was unrelated to operation of the plants. Titan has not
received any current information on the status of these plants within the last
year. A third plant utilizing the Company’s tire recycling technology
was in operation, in Taiwan, for more than three years, by Forest All Industry
Corporation until the Taiwanese government began using automobile tires for
other purposes (such as generating electricity) and thus cut the supply of tires
to Forest All Industries to approximately 10 days per month which made their
operation impractical. At present the Taiwan plant is not in
operation.
Currently, two licensees are actively
pursuing the construction of plants, PPT Holdings, Ltd., a Texas limited
partnership, is building a recycling facility in Nuevo Laredo, Tamaulipas,
Mexico and Ally Investment, L.L.C. (“Ally”) is building a facility in Port
Arthur, Texas. Both of the licensees are in the financing and design
state. Both licensees have completed all or most of the governmental
approvals necessary and have acquired the land for their recycling
plants. It is anticipated that each licensee will complete their
process of financing in the near future and commence construction of each of
their plants during fiscal 2010, at which time initial license fees will become
due to Titan.
Titan
continues its working relationship with Adherent Technologies, Inc.
(“Adherent”), a research and development laboratory in Albuquerque which has
provided the Company with major assistance in developing its technologies and
product analysis. The President and principal shareholder of
Adherent, Dr. Ronald E. Allred, is a director and shareholder of Titan
Technologies, Inc. Pursuant to a technical assistance agreement among
the Company, Adherent and Dr. Allred, Adherent and Dr. Allred will receive a
percentage of all future Company revenue that results primarily from
advancements made to Titan’s technology by Adherent’s research and development
efforts.
Business
Development
Management contemplates that all future
plants constructed and operated outside the U.S. pursuant to a license agreement
will result in payment to the Company of a negotiated production royalty based
upon gross sales plus a negotiated up-front fee per plant see (“General” below,
page 8). In order to promote continued development of its tire recycling
technology (and other technologies); Titan will retain the flexibility to modify
terms of its licensing agreement as it deems necessary. Titan plans
to remain actively involved in construction and operation of future plants on a
consultative basis, in addition to receiving licensing fees. As an
alternative and as developments warrant, Titan may also consider joint venture
arrangements in which it would acquire, directly or indirectly, an ownership
interest in new plants. For example, Titan holds a 7% equity
ownership in PPT Holdings, Ltd., the licensee of the Mexican
plants. In addition, in December 2007, the Company agreed to receive
a 10% interest in each future plant built by Ally in the U.S. in exchange for
any future franchise fees and royalty fees payable to Titan after the first
plant.
- 4 -
In addition to its tire recycling
technology, Titan has been working with Adherent in developing new technologies
for recycling electronic (computer) scrap and waste plastic. Titan and Adherent
believe that the plastics contained in these materials can be recycled and
recovered in the form of marketable plastic polymers and liquid and gaseous
hydrocarbons. Also, the electronic scrap contains recoverable metals,
including precious metals. Titan and Adherent believe that this
technology has now been developed to a point where a commercial pilot facility
is warranted, particularly for the electronic scrap.
Description
of Technology
The first step in all of the Company’s
recycling technology involves shredding the feed waste using conventional
equipment which is commercially available from a number of
manufacturers.
The next step of the Titan technology
utilizes thermolysis (together with a proprietary catalyst) to recycle tires and
other scrap material. Thermolysis is a process which breaks down its
raw material feed into basic products through a combination of elevated
temperature and other components, including absence of oxygen and use of a
proprietary catalyst. In the case of the Company’s proprietary tire
recycling technology, destructive distillation is accomplished at lower
temperatures than are normally associated with conventional pyrolysis techniques
for recycling. Titan’s process is referred to as a “tertiary” process because it
reduces the tire feed to its primary raw components, which consist are primarily
oil, steel and carbon black. As mentioned, the Titan technology uses
a proprietary reactor catalyst in connection with the thermolysis
process. The lower temperature allows recovery of these components in
marketable form. Titan also holds process patents covering the feed
and discharge components of its system, which it believes represent an
advancement over conventional pyrolysis equipment. Although not
trademarked, the Titan tire recycling technology is often referred to informally
as “TRTM-150” technology.
In addition to its relatively low
operating temperatures, the Company considers its technology to be
environmentally friendly because the TRTM-150 process is a closed system and the
only emissions are exhaust gases in the form of clean-burning fuels (most of
which are generated and re-used in the process itself) and a small amount of
dirt and ash which is environmentally suitable for normal
landfills. In fact, non-condensable gases recovered during the
TRTM-150 process provide sufficient fuel to generate the required heat for
further thermolysis.
The Company’s technology to recover
hydrocarbons, carbon and metals from electronic scrap also utilizes its TRTM-150
process to recover the hydrocarbons and carbon, followed by other conventional
processes to separate and recover the metals.
Based upon data from the Taiwan and
Korean facilities, a plant design improvement program was undertaken in 2003 to
further optimize Titan’s thermolysis process and adapt it for plants to be built
in North America. The results of this program provided the basis for
the Phase III plant design in fiscal 2003. The Phase III design is
capable of processing 150 tons per day while recovering a higher percentage of
marketable products than the Phase II design.
- 5 -
The Phase III design accomplishes the
following:
|
·
|
Provides
greater operating efficiencies for the process as a
whole
|
|
·
|
Recovers
a higher percentage of marketable
products
|
|
·
|
Lowers
the amount of process waste materials
generated
|
|
·
|
Lowers
the per ton operating cost for processing
tires
|
|
·
|
Lowers
the per ton capital cost for processing
tires
|
|
·
|
Produces
higher quality products.
|
The Phase
III design will be used for future plants. To the best of the
Company’s knowledge there are no commercial tire recycling plants operating
today that are comparable to Titan’s Phase III design. Although the
engineering principles utilized in Titan’s processing sequences are considered
to be state-of-the-art for existing processing plants, it is not possible to
patent Titan’s overall design concept because certain elements include existing
technologies and equipment.
Titan
did develop and patent its sealed feed and discharge system
technology. These unique features give Titan the ability to design
technically sound and economically viable tire processing
facilities. Titan’s design is based upon a processing sequence that
utilizes a number of proven chemical engineering principles working together in
an innovative configuration.
The
underlying engineering principles that are used in this process are as
follows:
·
|
Unique
design for thermal expansion,
|
·
|
Filtration
of carbon particles from high temperature gas stream,
|
·
|
Magnetic
separation of ferrous materials,
|
·
|
Gas,
liquid and solid separation criteria,
|
·
|
Thermo
dynamics of gas/solids heat
transfer.
|
All of
these principles are utilized in Titan’s Phase III plant design. What
is most
important
is their integration into a technically sound, overall plant design
configuration. The know-how obtained from the operating plants in
Korea and Taiwan helped the Company form the design improvements currently
incorporated in the Phase III design.
A tire recycling plant can only extract
what is contained in the discarded tires. Many tire manufacturers use
different ingredients in their individual tires. Furthermore,
passenger tire compounds differ in content from truck tires.
A tire recycling plant must have the
capability of extracting marketable products from the wide range of differing
compounds in the various tires they process. Some tire manufacturers
use polyisoprene in their compounding mixture, while others use styrene and
butadiene, yet others use polybutadine. All, however, use carbon
black for strength and add natural extenders such as calcium carbonate in their
tire compounding. In view of the variations in rubber compositions,
it is important to have a process that extracts the highest possible yield of
marketable products from whatever the tire’s component may be.
- 6 -
The
average discarded tire is a common passenger tire with an average bulk density
of 28 /lbs/cu.ft. One hundred (100) raw tires make one
ton. An average new passenger tire weights 25 lbs. An
average used passenger tire weighs about 20 lbs. and has the following breakdown
by weight:
-
|
28%
carbon black
|
-
|
41%
rubber (natural and synthetic)
|
-
|
17%
fabric, performance extenders, etc.
|
-
|
14%
steel
|
Products
and Marketing
Titan estimates that a single plant
using TRTM-150 technology processing shredded tires at the rate of 150 tons of
tires per day will produce on an annual basis:
(1)
|
Approximately
165,000 barrels of oil (34 degree API)
|
(2)
|
Approximately 4,545
tons of high quality scrap steel
|
(3)
|
Approximately.
14,850 tons of carbon black
|
The
supply of waste tires available for recycling is sufficient to supply a
significant number of plants processing 150 tons of tires per
day. Titan reasonably believes that the commercial viability of its
TRTM-150 technology and the resulting products has been established through
pilot plant operations and the three plants that have operated in
Asia.
It is
anticipated that the two licensees that are currently in the process of building
recycling plants in Texas and Mexico will prove the viability of Titan’s Phase
III TRTM-150 technology as one of the most efficient methods for recycling tires
during the next two fiscal years.
Oil
Management believes that Titan has
established a legitimate potential to become a major player in the fields of oil
production from recycling and alternative energy production. The oil
produced, using TRTM-150 technology, is low in sulfur content and viscosity (it
flows readily at room temperature) and contains a high percentage of “fuel” oils
which are attractive for direct feed (without blending) into
refineries. Accordingly, the oil is readily marketable at prices
comparable to light, sweet crude oil. At the current price of $80/bbl for crude,
one year’s estimated production of 165,000 bbls of oil will yield approximately
$13,200,000. Current publicly available information indicates that
more than 250 million tires are being disposed of annually in the United States,
which represents a potential supply of about 9 million barrels of recoverable
oil per year.
- 7 -
Steel
The scrap steel recovered using
TRTM-150 technology is good quality carbon-steel used in manufacturing tires and
is also readily marketable, except for having been shredded it is essentially
the same steel wire which was incorporated into the original manufacture of
tires. Although the quantity recovered in a 150 ton per day plant is
relatively minor, it nevertheless represents about $1,452,000 at $200.00
ton/year in revenue recovered at minimal cost.
Carbon
Products
Conventional
carbon black is produced through controlled burning of natural gas and oil (much
like soot) and is relatively free of impurities. The largest use of
carbon black (by a significant margin) is for the manufacture of tires, although
carbon black is also used extensively in the production of ink, paint, shoe
polish, plastics, moldings, gaskets and similar applications in which a black
product is necessary or deemed desirable. Many different grades of
carbon black are produced depending upon the intended use, but virtually all
conventionally produced carbon black is nearly ash-free.
Carbon
black produced through TRTM-150 thermolysis consists of the various grades which
went into manufacture of the tire. Because of the very fine physical
composition of the material, it is not realistically practicable to separate the
product by grade. In addition, carbon black produced through
thermolysis contains varying amounts of ash attributable to other minor
materials used in manufacturing the tire.
The world demand for carbon black is
expected to exceed 8.2 million metric tons (over 16 billion pounds) in
2009. While world prices for this commodity have been low for the
past several years, consumption and prices are expected to rise as the demand
for tires increases and the price of hydrocarbon products rise.
Market
research indicates that a market exists for Titan’s carbon
black. Moreover, it may be possible to use TRTM-150 carbon black in
normal tire production in the United States when blended with other grades of
carbon black. Titan believes that once a TRTM-150 plant has been
established in the United States or Europe, there will be ample demand for the
carbon product once consumers have an opportunity to evaluate a steady and
consistent supply of the product. Titan believes that carbon black
can be produced using the TRTM-150 process at a lower cost than conventional
carbon black, which should be of major significance in achieving market
penetration once a plant is operational in the United States or
Europe.
The
Company conducted testing on a bulk sample of activated carbon
black. Although the activation process is expected to generate
only about 50-60% of the product weight of the carbon black fed into the
activation process, this is more than offset by the much higher market price and
the ability to obtain a secure market for product. In addition to
Titan’s own work, samples of the carbon black were also successfully processed
into activated carbon black at the University of Illinois’ laboratory under the
direction of a well known expert in the field, who has been working on
thermolysis-produced carbon black as a source for production of activated carbon
for many years. The results of this testing were made available to
Titan and confirm the
- 8 -
Company’s
optimism that firm markets can be developed for its TRTM-150 carbon black or
activated carbon products once a commercial plant is operating in the
United States. The preliminary information recently received by Titan
indicates that thermolysis–produced carbon black from tires may produce a
superior activated carbon for certain applications.
The
Company and Adherent have also demonstrated with a bench scale working model,
that most of the ash impurities can be removed from the carbon black using a
conventional hydro-metallurgical process. Although further test work
must be performed to confirm that removal of ash is feasible on a commercial
scale, a relatively ash-free carbon black product would enhance product use in
applications requiring higher product purity. At present, Titan does
not have the funds required to complete this phase of test work and believes
that it will be necessary to establish its basic technology for recycling tires
through construction and operation of a commercial plant in North America in
order to fully evaluate available markets for the full range of carbon products
that it will be generated utilizing its thermolysis technology.
Review
of 2009
General:
During the fiscal year ended July 31,
2009, Titan received numerous inquiries regarding use of its tire recycling
technology in the United States and other countries. Several
inquiries have resulted in serious discussions and the signing of License
Agreements, some of which are continuing to date.
On August 23, 2006 Titan signed a
Licensing Agreement with Ally Investments, LLP a Texas Limited Liability
Partnership, located in Port Arthur, Texas (Ally) for a 300 ton/day plant to be
located in Port Arthur, Texas. On August 23, 2006, Ally paid an
initial non-refundable deposit of $100,000.00 for the exclusive right to
construct a plant in Mississippi, Texas, Oklahoma and Louisiana. The
$100,000 will be applied to the Licensing fee for Ally’s first
plant. The License Agreement with Ally contained requirements for
construction commencement of its initial plant in Port Arthur, Texas by March,
2007 and commencement of additional plants at approximately one year intervals
after completion of the first plant, up to a total of 4 plants. Ally
engaged Lockwood Greene to obtain an air permit from the State of Texas for its
first proposed plant in Port Arthur through its wholly owned subsidiary. The
License Agreement with Ally Investments, LLP “Ally”) was amended on February 23,
2007 by mutual agreement to allow Ally until such time as Ally obtains financing
and obtains governmental approval for its initial plant in Port Arthur,
Texas. Ally obtained a permit to build from the State of Texas
Commission on Environmental Quality in August 2007.
On December 12, 2007, Ally Investments,
LLP (“Ally”) and the Company entered into a Second Amendment of their Franchise
Agreement which eliminated any deadline for commencing the construction of
Ally’s first Plant in Port Arthur, Texas, but retained requirement that a new
plant be commenced within 12 months after the commencement of the first and each
subsequent plant.
- 9 -
The Amendment also provided, among
other terms, that in exchange for Titan’s eliminating its initial franchise fee
of $1.6 Million and its royalty fees on all subsequent plants and enlarging the
territory of Ally’s license to include the entire United States, Ally would give
Titan a Ten (10%) percent membership or equity interest in each subsequent plant
built by Ally in the U.S. In addition, on December 12, 2007 Ally and
the Company executed a Memorandum of Understanding related to a joint venture to
develop Titan’s technology for use in recycling scrap
electronics. Since December 2007, Ally has been working to secure
financing for one or more of its proposed plants.
The Second Amendment to the Ally
Franchise Agreement and the Memorandum of Understanding were attached to the
Registrant’s current report on Form 8-K filed December 21, 2007.
Effective September 30, 2009, the Company and Ally agreed to reinstate the
expired Franchise Agreement and to extend it for one year, through September 30,
2010, at which time the Agreement will terminate if Ally has not obtained
sufficient financing to commence construction of its proposed tire recycling
plant in Port Arthur, Texas.
Over the last four years, Titan
Technologies, Inc. has received cumulative non-refundable deposits aggregating
$700,000.00 as payment for three TRTM–150 plants in Mexico and the exclusive
right to use Titan’s TRTM-150 technology in Mexico from International Tire
Recycling and, its successor, PPT Holdings Ltd, a Texas Limited Liability
Company (“PPT”) located in Laredo, Texas. The latest payment of
$150,000 was received from PPT and was subject to a consulting fee of $60,400
payable to Edmundo Peredo.
On October 16, 2006, PPT engaged
Lockwood Greene as its prime engineering firm to design and build the core
process utilizing Titan’s TRTM-150 process as its initial proposed plant in
Nuevo Laredo, Mexico. PPT has more recently engaged a Mexican
architectural and engineering firm, Dycusa, located in Monterrey, Mexico as its
primary engineering firm for the infrastructure required for a fully operational
plant, including, but not limited to the building, storage silos, shredding
equipment, roads, and utilities.
Upon receipt of sufficient revenue, or
a financial partner, Titan plans to develop and test its recycling technology
for other hydrocarbon based materials, such as electronic scrap and
plastics and high sulfur coal. Research efforts have been conducted
in conjunction with Adherent Technologies and continue to represent a
significant potential for independent recycling plants, as well as for expansion
of recycling plants based upon Titan’s technology.
Outlook
During the fiscal year ending July 31,
2010, the Company’s efforts will continue to be directed toward the development
of new licenses and operations in the Americas, as well as Mexico and
European and Asian markets. This will include:
- 10 -
Additional
research and development (working with Adherent and others) by Titan
Technologies for the recovery of salable products, particularly with
respect to plastics.
Although
the Company continues to have contact with a number of interestedprospective licenses, it believes that
as soon as a plant is built and operating inTexas or Mexico that demonstrates the economic and technical
viability of its tirerecycling
technology that it will be far easier to license its technology on for more
favorable terms in the rest of the world outside the U. S. and
Mexico.
Titan believes that its technologies
offer an environmentally sound and commercially viable solution for dealing with
significant worldwide waste disposal problems, which appear to be continuing to
growing at an ever-increasing rate. For example, it is estimated that
more than 3 million tons of tires are now in U. S. waste disposal
facilities.
Similarly, Titan and Adherent intend to
continue research with respect to electronic waste, which contains a large
amount of non-biodegradable plastic waste. Preliminary research
indicates that these can be converted into marketable hydrocarbon products
through the Titan process. In addition, electronic scrap typically contains
several metals (including precious metals) which Titan believes can be recovered
and marketed on a commercial basis based upon research and development work
performed to date. Although additional research and development work
must be performed in order to confirm commercial viability of the electronic
scrap and auto fluff technologies, Titan and Adherent are encouraged by the
results achieved to date and intend to continue research with the objective of
establishing commercial processes in these technologies provided funding for
such research is available.
In August 2005, Titan applied for and
obtained a Provisional Patent for a new liquid seal feed system that will
replace Titan’s original patent which expired in August 2005. In
fiscal 2006, Titan applied for a utility patent for the liquid feed system, and
applied for provisional patents for a high temperature carbon & gas filter
and a fractional destructive distillation array. In 2007, Titan
applied for utility patents for the last two referenced provisional
patents.
Titan believes that fiscal 2009 was a
successful year and that fiscal 2010 will be better, based on the assumption
that one or both of Ally or PPT will commence construction of a plant utilizing
Titan’s TRTM-150 technology.
Recent
inquiries have been received by Adherent from entities wishing to use Adherent
and Titan’s technologies to liberate carbon fiber from carbon composite
materials, such as wind turbines, aircraft manufacturing, scrap and tennis
rackets.
Currently, there appears to be
heightened interest and government incentives for green technology and
alternative energy sources. Titan’s technology is within both
categories. Titan recycles hydrocarbon waste products and converts
them into oil, gas, and other by products that have commercial
value.
- 11 -
Research
and Development
As stated above, Titan intends to
direct most of its research and development efforts during fiscal 2010 toward
the continued development of its phase III TRTM-150 technology and the patenting
of any additional patentable innovations.
The
Industry and the Registrant’s Competition
Tires
Historically, most scrap tires have
been piled or buried, neither of which offers an efficient or environmentally
acceptable solution to disposal of scrap tires.
There are three areas of potential
competitors: other pyrolysis systems, other uses for scrap tires, and
other suppliers of carbon black. Blending oil and scrap steel are
commodity items, and therefore, there will be no significant competitive
pressures coming from these products.
The Scrap Tire Management Council in
its Scrap Tire Use Disposal Study published September 11, 1990, identified two
basic areas in which waste tires have been used in industry. Each of
these areas has developed into separate industries that will compete with the
Company for tires. These areas and industries are: (i) a substitute
for traditional fossil fuels in cement kilns, paper mills, utilities and
dedicated tire–to-energy facilities and (ii) as an ingredient for asphalt
paving. Limited numbers of tires have been made into sandals and
other wearing apparel and rubber products, but such uses have not and probably
will not contribute significantly to waste tire disposal. Numerous
companies now exist that are using waste tires in their products, including,
ball-point pens, video cassettes, bulletin boards, flooring products, rubber
mats, rubber protection devices for marine applications, garden products,
various forms of hoses, belts, and similar products that have historically been
made from new product. It is unknown what percentage of used tires
these competing products use. Management believes that these products
consume a very small percentage of the more than 250 million scrap tires that
are discarded in the United States each year.
There are no commercially sized
pyrolytic tire recycling plants operating in the United States as of
today. Several companies are trying to develop an economically viable
process to recycle scrap tires using pyrolysis or similar technologies, but none
have been successful to-date.
- 12 -
Although not checked on during the last
year, the following companies have attempted, or are attempting, to develop
commercially sized tire pyrolysis plants:
|
·
|
Internal
Hydro International, Inc., of Tampa Florida, focuses on generating energy
using used tires. On September 27, 2006 it entered into a joint
venture to produce a 100 ton per day tire to oil remediation project near
Springfield Illinois.
|
|
·
|
Environmental
Waste International, Ajax, Ontario. Has may have a prototype
system using microwaves and are concentrating their efforts on medical
waste.
|
|
·
|
Integrated
Technologies Group, Inc., Ardmore, OK. Owners of Safe Tire, a
tire shredding business, developed a tire pyrolysis system that was
featured in Popular
Mechanics magazine in 2001. No prototype or production
plant has been built.
|
The Company believes that burning tires
as a substitute fuel, provides only marginal savings for the user and that their
use in asphalt paving has yet to be proven viable or to meet the expectations
that it will substantially extend asphalt service life. At present,
these two industries consume less than twelve percent of the waste tires
discarded in the United States each year.
The only technology comparable to
Titan’s continuous process is pyrolysis process, which operates at much higher
temperatures and on a “batch” basis. Such pyrolytic facilities
currently exist in Japan, Taiwan, Germany and possibly South
Africa. However, they are believed to rely on government subsidies
because they involve significant capital outlays and operating costs and are
unable to handle any significant tonnage of scrap tire rubber.
Titan is not aware of any other uses
for waste tires that are reasonably competitive with the benefits which can be
derived from the TRTM-150 process. However, research into the problem
of waste tire disposal is continuing throughout the world and it should be
anticipated that new and novel recycling approaches may, from time to time, be
proposed as solutions to the problem of waste tire disposal.
The Company estimates that there is a
potential for approximately twenty TRTM-150 tire recycling plants in the United
States alone if a first U. S. plant can be built and successfully operated to
demonstrate in the U. S. that the TRTM-150 technology is commercially
viable. This estimate is based upon industry statistics that state
that scrap tire stockpiles contain approximately 27.1 scrap tires per capita of
population. Given this figure, it appears that a population base of
approximately one million people generate sufficient scrap tires to sustain the
operations of a TRTM-150 recycling plant.
Titan’s marketing efforts in the United
States have been focused on larger population areas. The Company
believes that, because of the current policies of providing incentives and
inducements to promote recycling, market conditions for implementation of its
technology should continue to improve in the near future.
- 13 -
Plastics
The Company believes that its plastic
recycling technology (developed with the assistance of Adherent Technologies) is
ready for commercial implementation. Titan’s objective is to
establish a plastics recycling plant at some location in the United States,
either on the east or the west coast near a major metropolitan
area. No specific location has yet been selected and funding for an
initial plant has not yet been arranged. Titan believes that there is
a reasonable possibility that a site could be selected during fiscal 2009 or
2010 and financing arranged for the construction of an initial plant, either
involving Titan as a participant or through a license or joint venture
arrangement with others.
On December 1, 1999, Titan, Adherent
Technologies, and Dr. Allred reestablished the research and development
parameters through which Adherent operates to advance the Registrant’s
technology. Adherent and Dr. Allred were granted a royalty ranging
from 1% to 5% on all proceeds received by the Company from any tire
recycling plant and 50% of all proceeds received by the Company from any
recycling plant for products other than tires. In addition, Titan
sold to Adherent (a company owned by Dr. Allred) 1,000,000 shares of its common
stock for a consideration of $10,000. Management believes that the
continued relationship with Adherent is to Titan’s advantage and that the
compensation given to Adherent and Dr. Allred is reasonable in light of the
substantial advances that Adherent has made in the Company’s technology over the
past 8 years. It is hoped that the continued affiliation between the
Company and Adherent will generate a continual stream of new applications for
Titan’s technology in the future.
Employees
The registrant has four full time
employees, one of which is paid $5,700 a month and each of the other three are
paid $3,500 per month.
ITEM
1A. RISK FACTORS
Lack of Profitable operation
in recent periods – The Company lacks operations that generate revenue,
but has been able to survive and continue its efforts to develop its technology
over the last ten years with very limited amounts of cash. Besides
the revenues from franchise fees the Company has raised working capital mainly
through the sale of stock. Since the Company is nearing the upper
limit of its authorized but unissued shares of common stock the ability to raise
additional working capital may be limited in the near future. This
puts greater emphasis on revenues.
Franchisees ability to
finance proposed plants – There are two franchisees, namely PTT Ltd. in
Mexico and Ally Investments, LLC in the U.S. that have paid portions of their
franchise fees and are in the process of financing their initial
plant. It is too early to say whether either of them will be
successful in raising the capital necessary to build a plant.
If both
do not succeed in the next year to finance their proposed plant and pay their
proposed franchise fees to the Company, the Company may not succeed due to lack
of revenue from franchise fees. The economic recession has made
financing large projects without a proven track record such as a tire recycling
facility utilizing Titan’ technology much harder to finance.
- 14 -
Lack of Stock to sell
– As stated above the Company’s working capital needs have historically been met
through the sale of stock and revenues from franchise fees. Since the
Company is nearing the upper limit of its authorized but unissued shares of
common stock its ability to raise additional working capital may be limited in
the near future.
Patent and trade
secrets – As far as the Company knows it holds patents and trade secrets
for the processing of hydrocarbons in a manner that yields all of the original
components of a hydrocarbon compound, such as a tire. To the extent
that others have or will develop more successful processes for conversion of
tires into their constituent elements, the Company’s future revenues may be
adversely affected.
No Revenues at this
time - Although the Company has been involved in the construction of
three plants that have operated in Korea and Taiwan, there are no working plants
at this time and thus no revenue. There is no assurance when or if
another plant will be constructed and in operation, such that revenue in the
form of franchise fees and royalties or a share of profits can begin to be paid
to the Company.
ITEM
2: DESCRIPTION OF PROPERTY.
Titan has the exclusive right to use
the TRTM-150 technology utilized in its TRTM-150 plants and the right to develop
such technology for the recycling of plastics and other organic
materials. In addition, Titan owns a mobile research and development
plant which has an estimated replacement value of approximately
$500,000. Since the plant was built for research and development
purposes, all plant expenditures have been charged to operations. It
also owns certain office furniture having an estimated replacement value of
approximately $12,000. Management believes that its facility and
equipment is adequate for the Registrant’s needs at the present and during the
foreseeable future.
Titan leases approximately 2,150 square
feet for its executive offices located at 3206 Candelaria, NE, Albuquerque, New
Mexico on a month to month basis at a rent of $1,025 per
month. Titan’s Management believes that the executive offices now
leased by it will be adequate for the Company’s business for the near
future.
ITEM
3: LEGAL PROCEEDINGS.
At the date of this report, there are
no known legal proceedings pending or threatened against Titan or against any
director or officer of the Registrant in their capacity as such.
ITEM 4: SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of
security holders during the fourth quarter of the fiscal year ended July 31,
2009.
- 15 -
PART
II
ITEM
5: MARKET
FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information: The
Company’s common stock is listed in the pink sheets rd under the symbol “TITT”
and is traded over-the-counter. The high and low bid prices for the
Company’s common stock for the past two years, as furnished by National
Quotation Bureau, Inc., is as follows:
Quarter
Ended
|
High
|
Low
|
Quarter
ended September 30, 2007
|
$0.21
|
$0.17
|
Quarter
ended December 31, 2007
|
$0.21
|
$0.17
|
Quarter
ended March 31, 2008
|
$0.20
|
$0.17
|
Quarter
ended June 30, 2008
|
$0.20
|
$0.13
|
Quarter
ended September 30, 2008
|
$0.20
|
$0.13
|
Quarter
ended December 31, 2008
|
$0.09
|
$0.05
|
Quarter
ended March 31, 2009
|
$0.11
|
$0.05
|
Quarter
ended June 30, 2009
|
$0.07
|
$0.04
|
Quarter
ended September 30, 2009
|
$0.06
|
$0.03
|
Dividends: The
Company has never paid dividends and its earnings have not warranted such
payment. However, it should be anticipated that, should the Company
experience earnings that might otherwise warrant the payment of dividends, the
possible future business development needs of the Company could result in no
dividends being paid in the foreseeable future.
Shareholders:
At October 20, 2009, the Company had approximately 893 shareholders
of record.
The
Company has no plan for purchasing any of its outstanding shares of common
stock
The
information required to be disclosed by Item 5(d) Securities authorized for
issuance under equity compensation plans is found in the Registrant’s Proxy
Statement in the Compensation of Directors and Executive Officers
Section.
ITEM
6: SELECTED FINANCIAL DATA
Not Applicable.
- 16 -
ITEM
7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Plan of Operation should
be read in connection with the Company’s financial statements and notes
thereto. Information discussed herein, as well as this Annual Report
on Form 10-KSB, includes forward-looking statements or opinions regarding future
events or the future financial performance of the Company, and are subject to a
number of risks and other factors which could cause the actual results to differ
materially from those contained in forward looking statements. Among
such factors are: general business and economic conditions; customer
acceptance of anticipated products which may be produced from plants using the
Company’s licensees to obtain financing for such plants; the ability of any
additional plants, if financed, in this Form 10-KSB or listed from time to time
in documents filed by the Company with the Securities and Exchange
Commission.
Plan
of Operation
Overview
As described above under Item 1, the
Company’s objectives and its primary activities relate to expanding use of
Titan’s patented and proprietary technology for construction and operation of
commercial plants designed to recycle waste tires and plastics into marketable
products. The Company believes that commercial viability of its tire
recycling technology has already been established through construction and
operation of three plants in Asia under license from Titan. The focus
of efforts during the next twelve months will be to license use of the Company’s
technology, subject to a reservation of a royalty relating to the sale from the
plants of the various products produced and sold from any such
plants. Additionally, the Company plans to perform on-going research
and analysis devoted to establishing additional uses for its technology, subject
to availability of adequate funds to do so.
Next
Twelve Months
The
objectives of the Company have not changed, and Titan believes it has an
excellent opportunity to license one or more plants using its Phase III
technology for construction and operation in the United States (or elsewhere)
during the next year. The key elements required to accomplish this
objective are as follows:
|
·
|
Assist
the two existing licenses to start construction of their new plants, which
will include a payment for licensing fee in order to provide the Company
with working capital to support its on-going general and administrative
expenses and cost of additional research and
development.
|
|
·
|
Development
of additional product and marketing information with respect to
gasification and destructive distillation of
coal..
|
As
described under Item 1, the Company believes that due to the work that has been
accomplished during the previous fiscal year, there may be one or two operating
TRTM-150 plants in North America by the end of calendar 2010.
- 17 -
Financial
Condition and Cash Requirements
The
Company’s cash position increased by $8,827 to $13,288 at July 31, 2009 from
$4,461 at July 31, 2008. During fiscal 2009, the Company sold shares
of its common stock in reliance upon certain exemptions from registration under
the Securities Act of 1933, as amended. In addition, 400,000 shares
were issued for cash in the amount of $22,000, subsequent to July 31,
2009. The proceeds of these limited sales and the Company’s
cash position will not be sufficient to cover anticipated expenses for the next
twelve months. If licensing fees do not materialize, it will be
necessary for the Company to raise additional funds through private placements
(or joint venture or similar arrangement) in order to continue with its
business. Based on prior experience, however, the Company believes it
will be able to do so for at least the next twelve months, although there can be
no assurance that such additional funding will be available. The
Company has no significant debt.
The Company’s costs and expenses of
operations were
$320,689 during
fiscal 2009, primarily resulting from the Company’s efforts to license a plant
in the United States or Mexico and to conduct research and development for
applications of new technology. Income from operations was $100,000
during the 2009 fiscal year. As conditions warrant, the Company will
also take such action to reduce administrative expenses to the extent
practicable, including issuance of stock and notes payable where possible for
payment of expenses. At present, the Company does not expect to spend any
significant amount of money for equipment during the next twelve months or
significantly increase its number of employees. These factors could
change if licensing fees or a joint venture (or similar arrangement)
materializes during such twelve month period.
Our
working capital deficit has limited our ability to expand our operations and
pursue our business plan. The following table sets forth our working capital
deficiencyat July 31, 2009 and 2008:
2009
|
2008
|
|||||||
Current
assets
|
$ | 14,313 | $ | 4,461 | ||||
Current
liabilities
|
671,293 | 484,752 | ||||||
Working
capital (deficit)
|
$ | (656,980 | ) | $ | (480,291 | ) |
Our
working capital deficit increased by $176,689 at July 31, 2009 compared to 2008,
primarily due to the increase in accounts payable and accrued
expenses.
Due to
continued losses from inception, we have accumulated deficits of $4,822,385 and
$4,601,696 at July 31, 2009 and 2008, respectively, and stockholders’ deficits
of $631,371 and $454,682, respectively.
Research
and Development
During
the next twelve months, the ability of the Company to conduct a
significant amount of further research and development will depend
upon receipt of licensing fees or research and development which may be funded
through joint ventures (or similar arrangements) with other
parties. Accordingly, there can be no assurance that additional
research and development will be conducted by the Company during the next twelve
months.
- 18 -
ITEM
7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable. The Company
does not presently or otherwise engage in market risk sensitive
instruments.
ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Titan
Technologies, Inc.
Financial
Statements
July
31, 2009 and 2008
- 19 -
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders
and Board of Directors
Titan
Technologies, Inc.
We have
audited the accompanying balance sheets of Titan Technologies, Inc. as of July
31, 2009 and 2008, and the related statements of operations, changes in
stockholders’ equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). These
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 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 Titan Technologies, Inc. as of July
31, 2009 and 2008, and the results of its operations and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred significant losses from
operations and is reliant on raising capital to initiate its business
plan. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard
to these matters are also discussed in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Start
Winter Schenkein & Co., LLP
Denver,
Colorado
November
12, 2009
- 20 -
Titan
Technologies, Inc.
Balance
Sheets
July
31,
|
|||||||||
2009
|
2008
|
||||||||
ASSETS
|
|||||||||
Current
Assets
|
|||||||||
Cash
|
$ | 13,288 | $ | 4,461 | |||||
Prepaid
expenses
|
1,025 | - | |||||||
Total
current assets
|
14,313 | 4,461 | |||||||
Other
Assets
|
25,609 | 25,609 | |||||||
$ | 39,922 | $ | 30,070 | ||||||
LIABILITIES
AND STOCKHOLDERS' ( DEFICIT)
|
|||||||||
Current
Liabilities
|
|||||||||
Accounts
payable and accrued expenses
|
$ | 151,293 | $ | 14,752 | |||||
Deferred
revenue
|
520,000 | 470,000 | |||||||
Total
current liabilities
|
671,293 | 484,752 | |||||||
Stockholders'
(Deficit)
|
|||||||||
Common
stock, no par value; 50,000,000 shares authorized
|
|||||||||
48,910,777
shares issued, 48,893,777 shares outstanding (July 31,
2009)
|
|||||||||
48,183,277
shares issued, 48,166,277 shares outstanding (July 31,
2008)
|
4,191,014 | 4,147,014 | |||||||
Treasury
stock, 17,000 shares at cost
|
- | - | |||||||
Accumulated
(deficit)
|
(4,822,385 | ) | (4,601,696 | ) | |||||
(631,371 | ) | (454,682 | ) | ||||||
$ | 39,922 | $ | 30,070 |
The
accompanying notes are an integral part of these financial
statements
- 21 -
Titan
Technologies, Inc.
|
||||||||
Statements
of Operations
|
||||||||
For
the years ended July 31,
|
||||||||
2009
|
2008
|
|||||||
Revenue
|
$ | 100,000 | $ | - | ||||
Costs
and Expenses
|
||||||||
General
and administrative
|
255,111 | 268,141 | ||||||
Outside
services
|
65,578 | 5,525 | ||||||
Depreciation
|
- | 53 | ||||||
320,689 | 273,719 | |||||||
Loss
from Operations
|
(220,689 | ) | (273,719 | ) | ||||
Provision
for Income Taxes
|
- | - | ||||||
Net
(loss)
|
$ | (220,689 | ) | $ | (273,719 | ) | ||
Weighted
average common shares outstanding -
|
||||||||
Basic
and diluted
|
48,501,517 | 47,137,714 | ||||||
Net
( loss ) per common share - basic and diluted
|
$ | (0.00 | ) | $ | (0.01 | ) |
The
accompanying notes are an integral part of these financial
statements
- 22 -
Titan
Technologies, Inc.
|
||||||||||||||||||||||||
Statement
of Stockholders' (Deficit)
|
||||||||||||||||||||||||
For
the Years Ended July 31, 2009 and 2008
|
||||||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Total
|
||||||||||||||||||||||
Number
of
|
Number
of
|
Accumulated
|
Stockholders'
|
|||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
(Deficit)
|
Equity
(Deficit)
|
|||||||||||||||||||
Balance,
July 31, 2007
|
45,979,839 | $ | 3,915,740 | 17,000 | $ | - | $ | (4,327,977 | ) | $ | (412,237 | ) | ||||||||||||
Issuance
of common stock for cash
|
2,186,438 | 231,274 | - | - | - | 231,274 | ||||||||||||||||||
Net
( Loss )
|
- | - | - | - | (273,719 | ) | (273,719 | ) | ||||||||||||||||
Balance,
July 31, 2008
|
48,166,277 | 4,147,014 | 17,000 | - | (4,601,696 | ) | (454,682 | ) | ||||||||||||||||
Issuance
of common stock for cash
|
727,500 | 44,000 | - | - | - | 44,000 | ||||||||||||||||||
Net
( Loss )
|
- | - | - | - | (220,689 | ) | (220,689 | ) | ||||||||||||||||
Balance,
July 31, 2009
|
48,893,777 | $ | 4,191,014 | 17,000 | $ | - | $ | (4,822,385 | ) | $ | (631,371 | ) |
The
accompanying notes are an integral part of these financial
statements
- 23 -
Titan
Technologies, Inc.
|
||||||||
Statements
of Cash Flows
|
||||||||
|
||||||||
For
the years ended July 31,
|
||||||||
2009
|
2008
|
|||||||
Cash
Flow From Operating Activities
|
||||||||
Net
(Loss)
|
$ | (220,689 | ) | $ | (273,719 | ) | ||
Adjustments
to reconcile net (loss) to net cash
|
||||||||
(used
in) operating activities:
|
||||||||
Depreciation
and amortization
|
- | 53 | ||||||
(Increase)
decrease in prepaid expense
|
(1,025 | ) | 2,525 | |||||
Increase
in accounts payable and accrued expenses
|
136,541 | 13,745 | ||||||
Increase
in deferred revenue
|
50,000 | - | ||||||
Net
cash (used in ) operating expenses
|
(35,173 | ) | (257,396 | ) | ||||
Cash
Flow From Investing Activities
|
- | - | ||||||
Cash
Flow From Financing Activities
|
||||||||
Proceeds
from common stock issuances for cash
|
44,000 | 231,274 | ||||||
Net
cash provided by financing activities
|
44,000 | 231,274 | ||||||
Net
increase (decrease) in cash
|
8,827 | (26,122 | ) | |||||
Beginning
cash
|
4,461 | 30,583 | ||||||
Ending
cash
|
$ | 13,288 | $ | 4,461 | ||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for interest expense
|
$ | - | $ | - | ||||
Cash
paid for income taxes
|
$ | - | $ | - |
The
accompanying notes are an integral part of these financial
statements
- 24 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
Titan
Technologies, Inc. (the "Company") was incorporated on July 3, 1955 as a New
Mexico corporation. The Company is an international licensor of
proprietary technologies. The Company’s primary technology involves
the construction of tire recycling plants.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Cash
and cash equivalents
For
purposes of balance sheet classification and the statements of cash flows, the
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Property
and equipment
Property
and equipment is stated at cost. Depreciation is calculated using
accelerated methods over estimated economic lives of five to seven
years.
Revenue
recognition
The
Company recognizes revenue from the licensing of its technology over the term of
the license agreement, and when the Company has substantially performed all
material services relating to the contract. 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.
On
contracts where the Company acts only as technical adviser during construction,
substantial performance is generally defined as installation of the
catalyst. Any amounts received under the contracts prior to the
installation of the catalyst are treated as deferred revenue and are not
recognized as revenue until substantial performance under the contract has
occurred or the contract has expired with no further obligation of the
Company.
- 25 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Direct
expenses under contracts are deferred and are matched against contract revenue
when substantial performance occurs. The deferred expenses are evaluated
periodically under the contract terms to ensure they are recoverable under the
contract.
Research
and development
Research
and development costs are charged to operations when incurred and are included
in general and administrative expenses. For the years ended July 31,
2009 and 2008, the Company incurred no research and development
costs.
Stock-based
compensation
The
Company accounts for equity instruments issued to employees for services based
on the fair value of the equity instruments and accounts for equity instruments
issued to other than employees based on the fair value of the consideration
received or the fair value of the equity instruments, whichever is more reliably
measurable.
The
Company accounts for stock-based compensation in accordance with Statement of
Financial Accounting Standards 123 (R) “Share-based Payment” (“SFAS
No. 123R”, revised 2004). This statement requires that the cost resulting from
all share-based transactions be recorded in the financial statements. This
statement establishes fair value as the measurement objective in accounting for
share-based payment arrangements and requires all entities to apply a
fair-value-based measurement in accounting for share-based payment transactions
with employees. This statement also establishes fair value as the measurement
objective for transactions in which an entity acquires goods or services from
non-employees in share-based transactions.
Fair
value of financial instruments
SFAS 107,
"Disclosures About Fair Value
of Financial Instruments," requires disclosure of fair value information
about financial instruments. SFAS No. 157, “Fair Value Measurements”
(SFAS 157) defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of July 31, 2009.
The
respective carrying values of certain on-balance-sheet financial instruments
approximate their fair values. These financial instruments include
cash, accounts payable and accrued expenses Fair values were assumed to
approximate carrying values for these financial instruments since they are short
term in nature and their carrying amounts approximate fair value.
- 26 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Net
(loss) per common share
The
Company calculates net income (loss) per share as required by SFAS 128, “Earnings Per
Share”. Basic earnings (loss) per common share calculations
are determined by dividing net income (loss) by the weighted average number of
shares of common stock outstanding during the year. Diluted earnings
(loss) per common share calculations are determined by dividing net income
(loss) by the weighted average number of common shares and dilutive common share
equivalents outstanding. During the periods in which the Company
incurs losses, common stock equivalents, if any, are not considered in the
computation, as their effect would be anti-dilutive.
Impairment
of long-lived assets
The
Company periodically reviews the carrying amount of its identifiable tangible
and intangible assets to determine whether current events or circumstances
warrant adjustments to such carrying amounts. If an impairment adjustment is
deemed necessary, such loss is measured by the amount that the carrying value of
such assets exceeds their fair value. Considerable management
judgment is necessary to estimate the fair value of assets; accordingly, actual
results could vary significantly from such estimates. Assets to be
disposed of are carried at the lower of their financial statement carrying
amount or fair value less costs to sell.
Recent
pronouncements
In June 2009, the FASB
issued SFAS 168, “The
FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles – a replacement of FASB No. 162” (“SFAS
168”). This Statement replaces FASB No. 162 to identify the sources
of authoritative accounting principles and the framework for selecting the
principles used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles in the United States. The provisions of SFAS 168 are effective for
the Company’s interim and annual periods after September 15, 2009.
The Company does not expect the adoption of SFAS 168 to have a material impact
on its financial statements.
- 27 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
In May
2009, the FASB issued SFAS 165, “Subsequent Events” (“SFAS 165”). SFAS 165
requires an entity to recognize in the financial statements the effects of all
subsequent events that provide additional evidence about conditions that existed
at the date of the balance sheet. For non-recognized subsequent events that must
be disclosed to keep the financial statements from being misleading, an entity
will be required to disclose the nature of the event as well as an estimate of
its financial effect, or a statement that such an estimate cannot be made. In
addition, SFAS 165 requires an entity to disclose the date through which
subsequent events have been evaluated. The Company adopted the
provisions of SFAS effective July 31, 2009. The adoption of SFAS 165
did not have material impact on the Company’s financial statements.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
financial statements.
Note
2. GOING CONCERN
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern.
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
years ended July 31, 2009 and 2008, the Company incurred net (losses) of
$(220,689) and $(273,719), respectively. At July 31, 2009, the Company had a
working capital deficit of ($656,980) and stockholders’ deficit of $(631,371).
In addition, the Company has not been able to generate significant operating
revenues through the licensing of its proprietary technologies.
Management
has taken the following steps 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 technology to a
marketable product.
|
|
·
|
Reduce
operating and administrative expenses, and issue stock and notes payable
in lieu of cash when possible
|
|
·
|
Defer
officer salaries if required.
|
- 28 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Note
3. LICENSE AGREEMENTS
On April
2, 2004, and as modified on October 30, 2004, the Company entered into an
Agreement with a group of investors, to provide for the construction of three
tire recycling plants to be built in the Republic of Mexico (“Mexico”). During
the year ended July 31, 2005, the Company received a non-refundable deposit of
$180,000, which was originally recorded as deferred revenue. Under the terms of
the agreement, the Company was to receive a payment of $500,000. Of
this amount, $300,000 was to be credited to licensing fees, ($100,000 for each
of the three initial recycling plants), and the remaining $200,000 for an
exclusive right to license the Titan technology in Mexico. The original
Agreement was extended from September 30, 2004 to March 31, 2005, whereupon it
was terminated effective March 31, 2005, due to non-performance by the licensee.
As more fully discussed below, the $180,000 previously paid to Titan under this
agreement was recognized as revenue, and credit has been given to the successor
investor, PPT Holding, Ltd. ("PPT"), in this amount.
Effective
February 9, 2006, the Registrant executed a License Agreement with PPT, a Texas
Limited Partnership and successor to the investor group discussed above, for the
exclusive right to build recycling facilities in Mexico, utilizing Titan’s
patented tire recycling technology (the “Mexican License”). The Agreement
provides for the initial construction of three facilities within three years,
commencing initially on or about September 15, 2006, which date has been
verbally extended to the date on which PPT has obtained the necessary building
permit for its first plant in Nuevo Laredo, Mexico, and has secured sufficient
financing to commence construction of the plant. PPT has obtained the building
permit for the first plant, but has not secured sufficient financing to commence
construction. Upon commencement of the construction of the first
plant PPT will become obligated to pay Titan an initial installment of $300,000
of the remaining $900,000 for the license fee for the first
plant. The Agreement also calls for a $200,000 payment for the
exclusive license, for PPT to utilize Titan's tire recycling technology in
Mexico, which amount has been previously received, as stated above.
- 29 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
The
Mexican License provides for a $1,000,000 license fee for each plant, payable as
follows: (i) a deposit of $100,000 paid by April 30, 2006; (ii) $300,000 payable
upon commencement of construction; (iii) $300,000 upon completion of
construction; and (iv) $300,000 upon reaching full capacity. During
the year ended July 31, 2006, PPT and its predecessor paid Titan $320,000, and
PPT received credit for the $180,000 previously paid by its predecessor.
Therefore, the total initial $500,000 requirement, including the $300,000
deposit for the first three plants as well as $200,000 for the exclusive license
for the Republic of Mexico, has been satisfied. An additional $50,000 was
received during the fiscal year ended July 31, 2007. An additional
$150,000 was received during the fiscal year ended July 31, 2009, which is
included in deferred revenue. Since construction has not yet
commenced, the balance of the deposit of $520,000 is presented as deferred
revenue at July 31, 2009.
The
Mexican License further provides that Licensee will pay Titan royalty payments
equal to $4.00 per ton of tires processed in the recycling plants in Mexico
after full capacity is reached. Failure by PPT to make the required
royalty payments for first three plants could result in Titan terminating the
License Agreement and loss of the exclusive license for Mexico and all monies
paid to date by PPT and its predecessor.
Additionally,
Titan has agreed to purchase a seven percent (7%) ownership interest in PPT
for $100,000, of
which $75,000 was paid during fiscal 2005 pursuant to previous agreements
that were subsequently deemed void. Titan has been given credit for
its previous payments, towards the purchase of its investment in
PPT. Since PPT is in the organizational stages, the final $25,000
paid in fiscal 2006 is presented as a deposit at July 31, 2009.
Effective
August 23, 2006, the Company entered into another licensing agreement with an
unrelated investor group, Ally Investments, LLC (“Ally”), for the use of Titan's
recycling patents and technology within the states of Texas, Louisiana,
Mississippi and Oklahoma, and received a non-refundable deposit in the amount of
$100,000, which amount is included in deferred revenue at July 31, 2008. The
licensing fee agreement provided for a licensing fee for each plant of
$1,600,000 upon securing both a construction site and construction financing,
and production royalties of 1.5% of gross revenues derived from the sale of all
products generated using Titan technology, upon reaching full
capacity.
.
|
On
December 12, 2007, the Company and Ally entered into a Second Amendment to
License Agreement that modified the original License Agreement in the
following respects:
|
- 30 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
1.
|
The
Territory was expanded from the four states to the entire United
States.
|
2.
|
The
license fee of $1,600,000 and the royalty payment of 1.5% of all products
produced was amended to a Ten (10%) percent membership interest in each of
the single purpose entities formed to own and operate each plant beyond
the first plant (the second and each subsequent
plant).
|
3.
|
The
obligation to pay the initial license fee for the first plant of
$1,600,000 remains unchanged, but the obligation to commence construction
of the first plant, as amended on February 23, 2007, to commence, on or
before December 31, 2007, and be in operation, no later that December 31,
2008 was modified to require that construction of the first plant commence
when (i) government agencies have granted construction approval and (ii)
Ally has obtained financing to build the first plant. As of July 31, 2009
construction had not commenced.
|
4.
|
The
termination of the Exclusive License was also modified to provide that the
exclusive license for the U.S. will terminate if Ally should fail to
commence to obtain a permit and prepare a feasibility study for the next
plant within twelve (12) months after the previous plant has reached full
capacity.
|
Also on December 12,
2007, the Registrant and Ally entered into a Memorandum of Understanding
regarding Plastics Scrap, including but not limited to the following
terms:
|
1.
|
The
grant of an exclusive license for Titan's Technology and patents for the
recycling of scrap electronics throughout the United
States.
|
|
2.
|
A
license fee of $500,000 each to the Registrant and Adherent Technologies,
upon Ally securing sufficient funding and government approvals to commence
construction of the first plastics recycling
plant.
|
|
3.
|
The
grant to the Registrant of a ten (10%) percent ownership interest in each
entity established to own and operate a plastics recycling plant anywhere
in the U.S.
|
|
4.
|
A
research and development time table for testing a sample of constituent
materials and development of a plastics recycling plant in the
U.S.
|
|
5.
|
A
commitment by Ally to fund and commence construction of the first plastics
recycling plant in the U.S. within four years after delivery of the first
sample of test material by Ally to
Titan.
|
This agreement expired on
December 31, 2008 and the non-refundable deposit of $100,000 was recognized as
income. On September 30, 2009, an agreement was reached to reinstate
the terms of the original contract with a termination date
of September 30, 2010.
- 31 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Note 4. RESEARCH AND
DEVELOPMENT AGREEMENT
The
Company has an arrangement with a research facility (“Adherent”) owned by a
director of the Company. Under the terms of the agreement the Company
is entitled to all of Adherent’s findings and developments. Adherent
is in the process of researching a waste plastics recycling process using the
Company's technology.
Under the
terms of the agreement, Adherent is entitled to 50% of the net income received
by the Company resulting from the sale and/or licensing of product, plant,
technology or otherwise of its technology related to feedstock, other than those
for tires.
Adherent
is entitled to an amount derived from tire revenue as follows: 5% of the first
$2,000,000 of net revenues, 3% of net revenue of $2,000,000 to $5,000,000, 2% of
net revenue
of $5,000,000 to $10,000,000, and 1% of all net revenue in excess of
$10,000,000.
No
amounts were paid to Adherent for the years ended July 31, 2009 and
2008.
Note
5. STOCKHOLDERS’ EQUITY (DEFICIT)
During
the year ended July 31, 2009, the Company issued 727,500 shares of common stock
at $0.05 to $ 0.08 per share, for total cash proceeds
of $44,000.
During
the year ended July 31, 2008 the Company issued 2,186,438 shares of common stock
at $0.10 to $ 0.12 per share, for total cash proceeds of $231,274.
Treasury
stock, consisting of 17,000 shares of common stock, was reserved for future
issuances to shareholders of the Company who had not exchanged their shares in
the previous entity for shares in the Company. No shares of treasury stock were
issued during the years ended July 31, 2009 and 2008.
- 32 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
In March
1997, the Company exchanged 3,000,000 restricted shares of its common stock for
a 28.5% interest in ESA Recycling GmbH ("ESA"), an Austrian company. No
investment was recorded because the estimated fair value of the net assets of
ESA at the time of the exchange was nominal. ESA had no operations but planned
to develop a tire recycling plant in Europe. Under a settlement
agreement, the 3,000,000 shares of the Company’s common stock were to be
transferred back to the Company in exchange for return its 28.5% interest in
ESA. During the year ended July 31, 2004 the Company retired a
certificate related to this settlement agreement for 1,200,000
shares. The Company is seeking return of the remaining 1,800,000
shares of common stock. Due to the uncertainty of the Company's
ability to gain possession, 1,800,000 of the shares have been reflected as
outstanding as of July 31, 2009 and 2008. Also, as part of the
settlement, the Company has agreed to pay to ESA, $300,000 from the proceeds
from each of the first five sales of recycling plants anywhere in the world
except Asia. These payments are due when the Company receives its final payment
for each plant.
Note
6. STOCK OPTIONS
The
Company has a compensatory stock option plan. Under the plan, the Company may
grant options for up to 1,350,000 shares of common stock. The Board of Directors
shall determine the exercise price and term of the options. The options vest on
the date granted. All options outstanding at July 31, 2009 were granted to
employees or directors and expire in the year ending July 31, 2015.
Summarized
information relative to the Company’s stock option plan is as
follows:
Number
of
|
Weighted
Average
|
|||||||
Shares
|
Exercise Price
|
|||||||
Outstanding
at July 31, 2007
|
1,350,000 | $ | 0.12 | |||||
Granted
|
- | - | ||||||
Exercised
|
300,000 | - | ||||||
Forfeited
|
- | - | ||||||
Outstanding
at July 31, 2008
|
1,050,000 | 0.12 | ||||||
Granted
|
- | - | ||||||
Exercised
|
- | - | ||||||
Forfeited
|
-
|
-
|
||||||
Outstanding
at July 31, 2009
|
1,050,000 | $ | 0.12 |
- 33 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Range
of
Exercise
Price
($)
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Number
Exercisable
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
$ 0.12
|
1,050,000
|
5.0
|
$ 0.12
|
1,050,000
|
5.0
|
$ 0.12
|
As of
July 31, 2009, the aggregate intrinsic value of all stock options outstanding
and currently exercisable was approximately $40,500. The intrinsic
value of each option share is the difference between the fair market value of
common stock and the exercise price of such option share to the extent it is
“in-the-money”. Aggregate intrinsic value represents the value that
would have been received by the holders of in-the-money options had they
exercised their options on the last trading day of the year and sold the
underlying shares of the closing stock price on each day. The total
number of in-the-money options outstanding and exercisable as of July 31, 2009,
was 1,050,000.
Note
7. INCOME TAXES
The
Company accounts for income taxes under SFAS 109, "Accounting for Income Taxes",
which requires use of the liability method. SFAS 109 provides that
deferred tax assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary
differences. Deferred tax assets and liabilities at the end of each
period are determined using the currently enacted tax rates applied to taxable
income in the periods in which the deferred tax assets and liabilities are
expected to be settled or realized.
The types
of temporary differences between the tax bases of assets and their financial
reporting amounts that give rise to a significant portion of the deferred tax
asset at July 31, 2009 are as follows:
Reconciling
Item
|
Tax
Effect
|
|||||||
Net
operating loss carryforward
|
$ | 4,698,000 | $ | 1,832,000 | ||||
Research
and development credit
|
9,000 | 4,000 | ||||||
$ | 4,707,000 | $ | 1,836,000 |
At July
31, 2009, the Company has loss carryforwards of approximately $4,698,000 which
can be used to reduce future taxable income and will expire throughout 2009 to
2029. In addition, the Company has a research credit of $9,000
available to offset income tax liabilities through 2022.
The
change in the valuation allowance for the deferred tax asset during the year
ended July 31, 2009 was approximately ($ 86,000).
- 34 -
Titan
Technologies, Inc.
Notes
to the Financial Statements
July
31, 2009 and 2008
Note
8. RELATED PARTY TRANSACTIONS
The
Company has an agreement with a shareholder to provide legal services and to
serve as Secretary of the Company for a monthly fee of $1,500. Total
expenses incurred under this agreement were $18,000 for both of the years ended
July 31, 2009 and 2008, which are included in general and administrative
expenses.
The
Company has an agreement with a related party to provide the use of an employee
at cost. The amount received under this agreement for the year ended
July 31, 2009 was $32,230. The Company has netted these amounts
against payroll expense.
Note
9. COMMITMENTS
During
the year ended July 31, 2004, the Company entered into four employment contracts
with its employees including two officers, and a consulting contract with a
third officer. The contracts are in effect for the five year period from January
1, 2003 to December 31, 2008, and call for annual aggregate payments of
$214,010. They are terminable by either party upon written notice and include a
two year non-compete provision. As of July 31, 2009 the contracts had
not been renewed.
Note
10. SUBSEQUENT EVENTS
Subsequent
to July 31, 2009 the Company issued 400,000 shares of common stock for
cash in
the amount of $22,000.
As
discussed in Note 3, effective September 30, 2009, the Company and Ally entered
into an agreement to reinstate the original Franchise Agreement of August 23,
2006 (as amended February 23, 2007 and December 12, 2007), and extended the date
to September 30, 2010. The Agreement will terminate on that date if Ally has not
obtained sufficient financing to commence construction of its proposed tire
recycling plant in Port Arthur, Texas.
We have
evaluated subsequent events through November 13, 2009, the date the financial
statements were issued, and have
determined that no events or transactions have occurred. Subsequent
to July 31, 2009, which would require recognition or discloser in the financial
statements other than that which is discussed above.
- 35 -
ITEM
9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There
have been no changes in or disagreements with Accountants of the kind described
by Item 304 of Regulation S-B at any time during Titan’s two (2) most recent
fiscal years.
ITEM 9A: CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures that are designed to ensure that
material information required to be disclosed in our periodic reports filed
under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded,
processed, summarized, and reported within the time periods specified in the
SEC’s rules and forms and to ensure that such information is accumulated and
communicated to our management, including that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer (principal financial officer), Ronald L. Wilder, as
appropriate, to allow timely decisions regarding disclosure. During
the quarter ended July 31, 2009 we carried out an evaluation, under the
supervision and with the participation of our management, including the
principal executive officer, Ronald L. Wilder, and the principal financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 13(a)-15(e) under the 1934
Act. Based on this evaluation, because of the Company’s limited
resources and limited number of employees, management concluded that as of July
31, 2009, our internal control over financial reporting is not effective in
providing reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with U.S. generally accepted accounting principles.
Changes in internal
controls
During
the fiscal quarter ended July 31, 2009, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Managements Report on
Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Under the supervision of our Chief
Executive Officer the Company conducted an evaluation of the effectiveness of
our internal control over financial reporting as of July 31, 2009 using the
criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financing statements will
not bed prevented or detected on a timely basis. In its assessment of
the effectiveness of internal control over financial as of July 31, 2009, we
determined that control deficiencies existed that constituted material
weaknesses as described below:
● lack
of documented policies and procedures;
● we
have no audit committee;
- 36 -
● there
is a risk of management override given that our officers have a highdegree of involvement in our day to day
operations.
● there
is no policy on fraud and no code of ethics at this time, though weplan to implement such policies in
fiscal 2010; and
● There
is no effective separation of duties, which includes monitoringcontrols, between the members of
management.
Management
is currently evaluating what steps can be taken in order to address these
material weaknesses.
Accordingly,
we concluded that these control deficiencies resulted in a reasonable
possibility that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis by the company’s
internal controls.
Stark
Winter Schenkein & Co., LLP, an independent registered public accounting
firm, was not required to and has not issued a report concerning the
effectiveness of our internal control over financial reporting.
ITEM
9B. OTHER INFORMATION
We have
disclosed all information required to be disclosed on reports on Form 8-K during
the fourth quarter of the year covered by this report and after our July 31,
2009 year end.
PART
III
ITEM
10: DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT.
The
information required by this item is incorporated by reference to the items
which will be contained in the Company's Definitive Proxy Statement for the 2009
Annual Meeting of Shareholders entitled "Election of Directors" and "Directors
and Executive Officers". All reports required by Section 16(a) of The
Exchange Act to be filed during the fiscal year were filed.
ITEM 11: EXECUTIVE
COMPENSATION.
The
information required by this item is incorporated by reference to the item which
will be contained in the Company's Definitive Proxy Statement for the 2009
Annual Meeting of Shareholders entitled "Executive Compensation".
ITEM 12: SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The
information required by this item is incorporated by reference to the item which
will be contained in the Company's Definitive Proxy Statement for the 2008
Annual Meeting of Shareholders entitled "Voting Securities and Principal Holders
Thereof".
- 37 -
ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The
information required by this item is incorporated by reference to the item which
will be contained in the Company's Definitive Proxy Statement for the 2009
Annual Meeting of Shareholders entitled "Voting Securities and Principal Holders
Thereof," "Executive Compensation" and "Certain Transactions."
Item
14. Principal Accountants Fees and Services
Audit Fees:
The
aggregate amount of fees billed in each of the last two fiscal years for
professional services rendered by Stark Winter Schenkein & Co., LLP, the
Company’s principal accountants, for the Company annual financial statements and
review of financial statements included in the Company’s Form 10-QSB or services
that are normally provided by Stark Winter Schenkein in connection with
statutory and regulatory filings or engagements was $18,750 in fiscal 2009 and
$20,950 in fiscal 2008.
Audit
Related Fees:
The
aggregate amount of fees billed in each of the last two fiscal years for
assurance and related services by Stark Winter Schenkein that are reasonably
related to the performance of the audit or review of the Company’s financial
statements and are not reported under Item 9(3)of Schedule 14A was $0 in fiscal
2009 and $0 in fiscal 2008.
Tax
Fees:
The
aggregate amount of fees billed in each of the last two fiscal years for
professional services rendered by Steve Estrada, CPA for tax compliance, tax
advice, and tax planning was $18,052 in fiscal 2009 and $17,205 in
2008.
All
Other Fees:
The
aggregate amount of fees billed in each of the last two fiscal years for
products and services provided by Stark Winter Schenkein, other than services
reported in Item 9(e) of Schedule 14A, was $0 in fiscal 2009 and $0 in fiscal
2008.
Pre-Approval
Policies and Procedures:
The
Company does not have an audit committee. In audit matters, the
Company acts through its board of directors. The Pre-Approval
Policies and Procedures followed by the Board of Directors include a review the
timeliness and quality of past services and bills as well as a review of the
cost for similar services provided by qualified audit and tax firms in
Albuquerque, New Mexico with a view to determining the fairness of the services
rendered and the fees billed by Stark Winter Schenkein.
%
of Stark Winter Schenkein contribution:
The
percentage of hours expended on Stark Winter Schenkein’s engagement to audit the
Company’s financial statements for the most recent fiscal year were attributed
to work performed by persons other than Stark Winter Schenkein’s full-time,
permanent employees was 0%.
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ITEM
15: EXHIBITS AND REPORTS PART IV ON FORM 8-K.
(a) Exhibits:
The
following exhibits are incorporated herein by reference to the
Registrant's Form 10-SB, File No. 0-25024
Exhibit
|
|
Number
|
Title
|
3.
|
Articles
of Incorporation and By-laws.
|
(i) Articles
of Incorporation:
|
|
Articles
of Incorporation dated July 14, 1954.
|
|
Articles
of Amendment to Articles of Incorporation dated October 2,
1986.
|
|
(ii)
By-laws currently in effect.
|
|
10.
|
Material
Contracts.
|
10.1
|
Consulting
Agreement dated September 15, 1992, Titan and Ronald E.
Allred.
|
10.2
|
Purchase
and Nonexclusive Licensing Agreement dated June 9, 1993, between Titan and
Geotechnologies Corporation and Dong Kook Steel Material Company,
Ltd.
|
10.3
|
Technical
License Agreement dated July 23, 1993, between Titan and Hannam Co.,
Ltd.
|
10.4
|
Technical
License Agreement dated July 23, 1993, between Titan and Dong Kook Steel
Material Co., Ltd.
|
10.5
|
Purchase
and Nonexclusive Licensing Agreement dated July 21,1994, between Titan and
Geotechnologies Corp.
|
10.6
|
Purchase
and Nonexclusive Licensing Agreement dated July 21, 1994, between Titan
and Geotechnologies Corp. and Southeast Environmental Tire Recycling
Corporation.
|
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39 -
The following exhibit is incorporated herein by reference to the
Registrant's Annual Report on Form 10-KSB for
the fiscal year ended July 31, 1995.
10.7
|
Option
agreement between the Registrant and Joseph Henry dated September
19,1995.
|
The following
exhibits are incorporated by reference to The Registrant's Annual Report on Form
10-KSB for the fiscal year ended July 31, 1996:
10.8
|
License
Agreement as amended dated February 16, 1996, with Environmental Solutions
Agency, Inc., relating to Europe, South Africa and North and South
America.
|
10.9
|
Marketing
and License Agreement dated March 19, 1996, with Dowan Company, Ltd.,
relating to Asia.
|
10.10
|
Agreement
dated April
25, 1996, with Skoda Klatovy S.P.D.,
relating to the construction of
a TRTM recycling plant in
Austria.
|
10.11
|
Addendum
to Skoda Klatovy S.P.D Agreement dated April 25, 1996.
|
10.12
|
Irrevocable
Option Agreement with Abtech Industries, LLC, dated June 10,
1996.
|
10.13
|
Option
Agreement between
Titan, Adherent Technologies and
Fiberite, Inc. dated September 4, 1996.
|
10.14
|
Promissory
Note dated September 24, 1996.
|
The following
exhibits are incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the fiscal year ended July 31, 2000:
10.15
|
Consulting
Agreement between the Registrant and Adherent
Technology and Ronald Allred dated
December 1, 1999.
|
The following
exhibits are incorporated by reference to the Registrant's Quarterly Report on
Form 10-QSB for the Quarter ended January 31, 2003:
10.16
|
Agreement
with United States Recycling, LLC dated February 20,
2003
|
10.17
|
License
Agreement with United States Recycling, LLC dated
February 20, 2003
|
The following
exhibit is incorporated by reference to the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended April 30, 2003:
10.18
|
Letter
Agreement dated June
4, 2003 amending Agreement and
License
Agreement with United States Recycling, LLC dated
February 20, 2003.
|
10.19
|
License
Agreement with Jose Louis Edmundo Peredo Tornero d/b/a International Tire
Recycling dated April 2, 2004.
|
10.20
|
Letter
Agreement dated October 29, 2004 amending the License Agreement with Jose
Louis Edmundo Peredo Tornero d/b/a International Tire Recycling dated
April, 2, 2004.
|
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40 -
The following
exhibit is incorporated by reference to the Registrant's Current Report on Form
8-K dated May 23, 2005:
10.21
|
License
Agreement with James Samis, Randall Gideon, and Pat Teagarden dated May
17, 2005.
|
10.22
|
License
Agreement dated February 1, 2006 for three plants in Mexico between the
Company and PPT Holding, Ltd.
|
The following
exhibit is incorporated by reference to the Registrant’s Current Report on Form
8-K dated August 23, 2006.
10.23
|
Second
License Agreement dated August 23, 2006 for the states of Texas,
Louisiana, Mississippi and Oklahoma between the Company and Ally
Investments, a Texas limited liability
partnership.
|
The following exhibits are incorporated
by reference to Registrant's Current Report on Form 8-K dated December 21,
2007:
10.24
|
Second
Amendment to License Agreement between the Registrant and Ally
Investments, LLC dated December 12, 2007.
|
10.25
|
Memorandum
of Understanding – Scrap Electronics between the Registrant and Ally
Investments, LLC dated December 12, 2007.
|
21.
|
Subsidiaries
of the Issuer.
|
The
Company has no subsidiaries
|
The following
exhibits are incorporated herein:
31
|
Certification
of CEO pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
as Adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32
|
Certification
pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
All other
exhibits required by Item 601 of Regulation S-K are inapplicable to this
Registrant in this filing.
(b)
Reports on Form 8-K:
No report on Form 8-K was filed by the
Registrant during the last quarter of the period covered by this
report.
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41 -
ON
WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 2009, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION(INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO) TO ANY RECORD HOLDER OR BENEFICIAL OWNER OF THE COMPANY'S
SHARES AS OF THE CLOSE OF BUSINESS ON OCTOBER 14, 2009. ANY EXHIBIT
WILL BE PROVIDED ON REQUEST UPON PAYMENT OF THE REASONABLE EXPENSES OF
FURNISHING THE EXHIBIT. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED
TO RONALD L. WILDER, PRESIDENT, TITAN TECHNOLOGIES, INC., 3206 CANDELARIA ROAD,
N.E., ALBUQUERQUE, NEW MEXICO 87107.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TITAN
TECHNOLOGIES, INC.
By: /s/ Ronald L. Wilder
Ronald
L. Wilder, President, Chief Executive Officer,
Chief
Accounting Officer, and Director
Dated
November 13, 2009
By: /s/ Robert Simon
Robert
Simon, Secretary
Date: November
13, 2009
In
accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of the Registrant and in the capacities and on the
dates indicated.
By: /s/ Ronald L. Wilder
Ronald
L. Wilder, Director
Date:
November 13, 2009
By: /s/ Dr. Ronald E. Allred
Dr.
Ronald E. Allred, Director
Date:
November 13, 2009
By:
/s/ Dana Finley
Dana
Finley, Director
Date:
November 13, 2009
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