UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
For the quarterly period ended June 30, 2002
OR
For the transition period from _______ to _______
Commission file number 0-26433
TITANIUM HOLDINGS GROUP, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0386415
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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(210) 293-1232
(Issuer's telephone number, including area code)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
State the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date: The total number of shares of Common Stock, par value $0.001 per share, outstanding as of June 14, 2002 was 5,572,810.
TITANIUM HOLDINGS GROUP, INC.
TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheet as of June 30, 2002 (Unaudited)
and December 31, 2001 (Audited) ........................................... 2
Condensed Consolidated Statement of Operations for the three months
ended June 30, 2002 and 2001 (Unaudited) .................................. 3
Condensed Consolidated Statements of Operations for the six months
ended June 30, 2002 and 2001 (Unaudited) .................................. 4
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2002 and 2001 (Unaudited) .................................. 5
Notes to the Condensed Consolidated Financial Statements (Unaudited) ......... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................................ 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ............................................................ 16
Item 2. Changes in Securities ........................................................ 16
Item 3. Defaults Upon Senior Securities .............................................. 16
Item 4. Submission of Matters to a Vote of Security Holders .......................... 16
Item 5. Other Information and Subsequent Events ...................................... 17
Item 6. Exhibits and Reports on Form 8-K ............................................. 17
SIGNATURES ............................................................................... 18
INDEX TO EXHIBITS ........................................................................ 19
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TITANIUM HOLDINGS GROUP, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
June 30, December 31,
2002 2001
------------ -------------
(Unaudited) (Audited)
ASSETS
Current assets
Cash $ 299,082 $ 571,423
Accounts receivable, net of allowance for doubtful accounts of $ 63,418 191,998 203,819
Inventory 383,937 434,845
Marketable securities-available for sale 1,107,970 2,361,180
Prepaid expenses and other current assets 128,432 48,759
------------ ------------
Total current assets 2,111,419 3,620,026
Fixed assets-less accumulated depreciation and amortization of $692,943
and $684,943, respectively 69,555 67,205
Deferred income tax asset, net of valuation allowance of
$341,000 - -
Other investment - 768,272
Marketable securities-available for sale (collateralized) 1,373,600 1,914,000
Notes receivable-related party, including accrued interest of $152,309
and $103,668, respectively 1,519,084 1,411,001
Goodwill 100,192 2,101,334
------------ ------------
TOTAL ASSETS $ 5,173,850 $ 9,881,838
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 252,419 $ 352,453
Current maturities of long-term debt 6,570 6,570
Notes payable-secured 1,585,000 1,655,000
------------ ------------
Total current liabilities 1,843,989 2,014,023
------------ ------------
Long-term liabilities
Long-term debt, less current maturities 17,154 19,710
------------ ------------
Total liabilities 1,861,143 2,033,733
------------ ------------
Commitments and Contingencies
Redeemable preferred stock-$.001 par value; authorized 5,000,000 shares
70,000 shares of convertible stock designated as
Series E stock-
$2.50 stated value; issued and outstanding 70,000
shares 175,000 175,000
------------ ------------
Stockholders' equity
Common stock-$.001 par value; authorized
20,000,000 shares;
issued and outstanding 5,572,810 shares 5,575 5,575
Additional paid-in capital 10,189,891 10,189,891
Accumulated other comprehensive income 1,014,780 2,808,390
Accumulated deficit (8,072,539) (5,330,751)
------------ ------------
Total stockholders' equity 3,137,707 7,673,105
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 5,173,850 $ 9,881,838
============ ============
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See Notes to Consolidated Financial Statements
TITANIUM HOLDINGS GROUP, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
Net Sales $ 1,033,973 $ 1,173,611
Cost of sales 535,449 685,021
----------- ------------
Gross profit 498,524 488,590
----------- ------------
Operating expenses:
Salaries 305,217 328,001
Professional fees 53,623 128,895
Depreciation and amortization 8,000 6,779
Amortization of goodwill -- 106,946
Marketing 8,731 3,920
Rent 81,540 84,356
Interest 38,305 111,028
Other 125,466 192,936
----------- ------------
Total operating expenses 620,882 962,861
----------- ------------
Operating loss (122,358) (474,271)
Loss on investment (668,272)
Other income (expense) 103,175 (165,787)
----------- ------------
Loss before income taxes (687,455) (640,058)
Income tax expense 6,936 12,888
----------- ------------
Net loss from continuing operations (694,391) (652,946)
----------- ------------
Income from operations of discontinued subsidiaries -- 109,268
Income from disposal of subsidiaries -- 208,200
----------- ------------
Net income from discontinued operations -- 317,468
----------- ------------
Net loss (694,391) (335,478)
Preferred stock dividends (1,313) (1,313)
----------- ------------
Net loss attributable to common stockholders $ (695,704) $ (336,791)
=========== ============
Basic and diluted loss per share from continuing operations $ (0.12) $ (0.10)
=========== ============
Basic and diluted income per share from discontinued operations $ -- $ 0.05
=========== ============
Loss per share-basic and diluted $ (0.12) $ (0.05)
=========== ============
Weighted average number of shares outstanding 5,572,810 6,692,723
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See Notes to Consolidated Financial Statements
TITANIUM HOLDINGS GROUP, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
Net Sales 2,224,548 $ 2,316,542
Cost of sales 1,236,376 1,342,490
----------- -----------
Gross profit 988,172 974,052
----------- -----------
Operating expenses:
Salaries 594,995 607,067
Professional fees 104,077 239,123
Depreciation and amortization 15,500 12,782
Amortization of goodwill - 213,865
Marketing 17,433 5,121
Rent 166,709 170,570
Interest 77,333 215,085
Other 269,947 176,262
----------- -----------
Total operating expenses 1,245,994 1,639,875
----------- -----------
Operating loss (257,822) (665,823)
Loss on investment (668,272) -
Other income (expense) 195,009 (163,511)
----------- -----------
Loss before income taxes (731,085) (829,334)
6,936 16,330
Income tax expense ----------- -----------
Net loss from continuing operations (738,021) (845,664)
----------- -----------
Income from operations of discontinued subsidiaries - 164,551
Income from disposal of subsidiaries - 208,200
----------- -----------
- 372,751
Net income from discontinued operations ----------- -----------
Net loss before cumulative effect change in accounting principle (738,021) (472,913)
Cumulative effect of change in accounting principle (2,001,142) -
----------- -----------
Net loss (2,739,163) (472,913)
Preferred stock dividends (2,625) (2,625)
----------- -----------
Net loss attributable to common stockholders $(2,741,788) $ (475,538)
=========== ===========
Basic and diluted loss per share from continuing operations $ (0.13) $ (0.13)
=========== ===========
Basic and diluted income per share from discontinued operations $ - $ .06
=========== ===========
Basic and diluted loss per share from cumulative effect of change
in accounting principle $ (0.36) $ -
=========== ===========
Loss per share-basic and diluted $ (0.49) $ (0.07)
=========== ===========
Weighted average number of shares
outstanding 5,572,810 6,722,100
=========== ===========
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See Notes to Consolidated Financial Statements
TITANIUM HOLDINGS GROUP, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited)
2002 2001
Cash flows from operating
activities:
Net loss $ (2,739,163) $ (472,913)
-------------- ---------------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 15,500 31,358
Loss on disposal of property and equipment 646 -
Amortization of goodwill - 213,865
Non-cash interest expense - 65,394
Cumulative effect of change in accounting principle 2,001,142
Gain on sale of subsidiaries - (208,200)
Accrued interest income (191,833) -
Shares returned for legal services - (46,875)
Loss on investment 668,272 212,112
Changes in assets and liabilities net of effects of
dispositions:
(Increase) decrease in accounts receivable 11,821 (12,587)
Decrease in inventories 50,908 39,489
Decrease in prepaid expenses and other current assets 20,327 1,015,482
Decrease in accounts payable and accrued expenses (100,034) (50,953)
-------------- ---------------
Total adjustments 2,476,749 1,259,085
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Net cash provided by (used) in operating activities (262,414) 786,172
-------------- ---------------
Cash flows from investing activities:
Cash paid for notes receivable (350,000) (1,000,000)
Proceeds from notes receivable and accrued interest 433,750 -
Purchase of property and equipment-net (18,496) (46,268)
Net proceeds on sale of subsidiaries - 533,334
Sale of subsidiaries - (94,130)
-------------- ---------------
Net cash provided by (used) in
investing activities 65,254 (607,064)
-------------- ---------------
Cash flows from financing activities:
Repayment of long-term debt (2,556) (925,471)
Repayment of secured notes payable (70,000) -
Purchase of treasury stock - (311,715)
Dividends paid (2,625) (2,625)
-------------- ---------------
Net cash used in financing activities (75,181) (1,239,811)
-------------- ---------------
Net decrease in cash (272,341) (1,060,703)
Cash - beginning 571,423 2,618,297
-------------- ---------------
Cash - ending $ 299,082 $ 1,557,594
============== ===============
Supplemental information:
Cash paid during the period for:
Interest $ 76,933 $ 158,613
============== ===============
Income taxes $ 6,936 $ 23,430
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See Notes to Consolidated Financial Statements
TITANIUM HOLDINGS GROUP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
1. General
The accompanying financial statements, footnotes and discussions should be read in conjunction with the financial statements, related footnotes and discussions contained in the Company's Annual Report filed with Form 10-KSB for the year ended December 31, 2001. The financial information contained herein is unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. All adjustments are of a normal recurring nature.
The results of operations for the three months and six months ended June 30, 2002 and 2001, are not necessarily indicative of the results to be expected for the full year.
2. Principal Business Activity and Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the accounts of Titanium Holdings Group, Inc. and its subsidiary (collectively the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.
The principal business activity of the Company is manufacturing and the wholesale distribution of sanitary maintenance supplies and paper products.
Property and equipment are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the property and equipment.
Inventories consisting of raw materials, work in process and finished goods are valued at the lower of cost or market. Cost is determined using the first-in, first-out method.
The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates by management. Actual results could differ from these estimates.
The Company has disposed of certain subsidiaries during the year ended December 31, 2001. The results of operations related to these subsidiaries have been segregated from continuing operations for the three months and six-month periods ended June 30, 2001.
Preferred stock dividends in arrears, which represent dividends declared, but unpaid at June 30, 2002 totals $1,313. As of July 1, 2002, all dividends declared through June 30, 2002 have been paid in full.
Earnings (loss) per share ("EPS") is computed by dividing net income or loss by the weighted-average number of common shares outstanding for the period. Both basic and diluted net income (loss) per share are the same, because the effect of the Company's outstanding warrants and options is anti-dilutive.
3. Investment in Affiliate
On March 14, 2001, b2bstores.com, Inc. completed a merger with IVAX Diagnostics, Inc., in which IVAX Diagnostics, Inc. merged with and into b2bstores.com, Inc. In the merger, b2bstores.com, Inc. issued 20,000,000 shares of common stock as merger consideration, changed its name to IVAX Diagnostics, Inc., and commenced trading on the American Stock Exchange under the symbol "IVD."
Because of the dilutive effect on the Company's equity holdings, the Company is no longer considered to be an affiliate of IVAX Diagnostics, Inc.
4. Investments
The Company classifies its existing marketable equity securities as available-for-sale in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS No. 115"), "Accounting for Certain Investments in Debt and Equity Securities." These securities are carried at fair market value, with unrealized holding gains and losses reported in stockholders' equity as a component of other comprehensive income (loss). Gains or losses on securities sold are based on the specific identification method.
On May 31, 2000, the Company purchased a 30% equity stake in Equip2move.com, Inc. ("Equip2move"), a New York-based start-up company which hosts auctions on the Internet. In July of 2000 the Company provided a working capital loan of $1,000,000 to Equip2move, which was ultimately converted into 1,000,000 shares of Equip2move's Series A Preferred Stock and a warrant to purchase 1,000,000 shares of Equip2move common stock at an exercise price of $1.00 (the "Warrant"). The Company's investment of $1,075,000 represented approximately 35% of the total equity of Equip2move as of May 31, 2001. As part of a stockholders agreement, the Company committed to provide additional financing of $1,250,000 by February 1, 2001. The Company did not deliver the additional proceeds by the scheduled deadline and began negotiations to relieve the financing obligation.
The negotiations ended as of June 29, 2001, when the Company and Equip2move agreed to a settlement to relieve the Company of certain obligations owed to Equip2move including; (i) complete and total relief of the remaining obligation to produce $1,250,000 in additional financing for Equip2move by February 1, 2001, and (ii) termination of any remaining obligation by the Company to pay not less than $150,000 and not more than $250,000 for the creation, design and implementation of the Equip2move website through June 30, 2001. In exchange for the relief of the future obligations, the Company reduced its equity in Equip2move from its position of approximately 35% to 19.9%. This reduction was completed through the Company's return of 2,607,675 shares of Series B common stock of Equip2move and the Warrant.
During the quarter ended June 30, 2002, Equip2move notified the Company of their intent to liquidate and dissolve Equip2move. Pursuant to an agreement effective June 30, 2002, the Company would receive $100,000, representing a majority of the remaining assets of Equip2move. As a result, the Company has recorded a loss on the investment of $668,272 during the quarter ended June 30, 2002. The Company received the $100,000 during the first week of July 2002.
During January 2002 and April 2002, with authorization by the Board of Directors, the Company advanced $225,000 and $125,000 respectively, to Excalibur I, L.L.C. in exchange for notes receivable. Excalibur is in the business of acquiring and servicing charged-off debt portfolios. A managing member of Excalibur is also a director of the Company.
5. Stockholders' Equity
During January 2001, a shareholder returned 25,000 shares of the Company's Common Stock which was originally issued in consideration for services performed, as part of a negotiated settlement.
During January 2001, the Company bought back 2,969 of its common shares on the open market for an amount aggregating $5,745, pursuant to its Stock Repurchase Program which was authorized by the Company's Board of Directors on November 22, 2000.
During March 2001, the Company retired 829 of its common shares representing shares not earned per the purchase agreement of Superior Chemical & Supply, Inc. for the 12 months ended July 31, 2000.
6. Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No. 141) and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142.)
SFAS No. 141 addresses financial accounting and reporting for business combinations. This statement requires the purchase method of accounting to be used for all business combinations, and prohibits the pooling-of-interests method of accounting. This statement is effective for all business combinations initiated after June 30, 2001 and supercedes APB Opinion No. 16, "Business Combinations" as well as FASB Statement of Financial Accounting Standards No. 38, "Accounting for Preacquisition Contingencies of Purchased Enterprises".
SFAS No. 142 addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for in financial statements upon their acquisition. This statement requires goodwill to be periodically reviewed for impairment rather than amortized, beginning on January 1, 2002. SFAS No. 142 supercedes APB Opinion No. 17, "Intangible Assets".
During the quarter ended June 30, 2002, the Company retained an independent consultant to measure the fair value of goodwill. As a result, the Company recorded a cumulative effect change in accounting principle of $2,001,142 due to the impairment of goodwill.
Had goodwill not been amortized during the three months and six months ended June 30, 2001, the results of operations would have been as follows:
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001
------------------ ----------------
Reported net loss $ (335,478) $ (472,913)
Addback: Goodwill amortization 106,946 213,865
---------------- ----------------
Adjusted net loss $ 228,532 $ (259,048)
================ ================
Basic and Diluted earnings (loss) per share:
Reported net loss $ (0.05) $ (0.07)
================ ================
Addback: Goodwill amortization (0.02) (0.03)
================ ================
Adjusted net loss $ (0.03) $ (0.04)
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7. INCOME TAXES
The provision for income taxes consists of state and local taxes of the Subsidiary, which files separate state and local income tax returns.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosure contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Company from time to time. The discussion of the Company's liquidity, capital resources and results of operations, including forward-looking statements
pertaining to such matters, does not take into account the effect of any changes to the Company's operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein.
This item should be read in conjunction with the financial statements contained elsewhere in the report.
General
In December 2000, the Board voted to discontinue its business plan of acquisition and consolidation of janitorial supply companies. The Board continues to explore strategic alternatives outside the janitorial industry which could include a variety of business combinations, including, but not limited to, divestitures, dispositions, acquisitions, mergers and strategic alliances. The Company has formed a Mergers and Acquisitions Committee and engaged the services of Harter Financial, Inc. to facilitate the search for an acceptable strategic alternative. Additionally, the Company will explore alternative business plans which may be incorporated into its current structure. In the interim, the Company intends to continue to operate its remaining operating subsidiary, Cleaning Ideas Corporation ("Cleaning Ideas"), monitor its equity investments and passively invest in business opportunities at the Board's discretion.
Prior to the Board's decision to discontinue its consolidation strategy in the janitorial industry, the Company's business model focused on acquiring janitorial distribution companies which met the Board's defined criteria. Since the implementation of the strategy in January 1999 until its discontinuance in December 2000, the Company had acquired five operating subsidiaries in the janitorial industry, including Kandel & Son, Inc. ("Kandel & Son"), NISSCO/Sunline, Inc. ("NISSCO"), Cleaning Ideas, Superior Chemical & Supply, Inc. ("Superior") and June Supply, Inc. ("June Supply") and had completed substantial investments in two companies, b2bstores.com, Inc. (now known as IVAX Diagnostics, Inc.) and equip2move.com Corporation. Subsequently, the Company has disposed of four of its operating subsidiaries, including; (i) the sale of the assets of NISSCO on September 29, 2000, (ii) the sale of the assets of June Supply on December 22, 2000, (iii) the sale of all of the capital stock of Kandel & Son as of June 29, 2001, and (iv) the sale of the assets of Superior, as of June 29, 2001. In June 2002, the Company also disposed of its remaining equity interest in Equip2move.com Corporation (See Note 4 of the Notes to the Consolidated Financial Statements).
Results of Operations
Results of operations for the six months ended June 30, 2002 and 2001:
The net sales decreased $91,994 for the six months ended June 30, 2002 ("2002") as compared to the six months ended June 30, 2001 ("2001") from $2,316,542 to $2,224,548. The gross profit percentage increased from 42% for 2001 to 44% for 2002. The decrease in sales is mostly attributable to the emergence of much stronger competition in 2002 as well as lower sales through the use of "drop-shipments". The increase in gross profit percentage is as a result of the decrease in "drop-shipments", which yield a much lower gross profit.
Operating expenses decreased from $1,639,875 for 2001 to $1,245,994 for 2002, approximately 24%. A large portion of this decrease, approximately $394,000, was due to the liquidation of debt, thereby reducing related interest expense accordingly. Additionally, amortization of goodwill related to acquisitions amounted to approximately $214,000 during 2001 and $-0- during 2002. This reduction as well as the reduction in most other operating expenses is due to the disposal of two subsidiaries in June 2001.
The Company had a net loss in 2002 of $2,739,163, as compared to a net loss of $472,913, in 2001. The increase in net loss was a result of the cumulative effect change in accounting principal due to the impairment of goodwill and the recorded loss on investment in Equip2move.com Corporation.
Results of operations for the three months ended June 30, 2002 and 2001:
The net sales decreased $139,638 for the three months ended June 30, 2002 ("2002") as compared to the three months ended June 30, 2001 ("2001") from $1,173,611 to $1,033,973. The gross profit percentage increased from 42% for 2001 to 48% for 2002. The decrease in sales is mostly attributable to the emergence of much stronger competition in 2002 as well as lower sales through the use of "drop-shipments". The increase in gross profit percentage is as a result of the decrease in "drop-shipments", which yield a much lower gross profit.
Operating expenses decreased from $962,861 for 2001 to $620,882 for 2002, approximately 35%. A large portion of this decrease, approximately $342,000, was due to the liquidation of debt, thereby reducing related interest expense accordingly. Additionally, amortization of goodwill related to acquisitions amounted to approximately $107,000 during 2001 and $-0- during 2002. This reduction as well as the reduction in most other operating expenses is due to the disposal of two subsidiaries in June 2001.
The Company had a net loss in 2002 of $694,391, as compared to a net loss of $335,478, in 2001. The increase in net loss was a result of the Company's recorded loss on investment in Equip2move.com Corporation.
Liquidity and Capital Resources
For the six months ended June 30, 2002, the Company's cash flows from operations was negative $262,414, as a result of a net loss of $2,739,163 and adjustments to arrive at cash used in operating activities of depreciation and amortization of $15,500, a loss on disposal of property and equipment of $646, an expense due to an accounting change of $2,001,142, a loss on investment of $668,272, a decrease in accounts receivables of $11,821, a decrease in inventories of $50,908, a decrease in prepaid expenses and other current assets of $20,327, offset by a decrease in accounts payable and accrued expenses of $100,034 and accrued interest income of $191,833.
For the three months ended June 30, 2002, the Company's cash flows from operations was negative $145,783, as a result of a net loss of $694,391 and adjustments to arrive at cash used in operating activities of depreciation and amortization of $8,000, a loss on equity investment of $668,272, a decrease in accounts receivables of $54,519, a decrease in inventories of $48,927, a decrease in prepaid expenses and other current assets of $14,158, offset by a decrease in accounts payable and accrued expenses of $143,539 and accrued interest income of $101,729.
The Company has no material research and development expenditures nor does it anticipate that it will have any such expenditures in the next twelve months.
Other than the possible disbursement for increased expenses for legal, printing, accounting and other services associated with the search for a strategic alternative, the Company does not expect its capital requirements to increase in any substantive amount during the calendar year 2002. The Company's future liquidity and capital funding requirements will depend on the extent to which the Company is successful in determining and implementing a new direction for the Company. The Company expects that capital requirements for calendar year 2002 will be met with the proceeds from the sale of an investment holding in March 2000, the proceeds from private placement offerings in November 2000 and September 2001, the income earned from an investment in promissory notes and the continued operating revenues from the Company's subsidiary.
General Risk Factors
Lack of an Operating Business Plan
The Company was organized in December 1997 and, in 1999, implemented an acquisition and consolidation strategy in the janitorial supply industry. Within two (2) years, the Company had acquired five wholly-owned operating subsidiaries in the janitorial industry. Subsequently, four of the five subsidiaries were sold. In December 2000, the Board voted to discontinue the acquisition and consolidation strategy due to; (i) a limited number of available companies that met the Company's required acquisition criteria, (ii) the inflated acquisition pricing on the few suitable available targets, and (iii) the Company's inability to attract a high level of investment interest under this strategy.
Since that time, the Board has not implemented a subsequent operating business plan or determined a particular business direction for the Company. The Company, therefore, continues to operate its remaining subsidiary, CIC, and monitor its outstanding investments. If the Company fails to identify a suitable business direction, the Company's present operating revenues may not sustain operating expenses, which could result in significant losses for the Company.
Operating Losses
From its incorporation on December 9, 1997, through the present, the Company has incurred significant operating losses. Such losses reflect the cost of the implementation of the acquisition and consolidation strategy, as well as the ultimate cost of disposal of the subsidiaries and abandonment of the strategy. The Company also anticipates that, in the near future, while the Board seeks an alternative strategy, it will incur net-operating losses. While management believes that it can develop a plan of operations that, when implemented, will permit the Company to achieve and sustain profitable operations, no assurance can be given that the Company's operations will be profitable in the future.
Limited Operating History
The Company has a limited operating history upon which to evaluate the performance and prospects of the Company. There can be no assurance that the Company will operate profitably, that management of the Company will be successful in developing a strategic alternative or that a chosen strategic alternative will be successful. There can be no assurance that the Company will generate sufficient revenues to meet its expenses or to achieve or maintain profitability.
Risk of Registration Under the Investment Company Act of 1940.
The Investment Company Act of 1940 requires registration for companies that are engaged primarily in the business of investing, reinvesting, and owning, holding or trading in securities. A company may be deemed to be an investment company if it owns "investment securities" with a value exceeding 40% of the value of its total assets (excluding government securities and cash items) on an unconsolidated basis, unless an exemption or safe harbor applies. Securities issued by companies other than majority-owned subsidiaries are generally counted as investment securities for purposes of the Investment Company Act. In light of the Company's minority equity investments in emerging companies and the possibility that the Board may pursue similar opportunities in the marketplace, the Company could have a substantial amount of its assets consist of equity interests in companies which are not majority-owned by the Company. The Company's equity interests in companies that are not majority-owned subsidiaries could be counted as investment securities. Registration as an investment company would subject the Company to restrictions that are inconsistent with its business strategy. The Company may have to take actions, including buying, refraining from buying, selling or refraining from selling securities, when it would otherwise not choose to in order to continue to avoid registration under the Investment Company Act.
Indemnification and Limitation of Liability
Under the Nevada Revised Statutes (the "Statutes"), the Company shall have the power to eliminate the personal liability of the directors and officers of the Company for monetary damages to the fullest extent possible under the Statutes or other applicable law. These provisions eliminate the liability of directors or officers to the Company and its stockholders for monetary damages arising out of any violation of a director of his fiduciary duty of due care.
Under the Statutes, the Company may, by a majority of its disinterested directors, shareholders, or, in some cases, by independent legal counsel, indemnify any officer or director against expenses actually and reasonably incurred, if such person acted in good faith in a manner reasonably believed to be in the best interests of the Company, and in the case of any criminal action or proceeding, if such person had no reasonable cause to believe his conduct was unlawful. The Company may indemnify any officer or director against expenses and amounts actually paid or incurred in settlement not exceeding, in the judgment of the Board of Directors, estimated expenses of litigation. Indemnification and/or advancement of expenses provided by the Statutes are not exclusive and the Company may make any further advancement or payment of expenses. However, no indemnification and/or advancement will be made to any officer or director if such person shall have been adjudged to be liable, unless, upon application and determination of the court that in view of the circumstances in the case, such person is fairly and reasonably entitled to indemnification.
The Commission has taken the position that indemnification of officers and directors for liability under the federal securities laws may be against public policy and, therefore, unenforceable.
Potential Loss from Lawsuit
On March 13, 2000, the Company entered into a Stock Purchase Agreement between the Company and ZERO, in which the Company sold 1,000,000 shares of b2b restricted common stock to ZERO at $7.00 per share (See "Legal Proceedings"). The net proceeds on the sale of the b2b stock were $6,750,000. ZERO has since put the Company on notice that it desires to rescind the Stock Purchase Agreement due to a material failure of consideration for the purchase of the b2b stock. The Company has denied any right of rescission by ZERO and began legal proceedings to contest such rescission claim. If a court were to determine that a declaration favorable to the Company was not proper and ZERO were to pursue and have the attempted rescission legally validated, it would have a material adverse effect on the Company.
Decreased Value in IVD Shares
The Company holds 1,228,500 shares of IVAX Diagnostics, Inc. ("IVD") common stock. This investment represents a significant amount of the Company's total assets. There is substantial fluctuation in the value of the IVD common stock as traded on the American Stock Exchange. Due to the significant holdings by the Company of the IVD common stock, a material depreciation in the value of the IVD common stock would have a direct and materially adverse effect on the Company and its ability to continue to do business or seek a strategic alternative. In addition, certain promissory notes are secured by shares of the Company's IVD common stock holdings. A significant decrease in the value of the IVD common stock would likely cause the holders of these promissory notes to request a 30 day prepayment by the Company, which would significantly impact the Company's cash reserves and ability to secure working capital.
Possible Default on Company Investment
The Company has invested in promissory notes issued by Excalibur I, L.L.C. ("Excalibur"). This investment represents a significant amount of the Company's total assets. Payments on the promissory notes are payable on a quarterly basis until a stated rate of return (between 135% and 150%) of the principal amount invested is paid back or upon the end of a two year period from the time of the investment, whichever comes first. The return on the promissory notes is based on the ability of Excalibur to arrange purchases of charged off debt portfolios and its ability to then arrange for the collection of the debt. If Excalibur were unable to secure debt portfolios at an advantageous price or arrange for successful collection of the debt, their ability to service the promissory notes and return the interest and principal due would be affected and the Company's investment would be at risk. The loss of a significant amount of the Company's investment with Excalibur would have a material adverse effect on the Company.
Risk Factors relating to the Janitorial Supply Industry
The Company, through Cleaning Ideas, continues to operate in the janitorial supply industry. The following risk factors relate to that area of the Company's operations.
Competition
The sanitary and janitorial supplies market is highly competitive and is served by numerous small, owner-operated private companies, public companies and several large regional and national companies. In addition, relatively few barriers prevent entry into the industry. As a result, any organization that has adequate financial resources and access to a minimum of technical cleaning expertise may become a competitor of the Company. Competition in the industry depends on a number of factors, including price. Certain of the Company's competitors may have lower overhead cost structures and may, therefore, be able to provide their products and services at lower rates than the Company can provide such products and services. Many of these competitors have long-standing operations and long-standing relationships with large customers such as hospitals and governmental agencies. There can be no assurance that the Company's competitors will not be able to use their competitive advantages in competing in price, offering more extensive lines of products or more favorable payment terms or otherwise, resulting in material adverse effects on the business of the Company. In addition, some of the Company's competitors are larger and have greater resources than are available to the Company. The Company cannot be certain that its competitors will not develop the expertise, experience, and resources to provide products and services that are superior in both price and quality to the products and services of the Company. Similarly, the Company cannot be certain that it will be able to maintain or enhance its competitive position in the market.
Government Regulation
Maintenance and distribution of many of the Company's products are subject to extensive regulation at the federal, state, and local levels. In particular, the Company is subject to regulations involving storage of hazardous materials promulgated by the Federal Environmental Protection Agency and the Occupational Safety and Health Act. As such, the Company's business is dependent upon continued compliance with governmental regulations regarding the operations of the Company's facilities. The Company believes that it is in substantial compliance with all such regulations that are applicable to its business. However, failure to maintain and demonstrate compliance with all such regulations could result in the preclusion of handling certain product lines and in mandated clean up expenditures.
Potential Exposure to Environmental Liabilities
The operations of the Company are subject to various environmental laws and regulations, including those dealing with the handling and disposal of waste products. As part of the cleaning and janitorial supplies manufacturing process, one or more of the operating Subsidiaries may store and use
some raw materials that are deemed to be hazardous materials and are closely regulated. As a result of past and future operations, the Company may be required to incur environmental remediation costs and other clean-up expenses. In addition, the Company cannot be certain that it will be able to identify or be indemnified for all potential liabilities relating to any acquired business.
There can be no assurance that the aggregate amount of any environmental liabilities that might be asserted against the Company or any or all of its operating Subsidiaries, in any such proceeding will not be material.
The Company cannot predict the types of environmental laws or regulations that may from time to time be enacted in the future by federal, state, or local governments, how existing or future laws or regulations will be interpreted or enforced, or what types of environmental conditions may be found to exist at its facilities. The enactment of more stringent laws or regulations or a more strict interpretation of existing laws and regulations may require additional expenditures by the Company, some of which could be material.
Product Liability and Insurance
The business of the Company involves substantial product liability risks associated with the handling, storing, and usage of cleaning products. While the Company believes its practices and procedures provide safeguards that comply with industry standards, it is not possible to eliminate all risks in this regard. The Company maintains product liability insurance in amounts it believes are usual and customary for a business of its size in its industry, though there can be no assurance that in the event of a finding of liability on the part of the Company for use of its products, that the amount of recovery would not be substantially in excess of the limits under the Company's insurance policies. If the Company were to incur product liability in excess of its insurance limits, it would have a material adverse impact on the Company's business and prospects.
Potential Risks of Low Priced Stocks
Historically, the price per share of the Company's Common Stock on the NASD OTC Bulletin Board has been below $5.00 per share with minimal trading. Accordingly, the Common Stock is within the definition of "penny stock," as contained in certain rules and regulations of the SEC. Under those regulations, any broker-dealer seeking to effect a transaction in a penny stock not otherwise exempt from the rules must first deliver to the potential customer a standardized risk disclosure document in a form required by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salespersons in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. This information must be given to the customer orally or in writing before the transaction and in writing before or with delivery of the customer's confirmation of the transaction. Under the penny stock rules, the broker-dealer must make a special determination of the suitability of the suggested investment for the individual customer and must receive the customer's written consent to the transaction. The effect of these rules is to limit the trading market and adversely effect the liquidity of the Common Stock.
Risk Factors Relating to a Strategic Alternative
No Assurance of Success of a Strategic Alternative
The Board has determined that it is in the best interest of its Stockholders to discontinue the consolidation and acquisition strategy in the sanitation and janitorial supply industry. Since the Company's formation, the sanitation and janitorial supply industry is the only industry that management
of the Company has been involved in operating. There can be no assurance that current management will be successful in locating a strategic alternative or that such an alternative would benefit the Company or Stockholder value. In addition, if the Company were to begin operating in a different industry, there could be no assurance that current management could operate in another industry successfully or retain management that would successfully run the Company in that industry.
Significant Charges and Expenses in a Business Combination
Although there is currently no specific business combination or alternative that the Company has negotiated, business combinations and alternatives of the type that the Company may seek often involve significant charges and expenses to conduct. These expenses include investment banking expenses, finders fees, severance payments, legal and accounting fees, printing expenses, travel costs, and other related charges. In addition, the Company could also incur additional unanticipated expenses in connection with a business combination.
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings
On March 13, 2000, upon a request from Zero.NET, Inc., a Delaware corporation ("ZERO") to consider a stock transaction, the Company negotiated and entered into a Stock Purchase Agreement (the "Agreement"), between the Company and ZERO, in which the Company sold 1,000,000 shares of b2bstores.com, Inc. ("b2b") restricted common stock to ZERO at $7.00 per share. The gross proceeds on the sale of the b2b stock were $7,000,000 less a brokerage commission, paid to Zero's brokerage firm, of $250,000. On January 29, 2001, the Company received a letter from outside counsel of ZERO (the "Letter"), which stated that ZERO desired to rescind the Agreement, claiming there was a material failure of consideration for the purchase of the b2b stock by ZERO. In response to the Letter, the Company has denied any right of rescission by ZERO and, on February 6, 2001, filed a petition for declaratory judgment in State District Court of Bexar County, Texas (the "Court"). The Company has petitioned the Court for a declaration that the Agreement remains in effect and is binding on the parties and that the purported rescission of the Agreement by ZERO is ineffective and invalid. ZERO removed the state court case to the United States District Court for the Western District of Texas, San Antonio Division, Civil Action No. SA 01 CV 364 EP in May 2001 pursuant to diversity of citizenship. A scheduling order was subsequently entered. Some written discovery has been conducted and the parties have exchanged witness and exhibit lists. The case was originally set for trial June 3, 2002, but has now been rescheduled for January 21, 2003. The Company intends to vigorously pursue a legal validation of their rights under the Agreement.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
An annual meeting of shareholders of the Company was held on June 14, 2002. Steven Etra, Randall K. Davis, Gary C. Granoff, Melvin Schreiber, Aladar Deutsch and Kenneth Etra were elected as directors of the Company, each to hold office until the next annual meeting of shareholders or until his successor has been elected and qualified, subject to earlier resignation or removal. Additionally, the shareholders ratified the appointment of Goldstein, Golub Kessler L.L.P. as independent certified public accountants for the 2002 fiscal year. The results of the voting at the annual shareholders meeting held on June 14, 2002 were as follows:
Proposal No. 1
(Election of Directors)
Company Nominee For Against Withheld
--------------- --- ------- --------
Steven Etra 2,820,410 44,266 -
Randall K. Davis 2,820,410 44,266 -
16
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Gary C. Granoff 2,820,410 44,266 - Melvin Schreiber 2,820,410 44,266 - Aladar Deutsch 2,820,410 44,266 - Kenneth Etra 2,820,410 44,266 - |
Proposal No. 2
(Ratification of Goldstein, Golub Kessler L.L.P. as independent certified public
accountants) For Against Abstain Non-Votes 2,820,410 44,266 - - |
ITEM 5. Other Information and Subsequent Events
The Company has been notified by the NASDAQ Stock Market that, in 2003, the OTC Bulletin Board will be phased out and a new market, the Bulletin Board Exchange, will be launched. The Company is currently analyzing the impact such changes will have on the trading of its Common Stock and what market alternatives may be available.
In January 2002, the Company began a new private placement of a minimum of $25,000 and maximum of $1,000,000 of promissory notes (the "Note Offering"). The notes are three-year, 9.75% notes and are secured by certain shares of common stock of IVD (the "Diagnostics Shares") held by the Company. Pursuant to the terms of the Note Offering, the Company is required to escrow Diagnostics Shares with an aggregate fair market value equal to 125% of the total aggregate face value of the outstanding notes. The amount of outstanding notes and value of the Diagnostics shares are reviewed periodically by the escrow agent, at which time the escrowed shares are adjusted accordingly. As of the closing of the Note Offering on May 30, 2002, the Company had sold an aggregate of $270,000 worth of the promissory notes to 3 accredited investors. This offering of the promissory notes is being conducted in reliance upon the exemption from registration provided by Rule 506 of Regulation D.
ITEM 6. Exhibits And Reports On Form 8-K
(a) Exhibits:
The exhibits, as listed on the Exhibit Index on page 19, are hereby incorporated by reference.
(b) Reports on Form 8-K:
None.
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, as amended, the Issuer has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
August 14, 2002
Titanium Holdings Group, Inc.
By: /s/ Randall K. Davis
----------------------------
Randall K. Davis, Chief Executive Officer
By: /s/ Jan Pasternack
----------------------------
Jan Pasternack, Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
2(i) Asset Purchase Agreement, by and between ebuyxpress.com L.L.C.,
NISSCO/Sunline, Inc. and Company, dated September 29, 2000
(Incorporated by reference to the Company's Report on Form 8-K
filed with the SEC on October 13, 2000).
2(ii) Asset Purchase Agreement, by and between York Supply, Ltd., June
Supply Corp., and Company, dated December 22, 2000 (Incorporated
by reference to the Company's Report on Form 8-K filed with the
SEC on December 28, 2000).
2(iii) Asset Purchase Agreement, by and between Superior One Source,
Inc., Superior Chemical & Supply, Inc., and Company, dated June
29, 2001. (Incorporated by reference to the Company's Report on
Form 8-K filed with the SEC on July 20, 2001).
2(iv) Stock Purchase Agreement between Richard Kandel, Kandel & Son,
Inc. and Company, dated June 29, 2001. (Incorporated by
reference to the Company's Report on Form 8-K filed with the SEC
on July 20, 2001).
3(i) Articles of Incorporation of the Company (Incorporated by
reference to the Company's Form 10-SB filed with the SEC on June
18, 1999).
3(ii) Bylaws of the Company (Incorporated by reference to the
Company's Form 10-SB filed with the SEC on June 18, 1999).
4(i) Certificate of Designation for the Company's Series A Stock
(Incorporated by reference to the Company's Form 10-SB filed
with the SEC on June 18, 1999).
4(ii) Certificate of Designation for the Company's Series E Stock
(Incorporated by reference to the Company's Form 10-SB filed
with the SEC on June 18, 1999).
4(iii) Certificate of Designation for the Company's Series D Preferred
Stock (Incorporated by reference to the Company's Report on Form
8-K filed with the SEC on September 3, 1999).
4(iv) Certificate of Amendment to the Certificate of Designation for
the Company's Series A Stock (Incorporated by reference to the
Company's Report on Form 10-SB/A filed with the SEC on October
22, 1999).
4(v) Certificate of Designation for the Company's Series B Stock.
(Incorporated by reference to the Company's Report on Form
10-SB/A filed with the SEC on December 16, 1999).
4(vi) Form of the Warrant Certificate - June 1999 (Incorporated by
reference to the Company's Report on Form 10-SB/A filed with the
SEC on October 22, 1999).
4(vii) Form of the Warrant Certificate - December 1999 (Incorporated by
reference to the Company's Report on Form 10-QSB filed with the
SEC on June 15, 2000).
4(viii) Form of the Warrant Certificate - February 2000 (Incorporated by
reference to the Company's Report on Form 10-QSB filed with the
SEC on June 15, 2000).
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4(ix) Form of three-year 9 3/4% Secured Promissory Note (Incorporated by
reference to the Company's Report on Form 10-QSB filed with the SEC on
November 9, 2001).
4(x) Pledge and Security Agreement by and between Company and Secured
Parties, dated October 31, 2001 (Incorporated by reference to the
Company's Report on Form 10-QSB filed with the SEC on November 9,
2001).
10(i)* Settlement Agreement and Mutual Release by and between equip2move.com
Corporation, certain stockholders of equip2move.com Corporation and
Titanium Holdings Group, Inc., dated June 30, 2002.
99(i)* Randall K. Davis Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99(ii)* Jan Pasternack Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
___________________
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*filed herein
Exhibit 10(i)
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (this "Agreement") is made effective as of the 30th day of June, 2002 (the "Effective Date") by and between equip2move.com Corporation, a Delaware corporation ("Equip2move"), the undersigned stockholders of Equip2move (the "Stockholders") and Titanium Holdings Group, Inc., a Nevada corporation ("Titanium").
RECITALS:
WHEREAS, on June 30, 2001 Equip2move, certain stockholders of Equip2move and Titanium entered into a Settlement Agreement (the "First Settlement") which relieved Titanium's obligation to provide any additional funding to Equip2move in exchange for Titanium's forfeiture of certain equity holdings of Equip2move; and
WHEREAS, after the First Settlement, Titanium's total aggregate equity holdings of Equip2move were reduced to 1,217,325 shares of Class B Common Stock (the "Common Holdings") and 1,000,000 shares of Series A Convertible Preferred Stock (the "Preferred Holdings" and together with the Common Holdings, the "Equity Holdings"); and
WHEREAS, Equip2move and Titanium have agreed to liquidate and dissolve Equip2move by the end of calendar year 2002; and
WHEREAS, Equip2move desires to provide $100,000, (the "Settlement Amount"), which represents the approximate amount of total net assets projected to be remaining at the date of dissolution of Equip2move, and a general release of claims against Titanium in exchange for the return of the Equity Holdings by Titanium and a general release of claims against Equip2move; and.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Delivery of Settlement Amount. Upon execution of this Agreement, Equip2move shall deliver to Titanium the Amount in the form of a cashier's check or wire transfer.
2. Return and Delivery of Securities to Equip2move. Upon execution of this Agreement, Titanium shall deliver to Equip2move a stock certificate for the Common Holdings either duly endorsed to Equip2move by Titanium or accompanied by appropriate stock transfer powers duly executed. If the certificated shares of the Common Holdings have been lost, stolen or misplaced, then Titanium shall deliver such requested documentation necessary to release the rights
of Titanium to the Common Holdings. Additionally, upon the execution of this Agreement, Titanium shall deliver to Equip2move a stock certificate for the Preferred Holdings either duly endorsed to Equip2move by Titanium or accompanied by appropriate stock transfer powers duly executed. If the certificated shares of the Preferred Holdings have not lost, stolen or misplaced, then Titanium shall deliver such requested documentation necessary to release the rights of Titanium to the Preferred Holdings.
3. Release by Equip2move and the Stockholders. Upon the Effective Date, Equip2move and the Stockholders hereby release and discharge Titanium and its officers, directors, employees, agents, shareholders and affiliated companies, and their respective successors, heirs and assigns (hereinafter the "Titanium Releasees") from any and all claims, demands, damages, actions, and causes of action whatsoever, known or unknown, whether in law or in equity, which Equip2move or the Stockholders have or may have in any capacity against Titanium Releasees from the time of the incorporation of Equip2move to the Dissolution Date, as defined below.
4. Release by Titanium. Upon the Effective Date, Titanium hereby releases and discharges Equip2move and its officers, directors, employees, agents, shareholders and affiliated companies, (including specifically Adelphia Holdings, LLC, its officers, directors, employees, agents, shareholders and affiliated companies) and their respective successors, heirs and assigns and the Stockholders (hereinafter the "Equip2move Releasees") from any and all claims, demands, damages, actions, and causes of action whatsoever, known or unknown, whether in law or in equity, which Titanium has or may have in any capacity against Equip2move Releasees from the time of the incorporation of Equip2move to the Dissolution Date, as defined below.
5. Representation of Counsel. The parties hereto, jointly and individually, hereby acknowledge that they have been represented by counsel in connection with the giving and execution of this Agreement; that they understand the meaning of this document; that they intend to be legally bound by all of the terms set forth herein; and that they have received consideration deemed by them and their counsel to be sufficient for the giving and execution of this document.
6. Representations and Indemnity.
(a) Representation and Warranty. Equip2move represents and warrants
that Equip2move has adequately set aside funds to properly release any
liabilities or obligations which Equip2move has as of the Effective Date and
which Equip2move is anticipated to have as of the date that Equip2move is
dissolved pursuant to Delaware General Corporation Law (the "Dissolution Date"),
such Dissolution Date to include any period of continuation of the corporation
after dissolution for the purposes of suit and winding up affairs, pursuant to
Section 278 of the Delaware General Corporation Law.
(b) Indemnity. Equip2move and each Stockholder, jointly and severally, agree to indemnify, defend and hold harmless Titanium from and against any and all claims, suits, losses, expenses (legal, accounting, investigation and otherwise), damages and liabilities, arising out of or relating to any inaccuracy of the representation or warranty made by Equip2move in 6(a) above.
7. Miscellaneous. No amendment, modification, or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge, or waiver is sought. No delay or failure at any time on the part of either party in exercising any right, power, or privilege under this Agreement, or in enforcing any provision of the Agreement, shall impair any such right, power, or privilege, or be construed as a waiver of such provision, or be construed as a waiver of any default or as any acquiescence therein, or shall affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior oral or written agreements, commitments, or understandings with respect to such matters. This Agreement or any interest herein may not be assigned by either party in whole or in part without the prior written approval of the other party. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted heirs, successors and assigns. The section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said sections. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. If any covenants in any provision of this Agreement or any part thereof is hereafter construed to be invalid or unenforceable , the same will not affect the remainder of the covenant or covenants which shall be given full effect without regard to the invalid or unenforceable provision. Any public announcement or disclosure with regard to this Agreement and the transactions contemplated herein, other than disclosure contained in filings required by the Securities and Exchange Commission or otherwise required by law, shall be kept confidential by the parties unless mutually agreed to in writing prior to such dissemination.
[Signature Page to Follow]
[Signature Page to the Equip2move Settlement and Mutual Release Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above-written.
TITANIUM HOLDINGS GROUP, INC.
By: /s/ Randall K. Davis
---------------------------------------------------
Randall K. Davis, Chairman of the Board, Chief
Executive Officer, President
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EQUIP2MOVE.COM CORPORATION
By: /s/ Russell M. Koster
---------------------------------------------------
Russell M. Koster, Chief Executive Officer
|
STOCKHOLDERS:
KOSTER INDUSTRIES INC.
By: /s/ Russell M. Koster
---------------------------------------------------
Russell M. Koster, President
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CORPORATE ASSETS INTERNATIONAL INC.
By: /s/ Ron Haas
---------------------------------------------------
Ron Haas, President
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PRESTIGE EQUIPMENT CORPORATION
By: /s/ Terry Lashin
---------------------------------------------------
Terry Lashin, President
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ROSEN SYSTEMS, INC.
By: /s/ Michael Rosen
---------------------------------------------------
Michael D. Rosen, President
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[Signature Page No. 2 to the Equip2move Settlement and Mutual Release Agreement]
/s/ Rodney W. Schultz
----------------------------------------------
RODNEY W. SCHULTZ
/s/ Jerry W. Root
----------------------------------------------
JERRY W. ROOT
/s/ William Davidson
----------------------------------------------
WILLIAM DAVIDSON
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Exhibit 99(i)
Certification of
Randall K. Davis, Chief Executive Officer
of Titanium Holdings Group, Inc.
This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies the quarterly report on Form 10-QSB (the "Form 10-QSB") for the quarter ended June 30, 2002 of Titanium Holdings Group, Inc. (the "Issuer"). I, Randall K. Davis, the Chief Executive Officer of Issuer certify that, to the best of my knowledge:
(i) the Form 10-QSB fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
(ii) the information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
Dated: August 14, 2002.
/s/ Randall K. Davis
--------------------------------
Randall K. Davis
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Subscribed and sworn to before me
this 14th day of August, 2002.
/s/ Rachel Morales
-----------------------------------------------------
Name: Rachel Morales
------------------------------------------------
Title: Notary Public
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My commission expires: 9/25/2004
Exhibit 99(ii)
Certification of
Jan Pasternack, Chief Financial Officer
of Titanium Holdings Group, Inc.
This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and accompanies the quarterly report on Form 10-QSB (the "Form 10-QSB")
for the quarter ended June 30, 2002 of Titanium Holdings Group, Inc. (the
"Issuer"). I, Jan Pasternack, the Chief Financial Officer of Issuer certify
that, to the best of my knowledge:
(i) the Form 10-QSB fully complies with the requirements of section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a) or 78o(d)); and
(ii) the information contained in the Form 10-QSB fairly presents, in all
material respects, the financial condition and results of operations
of the Issuer.
Dated: August 14, 2002.
/s/ Jan Pasternack
---------------------------------
Jan Pasternack
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Subscribed and sworn to before me
this 14th day of August, 2002.
/s/ Joel Leder
---------------------------------------
Name: Joel Leder
----------------------------------
Title: Notary Public
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My commission expires: 12/31/2005