-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q4B9WF6eksqYDLNUuvORczfPydBacqXxELpbcZOrGo264G96dX/21AsyrlQf+Odz 165G6HbY+dwUMrvvv37pFw== 0000950170-97-000346.txt : 19970401 0000950170-97-000346.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950170-97-000346 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANSUR INDUSTRIES INC CENTRAL INDEX KEY: 0000934851 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 650226813 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21325 FILM NUMBER: 97570151 BUSINESS ADDRESS: STREET 1: 8425 SW 129 TERRACE CITY: MIAMI STATE: FL ZIP: 33156 BUSINESS PHONE: 3052326768 MAIL ADDRESS: STREET 1: 8425 SW 129TH TERRACE CITY: MIAMI STATE: FL ZIP: 33156 10KSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1996 Commission File No. 000-21325 MANSUR INDUSTRIES INC. ------------------ (Exact Name of Small Business Issuer as Specified in its Charter) 8425 S.W. 129th Terrace Miami, Florida 33156 ------------------ (Address of Principal Executive Offices) (305) 232-6768 ----------------- (Issuer's Telephone Number, Including Area Code) Florida 65-0226813 - ------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT: TITLE OF EACH CLASS Common Stock, $.001 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-KSB or any amendment to this Form 10-KSB [ ] As of March 3, 1997, the number of shares of the registrant's Common Stock outstanding was 4,601,309. The aggregate market value of the Common Stock held by non-affiliates of the registrant as of March 3, 1997 was approximately $34,092,630, based on a closing price of $13.75 for the Common Stock as reported on the NASDAQ Small-Capitalization System on such date. For purposes of the foregoing computation, all executive officers, directors and 5% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers, directors or 5% beneficial owners are, in fact, affiliates of the registrant. DOCUMENTS INCORPORATED BY REFERENCE: The information required by Part III (Items 9, 10, 11 and 12) is incorporated by reference from the registrant's definitive proxy statement (to be filed pursuant to Regulation 14A). ITEM 1. BUSINESS. GENERAL Mansur Industries Inc. (the "Company") has developed and obtained patent protection with respect to a full line of self-contained, recycling industrial parts washers that incorporate innovative, proprietary waste minimization technologies and represent a significant advance over currently available machinery and processes. Focusing on waste minimization rather than its removal and recovery, the Company believes that its equipment will have a major impact on the industrial parts cleaning industry and will have a broad appeal to customers, because its equipment, unlike the machines now in use, facilitates efficient and economical compliance with environmental regulations, minimizes waste disposal requirements, enhances cleaning solution utilization, and increases worker safety and productivity. The Company anticipates that the product should be able to achieve fairly rapid market penetration because of its technological, economic and environmental advantages and its relatively low price point compared to competitive equipment. Most machinery and equipment require oil lubrication to function properly. Removal of lubrication oils from tools and parts during automotive, aviation, marine and general industrial maintenance, service and repair operations is typically effected through the use of mineral spirit solvents which become contaminated in the cleaning process. Under the most common current practice, the solvent becomes more contaminated (and less effective) with repeated use, and, when it is saturated with oil, sludge and other contaminants as a result of the cleaning process (and frequently classified as a hazardous waste under federal and state regulations), it must be stored on site until pick-up, when pure solvent is delivered and the contaminated solvent is, generally, shipped to regional refining facilities. This off-site recycling program is typically scheduled on four to sixteen week cycles and involves both the utilization of progressively more contaminated solvent for cleaning operations until the solvent is too contaminated for use, and thereafter, the on-site storage of the hazardous solution until the periodic waste recovery service. By contrast, the Company's products allow the use and re-use of the solvent by removing all the contaminants from the solvent within the cleaning unit itself, minimizing the volume of waste by-product and providing pure solvent to the customer on demand, without the costly and dangerous storage and transportation of hazardous waste. Moreover, the small amount of waste by-product yielded in the distillation process utilized by the Company's products can typically be recycled and/or disposed of together with the customer's used motor oil, which is generally not classified as a hazardous waste. In January 1997, the Company entered into a strategic alliance with First Recovery and Valvoline Oil Company, two affiliates of Ashland Inc., a multinational oil refiner and distributor of automotive related products, including Valvoline Oil and Ashland 140 Solvent, one of the brands of mineral spirits solvent used in the Company's SystemOne(R) Washer, and commenced a national expansion program pursuant to which First Recovery will be the exclusive sales representative of the SystemOne(R) Washer in 14 major metropolitan markets across the United States. In order to raise capital, in September 1996, the Company consummated an underwritten initial public offering (the "IPO") of 1,100,000 shares of its common stock, $.001 par value (the "Common Stock"), resulting in net proceeds to the Company of $6,034,660 after deduction of underwriting, legal, accounting and other offering related expenses. The proceeds of the IPO have been and will be used primarily for, among other things, the development of manufacturing capacity, marketing, research and development, sales and service centers, corporate headquarters, and for working capital and general corporate purposes. INDUSTRY OVERVIEW The Company believes the chemical industrial parts cleaning industry has grown primarily in response to the demand for means of removing lubrication oils and other contaminants from tools and parts during automotive, aviation, marine and general industrial maintenance, service and repair operations. Based on financial and trade journal reports, the Company believes that in 1996 businesses in the United States incurred more than $1 billion in expenses to clean industrial parts using chemical cleaning techniques. Industrial parts cleaning machines are used by automotive, aviation and maritime service, repair and rebuilding facilities, gas stations, transmission shops, parts remanufacturers, machine shops, and general manufacturing operations of every size and category requiring parts cleaning. The Company believes that the level of demand for the different types of industrial parts cleaning machines and services is and will continue to be a function of, among other things: (1) the effectiveness of the technology; (2) the cost of the machines and services; (3) the time and costs associated with documenting compliance with applicable environmental and other laws; (4) the safety and environmental risks associated with the machines and services; (5) customer service; and (6) the difficulty in handling the regulated substances used and/or generated by competitive machines. PRODUCTS The Company's product line includes a variety of self-contained recycling industrial cleaning and washing equipment, all of which incorporate proprietary waste minimization technology with respect to which the Company has obtained or applied for patent protection. The Company expects that all of the products listed below will be available for commercial exploitation at various times prior to December 31, 1998. All of the Company's products utilize technology that (i) provides continuously recycled cleaning solution during the cleaning process, (ii) eliminates the necessity for continual replacement and disposal of contaminated cleaning solution and residues and (iii) facilitates practical and cost effective compliance with environmental laws and regulations. The Company offers its various parts washing products to commercial users at prices which range from $2,000 to $25,000 per unit. SYSTEMONE(R) WASHER. The first of the Company's products to be available in commercial quantities is the SystemOne(R) Washer. The SystemOne(R) Washer line provides users with pure mineral spirit solvent, on demand, for parts and tools cleaning purposes, utilizing a low-temperature vacuum distillation process to recycle the used solvent within the SystemOne(R) Washer, so that the solvent may be used and reused without any need for off-site processing. The SystemOne(R) Washer minimizes the volume of waste by-product and eliminates the need for storage and disposal of the hazardous waste solvent necessitated by the most widely-used current treatment method. The Company has obtained patent protection for the SystemOne(R) Washer. The Company's SystemOne(R) Washer consists of one or two washing sinks mounted at standing level on top of a metal cabinet; a hinged lid on top of the washing sink to minimize evaporation of solvent; a five gallon primary solvent holding tank; a distillation unit which contains a residue reservoir; and a 30-gallon secondary solvent holding tank. The SystemOne(R) Washer utilizes a manually operated hose and scrubber which directs the flow of solvent to the part being cleaned. The distillation unit separates the solvent from the contaminants that accumulate in the solvent as a result of use by heating the solvent solution in a vacuum to a temperature at which the solvent, but not the residue, vaporizes; and then, cooling the solvent vapor so that the vapor condenses and is converted back into a liquid. The distilled solvent is channeled to the secondary solvent holding tank for future use. Accordingly, the solvent may be repeatedly used, distilled and reused without need for off-site distillation or processing. The residue is collected and held in the residue reservoir until final disposal. If used in accordance with the manufacturer's instructions, the Company believes that the residue generated by its SystemOne(R) washer may typically be legally recycled and/or disposed of in the same manner that used oil is recyled and/or disposed of. The Company has also developed and obtained patent protection with respect to a general parts washer which utilizes an aqueous based cleaning solution. The Company is in the process of evaluating when it will commence the commercial production and marketing of its aqueous based parts cleaner. The target market for SystemOne(R) Washers are automotive, aviation and maritime service, repair and rebuilding facilities, gas stations, transmission shops, parts remanufacturers, machine shops, and general manufacturing operations of every size and category requiring small parts cleaning. The SystemOne(R) Washer will generally require service approximately four times a year for replacement of solvent lost to evaporation or spillage and general maintenance requirements. SYSTEMONE(R) SPRAY GUN WASHER is scheduled for commercial introduction in the fourth quarter of 1997. It incorporates the Company's recycling/reclamation capabilities for paint thinner recovery. The target market for spray gun washers are automotive, aviation and maritime paint shops and all general manufacturing operations that incorporate painting operations. The Company anticipates that the auto paint industry will represent a substantial market. The SystemOne(R) Spray Gun Washer facilitates compliance with rigorous environmental disposal regulations for the paint industry. MULTIPROCESS POWER SPRAY WASHER is currently manufactured and marketed on a limited basis, and integrates three processes in one self-contained machine; a power spray wash process, a recycling/ reclamation process and a thermal oxidation process. The Power Spray Washer is able to accommodate large and bulky parts or units that are too large for the SystemOne(R) Washer. The target market for power spray washers are automotive, aviation and maritime maintenance, repair and rebuilding facilities, parts remanufactures, machine shops, transmission shops, and all facets of general manufacturing requiring maintenance and repair of mechanical equipment. MULTIPROCESS IMMERSION WASHER is scheduled for commercial introduction in the fourth quarter of 1997. It integrates an immersion wash process, a recycling/reclamation process and a thermal oxidation process in one self-contained machine. The MultiProcess Immersion Washer is designed for the cleaning of complex parts containing substantial integral and highly inaccessible passages requiring a total immersion washing. The primary target market for immersion washers are radiator rebuilding shops as well as automotive, aviation and maritime maintenance, repair and rebuilding facilities, parts remanufactures, machine shops, transmission shops, and all facets of general manufacturing requiring maintenance and repair of mechanical equipment. MINIDISPOSER is scheduled for commercial introduction in 1998. It is a compact and portable mini-thermal oxidizer developed as a practical and efficient means for the disposal of contaminants by thermal oxidation within a unit measuring only one cubic foot. The MiniDisposer will be marketed both as optional equipment with the SystemOne(R) Washer and as a stand alone mini-thermal oxidizer. The Company believes that the size and scope of the market for the MiniDisposer is substantial and diversified and includes industrial, commercial and consumer applications that generate small waste by-products. The Company continues to explore potential markets in medical, restaurant and other commercial and consumer applications. COMPETITION The industrial parts cleaning industry is highly competitive and dominated by one large competitor, Safety-Kleen Inc. ("Safety-Kleen"), which has substantially greater financial and other resources than the Company. Safety-Kleen services the parts cleaning industry through a "closed-loop" recycling system in which contaminated solvent is removed for recycling at regional refining facilities and fresh solvent is delivered on a periodic basis. There can be no assurance that Safety-Kleen will not develop or acquire technology similar to or different from the Company's that would allow it to provide an on-site recycling service. To the best of the Company's knowledge, no other company is currently commercially marketing a recycling parts washer with comparable characteristics to those of the Company's products. If the Company's competitors are successful in acquiring or developing patent rights for a recycling parts washer competitively superior to the Company's, the Company's ability to compete may be adversely affected. There can be no assurance that Safety-Kleen or other competitors will not acquire or develop patent rights with respect to a recycling parts washer which are competitively superior to the Company's patent rights. See "Patents, Trademarks and Proprietary Technology." The Company believes that certain of its target customers have attempted to enhance the capabilities of their existing industrial parts washers by acquiring machines capable of distilling solvent with machinery removed from the parts washers. Although there are a wide variety and types of such machinery currently available to the public, the Company believes its SystemOne(R) Washers provide superior service at a lower cost. The Company believes that Safety-Kleen services a significant portion of the parts washing machines currently in use. The Company believes that no other competitor accounts for more than 2% of the industrial parts washer market in the State of Florida or the United States. The Company believes that its SystemOne(R) Washer competes favorably with its competitors on the basis of, among other things, (1) the effectiveness of the technology; (2) cost and productivity savings; (3) reduced time and costs associated with documenting compliance with applicable environmental and other laws; (4) elimination of the safety and environmental risks associated with the competitor's machines and services; (5) customer service; and (6) the difficulty in handling the regulated substances used and/or generated by competitive machines. GOVERNMENT REGULATION Federal and state laws and regulations have been instrumental in shaping the industrial parts washing industry. Federal and state regulations dictate and restrict to varying degrees what types of cleaning solvents may be utilized, how a solvent may be stored and utilized, and the manner in which contaminated solvents may be generated, handled, transported, recycled and disposed of. Although the federal and state laws and regulations discussed below regulate the behavior of the Company's customers, and not the Company, the Company believes that customer demand for its SystemOne(R) Washer is partially a function of the legal environment in which the Company's customers conduct business. The Company's SystemOne(R) Washer was designed to help minimize the cost of complying with existing federal and state environmental laws and regulations. Any changes, relaxation or repeal of the federal or state laws and regulations which have shaped the industrial parts washing industry may significantly affect demand for the Company's products and the Company's competitive position. REGULATION OF SOLVENT TYPES. Federal and state regulations have restricted the types of solvents that may be utilized in industrial parts cleaning machines. Prior to December 1995, methyl chloroform was a widely used cleaning solvent. The Clean Air Act of 1990 mandated the elimination of methyl chloroform by December 1995. REGULATION OF HANDLING AND USE OF SOLVENTS. Stoddard solvents, more commonly known as mineral spirits and solvent naphtha, are the cleaning solvents typically used in the industrial parts washers of the Company's closest competitors. The Company intends to use mineral spirits with a minimum of 140 degrees fahrenheit ignitable limits in its SystemOne(R) Washer. Such mineral spirits do not exhibit the ignitability characteristic for liquid hazardous wastes as defined in the Resource Conservation and Recovery Act of 1976, as amended, and the implementing regulations of that statute adopted by the United States Environmental Protection Agency (the "EPA") (collectively, "RCRA"). Certain machines of the Company's competitors use mineral spirits with lower ignitable limits, which may, after use, render such mineral spirits subject to regulation as a hazardous waste. The Company believes that the ability to recycle the mineral spirits used in its SystemOne(R) Washer provides an economic benefit to the Company's customers by allowing them to avoid the expenses and potential liability associated with the disposal of such solvent as a hazardous waste. Federal, State and many local governments have adopted regulations governing the handling, transportation and disposal of such solvents. On the federal level, under the Hazardous Materials Transportation Act (HMTA), the United States Department of Transportation has promulgated requirements for the packaging, labeling and transportation of mineral spirits in excess of specified quantities. The Company does not intend to transport mineral spirits in quantities that would trigger the HMTA requirements. Relative to the handling and disposal of mineral spirits, many states and local governments have established programs requiring the assessment and remediation of hazardous materials that have been improperly discharged into the environment. Liability under such programs is possible for unauthorized release of mineral spirits in violation of applicable standards. Civil penalties and administrative costs may also be imposed for such violations. REGULATION OF GENERATION, TRANSPORTATION, TREATMENT, STORAGE AND DISPOSAL OF CONTAMINATED SOLVENTS. The generation, transportation, treatment, storage and disposal of contaminated solvents is regulated by the federal and state governments. At the federal level, the Resource Conservation and Recovery Act authorized the EPA to develop specific rules and regulations governing the generation, transportation, treatment, storage and disposal of hazardous wastes as defined by the EPA. The EPA's definition of hazardous waste appears under Chapter 40 CFR Part 261. The Company believes that none of the residue by-products, the used solvent before distillation or the solvent recycled in a SystemOne(R) Washer used in accordance with its intended purpose and instructions is subject to regulation as a "hazardous waste." By contrast, the Company believes that the mixture of solvent and contaminants which is periodically recovered from the machines of many of its competitors is subject to regulation as "hazardous waste." The Company believes that the ability to recycle and manage its residue by-product as used oil rather than as a hazardous waste is economically attractive to the Company's customers for a number of reasons. The Company believes that substantially all of its target customers currently have established systems for the handling, transportation, recycling and/or disposal of used oil. Accordingly, the classification of the residue as used oil would enable the Company's customers to: (1) dispose of or recycle the residue at no significant additional cost; and (2) avoid certain costs associated with establishing and disposing of wastes in compliance with a hazardous waste disposal system. Even if the residue by-product was required to be handled, transported, recycled and/or disposed of as a hazardous waste, the fact that the SystemOne(R) Washer effects a substantial reduction in the volume of waste product requiring disposal would still serve to minimize disposal costs. The Company believes that solvent which has been used and is being held in a SystemOne(R)Washer prior to distillation is not a "waste" and is not subject to regulation as a hazardous waste. The Company believes that the demand for its SystemOne(R) Washer is enhanced as a result of certain federal and state environmental laws and regulations. Although the demand for industrial parts cleaning machines and services may be substantial in certain international markets, the level of demand for the Company's SystemOne(R) Washer may not be substantial in certain countries as a result of permissive regulatory systems which allow the use of less environmentally stringent cleaning and waste disposal methods. MANUFACTURING AND SUPPLY On May 7, 1996, the Company entered into an agreement (the "Supply Agreement") with a supplier (the "Supplier") pusuant to which the Supplier agreed to supply to the Company, at the Company's election, between 3,000 and 5,000 SystemOne(R) units per year at established prices and in accordance with a delivery schedule. During the fourth quarter of 1996, the Company terminated the supply agreement and entered into a mutual release agreement pursuant to which the Company paid $139,673 to the Supplier for amounts outstanding under the Supply Agreement, inclusive of a $50,000 advance. The Company currently manufactures its SystemOne(R) Washers at its 20,000 square foot manufacturing facilities located in Miami, Florida, at which all manufacturing operations, including design, metal cutting, bending and welding, painting and assembly can be performed. The Company has acquired all of the machinery necessary to manufacture SystemOne(R) Washers. The Company believes that it can produce up to 400 SystemOne(R) Washers a month at its current manufacturing facility. The Company intends to secure additional manufacturing capacity as the need arises. The SystemOne(R) Washer is an assembly of raw materials and components all of which the Company believes are readily obtainable. The Company does not believe that it is dependent upon any of its respective current suppliers to obtain the raw materials and components necessary to assemble and manufacture SystemOne(R) Washers. The Company is capable of manufacturing its other products in the amounts required for testing and test marketing in its own manufacturing facility. DISTRIBUTION In January 1997, the Company entered into an agreement with the Valvoline Company and First Recovery, both affiliates of Ashland Inc., to serve as the Company's exclusive sales representative in a territory comprising 14 major metropolitan markets across the United States (the "Territory"). The agreement has a term of one year. Either party may terminate the agreement at any time, with or without cause, upon 90 days written notice. Pursuant to the terms of the agreement, Ashland receives a commission on all units sold. The marketing program with Ashland commenced in January 1997 and replaced the Company's limited original pilot program with Valvoline and First Recovery covering the Dallas and Houston markets. To assist in the marketing and support of this agreement, the Company plans to open support centers in each of the metropolitan areas comprising the Territory. Since the Valvoline Company and First Recovery have extensive sales forces, the Company does not plan to hire additional sales staff at this time. Although this program to date is proceeding as planned, there can be no assurance of the success of the program. The Company may market and service the SystemOne(R) Washers outside the Territory with its own marketing, service and technical support personnel. In addition to its sales and service operations in Miami, during 1996 the Company established sales, service and technical support service centers in Orlando, Tampa, Jacksonville and West Palm Beach, Florida in order to support its operations in Florida. The Company intends to continue to generate consumer awareness of its SystemOne(R) Washer through internal marketing efforts, general advertisements in trade publications, and participation in trade conventions. SALES FINANCING AND SERVICING PROGRAMS To date, the Company has made its SystemOne(R) Washers available to the public through a third party leasing program. The Company entered into an agreement (the "Product Financing Agreement") with Oakmont Financial Services ("Oakmont") on May 28, 1996 pursuant to which Oakmont agreed to provide third party leasing services to customers leasing SystemOne(R) Washers. Oakmont may reject a lease application if, in its sole discretion, the proposed transaction does not comply with Oakmont's then applicable criteria. If Oakmont elects to provide lease financing, Oakmont purchases the SystemOne(R) Washer from the Company at an agreed upon price. The Product Financing Agreement provides that, upon the customer's satisfaction of all of its lease payment obligations to Oakmont, the Company may, at its option, repurchase the subject equipment from Oakmont at a cash purchase price equal to the fair market value of the subject equipment plus applicable sales tax. The Product Financing Agreement states that the fair market value of a SystemOne(R) Washer shall be determined by the mutual agreement of the Company and Oakmont or, if such an agreement is not reached, by an appraiser selected by mutual agreement of the Company and Oakmont. Under the Product Financing Agreement, the Company has agreed, for a fee, to utilize a reasonable and non-discriminatory approach to assist Oakmont in reselling any SystemOne(R) Washers with respect to which a customer has failed to discharge its payment obligations to Oakmont. The Product Financing Agreement states that Oakmont does not have recourse against the Company for customer failures to discharge their obligations to Oakmont unless the Company has breached and failed to cure certain warranties, including warranties related to product use and performance, as well as warranties relating to information provided by the lessee. In the event the Company breaches its warranty and fails to cure the breach, the Product Financing Agreement requires the Company to purchase from Oakmont the leased equipment and Oakmont's rights under the lease agreements with the customer for an amount equal to the sum of all lease payments then due and owing under the lease, all lease payments payable from the date of default to the end of the lease term, less any applicable deposit which may be retained by Oakmont. The Product Financing Agreement has a term of one year, which term automatically renews for successive one-year terms. Under the Product Financing Agreement, either the Company or Oakmont may terminate the agreement with or without cause upon 60 days notice, without affecting the rights and obligations of either party with respect to previous sales. In addition, if Oakmont declines any five lease applications within a 30-day period, which lease applications are accepted and funded by a third party on terms declined by Oakmont, the Company may, upon 10 days notice, terminate the Product Financing Agreement. PATENTS, TRADEMARKS AND PROPRIETARY TECHNOLOGY The Company holds one or more United States patents relating to its SystemOne(R) Washer, Power Spray Washer, Spray Gun Washer, Immersion Washer and Thermal Oxidizer and anticipates that it will apply for additional patents it deems appropriate. The Company has applied for international patents in Canada, Japan, Europe and Mexico. The Company's patents with respect to its SystemOne(R) Washer were issued on September 27, 1994 and August 27, 1996 and will expire on September 26, 2011 and August 26, 2012, respectively. The Company has four additional patents pending with the U.S. Patent Office with respect to its SystemOne(R) Washer. The Company's patent with respect to its Power Spray Washer was issued on January 11, 1994, and expires on January 10, 2011. The Company's patent with respect to its Spray Gun Washer was issued on February 14, 1995, and expires on February 13, 2012. The Company's patent with respect to its Immersion Washer was issued on May 21, 1996 and expires on May 20, 2013. The Company's patent with respect to its MiniDisposer was issued on December 3, 1996 and expires on December 2, 2013. The Company believes that patent protection is important to its business. There can be no assurance as to the breadth or degree of protection which existing or future patents, if any, may afford the Company, that any patent applications will result in issued patents, that patents will not be circumvented or invalidated or that the Company's competitors will not commence marketing self-contained washers with similar technology. It is possible that the Company's existing patent rights may not be valid although the Company believes that its patents and products do not and will not infringe patents or violate proprietary rights of others. It is possible that infringement of existing or future patents or proprietary rights of others may occur. In the event the Company's products or processes infringe patents or proprietary rights of others, the Company may be required to modify the design of its products or obtain a license. There can be no assurance that the Company will be able to do so in timely manner, upon acceptable terms and conditions or at all. The failure to do any of the foregoing could have a material adverse effect upon the Company. In addition, there can be no assurance that the Company will have the financial or other resources necessary to enforce or defend a patent infringement or proprietary rights violation actions. Moreover, if the Company's product or processes infringes patents or proprietary rights of others, the Company could, under certain circumstances, become the subject of an immediate injunction and be liable for damages, which could have a material adverse effect on the Company. In December 1996, the Company received a federal trademark with respect to the mark "SystemOne" and design. The Company also relies on trade secrets and proprietary know-how and employs various methods to protect the concepts, ideas and documentation of its proprietary information. The Company has entered into confidentiality agreements with its employees, suppliers and appropriate vendors. However, such methods may not afford complete protection and there can be no assurance that others will not independently develop such know-how or obtain access to the Company's know-how, concepts, ideas and documentation. RESEARCH AND DEVELOPMENT During the years ended December 31, 1996 and 1995, the Company expended $684,467 and $393,874, respectively, on research and development of its various products. The Company plans to continue to focus significant resources on research and development of existing and future product lines. The Company recognizes that the industrial parts cleaning industry may be entering a phase of rapid technological change and progress and the Company will seek to retain what the Company perceives as its technological superiority over its competitors' products. In order to keep pace with the rate of technological change, the Company intends to devote considerable resources in time, personnel and funds on continued research and development for its products. Accordingly, the Company anticipates that its research and development costs will continue to increase for the foreseeable future. EMPLOYEES As of March 1, 1997, the Company employed 47 employees, of whom 6 were in corporate management, 2 were in research and development, 11 were in sales and marketing, 25 were in manufacturing, and 3 were in administration. To date, the Company has had no difficulty attracting and retaining qualified employees. The Company considers its relations with its employees to be good. ITEM 2. PROPERTIES. The Company maintains its corporate headquarters, research and development laboratory and manufacturing facilities in two 10,000 square foot buildings located in Miami, Florida pursuant to leases which expire on December 31, 1998. The Company has entered into a new lease with respect to a 30,000 square foot facility located in Miami, Florida which will become the Company's primary manufacturing facility commencing on or about June 1, 1997. The lease for this new facility commences on or about June 1, 1997 and expires on or about July 31, 2002. Branch support center leases have been entered into in Florida and Texas to serve those markets. Such leases have terms of one to two years and require monthly rental payments ranging from $450.00 to $862.50. Several additional support centers throughout the United States are planned in order to serve additional markets. The Company believes that its current manufacturing facilities, including the new facility, are suitable for their intended purposes and have capacities adequate for the current and projected needs for the Company's products. The estimated future minimum lease payments for 1997 under non-cancelable operating leases are $143,752. ITEM 3. LEGAL PROCEEDINGS. The Company is not involved in any litigation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year ended December 31, 1996. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock has traded on the NASDAQ SmallCap Market System under the symbol MANS since September 27, 1996, the date of the IPO. The following table sets forth, for the periods indicated, the high and low per share bid prices of the Common Stock as reported on the NASDAQ Small Cap Market: HIGH LOW --------- --------- Third Quarter 1996 (beginning September 27, 1996) $ 9.25 $ 8.13 Fourth Quarter 1996 $ 8.63 $ 7.00 First Quarter 1997 (through February 28, 1997) $ 16.00 $ 7.69 No cash dividends have been paid to date by the Company on its Common Stock. The Company intends to retain all future earnings for the operation and expansion of its business and does not anticipate the payment of dividends in the foreseeable future. Any future determination as to the payment of cash dividends will depend upon a number of factors, including future earnings, results of operations, capital requirements, the Company's financial condition and any restrictions under credit or other agreements existing from time to time, as well as such other factors as the Board of Directors may deem relevant. As of March 1, 1997, the Company had approximately 59 shareholders of record. There are in excess of 250 beneficial owners of the Company's Common Stock. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. GENERAL Since its inception in November 1990 the Company has devoted substantially all of its resources to research and development programs relating to its full line of self contained, recycling industrial parts washers. The Company was a development stage company through June 30, 1996, and commenced its planned principal operations in July 1996. The Company has been unprofitable since its inception and it anticipates that it will incur losses until such time as the Company is able to generate sufficient revenues to offset its operating costs and the costs of its continuing expansion. In light of the material uncertainties in connection with the commencement of the Company's operations, the Company cannot reasonably estimate the length of time before the Company may generate net income, if ever. The Company has made its SystemOne(R) Washer and services available to the public through a third party leasing program. The Company recognizes the revenue from the sale of a machine at the time that the equipment is delivered either to the third party lessor or directly by the Company to the lessee. A portion of the revenue (currently estimated at 10% of the sale price per machine) is accounted for as deferred revenue, and recognized as revenue with respect to the service portion of the agreement over the term of the underlying lease. RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995. The Company was a development stage company and did not generate any operating revenues prior to June 30, 1996. Therefore, comparison between the periods presented is not meaningful in certain instances. The Company generated revenues of $735,745 for the year ended December 31, 1996 in connection with the sale of the Company's SystemOne(R) Washers. During 1996, the Company sold 287 SystemOne(R) Washers, substantially all of which were made under the Product Financing Agreement with Oakmont. The Company's cost of goods sold for the year ended December 31, 1996 were $581,261, which, as a percentage of net sales, represented 79.0% for the year ended December 31, 1996. Cost of sales is comprised of direct material cost, direct labor cost, and manufacturing overhead expenses. As the number of units produced increases, the Company anticipates that the cost of goods sold as a percentage of sales should decrease as a result of achieving economies of scale. The Company's research and product development expenses for the year ended December 31, 1996 increased by 74% to $684,467 from $393,874 for the comparable period in 1995. This increase is primarily related to the Company's accelerated development of the SystemOne(R) prototype during 1996, as opposed to the basic and applied research conducted during the earlier period. During 1996, the Company manufactured and delivered SystemOne(R) Washers to various potential customers in order to test market receptivity. The Company's selling, general and administrative expenses for the year ended December 31, 1996 increased by 84% to $1,670,383 from $907,393 for the comparable period in 1995. The increase in selling, general and administrative expense is due to the hiring of additional marketing staff. The Company anticipates that its monthly general and administrative expenses will continue to increase over the next twelve months as the Company expands in accordance with its proposed business plan. However, a portion of the selling, general and administrative expenses are considered fixed; therefore, the Company anticipates that selling, general and administrative expenses as a percentage of revenue will decrease as the fixed costs are spread over a higher volume of sales. The Company recognized net interest income of $46,345 for 1996 as compared to net interest expense of $(17,878) for 1995. The Company's interest income for the year ended December 31, 1996 was due to the decrease in indebtedness of the Company and from the investment of the proceeds from the IPO in interest and cash equivalent instruments. For the year ended December 31, 1996, the Company incurred an exchange expense of $344,631 in connection with the conversion of all outstanding shares of Series A Preferred Stock into shares of Common Stock. For the year ended December 31, 1996, the Company paid dividends on redeemable preferred stock of $147,000 compared with $222,067 for the year ended December 31, 1995. As a result of the foregoing, the Company incurred net losses of $2,498,652 and $1,319,145 for the years ended December 31, 1996 and 1995, respectively. The Company's net losses to common shares for the years ended December 31, 1996 and 1995 were $2,645,652 and $1,541,212, respectively. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1996, the Company had working capital of $6,089,346 including cash and cash equivalents of $5,320,608. In connection with the IPO, the Company received net proceeds of $6,034,660 and retired $500,000 in principal amount of short term notes. The IPO proceeds were invested in an institutional money market fund and will be used to finance the Company's business plan as required. The capital requirements relating to implementation of the Company's business plan will be significant. Based on the Company's current assumptions relating to implementation of its business plan (including the timetable of and the cost associated with development of manufacturing capabilities, a service fleet, a corporate headquarters, and research and development facilities), the Company will seek to develop additional service centers as part of its product rollout. The Company believes that its ability to generate cash from operations is dependent upon, among other things, demand for its products and services and the Company's third party leasing arrangement with Oakmont. If the Company's third party leasing arrangements with Oakmont prove to be unsuccessful, and the Company is unable to locate another third party willing to provide comparable third party leasing services, the Company believes that it will be substantially dependent upon the proceeds of the IPO to execute its proposed plan of operations over the next 12 months. If the Company's plans change, its assumptions prove to be inaccurate, the capital resources available to the Company otherwise prove to be insufficient to implement its business plan (as a result of unanticipated expenses, problems or difficulties, or otherwise), the Company has plans to restructure its operations to minimize cash expenditures and/or obtain additional financing in order to support its plan of operations. In order to reduce certain of the Company's up-front capital requirements associated with service center and service fleet development, the Company intends to lease service center sites and may seek, to the extent possible, to lease rather than purchase certain equipment and vehicles necessary for service center development. There can be no assurance that the Company will have sufficient capital resources to permit it to fully implement its business plan. The Company has no current arrangements with respect to, or sources of, additional financing. There can be no assurance that any additional financing will be available to the Company on acceptable terms, or at all. If adequate funds are not available from additional sources of financing, the Company's business may be materially adversely affected. In addition, any implementation of the Company's business plan subsequent to the 12 month period immediately following the IPO will require capital resources substantially greater than the proceeds of the IPO or otherwise currently available to the Comapny. Aside from meeting SystemOne(R) Washer purchase and lease orders, the Company's material commitments principally relate to its obligations to make lease payments pursuant to certain real property and equipment leases (currently approximately $13,061 per month), and make installment payments pursuant to an equipment purchase finance agreement (currently approximately $5,690 per month). The Company anticipates that its material commitments will increase significantly over the next 12 months as a result of the Company's planned expansion. In August 1994, the Company acquired a Trumpf Model 200 TC Computer Numerical Controlled Punch Press (the "Punch Press"). The Company financed the acquisition of the Punch Press pursuant to a finance and security agreement with The CIT Group/Equipment Financing, Inc. ("CIT"). Pursuant to the terms of the finance agreement and security agreement, the Company has agreed to pay CIT an aggregate of $341,397 in equal monthly payments of $5,690 over five years. The Company's obligations to CIT are secured by a security interest in the Punch Press. As of December 31, 1996, the Company's accumulated deficit totaled $4,729,866. Since its inception, the Company has financed its operations through a variety of stock and debt issuances and conversions and the sale of property, some of which are described below. In November 1994, the Company borrowed $500,000 pursuant to a 12% Secured Convertible Promissory Note (the "Secured Note"). In April 1995 the Company issued 490,000 shares of 12% Cumulative Convertible Preferred Stock (the "Series A Preferred Stock") in exchange for $1,950,000 in cash and the satisfaction of the Secured Note. In May 1995, in order to minimize the Company's dividend obligations, the Company converted 580,000 shares of First Series Preferred Stock, and subsequently, all of the outstanding shares of First Series Preferred Stock and accrued interest thereon were converted into an aggregate 656,729 shares of Common Stock. In May 1996, the Company issued 20,000 shares of Common Stock in satisfaction of a promissory note in the principal amount of $100,000. In June 1996, the Company issued 628,180 shares of Common Stock in exchange for all of the Series A Preferred Stock and accrued dividends thereon. Pursuant to a revolving line of credit dated June 1, 1990, Mr. Paul Mansur, the Company's Chief Executive Officer and Director, advanced the Company an aggregate of $150,000 (the "Debt") between June 1, 1990 and May 31, 1996. On December 31, 1994 and December 31, 1995, the Company paid Mr. Paul Mansur $34,814 and $12,000, respectively, in satisfaction of interest owed with respect to the Debt. On May 31, 1996, the Company paid Mr. Paul Mansur $150,000 and $5,000 in satisfaction of the outstanding principal balance of and the interest owed with respect to the Debt. In June 1996, the Company issued (the "Private Financing") $1,012,500 in principal amount of Convertible Notes, bearing interest at the rate of 4% per annum through September 30, 1996 and thereafter until maturity at the rate of 12% per annum, and convertible into Common Stock at a conversion price of $6.75 per share. Pursuant to the provisions of the Convertible Notes, the entire outstanding principal amount was converted into 150,000 shares of Common Stock in connection with the IPO. As of September 9, 1996, the Company issued $500,000 in principal amount of Short Term Notes, bearing interest at the rate of 4% through September 1996 and 12% thereafter. The Short Term Notes were retired in connection with the IPO. The Company's cash and cash equivalents balance increased by $4,404,225 during the year ended December 31, 1996 to an ending balance of $5,320,608. At December 31, 1996, the Company had working capital of $6,089,346. CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS. - ------------------------------------------------------------ The foregoing Management's Discussion and Analysis contains various "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events, including, but not limited to, statements regarding growth in sales of the Company's products and the sufficiency of the Company's cash flow for its future liquidity and capital resource needs. These forward looking statements are further qualified by important factors that could cause actual results to differ materially from those in forward looking statements. These factors include, without limitation, increased competition, the sufficiency of the Company's patents, the ability of the Company to manufacture its systems on a cost effective basis, market acceptance of the Company's products and the effects of governmental regulation. Results actually achieved may differ materially from expected results included in these statements as a result of these or other factors. ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. This item begins on the next page. INDEPENDENT AUDITORS' REPORT The Board of Directors Mansur Industries Inc.: We have audited the accompanying balance sheets of Mansur Industries Inc. as of December 31, 1996 and 1995, and the related statements of operations, stockholders' equity (deficit) 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mansur Industries Inc. as of December 31, 1996 and 1995 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP February 10, 1997 Miami, Florida
MANSUR INDUSTRIES INC. BALANCE SHEETS December 31, 1996 and 1995 ASSETS 1996 1995 ------ ---- ---- Current assets: Cash $ 5,320,608 916,383 Accounts receivable 569,926 -- Inventory 617,465 193,838 Other assets 29,700 18,290 ----------- ----------- Total current assets 6,537,699 1,128,511 Intangible assets 46,166 -- Property and equipment, net 373,513 324,431 ----------- ----------- Total assets $ 6,957,378 1,452,942 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable and accrued expenses 297,747 219,477 Deferred revenue 95,160 -- Due to officers/shareholders -- 250,000 Current installments of long-term debt 55,446 45,846 ----------- ----------- Total current liabilities 448,353 515,323 Long-term debt, excluding current installments 118,432 154,165 ----------- ----------- Total liabilities 566,785 669,488 ----------- ----------- Convertible redeemable preferred stock, $1 par value. Authorized 1,500,000 shares, issued and outstanding 0 and 490,000 shares at December 31, 1996 and 1995, respectively -- 2,573,863 Stockholders' equity (deficit): Common stock, $0.001 par value. Authorized 25,000,000 shares, issued and outstanding 4,601,309 and 2,673,129 for 1996 and 1995, respectively 4,601 2,673 Additional paid-in capital 11,115,858 438,132 Accumulated deficit (4,729,866) (2,231,214) ----------- ----------- Total stockholders' equity (deficit) 6,390,593 (1,790,409) ----------- ----------- Total liabilities and stockholders' equity (deficit) $ 6,957,378 1,452,942 =========== ===========
See accompanying notes to financial statements.
MANSUR INDUSTRIES INC. STATEMENTS OF OPERATIONS For the years ended December 31, 1996 and 1995 1996 1995 ---- ---- Revenues $ 735,745 -- Costs of goods sold (581,261) -- ----------- ----------- Gross profit 154,484 -- Operating expenses: General and administrative 1,670,383 907,393 Research and development 684,467 393,874 ----------- ----------- Total operating expenses 2,354,850 1,301,267 ----------- ----------- Loss from operations (2,200,366) (1,301,267) Interest expense (41,432) (63,528) Interest income 87,777 45,650 Exchange expense on redeemable preferred stock (344,631) -- ----------- ----------- Net loss (2,498,652) (1,319,145) Dividends on redeemable preferred stock (147,000) (222,067) ----------- ----------- Net loss to common shares $(2,645,652) (1,541,212) =========== =========== Net loss per common share $ (0.78) (0.66) =========== =========== Weighted average shares outstanding 3,378,008 2,335,140 =========== ===========
See accompanying notes to financial statements.
MANSUR INDUSTRIES INC. Statements of Stockholders' Equity (Deficit) December 31, 1996 and 1995 COMMON STOCK ----------------------------- TOTAL PREFERRED STOCK ADDITIONAL STOCKHOLDERS' ------------------ PAID-IN ACCUMULATED EQUITY SHARES AMOUNT SHARES PAR CAPITAL DEFICIT (DEFICIT) ------ ------ ------ --- ---------- ----------- ------------- Balance at December 31, 1994 580,000 $633,929 2,000,000 $2,000 ($12,257) ($912,069) ($922,326) Issuance of preferred stock in exchange for cash and note payable, net of costs 490,000 2,374,596 - - - - - Accrued dividends on preferred stock - 22,800 - - (22,800) - (22,800) Conversion of preferred stock and accrued dividends to common stock (580,000) (656,729) 656,729 657 656,072 - 656,729 Accrued dividends on preferred stock - 199,267 - - (199,267) - (199,267) Issuance of common stock in exchange for services rendered - - 16,400 16 16,384 - 16,400 Net loss - - - - - (1,319,145) (1,319,145) -------- ---------- --------- ------ ----------- ----------- ---------- Balance at December 31, 1995 490,000 2,573,863 2,673,129 2,673 438,132 (2,231,214) (1,790,409) Issuance of common stock in exchange for services rendered - - 30,000 30 104,970 - 105,000 Conversion of note payable into common stock - - 20,000 20 99,980 - 100,000 Accrued dividends on preferred stock - 147,000 - - (147,000) - (147,000) Exchange of preferred stock and accrued dividends to common stock (490,000) (2,720,863) 628,180 628 3,064,866 - 3,065,494 Issuance of common stock resulting from conversion of notes payable and interest 150,000 150 1,021,350 - 1,021,500 Issuance of common stock resulting from initial public offering including conversion of notes payable, net of costs - - 1,000,000 1,000 5,875,560 - 5,876,560 Issuance of common stock for underwriter overallotment, net of costs - - 100,000 100 658,000 - 658,100 Net loss - - - - - (2,498,652) (2,498,652) -------- ---------- --------- ------ ----------- ----------- ---------- - $ - 4,601,309 $4,601 $11,115,858 ($4,729,866) $6,390,593 ======== ========== ========= ====== =========== =========== ==========
See accompanying notes to financial statements.
MANSUR INDUSTRIES INC. STATEMENTS OF CASH FLOWS For years ended December 31, 1996 and 1995 1996 1995 ---- ---- Cash used in operating activities: Net loss $(2,498,652) (1,319,145) Adjustments to reconcile net loss to cash used in operating activities: Depreciation 48,172 42,404 Stock issued for services 105,000 16,400 Interest expense on notes payable converted to common stock 9,000 -- Changes in operating assets and liabilities: Accounts receivable (569,926) -- Inventory (423,627) (95,245) Other assets (11,410) (7,884) Intangibles (46,166) -- Accounts payable and other accrued expenses 78,270 167,786 Deferred revenue 95,160 -- ----------- ----------- Net cash used in operating activities (3,214,179) (1,195,684) ----------- ----------- Investing activities: Purchase of property and equipment (97,277) (15,062) Proceeds from mortgage note receivable -- 200,000 ----------- ----------- Net cash used in investing activities (97,277) 184,938 ----------- ----------- Financing activities: Proceeds from notes payable and line of credit 1,512,500 -- Repayment of notes payable (176,110) (43,637) Proceeds from issuance of common stock 6,034,660 -- Proceeds from issuance of preferred stock -- 1,950,000 Exchange expense on preferred stock exchanged for common stock 344,631 -- ----------- ----------- Net cash provided by financing activities 7,715,681 1,906,363 ----------- ----------- Net increase (decrease) in cash 4,404,225 895,617 Cash, beginning of period 916,383 20,766 ----------- ----------- Cash, end of period $ 5,320,608 916,383 =========== =========== Supplemental cash flow disclosure: Interest paid $ 41,432 63,528 =========== ===========
Supplemental disclosures of noncash investing and financing activities: During 1995, convertible preferred stock in the amount of $580,000 and related accrued dividends in the amount of $76,729 were converted to common stock [see note 6(b)]. During 1996, the Company exchanged 490,000 shares of preferred stock in the amount of $2,374,596 plus related accrued dividends of $346,267 for 628,180 shares of common stock. In connection with this transaction the Company recorded an exchange expense of 12% in the amount of $344,631 [note 6(a)]. In connection with the Company's initial public offering, $500,000 in notes payable were converted to common stock. MANSUR INDUSTRIES INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (1) THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Mansur Industries Inc. (the "Company") is primarily engaged in research and development, marketing, and production of industrial parts cleaning equipment for use in automotive, marine, airline and general manufacturing industries. The Company's focus is on the design, development and manufacture of industrial cleaning equipment which incorporates continuous recycling and recovery technologies for solvents and solutions, thereby reducing the need to replace and dispose of contaminated solvents and solutions. (A) OPERATIONS AND LIQUIDITY The Company has been primarily engaged in research, development, marketing, and initial production of its products. The Company's ultimate success is dependent upon future events, including the successful commercialization of the Company's products. The Company was considered a development stage enterprise until it realized its first product sales during the third quarter of 1996. As indicated in the accompanying financial statements as of December 31, 1996 and 1995, the Company's accumulated deficit totaled $4,729,866 and $2,231,214, respectively. In past years, the Company has financed this deficiency primarily through additional debt and private placements of convertible redeemable preferred stock. On September 27, 1996, the Company filed a registration statement with the Securities and Exchange Commission (the "SEC") in connection with an initial public offering ("IPO") of 1,100,000 shares of its common stock. The IPO was consummated on October 2, 1996 [see note 7(b)]. (B) CASH AND CASH EQUIVALENTS Cash and cash equivalents includes cash on hand, demand deposits, and short term investments with original maturities of three months or less. (C) INVENTORY Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method for all inventories. Inventory consists of the following at December 31, 1996 and 1995: 1996 1995 ---- ---- Raw materials $355,690 55,738 Work in progress and finished goods 261,775 138,100 -------- ------- $617,465 193,838 ======== ======= (D) PROPERTY AND EQUIPMENT, NET Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the lease term or the estimated useful lives of the respective assets. (E) INTANGIBLES Patents, patent applications and rights are stated at acquisition cost. Amortization is recorded using the straight-line method over the legal lives of the patents, generally for a period ranging up to 17 years. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future cash flows from operations derived from intangible assets is less than their carrying value. (F) FINANCIAL INSTRUMENTS In assessing the fair value of financial instruments at December 31, 1996 and 1995, the Company has used a variety of methods and assumptions, which were based on estimates of market conditions and risks existing at those times. The carrying amount of long-term debt approximates fair value at December 31, 1996 and 1995, respectively, based on rates currently available to the Company for similar debt. For certain instruments, including accounts payable and accrued expenses, and short-term debt, the carrying amount approximates fair value due to their short maturity. (G) RESEARCH AND DEVELOPMENT Research and development expenses consist primarily of costs incurred in connection with engineering activities related to the development of industrial parts cleaning machinery and are expensed as incurred. (H) INCOME TAXES The Company accounts for income taxes based on the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. (I) NET LOSS PER COMMON SHARE The computation of net loss per common share for each year is based on the weighted average number of common shares outstanding. When dilutive, convertible preferred stock and convertible notes are included as common share equivalents using the "if converted" method. As these instruments have an antidilutive effect for the years presented, they are not included in the weighted average calculation. Primary and fully diluted earnings per share are the same for each of the years presented. (J) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (K) NEW ACCOUNTING STANDARDS In October 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which becomes effective for fiscal years beginning after December 15, 1995 and permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB Opinion No. 25") which allows an entity to measure compensation costs using the intrinsic value method of accounting and provide pro forma net income and pro forma earnings per share disclosure as if the fair-value-based method defined by SFAS No. 123 had been applied. The Company is currently accounting for stock-based compensation under APB Opinion No. 25 and has opted to continue accounting for stock-based compensation under this method. In June 1996, the FASB issued Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", which becomes effecitive for transactions occuring after December 31, 1996. The statement provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities based on consistent application of a financial-components approach that focuses on control. The statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers of financial assets that are secured borrowings. The Company has not determined what impact, if any, this standard will have on its results of operations and financial position. (2) PROPERTY AND EQUIPMENT, NET Property and equipment as of December 31, 1996 and 1995 was as follows: 1996 1995 USEFUL LIFE ---- ---- ----------- Furniture and equipment $ 90,711 20,433 5 years Machinery and equipment 380,582 353,606 10 years Leasehold improvements 10,852 10,852 - -------- ------- 482,145 384,891 Less accumulated depreciation 108,632 60,460 -------- ------- $373,513 324,431 ======== ======= Depreciation expense was $48,172 and $42,404 for the years ended December 31, 1996 and 1995, respectively. (3) DUE TO OFFICERS/SHAREHOLDERS The balance in due to officers/shareholders at December 31, 1995 consisted of notes payable in the amounts of $100,000 and $150,000 to a shareholder and the chief executive officer, respectively. During the second quarter of 1996, the note due to the shareholder was converted into 20,000 shares of the Company's common stock at a conversion rate of $5.00 per share. The note payable to the chief executive officer was paid off in its entirety in May 1996. In June and September 1996, the Company issued cumulative convertible redeemable notes payable, with interest of 4% per annum until September 30, 1996 and 12% thereafter, in the aggregate amount of $1,012,500, of which $303,750 was due to certain directors of the Company. These notes were automatically converted into 150,000 shares of common stock at a price of $6.75 per share simultaneously with the IPO of the Company. (4) LONG-TERM DEBT Long-term debt at December 31, 1996 and 1995 consisted of the following:
1996 1995 ---- ---- 12.5% note payable in monthly installments of $5,690, including interest, due August 4, 1999, secured by equipment with a depreciated cost of $216,034 $154,165 200,011 6.5% capital lease with monthly installments of $392, including interest, due November 21, 2001 19,713 - -------- ------ 173,878 200,011 Less current installments 55,446 45,846 -------- -------- Long-term debt, excluding current installments $118,432 154,165 ======== =======
The aggregate maturities of long-term debt for each of the four years subsequent to December 31, 1996 and 1995, are as follows: YEAR ENDING DECEMBER 31, AMOUNT ------------------------ ------ 1997 $55,446 1998 62,561 1999 47,483 2000 8,388 -------- $173,878 ======== (5) INCOME TAXES Since the Company was in the development stage through September 30, 1996, all of its costs through that date have been capitalized for tax purposes. Such amounts will be amortized for tax purposes over a 60 month period beginning with the month the Company commenced its trade or business. The Company incurred a $14,280 capital loss on the sale of real property in 1992. The capital loss may be carried forward by the Company for up to five years and will expire at the end of 1997. Capital losses carried forward may only be used to offset future capital gains. The gross amount of the deferred tax assets as of December 31, 1996 and 1995 was approximately $1,755,000 and $840,000, respectively. These deferred tax assets consist primarily of net operating and capital loss carryforwards, start-up costs, and research and experimental costs capitalized for tax purposes. The net operating losses of the Company will expire in varying amounts through the year 2012. Since realization of these tax benefits is not assured, a valuation allowance has been recorded against the entire deferred tax asset balance. In addition, if certain substantial changes in ownership should occur, there would be an annual limitation of the amount of tax attribute carryforwards which can be utilized in the future. (6) REDEEMABLE PREFERRED STOCK (A) SERIES A PREFERRED STOCK In April 1995, the Company issued 490,000 shares of 12 percent cumulative convertible redeemable preferred stock (the "Series A") as part of a second private placement within the meaning of Rule 144 of the Securities Act of 1933 (the "Act") at an offering price of $5 per share. The issuance raised $1,950,000 in cash and converted an existing $500,000 unsecured convertible promissory note into Series A shares. The Series A were convertible into common stock, one for one, at any time during the first 18 months following the issuance of the stock at the option of the stockholder. All then outstanding shares of Series A were to be redeemed no later than June 30, 1996. Dividends were payable at the time of conversion or redemption. On April 27, 1996, the board of directors of the Company approved an offer to exchange all of the Series A plus the aggregate amount of dividends accrued through June 30, 1996 in the amount of $346,267 for 628,180 shares of common stock. In June 1996, 100% of the Series A shareholders accepted the Company's offer to exchange all of their preferred shares together with their dividends. As such, included in the accompanying statement of operations for the year ended December 31, 1996 is an amount of $344,631 relating to the expense recognized by the Company in connection with this exchange. (B) FIRST SERIES PREFERRED STOCK In the fourth quarter of 1993, the Company issued 580,000 shares of 12 percent cumulative convertible redeemable preferred stock (the "First Series") in a private placement. The stock was convertible into common stock, one for one, at any time during the first 18 months following the issuance of the stock at the option of the stockholder. Dividends were payable at the time of the conversion or redemption. On May 30, 1995, the board of directors of the Company approved the redemption of all of the First Series outstanding at the redemption price of $1 per share plus dividends accrued through June 30, 1995, subject to the preferred shareholders' prior right to convert such preferred stock into common stock of the Company. In June 1995, 100% of the First Series with cumulative dividends thereon was converted into common stock on a one-for-one basis. (7) STOCKHOLDERS' EQUITY (A) CONVERTIBLE NOTE PAYABLE In May 1996, the Company converted a $100,000 note payable into 20,000 shares of common stock at a price of $5 per share pursuant to an amendment to the note signed in January of 1996. (B) COMMON STOCK As discussed in note 1, on October 2, 1996, the Company consummated an IPO whereby it made available to the public 1,100,000 shares of its common stock at a public offering price of $7.50 per share. The Company received proceeds of $6,034,660, net of underwriting discounts and other direct IPO costs. In addition, notes payable in the amount of $500,000 were converted into common stock in connection with the IPO. (C) STOCK BASED COMPENSATION In 1996, the Company adopted an executive compensation plan (the "Plan") pursuant to which the Company's board of directors may provide grants of stock options, stock appreciation rights, restricted stock, deferred stock, other stock related awards and performance or annual incentive awards to officers and key employees. During 1996, the Company granted 10,000 options to purchase common stock at $7.50 per share and 5,000 options to purchase common stock at $8.125 per share. All options have 10-year terms and vest over a 3-year period from the date of grant. At December 31, 1996, the total number of common shares available for grant under the Plan is 375,000. The weighted-average remaining contractual life of outstanding options is 9.83 years at December 31, 1996. There were no exercisable options outstanding at December 31, 1996. As discussed in note (1), the Company applies APB Opinion No. 25 in accounting for its Plan, and, accordingly, no compensation costs have been recognized for its stock options in the financial statements. In connection with the disclosure requirements under SFAS No. 123, the Company estimated the weighted-average fair value of options granted during 1996 at $5.67, using the Black-Scholes option-pricing model. The following weighted average assumptions were used: no expected dividend yield, risk- free interest rate of 6.85%, expected volatility of 55.26%, and an expected life of 10 years. The impact on the Company's net loss and loss per share for 1996 of applying the fair-value-based method of accounting in accordance with SFAS No. 123 is not material. (8) COMMITMENTS (A) LEASES The Company leases operating facilities under fixed rent operating leases. The facilities have lease terms ranging from nine months to five years. Subsequent to year end, the Company entered into an operating lease for its new corporate headquarters. As such, future payments are included in the future minimum lease payment schedule herein. Total rent expense was $85,327 and $55,572 for the years ended December 31, 1996 and 1995, respectively. At December 31, 1996, the estimated future minimum lease payments under non-cancelable operating leases are as follows: DECEMBER 31, ------------ 1997 $143,752 1998 113,815 1999 19,018 2000 19,875 2001 20,770 ------- $317,230 ======== (B) EMPLOYMENT AGREEMENT On September 1, 1993, the Company entered into an employment agreement with the president of the Company. Under the terms of this agreement, the Company agreed to pay the president a salary of $66,000 per annum for two years from the date of the agreement. In September 1995, this agreement was renewed for an additional two years. In August 1994, the Company amended the employment agreement to provide for a $500 per month car allowance and a $50,000 net after tax bonus for each patent issued or allowed by the United States Patent Office, both on a going-forward basis and retroactively, in consideration for the president, as inventor, assigning his rights under such patents to the Company. As of December 31, 1995, four such patents had been granted and as a result, an amount of $179,350 was accrued at December 31, 1995. In December 1996, the Company amended the employment agreement pursuant to a Board of Directors meeting held December 1996 to provide for an annual salary of $120,000. In September 1995, the Company entered into a two year employment agreement with the Chief Executive Officer of the Company which provided for an annual base salary of $48,000 and discretionary bonuses, based on performance, as determined by the Compensation Committee of the Board of Directors. In December 1996, the Company amended the employment agreement pursuant to a Board of Directors meeting held December 1996 to provide for an annual salary of $120,000. (C) SUPPLY AGREEMENT On May 7, 1996, the Company entered into an agreement (the "Supply Agreement") with a supplier (the "Supplier") pusuant to which the Supplier agreed to supply to the Company, at the Company's election, between 3,000 and 5,000 SystemOne(R) units per year at established prices and in accordance with a delivery schedule. The Supply Agreement delivery schedule provided for the monthly delivery of a minimum of 100, 200, 300 and 400 SystemOne(R) Washers in the quarters commencing August 1996, November 1996, February 1997 and May 1997, respectively, for the monthly delivery of a maximum of 500 SystemOne(R) Washers after December 1996. The Supply Agreement provided for adjustments in the established pricing schedule based upon certain reductions in the cost of production and/or increases in the cost of sheet metal. During the fourth quarter of 1996, the Company terminated the Supply Agreement. In accordance with the termination of the Supply Agreement the parties entered into a mutual release agreement pursuant to which the Company agreed to pay $139,673 to the Supplier for amounts outstanding under the Supply Agreement, inclusive of a $50,000 advance. (9) PRODUCT FINANCING AGREEMENT In May 1996, the Company entered into an agreement (the "Product Financing Agreement") with a leasing company which agrees to purchase machines produced by the Company and subsequently lease these machines to customers for 60 month terms. The Company will market the machines and provide the leasing company with credit information on potential customers which they may either accept or reject. The Product Financing Agreement states that the leasing company does not have recourse against the Company for customer failures to discharge their obligations to the leasing company unless the Company has breached and failed to cure certain warranties. Under the Product Financing Agreement, the Company has agreed to provide periodic service for the machines including solvent requirements. Revenue from providing such services is deferred and recognized over the lease term of the machine. In addition, upon the leasing company's request, the Company agrees to assist, without obligation, the leasing company in remarketing any repossessed or surrendered equipment for a fee. At the end of each customer lease, the Company has the option to purchase the machine from the leasing company at its fair market value. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information set forth under the caption "Management" contained in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Shareholders (the "Proxy Statement") is incorporated herein by reference. ITEM 10. EXECUTIVE COMPENSATION. The information set forth under the caption "Executive Compensation" contained in the Company's Proxy Statement is incorporated herein by reference. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information set forth under the caption "Security Ownership" contained in the Company's Proxy Statement is incorporated herein by reference. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information set forth under the caption "Certain Transactions" contained in the Company's Proxy Statement is incorporated herein by reference. ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (A) EXHIBITS EXHIBIT DESCRIPTION 3.1 Restated Articles of Incorporation of Registrant (1) 3.2 Bylaws of Registrant, as amended (1) 4.1 Certificate for Shares of Common Stock, per value $.001 (1) 4.3 Proposed form of Representatives' Warrant Agreement between the Registrant and the Underwriter with form of warrant attached (1) 10.1 Registrant's Executive Incentive Plan (1) 10.2 Master Lease and Distribution Agreement, effective August 1, 1996, among the Registrant, The Valvoline Company and First Recovery (1) 10.3 Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (1) 10.4 Employment Agreement between Pierre G. Mansur and the Registrant dated September 1, 1995 (1) 10.5 Employment Agreement between Paul I. Mansur and the Registrant dated September 1, 1995 (1) 10.6 Employment Agreement between the Company and Charles W. Profilet, dated as of November 27, 1995 (1) 10.7 Vendor Lease Plan Agreement between the Registrant and Oakmont Financial Services, dated as of May 28, 1996 (1) 10.8 A Manufacture Agreement between the Registrant and EMJAC Industries, Inc, dated as of May 7, 1996 (1) 10.9 Lease Agreement, dated October 29, 1994, between Registrant and Marvin L. Duncan (1) 10.10 Security Agreement between the Registrant and The CIT Group/Equipment Financing, Inc. for one (1) TRUMPF TC 200 CNC Punching Machine, Serial No. 070080 with tooling package dated as of October 25,1995 (1) 10.11 Term Life Insurance Policy for Pierre G. Mansur with the Equitable Life Assurance Society of the United States, dated as of November 9, 1994 (1) 10.12 Term Life Insurance Policy for Paul I Mansur with the Equitable Life Assurance Society of the United States, dated as of May 24, 1996(1) 10.13 United States Patent No. 5,277,208 for Multi-Process Power Spray Washer Apparatus dated January 11, 1994 (1) 10.14 United States Patent No. 5,349,974 for SystemOne(R)Washer dated September 27, 1994 (1) 10.15 United States Patent Application No. 08/394,290 for Improved SystemOne(R) Washer allowed April 2, 1996 (1) 10.16 United States Patent No. 5,388,601 for Spray Gun Washer dated February 14, 1995 (1) 10.17 United States Patent No. 5,518,013 for Immersion Washer dated May 21, 1996 (1) 10.18 United States Patent Applications No. 08/364,785 for apparatus for disposal of refuse by thermal oxidation allowed June 26, 1996 (1) 10.19 Short Term Note, dated as of September 9, 1996, between Maria G. Jackson and the Registrant in the principal amount of $100,000 (1) 10.20 Short Term Note, dated as of September 9, 1996, between First Malro and the Registrant in the principal amount of $250,000 (1) 10.21 Short Term Note, dated as of September 9, 1996, between Martin E. Samy and the Registrant in the principal amount of $50,000 (1) 10.22 Short Term Note, dated as of September 9, 1996, between Crestwell Corporation and the Registrant in the principal amount of $100,000 (1) 10.23 Employment Agreement, dated as of July 31, 1996 between Richard P. Smith and the Registrant (1) 10.24 Lease, dated as of September 1, 1996 between Y.F.G, Inc and the Registrant (1) 10.25 Lease, dated as of September 15, 1996 between Business Enterprises of Pinellas Limited and the Registrant (1) 10.26 United States Patent No. 5,549,128 for improved general parts washer dated August 27, 1996 10.27 United States Patent No. 5,579,704 for apparatus for disposing of refuse by thermal oxidation dated December 31, 1996 10.28 United States Patent Application for floor washing apparatus dated December 3, 1996 10.29 United States Patent Application for system and method of vapor recovery in industrial washing equipment dated December 19, 1996 10.30 United States Patent Application for a process for integrated recycling of cleaning solution in industrial washing equipment dated February 26, 1997 27 Financial Data Schedule (For SEC Use Only) (1) Incorporated by reference to the exhibit of the same number filed with the Registrant's Registration Statement on Form S-1 (File No. 333-08657). (B) REPORTS ON FORM 8-K (1) Commission Sales Representative Agreement, dated January 16, 1997, among the Valvoline Company, Ecogard Inc. and the Registrant. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Mansur Industries Inc. Dated: March 31, 1997 /S/ PAUL I. MANSUR ----------------------------- By: PAUL I. MANSUR Chief Executive Officer (Principal Executive Officer) PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE ---------- ----- ---- /S/ PIERRE G. MANSUR - -------------------- PIERRE G. MANSUR Chairman of the Board and President March 31, 1997 /S/ PAUL I. MANSUR - -------------------- PAUL I. MANSUR Chief Executive Officer; Principal Executive March 31, 1997 Officer; Director /S/ RICHARD P. SMITH - -------------------- RICHARD P. SMITH Chief Financial Officer; Principal Financial and March 31, 1997 Accounting Officer /S/ ELIAS F. MANSUR - -------------------- ELIAS F. MANSUR Director March 31, 1997 - -------------------- DR. JAN HEDBERG Director March 31, 1997 /S/ JOSEPH E. JACK - -------------------- JOSEPH E. JACK Director March 31, 1997
INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------ ----------- 10.26 United States Patent No. 5,549,128 for improved general parts washer dated August 27, 1996 10.27 United States Patent No. 5,549,704 for apparatus for disposing of refuse by thermal oxidation dated December 31, 1996 10.28 United States Patent Application for floor washing apparatus dated December 3, 1996 10.29 United States Patent Application for system and method of vapor recovery in industrial washing equipment dated December 19, 1996 10.30 United States Patent Application for a process for integrated recycling of cleansing solution in industrial washing equipment dated February 26, 1997 27 Financial Data Schedule EX-10.26 2 EXHIBIT 10.26 BAR CODE NO US005549128A UNITED STATES PATENT (19) (11) PATENT NUMBER: 5,549,128 MANSUR (45) DATE OF PATENT: * AUG. 27, 1996 - -------------------------------------------------------------------------------- (54) GENERL PARTS WASHER (75) Inventor: PIERRE G. MANSUR, Miami, Fla. (73) Assignee: MANSUR INDUSTRIES INC., Miami, Fla. (*) Notice: The portion of the terms of this patent subsequent to Sep. 27, 2011, has been disclaimed. (21) Appl. No.: 394,290 (22) Filed: FEB 24, 1995 (51) INT. CL. ............... B08B 3/10 (52) U.S. CL. ............... 134/104.1; 134/104.4; 134/108; 134/111 (58) FIELD OF SEARCH ........ 134/104.1, 104.4, 134/105, 107, 108, 109, 111; 202/170 (56) REFERENCES CITED U.S. PATENT DOCUMENTS 1,697,767 1/1929 Hirst 2,070,204 2/1937 Hetzer 2,243,093 5/1941 Flahive 2,352,356 6/1944 Albertson 2,682,273 6/1954 Rosch 2,698,288 12/1954 Dinley, Jr. 2,834,359 5/1958 Kearney ............... 134/108 X 2,924,557 2/1960 De Furia 3,011,924 12/1961 Rand 3,070,463 12/1962 Barday 3,177,126 4/1965 Charreau 3,598,131 8/1971 Weihe, Jr. .............. 134/107 3,610,260 10/1971 Kearney 3,707,404 12/1972 Carlson et al 3,718,147 2/1973 Laroche ............... 134/108 X 3,771,539 11/1973 De Santis 3,915,808 10/1975 Wilcox 3,996,949 12/1976 Boynton ............... 134/108 X 4,008,729 2/1977 Chizinsky ............... 134/107 4,051,858 10/1977 Mele 4,101,340 7/1978 Rand 4,122,861 10/1978 Lee 4,141,373 2/1979 Kartanson et al 4,170,240 10/1979 Gentry 4,223,140 9/1980 Hirdler et al .......... 544/192 4,290,439 9/1981 Charpentier ............. 134/107 4,299,663 11/1981 McCord 4,353,323 10/1982 Kobienzer ............. 134/107 X 4,433,698 2/1984 Blaul 4,443,269 4/1984 Capella et al 4,451,298 5/1984 Yagishita et al 4,505,284 3/1985 Kyatt 4,581,133 4/1986 Tomes 4,596,634 6/1986 McCord ................ 134/107 X 4,616,377 10/1986 Urbani 4,707,878 11/1987 Urbani 4,715,868 12/1987 Kennedy ................... 95/94 4,755,261 7/1988 McCord ete al 4,770,197 9/1988 Prisco, Jr. et al 4,771,503 9/1988 Urbani (List continued on next page.) FOREIGN PATENT DOCUMENTS 662742 3/1929 France .............. 134/105 2394334 2/1979 France .............. 134/109 369641 12/1958 Switzerland 290285 12/1928 United Kingdom PRIMARY EXAMINER--Philip R. Coe ATTORNEY, AGENT, OR FIRM--Robert M. Downey, P.A. (57) ABSTRACT An apparatus for washing automotive, aviation, marine and other general parts with a cleaning solution during maintenance, repair and rebuilding operations, includes a solution holding reservoir, a wash basin with a drain to facilitate return of the cleaning solution to the holding reservoir, and a pump in the holding reservoir for recirculating the cleaning solution through a discharge spout and into the wash basin for washing parts therein. A first valve assembly between the drain and the cleaning solution holding reservoir closes during periods of non-use to prevent vapors from escaping to the atmosphere. During a recycling process, a second valve assembly releases used, contaminated solvent from the holding reservoir into a distillation chamber where the solvent is heated to produce vapors. A condenser cools the vapors to a liquid state, yielding non-contaminated cleaning solutions, which is directed into the holding reservoir for future parts washing as demanded. 12 CLAIMS, 3 DRAWING SHEETS (SCHEMATIC DRAWING) 5,549,128 Page 2 U.S. PATENT DOCUMENTS 4,785,836 11/1988 Yamamoto 4,865,061 9/1989 Fowler et al ............. 134/108 4,874,472 10/1989 Kohler 4,879,004 11/1989 Ocsch et al 4,929,312 5/1990 Westcott 5,069,755 12/1991 Durr et al 5,095,925 3/1992 Elledge et al 5,141,009 8/1992 Morantz .............. 134/104.1 X 5,180,438 1/1993 Hockh et al 5,193,561 3/1993 Robb et al 5,232,299 8/1993 Hiss 5,318,056 6/1994 Kusz et al 5,349,974 9/1994 Mansur ................. 134/108 X 5,357,771 10/1994 Schaal 5,377,705 1/1995 Smith, Jr. et al 5,402,806 4/1995 Hakeem et al 5,415,193 5/1995 Taricco U.S. PATENT AUG. 27, 1996 SHEET 1 OF 3 5,549,128 (SCHEMATIC DRAWINGS) U.S. PATENT AUG. 27, 1996 SHEET 2 OF 3 5,549,128 (SCHEMATIC DRAWINGS) U.S. PATENT AUG. 27, 1996 SHEET 3 OF 3 5,549,128 (SCHEMATIC DRAWINGS) 5,549,128 1 GENERAL PARTS WASHER BACKGROUND OF THE INVENTION 1. Field of the Invention This invention relates to an apparatus for washing articles with a liquid cleaning solution, and more particularly to a general parts washer providing for recycling of contaminated, dirty cleaning solution during a recycling process to produce fresh, non-contamined cleaning solution on a regular basis for use in washing parts during maintenance, repair and rebuilding operations. 2. Description of the Related Art During maintenance, repair and rebuilding operations in virtually all industrial and commercial environments, it is necessary to wash a wide variety of parts and articles in order to remove grease, oil, dirt and other contaminants. Typically, volatile solvents or aqueous solutions are used in small parts cleaning operations, as they have been found to be most effective in removing grease and other accumulated residue from metal parts and other articles. In order to facilitate washing of various parts with a cleaning solvent, such as a hydrocarbon or halogenated hydrocarbon, there is presently available a sink which is removably supported on the top of a 55 gallon drum filled with cleaning solvent. A pump is provided which pumps the solvent from the drum to a spicket in the sink where it is used to rinse parts. From the sink, the sovlent is drained back into the drum. During washing operations, the solvent becomes immediately contaminated after the first use. However, the contaminated solvent is continuously used during cleaning operations until a next scheduled solvent replacement, which is usually on a monthly basis. The regular replacement of contaminated solvent is ordinarily provided by a service, which also supplies the washing apparatus, on a service contract basis. To replace the solvent, the sink is removed from the drum containing the contaminated solvent and is placed on another drum containing fresh solvent. The contaminated drum of solvent must then be taken away and disposed of in a manner complying with EPA contaminant disposal guidelines. This procedure is inefficient, costly and time consuming, leaving a busy manufacturing or repair facility with no other alternative than to perform parts cleaning operations using dirty, contaminated solvent between scheduled solvent replacement dates. The present invention improves upon my previous parts washing apparatus as set forth in U.S. Pat. No. 5,349,974, the subject matter of which is incorporated herein by reference. Specifically, the present invention provides for the optional elimination of a vacuum pump during the distillation process if the atmospheric vaporization temperatures of the cleaning solution being used is not dangerously high, and thus safe distillation at atmospheric pressure can be achieved. Also, the present invention eliminates the need for a removable lid on the distillatin chamber due to the sloping bottom configuration of the distillation chamber which is specifically structured to centrally gather contaminants which remain in the distillatin chamber. To gain access to the distillation chamber and remove the contaminants, a small port with a threaded cap and seal may be provided on the lower front of the distillation chamber, the cap being exteriorly accessible on the front of the apparatus. This structural modification provides for easier cleaning of the distillation chamber, in less time, and substantially reduces the cost of production of the apparatus. Further, in instances where it is desirous to distill under a vacuum, or 2 partial vacuum, the present invention provides for the use of a liquid ring vacuum pump. A primary advantage of liquid ring vacuum pumps is that they have a substantially longer operating life than other vacuum pumps due to their nature of operation, using liquid, as the means for creating a seal, eliminating friction and wear. Further, the liquid ring vacuum pump used in the present invention operates on standard 110 volt power, providing for greater efficiency. To accommodate a liquid ring vacuum pump, and prevent damage thereto, the present invention employs the use of a secondary reservoir, enabling the vacuum pump to operate using non-contaminated cleaning solution. SUMMARY OF THE INVENTION The present invention is directed to an apparatus for rinsing and washing (cleaning) articles such as general machine and engine parts, which provides pure, fresh cleaning solution on demand. More particularly, the present invention provides for the recycling of contaminated, dirty cleaning solution (including solvents and aqueous cleaning solutions) on a regular basis to provide fresh, non-contaminated solution for cleaning, and thus eliminating the need for regular replacement and disposal of contaminated cleaning solution. Accordingly, the present invention provides a practical and economical means for complying with contaminant disposal guidelines of the Environmental Protection Agency (EPA). In accordance with the general parts washing apparatus of the present invention, there is provided a wash basin including an at least partially surrounding wall structure defining a splash guard, an open top and a removable front wall portion. The wash basin further includes a floor which slopes slightly downward from the sides, front and rear towards a centrally disposed drain to facilitate recovery of cleaning solution after use. Once the cleaning solution has passed through the drain and a filter, the cleaning solution returns to a holding reservoir. A pump recirculates the cleaning solution from the holding reservoir to a spout which discharges the cleaning solution into the wash basin for rinsing articles during what might be termed a wash cycle. During a recycling process, a containment valve assembly is opened, releasing the cleaning solution from within the holding reservoir to a distillation chamber. Once the cleaning solution has drained into the distillation chamber, the containment valve assembly is closed and the cleaning solution is heated to a boiling point resulting in vapors entering a condenser. In the condenser, the vapors condense to a liquid state, producing fresh, recycled cleaning solution. This fresh cleaning solution is then lead into a holding reservoir for subsequent use during the wash cycle. A vacuum pump may be used to create a vacuum in the distillation chamber, thereby lowering the cleaning solution boiling point temperature. In a preferred embodiment, a liquid ring vacuum pump is used to provide extended pump life and greater efficiency to the apparatus. In this instance, the condensed, purified cleaning solution is directed from the distillation chamber to a secondary holding reservoir, enabling contaminated cleaning solution in the primary holding reservoir to be dumped into the distillation chamber. In this manner, the fresh cleaning solution, once transferred from the secondary holding reservoir to the primary holding reservoir, can be used to operate the liquid ring vacuum pump which requires solution free of sediment and contaminants in order to prevent damage thereto. Accordingly, with the foregoing in mind, it is a primary object of the present invention to provide a general parts 5,549,128 3 washing apparatus for use in cleaning pans during maintenance, repair and rebuilding operations, and which includes means for recovering and recycling cleaning solutions so as to provide a user with "on-demand" pure cleaning solution on a regular basis for cleaning. It is another object of the present invention to provide a general parts washing apparatus, as described above, which eliminates the need for constant replacement and disposal of contaminated cleaning solution while providing a practical and economical means of complying with EPA contaminant disposal guidelines. It is a further object of the present invention to provide a relatively compact and inexpensive parts washing apparatus adapted to recycle cleaning solutions so as to provide fresh, non-contaminated cleaning solutions on a regular basis. It is still a further object of the present invention to provide a general parts washing apparatus as described above which operates on standard 110 volts and which further requires no special water or air requirements. It is still another object of the present invention to provide an improved general parts washing apparatus which may incorporate the use of a liquid ring vacuum pump operating on 110 volts, and thus providing an extended pump life and greater efficiency. It is yet another object of the present invention to provide a general parts washing apparatus as described above, including a distillation chamber having a bottom structured and disposed to gather contaminants contained therein, thereby enabling the contaminants to be removed through a small port and eliminating the need for a removable lid and a lid lifting assembly, resulting in greater efficiency and reduced cost of construction. It is still another object of the present invention to provide a general parts washing apparatus as described above which complies with all government imposed safety regulations and requirements. These and other objects and advantages of the present invention will be more readily apparant in the description which follows. BRIEF DESCRIPTION OF THE DRAWINGS For a further understanding of the nature of the present invention, reference should be had to the following detailed description taken in connection with the accompanying drawings in which: FIG. 1 is a front, top perspective view of the general parts washer apparatus of the present invention; FIG. 2 is a rear top perspective view, in partial cutaway illustrating the primary structural components, in general form, contained within a cabinet interior of the apparatus. FIG. 3 is a side elevation, in partial section, illustrating the structure and interconnection of the components of the apparatus; and FIG. 4 is a schematic diagram illustrating the functional relationship between the various components of the present invention. Like reference numerals refer to like parts throughout the several views of the drawings. DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT Referring to the several views of the drawings, and initially FIG. 1, there is generally illustrated the general parts washer apparatus 10 of the present invention. The 5,549,128 4 apparatus 10 may be provided with a cabinet 12 including an upper portion defining a wash basin 14 and a lower portion 16 including a base 17, side walls 18. 18' rear wall 19 and a front wall 20. The wash basin 14 includes side wall portions 21, 22 and a rear wall portion 23 partially surrounding the wash basin 14, and defining a splash guard. A front wall panel 24 is removably fitted within opposite channels 25, 25' formed in the opposite side wall portions 21, 22 of the wash basin 14. During washing operations, the front wall panel 24 can be pulled upwardly and removed from a remainder of the apparatus 10. In this manner, access to the wash basin 14 is unobstructed from a front of the apparatus 10. The floor 26 in the wash basin 14 is preferably sloped from the sides, rear and front, downwardly from a central zone where there is located a drain 28 including a drain plate 29 through which cleaning solution drains after use for washing articles in the wash basin 14. After passage through the drain plate 29, the cleaning solution is directed through a filter 30 fitted directly below the drain plate. From the filter, the cleaning solution is lead through a return canal 32 which leads to a cleaning solution holding tank 40. A vapor containment valve assembly 34 is provided at the connection of the return canal 32 to the holding tank 40. During periods of non-use, the vapor containment valve is closed, thus preventing vapors from escaping to atmosphere from within the holding tank 40. The holding tank 40 is sized and configured to contain a predetermined amount of cleaning solution therein. The cleaning solution is recycled and reused throughout operation of the apparatus. A pump 44, supported within the holding tank 40, recirculates the cleaning solution in the holding tank 40 through a return conduit 46 leading to a 3-way valve 48 interconnecting between the return conduit and a spout 50 and a hose 52 having a wash brush 54 attached to an end thereof. A valve lever 56 facilitates operation of the valve to direct flow of cleaning solution to either or both the spout 50 and hose 52 for subsequent discharge into the wash basin 14 (see FIGS. 1, 3 and 4). The brush 54 attached to the hose 52 is specifically designed to permit fluid flow therethrough so that articles may be brushed and simultaneously rinsed with cleaning solution to remove accumulated grease, dirt and other contaminants from the articles being washed. Once discharged from either the spout 50 or brush 54, the cleaning solution returns to the holding tank 40 through the drain 28 and return canal 32. An electric switch is provided and is easily accessible on an exterior of the apparatus 10 (not shown for purposes of clarity) to facilitate deactivation of the pump 44 during periods of non-use. To this point, a wash cycle has been defined which continues during parts washing operations. After a period of washing operations, at such intervals as may be selectively determined, the cleaning solution contained within the holding tank 40 (now contaminated after being used for washing various articles in the wash basin) is released into a distillation chamber 60. Referring to FIGS. 3 and 4, at the initiation of a recycling process, the vapor containment valve assembly 34 is closed by motor M1, or solenoid, which rotates a cam 36 moving lever 35, resulting in spring 33 urging valve stem 37 upward and causing the valve head 38 to mate against valve seat 39, and thus preventing vapors within the holding tank 40 from escaping to atmosphere. The vapor containment valve assembly 34 is operated in a similar manner during all periods of non-use, as a safety measure to prevent vapors from escaping. In the recycling process, motor M2 (or solenoid) is activated causing rotation of cam member 64, thereby operating a 5,549,128 5 cleaning solution containment valve assembly 66. Upon initiation of the recycling process, partial rotation of cam member 64 moves lever 67 which applies an axial downward force on valve stem 70 to release a valve head 72 from engagement with a valve seat 76. Upon opening of the cleaning solution containment valve assembly 66, the contaminated cleaning solution is released from within the holding tank 40 through transfer canal 58 and into the distillation chamber 60. The bottom 41 of the holding tank 40 is specifically configured to slope toward the cleaning solution containment valve assembly 66, as seen in FIG. 3, so that upon opening of the valve assembly 66, the cleaning solution will readily flow through the transfer canal 58 and into the distillation chamber 60. Thereafter, a small amount of purified cleaning solution is sprayed onto the valve seat 76 as well as the bottom 41 of the holding tank 40 (as described more fully hereinafter) in order to wash sediment into the distillation chamber, leaving the now empty holding tank 40 clean and generally free of contaminants. The distillation chamber includes side walls 80, 81, a front wall 82, rear wall 83, a bottom 85 and a ceiling 84. The distillation chamber 60 is insulated on all sides, the bottom and top thereof to maintain heat therein. The bottom 85 of the distillation chamber 60 is specifically structured and configured to slope downwardly towards a lower central zone 86 so that sediment and other contaminants will settle and gather at the central zone 86, facilitating easier cleaning thereof. A removable cap 87 on the front of the apparatus removably fits in covering, scaling relation to a port 89 formed through the front wall of the distillation chamber 60 near the lower central zone 86. Removal of the cap 87 facilitates access to an interior of the distillation chamber 60, enabling accumulated contaminants in the lower central zone to be periodically removed. A tool, such as a spade on a rod, can be used to reach through the port 89 and scrape the bottom of the distillation chamber 60, pulling accumulated sediment out through the port. Once cleaned, the cap is replaced in covering, sealed relation on the port so that liquid and vapors do not escape therefrom during the distillation process. A plurality of heating elements 90 are provided within the disstilation chamber 60 to heat the cleaning solution to a temperature sufficient to produce vapors for distillation. The heating elements 90 may be comprised of electrically operated elongate elements each individually fitted within a tube which extends within an interior of the distillation chamber 60, so that the tubes are surrounded by the cleaning solution. A condenser 100 is positioned and disposed within a cooling zone and is cooled by a fan 102. The condenser 100 includes a first conduit 104 extending to and terminating at an open distal end within an upper portion of the distillation chamber 60. The open end 105 of the conduit 104 is specifically positioned and disposed for receipt of vapors therethrough. The vapors are thereafter led through the conduit 104 to the condenser 100, wherein the vapors are condensed to yield fresh, non-contaminated cleaning solution. A second conduit 108 extends from the condenser 100 to a second lower cleaning solution holding tank 110. The distilled, purified cleaning solution is directed into the lower holding tank 110 for temporary storage. At this point there is a separate charge of cleaning solution contained in the upper holding tank 40. When the charge of cleaning solution in the upper holding tank 40 is contaminated from parts washing operations, and recycling is needed, the charge of cleaning solution is released from the holding tank 40 into the distillation chamber 60, as described above. Thereafter, a small quantity (approximately one to two pints) of the 5,549,128 6 purified, fresh cleaning solution in the second, lower holding tank 110 is dispersed into the upper tank 40 from a transfer line 116 leading from transfer pump 114. The transfer pump 114 is interconnected to the bottom of the lower holding tank 110 by line 112 having a check valve 113 therebetween, to hold vacuum, as described hereinafter. The small quantity of cleaning solution dispersed on the valve assembly 66, removes sediment from the valve seat 76. At the same time, a liquid ring vacuum pump 130 discharges a small quantity of fresh cleaning solution contained therein, and within an output line 132, onto the sloped bottom 41 of the holding tank 40 to wash the sediment through the transfer canal 58 and into the distillation chamber 60. Once the holding tank 40 and valve assembly 66 are rinsed, the containment valve assembly 66 closes to seal off the distillation chamber 60. At this point, the transfer pump 114 is activated, resulting in the purified, non-contaminated cleaning solution in the lower holding tank 110 being transferred into the upper holding tank 40. When the charge of purified cleaning solution has been completely transferred from the lower tank 110 to the upper tank 40, liquid ring vacuum pump 130 is activated. The purified cleaning solution is drawn through an intake line 134 from the holding tank 40 to the vacuum pump 130, where it is thereafter discharged through output line 132, and through a second condenser 140 for cooling prior to returning to the holding tank 40. Operation of the vacuum pump 130 results in a suctin through vacuum line 150 leading to an upper portion of the lower holding tank 110. Continued operation of the vacuum pump 130 results in a vacuum being formed in the lower holding tank 110, the condenser 100 and the distillation chamber 60. In this manner, the temperature at which the cleaning solution will vaporize is substantially lowered, resulting in greater efficiency in the operation of the apparatus 10. To hold the vacuum in the distillation chamber 60, and the lower holding tank 110, a second check valve 136 is provided along the vacuum line. Referring to FIG. 4, a solenoid valve 144 is provided in the fluid intake line 134 leading from the holding tank 40 to the vacuum pump 130. Once a vacuum is achieved in the distillation chamber 60, the solenoid valve 144 is closed and the vacuum pump 130 is deactivated. Thus, the solenoid valve 144 prevents the cleaning solution from draining from the holding tank 40 and backing up into the vacuum pump 130. The contaminated cleaning solution in the distillation chamber 60 is thereafter heated and vaporized, as described above, resulting in the distilled, purified cleaning solution being collected in the lower holding tank 110. Subsequent recycling is repeated in the same manner as described above. While the invention has been shown and described to what is considered to be a practical and preferred embodiment, it is recognized that departures may be made within the spirit and scope of the following claims which, therefore, should not be limited except within the Doctrine of Equivalents. Now that the invention has been described, What is claimed is: 1. An apparatus for washing articles with a solution comprising: at least one holding reservoir structured and disposed to contain a predetermined charge of the solution therein, a wash basin including at least a partially surrounding wall structure, and a floor having a drain means therein for draining the solution from within said wash basin and into said holding reservoir, means for discharging the solution into said wash basis, means for recirculating the solution from said holding reservoir to said discharging means, 5,549,128 7 a distillation chamber being structured and disposed to receive said charge of solution therein. means for releasing and directing said charge of solution from said holding reservoir into said distillation chamber, and including solution containment valve means selectively operable between an open position to release contaminated solution into said distillation chamber and a closed position to either contain the solution in the holding reservoir or to prevent vapors from escaping from said distillation chamber once the cleaning solution has been released from said holding reservoir and is contained within said distillation chamber, heating means structured and disposed for heating the contaminated solution contained in said distillation chamber so as to produce vapors, and a condenser in fluid communication with said distillation chamber and structured and disposed for receipt and condensing of the vapors to yield purified, condensed liquid solution and being further structured and disposed for directing the purified, condensed liquid solution into said holding reservoir. 2. An apparatus for washing articles with a solution comprising: a holding reservoir for containing the solution, a wash basin including a floor with drain means therein structured and disposed for draining the solution from said wash basin and into said holding reservoir, solution discharge means for recirculating and discharging the solution from said holding reservoir into said wash basin, a distillation chamber operatively associated with said holding reservoir to receive contaminated solution, release means for selectively releasing and directing contaminated solution from said holding reservoir to said distillation chamber, access means for removing accumulated contaminants contained within said distillation chamber, heating means structured and disposed for heating the contaminated solution contained in said distillation chamber so as to produce vapors, and a condenser structured and disposed to condense the vapors from said distillation chamber to yield purified, condensed liquid solution and to direct the purified, condensed liquid solution into said holding reservoir. 3. An apparatus as recited in claim 2 further including vacuum means for creating a vacuum in said distillation chamber in order to lower a vaporization temperature of the cleaning solution. 4. An apparatus as recited claim 2 further including means for rinsing said holding reservoir after release of the contaminated solution into said distillation chamber, said rinsing means being structured and disposed to wash sediment and accumulated contaminants from an interior surface of said holding reservoir into said distillation chamber. 5. An apparatus as recited in claim 2 wherein said drain means includes filter means structured and disposed for passage of the solution therethrough for removing sediment and particulate from the solution prior to entering said holding reservoir. 6. An apparatus as recited in claim 2 wherein said solution discharge means includes a pump within said holding reservoir and a conduit connecting between said pump and a discharge spout, said discharge spout being structured and disposed for discharging solution pumped from said holding reservoir into said wash basin. 5,549,128 8 7. An apparatus as recited in claim 2 further including a vapor containment valve assembly structured and disposed to be operable between an open position, permitting the solution to flow through said drain means into said holding reservoir, and a closed position, preventing flow of the solution from said wash basin to said holding reservoir and further preventing fumes and vapors from the solution from escaping from within said holding reservoir to atmosphere. 8. An apparatus as recited in claim 2 wherein said release means includes a solution containment valve assembly selectively operable between a closed position to either contain the solution within said holding reservoir or to prevent vapors from escaping from said distillation chamber when said solution is contained therein, and an open position to release the solution from within said holding reservoir into said distillation chamber. 9. An apparatus for washing articles with a solution comprising: a first solution holding reservoir structured and disposed to contain a predetermined charge of the solution therein, a wash basin including at least a partially surrounding wall structure, and a floor having a drain means therein for draining the solution from within said wash basin and into said first solution holding reservoir, means for discharging the solution into said wash basin, pump means structured and disposed to circulate the solution from said first solution holding reservoir to said discharging means, a distillation chamber being structured and disposed to receive said charge of solution therein, means for releasing and directing said charge of solution from said first solution holding reservoir into said distillation chamber and including solution containment valve means selectively operable between an open position to release contaminated solution into said distillation chamber and a closed position for either containing the solution in said first solution holding reservoir or for preventing vapors from escaping from said distillation chamber once the contaminated solution has been released from said first solution holding reservoir and is contained in said distillation chamber, heating means structured and disposed for heating the contaminated solution contained in said distillation chamber so as to produce vapors, a condenser structured and disposed for receiving and condensing the vapors from said distillation chamber to produce purified, condensed, non-contaminated liquid solution, a second solution holding reservoir structured and disposed to receive the purified, condensed liquid solution from said condenser, and transfer pump means for transferring the purified, condensed liquid solution from said second solution holding reservoir to said first solution holding reservoir. 10. An apparatus as recited in claim 9 further including vacuum means for creating a vacuum in said distillation chamber in order to lower a vaporization temperature of the solution. 11. An apparatus as recited in claim 10 wherein said vacuum means includes a liquid ring vacuum pump. 12. An apparatus as recited in claim 11 wherein said liquid ring vacuum pump is operable using the purified, condensed liquid solution. * * * * * EX-10.27 3 EXHIBIT 10.27 BAR CODE NO US005579704A UNITED STATES PATENT (19) (11) PATENT NUMBER: 5,579,704 MANSUR (45) DATE OF PATENT: DEC. 3, 1996 - -------------------------------------------------------------------------------- (54) APPARATUS FOR DISPOSING OF REFUSE BY THERMAL OXIDATION (75) Inventor: PIERRE G. MANSUR, Miami, Fla. (73) Assignee: MANSUR INDUSTRIES INC., Miami, Fla. (21) Appl. No.: 364,785 (22) Field: DEC. 27, 1994 (51) INT. CL. .................. F23N 5/00; F23B 5/00; F23G 5/00 (52) U.S. CL. .............. 110/185; 110/192; 110/193; 110/211; 110/242; 110/250 (58) FIELD OF SEARCH ...... 110/241, 242, 110/248, 250, 211, 216 185, 192, 193, 229 (56) REFERENCES CITED U.S. PATENT DOCUMENTS 2,711,139 6/1955 Martin ................. 110/211 2,905,115 9/1959 Kendall ................ 110/211 5,363,777 11/1994 Yoshimoto el at ...... 110/241 X FOREIGN PATENT DOCUMENTS 3112976 1/1983 Germany ................ 110/211 PRIMARY EXAMINER--Henry A. Bennett ASSISTANT EXAMINER--Susanne C. Tinker ATTORNEY, AGENT, OR FIRM--Robert M. Downey, P.A. (57) ABSTRACT A unit for disposing of refuse and contaminants by thermal oxidation includes a housing having a bottom, side walls and a top disposed in surrounding relation to an interior thereof. A partial wall structure divides the housing interior to define a first thermal oxidation chamber sized and configured to contain the refuse and contaminants and a second flue gas burning chamber disposed in air-flow communication with said first chamber. Heating elements are provided in the first and second chambers to raise the temperature to a predetermined level in order to induce thermal oxidation of refuse in the first chamber and the resultant flue gasses passing through the second chamber. An exhaust stack receives the flue gasses exiting from the second chamber and includes a filter therein for removing remaining contaminants from the flue gasses prior to entering the atmosphere. 12 CLAIMS, 2 DRAWING SHEETS (SCHEMATIC DRAWING) U.S. PATENT DEC. 3, 1996 SHEET 1 OF 2 5,579,704 (SCHEMATIC DRAWING) U.S. PATENT DEC. 3, 1996 SHEET 2 OF 2 5,579,704 (SCHEMATIC DRAWING) 5,579,704 1 APPARATUS FOR DISPOSING OF REFUSE BY THERMAL OXIDATION BACKGROUND OF THE INVENTION 1. Field of the Invention This invention relates to a unit for disposal of refuse and contaminants, and more particularly, to a portable unit for disposing of refuse and contaminants by thermal oxidation, producing close to zero emissions at elevated temperatures. 2. Description of the Related Art The disposal of waste material presents numerous problems of environmental and economic concern. A common means of disposal of waste material, including contaminants, cardboard boxes, plastic, paper and other wastes products employs the use of incinerators to burn the waste material at high temperatures. While this method of disposal is effective to some degree, incinerators are generally large, cumbersome and costly to manufacture and operate. For this reason, most manufacturing facilities, medical facilities and other businesses need to transport waste material on a regular basis to a disposal facility having an incinerator. Another problem associated with use of conventionally known incinerators is the difficulty in maintaining low emissions to minimize release of harmful pollutants to the atmosphere. The need to adapt to increasingly strict EPA disposal guidelines places an added burden on disposal facilities, and businesses, significantly increasing the cost of disposing of waste material. In the related art, there have been various portable refuse treating apparatus developed which are suitable for use at a business facility having to dispose of waste material. In particular, the U.S. patent to Mogi, U.S. Pat. No. 5,170,724 discloses a burning apparatus having a burn-promoting plate which is specifically designed to burn fuel and refuse while giving rise to almost no smoke. The Mogi device employs the use of a burn-promoting plate which is designed to cause the refuse to be burned from top to bottom in a burning chamber. The refuse thrown in the burning chamber is ignited using fuel and a direct flame such as, for example, a match. Thus, the refuse is burned at relatively low temperatures. While this device is suitable for disposing of various waste material such as cardboard boxes, grass and bark, the burning method does not employ high enough temperatures for properly disposing of various contaminants, including sludge, grease and medical waste products. The Dessi, U.S. Pat. No. 5,086,713, discloses a refuse-treating unit which is adapted to hold a predetermined amount of refuse in a chamber for sterilization by heat to convert the refuse into at least a partly converted sterilized mass. The sterilized mass is then compacted to convert the mass into a compact block. While the Dessi treating unit is particularly suited for disposal of medical waste products, it is a significantly expensive apparatus to manufacture and, thus, is primarily limited to higher end users such as in the medical industry. Further, the Dessi unit is not particularly suited for disposal of other contaminants and waste products such as those commonly found in maintenance and repair facilities, including grease, sludge, oily rags, contaminated absorbent materials and the like. Accordingly, there is a definite need in all industries having to regularly dispose of refuse and contaminants for a portable, low cost device specifically structured to dispose of refuse and contaminants through thermal oxidation while producing close to zero emissions at elevated temperatures. 2 SUMMARY OF THE INVENTION The present invention is directed to a device for disposing of refuse and contaminants by thermal oxidation. More particularly, the present invention is directed to a portable, low cost device for disposing of refuse and contaminants such as, but not limited to, contaminated rags or wipes, oil and grease residue, contaminated absorbent materials and medical waste by thermal oxidation and including a housing having a bottom, side walls and a top disposed in surrounding relation to an interior thereof. At least one partial wall structure divides the housing interior to define a first thermal oxidation chamber sized and configured to contain the refuse and contaminants therein and a second flue gas burning chamber disposed in air-flow communication with the first chamber. The partial wall structure further defines a labyrinth to channel flow of flue gasses from the first thermal oxidation chamber to the second flue gas burning chamber. Heating elements are provided in the first and second chambers to raise the temperature in order to induce thermal oxidation through convection. Baffle means in the second chamber serve to interrupt the flow of flue gasses therethrough, prolonging exposure of the flue gasses to the heating elements, and thus heating the flue gasses to a predetermined temperature to ensure more complete thermal oxidation and a maximum reduction of contaminant vapor discharge. The flue gasses continue from the second chamber to an exhaust stack having a filter therein for removing additional pollutants prior to the flue gasses entering the atmosphere. A blower introduces air from atmosphere to the housing interior, thereby introducing sufficient oxygen to promote thermal oxidation. Control means on the housing include a switch for actuating the blower and heating elements. The control means may further include timer means for cycling the heating elements between and on and off state in order to maintain a predetermined temperature in the housing interior, while further preventing damage to the heating elements. A portion of the top of the housing may be defined by a movable lid or door to facilitate access to the housing interior. A tank or tray, formed of a high temperature alloy material, may further be provided for containing the refuse and contaminants within the first chamber, the tray being removable from the housing interior through an access opening exposed when the door is removed therefrom. Accordingly, with the foregoing in mind it is a primary object of the present invention to provide a portable, low cost device for disposing of refuse and contaminants by thermal oxidation. It is another object of the present invention to provide a portable, compact device for disposing of refuse and contaminants by thermal oxidation, while producing close zero harmful emissions at elevated temperatures. It is a further object of the present invention to provide a device or unit for disposing of refuse and contaminants by thermal oxidation and which employs the use of high temperature heating elements to generate temperatues in excess of 2,800 degrees fahrenheit within burning chambers of the unit, and including means for cycling the heating elements on and off to maintain a predetermined temperature and to prevent damage to the heating elements. It is still a further object of the present invention to provide a unit for disposing of refuse and contaminants by thermal oxidation, and wherein the unit is portable and adapted to operate on common 110 volts. 5,579,704 3 It is still a further object of the present invention to provide a unit for disposing of refuse and contaminants and including high temperature heating elements to induce thermal oxidation through convection while producing close to zero emissions so as to provide a practical and economical means of complying with Environmental Protection Agency waste disposal guidelines. It is yet another object of the present invention to provide a unit for disposing of refuse and contaminants, as described above, which complies with all government imposed safety requirements. These and other objects and advantages of the present invention will be more readily apparent in the description which follows. BRIEF DESCRIPTINO OF THE DRAWINGS For a fuller understanding of the nature of the present invention reference should be had to the following detailed description taken in connection with the accompanying drawings in which: FIG. 1 is a front, top perspective view, in partial cut-away of the refuse disposal unit of the present invention; FIG. 2 is a front elevation, in partial section, of the refuse disposal unit; and FIG. 3 is a schematic diagram illustrating the various electrical components of the unit. Like reference numerals refer to like parts throughout the several views of the drawings. DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT Referring to the several views of the drawings, and initially FIGS. 1 an 2, there is generally illustrated the unit 10 of the present invention for disposing of refuse and contaminants. The unit 10 is comprised of a housing 12 including a bottom 14, side walls 16, 17, 18, 19 and a top 15 disposed in surrounding relation to an interior 23 of the housing 12. The housing further includes a movable door 20, defining at least a portion of the top 15 of the housing 12, the door 20 being hingedly attached to a remainder of the housing 12 by hinge means 26, whereupon movement of the door 20 to an open position, as seen in FIG. 1, exposes an access opening 22 through the top of the housing, thereby facilitating access to the interior 23. The exterior walls, including top 15, bottom 14 and side walls 16, 17, 18, and 19 are all provided with a ceramic insulation 24 to contain heat within the housing interior 23 and to prevent and outer skin 25 of the housing from becoming hot. The interior of the housing includes a partial wall structure 30. In a preferred embodiment, the partial wall structure 30 includes a first partial wall 32 extending downwardly from the top 15 and terminating at a lower free distal edge 33 in spaced relation above an interior surface 14' of the bottom 14 so as to define a gap 34 therebetween. In a preferred embodiment, the partial wall structure 30 further includes a second partial wall 36 extending upwardly from the interior surface 14' of the bottom 14 and terminating at an uppere free distal edge 37 in spaced relation below an interior surface 15' of the top 15 to define a gap 38 therebetween. The partial wall structure 30, including first wall 32 and second wall 36 further serve to define a first thermal oxidation chamber 40 and a second flue gas burning chamber 50. The partial wall structure 30 forms a labyrinth to direct 5,579,704 4 flue gasses (resulting from thermal oxidation of refuse in the first chamber 40) from the first chamber 40 to a lower portion of the second chamber 50. A tray 46 formed of a high temperature alloy material is provided for containing the refuse, contaminants and generally any waste material for thermal oxidation in the first chamber 40. The tray 46 is specifically sized and configured to be inserted and removed through the access opening 22, thereby facilitating placement and removal of the refuse from within the thermal oxidation chamber 40. Heat generating means 60 are provided within the housing interior 23 including first heating elements 62 within the interior under-side of the door 20, as seen in FIGS. 1 and 2. Preferably the first heating elements 62 are at least partially embedded or recessed within the underside of the door 20 to prevent damage thereto when placing and removing the tray 46 from within the chamber 40. A second set of hearing elements 64 are provided within the second chamber 50, for burning flue gasses as they pass therethrough. Referring to FIG. 2 the flow of the flue gas is shown by the arrows, wherein the first heating elements 62 induce thermal oxidation of the contents within the tray 46, resulting in the flue gasses existing a top thereof. The flue gasses are thereafter directed through the labyrinth defined by the partial wall structure 30, and into a lower portion of the second chamber 50. Baffles 68 in the second chamber 50 serve to interrupt flow of the flue gasses through the second chamber 50, thereby prolonging exposure of the flue gasses to the heating elements 64. In a preferred embodiment, the heating elements 62, 64 are preferably high temperature super electronic heating elements capable of generating temperatures in excess of 2,800 degrees fahrenheit. Exposure of the flue gasses to the heating elements 64 in the second chamber 50 serves to ensure more complete thermal oxidation and a maximum reduction of contaminant vapor discharge into a flue stack 70. The flue stack 70 is further provided with a filter means 74, preferably a charcoal activated filter, which may be removable from the stack for cleaning and replacement. The filter means 74 removes remaining pollutants or contaminants in the flue gasses existing the second chamber 50. Thereafter, gasses exiting to the atmosphere through the open top 72 of the flue stack 70 have close to zero harmful emissions. To prevent accidental opening of the door 20 during thermal oxidation, and thus preventing injury, a lock means 75 is provided. Preferably, the lock means 75 is responsive to heat in the housing interior 23; locking the door 20 when temperatures are above a predetermined level in the housing interior 23. The lock means 75 may comprise a bi-metallic coil sensor 76 responsive to heat. A locking element 78 is movable into locked and unlocked engagement with the door 20 by the bi-metallic coil 76 in response to temperature changes within the housing interior 23. Referring to FIG. 3, there is shown a schematic diagram of the various electrically operated components of the unit 10. In particular, there is a control means 80 including a switch 82 operable between an open and closed circuit position. The switch 82 may be of a dial timer device 83 (see FIG. 2.) inw hich a timer 84 is provided to maintain the switch 82 in a closed circuit position for a preset amount of time. Alternatively, the switch 82 may comprise simply a togel switch or other simple switch to open and close the circuit. The control means 80 further includes a controller circuit board 86 having a switching mechanism 88 electrically connected with heating elements 62 and 64. The switching 5,579,704 5 mechanism 88 is specifically structured to cycle current flow to the heating elements 62, 64 so that the heating elements 62, 64 are activated for a predetermined time period and then deactivated for a predetermined time period when the switch 82 is in the closed circuit position. In this manner, a predetermined temperature level can be maintained within the housing interior 23, while further preventing damage to the heating coils 62, 64 which may result from extended, uninterrupted operation. A blower or fan 90 is further provided to supply air from atmosphere into the housing interior 23, thereby introducing sufficient oxygen to promote thermal oxidation of the refuse, contaminants or waste contents therein. The unit 10 is electrically powered by any conventional 110 volt power source, preferably using an electrical cord 94 having a plug 96 on a free end for plugging into a standard electrical socket. The cord 94 supplies electrical power to the switch 82 which, when closed, directs the electric power to the controller circuit board 86, heating elements 62, 64 and blower 90. While the invention has been shown and described in what is considered to be a practical and preferred embodiment, it is recognized that departures may be made within the spirit and scope of the following claims which, therefore, should not be limited except within the Doctrine of Equivalents. Now that the invention has been described, What is claimed is: 1. A unit for disposing of refuse and contamination comprising: a housing including a bottom, side walls, and a top disposed in surrounding relation to an interior of said housing, and an access door movable between covering and uncovering relations to an access opening communicating with said housing interior, a first thermal oxidation chamber sized and configured to contain the refuse and contaminants for thermal oxidation therein, a second flue gas burning chamber disposed in air flow communications with said first chamber and structured for upward passage therethrough of flue gasses resulting from thermal oxidation of said refuse and contaminants, a labyrinth between said first chamber and said second chamber and structured for channeling the flue gasses from an upper portion of said first chamber to a lower portion of said second chamber, first heat generating means for increasing the temperature in said housing interior to a predetermined temperature in order to induce thermal oxidation of the refuse and contaminants contained therein, exhaust means communicating with said second chamber for exhausting the flue gasses to atmosphere and including a flue stack extending upwardly from a top of said second chamber in receiving relation to the upwardly rising flue gasses passin through said second chamber, second heat generating means in said second chamber for heating said flue gasses passing upwardly therethrough to promote upward rise of said flue gasses towards said exhaust means and to ensure more complete thermal oxidation and a reduction of contaminants in said flue gasses prior to entering said exhaust means, filter means contained in said flue stack for removing additional pollutants and contaminants from the flue gasses prior to entering the atmosphere. 5,579,704 6 blower means for supplying air to the housing interior to provide oxygen at a sufficient rate and level in order to promote thermal oxidation of the refuse and contaminants therein, control means for actuating said first and second heat generating means and said blower means, and said control means including means for maintaining a predetermined temperature in said housing interior. 2. A unit as recite din claim 1 wherein said bottom, said walls and top of said housing include thermal insulation means therein to maintain heat within said housing interior and further to prevent an exterior of said housig from reaching harmful temperatures. 3. A unit as recited in claim 2 wherein said first and second heat generating means (include high temperature electrical heating elements capable of generating temperatures in excess of 2,800 degrees fahrenheit. 4. A unit as recited in claim 3 wherein said second chamber includes baffle means therein for interrupting flow of the flue gasses therethrough and prolonging exposure of the flue gasses to said second heat generating means. 5. A unit as recited in claim 4 wherein said means for maintaining a predetermined temperature includes a switching mechanism for activating and deactivating said first and second heat generating means. 6. A unit as recited in claim 5 further including a tray formed of a high temperature resistant alloy material for containing the refuse and contaminants therein for thermal oxidation within said first chamber. 7. A unit for disposing of refuse and contaminants comprising: a housing including a bottom, side walls, and a top disposed in surrounding relation to an interior of said housing, and an access door movable between covering and uncovering elation to an access opening communicating with said housing interior, a first thermal oxidation chamber sized and configured to contain the refuse and contaminants for thermal oxidation therein, a second flue gas burning chamber disposed in air flow communication with said first chamber and structured for upward passage therethrough of flue gasses resulting from thermal oxidation of said refuse and contaminants, a labyrinth between said first chamber and said second chamber and structured for channeling the flue gasses from an upper portion of said first chamber to a lower portion of said second chamber, first heat generating means for increasing the temperature in said housing interior to a predetermined temperature in order to induce thermal oxidation of the refuse and contaminants contained therein, exhaust means communicating with said second chamber for exhausting the flue gasses to atmosphere and including a flue stack extending upwardly from a top of said second chamber in receiving relation to the upwardly rising flue gasses passing through said second chamber, second heat generating means in said second chamber for heating said flue gasses passing upwardl therethrough to promote upward rise of said flue gasses towards said exhaust means and to ensure more complete thermal oxidation and a reduction of contaminants in said flue gasses prior to entering said exhaust means, filter means contained in said flue stack for removing additional pollutants and contaminants from the flue gasses prior to entering the atmosphere, 5,579,704 7 blower means for supplying air to the housing interior to provide oxygen at a sufficient rate and level in order to promote thermal oxidation of the refuse and contaminants therein. lock means for locking said access door in covering relation to said access opening and preventing movement of said access door to an open position in uncovering relation to said access opening when temperatures within said housing interior are above a predetermined level, said lock means including a first element responsive to heat and a second locking element movable into locked and unlocked engagement with said access door by said first element in response to temperature changes within said housing interior. control means for actuating said first and second heat generating means and said blower means, and said control means including means for maintaining a predetermined temperature in said housing interior. 8. A unit as recited in claim 7 wherein said bottom, side walls and top of said housing include thermal insulation 5,579,704 8 means therein to maintain heat within said housing interior and further to prevent an exterior of said housing from reaching harmful temperatures. 9. A unit as recited in claim 8 wherein said first and second heat generating means include high temperature clectrical heating elements capable of generating temperatures in excess of 2,800 degree Fahrenheit. 10. A claim as recited in claim 9 wherein said second chamber includes baffle means therein for interrupting flow of the flue gasses therethrough and prolonging exposure of the flue gasses to said second heat generating means. 11. A unit as recited in claim 10 wherein said means for maintaining a predetermined temperature ncludes a switching mechanism for activating and deactivating said first and second heat generating means. 12. A unit as recited in claim 1 further including a tray formed of a high temperature resistant alloy material for containing the refuse and contaminants therein for thermal oxidation within said first chamber. * * * * * EX-10.28 4 EXHIBIT 10.28 (SEAL) UNITED STATES DEPARTMENT OF COMMERCE PROVISIONAL APPLICATION PATENT AND TRADEMARK OFFICE FILING RECEIPT ASSISTANT SECRETARY AND COMMISSIONER OF PATENTS AND TRADEMARKS WASHINGTON, D.C. 20231 APPLICATION NUMBER FILING DATE FIL FEE REC'D ATTORNEY DOCKET NO. DRWGS $75.00 MANSPA 296 2 ROBERT M DOWNEY 701 BRICKELL AVENUE SUITE 1480 MIAMI FL 33131 Receipt is acknowledged of this Provisional Application. This Provisional Application will not be examined for patentability. Be sure to provide the PROVISIONAL APPLICATION NUMBER, FILING DATE, NAME OF APPLICANT, and TITLE OF INVENTION when inquiring about this application. Fees transmitted by check or draft are subject to collection. Please verify the accuracy of the data presented on this receipt. If an error is noted on this Filing Receipt, please write to Box Provisional Application within 10 days of receipt. Please provide a copy of the Provisional Application Filing Receipt with the changes noted thereon. This Provisional Application will automatically be abandoned twelve (12) months after its filing date and will not be subject to revival to restore it to pending status beyond a date which is after twelve (12) months from its filing date. APPLICANT(S) PIERRE G. MANSUR, MIAMI, FL. FOREIGN FILING LICENSE GRANTED 12/03/96 * SMALL ENTITY * TITLE FLOOR WASHING APPARATUS (SEE REVERSE) EX-10.29 5 EXHIBIT 10.29 (SEAL) UNITED STATES DEPARTMENT OF COMMERCE PATENT AND TRADEMARK OFFICE FILING RECEIPT ASSISTANT SECRETARY AND COMMISSIONER CORRECTED OF PATENTS AND TRADEMARKS WASHINGTON, D.C. 20231
APPLICATION NUMBER FILING DATE GRP ART UNIT FIL FEE REC'D ATTORNEY DOCKET NO. DRWGS TOT CL IND CL 1308 $385.00 MANSPA196 4 17 3
ROBERT M DOWNEY SUITE 1480 701 BRICKELL AVENUE MIAMI FL 33131 Receipt is acknowledged of this nonprovisional Patent Application. It will be considered in its order and you will be notified as to the results of the examination. Be sure to provide the U.S. APPLICATION NUMBER, FILING DATE, NAME OF APPLICANT, and TITLE OF INVENTION when inquiring about this application. Fees transmitted by check or draft are subject to collection. Please verify the accuracy of the data presented on this receipt. If an error is noted on this Filing Receipt, please write to the Application Processing Division's Customer Correction Branch within 10 days of receipt. Please provide a copy of the Filing Receipt with the changes noted thereon. APPLICANT(S) PIERRE G. MANSUR, MIAMI, FL. CONTINUING DATA AS CLAIMED BY APPLICANT--PROVISIONAL APPLICATION NO. FOREIGN FILING LICENSE GRANTED 12/19/96 * SMALL ENTITY * TITLE SYSTEM AND METHOD OF VAPOR RECOVERY IN INDUSTRIAL WASHING EQUIPMENT PRELIMINARY CLASS: 210 (SEE REVERSE) EX-10.30 6 EXHIBIT 10.30 (SEAL) UNITED STATES DEPARTMENT OF COMMERCE PATENT AND TRADEMARK OFFICE FILING RECEIPT ASSISTANT SECRETARY AND COMMISSIONER CORRECTED OF PATENTS AND TRADEMARKS WASHINGTON, D.C. 20231
APPLICATION NUMBER FILING DATE GRP ART UNIT FIL FEE REC'D ATTORNEY DOCKET NO. DRWGS TOT CL IND CL 1313 $385.00 MANSPA396 5 19 3
ROBERT M DOWNEY 701 BRICKELL AVENUE SUITE 1480 MIAMI FL 33131 Receipt is acknowledged of this nonprovisional Patent Application. It will be considered in its order and you will be notified as to the results of the examination. Be sure to provide the U.S. APPLICATION NUMBER, FILING DATE, NAME OF APPLICANT, and TITLE OF INVENTION when inquiring about this application. Fees transmitted by check or draft are subject to collection. Please verify the accuracy of the data presented on this receipt. If an error is noted on this Filing Receipt, please write to the Application Processing Division's Customer Correction Branch within 10 days of receipt. Please provide a copy of the Filing Receipt with the changes noted thereon. APPLICANT(S) PIERRE G. MANSUR, MIAMI, FL. CONTINUING DATA AS CLAIMED BY APPLICANT-- THIS APPLN IS A CON OF WHICH IS A CIP OF FOREIGN FILING LICENSE GRANTED 02/26/97 * SMALL ENTITY * TITLE PROCESS FOR INTEGRATED RECYCLING OF CLEANING SOLUTION IN INDUSTRIAL WASHING EQUIPMENT PRELIMINARY CLASS: 134 (SEE REVERSE) EX-27 7
5 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 5,320,608 0 569,926 0 617,465 6,537,699 482,145 108,632 6,957,378 448,353 0 0 0 4,601 6,385,992 6,957,378 735,745 735,745 581,261 2,936,111 344,631 0 41,432 (2,498,652) 0 (2,498,652) 0 0 0 (2,498,652) (.78) (.78)
-----END PRIVACY-ENHANCED MESSAGE-----