Royalty Information
Summary of Important Facts About Royalties
Our focus is to manage and administer the royalty revenue from Hunting PLC.
The royalty payments to shareholders have been explained in past Titan emails, Koala emails and Updates as well as numerous notices to all shareholders. Below is a recap of this important information for all concerned.
The capital structure of Titan was very typical of a private company. It had various classes of shares that were purchased. There were common shares bought between 25 cents and $1.00. There were Preferred B shares that were purchased at $1.00 and there were Preferred C shares that were originally bought at $1.75.
Preferred shares were granted certain and standard preferences in the event of a bankruptcy or a liquidation of assets. The sale of our intellectual property to Hunting was considered a liquidation, as the Titan Process was basically 100% of the company’s assets.
As such, preferred shareholders were entitled to receive a refund of their investment capital. This was approximately $7.8 million. Therefore, the first royalty payments from Hunting will go to these shareholders first. Many common shareholders also bought preferred B and C shares as they continued to invest in Titan.
There were also debts that needed to be paid off. As of the date of the transaction with Hunting, the company still had $7.2 million in debt. This also had to be paid off. After the B and C preferred shareholders receive a return of their capital, they will still be eligible to receive shareholders royalties until 2040.
The details of this information are contained in this document: Asset Purchase Agreement with Hunting. Most shareholders have read this agreement and voted to accept the APA. On March 6, 2025, the sale of the I.P. to Hunting was consummated. For a basic summary of the entire transaction, please read the FAQ section below.
Summary of Important Facts About Royalties
As royalties are paid to Koala, preferred shareholders will be paid back their capital.
Debt holders will also receive partial payments from the royalties as well.
When 100% of the preferred shareholders have received their capital returned and debt holders have been paid back $3 million of the debt owed then all shareholders will start to receive royalty payments.
Debt holders are entitled to 50% of allocated capital received from Hunting that Koala deemed as payable to shareholders. This was limited to $3 million. After that amount, debt holders will only receive 20% of the future Koala royalty distributions and shareholders will receive 80%.
When the preferred shareholders and the debts are paid off, then 100% of the royalties distributed by Koala will be to all shareholders.
We are very aware that most shareholders are anxious to know what the timetable and amount of royalties in the future could be. Currently, Koala’s revenue from Hunting is dependent on the size of the OOR contracts that are being consummated. They have announced that they are projecting $100 million in OOR revenues by 2030.
Using as a guideline a possible revenue ramp up from 2026, one could project that from today to 2030, the royalties that could inure to Koala could be in the $30-36 million range.
After 2030, it is possible that the royalties could start to approach 30 to 50 cents per share annually. If Hunting were to achieve a 1/2% penetration of the oil supply, which is a very large number, the royalty per share would be $2-3 per share annually.
As we move forward and Hunting continues to ramp up the marketing of OOR, we will have much more guidance and vision available to us. The bottom line is that when Hunting does indeed capture some large contracts, their revenue should move up substantially. OOR is not a one shot sale of some equipment or service. It’s a multi-year service that could last a decade from one sales cycle.
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