SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   Form 10-KSB

     This is the Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the full year ending December 31, 1998 concerning


                        TOUPS TECHNOLOGY LICENSING, INC.
                        A Florida Corporation located at



     7887  Bryan  Dairy  Road,   Suite  105,   Largo,   Florida  33777  o  voice
(727)-548-0918 o fax (727)-549-8138



    0-23897                                             59-3462501
Commission File Number                          IRS Employer Identification No.

Over-The-Counter Bulletin Board ("OTC:BB")                Common
     Name of each exchange                       Securities registered under
     on which registered                     Section 12(g) of the Exchange Act:


     The  Company  has filed all  reports  required to be filed by Section 13 or
15(d) of the  Exchange  Act during the past 12 months and the  Company  has been
subject to such filing requirements for the past 90 days.


     The  Company's  revenues for the fiscal year ending  December 31, 1998 were
$3,132,001.


     At March 29, 1999, the closing bid price of the Company's  common stock was
$2.00 The Company's common stock is traded under the symbol "TOUP."


     At December 31, 1998, the Company had  22,217,299  common shares issued and
outstanding.


<PAGE>
                                 Reference Page

                                     Part I

           Item                                                     Page Number

Item 1     Description of Business

Item 2     Description of Property

Item 3     Legal Proceedings

Item 4     Submission of Matters to a Vote of Security Holders

Item 5     Market for Common Equity and Related Stockholder Matters

Item 6     Management's Discussion and Analysis or Plan of Operation

Item 7     Financial Statements

Item 8     Changes In and Disagreements With Accountants on 
            Accounting and Financial Disclosure

                                    Part III

Item 9      Directors, Executive Officers, Promoters and
            Control Persons; Compliance With Section 16(a)
            of the Exchange Act

Item 10     Executive Compensation

Item 11     Security Ownership of Certain Beneficial Owners 
             and Management

Item 12     Certain Relationships and Related Transactions

Item 13     Exhibits and Reports on Form 8-K

Part F/S

Signatures
<PAGE>
                                     Part I

Item 1            Description of Business.

     The following  highlights the Company's business.  This section is followed
by a more detailed  discussion  relating to each of our nine divisions  which is
immediately  followed  by an  overview  of the  marketplace  for  the  Company's
products  and  services.  Beginning  on page  F-1 is the  Company's  Independent
Auditor's Report and audited  financial  statements for the year ending December
31, 1998.

Business  Purpose - Toups  Technology  Licensing,  Inc., was incorporated in the
state of Florida on July 28, 1997 ("Toups Technology",  "TTL" or the "Company").
The Company's business purpose is commercializing late-stage technologies, which
are  acquired  through  license  agreements  and  acquisitions.   The  Company's
technologies and acquisitions to date are in the energy, environmental,  natural
resource and healthcare market segments.

Results of 1998 (first full year) Operations - The following  discussion  should
be read in conjunction with the Company's audited  financial  statements for the
years ended  December  31, 1998 and 1997 which begin on page F-1. For the period
ending  December 31, 1998, the Company posted  revenues of $3,132,001,  compared
with $1,196,169 for the fiscal year ending  December 31, 1997.  Gross profit for
1998 was  $1,147,071  or 37% of revenues,  which was up from  $373,799 or 31% of
revenues for 1997. Net income for the period ending December 31, 1998 reflects a
loss of  $(2,187,994)  or a loss of ($0.09)  per share  based on the  22,217,299
shares  outstanding  at  December  31,  1998 or a loss of $(0.18) per share on a
fully-weighted  average  compared with net income of $49,101 or $0.005 per share
for the year ending December 31, 1997.

     The  Company  attributes  33% or  $728,531  of its losses  during 1998 to a
charge against  earnings  relating to the issuance of common stock for services.
The Company attributes the remaining 66% or $1,459,463 of its losses to earnings
at the  full-year  ending  December  31, 1998 to first year  operational  losses
incurred in the development and market introduction of its various technologies.
(See "Independent Auditor's Report and accompanying  consolidated balance sheets
of Toups Technology Licensing,  Incorporated and subsidiaries as of December 31,
1998  and  1997,  and  the  related   consolidated   statements  of  operations,
stockholders'  equity,  and cash flows for the years then ended"  which begin on
Page F-1 of this Form 10-KSB).

     For the year ended  December  31,  1998,  the Company  had total  assets of
$5,312,840 as compared with $562,054 for the period ending December 31, 1997 and
stockholders equity grew from $256,484 at December 31, 1997 to $3,360,798 at the
year ending December 31, 1998.

Forecast of growth - A division by division forecast of operational expectations
for 1999 begins on page 6 . The Company envisions growth during 1999 will be
approximately  80%  internal  and 20%  from  the  licensing/acquisitions  of new
technologies. The Company estimates it will derive revenues during 1999 from all
nine current  divisions.  The Company  intends to acquire  technologies  through
licensing, joint ventures, acquisitions,  manufacturing rep agreements and other
similar means.  The Company intends to commercialize  its  technologies  through
joint ventures;  strategic  alliances;  sub-licenses;  providing  services;  and
through the direct manufacture and sale of products.
<PAGE>
Business  Method  -  TTL  enters  worldwide  exclusive  license  agreements  for
developed technologies, which are at or near the market-entry stage. The Company
also makes acquisitions of existing companies,  which add to or compliment TTL's
technology  mix.  TTL  commercializes  the  technologies  by folding each into a
seasoned,   entrepreneurial-minded   corporate   infrastructure   housed   in  a
state-of-the-art  manufacturing  facility.  The combination results in a turnkey
process wherein  emerging  technologies  can mature into marketable  products or
services and the Company's  shareholders  can participate in a  multi-technology
approach at the development/market introduction stage.

Management - The Company's management team is led by President,  Chief Executive
Officer and Chairman of the Board,  Leon H. Toups. Mr. Toups' past  associations
include ten years serving as President and Chief Executive Officer of Chromalloy
American.  Prior to its sale and during the  period of Mr.  Toups'  association,
Chromalloy  American was a 600 company  international  conglomerate  serving six
major market segments with revenues of approximately $2 billion.  Co-founders of
Toups  Technology  include Chief Executive  Officer and Chairman Mr. Leon Toups,
Executive  Vice  President  and  Director  Mr. Mark  Clancy and Chief  Financial
Officer and Director Mr. Michael Toups.  (See  "Directors,  Executive  Officers,
Promoters  and Control  Persons;  Compliance  with Section 16(a) of the Exchange
Act").

Operating  structure - In addition  to the above  named  Officers,  at the staff
level to support all technologies, the Company has a Safety Officer, Engineering
Coordinator,  Sales Manager,  Compliance/Quality Control Director and Purchasing
Coordinator.  At the line level,  the Company  typically  engages the technology
inventor  as  Project  Manager.  This  structure  preserves  the  single-minded,
entrepreneurial  spirit of each inventor while providing  managerial  support in
matters  relating to  operations,  sales and  marketing,  finance  and  business
development.

Operating  facilities - The Company's  headquarters and  manufacturing  facility
occupies  approximately  50,000 (fifty thousand)  square-feet within the 96-acre
Pinellas Science  Technology and Research Center ("STAR Center") located at 7887
Bryan  Diary Road,  Largo,  Florida.  The Company  also has leased a 10,000 (ten
thousand)  square  foot  stand-alone  building  within  which  is  housed  TTL's
AquaFuel(a)  Division.  The Company  also  maintains  its  Balanced Oil Recovery
System (BORS) Lift Engineering  office in Claremore,  Oklahoma and BORS national
sales office in Garden City, Kansas. (See "Description of Property").

Employees - The Company provides medical insurance,  vacations, stock incentives
and other,  similar employee benefit programs.  None of the Company's  employees
are represented by collective bargaining  agreements.  At December 31, 1998, the
Company had 88  full-time  and 0 part-time  employees  engaged in the  following
areas:

                                   Executive                          5
                                   Engineering/technical             11
                                   Manufacturing                     59
                                   Sales                              9
                                   Administrative                     4
                                   Total                             88
<PAGE>
1999 capital  financing  programs.  During the first quarter,  1999, the Company
completed agreements for the sale of $1,500,000 of its Subordinated  Convertible
Notes (the " Notes")  and the sale of  $750,000  of its Series A 7%  Convertible
Preferred Stock (the "Preferred").  Each transaction was done with a domestic US
fund. Both placements were conducted to provide for capital  expenses  estimated
to occur throughout 1999. (See "Market for Common Equity and Related Shareholder
Matters").

Divisional Summary

     At the end of 1998, the Company was comprised of nine  divisions  resulting
from  licensed  technologies,  the  acquisition  of  operating  entities  and  a
manufacturing  rep agreement.  During 1998, the Company earned its revenues from
six of its nine  divisions.  A more  complete  discussion  of each  division  is
immediately following the table below.


              Market             Business              Date & Method of  1998
#  Division   Segment            Purpose                Acquisition     revenue
-  --------   ----------------   -----------------   -----------------  -------
1  BORS       Energy &           Manufacture and       January, 1998      Yes
              Natural Resource   direct sale of        Exclusive world
                                 oil pump equipment    wide license

2  Brounley    Energy            Manufacture and sale  September , 1998   Yes
   Engineering                   of radio frequency    acquisition
                                 power generators   
                                 for lasers, plasma 
                                 etching and other 
                                 applications

3  InterSource  Healthcare       Resale of medical      December 16, 1998 Yes
   Healthcare                    equipment and          acquisition
                                 consumbables.  

4   TTL         Manufacturing    Fabrication to         April, 1998       Yes
    Manufacturing                customer prints        acquisition
                                                       (formerly A.M.W. 
                                                        Metal Fabricators)

5   AquaFuel   Energy &         Alternative fuel and    November 3,1997   Yes
               Environment &    Recycling of polluted   Exclusive,world
               Natural          water                   wide license
               Resource 

6   ETR        Energy &         Recycles scrap tires    June, 1998         No
               Environment      into various products   Exclusive, world
                                                        wide license

7   Precision  Manufacturing    Precision welding for    Internally        Yes
    Micro Welding               aerospace, medical and   developed
                                automotive components

8   Tunnel Bat  Environment    Manufacture and sale of   August, 1998      No
                               culvert reclamation       Exclusive, world
                               vehicle                   wide license

9   TTL         Energy         Provides electric power   June, 1998        No
    Power Systems              co-generation that        Non-exclusive
                               parallels  with the       manufacturers rep
                               local  manufacturers
                               utility grid                

     A detailed  discussion of each above cited division  begins on page 11. The
Company  spent  virtually  all of 1998 in developing  its business  purpose.  In
considering  the Company's  operational  objectives  during 1999,  the following
discussion is provided.

     1998 into 1999.  For the Company's  first full fiscal year ending  December
31, 1998, TTL's independent audit reflects revenues of $3,132,001 and net income
(loss) of ($2,187,994). During 1998, the Company grew from 5 to 88 employees and
from occupying 5,000  square-feet in a single location to now operating a 50,000
square foot manufacturing,  precision  micro-welding  facility,  a 10,000 square
foot off site location, a national engineering office in Claremore, Oklahoma and
a national sales office in Garden City, Kansas.

     Also during 1998,  the Company  acquired  the rights to four  technologies,
made three  acquisitions  and increased  assets from  approximately  $562,054 to
$5,312,840.  The Company continues to operate with minimal debt and normal trade
payables and has seen meaningful  revenue growth from the last quarter,  1998 to
the first  quarter,  1999.  With the maturing of the  Company's  nine  divisions
coupled with the recently completed private  securities sale of $2,250,000,  the
Company is confident it can expand  operations  for the  remainder of 1999.  The
following  discussion relates to management's  short and long-term  expectations
for each division with an emphasis on near term opportunities.

Research and  development.  As a facilitator of  technologies,  a portion of the
Company's  cash  will  be used  to  finance  the  development  of its  products,
particularly its Electromagnetic Tire Recycling and Tunnel Bat technologies. The
Company also estimates it may incur additional research and development costs in
relation  to  AquaFuel.  As of this  writing,  the Company  estimates  such 1999
research and  development  costs would be  approximately:  Electromagnetic  Tire
Recycling - $450,000; Tunnel Bat vehicles - $72,000 and; potentially, AquaFuel -
$300,000.

The  Balanced  Oil  Recovery  System  Lift - (BORS)  The  Company  believes  its
near-term  opportunity  with the BORS technology is an expansion of TTL's direct
selling  program.  A detailed  discussion  of the BORS  technology  can be found
beginning on page 12

     The Company  believes  that during  1998,  the BORS  technology  followed a
conventional  path  from  prototype  through  market   introduction  and  sales.
Throughout  1998,  the  Company  believes  it verified  the  feasibility  of the
technology and, through field trials and engineering development,  completed the
production model. During the fourth quarter, 1998 into the first quarter,  1999,
the Company  began  sales  within the States of Texas and  Oklahoma.  During the
first quarter, 1999, the Company sought to establish the field service and sales
infrastructure  necessary to provide for on-going,  reliable  operations  and to
expand its primary sales territory to include Kansas.

     The Company has established a minimal goal of selling 600 BORS units during
1999.  The Company  intends to  manufacture  and assemble the BORS device at its
facilities in Largo,  Florida.  The Company has engaged a three-fold strategy to
achieve its 1999 sales  objectives  including (i) a leasing program for both the
private  operator as well as the small business  owner;  (ii)  establishing  and
staffing a national  direct  sales office  located in Garden  City,  Kansas and;
(iii)  establishing a series of  distributors  each of whom would be responsible
for a minimal number of sales and for providing service on BORS units sold.

     The  Company has  developed a leasing  program  utilizing  outside  leasing
sources to provide for both the private  operator  defined as the purchaser of 1
to 4 BORS units and the Small Business or  partnership  defined as the purchaser
of amounts in excess of $75,000. The leasing program can provide approval in one
day for amounts below $75,000 and within three days for  transactions  over that
amount. The following table outlines the essential requirements of the Company's
BORS leasing program:

# of Units        Standards

1                 2 years in business under current  ownership - average daily 
                  checking  balance $1,500 or higher for the past 2 years

2                 4 years in business under current  ownership - average daily 
                  checking  balance $6,500 or higher for the past 2 years

3 or 4            5 years in business  under current  ownership - average daily 
                  checking  balance  $10,500 or higher for the past 2 years and 
                  comparable credit with a loan or lease

More than 4       Five years in business under current ownership average daily  
                  checking  balance  $20,000 or higher for the past 3 years 
                  and  comparable  credit  with a loan or lease

     To better focus the Company's direct BORS selling program, during February,
1999,  TTL  engaged  Mr.  Larry  Rice as its Vice  President,  BORS and opened a
national  sales  office in Garden  City,  Kansas.  Mr.  Rice's past  experiences
include more than 20 years industry-related  experience. Mr. Rice is a salaried,
full-time employee of TTL. As a part of the BORS pricing structure,  the Company
offers a  $1,000  commission  for the sale of each  BORS  unit.  Utilizing  this
commission  structure,  the Company seeks to engage field sales  representatives
whom are  engaged on a  commission-only  basis.  After  running  classified  ads
throughout  the states of Texas,  Oklahoma and Kansas,  during March the Company
trained a total of 23 sales  representatives  at its Garden City  office.  As of
this writing,  the Company has 23 field sales  representatives  operating in the
states of Texas, New Mexico,  Louisiana,  Mississippi,  Oklahoma and Kansas. The
Company's  direct  selling  program  is,  in the view of  management,  a part of
establishing  a  series  of  distributors  whom  will  also be  accountable  for
providing after sale service requirements.

     To  facilitate  the  field-network   approach,   the  Company  developed  a
Distributorship  Agreement which provides an exclusive territory to a particular
Distributor.  Under the terms of the agreement, the Company provides product and
training.  In  exchange  for  the  "exclusive"  nature  of  the  agreement,  the
Distributor  is obligated  to cause for the sale of a specified  number of units
and to provide for all after market  service  requirements.  The  Distributor is
able to charge a fee for service-related work outside the scope of the Company's
BORS warranty.  In general,  the terms of the agreement provide for an exclusive
territory  for initial  periods of twelve  months  afterwhich it can be extended
automatically  for twelve months  provided the minimum  number of BORS units are
sold.
     The  Distributorship  Agreements are not contracts for sale but represent a
minimal number of BORS units which a particular distributor must sell during the
term of their  agreement to retain  exclusive  rights to market the BORS product
line.

     To date, the Company has executed 5 Distributorship Agreements with parties
covering territories in the states of Texas, New Mexico, Louisiana, Mississippi,
Oklahoma,  California  and  Kansas..  The  following  table  summarizes  the key
elements of these agreements. There is no penalty to the distributor for failing
to meet the  following  objectives  except  to lose the  exclusive  rights  to a
particular territory.  The Distributors under agreement with the Company to date
are  an   Oklahoma-based   oil  field  equipment   company;   a  Louisiana-based
environmental  technologies  company;  an  Oklahoma-based  oil  field  equipment
company,  and; an Oklahoma-based  oil field operator.  The five  distributorship
agreements are summarized below:


Distributor     State                      Term of Agreement    Number of BORS 
                                                               Units to be sold
----------      ----------------------     -----------------   ----------------

     A          Edmond, Oklahoma-based      March 26, 1999          120
                                            March 26, 2000

     B          Lafayette,Louisiana-based   March 22, 1999          200
                                            March 22, 2000

     C          Seminole, Oklahoma-based    March 18, 1999          120
                                            March 18,2000

      D         Ardmore, Oklahoma-based     March 18, 1999           60
                                            September 18, 1999

InterSource.  The Company's near-term opportunities for its InterSource division
are expansion of its consumables,  particularly pharmaceutical sales, as well as
expanding its  international  new and used  equipment  selling  activities.  The
Company's  InterSource  division markets new and used medical equipment for both
domestic and international clients as well as consumable items.

     As a marketer of new and used  medical  equipment,  InterSource  represents
numerous original  equipment  manufacturers in a variety of specialized  product
areas  including  imaging  and  laboratory  equipment;  outfitting  clinics  and
hospitals,  physicians'  office equipment and ultrasound  units. In consumables.
InterSource offers a portfolio of products including insulin,  insulin syringes,
physicians' office supplies, surgical instruments and urine drainage bags.

     In  furtherance  of  marketing  both new and used  medical  equipment,  the
Company has engaged an in-house selling division comprised of a licensed medical
doctor, a registered pharmacist and a registered nurse. The Company believes the
experiences of its sales personnel are instrumental in articulating the value or
benefit of a particular piece of equipment.  The Company's professional staff of
InterSource selling agents also participates in the sale of consumables.

     To expand consumable sales, InterSource President John Silwoski concluded a
distributorship agreement with Texas-based Carrington Surgical Instruments, Inc.
and Carrington International Group, LLC.. Under the terms of the distributorship
agreement,  InterSource shall act as a distributor for all Carrington  products.
During the month of March, 1999,  InterSource  processed  $1,500,000 in sales by
virtue of the Carrington distributorship agreement.

AquaFuel.  The  Company's  near  term  opportunities  with  AquaFuel  include  a
continuation   of  its   AquaFuel-Dominicana   Joint   Venture  and  the  market
introduction  of consumer and  industrial  equipment.  The  Company's  long-term
opportunities  foresee an expansion of the Company's  AquaFuel  division into an
Alternative  Fuels  division  as TTL  acquires,  through  license  agreement  or
acquisition, additional fuel technologies. A complete discussion of the AquaFuel
technology can be found starting on page 18.

     During  December,  1998, the Company  entered into a  joint-venture  with a
consortium  of companies in the  Dominican  Republic.  The  joint-venture  named
AquaFuel-Dominicana is structured to purchase AquaFuel-producing  equipment from
TTL. Once the equipment is purchased,  the joint-venture  intends to utilize the
fuel produced in the production of electricity in various parts of the Dominican
Republic.  The Company would derive its revenues both from the sale of equipment
and as a 49% owner of the joint-venture.

     Throughout  1998, the Company  believes it  successfully  demonstrated  the
quantitative  aspects and  established  the  character  of AquaFuel  through the
publication  of  two  certification   reports.   AquaFuel,  in  the  opinion  of
management,  is the cleanest  burning fuel known at this writing and can be used
in any combustion engine with minor modifications.  Satisfied with the result of
the AquaFuel  technology,  i.e.,  clean  burning,  non-fossil  fuel, the Company
sought to improve on the  economics of producing  AquaFuel in large  quantities.
For the analytical  purposes of studying AquaFuel,  throughout 1998, the Company
made use of a crude production apparatus able to generate approximately 30 cubic
feet of  AquaFuel  fuel per hour.  Using  this  apparatus,  the costs to produce
AquaFuel  were  significantly  higher  than the costs to produce  fossil  fuels.
However,  as discussed in the  Company's  AquaFuel  Certification  Reports,  the
production of the fuel grows on an exponential  basis relative to an increase in
electric  power.  The  amount  of  fuel  produced  from  a 40  volt  charge  was
approximately 3 times the amount of fuel produced from a 20 volt charge.

     As a part of its obligations under the  AquaFuel-Dominicana  joint venture,
the Company is scheduled to deliver  equipment  during the second quarter,  1999
which is able to produce  AquaFuel at the rate of 4,000 cubic feet per hour.  In
order to carefully address the mechanics of expanding equipment  capability from
producing 30 cubic feet per hour to 4,000 cubic feet per hour, the Company opted
to develop an  intermediary  step and develop an initial  unit able to produce a
minimum of 2,000 cubic feet per hour. Since January,  1999, the Company has been
engineering and fabricating the intermediary,  2,000 cubic feet per hour unit at
its facilities in Largo, Florida.

     To date, the Company has been able to develop  equipment able to generate a
minimum of 1,500  cubic feet per hour.  The  Company  envisions  that this first
AquaFuel  production  apparatus can meet the cubic feet per hour  obligations of
the  AquaFuel-Dominicana  Joint Venture by running two or three units in series.
During  preliminary  operation of the prototype  commercial  AquaFuel unit, as a
stand-alone unit only, the Company has not experienced a significant improvement
in the economics of producing AquaFuel.  However, as previously described,  when
AquaFuel is produced in  conjunction  with the  recycling of liquid  waste,  the
"cost" of producing  AquaFuel can be  substantially  reduced  below the costs of
producing other fossil fuels.

     When and as the Company is able to reduce the production costs of AquaFuel,
TTL envisions marketing  industrial and consumer equipment such as welding tips,
combustible engine conversion kits, gas burners and various AquaFuel  production
units  which can range in size from a few hundred to a few  thousand  cubic feet
per hour.

     As a part of the Company's long-term environmental commitment,  during 1999
TTL intends to expand its AquaFuel  division into an general  Alternative  Fuels
division through acquiring the license rights to other existing alternative-fuel
technologies.  While preliminary discussions with the owners of such alternative
fuel technologies has been promising, there can be no assurance the Company will
be successful in attracting other alternative fuel technologies.

     Electromagnetic   Tire   Recycling   Process.   The  Company's   near  term
opportunities relating to the Electromagnetic Tire Recycling Process ("ETRP") is
the activation of the first  commercial  size ETRP module,  the sale of products
estimated  to result  therefrom  and  through  granting  license  agreements.  A
complete discussion of the ETRP technology can be found starting on page 21.

     The ETRP technology relates to a fully-contained module designed to process
up to 100 tires per hour into which the shredded  rubber tires are reverted back
to the original elements of carbon black, oils and  petro-chemicals.  The module
design anticipates the majority of the steel is removed prior to processing.  In
order for the Company to demonstrate  the economic  viability of the technology,
TTL must construct a single module,  and locate the proto-type  device within an
existing tire processing facility.  It is not necessary for the Company to incur
the expense of constructing a  fully-operational  stand-alone  plant in order to
demonstrate the economic viability of the ETRP technology.

     Accordingly,  the  Company  is  currently  investigating  a number of sites
throughout  the state of Florida  and has ear marked the capital  expense  funds
necessary to complete the design and  fabrication of the proto-type ETRP module.
The Company estimates the costs to complete  development of the ETRP module will
be  approximately  $450,000.  Once built,  the Company  will  propose to enter a
partnership with an existing  facility that can allow the ETRP module to operate
under  existing  environmental  permits as well as save the Company  substantial
capital  expenditures  by making use of shredders,  baggers,  conveyor belts and
other standard equipment necessary for the processing of used tires.

     Should the  Company be  unsuccessful  in  locating  a  partnership  with an
existing facility,  given the emission-free character of the ETRP apparatus, the
Company  believes  it will be able to gain the  necessary  permits  to operate a
prototype  module  from  its  headquarters   facility  in  Largo,  Florida.  The
environmental  permitting  process of an entity such as that envisioned  through
the operation of an ETRP apparatus can be lengthy and expensive.  In addition to
any  required  emission  permits,  in order to  operate an ETRP  apparatus,  the
Company  must also gain  permits  for the  handling  of the  resultant  products
including  Carbon  Black,  petro-chemicals  and  certain  oils.  Failure  on the
Company's part to gain any one or all of the various environmental permits could
prevent TTL from operating an ETRP proto-type module.

Tunnel Bat. The Company's near-term opportunities relating to Tunnel Bat include
completing  manufacturing design and assembly of the Tunnel Bat production model
and  engaging  the  sale  thereof.  A  complete  discussion  of the  Tunnel  Bat
technology begins on page 23.

     As the Tunnel Bat licensee, the Company desires to manufacture for sale the
Tunnel Bat vehicle. The Company may manufacture the vehicle or may outsource the
manufacturing  of the vehicle.  At present,  there are two  proto-type  vehicles
which are actively engaged by technology  inventor and Tunnel Bat Licensor David
Richardson in providing the Tunnel Bat reclamation  services throughout Florida.
The Company is now in the process of completing the engineering  specifications,
design,  drawings  and parts  lists for the first  production  model  Tunnel Bat
vehicle.

     The Company estimates the costs to complete the engineering  development of
the Tunnel Bat production model will be approximately  $72,000.  The Company has
ear  marked  these  funds from  on-hand  reserves.  The  Company  estimates  the
engineering  development  will  take  approximately  four and half  months.  The
Company has broken the Tunnel Bat vehicle development schedule into five phases:
specifications;  design  assembly;  order main  components;  detail parts,  and;
assembly.  Once the design phase is complete,  the Company may  manufacture  the
Tunnel Bat vehicle from its facilities in Largo, Florida.

     The  Company  estimates  the  Tunnel  Bat  vehicle  can  be  in  production
approximately the third quarter,  1999. The Company intends to market the Tunnel
Bat vehicle  primarily through direct mail to construction and similar companies
initially  in  southeastern  United  States.  As the  Company  is  unaware  of a
competitive box culvert reclamation vehicle, no meaningful  estimation of demand
or market  acceptance can be given. The Company has set a goal of selling twenty
Tunnel Bat  vehicles  during  1999.  Once the  Tunnel  Bat  vehicle is ready for
production,  the Company intends to develop an in-house  marketing program using
conventional  mediums  and at least  one  dedicated  sales  representative.  The
Company  estimates  the majority of the Tunnel Bat vehicle  purchasers  would be
governmental  entities such as municipalities,  counties and cities. The Company
also believes the Tunnel Bat vehicle can be marketed to general contractors whom
provide work for such governmental entities.

Brounley Engineering. The Company's near-term opportunities through its Brounley
division  are an  expansion of its direct  domestic  and  international  selling
programs. The current products offered by Brounley are primarily radio-frequency
generators  used to power CO2 lasers  used in  medical,  marking  and  machining
applications.  The power levels vary from 600 to 10,000 watts at  frequencies of
13.56 to 125 Mhz. The designs are modularized resulting in ease of manufacturing
from a parts commonality standpoint as well as testing. A complete discussion of
the Brounley technology begins on page 24.

TTL  Manufacturing  and Precision  Micro-Welding.  A significant  portion of the
Company's  development  strategy  was  the  organization  of a  state-of-the-art
manufacturing, specialty-welding division. Operating now from 50,000 square-feet
with the Science Technology and Research Center in Largo,  Florida,  the Company
has configured a significant amount of high technology  manufacturing  equipment
and  advanced  micro-welding  devices.  .A complete  discussion  relating to the
Company's   manufacturing   capabilities   begins  on  page  26  and  precision
micro-welding capabilities begins on page 27.

During the  fourth  quarter,  1998 and first  quarter,  1999,  the  Company  has
dedicated  its efforts to bringing the various  pieces of equipment  on-line and
ready for operation. For instance, the Company expensed approximately $25,000 in
the  assembly  and  start-up of a  Leybold-Heraeus  Electron  Beam Welder  which
carries a 150KV, 40 milliamp  output.  Together with the resource gained through
acquiring  AMW Metal  Fabricators  during the summer,  1998,  the Company is now
prepared  to  provide  a  full  metal   fabrication,   machine   and   specialty
micro-welding capability to the west coast area of Florida.

     On April 5, 1999,  the Company  intends to activate the selling  program of
its  manufacturing  and  precision  micro-welding  divisions  through  adding an
executive  level sales  manager to organize  and execute the  Company's  selling
objectives.  To support this introductory  selling program, the Company plans to
conduct a direct-mail  campaign. In addition to the dedicated selling efforts of
each of its  divisions,  TTL also intends  during  April to add a  telemarketing
position to its corporate office such that this function can support the efforts
of which ever  division is most in need.  Initially,  the  Company  will focus a
substantial  portion of its  telemarketing  efforts on  expanding  sales for its
manufacturing and specialty micro-welding divisions.

     During 1998, the Company derived revenues from six divisions  including (1)
BORS Lift;  (2) Brounley  Engineering;  (3)  InterSource  Health  Care;  (4) TTL
Manufacturing; (5) AquaFuel, and; (7) Precision Micro-Welding.

     During  1998,  the Company  did not derive  revenues  from three  divisions
including (6) Electromagnetic  Tire Recycling Process; (8) Tunnel Bats, and; (9)
TTL Power Systems.

 (1)     The Balanced Oil Recovery  System Lift.  On January 15, 1998 as amended
         in June,  1998 the Company  executed  an  exclusive  worldwide  License
         Agreement  with inventor  Gerold Allen for the rights to  commercialize
         the BORS Lift technology. The BORS Lift is not covered under any patent
         or similar  device.  Mr. Allen now serves as the  Company's  Claremore,
         Oklahoma-based BORS Chief Engineer.

                                                        (PICTURE OMITTED)

              The BORS  Technology - From January through  September,  1998, the
         Company  engaged in BORS Lift field  trials and  completed  a base-unit
         design.  The BORS  Lift is a  turnkey  device  that  more  economically
         produces oil from shallow,  low-volume "stripper" wells (10 barrels per
         day or less).  By lifting oil rather than  pumping,  the BORS Lift also
         eliminates  conventional rods, tubing, downhole pumps or pumping units,
         and related  maintenance costs.  Standing just 4 ft tall and 8 ft long,
         it is  capable  of  producing  from a gas  driven  well  with a maximum
         fluid-balance level of 2,500 feet.

              Collectively,   the   Company-sponsored   field  tests  and  sales
         installations  to date demonstrate that the BORS(a) Lift device is able
         to increase  production by approximately 200% - 400%, decrease electric
         costs  from  $3.50  per  barrel to $0.035  per  barrel,  and is able to
         extract  oil  with  an   insignificant   quantity  of  water,   thereby
         eliminating any need for the process of separation and disposal.



<PAGE>


         BORS Manufacturing - The Company  manufactures the BORS device in-house
         except for the galvanizing process. The Company purchases the computers
         and  motors  for the BORS  device  from  national  suppliers.  Based on
         current  equipment and  facilities,  the Company is able to manufacture
         125 BORS units per month on a single-shift basis and can manufacture up
         to 500  BORS  units  per  month on a  three-shift  basis.  The  Company
         currently  maintains  storage  facilities  in  Claremore,  Oklahoma and
         Garden City,  Kansas,  which can inventory  BORS units pending sale and
         delivery.

         BORS Research and  Development - There is not  additional  research and
         development  necessary to commercialize the BORS technology.  While the
         Company  continues  sales  of  the  initial  BORS  Lift  device,  it is
         developing two additional models (i) one of which is a deep-well design
         configured to extract oil at a depth of up to 7,500 feet, and; (ii) the
         second is known as a "bailer"  which is a pump  designed to extract the
         highest volume of liquid possible without regard to water separation.

         BORS  Leasing  Program - To enhance the  likelihood  of the BORS market
         introduction,  the Company has arranged for a lease-financing  program.
         The  program  allows  for  approval  within  24 to  72  hours  with  no
         application  fee.  Qualified  purchasers  can  take  possession  of and
         operate  the  equipment  for two  months  prior to making  the first of
         sixty,  $400  payments.  The  lease  financing  company  considers  the
         equipment  as well as the  production  of oil in  collateralizing  each
         sale.  Including the production of oil as a part of the buyer's payment
         assurances  significantly  increases  the  number of  prospective  well
         owners which can qualify for this program.

         BORS Marketplace - The Company's BORS device is designed to extract oil
         primarily  from  gas-driven  wells with a fluid depth of 2,500 feet and
         rates of production under 10 barrels per day. Management estimates that
         nearly one quarter of domestically  produced oil comes from wells which
         on average  produce 10 or less barrels per day.  According to The Texas
         Monthly  Crude &  Condensate  Report,  per barrel  prices  paid  during
         September  1998 ranged from $11 to $13.50  compared  with 1985  prices,
         which ranged up to $21.00 per barrel.  Extracting oil using traditional
         pumps can exceed the value of the oil removed. The Company believes the
         increase in  production  and  decrease in utility  costs  competitively
         differentiates   the  BORS  device.  The  Company  does  not  have  any
         meaningful  data relating to the number of worldwide  oil wells,  which
         fit this criteria.  However,  the Company believes the potential market
         place is large enough to allow for the sale of 100 BORS units per month
         on a continuous basis.

(2)      Brounley  Engineering & Associates.  On September 30, 1998, the Company
         acquired Brounley  Associates,  Inc. in an exchange of common shares in
         which TTL issued  900,000  unregistered  common  shares in exchange for
         100% of the issued  and  outstanding  common  shares of  Brounley.  The
         Company agreed to register  125,000 of the 900,000 common shares issued
         in the acquisition of Brounley.  Brounley is a wholly owned  subsidiary
         of Toups Technology.

                                                        (PICTURE OMITTED)

         Brounley Technology - Brounley is engaged in the design and manufacture
         of RF (radio frequency) and related circuits, particularly in the field
         of solid  state power  generation.  Brounley's  integrated  and modular
         design  concepts  competitively  differentiate  their  product  line of
         high-powered RF generators in small packages.  In 1993,  Brounley added
         production  facilities to build a new line of generators for Lasers and
         for the Plasma Etching & Sputtering industry. In addition to Integrated
         RF  Generators,  Brounley  offers clients a full range of services from
         original design to a final product.

                                                        (PICTURE OMITTED)

         Brounley  Product  Line -  Brounley  offers  a full  line  of RF  Power
         Generators for the laser and plasma  industries  which includes a power
         range from 50W to 10,000W.  In  addition,  Brounley  also offers  solid
         state tuners for the plasma industry.  Other Brounley  products include
         power supplies,  RF pre & power  amplifiers and a variety of designs to
         support Military communications programs.

         Viperstrike RF Power  Generators.  Brounley  offers its own brand of RF
         power  generators  dubbed  Viperstrike.  The Company's  Viperstrike  RF
         Generators is available in size from the PB300 laser mounted model with
         300W output power up through the 8X2 with  10,000W  output  power.  The
         Viperstrike  line  of RF  power  generators  can  be  controlled  by an
         existing  system or with the  addition of a Brounley  digital or analog
         controller.  The user can  combine  or divide  the  output  power  from
         Viperstrike RF power  generators  using Brounley's line of RF combiners
         and dividers.

         International  Organization for Standardization (ISO) 9000. Brounley is
         currently  engaged in a top to bottom quality program  designed to lead
         to an ISO 9000 Certification during the fourth quarter,  1999. ISO is a
         worldwide  federation  of  national  standards  bodies,  from  some  90
         countries.  It promotes the development of standardization  and related
         activities  to  facilitate  the  international  exchange  of goods  and
         services,  and  develop  intellectual,  scientific,  technological  and
         economic   cooperation.   The  ISO  consists  of  some  170   technical
         committees, 640 subcommittees,  1800 working groups and 10 ad hoc study
         groups.  These represent the viewpoints of  manufacturers,  vendors and
         users, engineering professions, testing laboratories,  public services,
         governments,  consumer groups and research organizations in each of the
         90 member countries.

              As  an  ISO  9000  certified  manufacturing  facility,  Brounley's
         product line achieves a heighten level of client receptivity  resulting
         from a verifiable design, testing and manufacturing techniques. The ISO
         9000 is recognized as the  guidelines  for selection and use of quality
         management and assurance standards for both supplier and customer.  ISO
         9000 elaborates on the general philosophy of quality systems standards,
         their characteristics, the existing types, where and when they are best
         used,  and describes  what  elements  quality  assurance  models should
         incorporate.   It  also  deals  with  demonstration  and  documentation
         requirements, pre-contract assessment and contract preparation.

         Brounley Research and Development - Brounley's  engineering  department
         is  working  to  further  reduce  the  overall  size  of the  Company's
         generators while preserving and increasing the power.  Brounley is also
         engaged  in a Plasma  generator  design  which  is  slated  for  market
         introduction during the fourth quarter, 1999 through the first quarter,
         2000. As a part of its overall development,  Brounley is evaluating all
         aspects  of  its  operations  so as to  become  an ISO  9000  certified
         manufacturing facility by the fourth quarter, 1999.

         Brounley  Marketplace  - Currently,  Brounley  sells into the laser and
         plasma markets for  industrial,  medical and military  applications  as
         well as  military  communications  and power  industries.  The  Company
         believes that once Brounley is ISO 9000 certified the market acceptance
         of its products will be significantly enhanced.

(3)      InterSource  Health Care.  On December 18, 1998,  the Company  acquired
         two-year  old  InterSource  Healthcare,  Inc.  in an exchange of common
         shares  agreement in which the Company  issued  1,203,241  unregistered
         common shares in exchange for 100% of the issued and outstanding common
         shares of  InterSource.  The Company agreed to register  225,000 of the
         1,203,241 common shares issued in the course of the acquisition.
         InterSource is a wholly owned subsidiary of Toups Technology

                                                        (PICTURE OMITTED)


         InterSource Business - InterSource seeks to match buyers and sellers of
         new and used  (refurbished)  medical equipment and consumables  through
         its internet site located at www.intersourcenet.com.  For the seller of
         new or refurbished  medical equipment and/or  consumables,  InterSource
         offers a secure  internet  site coupled with a  professionally  staffed
         in-house  sales  force.  For the  buyer  of  medical  equipment  and/or
         consumables,  InterSource offers a one-stop means to comparatively shop
         through the convenience of the internet.

         InterSource  Marketing - InterSource  offers its equipment and products
         through a secure  internet  home page and through an  in-house,  direct
         sales program. The staff of InterSource's direct sales program includes
         a licensed medical doctor, a registered pharmacist,  a registered nurse
         and the former principal of Alpha Laboratories Corporation.

         An  InterSource  Transaction  -  Contact  is  made  with a  prospective
         customer  that became  aware of  available  equipment  and/or  products
         either through InterSource's  internet home-page or from direct selling
         efforts.  A detailed  investigation is done to assure the supply of the
         proper  product at the proper  cost to meet an  individual  need of the
         customer.  Once completed,  the customer  places an order.  InterSource
         then procures the needed  item(s),  receives and inspects the products,
         and ships direct to the customer.  Payment terms vary  dependant of the
         product(s) ordered,  however, 95% of the payments are made between time
         of order and time of  delivery.  The other 5% are net 30-day  terms for
         smaller  orders of  consumable  products  to credit  worthy  customers.
         InterSource  maintains  a minimal  inventory  of items;  most items are
         purchased  for direct  resale after an actual order is received  from a
         customer.  InterSource,  under the terms of a wholesale  broker license
         can only broker pharmaceuticals and cannot take possession of same. All
         pharmaceutical  sales are done on a letter of credit  basis  payable at
         time of delivery.

         InterSource Marketplace - The Company estimates the marketplace for its
         InterSource  division is the general medical  equipment  marketplace of
         approximately  $100 billion  annually.  InterSource  also operates in a
         limited way in the United States pharmaceutical  marketplace.  Both the
         new and used medical equipment and pharmaceutical industries are highly
         competitive.  The  Company is unaware  of other  entities  engaged in a
         business  purpose  similar to that of InterSource.  However,  given the
         size  and  scope  of the  medical  industry,  the  Company  expects  to
         encounter  competition  more than likely from  companies  with  greater
         financial and marketing resources than TTL.

(4)      TTL Manufacturing  (formerly AMW Metal Fabricators  Corporation (AMW)).
         On April 29,  1998,  the Company  acquired AMW in an exchange of common
         shares  agreement  in which the  Company  issued  500,000  unregistered
         common shares in exchange for 100% of the issued and outstanding common
         shares of AMW. AMW is a wholly owned subsidiary of Toups Technology and
         is been renamed as TTL Manufacturing.

         Manufacturing  capabilities  -  The  Company's  manufacturing  division
         incorporates  state of the art custom metal  fabrication and machining.
         The  Company's  metal  fabrication  capabilities  allow TTL to build to
         print products for a wide range of industrial and business needs.  With
         its  in-house  equipment,  TTL can  fabricate  a wide range of material
         including stainless and carbon steel,  aluminum,  copper,  titanium and
         incanel.  TTL's machine stop is equipped to do  prototype,  customer or
         production  work. TTL has the latest in CNC technology with A Hass Hl-4
         30hp Lathe and a Haas VF-4 vertical  milling  center.  The equipment is
         efficient for production runs and the Company also has several vertical
         mills,  tooling  lathes and drill presses.  The following  displays the
         more significant  sheet metal and machining  equipment now available at
         TTL's manufacturing plant in Largo, Florida.

                                                        Sheet Metal
                                                        (PICTURE OMITTED)




Accurshear NC  controlled  backstop with an accuracy to within .002" with a 1/4"
capacity up to 10' sheets.





                                                        (PICTURE OMITTED)



     Accurpress a 3 asix CNC control, 175 ton with 3/8" capacity in 12' sheets











                                                        (PICTURE OMITTED)



     Trumatic 200 CNC Punch - Capable of punching and forming up to 3/16' carbon
steel. Includes 17 tooling stations






                                                        (PICTURE OMITTED)



     M.G.  Industries  DNC 2.8. CNC  High-definition  Plasma  cutter with a 3/8"
capacity, a 6' X 12' cutting area and hypertherm 70 amp power source.





                                    Machining




                                                        (PICTURE OMITTED)


     Haas VF-4  Vertical  Machining  Center  features a 20 station  tool holder;
2-speed  gear box; 250 feet-lbs of cutting  torque;  20 hp spindle;  dual 22 bit
processors, and; travels 50"X20"X25."






<PAGE>



                                                        (PICTURE OMITTED)


     Haas HL-4 CNC Lathe featuring 30 hp spindle;  14.5" turning  diameter;  34"
turning  depth;  12  tooling  stations;  up  to 5"  bar  capacity  and  a  fully
programmable tailstock.







     Various other machining equipment such as 3 vertical mills with DRO; 2 tool
room  lathes  (1 with  DRO);  Geisholt  turret  lathe  with 6 tool  stations;  2
horizontal  band saws;  hyd-mech  band saw with NC auto feed (12" X 12"  cutting
area)





                                                        (PICTURE OMITTED)





(5)      AquaFuel(TM).  The  Company is the  worldwide  exclusive  licensee  for
         AquaFuel(TM).  On the 3rd of  November,  1997,  the Company  executed a
         world-wide exclusive license agreement to design,  manufacture and sell
         or  otherwise  commercialize  technology  based on a series  of  United
         States patents,  patents pending and trademarks,  collectively known as
         "AquaFuel(TM)."  The  patents  include (i) US Patent  5,435,274  titled
         Electric Power  Generation  Without  Harmful  Emissions  dated July 25,
         1995; (ii) US Patent 5,692,459 titled Pollution-Free  Vehicle Operation
         dated December 2, 1997;  (iii) US Patent  5,792,325 titled Electric Arc
         Material Processing System US Patent 5,826,548.

                                                        (PICTURE OMITTED)


         AquaFuel(TM)  Technology - AquaFuel(TM) is a non-fossil combustible gas
         produced by an  electric  discharge  of carbon  arcs within  distilled,
         fresh, salt or other types of water, thus being essentially composed of
         Hydrogen,   Oxygen,   Carbon  and  their  compounds.   AquaFuel(TM)  is
         competitive with respect to Hydrogen for cost, easiness and rapidity of
         production  and energy  content.  AquaFuel(TM)  is  manufactured  using
         off-the-shelf  equipment  and requires no fossil fuel in any form.  The
         materials used in the AquaFuel(TM) manufacturing process include water,
         carbon and an electric arc.

         AquaFuel(a)  Research and  Development  - The Company has completed its
         first two scientific certification reports relating to AquaFuel(a). The
         certifications   embody  scientific   measurements,   observations  and
         narrative  compiled  from a worldwide  body of  scientists,  engineers,
         universities,  laboratories and governmental  agencies  relating to the
         characteristics  of  AquaFuel(a).  The conclusions of the research team
         leader Dr. Rugero Maria Santilli state:

         1      AquaFuel(a) is cost competitive, has dramatically less pollutant
                in the  combustion  exhaust,  and can be more  easily and safely
                produced and stored anywhere desired than any other  combustible
                gas,  even  neglecting  its free  production  as a by product of
                sewage recycling;

         2      In view of the  above  characteristics,  AquaFuel  is one of the
                best,  if not  the  best  fuel  available  at this  writing  for
                automotive and other uses on a world-wide basis, with particular
                reference to consumer,  but also for  municipal  industrial  and
                military applications.

         3      The  AquaFuel  process  provides a  basically  novel  method for
                recycling liquid waste which produces  AquaFuel as a usable gas,
                water usable for irrigation and solids usable for fertilization;

         4      AquaFuel is an excellent gas for the production of  electricity,
                particularly  in the free form  obtained  from the  recycling of
                liquid waste from cities and municipalities;

         5      Systematic  scientific  experimentation  and theoretical studies
                have  identified  a number of  anomalies  in AquaFuel  which are
                applicable  to  all  other  gases,  thus  permitting  a new  gas
                technology with  implications and applications to the entire gas
                industry and consequentially vast, additional economic horizons.

         AquaFuel Commercialization - The Company is engaged in the construction
         of the first commercial-sized AquaFuel(TM) production unit. Delivery of
         the unit is scheduled for April, 1999. The device being constructed has
         been designed as a continuous run system in a hi-duty cycle mode.  This
         AquaFuel(TM)  commercial  apparatus makes use of  off-the-shelf  proven
         electric  arc  technology   with  a  pressurized   gas  production  and
         collection  system.  The  3-phase-AC  system  will  utilize  480V input
         voltage with an electrical load of 135KVA.

              A  primary  consideration  in  making  AquaFuel(TM)   commercially
         available  is to develop  sophisticated  production  equipment  able to
         generate  AquaFuel(TM)  at prices  competitive  with fossil fuels.  The
         AquaFuel(TM)  production  apparatus  being  constructed is estimated to
         produce  in  excess  of  4,000  cubic  feet  of  fuel  per  hour.  More
         importantly,   the  electric  arc  technology  allows  for  a  dramatic
         reduction in the use of carbon which, together with water, comprise the
         main ingredients in the production of AquaFuel(TM).

         Significant  AquaFuel  Agreement  - Dominican  Republic-based  Electric
         Utility Joint Venture. On December 16, 1998, the Company entered into a
         joint venture with Dominican Republic-based Comapnia de Luz y Fuerza de
         las  Terrenas  to  construct  and operate an  AquaFuel(TM)  facility to
         provide  fuel  for  the  production  of  electricity.   Luz  y  Fuerza,
         headquartered in Santo Domingo,  Dominican Republic, is a consortium of
         entities  organized to privatize the delivery of electric power through
         the  Dominican  Republic.  It  is  the  country's  only  non-government
         electric utility,  operating several power generation  facilities.  The
         Luz y Fuerza transmission lines provide electricity to four major urban
         areas.

              The TTL-Luz y Fuerza  joint-venture  estimates a 15-month schedule
         from  feasibility  study through fully  operational  output required to
         reach the AquaFuel  production rate necessary to fulfill the agreement.
         The first  significant  equipment is scheduled to arrive in April, 1999
         which will be able to generate  AquaFuel  at the minimum  rate of 4,000
         cubic-feet    per   hour   (see   above    discussion    relating    to
         Commercialization).

(6)      Electro-magnetic  Tire Recycling Process ("ETR Process") The Company is
         the worldwide  exclusive licensee for the ETR technology.  On April 20,
         1998, the Company acquired the worldwide  exclusive  license rights for
         the life of ETR patents pending.  The Company has aided the inventor in
         filing for applicable patents.

                                                        (PICTURE OMITTED)


         The ETR  Technology - The ETR Process was developed to recover the oil,
         steel and carbon black that were utilized in the  manufacture of tires.
         The process is  self-contained,  using scrap tires as the  feed-source,
         fed in  through  the ETR  equipment  as a means to reduce  the tires to
         their basic elements.  As a percent of weight,  the by-products of each
         tire are 10% steel; 25% fuel gas; 25% petro-chemicals,  and; 40% carbon
         black.  The ETR  technology  reclaims  these  products  which  are then
         offered for sale.

              The ETR technology  differentiates  from competition because there
         are no emissions and,  therefore,  no residue from combustion.  The ETR
         technology is further  differentiated  from  competition in its modular
         design,  which allows for a tire "plant" to be a single unit up through
         a full-scale, multi-unit plant.

         ETR Research and Development - The final commercial  development of the
         ETR equipment will take a two-pronged  path through (i) the fabrication
         of the actual ETR module and;  (ii) a detailed  analysis  of  materials
         resulting  from the ETR  equipment  including  carbon  black,  oils and
         petro-chemicals.  The  following  discussion  relates to the  Company's
         testing program for end product  viability.  The ETR equipment  reverts
         tires back to their  original  elements.  The purpose of the  Company's
         testing  program is to  determine  the  quality  and  character  of the
         materials   produced  by  the  equipment  such  that  a  market  demand
         determination can be made.

         As  it  relates  to  the  gas,  the  Company  is  currently   test  BTU
         Composition,  Btu content & physical properties of reformed "catalytic"
         or refinery type gases. This testing series describes the heating value
         of the gases, their physical properties and the composition of gases on
         a percentage  basis.  The  importance  of this test lies in the heating
         value (Btu  content)  of the gas which must be known to  determine  its
         value as a fuel and the types of  equipment  suitable  for its use. The
         physical properties,  molecular weight,  density,  specific gravity are
         considered  important,  base-line  information.  The  Company  is  also
         conducting  tests to determine  concentrations  of benzene and volatile
         sulfur compounds.  The Company's ETR process produces over eight to ten
         gases which will be similarly tested.

         The  Company's  testing  relating  to the oil  products  produced  from
         include physical  characteristics such as specific gravity,  flashpoint
         and  carbon  residue.  The  importance  of these  tests  can be seen in
         comparing  these with  produces  such as regular and low sulfur  diesel
         fuels,  special petroleum  spirits,  kerosene and grades 1 and 2 burner
         fuels.  Other  tests  underway  relating  to the oil  products  include
         gross/net heat of combustion, possible sulfur content, cetane index and
         trace metals.

         The carbon black is the final series of products  produced from the ETR
         equipment   and   is   currently   being   tested   for   the   typical
         physico-chemical  properties  of carbon  produces  including  particle,
         size, weight,  structure,  iodine adsorption number, tint strength, DBP
         oil absorption,  heat loss, ash content,  pour density and stress.  The
         tire project has purchased  blenders,  sieves and a shaker to determine
         the characteristics size and weight of the carbon products. Samples are
         separated  two  ways.  The  first  is  a  "not  force"  separation.  It
         identifies  the  percentage of each size mesh the carbon  classifies to
         with no  crushing  effort.  The  second  type of  sizing  utilizes  the
         blenders, a roller, sieves and a shaker to process the carbon as finely
         as  possible.  This small  scale  operation  mimics  commercial  carbon
         processing  for  particle  size  reduction.  The sizing will  determine
         proportions and consistency of the carbon black product.

         Commercial Scale-Up.  The Company is now engaged in the construction of
         a 100-tire per hour module.  The remainder of the components  necessary
         for each ETR  plant are  standard,  off-the-shelf  equipment  such as a
         shredder, gas and oil collection systems and storage tanks. TTL intends
         to commercialize its ETR technology  through joint ventures,  strategic
         alliances, and the direct sale of products and services.

(7)      Precision Micro-Welding.  TTL's Precision Micro-Welding division is the
         result of equipment  acquired by the Company  such as an Electron  Beam
         Welder  valued  at  $1,200,000  and the  operational  expertise  of AMW
         Manufacturing.  TTL's Precision  Micro-Welding  equipment and expertise
         supports  the  tool  and  die,  plastic  injection  molding  and  other
         industries with welding  requiring  filler wire sizes from .005 to .020
         inch in diameter.

              The  Company's  Precision  Micro-Welding  Division  offers a total
         range of welding capabilities including inert gas or CO2, plasma, laser
         and electron  beam  welding  processes.  Welding  provides the greatest
         junction strength.  In a proper weld the joint will be as strong as the
         parent material--sometimes stronger.

              In welding,  two metal  sections are  normally  joined by bringing
         their surfaces into contact under high temperature,  high pressure,  or
         both,  depending  on the  application.  Although  most  welds  are made
         between similar metals, different compatible metals may also be welded.

                                                        (PICTURE OMITTED)


              Electron  Beam Welding  provides  solutions to many  sophisticated
         welding  problems  by  joining  components  with very  precise,  finely
         controlled,  accelerated  stream of  electrons.  With the Electron Beam
         process, the metallurgical  characteristic and overall integrity of the
         most precision components are kept intact.

              A big  advantage  to the  Electron  Beam  process is the low total
         energy input to the work piece.  Conventional welding methods depend on
         thermal  conductivity  or on surface melting in order for the fusion to
         penetrate.  The electron beam welder also offers these major advantages
         over alternative welding methods:

         o    Welding highly reflective  material (such as cooper) Electrons are
              a much more  efficient  form of energy than  photons of light (use
              with lasers)
         o    Versatility - From thin .001" to 2" deep  penetration  welds,  EBW
              can  satisfy  the entire  range  with  extraordinary  control  and
              repeatabley
          o    inaccessible  deep areas - Long focal  distances allow welding in
               tight deep areas
          o    Refractive  materials.  Electron  Beam  welding is conducted in a
               very high vacuum  creating a fusion  zone of vacuum melt  quality
               that can yield over 95% strength of the base material.



Laser  Welding.  Light emerges from a laser in a narrow beam that can be focused
down to less  than  0.001  inch in  diameter.  Such  concentrated  beams  are so
powerful  that they are used to drill tiny  holes in  diamonds,  taking  minutes
where old  methods  took days.  Ultra thin wires are also made by pulling  metal
through these holes. Laser light can then be used to weld these tiny wires.


                                                        (PICTURE OMITTED)




     2 Micro Tig Welding Stations. For Tig welding, the Company's welders use 75
power  microscopes  to  produce  high  quality  precision  welds on all types of
materials.



                                                        (PICTURE OMITTED)

              Arc welding uses the intense heat of an  electrical  arc generated
         when a high  current  flows  between  the base metal and an  electrode.
         Temperatures of up to  7,000(degree)F  (3,870(degree)C)  are applied to
         melt the local base and filler  materials.  Shielded  metal-arc welding
         uses  electrodes made of a coated metal filler wire. The electrical arc
         breaks down the coating to provide a  protective  atmosphere  that both
         stabilizes the arc and acts as a flux.

         Other precision welding support equipment at TTL includes:

              Weld Logic Pulsearc .10 to 100 amp range;

              Miller Aerowave CC, AC-DC 3-400 amp AC wave control;

              2 Secheroa Plasma Fix 50 E welders with Merrick Amptrack Micro 1-B
computer and positioner

              2 Raytheon Yag Laser Welders

              Jec Laser engraver

              Vacuum welding chamber


(8)      Tunnel  Bat(TM)  On July 1,  1998,  the  Company  entered  a  worldwide
         exclusive  license  agreement  with  inventor Dave  Richardson  for the
         commercialization of the Tunnel Bat technology.  The Company intends to
         apply  for  Tunnel  Bat  patent(s)  on behalf  of Mr.  Richardson.  The
         exclusive  ownership  of all  such  patents  shall  be  100%  with  Mr.
         Richardson   and  none  with  TTL.   The  Company   will   continue  to
         commercialize  the Tunnel  Bat  technology  by virtue of its  exclusive
         worldwide license.

                                                        (PICTURE OMITTED)

         Tunnel Bat  technology.  The Tunnel Bat technology  refers to a vehicle
         specifically   designed  to  mobilize  the  removal  of  silt,  debris,
         vegetation,  soil,  rock, and other types of blockage from inside a box
         culvert.  Box culverts  relate to a sewer or drain running under a road
         or  embankment.  Invented by Dave  Richardson  in 1994,  the Tunnel Bat
         vehicle  represents  a solution  to the  growing  problem  of  removing
         blockage from box culverts.

                                                        (PICTURE OMITTED)


              Prior to the  invention  of the  Tunnel  Bat,  box  culverts  were
         manually  cleaned by crawling  into the box culvert  with a small wagon
         and shovel, filling the wagon with blockage, crawling back out to empty
         the wagon and then  repeating  the  process  until the box  culvert was
         cleaned. In addition to being a slow and difficult manual process, many
         box culverts are found to have snakes and other creatures  living among
         the blockage material, making it possibly unsafe for personnel.

                                                        (PICTURE OMITTED)


              The Tunnel Bat  equipment is able to turn a slow,  unpleasant  job
         into a  reliable,  thorough  professional  approach  to  desilting  box
         culverts.  The equipment is fully  mobilized,  allowing for the maximum
         removal of blockage while providing a safe working  environment.  Toups
         Technology  is  unaware  of any other  product  on the  market  that is
         designed to address the thousands of box culverts throughout the United
         States.

         Tunnel Bat  development.  The Company is now engineering  final vehicle
         production  model designs.  During this time, the Licensor is operating
         two  Tunnel  Bat  prototype  vehicles  in the  course of  cleaning  box
         culverts  under  contract  with  the  State  of  Florida   through  the
         Department  of  Transportation.  The Company  estimates  the Tunnel Bat
         production model will be completed on or about June, 1999.  Thereafter,
         the Company  intends to offer the vehicle  through its  in-house  sales
         department primarily to contractors and government municipalities.

(9)    TTL Power Systems.  During the third quarter, 1998, the Company entered a
       non-exclusive product representation  agreement with Southwest Machine, a
       Missouri   corporation   ("manufacturer").   Under   the   terms  of  the
       non-exclusive  agreement,  the Company is to provide marketing,  finance,
       sales and  coordination  and the  manufacturer is provide its products at
       favorable prices. In the course of executing a proposed TTL Power Systems
       sale,  the Company would  contact and negotiate  through the closing with
       prospective customer and then forward the order to the manufacturer.  The
       manufacturer then produces and delivers the equipment to the end-user.

                                                        (PICTURE OMITTED)

       Power System features.  The electric  generators which the Company offers
       by  virtue  of its rep  agreement  features  a  system  that  can  either
       synchronizes with the local utility or as act as a stand-alone  source of
       power.  The units can produce 120, 240, 480 or other  specified  voltage.
       The  generators  are  designed  to operate  on almost any fuel  including
       Natural Gas, raw wellhead gas, propane,  diesel and each generator can be
       converted from running one fuel to another with a simple  conversion kit.
       One 80 kilowatt generator will supply enough power for about five typical
       households  and the units  can be  linked  together  for  flexible  power
       requirements and uninterrupted  service during  maintenance of individual
       units.

       Power System product line. By virtue of its rep agreement, the Company is
       able to offer Hercules Engine  Generator Set complete with oil field skid
       and enclosure with paralleling  switchgear in sizes which include a 130KW
       turbo and an 80KW  non-turbo.  In addition,  the Company is able to offer
       the Engine Master diesel Engine Generator Set complete with oil field ski
       and  enclosure  with  paralleling  switchgear in sizes which include 25KW
       turbo and a 30KW nonturbo.  While the 25KW turbo can run either on either
       a multi-fuel  or gas while the 30KW is designed to operate on diesel fuel
       only.



                                  


<PAGE>


     The  Company's   Marketplace.   In   determining   the  Company's   overall
marketplace, TTL has categorized its nine divisions as follows:

     In the case of the BORS Lift device,  the Company operates in the oil field
equipment segment of the manufacturing sector;

     In  the  case  of  Brounley  Engineering,   the  Company  operates  in  the
electronics segment of the manufacturing
sector;

     In  the  case  of  InterSource  HealthCare,  the  Company  operates  in the
healthcare equipment segment of the healthcare sector;

     In the  case  of TTL  Manufacturing,  the  Company  operates  in the  metal
fabrication segment of the manufacturing sector;

     In the case of  AquaFuel,  the  Company  operates in the  alternative  fuel
segment of the energy sector;

     Further  in the  case of  AquaFuel,  the  Company  operates  in the sale of
equipment segment of the environmental sector;

     In the  case  of  Precision  Micro-Welding,  the  Company  operates  in the
specialty-welding segment of the
manufacturing sector;

     In the case of Tunnel Bat, the Company operates in the manufacture and sale
of equipment segment of the manufacturing sector;

     In the case of Power Systems, the Company operates in the sale of equipment
segment of the energy sector.

     Accordingly,  the major market  sectors  within which the Company  competes
include  Manufacturing,  Healthcare,  Energy and the Environment.  The Company's
various products and services are predominately at the market entry stage and as
yet have not achieved any  meaningful  market share.  Due to the novel nature of
the BORS  Lift,  AquaFuel,  ETR and Tunnel Bat  technologies,  coupled  with the
absence  of  significant  sales  to date,  the  Company  is  unable  to  provide
meaningful competitive information.

     The only  significant  competitive  factor of which  management is aware at
this time  includes the  per-barrel  price of oil,  which is currently at an all
time low.  While the Company  believes this factor  encourages  the sales of its
BORS Lift device,  the current price of oil may preclude certain  producers from
having sufficient  capital to purchase the Company's BORS Lift or, if purchased,
may have  difficulty  maintaining  payments.  The  Company  intends to  exercise
prudent business  judgements in granting any credit for the purchase of its BORS
Lift device.



<PAGE>


Manufacturing  - The  Manufacturing  sector includes  companies  involved in all
manner of manufacturing operations,  from heavy machinery to hardware as well as
companies  involved in the wholesale  distribution of these products.  Among the
companies covered are agricultural, construction and material handling machinery
makers;  machine tool, metal fabrication and flow control  equipment  companies;
electrical  equipment  makers,  packaging  makers and rubber,  plastic and glass
products companies.

Healthcare . In 1997, the US annual expenditures on health products is estimated
at $111 billion with US expenditures on drugs and other medical nondurables came
to about $95 billion while  spending for medical  equipment  such as eyeglasses,
hearing  aids,  artificial  limbs  and  wheelchairs  cam to about  $16  billion.
Worldwide drug sales are rising at the rate of 8% -10% a year and medical device
sales at 7% a year. In the international marketplace,  US firms account for more
than 40% of the $120 billion market for medical devices and more than 30% of the
$265  billion  pharmaceutical  market.  Medical  products,  the most diverse and
fragmented  segment of the health care market,  include  some  130,000  items --
everything  from flimsy exam gowns and gauze to heart  valves and  sophisticated
diagnostic  equipment.  The threat of AIDS and other infectious diseases has led
to the increased use of protective equipment and disposable products,  while the
aging population has fueled growth in orthopedic an cardiovascular markets.

Energy.  The US energy  industry is estimated at $473 billion.  About 85% of the
energy we consume comes from three major  sources:  oil, which is #1 in terms of
energy  consumption;  natural gas, #2; and coal,  #3. The electric  company uses
much of  these  fuels,  and with  good  reason:  close  to 100% of US homes  and
businesses are wired for electricity.  The oil industry,  composed of integrated
oil  companies  and oil  field  equipment  and  services  companies,  as well as
pipelines,  refineries, and resellers,  produces the crude oil that is converted
to gasoline, heating fuel, jet fuels and more.

Environment . The Environmental  Equipment and Services industry is estimated at
$150  billion  annual   revenues  with  annual  growth   estimated  at  5%.  The
predominantly  small environmental firms purify air and water, cart away wastes,
and clean up toxic  dumping  grounds,  often  according  to plans  conceived  by
engineering  consulting  firms.  In  genera,   environmental   technologies  are
classified  four  ways:  monitoring  and  assessment  to detect  pollutants  and
indicate the  environment's  condition;  control of hazardous  substances before
they enter the environment; "remediation' to detoxify hazardous substances after
they enter the environment;  and restoration of already polluted  ecosystems.  A
1990  EPA  report  estimated  that in the  year  2000,  the  annual  cost of EPA
regulations,  including the costs of compliance and going through the regulatory
process, would be approximately 2.8% of the gross national product.


<PAGE>


Item 2            Description of Property

     The   Company's    headquarters   and   manufacturing   facility   occupies
approximately  50,000  (fifty-thousand)  square-feet within the 96-acre Pinellas
Science  Technology and Research  Center ("STAR  Center")  located at 7887 Bryan
Diary Road, Largo, Florida.

     Formerly used by Lockheed Martin Specialty  Components,  Inc. as a provider
for the Department of Energy ("DOE"),  the STAR Center has been converted into a
technology incubator for engineering firms and specialty manufacturers. The STAR
Center is a 739,873 square-foot complex,  comprised of 17 separate buildings;  a
150,000 square-foot,  16-foot high bay manufacturing area, and approximately 100
separate areas, including laboratories, production space and offices.

     The Company also maintains a 10,000 square-foot  facility wherein is housed
its   AquaFuel(a)   division.   The  Company  also  maintains  an   engineering,
installation  and field  service  office in  Claremore,  Oklahoma and a national
sales office in Garden City, Kansas relating to its BORS device.

     The Company  does not invest in real estate or real estate  mortgages,  nor
does the Company invest in the  securities of or interests in persons  primarily
engaged in real estate activities.

Item 3            Legal Proceedings

     The Company is not subject to any legal proceedings. The Company is unaware
of any governmental  authority that is contemplating  any procedure to which the
Company is a participant.

     The Company was recently served with notice relating to an alleged conflict
between the various  patents  underlying  TTL's AquaFuel  technology and patents
held in the name of Wilbur Dammann and David Wallman. Counsel to the Company has
since opined that the allegations are without legal merit.  However,  due to the
importance  of  AquaFuel  to  the  Company's  business  purpose,  the  following
discussion is provided.

     On November 25, 1998, the Company was served with an Infringement Notice by
Counsel representing Messrs. Wilbur A. Dammann and W. David Wallman as inventors
relating to U. S.  patents  5,159,900  Method and Means of  Generating  Gas from
Water  for  Use  As A  Fuel  issued  November  3,  1992  and  5,417,817  Biomass
Gasification  Process and Apparatus issued May 23, 1995  (collectively  "Dammann
and Wallman Patents).

     The November 25, 1998 Infringement Notice alleged the  commercialization of
technology  based on US Patents  5,435,274 and  5,692,459  and other  associated
patents and trademarks  (collectively the "AquaFuel  Patents") would infringe on
the  Dammann  and  Wallman  Patents.   By  inference,   the  November  25,  1998
Infringement Notice further alleges that parts of the AquaFuel Patents are based
on a practice  which is in the  public  domain as such  practice  is based on US
Patent  603,058 issued April 26, 1898 in the names of Hillary  Eldridge,  Daniel
Johnson Clark and Sylvain Blum (the "Eldridge Patent").

     The  Infringement  Notice  further  alleged  the Company had failed to cite
these matters in its Internet home page and in official filings submitted to the
Securities and Exchange Commission.

     At the time the Infringement Notice was received,  the Company was actively
engaged in license  negotiations  relating to the  Dammonn and Wallman  Patents.
Messrs.  Dammonn and Wallman had  neglected  to inform  their  counsel of active
license negotiations prior to serving the Infringement Notice. Upon notification
of on-going  negotiations,  on December 9, 1998, counsel to Messrs.  Dammonn and
Wallman withdrew their charge of infringement.

     The  Company  subsequently  proposed a license  agreement  relating  to the
Dammonn and Wallman  Patents which was rejected in a January 8, 1999,  two-page,
seventeen point writing (the "Rejection Letter").

     Throughout the Rejection Letter,  Dammonn and Wallman state that TTL should
terminate its world-wide  exclusive agreements relating to AquaFuel and that the
Company should execute a  non-exclusive,  relatively  short-term  agreement with
Dammonn and Wallman.  Further, the Dammonn and Wallman rejection letter directed
TTL  to  pay  anywhere  from  $750,000  to   $2,000,000   for  the   short-term,
non-exclusive license agreement.

     Upon receipt of these materials,  the Company engaged its patent counsel to
conduct  an  in-depth  review  of the  three  patents  underlying  the  AquaFuel
technology which are in the name of William Richardson, Jr., the two Dammann and
Wallman  Patents and the  Eldridge  Patent.  Further,  the  Company  conducted a
thorough review of all materials posted on the Company's  Internet home page and
in all documents filed with the Securities and Exchange Commission.

     At the conclusion of this  investigation,  on January 26, 1999, the Company
responded to Dammann and Wallman stating the following:

1.   The Dammann and  Wallman  claims to patent  priority  were  "without  legal
     merit.";

2.     The Dammann and Wallman statements to members of the financial  community
       were based on false assumptions and were potentially damaging to TTL;

3.     That any claims of misrepresenting  information in the Company's official
       security filings should be immediately brought forth;

4.     That in legal fact,  the Dammann and Wallman  patents are  subordinate to
       the AquaFuel Patents and that any  commercialization  of their technology
       would result in a cease and desist order from TTL;

5.     The Company's WAFT agreement (the Company's AquaFuel license agreement is
       with WAFT  Partners)  requires TTL pay  quarterly  advance  royalty fees.
       After receipt of the Rejection Letter,  TTL paid all advance royalty fees
       through 1999. TTL further  notified WAFT Partners of the Company's intent
       to  continue  the  agreement  for the next  three-year  period  beginning
       January 1, 1999.

     Summary  of TTL's  patent  counsel  Opinion  relating  to a  review  of the
AquaFuel, Dammann and Wallman and Eldridge Patents:

     "It is my opinion that neither of the Dammann  patents is of concern to the
present  technical  efforts  of TTL." As it relates  to the  assertion  that the
AquaFuel  patents  cannot be  practiced  without  infringing  on the Dammann and
Wallman  Patents,  TTL's counsel  indicated  this "made no sense." The assertion
that the  AquaFuel  Patents  cannot be enforced,  TTL's  counsel  states  "These
comments  are  without  legal  merit." As it relates to the  assertion  that the
AquaFuel  patent  owner  failed to cite the  Eldridge  or  Dammonn  and  Wallman
Patents,  TTL's counsel  reports "the public records in the file wrappers of the
first two  Richardson  (AquaFuel)  Patents  show that Dammonn 1 was cited by the
Examiner against Richardson 1 and 2 and were found to be patentable thereover."

     The Company has engaged  additional  patent  counsel  whom is  preparing an
affidavit  of  testimony  relating to these  matters.  The  following  pictorial
reflects the time-frames  involved and provides certain pertinent notes relating
to the AquaFuel and Dammann and Wallman Patents:

1.     According  to  WAFT  Partnership  patent  counsel,   Richardson's  patent
       priority  over  Dammann  and Wallman  was  established  by virtue of 1989
       disclosure of invention to Florida for funding.

                                (PICTURE OMITTED)

2.     Dammann executes a Statutory  Disclaimer relating to claims 1, 2 and 3 of
       original Dammann Patent 1. According to WAFT Partnership  patent counsel,
       "Hence, Dammann having admitted on the record that he never was the first
       inventor of his first claimed embodiment."

3.     In correspondence  setting forth reasons for allowing certain claims made
       in AquaFuel Patent 2, the Patent Office Examiner  states:  "The following
       is an examiner's  statement of reasons for  allowance:  The 35 USC 102(b)
       rejection of claims 1, 6, 8, 11-14, 22 and 23 has been withdrawn because,
       as a result of the evidence of the  disclaimer  of claims 1-3 by Dammann,
       that patent no longer  claims the rejected  invention  and  therefore the
       Rule 131 Declaration is considered sufficient to overcome the rejection.



<PAGE>


Item 4            Submission of Matters to a Vote of Security Holders

                  None.

                                     PART II

Item 5            Market for Common Equity and Related Stockholder Matters

     Since activation of operations in November,  1997, the Company has provided
for its venture funding  requirements  through sales of its securities at prices
ranging from $0.62 to $1.25 per share.  As a result of these sales,  the Company
issued  securities  to various  persons and firms and all such  securities  were
acquired  directly  from the Company in  transactions  not  involving any public
offering. All securities were sold in reliance on Section 4(2) of the Securities
Act of 1933. All purchasers  executed a Subscription  Agreement  indicating they
have such knowledge and experience in financial and business matters that either
alone or with a purchasers representative,  are capable of evaluating the merits
and risks of the investment.

     The  Company  has not relied on an  underwriter  or  similar  person in the
course of selling its securities or the subsequent trading thereof.  The Company
has made use of its  securities  counsel,  independent  auditor and  independent
transfer agent as needed. As a part of its Private Placement  Memorandum used by
the  Company  for the  initial  sale of its  securities  during  late 1997,  TTL
undertook  certain  specific steps  necessary to effect a public trading market.
The  following  relates to the tasks  completed,  which relate to the  Company's
undertakings assured in the initial sales of its securities.

1.     Immediately  upon completion of the Company's  initial Private  Placement
       pursuant  to Rule  504 of  Regulation  D,  the  Company  submitted  three
       simultaneous applications:

       (i)    Form 10SB12G  which is submitted  to the  Securities  and Exchange
              Commission.  A  registration  of securities on this form obligates
              the Company to provide existing and prospective  shareholders with
              certain  information.  A part of these  requirements  obligate the
              Company to provide existing and prospective shareholders quarterly
              financial   statements   prepared  by  management  and  an  annual
              financial audit prepared by independent auditors. The SEC declared
              the Company's Form 10SB12G effective June, 1998.

       (ii)   An  application  was made  with  Standard  and  Poors  Corporation
              Records and as of April, 1998, the Company has been listed on page
              8153 under the heading  Company  Descriptions in Standard & Poor's
              Cooperation Records.

       (iii)  A  Form  15c2-11  was  filed  with  the  National  Association  of
              Securities  Dealers  through the Company's  initial  Market Maker.
              During  June,  1998,  the  Company's  securities  were cleared for
              trading through the NASD OTC Marketplace.  Quotations on the OTCBB
              reflect inter-dealer prices, without retail mark-up,  mark-down or
              commission, and may not represent actual transactions.

2.     During October, 1998, the Company filed a securities registration on Form
       SB-2 with the Securities and Exchange  Commission relating to shares sold
       exclusively  to  accredited  investors in reliance on  Regulation D, Rule
       506.

     Since June 16, 1998, the date when the Company's shares began trading,  the
Company's per share price has ranged from $1.375 to $3.00 and has  predominately
traded at an average of $2.00 per share.  Throughout this period from June, 1998
through  the date of this  filing,  the  Company's  has  traded  an  average  of
approximately 60,000 shares daily.

     As of  December  30,  1998,  Company had in excess of 700  Shareholders  of
Record.

     In order to allow for its  current  year  capital  needs,  during the first
quarter 1999, the Company  completed the sale of $1,500,000 of its  Subordinated
Convertible Notes to The Augustine Fund (the "Augustine  Notes") and the sale of
$750,000 of its Series A 7% Convertible  Preferred  Stock to The Shaar Fund (the
"Shaar  Preferred").  Both  placements  were  conducted  to provide  for capital
expenses estimated to occur throughout 1999.

     The Augustine Notes. On February 17, 1999, the Company executed a series of
agreements with Augustine Capital Group  ("Augustine")  relating to the purchase
by Augustine of $1,500,000 of TTL's Series 1999-A Eight Percent (8%)  Covertible
Notes (the  "Notes")  and the  issuance  of  Warrants  and  registration  rights
relating thereto. On that same date,  Augustine delivered $750,000 to TTL and is
obligated to deliver a second $750,000 30 days following the registration of the
shares underlying the Notes. There were no brokers,  promoters,  underwriters or
similar persons  associated with this transaction.  Closing fees of $10,000 were
paid (i) to Augustine  counsel and (ii) third party counsel whom acted as Escrow
Agent.  A more  detailed  summary  of  the  Series  1999-A  Eight  Percent  (8%)
Convertible Note due January 1, 2002 and the warrants and  registrations  rights
provided in connection therewith immediately follows

     The Shaar  Preferred.  On March 30, 1999, the Company  executed a series of
agreements  and amended its articles of  incorporation  in order to complete the
placement  of $750,000 of its Series A 7%  Preferred  Stock with The Shaar Fund.
Under the terms of the Series A Preferred  Stock, the holder may convert at 105%
of the closing price (the "Closing  Price" was fixed at $2.10 on March 30, 1999)
anytime up to 90 days after  issuance;  85% of the closing price anytime between
91 days and 119 days following closing; 80% of the closing price anytime between
120 and 149 days following closing, or; 75% anytime after 150 days following the
closing date. The Company also issued 93,750  warrants  exercisable at $2.40 per
share in  connection  with the  sale of  Preferred  Stock  and  granted  certain
registration rights. The Company paid a finders fee of 8% or $60,000 plus 50,000
Warrants  allowing for the purchase of the  Company's  securities at 120% of the
closing bid price at time of exercise. A more detailed summary of the Series A -
7%  Convertible  Preferred  Stock  and the  warrants  and  registrations  rights
provided in connection therewith immediately follows this section.



<PAGE>


Series 1999-A Eight Percent (8%) Convertible Note due January 1, 2002

     The  Company  shall repay to  Augustine  the  principal  sum of $750,000 on
January 1, 2002 (Maturity Date) and interest on the principal sum outstanding at
the rate of 8% per  annum  due  quarterly  in  arrears  on March  31,  June 30 ,
September 30 and December 31 of each year during the term of the Note. The first
such  interest  payment is due June 30, 1999.  The Notes may be  exchangable  in
amounts of $50,000  or  greater.  Conversions  of the Note must be  effected  in
increments of at least $10,000 of principal amount.

     Augustine  may convert  the face amount of the Note at any time  commencing
the earlier of (i) the date the  Registration  Statement  relating to the shares
underlying  the Note becomes  effective,  or; (ii) the date which is ninety (90)
days after February 17, 1999 (date of Note).  Accordingly,  the Conversion  date
would be approximately May 17, 1999.

     The per share price at which  Augustine  may convert the Note is the lesser
of:  (i) 100% of the  lowest  closing  bid price per share  during the five days
preceeding  the Closing Date (this price per share has been fixed at $1.78125 (1
& 25/32) per share.  Accordingly,  should  Augustine  select  method (i) for the
conversion  rate of their  principal  amount,  they would be entitled to 421,053
Toups Technology common shares); or (ii) 80% of the lowest closing bid price per
share during the five days preceeding the conversion date.

     The Company  may,  at its option,  redeem the Note at any time in an amount
equal to 125% of the face  amount  of the  portion  of the Note  remaining  plus
interest at the time of such redemption.

     In keeping  with the intent of the  parties,  the  Company  shall  register
421,053 common shares relating to the first closing and 421,053 common shares in
anticipation  of the second  closing.  At this  time,  the  estimated  number of
registered  common  shares  necessary  for the full  conversion of the principal
amount of the notes is 842,106 common shares.

Warrants in connection with the Augustine Notes

     As a part of sale the Augutine Notes, the Company provided 150,000 Warrants
wherein each such Warrant  entitles the holder thereof to purchase the Company's
common  stock at the rate of 110% of the closing bid price for the Common  Stock
on the date of such  Closing  (the  closing bid price for the  Company's  common
shares on February 17, 1999 was $2.00.  Accordingly,  the exercise price for the
Warrants  relating  to the first  Closing  is $2.20 per  share  making  the full
exercise price of the 125,000  Warrants  delivered in connection  with the first
Closing $275,000).

Registration Rights  in connection with the Augustine Notes

     As a  part  of  its  Augustine  agreements,  the  Company  granted  certain
registration  rights  which,  in  effect,  require  TTL  to  amend  its  current
pre-effective SB-2 Registration  Statement to include the total estimated number
of shares available for conversion of the Notes and exercise of the Warrants.



<PAGE>


Series A 7% Convertible Preferred Stock

On March 30, 1999,  the Company  executed a series of agreements and amended its
artciles of  incorporation in order to complete the placement of $750,000 of its
Series A 7% Preferred Stock with The Shaar Fund. Under the terms of the Series A
Preferred  Stock, the holder may convert at 105% of the closing price anytime up
to 90 days after issuance;  85% of the closing price anytime between 91 days and
119 days following closing; 80% of the closing price anytime between 120 and 149
days  following  closing,  or; 75% anytime after 150 days  following the closing
date. The Company also issued 93,750 warrants  exercisable at $2.40 per share in
connection  with the sale of Preferred  Stock and granted  certain  registration
rights.  The Company  paid a finders fee of 8% or $60,000  plus 50,000  Warrants
allowing for the purchase of the Company's securities at 120% of the closing bid
price at time of exercise.

Warrants issued in connection with the Series A 7% Convertible Preferred Stock

     As a part of the sale of its Series A 7% Convertible  Preferred  Stock, the
Company also issued  93,750  Warrants  providing the holder the right to acquire
the  Company's  common stock at a price equal to 120% of the market price on the
closing date.  The Warrants may be exercised  anytime up through March 30, 2004.
The exercise price of the warrants  issued in connection with the sale of Series
A 7% Convertible  Preferred  Shares is $2.40 per share. As a further part of the
sale of the  Series  A 7%  Convertible  Preferred  Shares,  the  Company  50,000
warrants as a part of a finders fee. The finder's  warrants are identical in all
respects  to the  warrants  issued to the holder of the Series A 7%  Convertible
Preferred Shares.

Registration  rights in connestion  with the Series A 7%  Convertible  Preferred
Stock

     As a part  of its  Shaar  Fund  agreements,  the  Company  granted  certain
registration  rights  which,  in  effect,  require  TTL  to  amend  its  current
pre-effective SB-2 Registration  Statement to include the total estimated number
of shares  available for  conversion of the Preferred  Stock and exercise of the
Warrants including those Warrants issued to the finder.

Other shareholder matters

     Holders of the  Company's  Common Stock are entitled to dividends  when, as
and if  declared  by the  Board of  Directors,  out of funds  legally  available
therefore.  The Company does not  anticipate  the  declaration or payment of any
dividends in the foreseeable future.

     The Company intends to retain earnings,  if any, to finance the development
and expansion of its  business.  Future  dividend  policy will be subject to the
discretion  of the  Board  of  Directors  and  will be  contingent  upon  future
earnings,  if any. Other factors  regarding the payment of dividends include the
Company's financial condition, capital requirements, general business conditions
and  other,  similar  matters.  Therefore,  there can be no  assurance  that any
dividends of any kind will ever be paid.

     The Company's  registrar and transfer agent is  Continental  Stock Transfer
&Trust Company.

Item 6   Management's Discussion and Analysis or Plan of Operation.

           Results of Operations for the Year Ended December 31, 1998

     The following  discussion and analysis  should be read in conjunction  with
the financial  statements  and related  notes,  as well as the discussion in the
Form 10-KSB,  which  provide  additional  information  concerning  the Company's
financial activities and condition.

Overview:

     Toups Technology  Licensing,  Incorporated ("TTL" or "The Company) business
purpose is commercializing  late-stage technologies,  which are acquired through
license agreements and acquisitions. The Company's technologies and acquisitions
to date are in the energy, environmental, natural resource and healthcare market
segments.  At the end of 1998, the Company was comprised of nine divisions,  six
of which earned revenues during 1998.

Results of Operations

Fiscal Year Ended December 31, 1998,  Compared to Fiscal Year Ended December 31,
1997

     Sales for 1998 were  $3,132,001,  an  increase  of  $1,935,832  or 62% from
$1,196,169  in 1997.  The  increase in revenues was  attributable  to the market
launch and acceptance of the Company's BORS Lift units during the Fourth Quarter
of 1998,  as well as sales growth in the TTL  Manufacturing  division,  formerly
Advanced   Micro-Welding,   Inc.   ("AMW"),   and  Brounley   Associates,   Inc.
("Brounley"),  a  wholly-owned  subsidiary  of TTL.  AMW and  Brounley  were two
acquisitions  accounted  for as a pooling of  interest  by TTL during  April and
October 1998, respectively. Since TTL did not commence operations until November
1997,  figures for the year ended  December 31,  1997,  reflect less than a full
year's  transactions  (subsidiaries  accounted  for by the  pooling of  interest
method  reflect the full year's  transactions  for the year ended  December  31,
1997).  The  Company's  third   acquisition,   InterSource   Health  Care,  Inc.
("InterSource"),  was accounted for by the purchase  method of accounting  for a
business combination.  Accordingly,  the accompanying  statements do not reflect
revenues or expenses  related to the  acquisition  prior to the closing  date of
November 30, 1998.

     Gross profit for 1998 was $1,147,071 or 37% of revenues,  which was up from
$373,799  or 31% of  revenues  for  1997.  The  increase  in gross  profit  as a
percentage  of revenues in 1998 was the result the strong  profit  margin of the
in-house manufactured BORS Lift.

     The  Company's  selling,  general  and  administrative  (SG&A)  expenses of
$3,276,932  were  comprised  of  development  expenses,   salaries,   consulting
services,  and other operating costs in 1998, up from $315,893 during 1997. As a
percentage of revenues, SG&A increased to 105% in 1998 up from 26% in 1997. SG&A
expenses  increased  in 1998 to  support  further  technology  development,  new
product introductions and future business expansion. In 1998, $728,351 or 33% of
SG&A expenses were non-cash  expenses paid for through  capital stock issued for
services to further the Company's technologies.


<PAGE>


     The Company incurred increased  personnel expenses and development costs to
build its infrastructure,  assembling a team of engineers,  scientists and other
professionals,  and prepare its  technologies  for market  applications.  During
1998,  the  Company  completed  its  independent  testing  for  AquaFuel  market
applications  and  scalability  results  including  its  first   production-unit
contract for the Dominican  Republic.  In addition,  the Company completed field
tests of BORS Lifts and began  full-scale  production  placing  100 units in the
field,  developed  applications  for  its  tire  recycling  process  technology,
completed  design for and began  production of Tunnel-Bat  units,  completed the
acquisition of AMW,  Brounley and  InterSource  and furthered  discussions  with
potential acquisition candidates,  as well as candidates for technology licenses
that fit with the Company's business purpose.

     As a result of these  activities,  the Company had a 1998 operating loss of
$2,129,861, a decrease from an operating profit of $57,906 for 1997.

     Net interest expense for 1998 was $14,373,  up from $664 in 1997.  Interest
expense related to borrowings of wholly-owned subsidiaries prior to acquisition.

Liquidity and Capital Resources

     Net cash used by operating  activities of $2,422,529  related  primarily to
the  Company's  operating  loss and the  increase  in  accounts  receivable  and
inventories  from BORS lifts sales in the fourth  quarter of 1998.  The Company,
however,  had a net  working  capital  surplus  of  $1,545,580  at year end,  an
increase of $1,331,762  from December 31, 1997. The increase in working  capital
was principally the result of an increase in accounts receivable  resulting from
Fourth Quarter BORS Lift sales and financing  activities through the issuance of
$3.8 million in common stock through private equity  offerings.  At December 31,
1998 the Company had $5,312,840 in assets and $3,360,798 in stockholders' equity
up from $562,054 and $256,484 respectively at December 31, 1997.

     As of December  31, 1998,  the Company had $49,574  drawn on a $50,000 bank
line  of  credit  for  InterSource  and  $388,237  in  capital  leases  for  TTL
Manufacturing. The Company had no other bank financing or other debt obligations
outstanding other than trade payables,  accrued expenses, and other expenses due
during the normal course of business.

     Through the  acquisitions of AMW,  Brounley and InterSource the Company has
significant production  capabilities available without the requirement for large
plant and equipment capital expenditures.  The InterSource  acquisition added in
excess of $2 million in fair market value of equipment purchased and refurbished
by  InterSource  under its  facility  lease.  The  equipment  remained  from the
facility's former tenant, a large defense  contractor,  and included  computers,
milling  equipment,  lathes,  shelving  and  storage  units,  precision  welding
equipment and other  production  machinery.  InterSource held this equipment for
resale  but  TTL  has  chosen  to  maximize  the  equipment   through   internal
utilization.  This equipment  combined with AMW's,  Brounley's and InterSource's
technical  resources  will  allow  TTL to  fully  utilize  its  development  and
production capabilities 1999.



<PAGE>


     The Company  has also  completed  agreements  for two  financing  offerings
subsequent to year end for a total of $2,250,000.  The financings are structured
as $1,500,000  subordinated  convertible Note and $750,000 convertible preferred
stock.  The proceeds of the sale of these  offerings  are  available for capital
expenditures  related to  technology  development  costs,  future  acquisitions,
working capital, and general corporate purposes.

     The Company believes its existing cash,  together with projected cash flows
from operations and the availability of future equity and/or offerings,  will be
sufficient to meet the Company's cash requirements in 1999.

Forward Looking Statements

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations contains certain  "forward-looking  statements" as defined
in the Private  Securities  Litigation  Reform Act of 1995.  Such statements are
based on management's  estimates,  assumptions,  and projections.  Major factors
that could cause results to differ  materially from those expected by management
include,  but are not  limited  to: the timing  and nature of  independent  test
results;  the nature of  changes in laws and  regulations  that  govern  various
aspects of the Company's business;  retention and productivity of key employees;
the  availability  of acquisition  candidates and  proprietary  technologies  at
purchase  prices the Company  believes to be a fair market;  the  direction  and
success of competitors; management retention; and unanticipated market changes.

Year 2000 Compliance

     The Company has completed a  prelimanary  assessment  concerning  Year 2000
issues and has determined that its  technologies,  manufacturing  factilites and
internal  operatins  will not be  impacted  or  affected.  The  Company  made no
material  expenditures  in 1998 with regard to Year 2000 issues and  anticipates
that  expenditures  in 1999  will have no  material  effect  to its  results  of
operations  and capital  resources.  In addition,  the Company's  stock transfer
agent,  Continental  Stock Transfer % Trust  Company,  has been certified as Y2K
compliant







               THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK



<PAGE>


Item 7            Financial Statements

                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                   1997
                                                           1998   (Note 2)
                                                           ----    --------

                                     ASSETS

Current assets:
   Cash                                                $772,080    $104,580
   Accounts receivalbe - trade (net of allowance
     of $74,237 and $5,000, respectively)             1,768,999      88,384
   Inventory                                            542,555     237,682
   Prepaid royalties                                     89,000      11,000
   Other current assets                                   2,776         800
                                                    -----------    --------

       Total current assets                           3,175,510     442,446
                                                    -----------     -------

Property, plant and equipment:
   Property, plant and equipment                      2,170,072     174,488
   Less:  Accumulated depreciation and amortization     152,159      65,775
                                                     ----------    --------

       Net property, plant and equipment              2,017,913     107,713
                                                     ----------    --------

Other assets:
   Security deposits                                     31,932       5,000
   Related party receivables                             87,485           0
   Other assets                                               -       5,895
                                                       --------      ------

       Total other assets                               119,417      10,895
                                                     ---------      --------
       Total assets                                  $5,312,840     $562,054
                                                     ==========     ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                         1997
                                                                1998   (Note 2)
                                                                ----   -------

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable and accrued expenses                   $1,391,826  $109,748
   Royalties payable                                           42,843 
   Income taxes payable                                        40,562         -
   Deposits                                                    39,000    73,540
   Current portion of notes payable - stockholder                   -    15,325
   Current poriton of capital lease obligations                66,125    24,324
   Line of credit                                              49,574         -
   Other current liabilities                                        -     5,691
                                                             ------   ---------

     Total current liabilities                              1,629,930   228,628
                                                          -----------   -------

Long-term debt:
   Capital lease obligation, net of current portion           322,112    49,452
   Notes payable - stockholder, less current portion                -    27,490
                                                             --------   -------

     Total long-term debt                                     322,112    76,942
                                                            ---------  --------

     Total liabilities                                      1,952,042   305,570
                                                           ----------   -------

Stockholders' equity:
   Capital stock                                               22,217    10,030
   Additional paid-in capital                               5,484,950   197,237
   Retained earnings (deficit)                             (2,146,369)   49,217
                                                           -----------   ------

     Total stockholders' equity                             3,360,798   256,484
                                                           ----------   -------

     Total liabilities and stockholders' equity            $5,312,840  $562,054
                                                          ===========  ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  For the years ended December 31, 1998 and 1997

                                                                     1997
                                                       1998        (Note 2)
                                                       ----        --------


Revenue                                              $3,132,001      $1,196,169

Cost of goods sold                                    1,984,930         822,370
                                                     -----------     ----------

Gross profit                                           1,147,071        373,799

General and administrative expenses                    3,276,932        315,893
                                                       ----------     ---------

Total operating earnings (deficit)                    (2,129,861)        57,906

Other income (expense):
Interest income                                            6,861            543
Interest expense                                         (21,234)       (1,207)
Other income                                                   -           155
Other expense                                                  -          (325)
                                                       -----------     --------

Total other income (expenses)                             (14,373)        (834)
                                                        ----------    ---------

Earnings (deficit) before income taxes                  (2,144,234)      57,072

Income taxes                                                43,760        7,971
                                                         ----------   ---------

Net income (loss)                                      $(2,187,994)    $ 49,101
                                                       ===========     ========

Weighted average number of
shares outstanding                                      12,167,182    9,781,751

Net income (loss) per share                             $    (0.18)   $   0.005
                                                       ============    ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the years ended Decmeber 31, 1998 and 1997

                                                                       1997
                                                            1998     (Note 2)
                                                            ----     --------

Cash flows from operating activities:
   Net income (loss)                                    $(2,187,994)  $  49,101
   Adjustments to reconcile net income (loss) to
     net cash provided (used by operating activities:
       (Gain) loss on sale of assets                               -      (155)
       Depreciation and amortization expense                  81,634     21,840
       Bad debt expense                                       76,312      5,000
       Capital stock issued for services                     728,351      8,470
       (Increase) decrease in accounts receivable         (1,656,051)  (11,933)
       (Increase) decrease in inventory                     (291,042)  (54,403)
       (Increase) decrease in other current assets            (1,976)        -
       (Increase) decrease in security deposits              26,932)   (5,000)
       (Increase) decrease prepaid royalties                 (78,000)  (11,000)
       (Increase) decrease in other assets                     5,895    (5,195)
       (Increase) decrease in accounts payable               565,382     56,334
       (Increase) decrease in royalties payable               42,843          -
       (Increase) decrease accrued expenses                  350,218         74
       (Increase) decrease in income taxes payable            40,562          -
       (Increase) decrease in other current liabilities      (71,731)         -
                                                            ---------   -------

       Net cash provided (used) by operating activities    (2,422,529)   53,133

Cash flows from investing activities:
   Acquisition of cash from investing                           3,715         -
   Acquisiton of property, plant and equipment               (507,047) (15,690)
   Proceeds from sale of equipment                                  -       750
   Loans to related party                                     (18,428)       -
   Loans to subsidiary prior to acquisition                  (164,297)       -
                                                            ----------   ------

       Net cash used by investing activities                 (686,057) (14,940)



  See Auditor's Report and accompanying financial statements and Notes thereto




<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the years ended Decmeber 31, 1998 and 1997

                                                                        1997
                                                             1998      (Note 2)
                                                             ----      --------


Cash flows from financing activities:
   Distributions to stockholders                           (7,592)     (41,527)
   Proceeds from the sale of capital stock              3,850,278      100,000
   Principal repayments on notes payable - stockholder    (11,215)      (4,685)
   Proceeds from line of credit                             4,600            -
   Repayments on line of credit                            (4,600)           -
   Principal repayments on capital lease obligations      (55,385)      (4,197)
   Purchase of treasury stock                                   -      (29,000)
                                                          ---------     -------

       Net cash provided by financing activities         3,776,086       20,591
                                                         ----------    --------

Net increase in cash                                       667,500        8,784

Cash, beginning of year                                    104,580       45,796
                                                          ---------     -------

Cash, end of year                                         $772,080     $104,580
                                                          =========    ========

Supplemental Cash Flow Disclosures:
Cash paid for interest                                      $21,234    $  3,110
Cash paid for income taxes                                 $ 11,967    $  4,481



  See Auditor's Report and accompanying financial statements and Notes thereto





<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                 CONSOLIATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  For the year ended December 31, 1998 and 1997

                                    Common    Additional    Retained
                         Number      Stock      Paid-In     Earnings
                        Of Shares   (At Par)   Capital      (Deficit)   Total


Balance 
December 31, 1996 
(Note 2)                1,400,000    $1,400     $97,397      $41,643   $140,440
Issuance of common
   stock upon
   inception            8,250,000     8,250           0            0      8,250
Stock Issued for:
   Services               100,000       100           -            -        100
   Cash                   160,000       160      99,840            -    100,000
   Rent                   120,000       120           -            -        120
Net income  (loss) for
   the year ended
   December 31, 1997            -         -           -       49,101     49,101
Distributions       to
   shareholders                 -         -           -      (41,527)  (41,527)
                         --------    ------     -------      --------   -------
Balance,  December 31,
   1997 (Note 2)       10,030,000    10,030     197,237       49,217    256,484
Stock issued for:
   Services             5,602,697     5,603     722,748            -    728,351
   Cash                 5,381,361     5,361   3,844,897            -  3,850,278
   Acquisitions         1,203,241     1,203     688,468            -    689,671
Cancellation  of  note
   payable-stockholder          -         -      31,600            -     31,600
Net income  (loss) for
   the   year    ended
   December 31, 1998            -         -           -  (2,187,994)(2,187,994)
Distributions       to
   shareholders                 -         -           -      (7,592)    (7,592)
                          -------    ------      ------   ---------- ----------
Balance,  Decemeber 31,
   1998                22,217,299   $22,217  $5,484,950 $(2,146,369) $3,360,798
                       ==========   =======  ========== ============ ==========


  See Auditor's Report and accompanying financial statements and Notes thereto

Item 8     Changes In and  Disagreements  With  Accountants  on Accounting  and
           Financial Disclosure.

     The Company has never had any disagreement with its independent auditors or
its accountants.

                                    PART III

Item 9  Directors,  Executive Officers,  Promoters and Control Persons;  
        Compliance With Section 16(a) of the Exchange Act.

     The  following  Directors  and  Executive  Officers  have  served  in their
respective  capacities  since July 28, 1997 (date of  inception).  The Directors
were  re-elected  for the current  term at a Meeting of  Shareholders  conducted
January 5, 1998. All three  individuals have been nominated and have accepted to
serve as  Directors  for the coming  fiscal  year.  None of the  Directors  hold
similar positions in any other reporting company. The Company intends to conduct
its next election of Directors at its Annual Meeting of Shareholders.

     Chairman of the Board of Directors,  President and Chief Executive Officer:
Leon H. Toups (60). Mr. Toups' past professional  experiences include, from 1980
to present,  that of  President  and  Chairman of the Board of Directors of DMV,
Inc., Clearwater, Florida. Prior thereto, from 1973 to 1980, Mr. Toups served as
President and Chief Operating  Officer,  as a Member,  of the Board of Directors
and as a Member of the Executive Committee of Chromalloy  American  Corporation,
St. Louis,  Missouri,  and as President of Chromalloy Natural Resources Company,
Houma,  Louisiana.  Chromalloy  American was an international  conglomerate with
sales of approximately $2.0 billion,  which employed 45,000 people worldwide and
traded its capital  stock on the New York Stock  Exchange.  Mr.  Toups holds the
following  degrees:  MS  Aerospace  Engineering,  University  of  Florida;  M.S.
Mechanical Engineering,  Georgia Tech; BS Mechanical Engineering,  Georgia Tech.
From 1968 to 1969, Mr. Toups attended MIT on a NASA Hugh Dryden Fellowship.

     Director,  Corporate  Secretary and Executive Vice  President:  Mark Clancy
(43).  Mr.  Clancy's past business  experiences  include:  from 1993 to present:
Compliance Officer, DMV, Inc., Largo, Florida; 1996 to present: President, Total
Kids, Incorporated,  Tampa, Florida. Prior thereto, Mr. Clancy served as General
Sales Manager of WRCC FM Radio, Cape Coral,  Florida, and as Sales Consultant to
WIZD  FM  Radio,  West  Palm  Beach,  Florida.  Mr.  Clancy  holds  an  AA  from
Hillsborough  Community  College,  Tampa,  Florida  and  currently  attends  the
University of South Florida.

     Director,  Vice-President,  Finance,  Chief Financial  Officer:  Michael P.
Toups (33).  Mr.  Toups' past  professional  experiences  include,  from 1996 to
present:  a Director and  Vice-President,  Finance for InterSource  Health Care,
Inc., Clearwater, Florida; 1992 through the present: Vice-President, Finance and
Operations,  DMV, Inc., Clearwater,  Florida. Mr. Toups holds an MBA, University
of Notre Dame with  concentrations  in finance and  marketing and a BA degree in
Business Administration from Texas Christian University.

     The  Company's  Chief  Financial  Officer,  Vice  President,   Finance  and
Director,  Michael Toups, is the son of the Company's President, Chief Executive
Officer and Chairman of the Board of Directors, Leon H. Toups.

Item 10  Executive Compensation

     The following table sets forth information respecting the compensation paid
during the  Company's  last fiscal  year to the  President  and Chief  Executive
Officer (CEO) and to the other  executive  officers of the Company.  The Company
does not compensate its Directors for the services.

Compensation Table

                                     Annual           Long-Term
                                  Compensation       Compensation
(a)                     (b)      (c)         (d)          (e)
                                                      Restricted
Name and              Fiscal                             Stock        Total
Principal Position     Year    Salary($)    Bonus($)    Award(s)   Compensation

Leon H. Toups           1998     $63,000      $0          $650        $63,650
Chairman of the Board
of Directors
President
Chief Executive Officer

Mark Clancy             1998     $62,000       $0          $650        $62,650
Director
Executive Vice President
Corporate Secretary

Michael P. Toups         1998    $61,000       $0          $650        $61,650
Director
Vice President, Finance
Chief Financial Officer

Jerry Kammerer          1998(f)  $48,000       $0            $0         $48,000

   (a) All named executive  Officers have served in their respective  capacities
       since formation of the Company during July 1997.
  (b)  The Company was  incorporated  during  July 1997.  The Company  activated
       operations on November 1, 1997 and all three officers were compensated at
       the rate of $3,000 per month for the  months of  November  and  December,
       1997.
  (c)  Any increase in Officer  compensation  would be  predicated on prevailing
       industry standards and the existing  financial  situation of the Company.
       The Board of Directors may authorize an increase in the  compensation  of
       the Company's executive officers without a vote of Shareholders.


<PAGE>


  (d)  The  Company  did not make  any  bonus  cash  payments  to its  executive
       officers  since  inception  except a  Christmas  bonus equal to one weeks
       salary which was also given to all of the Company's  employees.  However,
       the Company may, in the future,  develop programs which may include bonus
       payments.
  (e)  Each Officer  received his shares upon  incorporation,  at par value,  in
       lieu of cash  compensation.  During the course of 1998,  the  Company has
       issued 650,000 unregistered common shares to each of its Officers
  (f)  Mr.  Kammerer  served as a Director and as the Company's Vice  President,
       Business Development from January through August, 1998.

Item 11           Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  certain  information  with respect to the
beneficial  ownership of the Company's  Common stock by each person known by the
Company to be the beneficial owner of more than 5% of the outstanding  shares of
Common Stock, by each director,  by each of the executive  officers named in the
Summary Compensation Table, and by all directors as a group. 5% of the Company's
outstanding shares would be 1,110,865

                                                     # of Shares   % of Shares
Name and Address                 Position                Owned        Owned

Leon H. Toups             President, CEO and          4,006,680(2)      18%
418 Harbor View Lane      Chairman of the Board
Largo, Florida  33770     of Directors

Mark Clancy               Executive Vice President,   2,383,340        10.7%
417 Barrett Court         Corporate Secretary and
Tampa, Florida  33617     Director

Michael P. Toups          Vice-President, Finance,    2,383,340        10.7%
400 Palm Drive            Chief Financial Officer
Largo, Florida  33770     Director

All Officers and Directors                            9,328,048        42.0%
as a Group. (five persons)

Jerry Kammerer            (1)                         1,660,000         7.5%
1421 Water View Drive
Largo, Florida  33771

(1)  Mr. Jerry Kammerer is a former  Director of the Company.  Mr.  Kammerer was
     terminated as an Officer and Director of the Company on August 20, 1998. As
     of January  19,  1999,  of the  1,750,000  shares  originally  owned by Mr.
     Kammerer,  180,000  were  eligible  for  resale  pursuant  Rule 144 and Mr.
     Kammerer subsequently resold the 180,000 shares. 
(2)  During December, 1998, Mr. Toups donated 110,000 unregistered common shares
     to organizations which are part of the Catholic Church.

Item 12           Certain Relationships and Related Transactions

     Mr. Michael Toups, who serves as the Company's Chief Financial  Officer and
as a Director,  is the son of the Company's President and Chairman of the Board,
Leon H. Toups.

Item 13           Exhibits and Reports on Form 8-K

During 1998 the Company filed three reports of Form 8-K:

Date of Filing    Event

         Acquisition of Brounley Engineering & Associates
         Acquisition of InterSource HealthCare
         Execution of AquaFuel(a) Joint-Venture Agreement

                                    Part F/S


                          lNDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Toups Technology Licensing, lncorporated
(A Development Stage Company)
Largo, Florida

     We have  audied  the  accompanying  consolidated  balance  sheets  of Toups
Technolgy Licensing,  Incorporated and subsidiaries (the Company) as of December
31,  1998 and  1997,  and the  related  consolidated  statemsnf  of  operations,
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted  our audits in accordance  with  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 audt also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as weII as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Toups  Technology  Licensing,  Incorporated  and subsidiaries as of December 31,
1998 and 1997, and the results of their  operations and their cash flows for the
years then ended in conformity with generally accepted accounting principals.


February 2, 1999

Harper, Van Scoik & Company, L. L. P.
A WORLDWlDE ORGANIZATION OF ACCOUNTlNG FlRMS AND BUSlNESS ADVlSORS

                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                   1997
                                                           1998   (Note 2)
                                                           ----    --------

                                     ASSETS

Current assets:
   Cash                                                $772,080    $104,580
   Accounts receivalbe - trade (net of allowance
     of $74,237 and $5,000, respectively)             1,768,999      88,384
   Inventory                                            542,555     237,682
   Prepaid royalties                                     89,000      11,000
   Other current assets                                   2,776         800
                                                    -----------    --------

       Total current assets                           3,175,510     442,446
                                                    -----------     -------

Property, plant and equipment:
   Property, plant and equipment                      2,170,072     174,488
   Less:  Accumulated depreciation and amortization     152,159      65,775
                                                     ----------    --------

       Net property, plant and equipment              2,017,913     107,713
                                                     ----------    --------

Other assets:
   Security deposits                                     31,932       5,000
   Related party receivables                             87,485           0
   Other assets                                               -       5,895
                                                       --------      ------

       Total other assets                               119,417      10,895
                                                     ---------      --------
       Total assets                                  $5,312,840     $562,054
                                                     ==========     ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                         1997
                                                                1998   (Note 2)
                                                                ----   -------

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable and accrued expenses                   $1,391,826  $109,748
   Royalties payable                                           42,843 
   Income taxes payable                                        40,562         -
   Deposits                                                    39,000    73,540
   Current portion of notes payable - stockholder                   -    15,325
   Current poriton of capital lease obligations                66,125    24,324
   Line of credit                                              49,574         -
   Other current liabilities                                        -     5,691
                                                             ------   ---------

     Total current liabilities                              1,629,930   228,628
                                                          -----------   -------

Long-term debt:
   Capital lease obligation, net of current portion           322,112    49,452
   Notes payable - stockholder, less current portion                -    27,490
                                                             --------   -------

     Total long-term debt                                     322,112    76,942
                                                            ---------  --------

     Total liabilities                                      1,952,042   305,570
                                                           ----------   -------

Stockholders' equity:
   Capital stock                                               22,217    10,030
   Additional paid-in capital                               5,484,950   197,237
   Retained earnings (deficit)                             (2,146,369)   49,217
                                                           -----------   ------

     Total stockholders' equity                             3,360,798   256,484
                                                           ----------   -------

     Total liabilities and stockholders' equity            $5,312,840  $562,054
                                                          ===========  ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  For the years ended December 31, 1998 and 1997

                                                                     1997
                                                       1998        (Note 2)
                                                       ----        --------


Revenue                                              $3,132,001      $1,196,169

Cost of goods sold                                    1,984,930         822,370
                                                     -----------     ----------

Gross profit                                           1,147,071        373,799

General and administrative expenses                    3,276,932        315,893
                                                       ----------     ---------

Total operating earnings (deficit)                    (2,129,861)        57,906

Other income (expense):
Interest income                                            6,861            543
Interest expense                                         (21,234)       (1,207)
Other income                                                   -           155
Other expense                                                  -          (325)
                                                       -----------     --------

Total other income (expenses)                             (14,373)        (834)
                                                        ----------    ---------

Earnings (deficit) before income taxes                  (2,144,234)      57,072

Income taxes                                                43,760        7,971
                                                         ----------   ---------

Net income (loss)                                      $(2,187,994)    $ 49,101
                                                       ===========     ========

Weighted average number of
shares outstanding                                      12,167,182    9,781,751

Net income (loss) per share                             $    (0.18)   $   0.005
                                                       ============    ========



  See Auditor's Report and accompanying financial statements and Notes thereto



<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the years ended Decmeber 31, 1998 and 1997

                                                                       1997
                                                            1998     (Note 2)
                                                            ----     --------

Cash flows from operating activities:
   Net income (loss)                                    $(2,187,994)  $  49,101
   Adjustments to reconcile net income (loss) to
     net cash provided (used by operating activities:
       (Gain) loss on sale of assets                               -      (155)
       Depreciation and amortization expense                  81,634     21,840
       Bad debt expense                                       76,312      5,000
       Capital stock issued for services                     728,351      8,470
       (Increase) decrease in accounts receivable         (1,656,051)  (11,933)
       (Increase) decrease in inventory                     (291,042)  (54,403)
       (Increase) decrease in other current assets            (1,976)        -
       (Increase) decrease in security deposits              26,932)   (5,000)
       (Increase) decrease prepaid royalties                 (78,000)  (11,000)
       (Increase) decrease in other assets                     5,895    (5,195)
       (Increase) decrease in accounts payable               565,382     56,334
       (Increase) decrease in royalties payable               42,843          -
       (Increase) decrease accrued expenses                  350,218         74
       (Increase) decrease in income taxes payable            40,562          -
       (Increase) decrease in other current liabilities      (71,731)         -
                                                            ---------   -------

       Net cash provided (used) by operating activities    (2,422,529)   53,133

Cash flows from investing activities:
   Acquisition of cash from investing                           3,715         -
   Acquisiton of property, plant and equipment               (507,047) (15,690)
   Proceeds from sale of equipment                                  -       750
   Loans to related party                                     (18,428)       -
   Loans to subsidiary prior to acquisition                  (164,297)       -
                                                            ----------   ------

       Net cash used by investing activities                 (686,057) (14,940)



  See Auditor's Report and accompanying financial statements and Notes thereto




<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the years ended Decmeber 31, 1998 and 1997

                                                                        1997
                                                             1998      (Note 2)
                                                             ----      --------


Cash flows from financing activities:
   Distributions to stockholders                           (7,592)     (41,527)
   Proceeds from the sale of capital stock              3,850,278      100,000
   Principal repayments on notes payable - stockholder    (11,215)      (4,685)
   Proceeds from line of credit                             4,600            -
   Repayments on line of credit                            (4,600)           -
   Principal repayments on capital lease obligations      (55,385)      (4,197)
   Purchase of treasury stock                                   -      (29,000)
                                                          ---------     -------

       Net cash provided by financing activities         3,776,086       20,591
                                                         ----------    --------

Net increase in cash                                       667,500        8,784

Cash, beginning of year                                    104,580       45,796
                                                          ---------     -------

Cash, end of year                                         $772,080     $104,580
                                                          =========    ========

Supplemental Cash Flow Disclosures:
Cash paid for interest                                      $21,234    $  3,110
Cash paid for income taxes                                 $ 11,967    $  4,481



  See Auditor's Report and accompanying financial statements and Notes thereto


<PAGE>


                        TOUPS TECHNOLOGY LICENSING, INC.
                                AND SUBSIDIARIES

                 CONSOLIATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  For the year ended December 31, 1998 and 1997

                                    Common    Additional    Retained
                         Number      Stock      Paid-In     Earnings
                        Of Shares   (At Par)   Capital      (Deficit)   Total


Balance 
December 31, 1996 
(Note 2)                1,400,000    $1,400     $97,397      $41,643   $140,440
Issuance of common
   stock upon
   inception            8,250,000     8,250           0            0      8,250
Stock Issued for:
   Services               100,000       100           -            -        100
   Cash                   160,000       160      99,840            -    100,000
   Rent                   120,000       120           -            -        120
Net income  (loss) for
   the year ended
   December 31, 1997            -         -           -       49,101     49,101
Distributions       to
   shareholders                 -         -           -      (41,527)  (41,527)
                         --------    ------     -------      --------   -------
Balance,  December 31,
   1997 (Note 2)       10,030,000    10,030     197,237       49,217    256,484
Stock issued for:
   Services             5,602,697     5,603     722,748            -    728,351
   Cash                 5,381,361     5,361   3,844,897            -  3,850,278
   Acquisitions         1,203,241     1,203     688,468            -    689,671
Cancellation  of  note
   payable-stockholder          -         -      31,600            -     31,600
Net income  (loss) for
   the   year    ended
   December 31, 1998            -         -           -  (2,187,994)(2,187,994)
Distributions       to
   shareholders                 -         -           -      (7,592)    (7,592)
                          -------    ------      ------   ---------- ----------
Balance,  Decemeber 31,
   1998                22,217,299   $22,217  $5,484,950 $(2,146,369) $3,360,798
                       ==========   =======  ========== ============ ==========


  See Auditor's Report and accompanying financial statements and Notes thereto

                    TOUPS TECHNOLOGY LICENSING, INCORPORATED
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997

1.  Summary of Significant Accounting Policies

           Company  - Toups  Technology  Licensing,  Incorporated  (Company),  a
      Florida  Corporation,  was  formed on July 28,  1997,  and  activated  its
      startup  operations on November 1, 1997 to facilitate market  applications
      through the licensing of late-stage  technologies primarily in the energy,
      environmental,  natural  resources and  healthcare  market  segments.  The
      Company  selects  proprietary  products or devices within market  segments
      which  management  perceives  are not  subject to rapid  change and can be
      delivered  to the  marketplace  within a three to six  month  period.  The
      consolidated  financial statements include the accounts of the Company and
      the  following  wholly  owned  subsidiaries.   All  material  intercompany
      transactions have been eliminated.

               Subsidiary's  Name  Business  Activity  


Advanced  Micro  Welding,  Inc.(AMW)  Advanced  Micro  Welding,  Inc., a Florida
Corporation,  was formed on February 3, 1992. The Company's  primary  operations
consist of custom metal fabrication and micro welding.

Brounley  Associates,  Inc.  (Brounley)  Brounley  Associates,  Inc.,  a Florida
Corporation,  was formed on  February  23,  1994.  The Company is engaged in the
design, manufacture and sale of radio frequency (RF) generators.


InterSource  Healthcare,  Inc.  (InterSource)  InterSource  Healthcare,  Inc., a
Florida  Corporation,  was formed on  November 9, 1996.  The  Company  sells and
refurbishes   medical   equipment,   provides   services  for  medical  facility
development, and sells pharmaceutical products.


     Basis of Accounting - The accompanying  consolidated  financial  statements
are prepared using the accrual basis of accounting where revenues are recognized
when earned and expenses are recognized when incurred.  This basis of accounting
conforms to general accepted accounting principles.


1.  Summary of Significant Accounting Policies (Continued)

           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 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.

           Inventories - Inventories are stated at the lower of cost (determined
      on a first-in,  first-our basis) or market.  Work-in-process  and finished
      goods include material, labor and overhead.

           Comparability  of  Statements  - Since  Toups  Technology  Licensing,
      Incorporated did not commence  operations until November 1997, amounts for
      the  year  ended  December  31,  1997,  reflect  less  than a full  year's
      transactions  (subsidiaries  accounted  for using the  pooling-of-interest
      method  reflect  the full  year  ending  December  31,  1997)  and are not
      directly comparable with 1998 figures.

           Advertising - Advertising costs are charged to operations in the year
      incurred and totaled $66,756 and $1,522 for 1998 and 1997, respectively.

           Property,  Plant and Equipment - All property, plant and equipment is
      recorded at cost. Depreciation,  which includes the amortization of assets
      recorded under capital  leases,  is computed on the  straight-line  method
      over the  estimated  useful  lives of the assets.  Repair and  maintenance
      costs which do not  increase  the useful life of the assets are charged to
      operations as incurred.

           Allowance  for  Doubtful  Accounts  -  The  Company   establishes  an
      allowance for uncollectible  trade accounts receivable based on historical
      collection  experience and management's  evaluation of  collectibility  of
      outstanding accounts  receivable.  The allowance for doubtful accounts was
      $74,237 and $5,000 as of December 31, 1998 and 1997, respectively.

           Income Taxes - Deferred income taxes are reported using the liability
      method.  Deferred  tax  assets are  recognized  for  deductible  temporary
      differences  and  deferred  tax  liabilities  are  recognized  for taxable
      temporary  differences.  Temporary differences are differences between the
      reported  amounts of assets and liabilities and their tax bases.  Deferred
      tax assets are reduced by a valuation  allowance  when,  in the opinion of
      management,  it is more  likely  than not that some  portion or all of the
      deferred  tax  assets  will  not be  realized.  Deferred  tax  assets  and
      liabilities  are adjusted for the effects of changes in tax laws and rates
      on the date of enactment.

           Earnings  (Loss)  per Share -  Earnings  per share  are  computed  by
      dividing net income (loss) by the weighted-average number of shares issued
      and outstanding  during the reporting  period.  Shares issued or purchased
      during the period affect the amount of shares outstanding and are weighted
      by the fraction of the period they are outstanding.



<PAGE>


2.  Acquisition of Businesses

                  Advanced Micro Welding, Inc.

           On April 1,  1998,  the  Company  acquired  all the  common  stock of
      Advanced Micro  Welding,  Inc. (AMW) in exchange for 500,000 shares of the
      Company's  restricted  common  stock.  AMW is engaged in micro welding and
      custom metal  fabricating.  The  transaction  has been  accounted for as a
      pooling  of  interest  and,   accordingly,   the  consolidated   financial
      statements  for 1998 and 1997 have been  restated to include all  accounts
      and operations of AMW as if the  acquisition had occurred at the beginning
      of the year presented.

           Unaudited net sales and net income of the separate  companies for the
      period prior to the acquisition were:

                                                    March 31,
                                                       1998           1997

   Net sales:
    Toups Technology Licensing, Incorporated(1)     $       -0-         $ -0-
     AMW                                               109,154        344,149
                                                     ---------      ---------
                        Total                        $ 109,154       $344,149

    Net income (loss):
     Toups Technology Licensing, Incorporated        $(215,096)      $(40,413)
                  AMW                                    7,246         55,785
                                                      --------        ---------
                        Total                        $(207,850)        $15,372
 
(1)Toups  Technology  Licensing,  Incorporated  was a development  stage company
     during all of 1997.

           Brounley Associates, Inc.

           On October 1, 1998,  the  Company  acquired  all the common  stock of
      Brounley Associates, Inc. (Brounley) in exchange for 900,000 shares of the
      Company's  restricted  common  stock.  Brounley  is  engaged in the design
      manufacture and sale of radio frequency  generators  throughout the United
      States and abroad.  The transaction has been accounted for as a pooling of
      interest and, accordingly,  the consolidated financial statements for 1998
      and 1997 have been  restated to include all  accounts  and  operations  of
      Brounley as if the  acquisition  had occurred at the beginning of the year
      presented.



<PAGE>




                    TOUPS TECHNOLOGY LICENSING, INCORPORATED
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997

Acquisitions of Businesses (Continued)

           Unaudited net sales and net income of the separate  companies for the
      period prior to the acquisition were:

                                                  September 30,
                                                     1998            1997

       Net sales:
        Toups Technology Licensing Incorporated
         and subsidiary                             $790,667     $ 344,149
        Brounley                                     910,292       852,020
                                                     --------     ----------
                        Total                      $1,700,959    $1,196,169

        Net income (loss):
         Toups Technology Licensing, Incorporated
          and subsidiary                            (1,358,377)     15,372
         Brounley                                      158,427      33,729
                                                    -----------     ---------
                        Total                       $(1,199,950)     $49,101
                                                                     

           InterSource Healthcare, Inc.

           On November  30,  1998,  the Company  purchased  100% of the stock of
      InterSource Healthcare,  Inc. (InterSource) by issuing 1,203,241 shares of
      restricted  and  unrestricted  common  stock .  InterSource  acquires  and
      refurbishes  used  medical  equipment  for  resale,  sells  pharmaceutical
      products  and  provides  services for medical  facility  development.  The
      Company's 1998 consolidated  results include the operations of InterSource
      from the date of acquisition.

           The  acquisition  was  accounted  for  using the  purchase  method of
      accounting.  Accordingly,  the  purchase  price was  allocated  to the net
      assets acquired based upon their estimated fair market values.




<PAGE>




                    TOUPS TECHNOLOGY LICENSING, INCORPORATED
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997

Acquisitions of Businesses (Continued)

           The following  unaudited pro forma summary  combines the consolidated
      results of the Company and  InterSource as if the acquisition had occurred
      at the beginning of 1998 and 1997 after giving effect to certain pro forma
      adjustments,  including, among other things, additional depreciation based
      on the fair value of equipment  acquired and the estimated  related income
      tax effect.
                                                   1998              1997

               In thousands, (unaudited)
                  Net sales                      $4,134,161      $1,970,559
                  Net income (loss)             $(2,213,556)       $(23,547)

           This pro forma financial  information is presented for  informational
      purposes  only and may not be  indicative  of the results of operations as
      they  would have been if the  Company  and  InterSource  had been a single
      entity  during  1998 and 1997,  nor is it  necessarily  indicative  of the
      results of operations which may occur in the future.


Joint Venture

           Effective  December 15, 1998,  the Company  entered into an agreement
      with  Compania  DeLuz Y Fuerza De Las  Terrenas,  C. por A.  (Utility),  a
      Dominican  Republic  utility  company,  to form the  joint  venture  "Aqua
      Fuel(a)-Dominicana, SA". The ownership of Aqua Fuel-Dominicana will be 49%
      to Toups Technology Licensing, Inc. (TTL) and 51% to the utility.

           The purpose of Aqua Fuel-Dominicana is the construction and operation
      of an Aqua Fuel(a)  production  facility which,  at a minimum,  is able to
      generate 1.653 gigawatts of electric power during a twenty year period.

           The  agreement  outlines a  three-step  approach to  accomplish  Aqua
      Fuel-Dominica's  purpose,  1) a  feasibility  study  of  an  Aqua  Fuel(a)
      generator  with a  capability  of at least  4,000  CF/hr to run a 1,000 KW
      generator  successfully  and continuously for a period of two weeks and is
      scheduled  to  conclude  no later than  sixty days after the Aqua  Fuel(a)
      generator is installed in the Dominican Republic; 2) immediately after the
      completion of the Feasibility Study, the development of the blueprints and
      design for  construction  of the Aqua Fuel(a)  production  facility  shall
      commence and will be completed  no later than 60 days  thereafter;  and 3)
      the  construction of the plant shall commence  immediately upon receipt of
      the drawings and materials being  available in the Dominican  Republic and
      is scheduled for completion within six months.

           TTL's  capital  contribution  to  Aqua  Fuel-Dominicana  will  be the
      delivery of the Aqua Fuel(a)  technology  and the equipment as required by
      the agreement,  the Utility is required to fund all other capital needs of
      the joint venture. Additionally, the Utility is to find investors who will
      invest at least  $500,000 in TTL, TTL is to issue 500,000 of its shares to
      the Utility and 2,000,000 shares to the president of Aqua  Fuel-Dominicana
      for services during 1999.
4.  Concentration of Credit Risk

           The Company  maintains  cash  deposits with a bank that include funds
      greater than the federally insured limit of $100,000. The cash balances in
      excess of the insured  amounts were $650,765 at December 31, 1998 and $-0-
      at December  31, 1997.  Management  believes the Company is not exposed to
      any significant credit risk related to cash.

           The Company  grants credit to its customers  during the normal course
      of business and performs  ongoing  credit  evaluations  of its  customers'
      financial condition. The Company maintains allowances for potential credit
      losses. The Company had sales to five customers that totaled approximately
      83% of total sales for the year ended  December  31,  1998.  Additionally,
      three  customers  comprise  approximately  96% of the  December  31,  1998
      accounts  receivable - trade. The owners of the entities that comprise the
      three customers are minority shareholders of the Company.


5.  Inventories

           Inventories  as of  December  31,  1998  and  1997  consisted  of the
following:

                                     1998              1997

               Raw materials       $455,357           $99,278
               Work-in-process       46,004           131,554
               Finished goods        41,294             6,850
                                   -------            --------
                        Total      $542,655           $237,682


6.  Licensing Agreement Commitments

           The  Company  has  entered  into  licensing   agreements  with  three
      licensors.   Amounts  relating  to  these   agreements   recorded  in  the
      accompanying consolidated statements are as follows:
                                   Year ending December 31,
                                    1998              1997

               Prepaid royalties    $89,000        $11,000
                                  =========       ========

               Royalties payable  $42,843          $   -0-
                                  =======          =======



<PAGE>


6.  Licensing Agreement Commitments (Continued)

           Royalty  expense  for the year ended  December  31, 1998 and 1997 was
      $94,843 and $-0-,  respectively.  In exchange  for the rights  under these
      agreements, the Company has committed to pay the following:

               Year ending
                    1999          $        96,000
                    2000                   96,000
                                   ----------------
                          Total    $       192,000
                                  ================

           In addition  to the above,  if the  Company  exercised  its option to
      renew the licenses it will have future minimum royalties as follows:

               Year ending
                    2001                             $        200,000
                    2002                             $        250,000
                    2003                             $        300,000
                    2004, and every year thereafter  $        400,000


7.  Property, Plant and Equipment

           Property,  plant and  equipment,  at cost,  and  related  accumulated
      depreciation  and  amortization  as of  December  31,  1998  and  1997 are
      summarized as follows:

                                                      1998              1997

               Leasehold improvements              $  96,999          $  -0-
               Office furniture and equipment        119,467           7,594
               Machinery and equipment             1,505,517          88,921
               Equipment under capital leases        448,089          77,973
                                                   --------          ------- 
                                                   2,170,072         174,488
               Less: Accumulated depreciation 
                     and amortization                152,159          65,775
                                                   --------          -------
                        Total                      $2,017,913        $108,713





<PAGE>


8.  Related Party Transactions

     The  Company  has  the   following   receivables   from   officers   and/or
stockholders:

                                           1998              1997
Interest-free demand note - unsecured:
                  Shareholders            $85,263            $   -0-
                  Officers                  2,222                -0-
                                          -------             ------
                         Total            $87,485              $  -0-
                                          =======            ========
               8% note payable            $    -0-         $   42,815
                 Less: Current portion         -0-             15,325

                        Long-term portion $   -0-            $ 27,490
                                        ================  ===============


           For the year  ending  December  31,  1998,  the  Company had sales of
      approximately   $1.7  million  to  entities  owned  by  certain   minority
      shareholders of the Company.

           The Company paid approximately $22,632 for employee leasing, $102,308
      for  rent,  and  $21,000  for  consulting  fees to  Intersource  prior  to
      acquisition.


 9.  Capital Leases

           The following is an analysis of the equipment under capital leases by
major classes:

                                                 1998              1997

               Machinery and equipment           $448,089        $ 77,973
               Less: Accumulated depreciation      53,003           2,250
                                                 --------        --------
                        Total                   $395,086         $ 75,723
                                              ===========       =========

     Amortization of leased  equipment is included in  depreciation  expense and
totaled  $50,753  and $2,250 for the year  ending  December  31,  1998 and 1997,
respectively.


<PAGE>


9.  Capital Leases (Continued)

     The following is a schedule by years of future minimum lease payments as of
December 31, 1998 and 1997.

                                 1998            1997

1998                         $      -           $ 20,503
1999                          111,359             20,503
2000                          118,403             20,503
2001                          115,817             20,503
2002                          101,541             10,773
2003                           61,549                  -

Total minimum lease payments  508,669             92,785
Less: Amount 
 representing interest        120,432              19,009

 Present value of net 
   imum lease payments       $ 388,237            $73,776
                           ===========           =======

           The present value of net minimum lease  payments are reflected in the
balance sheet as:

                                                          1997         1998

Current portion of capital lease obligations materials   $66,125      $24,324
Capital lease obligations, net of current portion        322,112       49,452
                                                      ---------       --------
                                                       $ 388,237      $ 73,776
                                                     ==========        =======


10.  Note Payable - Stockholder

           The balance reflected on the December 31, 1997 consolidated financial
      statements relates to a note payable with an original principal balance of
      $47,500 and interest rate of 8% to a stockholder  dating back to 1994 when
      Brounley  was formed.  No  payments  were made on this note prior to 1997.
      During 1998,  the note balance of $31,600 was  reclassified  as additional
      paid-in capital.




<PAGE>


                    TOUPS TECHNOLOGY LICENSING, INCORPORATED
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997




<PAGE>


11.  Line of Credit

           InterSource  maintains a $50,000  bank line of credit  with  interest
     payable monthly at bank prime (current 8.75%) plus 2%. At December 31, 1998
     and 1997, the amounts due were $49,574 and $-0-, respectively.  The line of
     credit matures  November 30, 1999. The line is secured by inventory and the
     personal guarantee of certain stockholders.


12.  Capital Stock

           Common

           In 1998,  the  Company  amended  its  Articles  of  Incorporation  to
     authorize  50  million  shares of common  stock  with a par value of $0.001
     (one,  one-thousandth  dollar) per share. As of December 31, 1998 and 1997,
     there  were  22,217,299  and  8,630,000   shares  issued  and  outstanding,
     respectively.  Of the 22,217,299  shares issued and outstanding at December
     31, 1998,  6,034,056  shares are  unrestricted  and  16,183,243  shares are
     restricted  as to  the  sale  to  other  parties  pursuant  to  the  resale
     provisions of Sec. Rule 144. Of the 8,630,000 shares issued and outstanding
     at December 31, 1997,  170,000 shares are unrestricted and 8,460,000 shares
     are  restricted  as to the sale to other  parties  pursuant  to the  resale
     provisions of SEC Rule 144.

           Preferred

           The  Company  is also  authorized  to  issue  10  million  shares  of
     preferred stock having a par value of $1 per share. There were no preferred
     shares issued or outstanding at either December 31, 1998 or 1997.


13.  Operating Leases

           The  Company  has  leases  for  buildings  which  are  classified  as
     operating leases.  Total rent expense for all operating leases for 1998 and
     1997 was $117,154 and $-0-, respectively.

           Future  minimum lease  payments  under the  noncancellable  operating
     leases with initial or remaining terms of one year or more are as follows:

                  1999         $  291,410
                  2000            263,718
                  2001            276,904
                  2002            265,414
                              ___________
                              $ 1,097,446



14.  Income Taxes

           The Company has  cumulative  net  operating  losses of  approximately
     $2,300,000 and $40,413 at December 31, 1998 and 1997,  respectively,  which
     are expected to provide future tax benefits of  approximately  $782,000 and
     $8,085,  respectively,  for both  Federal and State  purposes.  A valuation
     allowance  for  the  entire  benefit  has  been  recognized  as it  is  not
     reasonable to estimate  when or if the benefit will be realized.  These tax
     benefits expire  beginning in 2012. The income tax expense  recorded in the
     accompanying  financial  statements  represents  income  taxes  payable for
     operations of the companies  acquired for activities  prior to the dates of
     merger.


15.  Noncash Disclosures

           The following  transactions  were excluded from the statement of cash
     flows because they were not cash transactions.

     . At inception the Company issued 8,250,000 shares to its organizers. These
shares of stock were recorded at a total of $8,250.

     . In addition to the  commitments  described  in the  "licensing  agreement
commitment" note. In 1997, the Company issued 165,000 shares of restricted stock
to the licensors of the Company's three technologies. These shares were recorded
at a total of $165.

     . In 1997,  the  Company  issued  125,000  shares  of  restricted  stock to
consultants and employees. These shares were recorded at $125.

     . In 1997, the Company  issued  120,000 shares of restricted  stock for the
use of operating facilities for one year. These shares of stock were recorded at
$120.

     . In 1998,  the Company  acquired  assets of $369,846  under  capital lease
agreements.

     . In 1998,  a  shareholder  note  payable for $31,600 was  reclassified  as
additional paid-in capital.




<PAGE>


15.  Noncash Disclosures (Continued)

 .    In 1998, the Company issued  1,203,241  shares of restricted  stock for the
     acquisition of InterSouce Healthcare, Inc.

                            Assets acquired          $1,301,521
                           Liabilities acquired        $611,850

 .    In 1998, the Company issued 5,602,697 shares of restricted common stock for
     services. These shares were recorded at a total of $728,351.

 .    In 1998,  the Company  issued  900,000  shares of restricted  stock for the
     acquisition of Brounley Associates, Inc.

                            Assets acquired             $358,887
                           Liabilities acquired          $99,670

 .    In 1998,  the Company  issued  500,000  shares of restricted  stock for the
     acquisition of Advanced Micro Welding, Inc.

                            Assets acquired             $301,834
                           Liabilities acquired         $214,544


16.  Contingencies

           The Company is periodically involved in legal actions and claims that
     arise in the normal  course of  operations.  Management  believes  that the
     ultimate  resolution  of any such actions will not have a material  adverse
     effect on the Company's financial position.

           The year  2000 is  expected  to  create  computer  problems  for many
     organizations  because some computers and their programs only recognize the
     last two digits in the year.  For example,  the year 1998 is  recognized as
     98. When the year 2000 arrives some  computers may not process  information
     accurately  or may shut down.  Management  is in the process of  evaluating
     their  systems to  correct  any  problems  which may be created by the year
     2000. The Company plans to have all their vital internal systems  compliant
     before the year 2000  arrives.  However,  it is not possible to insure that
     outside entities will be 2000 compliant.




<PAGE>





17.  Commitments

           The  Company  has  entered  into  an  agreement  to  have   equipment
     manufactured for a cost of $500,000.  At December 31, 1998, the first phase
     of the  equipment  is complete  and $72,100 has been  recorded in property,
     plant and equipment.


18.  Subsequent Events

     In January 1999,  the Company  entered into a lease  agreement that will be
accounted for as a capital  lease.  The  equipment  has a cost of $341,200.  The
lease calls for an initial payment of $34,120 followed by sixty monthly payments
of $6,323.

     In January 1999,  the Company  issued  25,000  shares of restricted  common
stock at a price of $1.00 per share.

     On February 17,  1999,  the Company  sold  $750,000 of Series  1999-A Eight
Percent  (8%)  convertible  notes due  January  1,  2002.  Under the  securities
purchase  agreement,  the investor will purchase another $750,000 in convertible
notes within 30 days after the Company files a Registration Statement or at such
time as the parties mutually agree.

     The notes can be  converted  to common stock of the company at a conversion
price  (the  "Conversion  Price")  for each share of common  stock  equal to the
lesser of (x) one hundred percent (100%) of the lowest of the closing bid prices
for the Common Stock for the five (5) trading  days  immediately  preceding  the
Closing Date (defined as the date of this Note);  or (y) eighty percent (80%) of
the lowest of the  closing  bid  prices  for the  Common  Stock for the five (5)
trading  days  immediately  preceding  the  Conversion  Date as  reported on the
National Association of Securities Dealers OTC Bulletin Board Market.

     Additionally,  the investor was issued a warrant to purchase  75,000 shares
of the Company's stock at $2.3375 per share through February 17, 2002.



                                   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.

                               TOUPS TECHNOLOGY LICENSING, INC.



                          By: S/S LEON H. TOUPS
                              Leon H. Toups, Chief Executive Officer

Date:  March 31, 1998

                          By: S/S MICHAEL P. TOUPS
                              Michael P. Toups, Chief Financial Officer

Date:  March 31, 1998


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

Signature                  Capacity                               Date

s/s LEON H. TOUPS     Chairman of the Board of Directors,    March 31, 1999
-----------------     President and Chief Executive Officer,
                      co-founder

s/s MARK C. CLANCY    Director,                              March 31, 1999
------------------    Executive Vice President,
                      Corporate Secretary
                      co-founder

s/s MICHAEL P. TOUPS  Director,                               March 31, 1999
--------------------  Vice President Finance,
                      Chief Financial Officer,
                      co-founder

The above represents the Board of Directors of Toups Technology Licensing, Inc.