Toolbuilders cancels ‘reverse merger’ plans

Toolbuilders Laboratories, Inc., a Spokane technology company, has canceled plans for a “reverse merger” with Temporary Financial Services, Inc., also based in Spokane.

The firms had announced the reverse merger in January.

Toolbuilders, launched in 2000, produces software that is used by other companies’ software professionals. Its primary product, called Sempre, is used to insure quality control in software development.

The reverse merger would have allowed Toolbuilders to acquire the trading rights of publicly held Temporary Financial Services.

The goal was to help Toolbuilders gain more capital for growth, said company Vice President for Operations Shad Wheeler.

His father, Sandy Wheeler, issued a press release that said the merger was halted due to the high costs involved in completing the deal.

“The cost of due diligence, particularly in light of the increased provisions of the Sarbanes-Oxley Act, made the benefits of combining the companies prohibitive,” the release said. The Sarbanes-Oxley Act of 2002 addresses corporate governance and financial disclosures. Shad Wheeler said preparing financial disclosures required under that act would have run to approximately $500,000.

“That came to a chunk of change,” he said.

Toolbuilders will continue seeking additional funding from private sources, Shad Wheeler said. In May, company directors will make presentations before the Alliance of Angels, a Seattle venture capital consortium, he said.

Sandy Wheeler, formerly co-founder and vice president of marketing at Bowflex International, joined Toolbuilders in late 2002 after the firm’s founders bowed out.

The merger idea developed through Sandy Wheeler’s friendship with principals at Temporary Financial Services, said Shad Wheeler.

Traded over the counter, Temporary Financial Services engages primarily in the seller-financed real estate contract-receivable business.

With offices at 505 N. Argonne, Toolbuilders has 13 employees; six of them are developers. It has no full-time contracts at this point, said Michael Penner, company marketing director.

The primary focus for now is landing contracts with companies working for the federal government, said Shad Wheeler.