Item 1. Business
Item 1. Business
Corporate History
The Company was originally incorporated on June 30, 2021, in the State
of Nevada with the name, “Prime Time Holdings, Inc.”
On June 30, 2021, our current director, Jeffrey
DeNunzio, was appointed Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and Director of the Company.
On September 14, 2021, the Company entered
into an “Agreement and Plan of Merger”, whereas it agreed to, and subsequently participated in, a Nevada holding company
reorganization pursuant to NRS 92A.180, NRS 92A.200, NRS 92A.230 and NRS 92A.250 (“Reorganization”). The constituent
corporations in the Reorganization were China Shouguan Investment Holding Group Corp. (“CHSO” or
“Predecessor”), Sparx Holdings Group, Inc., FKA “Prime Time Holdings, Inc.” (“PRTM” or
“Successor”), and Prime Time Merger Sub, Inc. (“Merger Sub”). Our director, Jeffrey DeNunzio, is and was,
the sole director/officer of each constituent corporation in the Reorganization.
Immediately prior to the Reorganization, Prime
Time Holdings, Inc. issued 1,000 common shares of its common stock to Predecessor and Merger Sub issued 1,000 shares of its common stock
to Prime Time Holdings, Inc. As such, immediately prior to the merger, Prime Time Holdings, Inc. became a wholly owned direct subsidiary
of China Shouguan Investment Holding Group Corp. and Merger Sub became a wholly owned and direct subsidiary of Prime Time Holdings, Inc.
Pursuant to the above, on September 15, 2021,
Prime Time Holdings, Inc. filed Articles of Merger with the Nevada Secretary of State. The merger became effective on September 17, 2021,
at 9:00 AM PST (“Effective Time”). At the Effective Time, Predecessor was merged with and into Merger Sub (the “Merger),
and Predecessor became the surviving corporation. Each share of Predecessor common stock issued and outstanding immediately prior to the
Effective Time was converted into one validly issued, fully paid and non-assessable share of Prime Time Holdings, Inc.’s (“Successors”)
common stock. The result of the merger was that each former shareholder of Predecessor each became a shareholder of PRTM holding an equivalent
amount of shares in PRTM that they previously held in CHSO prior to the merger. The Agreement and Plan of merger were made a part of the
Articles of Merger that were filed as EX-99.1 to the Form 8-K filed with the Securities and Exchange Commission on September 20, 2021.
At the Effective Time, Prime Time Holdings, Inc.,
as successor issuer to China Shouguan Investment Holding Group Corp. continued to trade in the OTC MarketPlace under the previous ticker
symbol “CHSO” until the new ticker symbol “PRTM” for the Company was released into the OTC MarketPlace
on September 21, 2021. The Company was given a new CUSIP Number by CUSIP Global Services for its common stock of 74167E103.
On September 17, 2021, immediately after
the completion of the Reorganization, we cancelled all of the stock held in China Shouguan Investment Holding Group Corp. resulting in
China Shouguan Investment Holding Group Corp. as a stand-alone company.
Our common stock traded in the OTC Markets
under the Predecessor ticker symbol “CHSO”, and CUSIP number 169420205 under which the common stock of Predecessor previously
listed and traded until our new ticker symbol “PRTM” and CUSIP number 74167E103 was announced September 20, 2021 on the Financial
Industry Regulatory Authority’s daily list with a market effective date of September 21, 2021.
On May 18, 2022, Mr. Jeffrey DeNunzio resigned as
the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary, and Treasurer. He remains a Director of the
Company.
The resignation of Mr. Jeffrey DeNunzio was not the
result of any disagreement with the Company on any matter relating to its operations, policies, or practices. There is no arrangement
or understanding among the newly appointed officers and directors or any other person pursuant to which they were appointed as a director
and officer of the Company.
On May 18, 2022, Ms. Cassandra DeNunzio was appointed
as the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and Director.
Our Common Stock is quoted on the OTC Markets
Group Inc.’s Pink® Open Market under the ticker symbol “SHGI”.
A Certificate of Amendment to change our name from Prime Time Holdings,
Inc. to Sparx Holdings Group, Inc., and our authorized shares of Common Stock from 200,000,000 to 500,000,000 was filed with the Nevada
Secretary of State on July 19, 2022.
On August 29, 2022, we entered into and consummated a Patent License Agreement
(“Agreement”) with Sparx Technologies, LLC, a limited liability company (“Licensor”). Licensor is solely owned
and controlled by Ms. Cassandra DeNunzio, our CEO and director. Ms. DeNunzio is the sole and first named inventor under a provisional
patent application with a Serial No. 63/304,302 filed with the United States Patent Office (“USPTO”) on January 28, 2022,
relating to the fire protection industry and particularly a commercially available battery-operated wireless electronic fire sprinkler
network. As a result of the Agreement, we adopted the existing operations and business plan of Sparx Technologies, LLC pursuant to the
terms and conditions of the patent licensing agreement and ceased to be a shell company.
On September 19, 2022, Sparx Technologies, LLC filed Trademark Applications
with the USPTO to register our brand name, “SPARX” and Sparx design logo. Licensor has provided us permission informally to
utilize the brand name SPARX and design logo. There are no terms of consideration pursuant to this arrangement and no formal agreement.
On November 8, 2022, our corporate action to change our name to Sparx Holdings
Group, Inc., and our ticker symbol from PRTM to SHGI was processed by FINRA with a Daily List Announcement date of November 8, 2022, and
a Market Effective Date of November 9, 2022.
On January 20, 2023, Sparx Technologies, LLC filed under Utility
Patent Application No. 18/099,584 entitled, “Mesh Network Fire Suppression System and Associated Methods” with the United
States Patent & Trademark Office. The patent describes claims, methods and materials for digital communications between fire sprinkler
heads utilizing battery operated wireless fire sprinkler technology.
On January 23, 2023, Sparx Technologies, LLC filed an international patent
application (PCT) with the USPTO, resulting in international patent pending status. An international application Serial No. PCT/US23/11314
was issued by the USPTO.
We use home office space and equipment of our directors at no cost.
Our mailing address is 780 Reservoir Avenue, #123, Cranston, RI 02910. Our phone number is 774-250-2456.
Currently, we have no contractual employees. Our CEO, Ms. Cassandra DeNunzio
works full time in the development of our business plan and licensed technology from Sparx Technologies, LLC.
The Company has elected June 30 th as its year end.
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Table of Contents
Our Markets
As of the date of this Annual Report, these and other independent government and trade publications cited herein are publicly available on the Internet
without charge.
We plan to serve a range of markets where we believe traditional
fire sprinkler technology 1 cannot provide adequate or reasonable fire protection. Our market opportunities include providing
fire suppression for the warehouse and storage industry for high ceiling heights, automated storage and retrieval systems (ASRS systems)
and dense storage, storage of highly flammable commodities like plastic and synthetic materials, lithium-ion based battery energy storage
systems which currently do not have many tested and validated fire protection recommendations, buildings with obstructed constructions
like purlins and girders, buildings with sloped ceilings, forest product storage, aerosol storage, atriums, tunnels, and more. We believe
there is a large opportunity for growth in the global fire sprinkler market due to strict regulations for installing fire suppression
systems worldwide and the increasing investment for businesses and building owners to safeguard their infrastructures and reduce loss
and damage of life, commodities, and property. The global fire sprinkler market size was valued at $12.49 billion USD in 2021, and is
projected to reach $22.26 billion USD by 2030, registering a CAGR of 7.49% over the forecast period (2022 to 2030) 2 . With the
introduction of our new technology to the market, we anticipate our innovations spurring market growth. We plan to first list, approve,
and commercialize our products in the US where the fire sprinkler market reached a value of $4.3 billion USD in 2021 3 . We believe
most of our market opportunity is currently within the commercial segment, specifically within the application of storage and warehousing.
Market research revealed a record-setting level of warehouse construction
in the US, with a groundbreaking addition of 689.4 million square feet (ft.) in the third quarter of 2022 4 . For new construction
in a high-rise building, the cost per square foot of fire sprinkler coverage is generally $1-$2 USD and in high-rise applications, approximately
$2-$4 USD 5 . Using a valuation of $3 USD per square foot for fire sprinkler coverage as storage applications tend to be more
expensive than residential applications, with 689.4 million square ft. of new warehouse construction in the third quarter of 2022, we
estimate the total existing fire sprinkler storage and warehousing market in the US to be valued at approximately $2 billion USD. Once
we penetrate our initial target market in the US for storage and warehousing, we will consider expanding into the larger global market
for fire sprinklers in the commercial segment and beyond.
We believe the Company can gain market share in the storage and
warehousing segment because we have designed technology to change the underlying fundamentals of how fire sprinklers operate to keep
up with the ever-evolving storage industry. Warehouses are trending towards higher ceiling heights and greater storage densities to
meet the growing demands of e-commerce and to circumvent the increasing cost of real-estate. The trend for warehouses 60 years ago
included ceiling heights of 20-25 ft. while today’s warehouse roof heights trend towards 45 ft. or more 6 .
Warehouses are also implementing automated technology using ASRS and robotics which has changed the way warehouses operate. Higher
ceiling heights and the plastic bins utilized by ASRS structures to store commodities with exceptionally tall racks and narrow
aisles make it very difficult for a traditional fire sprinkler system to control potential files. These challenges have prompted
retailers, building owners, and insurance providers to reassess their fire protection systems; however, in many cases there are very
few reasonable and effective options available. We are developing state-of-the-art technology with a focus on meeting the needs of
retailers and storage customers who are constantly striving to expand their operations and maximize efficiency. We are confident
that our patent-pending technology, combined with a customer-centric approach, positions us to meet the demands of
the fire sprinkler storage market as ceiling heights continue to increase and the use of automation in warehouses continues to
grow.
We are also actively pursuing opportunities to serve areas where
traditional sprinklers are unable to provide sufficient protection. We see great potential in leveraging our innovative technology to
capture market share in sectors that involve the storage of highly hazardous materials such as aerosols, flammable liquids, tires, and
lithium-ion based battery energy storage systems. At present, the storage of these commodities is hindered by several limitations driven
by traditional fire sprinkler capabilities including restricted ceiling heights, storage configurations, aisle widths between storage
racks, and more. Notably, there is no approved or listed fire protection system for lithium-ion based battery energy storage systems.
We intend to leverage, what we believe to be, our cutting-edge technology to address the gaps that traditional fire sprinkler systems
are unable to effectively fill.
With our patent-pending technology we believe we are positioned to
provide superior fire protection solutions for warehousing and storage. Our multi-sensor technology will allow us to respond to fires
very early on in fire development and our fire sprinklers communicate and work together to prevent fire spread. We are leveraging software
and electronics to detect and respond to fires faster than traditional fire sprinklers that only rely on a fixed temperature threshold
for activation. Our approach to get to market quickly and effectively is not to fully replace traditional fire sprinklers, but to use
our technology to enhance their operation and create flexible and adaptable solutions for the fire sprinkler needs of modern storage facilities
and warehouses. Our technology, at its current rate of development, can currently integrate with 5mm bulb-type traditional fire sprinklers.
We are also working on solutions that are compatible with 3mm bulb-type traditional fire sprinklers as well as solder link-type fire sprinklers
so our technology can be compatible with just about every traditional fire sprinkler on the market.
We believe our technology will allow us to gain market share quickly
and effectively in the storage and warehousing segment because we believe we can make quick changes that influence fire detection and
sprinkler operation through simple software updates. Our current designs leverage software and electronics so we can easily adjust the
sensors and thresholds used for fire detection and control which sprinklers operate and when. For a company that relies solely on traditional
fire sprinklers, it could take months of product development to achieve the same goal that could possibly take us minutes with only a
few software changes. Our technology allows us to be nimble, agile, and responsive when designing for specific applications. We believe
the ability to make rapid design changes for our future customers is crucial for staying competitive and meeting customer demands in today's
fast-paced business environment.
1 Traditional fire sprinklers in the context of this document
are primarily mechanical devices that contain a heat-sensitive element that could be in the form of a glass bulb or a fusible metal link
that will rupture or melt at a certain temperature threshold, activating the sprinkler and allowing water to flow. Traditional sprinklers
will not turn on all at once. Each one activates independently, on its own.
2 Straits
Research. (2022). (rep.). Fire Sprinkler Market Trend, Growth to 2022-2030 . Retrieved February 2, 2023, from https://straitsresearch.com/report/fire-sprinkler-market#:~:text=The%20global%20fire%20sprinkler%20market,period%20(2022%E2%80%932030).
3 IMARC Group.
(2021). (rep.). United States Fire Sprinklers Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027 .
Retrieved January 9, 2023, from https://www.imarcgroup.com/united-states-fire-sprinklers-market#:~:text=Market%20Overview%3A,US%24%204.3%20Billion%20in%202021.
4 Newmark.
(2022). (rep.). National Industrial Market Report . Retrieved February 2, 2023, from https://www.nmrk.com/insights/market-report/national-industrial-market-report.
5 Smoke Guard,
Inc. (2022, February 2). What Is the Cost of a Commercial Fire Sprinkler System? [web log]. Retrieved February 2, 2023, from https://smokeguard.com/blog/2022/february/02/what-is-the-cost-of-a-commercial-fire-sprinkler-system#:~:text=A%20high%2Drise%20building%20will,per%20square%20foot%20of%20coverage.
6 Mishall,
J. (2022, July 28). Storage trends and new technology ignite fire risks for commercial warehouses . Zurichna.com. Retrieved February
2, 2023, from https://www.zurichna.com/knowledge/articles/2022/07/storage-trends-and-new-technology-ignite-fire-risks-for-commercial-warehouses
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Table of Contents
Opportunities for Innovation
High Ceiling Heights
Warehouses are shifting towards taller ceiling heights
due to the growing demand for e-commerce, the introduction of machinery and new automation technologies, and the need for more efficient
use of space. As warehouse ceiling heights increase, warehouse operators will require more efficient and effective fire sprinkler solutions
to expand their operations and protect their investments. According to Forbes, “Fueled by the global pandemic, a study from US Census
Bureau showed that ecommerce grew 43% in 2020. Two years later, it’s still going strong — and likely never to return to pre-pandemic
levels despite some near-term signs of economic slowing” 1 . As e-commerce experiences rapid growth, warehouse facilities
are increasing their clear heights (the usable height in which a tenant can store products on racking) from 32 ft. to 36 ft. 2
36 ft. clear heights are an extremely large jump from the 20 ft. average clear height for warehouses in the 1970s. 3 A warehouse
with a 36 ft. clear height can increase their storage capacity by 10 to 25% as opposed to a 32 ft. clear height given the same footprint 2 .
With clear heights and ceiling heights continuing to rise, a significant gap is emerging for traditional fire sprinklers.
Higher ceiling heights for storage and warehousing
facilities present a growing opportunity for fire sprinkler innovation. To provide sufficient protection for warehouses with higher ceilings
and increased storage heights, some traditional fire sprinkler companies have advocated for the installation of in-rack sprinklers, which
are fire sprinklers that are directly integrated into storage racks. However, this approach has several drawbacks. For one, installing
in-rack sprinklers can be quite costly, and the sprinklers are vulnerable to damage from heavy equipment, employees, or contractors. Moreover,
such sprinklers can also restrict the flexibility of the warehouse since they require a network of piping that must be installed into
the racking. To keep up with rising ceiling heights in storage, many traditional fire sprinkler companies rely on large orifice sprinklers
and systems with high water demand to provide adequate fire protection. These sprinklers, called early suppression fast response (ESFR)
sprinklers, are intended to output a large volume of water from the ceiling with larger droplets than conventional sprinkler heads.
Traditional fire sprinkler solutions for providing
protection at higher ceiling heights primarily involve ESFR sprinklers and increasing the amount of water used. The graph below shows
how the basic sprinkler water demand for higher ceiling heights increases dramatically for traditional fire sprinkler systems, especially
as warehouses shift from 30 ft. to 40 ft. ceiling heights.
The above graph uses data
from FM’s Global Datasheet 8-9 for open-frame rack storage ceiling-only sprinkler protection criteria for traditional K25.2 sprinklers 4
Increasing water usage can come with a high expense.
The water supply available in a warehouse may not be able to generate the necessary hydraulic pressure to meet the demand of a fire protection
system and installing a fire pump, larger piping, and large storage tanks can be incredibly costly. The fixed cost of a fire pump can
easily exceed $50,000-$60,000 5 , and there are additional costs to consider, such as providing proper electrical and ventilation
for a pump room and ongoing maintenance costs.
A surge in basic sprinkler water demand as ceiling
heights increase from 30 ft. to 40 ft. is especially notable for the storage of uncartoned expanded plastic commodities. The basic sprinkler
water demand for traditional K25.2 sprinkler systems more than doubles for uncartoned expanded plastics protection and only obtains 10
extra ft. of ceiling height. Uncartoned expanded plastics include low density plastics that are not stored in a water absorbing material
like cardboard boxes and include insulation boards, packing beans, polystyrene foam (like for coffee cups, plates, or meat trays), mattresses,
cushioned furniture, candles, pipe insulation, and more.
For many commodities stored at high ceiling heights
the cost of meeting increased water demand could be prohibitively high, and for exposed expanded plastics storage, it can be increasingly
difficult to provide sufficient ceiling-only traditional sprinkler protection.
At Sparx, we strongly believe that relying solely
on excessive water usage with high hydraulic expenses is not the most optimal approach to combat the challenges associated with providing
adequate fire protection for higher ceiling and storage heights. Our system is specifically designed to minimize hydraulic expenses and
provide effective fire protection by utilizing advanced software and electronics to control sprinkler operating patterns and multi-sensor
technology to identify fires during their early stages of development. Through algorithmic control of sprinkler operating patterns, we
believe we can precisely target the affected area and maximize the efficiency of the water supply. We believe our technology also allows
us to detect fires in their early stages through the use of gas, flame, smoke, and temperature sensing. By suppressing smaller fires,
we believe we can use less water and reduce the overall impact of a fire.
We also believe the Sparx™ Smart
Sprinkler System can provide solutions for warehouses with higher ceiling and storage heights where traditional fire sprinklers
cannot when acting alone. For example, fires involving the storage of exposed-expanded plastics commodities
for ceiling heights greater than 40 ft. currently have no prescribed ceiling-only sprinkler protection options
available 4,6 . Given the high heat release rate and the potential for nearby storage arrays to ignite, thermal radiation
generated by these fires can quickly lead to uncontrolled fire growth. At higher ceiling and storage heights for this commodity, we
believe it is crucial to have early response and optimal sprinkler operating patterns, both of which are offered by the Sparx™
Smart Sprinkler System, in order to effectively contain thermal radiation and suppress flames.
The challenges posed by increasingly high ceiling
and storage heights in the warehousing industry present an opportunity for innovation in fire sprinkler protection. At Sparx, we are dedicated
to meeting the evolving needs of the industry. With our patent-pending technology, we believe we are well-positioned to offer effective
solutions for even the most complex storage and warehousing fire protection applications.
1 Newman,
D. (2022, September 8). E-commerce popularity ignites growing investment in warehouse automation . Forbes. Retrieved February 16,
2023, from https://www.forbes.com/sites/danielnewman/2022/09/06/e-commerce-popularity-ignites-growing-investment-in-warehouse-automation/?sh=2d0881925346
2 Cope, E.,
& Dean, P. (2020, October 22). 36 is the new 32: Increasing clear height for maximum efficiency . Method Architecture. Retrieved
February 16, 2023, from https://methodarchitecture.com/industrial-clear-height-36/
3 Prevoe,
B. (2018, March). Raise the roof! When to consider higher cubic clear heights for your warehouse operations . https://pdf.euro.savills.co.uk/usa/in-depth-reports/ov-warehouseoperations-isg-2018-03-29.pdf.
Retrieved February 16, 2023.
4 FM Global.
(2022, January). FM Global Datasheet 8-9, Storage of Class 1, 2, 3, 4 and Plastic Commodities. Johnston, RI.
5 Koorsen
Fire & Security. (2022, March 23). Introduction to Fire Pumps . Koorsen Fire & Security. Retrieved February 16, 2023, from
https://blog.koorsen.com/introduction-to-fire-pumps
6 National Fire Protection
Association. (2022). NFPA 13, Standard for the Installation of Sprinkler Systems, 2022 Edition. Quincy, MA.
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Table of Contents
Automated Storage and Retrieval Systems (ASRS)
To enhance space utilization and boost throughput, warehouses are
adopting compact automated storage and retrieval systems, commonly referred to as ASRS systems. ASRS systems are computer and robot-aided
systems that can retrieve or store items in specific locations. We expect the increased use of automation in warehouses to directly impact
market opportunities in the storage segment for fire sprinklers as these innovations will require specialized fire protection. The warehouse-automation
market is forecasted to reach $51 billion by 2030, a CAGR of 23 percent 1 . We predict that the tremendous growth in the warehouse-automation
industry is going to create market expansion for the fire sprinkler storage segment.
When a fire occurs, compact ASRS systems can be extremely hazardous
because firefighters have limited access to extinguish fires following sprinkler operation. In the storage industry, traditional fire
sprinkler systems are typically not designed to extinguish a fire, but instead, they are intended to suppress and control a fire until
the fire department or fire service is able to intervene. If a fire originates deep in the upper tiers of an ASRS storage array, it can
be incredibly unsafe for firefighters to navigate a 35 ft. tall structure with slim aisles and limited mobility. Compact ASRS systems
are escalating the demand for fire sprinkler systems that not only suppress fires in storage facilities but can also extinguish them.
This presents a significant opportunity for innovation in the fire sprinkler industry, as extinguishing fires is storage occupancies is
currently not a function of traditional fire sprinkler systems.
Extinguishing fires is just one of many challenges facing traditional
fire sprinkler systems in the context of compact ASRS systems. With such systems becoming increasingly dense, there is often no available
space to install in-rack sprinklers and piping, which cannot be placed in areas that would obstruct robotic movement or bracing. Additionally,
the high storage density of compact ASRS makes it difficult for ceiling-only traditional Early Suppression Fast Response (ESFR) sprinklers
to reach the base of a fire. Another obstacle posed by compact ASRS is the frequent use of open-top containers, which facilitate order
picking but lack protection guidance based on NFPA 13 - Standard for the Installation of Sprinkler Systems 2 . These containers
impede the flow of water from fire sprinklers to the base of an ASRS structure, making them hazardous from a fire protection perspective.
Together, these challenges have led to limited regulatory prescribed code options for fire sprinkler systems that can provide adequate
protection for compact ASRS systems 3 . As the warehouse-automation market continues to grow, demand for fire sprinkler innovation
in this space is expected to rise.
Many ASRS systems have uniquely designed storage bins, robotic mechanisms,
robotic movement, and structural configurations. We believe there will be opportunities for partnering with ASRS and retail companies
to create custom fire sprinkler solutions tailored to specific customer applications, since compact ASRS solutions each have distinctive
characteristics that pose their own fire protection challenges. We believe that it will take a nimble and agile company in fire sprinkler
technology development, like Sparx, to adapt solutions to the rapidly changing warehouse environment and quickly bring solutions to market
for a variety of compact ASRS structures. With the Sparx™ Smart Sprinkler System, we can transform the way our system operates within
minutes rather than months of product iteration. The Sparx™ Smart Sprinkler System can be easily configured based on a variety of
sensor inputs to trigger various sprinkler responses using software.
We believe the Sparx™ Smart Sprinkler System is an ideal solution
for ASRS fire protection because of its multi-sensor technology that can detect fires at an early stage, maximizing the chances for both
suppression and extinguishment. Additionally, the system provides precise sprinkler operating patterns that can pinpoint the fire's origin
and prevent its spread within densely packed storage areas. This technique allows for a 'surround and drown' approach, enabling quick
action to deliver an abundance of water directly to the fire and the surrounding areas, effectively inhibiting any outward propagation
of flames.
1 Barbee , J., Davies, A., Dubeauclard , R., Lange , T.,
& Lennartz, C. (2021, December 27). Automation has reached its tipping point for omnichannel warehouses . McKinsey & Company.
Retrieved February 16, 2023, from https://www.mckinsey.com/industries/retail/our-insights/automation-has-reached-its-tipping-point-for-omnichannel-warehouses
2 National Fire Protection
Association. (2022). NFPA 13, Standard for the Installation of Sprinkler Systems, 2022 Edition. Quincy, MA.
3 UL Solutions. (n.d.).
New Challenges in Fire Safety in ASRS Warehouses . UL Solutions. Retrieved February 16, 2023, from https://www.ul.com/resources/new-challenges-fire-safety-asrs-warehouses
Unique Architectures
Unique architectural elements like sloped ceilings
are currently one of the biggest challenges associated with traditional ESFR sprinklers, according to the Fire Protection Research Foundation 1 .
For storage applications, NFPA 13 - Standard for the Installation of Sprinkler Systems limits ceilings to a maximum slope of 2 in 12 (equivalent
to a roof slope of about 9.5 degrees) when using ceiling-only ESFR sprinklers 2 . According to FM standards, the maximum ceiling
slope in storage applications can be 10 degrees for ceiling-only sprinklers, unless in-rack sprinklers are installed 3 . A warehouse
with sloped ceilings can also install a continuous flat ceiling below their roof to maintain compliance for ESFR sprinklers, but this
comes with added expense and hassle.
Sloped ceilings alter the dynamics for how the hot
gases travel along the ceiling during a fire which can lead to skewed sprinkler operating patterns and an increase in sprinkler operations
using traditional ceiling-only ESFR sprinklers 3 . Considering the challenges that traditional fire sprinklers have in this application
and the lack of approved or listed options for ceiling-only sprinkler protection beyond 10 degree sloped ceilings in storage, the market
for sufficient fire suppression in this area is completely open for innovation.
Research demonstrates that correction factors can
be applied to electronic fire sprinkler activation algorithms to achieve optimal sprinkler operating patterns for buildings with sloped
ceilings 4 . However, there are currently no listed or approved ceiling-only fire sprinklers on the market for storage occupancies
with sloped ceilings beyond 10 degrees. The Sparx™ Smart Sprinkler System decouples detection from sprinkler activation unlike traditional
ESFR fire sprinklers, which allows us to provide algorithmic correction factors to potentially offer protection for this challenging application.
1 Jordan, S. J., &
Ryder, N. L. (2020). (rep.). Protection of Storage Under Sloped Ceilings Phase III: Large Scale Testing Summary and Guidance . Quincy,
MA: Fire Protection Research Foundation.
2 National Fire Protection
Association. (2022). NFPA 13, Standard for the Installation of Sprinkler Systems, 2022 Edition. Quincy, MA.
3 FM Global. (2022, January).
FM Global Datasheet 8-9, Storage of Class 1, 2, 3, 4 and Plastic Commodities. Johnston, RI.
4 Xin, Y.
(2020). SMART Sprinkler for Highly Challenging Fires . SFPE. Retrieved February 16, 2023, from https://www.sfpe.org/publications/periodicals/sfpeeuropedigital/sfpeeurope20/europeissue20feature1
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Table of Contents
High-Hazard Commodities
Ceiling-only fire sprinklers face numerous challenges when it comes
to storing high-hazard commodities. The fire sprinkler industry requires third-party evaluation of products to be approved or listed for
their use in facilities to protect the building, its occupants, and the commodities being stored. Fire sprinkler products undergo extensive
third-party testing – two of the most common groups being FM Global (FM) and UL Solutions (UL). Additionally, there are codes and
standards like the National Fire Protection Association in the United States, a global self-funded nonprofit organization, that develops
codes and standards related to fire sprinkler design and installation requirements. Upon reading the codes and standards provided by FM
and NFPA, we believe the gaps within the traditional fire sprinkler industry start becoming clear. Many of these gaps, in our opinion,
appear to exist with the storage of high-hazard commodities like tires, aerosols, and flammable and combustible liquids. Additionally,
the use of battery energy storage systems (BESS) presents a relatively new high-hazard commodity to the fire protection industry. The
table below highlights high-hazard commodities that present potential opportunities for the innovative fire protection offered by the
Sparx™ Smart Sprinkler System.
Commodity
Hazard Description
Current Limitations for Ceiling-Only Sprinklers
Opportunities for Innovation
Tires
Tires produce large amounts of heat, smoke, and toxic gases and are often stored in dense and compact arrangements
Maximum ceiling height of 40 ft., with 30 ft. of storage in permanent and portable racks with open shelves 1,2
·
The criterion for 40 ft. ceilings/30 ft. of tire storage requires a basic sprinkler water demand of more than 2,600 gpm of water which
could result in high hydraulic expense
·
There are no prescribed ceiling-only fire sprinkler options available for tires stored at heights greater than 30 ft. 1,2
Aerosols – Level 2 (deodorants, hair sprays, antiseptics, anesthetics, some furniture polishes, and windshield de-icers, and other water-miscible flammable aerosol products)
Aerosol products can rupture under the presence of heat and flames,
creating large fire balls that can increase the intensity of a fire
Maximum storage heights of only 20 ft. for cartoned aerosols with ceiling-only fire sprinkler protection (aerosols stored in cardboard boxes) 3
· The maximum storage height for these commodities is very limited - only 20 ft. storage heights 3
Aerosols – Level 3 (some automotive products like engine and carburetor cleaners, undercoats and lubricants, wood polishes, paints and lacquers, some insecticides, oil-based antiperspirants, and more)
Maximum storage heights of only 15 ft. for cartoned aerosols with
ceiling-only fire sprinkler protection (aerosols stored in cardboard boxes) 3
Ceiling-only fire sprinkler protection cannot be provided for
uncartoned Level 3 aerosol products 3
·
The maximum storage height for these commodities is extremely limited – only 15 ft. storage heights for cartoned storage 3
·
There are no options for ceiling-only fire sprinklers to protect uncartoned storage of Level 3 aerosols (in-rack sprinklers must
be used which decreases warehouse flexibility, increases susceptibility to sprinkler damage from warehouse operations, and piping networks
must be installed within storage racks) 3
Flammable and Combustible Liquids (commodities including gasoline, cleaners, rubbing alcohol, nail polish remover, hand sanitizer, cooking oils, and more)
Flammable liquids produce vapors that burn when heated or ignited – fires can burn readily and intensively and can be explosive under certain conditions
Most configurations for flammable and combustible liquids require in-rack sprinkler protection 4
·
Warehouses are constrained in terms of flexibility since the fire protection design is often designed to meet the needs of a specific
flammable or combustible liquid application
·
In most circumstances, flammable and combustible liquids require in-rack sprinkler protection 4
Lithium-Ion Battery Energy Storage Systems (BESSs)
Thermal runaway* is a unique and dangerous hazard in BESS and once
started, thermal runaway cannot be stopped
*Thermal runaway is a hazardous phenomenon in which a lithium-ion
cell enters an uncontrollable, self-heating state. Thermal runaway can result in the release of toxic gases, extremely high temperatures,
smoke, and fire.
Sprinkler systems installed per NFPA 13 are required for per NFPA 855 - Standard for the Installation of Stationary Energy Storage Systems; however, there is no fire protection system approved or listed for the protection of lithium-ion based energy storage systems 5,7
·
The global lithium-ion battery market is expected to grow at a remarkable 18.9% CAGR over the forecast period from 2022 to 2030 which
we predict will create market expansion for the global fire sprinkler market 6
·
According to NFPA 855 - Standard for the Installation of Stationary Energy Storage Systems, “ water is considered the preferred
agent for suppressing lithium-ion battery fires ” 5
·
Fire sprinklers can delay or prevent fire spread to adjacent battery cells decreasing the likelihood of propagation of thermal runaway
·
Currently, there are no fire protection systems that are currently FM-Approved or UL-Listed for the application of BESSs 7
·
To effectively achieve suppression or extinguishment, fire sprinkler systems will require electronics and software to detect fires quickly
and accurately – the best protection systems will be able to integrate with battery management systems and ventilation systems
The table above outlines the existing constraints
for fire sprinkler systems when storing high-hazard commodities, while also identifying the factors that could stimulate advancements
in fire sprinkler technology.
The Sparx™ Smart Sprinkler System provides early fire detection
using multiple sensors, allowing us to respond to fires faster than traditional fire sprinkler systems. Early detection can facilitate
a more rapid response to a fire, allowing the fire sprinkler system to initiate suppression or extinguishment quickly. This can significantly
reduce the time that the fire has to grow and spread, making it easier to control and suppress or extinguish.
The Sparx™ Smart Sprinkler System employs algorithms to control
fire sprinkler operations, providing efficient and targeted fire suppression to prevent the spread of fires. The algorithms used by the
Sparx™ Smart Sprinkler System are instruction sets and computational procedures used to control the operation of the sprinklers
in a more efficient and targeted manner, based on factors such as the location and severity of the fire. By using algorithms to optimize
the operation of the sprinklers, water usage can be reduced while still effectively suppressing the fire. Sprinklers are activated through
an automated process initiated by our software, which sends an electrical signal to activate the sprinklers as needed. For instance, if
a fire were to break out in an aerosol storage area, the Sparx™ Smart Sprinkler System could promptly trigger the sprinkler head
directly above the fire, along with those surrounding it, to deliver water to both the fire's source and the surrounding aerosol commodities,
effectively suppressing any fireballs that might emerge from rupturing products. Traditional fire sprinklers in storage applications are
designed to operate independently of one another which can lead to challenges when it comes to fire spread and adequate suppression performance.
With quick detection and controlled sprinkler operating patterns,
we believe Sparx can provide protection for high-hazard commodities in applications that traditional fire sprinklers cannot. We intend
to use the Sparx™ Smart Sprinkler System to fill industry gaps for the storage of high-hazard commodities at higher storage heights,
higher ceiling heights, and to provide an alternative to in-rack sprinkler protection. For scenarios that currently require high hydraulic
expenses from ceiling-only ESFR sprinklers, we believe our technology will also require less water demand since we are responding to smaller
fires very early on in fire development. Moreover, when it comes to addressing specific challenges, such as the safe storage of battery
energy storage systems, our expertise will enable us to offer highly effective fire sprinkler protection through quick and targeted sprinkler
response, efficient cooling, and seamless integration with battery management and ventilation systems.
1 FM Global. (2009, January).
FM Global Datasheet 8-3, Rubber Tire Storage. Johnston, RI.
2 National Fire Protection
Association. (2022). NFPA 13, Standard for the Installation of Sprinkler Systems, 2022 Edition. Quincy, MA.
3 National Fire Protection
Association. (2023). NFPA 30B, Code for the Manufacture and Storage of Aerosol Products, 2023 Edition. Quincy, MA.
4 National Fire Protection
Association. (2021). NFPA 30, Flammable and Combustible Liquids Code, 2021 Edition. Quincy, MA.
5 National Fire Protection
Association. (2023). NFPA 855, Standard for the Installation of Stationary Energy Storage Systems, 2023 Edition. Quincy, MA.
6 AltEnergyMag.
(2022, November 1). Lithium-ion Battery Market Growing Demand, Globally . AltEnergyMag. Retrieved February 16, 2023, from https://www.altenergymag.com/content.php?post=38477
7 Dieken, D. (2020, May
28). Fire Protection Requirements for Large-Scale Energy Storage Systems (ESS). LinkedIn. Retrieved February 16, 2023, from https://www.linkedin.com/pulse/fire-protection-requirements-energy-storage-systems-ess-dieken-pe
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Competition
The fire sprinkler industry is made up of a relatively small number of
key companies including AG Fire Sprinkler, American Fire Technologies, APi Group, GW Sprinkler A/S, Honeywell International Inc., Johnson
Controls International Plc, Minimax GmbH & Co. KG, Robert Bosch GmbH, Siemens AG, and SIRON Fire Protection 1 .
We believe there to be only a few key companies in this industry, generally
due to the high barriers to entry that come from product testing, approvals, and certification from agencies like UL Solutions (UL), FM
Global (FM), and VdS. While there are some notable companies involved in the competitive landscape for the fire sprinkler industry, as
a whole, we believe Sparx has very few direct known competitors who are primarily focused on using software and electronics to offer protection
for highly challenging fires.
We are predominantly dedicated to the advancement of technology in the
fire protection industry as opposed to simply releasing the next iterative fire sprinkler product. We believe our approach will offer
us lucrative growth opportunities as we expand our foothold in the global fire sprinkler market. Because we are focused on offering protection
for highly challenging fires (fires that cannot be easily and reasonably protected by traditional sprinkler technology), by nature, we
believe we are competing in a highly uncompetitive space.
In the industry there are currently only two UL Listed electronic fire
sprinklers (a K17 2 version and a K25 2 version) on the market capable of electronic detection and actuation. These
electronic sprinklers, both released by Johnson Controls International Plc, operate via wired communications and power 3 . These
sprinklers require a separate heat detector for each and every sprinkler that must be connected by an installer via a wiring harness.
The sprinklers are also wired to each other and back to a control panel via Class A or B wiring (usually Class A for added reliability) 4 .
This system, marketed for storage applications, has inherent complications and costs due to the amount of wiring required. We believe
that a battery-powered wireless solution will eliminate the installation complexities that can come from running wire between 100+ sprinkler
heads and the high labor costs associated with this system.
In addition to the electronic sprinkler products offered by Johnson Controls
International Plc, a US based company called Plumis Inc. offers a product called Automist Smartscan Hydra. The Automist Smartscan Hydra
offers a fire sprinkler alternative for the application of residential occupancies up to and including four stories in one or two family
dwellings with light and ordinary hazards 5 . The Automist Smartscan Hydra system also provides a wired solution to connect the
controller to various water mist heads. The water mist heads are generally wall mounted and operate on different principles than sprinkler
heads. Water mist is intended to use fine droplets that evaporate at the base of a fire to extract heat. Sparx intends to pursue a different
market share compared to the Plumis Inc. solution by tackling highly challenging fires with wireless sprinkler technology as opposed to
pursuing residential applications with wired water mist systems.
We believe our proprietary technology has a competitive advantage in that
it offers a flexible wireless battery-powered solution that will solve a multitude of problems present in wired electronic sprinkler systems.
We believe the complexity and costs due to installation for a wireless system will be much lower for our future customers in terms of
material (wire, connectors, conduit, etc.), but especially for labor. We plan to capture more revenue for a premium product that offers
ease of installation compared to a wired system where revenues are normally lost to electricians, electrical unions, and electrical contractors.
We also believe the wireless solution we plan to bring to market will be less prone to human error during installation. In a wired solution,
it can be exceedingly difficult to troubleshoot multiple wires if there are shorts, opens, or ground faults present, especially if the
system is protecting dense storage structures with ceiling heights that are 35+ feet tall. Our proprietary technology could also increase
system reliability compared to a wired solution due to the fact that our solution operates on a wireless network with numerous communication
paths from fire sprinklers to the controller as opposed to only a single or duplicate set of wires.
In our findings and experience, we have seen only a few attempts and efforts
made to bring electronics and software into the predominantly mechanical world that fire sprinklers have belonged to since their inception.
We believe we are uniquely positioned to deliver and commercialize the first battery-powered wireless fire sprinklers that elegantly synthesize
detection and suppression.
1 Chinchane,
A., Singh, S. P., & Sumant, O. (2020). (rep.). Fire Sprinkler Market . Allied Market Research. Retrieved January 27, 2022, from
https://www.alliedmarketresearch.com/fire-sprinkler-market.
2 The k-factor of a sprinkler, or coefficient
of discharge, is a specification for fire sprinklers used to calculate the flow and water discharged from sprinkler heads.
Blackstone, V. L. (n.d.).
What is the K factor on a sprinkler head? Hunker. Retrieved January 29, 2022, from https://www.hunker.com/13418788/what-is-the-k-factor-on-a-sprinkler-head
3 Johnson
Controls International Plc. (n.d.). EAS-1 System Overview . Johnsoncontrols.com. Retrieved January 30, 2022, from https://www.johnsoncontrols.com/eas/overview
4 National
Training Center. (2020). NFPA 72 Circuits and Pathways . National Training Center. Retrieved January 30, 2022, from https://nationaltrainingcenter.com/nfpa-72-circuits-and-pathways/
5 Plumis
Inc. (n.d.). Automist Smartscan Hydra BS8458 fire sprinkler performance . Plumis. Retrieved January 29, 2022, from https://plumis.com/smartscan
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Business
Information
We are a technology company incorporated in the state of Nevada on June
30, 2021, and headquartered in Cranston, Rhode Island with a mission to provide new generation fire protection to businesses and building
owners that operate within infrastructures that cannot be adequately or reasonably protected by traditional fire sprinklers 1 .
We intend with Sparx Technologies, LLC (“Sparx”) to revolutionize the fire protection industry with a commercially available
wireless battery-powered electronic fire sprinkler network and develop the industry’s first commercially available wireless battery-powered
electronic fire sprinkler system that can be adapted to a variety of different applications and customers.
On August 29, 2022, we entered into and consummated a Patent License Agreement
(“Agreement”) with Sparx Technologies, LLC, a limited liability company (“Licensor”). Licensor is solely owned
and controlled by Ms. Cassandra DeNunzio, our CEO and director. Ms. DeNunzio is the sole and first named inventor under a provisional
patent application with a Serial No. 63/304,302 filed with the United States Patent Office (“USPTO”) on January 28, 2022,
relating to the fire protection industry and particularly a commercially available battery-operated wireless electronic fire sprinkler
network. The Patent License Agreement, referenced herein, is attached as EX-10.1 to the Form 8-K filed with the Securities and Exchange Commission
on August 29, 2022. As a result of the Agreement, we adopted the existing operations and business plan of Sparx Technologies, LLC pursuant
to the terms and conditions of the patent licensing agreement and ceased to be a shell company.
In partial consideration for the exclusive license granted by Licensor
to the Company, the Company paid Sparx Holdings, LLC, a limited liability company, controlled and solely owned by Ms. DeNunzio, a non-refundable
license fee upon execution of the Agreement in the amount of One Hundred Million shares (100,000,000) of the Company’s common stock
(the “Initial License Fee”). The Initial License Fee is consideration for the grant and continuation of the license pursuant
to a five-year term. Licensor shall have no obligation or liability to return any portion of the Initial License Fee. The Company shall
pay Licensor a royalty of fifty percent (50%) of Licensee’s Net Sales of all Licensed Products developed and sold by the Company.
Ownership of the licensed technology prior to, during the course or as a result of the Agreement, will be the sole and exclusive property
of Licensor.
Our Chief Executive Officer and Director, Casandra DeNunzio has agreed
to lend us equipment at no cost resulting in us having in-house capabilities to design and build innovative electronic fire
protection products and solutions. Ms. DeNunzio has extensive industry knowledge, familiarity with local specifications and regulations,
fire codes and expertise in the design and test engineering of fire detection, suppression, and extinguishment technology and their components
and systems. We have available to us, the equipment, capabilities, and expertise to create prototype electronic circuits, assemble and
reflow printed circuit boards, benchtop test electrical assemblies with DC and AC power supplies, troubleshoot designs with multimeters,
and create wiring harnesses.
The Company has now begun to finalize the prototype Sparx™
Smart Sprinkler System and has started working towards the design and development for the remaining system components to complete
the Sparx™ Smart Sprinkler System. The remaining components needed for the system prototype include a base station that
the wireless battery-powered Sparx™ Smart Sprinkler Systems communicate with and an installation and commissioning tool. As
mentioned elsewhere in this Annual Report, a utility patent has been filed with the USPTO that covers the technology. The Company plans to
commercialize Licensor’s wireless fire suppression technology into a fire protection/fire safety product line and seek listing
or approval from third-party testing bodies. Our plan is to provide superior protection against highly challenging fires for a range
of premises, including commercial buildings and industrial sites, through the application of our advanced proprietary wireless mesh
network fire suppression system technology. We plan to design, develop, integrate, install, test, manufacture, produce, and market
our wireless mesh network fire suppression system in an effort to commercialize our products.
On January 20, 2023, Sparx Technologies, LLC filed a utility patent application
with the USPTO under 35 USC 111(a) for a Mesh Network Fire Suppression System and Associated Methods with Serial No. 18/099,584. A prior
provisional application with Serial No. 63/304,302 was issued by the USPTO on January 28, 2022.
In addition, an international patent application (PCT) was also filed with
the USPTO on January 23, 2023, resulting in international patent pending status. An international application Serial No. PCT/US23/11314
was issued by the USPTO. Sparx relies on a combination of patent, trademark, copyright, trade secret, and contractual protections to establish
and protect its intellectual proprietary rights.
The Basics of Our Technology
We plan to use the Sparx™ Smart Sprinkler System to expand the capabilities
of traditional fire sprinklers and offer effective and efficient protection for applications that traditional fire sprinklers may not
adequately cover. An image of a traditional fire sprinkler is shown below.
The image above shows a
traditional fire sprinkler with labeled components
A traditional fire sprinkler system consists of two essential components:
a water supply and a fire sprinkler head. The sprinkler head comprises a plug, a trigger mechanism, a frame, and a deflector plate. The
plug holds back the water, while the trigger mechanism activates the sprinkler head when the temperature reaches a specific threshold.
This threshold typically ranges from 135 to 286 degrees Fahrenheit and is determined by the designers based on the specific environment
and application. The trigger mechanism can be a glass bulb filled with liquid that expands when heated causing the glass to break or two
metal plates held together by a solder point that separates when heated.
When a fire starts, the hot air rises and spreads
along the ceiling until it reaches a sprinkler head. When the temperature threshold is met, the trigger mechanism is activated, and the
plug is released, allowing the water to flow through the sprinkler head. The water hits the deflector plate, causing the water droplets
to disperse over a larger area. The water will continue to flow until the water supply runs out or the fire department arrives and manually
shuts off the water via the system’s control valve.
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A common misconception perpetuated by popular media
is that every sprinkler in a room activates at the same time during a fire. Modern fire sprinkler heads are designed to operate independently.
This means that a specific sprinkler head will activate and release water, only if it has individually reached a certain temperature threshold.
Traditional fire sprinkler systems can encounter
various obstacles that may compromise their effectiveness including unpredictable operating sequences, unintentional cooling of adjacent
areas after sprinkler activation, and a phenomenon known as 'sprinkler skipping,' whereby sprinklers closer to the fire may fail to activate
before those located further away. These factors can put lives and property at risk, highlighting the need for modern and innovative fire
suppression technologies.
Our system is being designed to provide
effective fire suppression by automatically activating a group of existing sprinklers directly above the fire. This method ensures
water delivery to the base of the fire and wets adjacent areas to prevent the fire from spreading. Our system's unique capability to
automatically activate an optimal group of sprinklers for fire suppression or extinguishment distinguishes us from traditional fire
sprinkler solutions that rely solely on the heat produced by a fire to activate the necessary sprinklers. We believe our technology
offers greater predictability, precision, and efficiency in controlling fires.
Recognizing the critical role of rapid sprinkler
response in suppressing fires, we strive to respond promptly to catch smaller fires that are easier to contain or extinguish with fire
sprinklers. Fires can exhibit distinct behaviors depending on the commodities and storage configurations involved. Some fires may smoke
or smolder during their early stages, while other fires may rapidly reach the ceiling with high heat release rates. The exclusive dependence
on a fixed temperature threshold by traditional sprinklers is not the most effective approach for timely detection in all fire scenarios.
We have integrated multi-sensor technology into our fire sprinkler designs, featuring flame, gas, smoke, and temperature sensors to provide
comprehensive and advanced fire detection.
The Sparx TM Smart Sprinkler System
Sparx is in the process of designing and developing a fire sprinkler
system capable of electronic detection, communication, and actuation. By leveraging cutting-edge electronic and software
technologies, we aspire to enhance the capabilities of traditional fire sprinklers allowing us to serve applications that otherwise
could not be protected. Our wireless battery-powered fire sprinklers come equipped with advanced sensing capabilities, including
flame, gas, smoke, and temperature sensors. Using our multi-sensor technology, we can detect fires at their earliest stages, even
before they have a chance to grow significantly. Our unique approach to fire safety is critical because fires tend to spread
rapidly, and the larger they become, the more challenging they are to control. We believe our ability to respond quickly and
efficiently will open up new opportunities for various fire protection scenarios.
We are using mesh networking topology to allow our fire sprinklers to communicate
with each other and provide seamless coordination of fire suppression efforts. A mesh network is a local area network in which nodes (in
this case, sprinklers) connect directly, dynamically, and non-hierarchically to each other, working together to efficiently route data.
Our fire sprinklers communicate with each other and to a central base station in the network, providing unparalleled situational awareness
compared to traditional systems. Using environmental data gathered by our fire sprinklers, the base station makes informed decisions about
which sprinklers to actuate in the event of a fire, ensuring optimal suppression or extinguishment. By controlling the number of sprinkler
operations, the base station avoids over-stressing the water supply and minimizes water damage, all while achieving the desired level
of fire suppression. With our mesh networking topology and advanced sensing capabilities, we believe we can respond quickly, efficiently,
and with superior activation precision, making it possible to protect even the most challenging fire scenarios.
At Sparx, we are developing technology that transforms traditional fire
sprinklers into wireless, battery-powered marvels. Our wireless, battery-powered system is designed to expand the capabilities of traditional
fire sprinklers, enabling them to detect and respond to fire conditions faster and with greater precision than ever before. Our technology
seamlessly integrates with existing traditional fire sprinkler systems, harnessing the proven safety and reliability of these established
solutions. We plan to take advantage of the carefully engineered spray patterns and stringent testing standards for traditional fire sprinklers
and use our technology to augment their functionality. We believe that by combining our technology with traditional fire sprinklers it
will allow us to provide effective and reasonable fire protection solutions in applications that may not have been possible with traditional
fire sprinklers alone.
Each Sparx™ Smart Sprinkler contains electronics housed near the
sprinkler threads and wrench flats. The electronics include sensors used for detecting fire, a communication module, a replaceable battery
pack, actuation circuitry used for automatically triggering sprinkler operation in the event of a fire, and monitoring circuitry used
to supervise the integrity of necessary electrical components.
Sparx™ Smart Sprinklers have the ability to communicate with other
using modules that are FCC Certified (USA), operate on the Industrial, Scientific, and Medical (ISM) band, and are RoHS compliant. The
electronics in the network are designed to enter low-power sleep modes and wake periodically to sample environmental conditions to prolong
battery-life. The electronics and battery packs for Sparx™ Smart Sprinklers are designed to last for reasonable periods of time
(i.e. years). The base station for the network will be able to provide notification if there are any low-battery warnings or any other
issues with the network that should be addressed. The base station will also be able to display a history of any troubles, supervisory
signals, or alarms that are reported in the network.
Our inaugural Sparx™ Smart
Sprinkler System prototype, which is currently in the research and development phase, has been purposefully engineered to interface with
traditional fire sprinklers that comprise 5mm frangible glass bulbs. To ensure the electronics at each sprinkler remain unscathed during
sprinkler head installation, they can be easily attached by an installer after the sprinkler head is threaded into the piping. Our installation
process has been meticulously designed to be streamlined, swift, and uncomplicated, saving warehouse and storage customers from the high
costs and laborious efforts associated with installing wired electronic fire sprinkler systems. Wired electronic fire sprinkler systems
necessitate the hiring of electrical contractors to run conduit along the ceiling between sprinkler heads, connecting wires to numerous
junction boxes, and troubleshooting issues such as shorts, opens, and ground faults at the ceiling-level.
The image above shows a
labeled drawing of the Sparx™ Smart Sprinkler prototype, viewed from the side with transparent electronics enclosures.
Note that the enclosures
in the image above are transparent for the purpose of this picture, but the actual product will have fully opaque enclosures.
The image above shows the
Sparx™ Smart Sprinkler prototype, tilted upwards, viewed from the side.
The image above illustrates
the Sparx™ Smart Sprinkler prototype connected to a water supply.
The image above depicts the
Sparx™ Smart Sprinkler prototype tilted downwards, exposing the sprinkler threads. The prototype includes a baseplate that sits
around the sprinkler head above the wrench flats, similar to a recessed sprinkler escutcheon. The sprinkler can be installed with the
baseplate, and after the sprinkler is threaded into the pipe, the electronics enclosures are able to be attached to the baseplate by the
installer in the field. The electronics enclosures are designed to sit around the perimeter of the sprinkler threads and pipe connection.
We have designed an actuating mechanism that interfaces with traditional
5mm bulb-type fire sprinklers. The mechanism simply clips onto the outside surface of the glass bulb with an ordinary amount of force
(no tools required), allowing for quick and easy installation. A short wiring harness connects the clip to the housed electronics at the
sprinkler threads and wrench flats, which can be connected by an installer during the sprinkler installation process. To ensure proper
circuit integrity and fire safety, both the short wiring harness and actuating mechanism within the clip are electrically monitored. Additionally,
a proximity sensor can be incorporated onto the clip to verify proper fit of the clip mechanism against the glass bulb for added reliability.
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In the event of a fire, when a sprinkler head is provided with an actuation
instruction via software, the clip mechanism will cause the glass bulb to break which allows water to flow out of the sprinkler head.
The clip mechanism is designed to quickly provide ample heat to the glass bulb, allowing it to shatter, causing the sprinkler plug to
be pushed out by water flowing through the sprinkler. This clip mechanism allows our advanced software and hardware to decide when to
operate fire sprinklers, as opposed to traditional fire sprinklers which activate only from the heat produced by a fire.
Pictured above: Rendering - clip mechanism
Pictured above: Physical clip mechanism from our physical development prototype
The images above both
show a Sparx™ Smart Sprinkler prototype with the attached clip mechanism that we have designed to allow the sprinkler to be
operated via an electrical signal. The clip comprises a small heating element that rapidly heats the bulb until it shatters when
provided with ample power from the electronics assembly that this mechanism connects to.
While the entirety of the Sparx™
Smart Sprinkler system remains in the developmental stages, and further alterations may be made to the overall aesthetic or design, pictured
below is a full physical, working, prototype we have created of the system, less the base station and commissioning tool. The intent
is for a single system to include numerous “sensing units”. Specifically, these are the portions that communicate with one
another via the base station/ commissioning tool and fit directly over a single sprinkler head.
Pictured above: Inactivated bulb style sprinkler
head with Sparx™
Sensing Unit (fits around bulb style sprinkler head)
Pictured above: Activated bulb style sprinkler
head with Sparx™
Sensing Unit (fits around bulb style sprinkler head)
One can view
our functioning development prototype here: https://www.youtube.com/watch?v=BtlJBlV4qFk
To ensure a safe and reliable
installation process, we currently plan to pre-install the actuating mechanism clips onto the sprinkler bulbs during manufacturing. This
approach eliminates any risk of damage to the sprinkler bulb during the sprinkler installation process, providing peace of mind for installers
in the field. We believe that our fire sprinkler system will be ideal for new installations, or for retrofit installations where existing
sprinkler systems will be drained and traditional sprinkler heads will be replaced with Sparx™ Smart Sprinklers.
We are currently finishing development of our Sparx™ Smart
Sprinkler prototype that can interface with traditional 5mm bulb-type sprinklers. Currently, our primary focus is on completing the rest of the Sparx™ Smart Sprinkler System. Our plan is to develop a base station, an installation
tool, and a web-based dashboard for building owners and maintenance managers to monitor their system's health and status. We believe
the base station is a critical component of the Sparx™ Smart Sprinkler System because it manages when sprinklers enter
low-power sleep modes, makes decisions on sprinkler actuation during a fire, and notifies users of any troubles, supervisory
signals, or alarms present in the network.
To facilitate optimal sprinkler actuation during a fire, the system needs
to know the locations of all Sparx™ Smart Sprinklers within a design area. Our installation and commissioning tool will enable installers
to easily and accurately map out sprinkler locations and feed that information back to the base station.
In addition, we plan to create a web-based interface that allows building
owners and maintenance managers to monitor their system's health and status, set up notification settings, and receive alerts via text
messages or emails when the system needs maintenance or if there are any troubles, supervisory signals, or alarm conditions indicating
the presence of fire and sprinkler activation.
While we expect to encounter some challenges during the system's development,
we are confident that we can overcome them. Our team has already tackled the hardest technical challenges, such as developing a reliable
network architecture that enables low-power battery operation and creating a fire sprinkler prototype capable of electronic detection
and actuation. With our sights set on completing the remaining components, we look forward to delivering an advanced and robust wireless
battery-powered electronic fire sprinkler system to our future customers.
We welcome partnership opportunities with traditional fire sprinkler companies
interested in integrating their traditional fire sprinkler products with our technology. Our product is designed to work with existing
5mm bulb-type traditional fire sprinklers, and we plan to expand our product line to support 3mm bulb-type sprinklers as well as link-type
fire sprinklers. Our current wireless battery-powered technology can also be configured to interface with Metron or squib-type electronic
fire sprinklers. We remain committed to exploring new ways to enhance our technology and provide seamless integration with a range of
traditional fire suppression systems.
Internal Verification and Validation Testing
As we continue to develop our base station technology and installation
interface tool for sprinkler mapping, we are also working to conduct preliminary verification and validation testing on our fire sprinkler
prototype. Our aim is to conduct comprehensive testing before submitting our product to third-party approval agencies for listing and
approval. Third-party testing is crucial for the fire-sprinkler industry as it enables effective marketing of products, but it can also
be costly. Thus, we seek to conduct as much preliminary testing as possible to identify and address any design changes before third-party
testing, in order to streamline and expedite the listing or approval process.
We will be conducting various tests on our fire sprinkler prototype based
on existing standards from third-party approval agencies, like UL or FM. Our internal testing program will include conducting spray testing
to ensure our technology does not interfere with sprinkler spray patterns, mechanical testing like rough-usage tests, high-temperature
exposure tests, vibration tests, corrosion tests and electrical testing including set-point accuracy tests, transient tests, dielectric
voltage-withstand tests, and more. We will also plan to internally conduct small-scale fire tests to confirm our Sparx™ Smart Sprinkler
System works as intended before we conduct large-scale fire tests at third-party testing bodies like UL or FM.
Third-Party Testing
To effectively market our products, third-party testing
is necessary. UL and FM are two of the most common third-party entities in the United States that provide listing, approval, or certification
services. UL is a reputable testing institute that is one of the largest public safety testing labs in the world, while FM also has an
international reputation for testing and is well-regarded in the industry. In contrast to UL, FM is an insurance company that provides
insurance coverage to customers that use products that they have approved or certified to their own testing standards.
Our initial objective is to obtain UL Listing to
fill an industry gap for providing adequate and reasonable sprinkler protection in storage and warehousing applications. We would also
like to obtain FM Approval for the Sparx™ Smart Sprinkler System, but we believe that there may be additional testing with FM due
to our product’s novelty in the fire sprinkler industry. Our plan is to first work with UL to see how our product performs in large-scale
testing, before working with FM on a test program for FM Approval. The third-party testing required for our product will most likely include
mechanical and electrical testing, as well as large-scale fire testing.
Our product's first application will be focused on
providing adequate suppression for a storage application that cannot be currently protected with reasonable water demand. We want to ensure
that our first application for testing is in line with the fire protection requirements for the average clear heights of the current proposed
industrial developments for storage and warehousing. We plan to allocate a significant portion of our funding towards conducting large-scale
fire tests, which can be expensive due to the need for experienced personnel and state-of-the-art test labs that can handle fire hazards.
Fire tests for high-storage heights must be conducted in at least three scenarios, as fires can originate directly under a single sprinkler
head, between two sprinkler heads, or among four sprinkler heads. We estimate the cost of each large-scale fire test for high-storage
heights to range anywhere from $250k to $1M.
Following a test program with UL, we may decide to pursue FM Approval so
we can sell our products to more customers, conduct performance-based design solutions for individual customers, or work towards conquering
other challenging fire suppression applications.
Commercial Scale Up and Revenue Stream
After successfully completing a comprehensive test
program with a highly reputable third-party testing body, we aim to take our business to the next level by increasing our inventory and
expanding our marketing efforts to reach storage and warehousing customers. Our marketing campaigns will highlight our advanced technology
and will showcase the ease of use when implementing our products. We are also committed to establishing strong relationships with fire
protection code consultants and engineers and sprinkler installation and service companies to ensure that our product is recognized as
a top option in the market.
Our revenue streams will be predominately generated from the sale of, what
we believe to be, our superior products that we anticipate offering. We also anticipate generating additional revenue from our innovative
software-as-a-service (SaaS) tool.
Our primary revenue source will be our product revenue
model, which is based on differentiating our products as specialty goods. Our target customers are warehouses and storage facilities with
certain applications that require fire protection options beyond what traditional fire sprinklers can offer. Our goal is not to directly
compete with traditional fire sprinkler protection, but to complement traditional fire sprinklers with, what we believe to be, our superior
technology. This product revenue stream will provide the financial foundation to cover our expenses, invest in new products, and expand
our business. By positioning our products as specialty goods, we can create a perception of high value and exclusivity among our customers,
enabling us to charge premium prices. Additionally, our unique selling proposition of wireless, battery-powered electronic fire sprinkler
technology that can interface with traditional fire sprinklers is not currently available in the market, reducing competition. We believe
that the quality and performance of our products will lead to increased customer loyalty and distinctive brand identity due to their premium
quality and their ability to adequately and reasonably provide protection in applications that are considered highly challenging for fire
suppression.
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Our company is also planning to offer specialized
training services for companies that provide licensed inspection, testing, and maintenance services for fire protection systems. We understand
the importance of ongoing maintenance and servicing for fire sprinkler systems, which is why we aim to guide these companies in the proper
installation and servicing of our revolutionary Sparx™ Smart Sprinkler System. Our training program will provide us with indirect
sales revenue by creating an ecosystem of knowledgeable and confident users who are more likely to recommend and promote the Sparx™
Smart Sprinkler System. It is crucial for those installing and servicing our system to have the knowledge and confidence necessary to
ensure proper installation and functionality. Our training program will cover all aspects of installing and servicing our system, from
basic installation and troubleshooting to more advanced maintenance and repair. As our customers become more proficient in using our products,
they can also become advocates for it. This is particularly true in the fire protection industry where word-of-mouth recommendations can
be critical to success. In addition, our training program can also help build trust and credibility with our customers. By investing in
training and education, we are demonstrating a commitment to supporting our customers and ensuring their success with the Sparx™
Smart Sprinkler System. This can help to build long-term relationships with our customers and increase their loyalty to our brand. We
believe that this will not only generate indirect sales for our company but will also enhance the quality of service provided to our customers,
resulting in increased customer loyalty.
Our revenue stream also includes our subscription-based SaaS tool that
offers customers the convenience of accessing our software application to monitor the health and status of their fire sprinkler system,
wherever and whenever they need to. Additionally, our customers can choose to receive timely notifications via SMS or email alerts in
case of any trouble, supervisory signals, or alarm conditions present in their system. This service is beneficial to customers to gain
insight to their system whenever and wherever they want to, even if they are away from the warehouse. Regular inspection, testing, and
maintenance is necessary for all fire sprinkler systems, and for electronic fire sprinkler systems, there may be additional requirements
such as retrieving reports from the system to verify that sprinklers are detecting temperatures within a normal range. With the establishment
of timely notifications for inspection, testing, and maintenance needs, building owners and warehouse maintenance managers can proactively
manage the requirements for their fire sprinkler system, resulting in peace of mind that their fire sprinkler systems will perform when
needed. Our SaaS tool can provide a predictable and steady revenue stream generated by recurring subscriptions and can help provide stability
and predictability for our business over time.
Intellectual Property
Sparx Technologies, LLC filed a provisional patent application
with a Serial No. 63/304,302 filed with the United States Patent Office (“USPTO”) on January 28, 2022, a utility patent application
filed with the USPTO on January 20, 2023 with Serial No. 18/099,584, and an international application filed with the USPTO on January
23, 2023 with Serial No. PCT/US23/11314 intended to protect Sparx’s battery-powered wireless fire sprinkler technology. Sparx relies
on a combination of patent, trademark, copyright, trade secret, and contractual protections to establish and protect its intellectual
proprietary rights.
Sparx Technologies, LLC has also filed federal trademark registration
applications in the U.S. for the SPARX word mark and logo covering use with our goods and services which are pending examination.
We believe it is important to our success that we:
•
Obtain and maintain patents and other legal protections covering our proprietary art, materials, technology, inventions, applications of such, and improvements we consider important to our business;
•
Prosecute our patent and trademark applications and enforce our intellectual
property rights;
•
Preserve the confidentiality of our trade secrets; and
•
Operate without infringing the patents, trademarks or proprietary rights of third parties.
Our Approach
We believe that there is a lot of room for innovation to meet the
fire protection needs of today's modern businesses and building owners. The design of fire sprinklers has not changed significantly over
the last fifty or so years and still consists of mostly simple mechanical components 1 . Traditional sprinklers cultivated
from 19 th century science use the same physical element to detect fires as they do to cause water to flow. Traditional fire
sprinklers can face many complications because the heat-sensitive operating element shares two important primary functions, fire detection
and sprinkler actuation. If a fire starts near the ground under a storage rack in a tall warehouse, significant fire spread can occur
by the time a fire is detected at the ceiling, where sprinklers are commonly located. A single sprinkler could operate and a phenomenon
known as sprinkler skipping can occur that will cause sprinklers farther away from the fire origin to activate earlier than those that
are closer and fire can continue to spread 2 . Our patent pending technology will allow for the decoupling of fire detection
from sprinkler activation and will provide us with the ability to have greater control over sprinkler operations and respond to fires
very early on in fire development. We believe that we can disrupt the fire sprinkler industry with our ability to leverage electronics
and software in fire sprinkler system design by fundamentally changing the way the industry approaches fire suppression.
We intend to create a framework for fire protection that will allow
for wireless communication and electronic detection and actuation of sprinklers. With this framework, we will be able to use the same
basic hardware components, and program application-specific algorithms 3 tailored to the building, environment, and the structure
and commodities the system is designed to protect. Our advanced algorithms are computation instructions designed to regulate the sampling
of sensor data by fire sprinklers and accurately detect the presence of fire. When a fire condition is detected, the algorithm automatically
triggers the most optimal fire sprinklers to suppress that fire via software, resulting in effective and efficient fire suppression. Our
framework will allow us to make minimal, non-invasive changes when applying our patent pending technology from one customer-specific application
to the next, allowing us to formulate solutions for various highly challenging fires quickly and effectively. Having the ability to pull
additional levers with software and algorithms will give us the edge we need to deliver where traditional sprinklers cannot. We will be
able to use software to change the way sprinklers respond to fires without redesigning the physical components of the sprinkler itself.
This flexibility and adaptability will give Sparx an advantage when it comes to making design changes and expanding our product offerings.
1 Murphey,
Dakota. “A History of Fire Sprinklers - IFSEC Global: Security and Fire News and Resources.” IFSEC Global | Security and Fire
News and Resources. IFSEC Global | Security and Fire News and Resources, May 1, 2019. https://www.ifsecglobal.com/fire-news/a-history-of-fire-sprinklers/.
2 Xin, Yibing.
“SMART Sprinkler for Highly Challenging Fires.” SFPE Europe , Issue 20 (Q4 2020). https://www.sfpe.org/publications/sfpeeuropedigital/sfpeeurope20.
3 Our application specific algorithms will contain a set
of instructions that govern which sprinklers are needed for operation and when those sprinklers must operate in the event of a fire. The
instructions may be different for various applications depending on factors like building layout, ceiling heights, commodity, how the
commodity is stored, etc.
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Employees
We have no contractual employees. Cassandra DeNunzio is our Chief
Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and director. Jeffrey DeNunzio is also a director of
the Company. Cassandra DeNunzio and Jeffrey DeNunzio are our only directors.
At this time, Cassandra DeNunzio and Jeffrey DeNunzio are not
compensated for their services provided to the Company. We have no plans at this time to compensate any of our directors however, we
may elect to compensate them in the future for services they may provide to the Company.
Ms. DeNunzio works full time for both Sparx Holdings Group, Inc., and
Sparx Technologies, LLC. Sparx Technologies, LLC is a Wyoming Limited Liability Company.
On
August 29, 2022, we entered into a Patent License Agreement with Sparx Technologies, LLC and adopted its operations and business plan
to commercialize new generation wireless fire suppression technology developed by our CEO into a fire protection/fire safety product
line (including the Sparx™ Smart Sprinkler System ).
Ms. DeNunzio has the flexibility to further our business plan and develop new generation fire suppression
technology. Jeffrey DeNunzio works full time as an outside business consultant, however, he assists part time in assisting Ms.
Cassandra DeNunzio in further the Company’s business agenda.
We do not presently have pension, health, annuity, insurance, stock options,
profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available
to our officer and directors.
Item 1A. Risk Factors.
As a smaller reporting company, as defined
in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
At present, we do not rent nor own any
properties. We utilize home office space of management at no cost.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.