<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 14, 2000 (AMENDED AS OF JANUARY 16, 2001)
---------------------------------------------------
(Date of Report)
SILVER RAMONA MINING, INC.
--------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-23737 820290939
-------- ------- ---------
(State or other
jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2100 HIGHWAY 360, SUITE 400-B, GRAND PRAIRIE, TEXAS 75050
---------------------------------------------------------
(Address of principal executive offices)
(972) 641-5494
--------------
(Registrant's telephone number, including area code)
NONE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT.
ITEM 5. OTHER EVENTS.
GENERAL
As of May 9, 2000, Silver Ramona Mining, Inc., a Delaware corporation (the
"Company"), its wholly-owned subsidiary, Achievement Tec Acquisition
Corporation, a Delaware corporation ("Acquisition"), and Achievement Tec, Inc.,
a Texas corporation ("Achievement Tec"), entered into an Agreement and Plan
of Merger, subsequently amended by a certain Addendum to Agreement and Plan of
Merger, dated as of July 1, 2000, among the Company, Acquisition and Achievement
Tec (as amended, the "Merger Agreement"), whereby Acquisition will merge with
and into Achievement Tec pursuant to the law of the States of Delaware and Texas
and Achievement Tec will be the surviving corporation (the "Merger"). Pursuant
to the Merger Agreement, the pre-Merger holders of capital stock of Achievement
Tec will receive an aggregate of 7,014,448 shares of common stock of the
Company, representing 70% of the outstanding common stock of the Company
immediately following such issuance. The last reported bid price for a share of
common stock was $0.0625 on November 10, 2000. Accordingly, as 7,014,448 shares
of the common stock of the Company were issued in connection with the Merger,
the Company estimates the value of the Merger transaction is approximately
$438,400.
The following table sets forth information as of the date hereof with
respect to the beneficial ownership of the outstanding shares of common stock of
the Company immediately following the Merger by (i) each person known by the
Company to beneficially own five percent (5%) or more of the outstanding shares;
(ii) the Company's officers and directors; (iii) the Company's officers and
directors as a group; and (iv) the Company's nominee directors.
As used in the table below, the term "BENEFICIAL OWNERSHIP" means the sole
or shared power to vote or direct the voting, or to dispose or direct the
disposition, of any security. A person is deemed as of any date to have
beneficial ownership of any security that such person has a right to acquire
within 60 days after such date. Except as otherwise indicated, the stockholders
listed below have sole voting and investment powers with respect to the shares
indicated.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENTAGE OF CLASS
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
---------------- ------------------ ----------------------
<S> <C> <C>
Dale B. Lavigne* 82,487 0.8%
Box A
Osburn, ID 83849
Lewis J. Lavigne* 78,004 0.8%
HC-01 Box 188
Kellogg, ID 83837
Duane E. Little* 79,929 0.8%
211 West Elder
Kellogg, ID 83837
Robert S. Turnbow* 78,618 0.8%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES OF COMMON STOCK PERCENTAGE OF CLASS
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED (1)
---------------- ------------------ ----------------------
<S> <C> <C>
211 West Elder
Kellogg, ID 83837
Glenn A. Arbeitman(2) 1,047,252 10.4%
155 First Street
Mineola, NY 11501
Corey Ribotsky(3) 1,238,875 12.4%
155 First Street
Mineola, NY 11501
Richard Berman** 859,613 8.6%
c/o Achievement Tec, Inc.
2100 Highway 360
Suite 400-B
Grand Prairie, Texas 75050
Milton Cotter**(4) 3,790,571 37.9%
c/o Achievement Tec, Inc.
2100 Highway 360
Suite 400-B
Grand Prairie, Texas 75050
Eric Cotter** 449,965 4.5%
c/o Achievement Tec, Inc.
2100 Highway 360
Suite 400-B
Grand Prairie, Texas 75050
Joseph C. Lloyd** 0 0
c/o Achievement Tec, Inc.
2100 Highway 360
Suite 400-B
Grand Prairie, Texas 75050
All Current Officers and
Directors as a Group 319,038 3.2%
(4 Persons)
All Nominee Directors 5,100,149 50.9%
as a Group (4 persons)
</TABLE>
----------------------
* Indicates Current Director
** Indicates Nominee Director
(1) Calculated based upon approximately 10,014,448 shares of common
stock outstanding following the Merger and presumes all shares are
issued pursuant to the Merger.
(2) Includes 394,752 shares owned of record by New Millenium Capital
Partners II, LLC, entities controlled by the referenced individual.
(3) Includes 191,623 shares owned of record by AJW Partners, LLC and
394,752 shares owned of record by New Millenium Capital Partners II,
LLC, entities controlled by the referenced individual.
(4) Includes 1,821,292 shares held by the Cotter 1986 Trust, of which
the referenced individual is trustee.
<PAGE>
The Board of Directors of the Company presently consists of four members.
The Designated Directors will assume office concurrently with the effective time
of the Merger. This will be accomplished at a meeting by written consent of the
Board of Directors providing that the current directors will resign, such that
immediately following such action, the vacancies will be filled by the
Designated Directors.
The Designated Directors listed below have consented to act as a director
of the Company. The Designated Directors will constitute all of the members of
the Board after they are appointed.
DIRECTORS OF THE COMPANY FOLLOWING THE MERGER
MILTON COTTER has served as Chairman of the Board of Directors, President,
and Chief Executive Officer of Achievement Tec since 1997. In 1963, he joined
the Atomic Energy Commission's and The Department of Defense's nuclear weapons
effort through Sandia Nuclear Weapons Laboratory. In this job, he was part of
the team that handled assessments within companies to establish vendors who
could provide people possessing the abilities to work on high quality and top
secret parts for nuclear weapons. After leaving Sandia in 1968, Mr. Cotter
applied assessment technology into both the Cabot Corporation and the Kane
Miller Corporation, by going into the newly acquired companies and testing the
people to determine who to keep in what jobs, thus resulting in the newly
acquired company performing well as part of the company that acquired them. In
1972, Mr. Cotter became a private consultant to several companies, in
conjunction with a psychological testing firm in Dallas, using standardized
tests available on the marketplace. In 1988, Mr. Cotter assembled a staff to
begin building the computer software in the assessment industry. That technology
has been used to create benchmarks by job category of thousands of jobs within
companies. In 1997, Mr. Cotter used that database of jobs, adding to it, which
has resulted in a database of thousands of jobs based on successful people in
companies across America and Canada. This database is now used across America in
the hiring process by companies of all sizes, as well as Workforce Commissions
in the career direction of people. Because of the success of the system, the
system has since been emulated by testing firms that have come into existence in
the marketplace.
ERIC COTTER is the son of Milton Cotter and has served as the Vice
President of Administration of Achievement Tec since 1985. Mr. Cotter has
overseen the filing of all copyrights, integration work with the systems and
administrative functions of the company, including financial administration,
accounting, bookkeeping, payables, receivables, payroll and taxes. Mr. Cotter
also acts as a liaison between professionals for mergers and acquisitions. Most
recently, he has assumed responsibility for overseeing work related to bringing
up the applicant/job matching system utilized by the greater New York City
Consortium for Worker Education. Mr. Cotter graduated from Baylor University in
1985 with a BBA.
RICHARD BERMAN has over 30 years of experience in private equity,
investment banking and business development/operations. In September, 1998, Mr.
Berman joined Internet Commerce Company (publicly traded on Nasdaq: ICCSA) and
is currently a Director of ICC, as well as Chairman of the Board for Knowledge
Cube. For more than 15 years prior to that, Mr. Berman, through American
Acquisition Company, acted as principal in venture capital and real estate, as
an advisor in mergers and acquisitions and as a source of funding for small
growth companies. He was
<PAGE>
also the Chairman of Prestolite Battery, the largest battery producer in Canada,
as well as Senior Vice President of Bankers Trust. Berman holds an MBA from New
York University, a JD from Boston College and a Graduate Diploma from the Hague
Academy of International Law.
JOSEPH C. LLOYD has served as President and co-owner of Career
Direction, Inc., a career fair management company specializing in the
multi-unit restaurant industry, since 1993. Prior to Career Direction, Mr.
Loyd was the General Manager of Operations for Tia's Tex-Mex Restaurant chain
in Dallas, Texas. Mr. Loyd's twelve years of operational management
experience consisted of employment with Bennigan's, No. 1 Pearl Street,
Tolbert's and Tia's Tex Mex. Prior to moving to Dallas, Mr. Loyd owned and
operated his own restaurant in Oklahoma City, Oklahoma for three years. Mr.
Loyd attended Oklahoma State University from 1977 to 1981.
To the best of the Company's knowledge, none of the Designated Directors
beneficially currently own any equity securities, or rights to acquire any
equity securities of the Company, or has been involved in any transactions with
the Company or any of its directors, executive officers or affiliates, except
for the transactions contemplated by the Merger Agreement and the exhibits
thereto.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY PRIOR TO THE MERGER
The following is certain biographical information with respect to the
members of the Board of Directors and Executive Officers of the Company prior to
the Merger.
ROBERT S. TURNBOW, age 80, is President of the Company and has been a
director since its inception in 1967. For the past five years and previously,
Mr. Turnbow has served as a director of several other small mining companies in
Idaho. He is also a retired motel owner and operator. Mr. Turnbow has over 25
years of mining industry experience.
DALE B. LAVIGNE, age 67, is the Secretary and Treasurer of the Company and
has been a director since its inception in 1967. For the past five years and
previously, Mr. Lavigne worked as an officer and/or director of several mining
companies, including the Metropolitan Mines Corporation. He is also President,
director and major shareholder of Osburn Drug Company of Osburn, Idaho. Mr.
Lavigne attended the University of Montana where he earned a degree as a
pharmacist.
LEWIS J. LAVIGNE, age 73, has been a director of the Company since its
inception in 1967. He has over 25 years of experience in management of the
Company and other small mining enterprises. In recent years, he has also worked
as a director of other small mining companies in Idaho. He is an officer,
director and shareholder of Osburn Drug Company of Osburn, Idaho. Mr. Lavigne
attended the University of Idaho and is a retired metallurgical accountant by
training.
DUANE E. LITTLE, age 60, has been a director of the Company since its
inception in 1967. He has over 25 years of experience in management of the
Company and has worked as a director of other small mining companies. He has
also held the position of Shoshone County Assessor since 1975. He studied
business and applied science at the University of Idaho where he received a
bachelor's degree.
<PAGE>
ABOUT ACHIEVEMENT TEC
Achievement Tec provides testing and assessment services for use in the
employment applicant selection process, employee training and development and
career aptitude assessment and placement. These testing and assessment services
are available as software and Internet applications and in traditional paper
formats.
Achievement Tec also offers online services to individuals and employees
across America, in Canada and around the world, and anticipates offering
employee background checking capabilities through the Internet, as well.
Achievement Tec has recently acquired contracts for Tarrant County, Texas,
and the greater New York City area, to provide services matching unemployed
workers with jobs in those geographic areas, and is currently bidding and
negotiating on other contracts in other cities across America.
* * *
The transaction described above is qualified in its entirety by the Merger
Agreement and related documents and subject to various conditions set forth in
the Merger Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The required financials have been attached to this filing as Annex A.
(b) Pro Forma Financial Information.
The required financials have been attached to this filing as Annex A.
(c) Annexes and Exhibits.
Annex A Financial Statements
Exhibit 10.1* Agreement And Plan Of Merger, dated as of May 9,
2000, among Silver Ramona Mining, Inc., Achievement Tec
Acquisition Corporation, and Achievement Tec, Inc., as
heretofore amended and supplemented
--------
* previously filed.
<PAGE>
ANNEX A
ACHIEVEMENT TEC, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998 (AUDITED)
AND
SEPTEMBER 30, 2000 (UNAUDITED)
<PAGE>
ACHIEVEMENT TEC, INC.
FINANCIAL STATEMENTS
INDEX
PAGE
DECEMBER 31, 1999 AND 1998 (AUDITED):
INDEPENDENT AUDITORS' REPORT F2
BALANCE SHEETS F3
STATEMENTS OF OPERATIONS F4
STATEMENT OF STOCKHOLDERS' DEFICIENCY F5
STATEMENTS OF CASH FLOWS F6
NOTES TO FINANCIAL STATEMENTS F7-F14
SEPTEMBER 30, 2000 (UNAUDITED):
BALANCE SHEETS (UNAUDITED) F15
STATEMENTS OF OPERATIONS (UNAUDITED) F16
STATEMENT OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) F17
STATEMENTS OF CASH FLOWS (UNAUDITED) F18
NOTES TO FINANCIAL STATEMENTS F19-F23
SILVER RAMONA MINING COMPANY AND SUBSIDIARY
PROFORMA FINANCIAL STATEMENTS (UNAUDITED):
UNAUDITED PROFORMA CONSOLIDATED FINANCIAL DATA F24
PROFORMA CONSOLIDATED BALANCE SHEET (UNAUDITED) F25-F26
NOTES TO PROFORMA CONSOLIDATED BALANCE SHEET F27
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS F28
- F1 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
ACHIEVEMENT TEC, INC.
We have audited the accompanying balance sheets of ACHIEVEMENT TEC, INC. as of
December 31, 1999 and 1998, and the related statements of operations,
stockholders' deficiency and cash flows for the years then ended. 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ACHIEVEMENT TEC, INC. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
July 15, 2000
- F2 -
<PAGE>
ACHIEVEMENT TEC, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,000 $ --
Accounts receivable, net of allowance for
doubtful accounts of $6,000 and $22,743 40,583 76,717
Prepaid expenses 4,275 --
--------- ---------
Total current assets 49,858 76,717
Property and equipment, net of accumulated
depreciation of $12,438 and $5,900 35,469 11,575
Other assets 68,171 2,671
--------- ---------
TOTAL ASSETS $ 153,498 $ 90,963
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Bank overdraft $ 17,007 $ 26,401
Accounts payable and accrued expenses 27,847 40,170
Notes payable - Current 217,932 180,159
--------- ---------
Total current liabilities 262,786 246,730
Due to officer 219,238 256,811
Notes payable - Non Current 114,629 195,693
--------- ---------
Total liabilities 596,653 699,234
--------- ---------
Commitments and contingencies -- --
STOCKHOLDERS' DEFICIENCY
Preferred stock - no par value; 1,000,000
shares authorized; 139,958 issued and outstanding 200,000 --
Common stock - no par value; 1,000,000
shares authorized; 500,000 issued and outstanding 52,744 52,744
Accumulated deficit (695,899) (661,015)
--------- ---------
Total stockholders' deficiency (443,155) (608,271)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 153,498 $ 90,963
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F3 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
REVENUE $ 1,109,889 $ 1,148,814
----------- -----------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Salary and employee benefits 663,259 660,657
Product costs 108,300 --
Commission expense 19,044 70,812
Insurance expense 65,080 92,901
Depreciation and amortization expense 6,538 21,394
Professional fees 17,512 8,000
Travel and entertainment expense 44,844 70,196
Rent expense 52,802 46,369
Advertising expense 4,297 5,208
Other general and administrative expenses 116,025 168,499
----------- -----------
Total selling, general and administrative expenses 1,097,701 1,144,036
----------- -----------
INCOME FROM OPERATIONS 12,188 4,778
----------- -----------
OTHER INCOME (EXPENSE)
Interest income -- 2,765
Interest expense (47,072) (41,684)
Other income -- 10,422
----------- -----------
Total other income (expense) (47,072) (28,497)
----------- -----------
LOSS BEFORE INCOME TAXES (34,884) (23,719)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (34,884) $ (23,719)
=========== ===========
NET LOSS PER COMMON SHARE
Basic $ (.07) $ (.05)
=========== ===========
Diluted $ (.07) $ (.05)
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F4 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock Total
----------------------- ---------------------- Accumulated Stockholders'
Shares Amount Shares Amount Deficit Deficiency
--------- --------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 500,000 $ 52,744 -- $ -- $(637,296) $(584,552)
Net Loss for the Year Ended
December 31, 1998 -- -- -- -- (23,719) (23,719)
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1998 500,000 52,744 -- -- (661,015) (608,271)
Net Loss for the year ended
December 31, 1999 -- -- -- -- (34,884) (34,884)
Issuance of preferred stock -- -- 139,958 200,000 -- 200,000
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1999 500,000 $ 52,744 139,958 $ 200,000 $(695,899) $(443,155)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F5 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net loss $ (34,884) $ (23,719)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 6,538 21,394
Bad debt expense (recovery) (16,743) 22,743
Changes in certain assets and liabilities:
(Increase) decrease in accounts receivable 52,877 (43,524)
(Increase) decrease in prepaid expenses (4,275) 55,065
Increase (decrease) in bank overdraft (9,394) 4,724
Decrease in accounts payable and accrued expenses (12,322) (20,023)
--------- ---------
Total cash (used in) provided by operating activities (18,203) 16,660
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in property and equipment (30,432) (32,999)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in other assets (65,500) --
Repayment of note payable (43,291) (23,446)
Increase (decrease) in due to officer (37,574) 39,785
Sale of preferred stock 200,000 --
--------- ---------
Total cash provided by financing activities 53,635 16,339
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,000 --
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR -- --
--------- ---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 5,000 $ --
========= =========
CASH PAID DURING THE YEAR FOR:
Interest expense $ 47,072 $ 41,685
========= =========
Income taxes $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F6 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) ORGANIZATION
Achievement Tec, Inc. (the "Company"), formerly known as Profile
Technologies, Inc. and Communications Institute of America, Inc.,
was incorporated under the laws of the state of Texas during 1956.
b) LINE OF BUSINESS
The Company develops, markets, and sells computer PC Software to
compare an individual's mental aptitudes and personality traits to
the aptitudes and traits (and the levels required) for success in a
particular job. During 1999 and 1998, the Company has expanded its
product line and converted it for utilization via the internet. The
Company has developed product lines and business models for
e-commerce that focus on applicant attraction, employee selection,
employee training and development and delivery of online services.
For delivery of these product lines, the Company has developed the
following websites:
www.virtualhrcenter.com
www.positivestep.com
www.careerdirection.com
www.mycareerdirection.com
c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the periods presented. Actual results
could differ from those estimates.
d) REVENUE RECOGNITION
Revenue is recognized based upon the accrual method of accounting.
Revenue is recorded at the time of the sale, usually upon shipment
of the product.
e) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
f) CONCENTRATION OF CREDIT RISK
The Company places its cash in what it believes to be credit-worthy
financial institutions. However, cash balances may exceed FDIC
insured levels at various times during the year.
g) PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method based upon the estimated useful lives
of the various classes of assets.
- F7 -
<PAGE>
ACHIEVEMENT TEC, INC., INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h) INCOME TAXES
Income taxes are provided for based on the liability method of
accounting pursuant to Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes". The liability
method requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary
differences between the reported amount of assets and liabilities
and their tax basis.
i) ADVERTISING COSTS
Advertising costs are expensed as incurred and included in selling,
general and administrative expenses. For the years ended December
31, 1999 and 1998, advertising expense amounted to $4,297 and
$5,208, respectively.
j) FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial
instruments consist of cash, accounts receivable, inventory,
accounts payable and accrued expenses, and long-term debt. The
carrying amounts of cash, accounts receivable and accounts payable
and accrued expenses approximate fair value due to the highly liquid
nature of these short-term instruments. The fair value of long-term
borrowings was determined based upon interest rates currently
available to the Company for borrowings with similar terms. The fair
value of long-term borrowings approximates the carrying amounts as
of December 31, 1999 and 1998.
k) LONG-LIVED ASSETS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" requires that
long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company has adopted this statement
and has determined that recognition of an impairment loss for
applicable assets of continuing operations is not necessary.
l) STOCK-BASED COMPENSATION
SFAS No. 123, "Accounting for Stock-Based Compensation", encourages,
but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company
has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and
related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.
m) LOSS PER SHARE
SFAS No. 128, "Earnings Per Share" requires presentation of basic
loss per share ("Basic LPS") and diluted loss per share ("Diluted
LPS").
- F8 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
m) LOSS PER SHARE (CONTINUED)
The computation of basic loss per share is computed by dividing loss
available to common stockholders by the weighted average number of
outstanding common shares during the period. Diluted loss per share
gives effect to all dilutive potential common shares outstanding
during the period. The computation of diluted LPS does not assume
conversion, exercise or contingent exercise of securities that would
have an anti-dilutive effect on losses.
The shares used in the computation of loss per share were as follows
as of December 31, 1999 and 1998:
Basic 500,000
=======
Diluted 500,000
=======
n) COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income" establishes standards
for the reporting and display of comprehensive income and its
components in the financial statements. As of December 31, 1999 and
1998, the Company has no items that represent comprehensive income
and, therefore, has not included a schedule of comprehensive income
in the financial statements.
o) IMPACT OF YEAR 2000 ISSUE
During the year ended December 31, 1998, the Company conducted an
assessment of issues related to the Year 2000 and determined that it
was necessary to modify or replace portions of its software in order
to ensure that its computer systems will properly utilize dates
beyond December 31, 1999. The Company expects to complete any Year
2000 systems modifications and conversions by the beginning of 1999.
Currently, the Company does not expect costs associated with
becoming Year 2000 compliant to be material. At this time, the
Company cannot determine the impact the Year 2000 will have on its
key customers or suppliers. If the Company's customers or suppliers
don't convert their systems to become Year 2000 compliant, the
Company may be adversely impacted. The Company is addressing these
risks in order to reduce the impact on the Company.
p) RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 131, "Disclosure About Segments of an Enterprise and
Related Information" was issued, which changes the way public
companies report information about segments. SFAS No. 131, which is
based on the selected segment information, requires quarterly and
entity-wide disclosures about products and services, major
customers, and the material countries in which the entity holds
assets and reports revenues. SFAS No. 131 does not effect the
Company as of December 31, 1999 and 1998.
- F9 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
p) RECENT ACCOUNTING PRONOUNCEMENTS (continued)
SFAS No. 132, "Employers' Disclosures about Pension and Other Post
Employment Benefits," was issued in February 1998 and specifies
amended disclosure requirements regarding such obligations. SFAS No.
132 does not effect the Company as of December 31, 1999 and 1998.
SFAS No. 133, "Accounting for Derivative Instruments and for Hedging
Activities" requires that certain derivative instruments be
recognized in balance sheets at fair value and for changes in fair
value to be recognized in operations. Additional guidance is also
provided to determine when hedge accounting treatment is appropriate
whereby hedging gains and losses are offset by losses and gains
related directly to the hedged item. While the standard, as amended,
must be adopted in the fiscal year beginning after June 15, 2000,
its impact on the Company's financial statements is not expected to
be material as the Company has not historically used derivative and
hedge instruments.
Statement of Position ("SOP") No. 98-1 specifies the appropriate
accounting for costs incurred to develop or obtain computer software
for internal use. The new pronouncement provides guidance on which
costs should be capitalized, and over what period such costs should
be amortized and what disclosures should be made regarding such
costs. This pronouncement is effective for fiscal years beginning
after December 15, 1998, but earlier application is acceptable.
Previously capitalized costs will not be adjusted. The Company
believes that it is already in substantial compliance with the
accounting requirements as set forth in this new pronouncement, and
therefore believes that adoption will not have a material effect on
financial condition or operating results.
SOP No. 98-5 requires that companies write-off previously defined
capitalized start-up costs including organization costs and expense
future start-up costs as incurred. This statement does not effect
the Company as of December 31, 1999 and 1998.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Machinery and Equipment $ 44,907 $ 17,475
Furniture and Fixtures 3,000 --
-------- --------
47,907 17,475
Less: Accumulated Depreciation (12,438) (5,900)
-------- --------
Property and Equipment, net $ 35,469 $ 11,575
======== ========
</TABLE>
Depreciation expense for the years ended December 31, 1999 and 1998
was $6,538 and $21,394, respectively.
- F10 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - NOTES PAYABLE
Notes payable consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
a) First Savings Bank - Interest rate 7.75% -
Due on March 25, 2000 $ 109,932 $ 110,000
b) First Savings Bank - Interest rate 10.5% -
Due on December 15, 2000 48,000 60,159
Various Notes Payable - Interest rate 7% -
Due at various dates to 2002 174,629 195,693
Compass Bank - Interest rate 10.5% -
Due on October 16, 1999 -- 10,000
--------- ---------
332,561 375,852
Less: Current Portion (217,932) (180,159)
--------- ---------
Long-Term Portion $ 114,629 $ 195,693
========= =========
</TABLE>
a) On March 25, 1999, the Company refinanced its $110,000 loan with
First Savings Bank. The loan amount remained $110,000 with interest
bearing a rate of 7.75% per annum due on March 25, 2000. Interest
only is payable on April 25, 1999 and then on the 25th day of each
month thereafter (see Note 8).
b) On August 1, 1999, the Company refinanced its $60,159 loan with
First Savings Bank. The loan bore interest at a rate of 10% per
annum due on August 1, 2000. This loan was then refinanced on
December 23, 1999. The loan balance totaled $48,000 bearing interest
at a rate of 10.5% per annum. The loan is payable in 11 payments of
$4,000 in principal plus accrued interest beginning on January 15,
2000 and payable the 15th day of every month thereafter until
December 15, 2000 when the entire balance shall be due (see Note 8).
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a) The Company leases office space under an operating lease expiring
July 31, 2000. Minimum monthly payments under the lease total
$4,150. Rent expense under operating leases for the year ended
December 31, 1999 and 1998 was approximately $52,802 and $46,369,
respectively (See Note 8).
b) The Company is a party to claims and lawsuits arising in the normal
course of operations. Management is of the opinion that these claims
and lawsuits could have a material effect on the financial position
of the Company. The Company believes its exposure from these claims
and lawsuits should not be material as of December 31, 1999 and
1998.
- F11 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 5 - PREFERRED STOCK
On September 20, 1999, the Company amended their Articles of
Incorporation to have the authority to issue 1,000,000 shares of
newly created preferred Class A stock with no par value. The
preferred stock is convertible on a 1:1 basis with the Company's
common stock. As of December 31, 1999, 139,958 shares have been
issued.
NOTE 6 - RELATED PARTY TRANSACTIONS
As of December 31, 1999 and 1998, the Company has a payable due to
an officer totaling $219,238 and $256,811, respectively. These
amounts represent advances made to the Company by its Chief
Executive Officer for various expenses. This payable bears interest
at the rate of 8% per annum, with interest only payable in monthly
installments beginning on January 1, 1999 continuing until January
1, 2004, at which time the remaining unpaid principal and interest
shall be due in full.
NOTE 7 - INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------
1999 1998
------- ------
<S> <C> <C>
Current Tax Expense
U.S. Federal $ -- $ --
State and Local -- --
------- ------
Total Current -- --
------- ------
Deferred Tax Expense
U.S. Federal -- --
State and Local -- --
------- ------
Total Deferred -- --
------- ------
Total Tax Provision (Benefit) from
Continuing Operations $ -- $ --
======= ======
</TABLE>
The reconciliation of the effective income tax rate to the Federal
statutory rate is as follows for the years ended December 31, 1999
and 1998:
<TABLE>
<CAPTION>
<S> <C>
Federal Income Tax Rate (34.0)%
Effect of Valuation Allowance 34.0%
----------
Effective Income Tax Rate 0.0%
==========
</TABLE>
- F12 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 7 - INCOME TAXES (Continued)
At December 31, 1999 and 1998, the Company had net carryforward
losses of approximately $695,899 and $661,015, respectively. Because
of the current uncertainty of realizing the benefit of the tax
carryforwards, a valuation allowance equal to the tax benefit for
deferred taxes has been established. The full realization of the tax
benefit associated with the carryforwards depends predominantly upon
the Company's ability to generate taxable income during the
carryforward period.
Deferred tax assets and liabilities reflect the net tax effect of
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and amounts used for
income tax purposes. Significant components of the Company's
deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
Deferred Tax Assets
Loss Carryforwards $ 236,600 $ 224,745
Less: Valuation Allowance (236,600) (224,745)
--------- ---------
Net Deferred Tax Assets $ -- $ --
========= =========
</TABLE>
Net operating loss carryforwards expire starting in 2007 through
2014. Per year availability is subject to change of ownership
limitations under Internal Revenue Code Section 382.
NOTE 8 - SUBSEQUENT EVENTS
a) During the period from January 1, 2000 to July 15, 2000, the Company
issued 279,916 shares of preferred stock for approximately $400,000.
b) During March 2000, the Company refinanced its $110,000 loan with
First Savings Bank. The loan amount remained $110,000 with interest
bearing a rate of 8.4% per annum due on March 25, 2001. Interest
only is payable on April 25, 2000 and then on the 25th day of each
month thereafter.
c) On March 1, 2000, the Company entered into an operating lease for
office space located in New York, New York. Minimum monthly payments
under the lease total $1,450.
d) On April 19, 2000, the Company borrowed $15,000 from First Savings
Bank. The loan bears interest at a rate of 11.5% per annum. The loan
is payable in 24 payments of $699 in principal plus accrued interest
beginning on May 19, 2002 and payable the 19th day of every month
thereafter until April 19, 2002 when the entire balance shall be
due. The loan is collateralized by certain accounts receivable,
inventory and equipment.
- F13 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 8 - SUBSEQUENT EVENTS (Continued)
e) During July 2000, the Company renewed its office space lease for a
period of one year expiring on July 31, 2001.
f) On July 13, 2000, the Company borrowed $50,000 from First Savings
Bank. The loan bears interest at a rate of 11.5% per annum. Interest
is payable on August 13, 2000, and payable the 13th day of every
month thereafter until October 13, 2000, when the entire balance
shall be due or upon demand if demand is made. The loan is
collateralized by certain accounts receivable, inventory and
equipment.
- F14 -
<PAGE>
ACHIEVEMENT TEC, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ -- $ 5,000
Accounts receivable, net of allowance for
doubtful accounts of $26,000 and $6,000 146,691 40,583
Prepaid expenses 79 4,275
--------- ---------
Total current assets 146,770 49,858
Property and equipment, net of accumulated
depreciation of $21,011 and $12,438 63,247 35,469
Other assets 68,766 68,171
--------- ---------
TOTAL ASSETS $ 278,783 $ 153,498
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Bank overdraft $ 12,123 $ 17,007
Accounts payable and accrued expenses 44,528 27,847
Notes payable - Current 331,624 217,932
--------- ---------
Total current liabilities 388,275 262,786
Due to officer 135,730 219,238
Notes payable - Non Current 4,893 114,629
--------- ---------
Total liabilities 528,898 596,653
--------- ---------
Commitments and contingencies -- --
STOCKHOLDERS' DEFICIENCY
Preferred stock - no par value; 1,000,000
shares authorized; 419,874 and 139,958
issued and outstanding 600,000 200,000
Common stock - no par value; 1,000,000
shares authorized; 500,000 issued and outstanding 52,744 52,744
Accumulated deficit (902,859) (695,899)
--------- ---------
Total stockholders' deficiency (250,115) (443,155)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 278,783 $ 153,498
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F15 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the Quarter Ended For the Nine Months Ended
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE $ 270,134 $ 294,572 $ 898,967 $ 831,737
----------- ----------- ----------- -----------
EXPENSES
Salary and employee benefits 253,452 158,048 733,673 490,154
Product costs 2,056 35,747 7,997 56,795
Commission expense 107 15,370 11,768 15,886
Insurance expense 14,270 10,755 45,144 29,828
Depreciation and amortization expense 5,531 1,559 16,428 4,194
Professional fees 5,300 9,143 87,882 40,118
Travel and entertainment expense 7,214 8,160 35,771 29,014
Rent expense 15,385 18,804 51,532 44,143
Advertising expense 890 408 5,776 3,082
Other general and administrative expenses 9,078 25,604 87,410 76,520
----------- ----------- ----------- -----------
Total selling, general and administrative expenses 313,283 283,598 1,083,381 789,734
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (43,149) 10,974 42,003
OTHER INCOME (EXPENSE):
Interest expense (6,697) (9,445) (22,546) (25,900)
---------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS BEFORE
PROVISION FOR INCOME TAXES (49,846) 1,529 (206,960) 16,103
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (49,846) $ 1,529 $ (206,960) $ 16,103
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE:
Basic and diluted $ (.10) $ .00 $ (.42) $ .03
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- F16 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENT OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK Total
-------------------- --------------------- Accumulated Stockholders'
SHARES AMOUNT SHARES AMOUNT DEFICIT DEFICIENCY
--------- --------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 500,000 $ 52,744 -- $ -- $(637,296) $(584,552)
Net Loss for the Year Ended
December 31, 1998 -- -- -- -- (23,719) (23,719)
-------- --------- --------- --------- --------- ---------
Balance at December 31, 1998 500,000 52,744 -- -- (661,015) (608,271)
Net Loss for the year ended
December 31, 1999 -- -- -- -- (34,884) (34,884)
Issuance of preferred stock -- -- 139,958 200,000 -- 200,000
-------- --------- --------- --------- --------- ---------
Balance at December 31, 1999 500,000 52,744 139,958 200,000 (695,899) (443,155)
Issuance of preferred stock
(Unaudited) -- -- 279,916 400,000 -- 400,000
Net Loss for the Nine Months
ended September 30, 2000
(Unaudited) -- -- -- -- (206,960) (206,960)
-------- --------- --------- --------- --------- ---------
Balance at September 30, 2000
(Unaudited) 500,000 $ 52,744 419,874 $ 600,000 $(902,859) $(250,115)
======== ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F17 -
<PAGE>
ACHIEVEMENT TEC, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
SEPTEMBER 30,
----------------------
2000 1999
---------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $(206,960) $ 16,103
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 16,428 4,194
Bad debt expense 20,000 --
Changes in certain assets and liabilities:
(Increase) decrease in accounts receivable (126,108) 45,054
(Increase) decrease in prepaid expenses 4,196 --
Increase (decrease) in bank overdraft (4,884) 26,401
Decrease in accounts payable and accrued expenses 16,681 26,016
---------
Total cash (used in) provided by operating activities (280,647) 117,768
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in property and equipment (36,351) (9,930)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in other assets (8,450) --
Repayment of note payable 3,956 (185,198)
Increase (decrease) in due to officer (83,508) (55,109)
Sale of preferred stock 400,000 150,000
--------- ---------
Total cash provided by financing activities 311,998 (90,307)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS (5,000) 17,531
CASH AND CASH EQUIVALENTS - BEGINNING 5,000 --
--------- ---------
CASH AND CASH EQUIVALENTS - ENDING $ -- $ 17,531
========= =========
CASH PAID DURING THE PERIOD FOR:
Interest expense $ 22,546 $ 25,900
========= =========
Income taxes $ -- $ --
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statement.
- F18 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) ORGANIZATION
Achievement Tec, Inc. (the "Company"), formerly known as Profile
Technologies, Inc. and Communications Institute of America, Inc.,
was incorporated under the laws of the state of Texas during 1956.
b) LINE OF BUSINESS
The Company develops, markets, and sells computer PC Software to
compare an individual's mental aptitudes and personality traits to
the aptitudes and traits (and the levels required) for success in a
particular job. During 1999 and 1998, the Company has expanded its
product line and converted it for utilization via the internet. The
Company has developed product lines and business models for
e-commerce that focus on applicant attraction, employee selection,
employee training and development and delivery of online services.
For delivery of these product lines, the Company has developed the
following websites:
WWW.VIRTUALHRCENTER.COM
WWW.POSITIVESTEP.COM
WWW.CAREERDIRECTION.COM
WWW.MYCAREERDIRECTION.COM
c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the periods presented. Actual results
could differ from those estimates.
d) REVENUE RECOGNITION
Revenue is recognized based upon the accrual method of accounting.
Revenue is recorded at the time of the sale, usually upon shipment
of the product.
e) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
f) CONCENTRATION OF CREDIT RISK
The Company places its cash in what it believes to be credit-worthy
financial institutions. However, cash balances may exceed FDIC
insured levels at various times during the period.
g) PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is computed
using the straight-line method based upon the estimated useful lives
of the various classes of assets.
- F19 -
<PAGE>
ACHIEVEMENT TEC, INC., INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h) INCOME TAXES
Income taxes are provided for based on the liability method of
accounting pursuant to Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes". The liability
method requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary
differences between the reported amount of assets and liabilities
and their tax basis.
i) ADVERTISING COSTS
Advertising costs are expensed as incurred and included in selling,
general and administrative expenses. For the nine months ended
September 30, 2000 and 1999, advertising expense amounted to $5,776
and $3,082, respectively.
j) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts
receivable, inventory, accounts payable and accrued expenses, and
long-term debt. The carrying amounts of cash, accounts receivable
and accounts payable and accrued expenses approximate fair value due
to the highly liquid nature of these short-term instruments. The
fair value of long-term borrowings was determined based upon
interest rates currently available to the Company for borrowings
with similar terms. The fair value of long-term borrowings
approximates the carrying amounts as of September 30, 2000 and 1999.
k) LONG-LIVED ASSETS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" requires that
long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company has adopted this statement
and has determined that recognition of an impairment loss for
applicable assets of continuing operations is not necessary.
l) STOCK-BASED COMPENSATION
SFAS No. 123, "Accounting for Stock-Based Compensation", encourages,
but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company
has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees", and
related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.
m) LOSS PER SHARE
SFAS No. 128, "Earnings Per Share" requires presentation of basic
loss per share ("Basic LPS") and diluted loss per share ("Diluted
LPS").
- F20 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
m) LOSS PER SHARE (CONTINUED)
The computation of basic loss per share is computed by dividing loss
available to common stockholders by the weighted average number of
outstanding common shares during the period. Diluted loss per share
gives effect to all dilutive potential common shares outstanding
during the period. The computation of diluted LPS does not assume
conversion, exercise or contingent exercise of securities that would
have an anti-dilutive effect on losses.
The shares used in the computation of income (loss) per share were
as follows as of September 30, 2000 and 1999:
SEPTEMBER 30,
------------------------
2000 1999
------- -------
Basic 500,000 500,000
======= =======
Diluted 500,000 505,000
======= =======
n) UNAUDITED FINANCIAL INFORMATION
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly its financial
position as of September 30, 2000 and the results of its operations
and cash flows for the nine months ended September 30, 2000 and
1999. These statements are condensed and therefore do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The results
of operations for the nine months ended September 30, 2000 and 1999,
are not necessarily indicative of the results to be expected for the
full year.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
September 30, December 31,
2000 1999
------------ ------------
Machinery and Equipment $ 74,638 $ 44,907
Furniture and Fixtures 9,620 3,000
------------ ------------
84,258 47,907
Less: Accumulated Depreciation (21,011) (12,438)
------------ ------------
Property and Equipment, net $ 63,247 $ 35,469
============ ============
Depreciation expense for the nine months ended September 30, 2000
and for the year ended December 31, 1999 was $8,573 and $6,538,
respectively.
- F21 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 3 - NOTES PAYABLE
Notes payable consisted of the following:
September 30, December 31,
2000 1999
------------- ------------
a) First Savings Bank - Interest rate 8.4%-
Due on March 25, 2001 $ 109,932 $ 109,932
b) First Savings Bank - Interest rate 10.5%-
Due on December 15, 2000 12,000 48,000
c) First Savings Bank - Interest rate 11%
Due on April 19, 2002 12,728 --
d) First Savings Bank - Interest rate 11.5%-
Due on October 13, 2000 50,000 --
Various Notes Payable - Interest rate 7%-
Due at various dates to 2002 151,857 174,629
--------- ---------
336,517 332,561
Less: Current Portion (331,624) (217,932)
--------- ---------
Long-Term Portion $ 4,893 $ 114,629
========= =========
a) On March 25, 1999, the Company refinanced its $110,000 loan with
First Savings Bank. The loan amount remained $110,000 with interest
bearing a rate of 7.75% per annum due on March 25, 2000. Interest
only is payable on April 25, 1999 and then on the 25th day of each
month thereafter. During March 2000, the Company refinanced the loan
again. The loan amount remained $110,000 with interest bearing a
rate of 8.4% per annum due on March 25, 2001. Interest only is
payable on April 25, 2000 and then on the 25th day of each month
thereafter.
b) On August 1, 1999, the Company refinanced its $60,159 loan with
First Savings Bank. The loan bore interest at a rate of 10.5% per
annum due on August 1, 2000. This loan was then refinanced on
December 23, 1999. The loan balance totaled $48,000 bearing interest
at a rate of 10% per annum. The loan is payable in 11 payments of
$4,000 in principal plus accrued interest beginning on January 15,
2000 and payable the 15th day of every month thereafter until
December 15, 2000 when the entire balance shall be due.
c) On April 19, 2000, the Company borrowed $15,000 from First Savings
Bank. The loan bears interest at a rate of 11% per annum. The loan
is payable in 24 payments of $699 in principal plus accrued interest
beginning on May 19, 2000 and payable the 19th day of every month
thereafter until April 19, 2002 when the entire balance shall be
due. The loan is collateralized by certain accounts receivable,
inventory and equipment.
d) On July 13, 2000, the Company borrowed $50,000 from First Savings
Bank. The loan bears interest at a rate of 11.5% per annum. Interest
is payable on August 13, 2000 and payable the 13th day of every
month thereafter until October 13, 2000 when the entire balance
shall be due or upon demand if demand is made. The loan is
collateralized by certain accounts receivable, inventory and
equipment.
- F22 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company leases office space in Dallas, Texas under an operating
lease expiring July 31, 2001. Minimum monthly payments under the
lease total $4,150.
On March 1, 2000, the Company entered into an operating lease for
office space located in New York, New York. Minimum monthly payments
under the lease total $1,450.
Rent expense under operating leases for the nine months ended
September 30, 2000 and 1999, was approximately $51,532 and $44,143,
respectively.
NOTE 5 - PREFERRED STOCK
On September 20, 1999, the Company amended their Articles of
Incorporation to have the authority to issue 1,000,000 shares of
newly created preferred Class A stock with no par value. The
preferred shares are convertible on a 1:1 basis with the Company's
commons stock. As of December 31, 1999, 139,958 shares have been
issued.
During the period from January 1, 2000 to July 15, 2000, the Company
issued 279,916 shares of preferred stock for $400,000. As of
September 30, 2000, 419,874 shares have been issued.
NOTE 6 - RELATED PARTY TRANSACTIONS
As of September 30, 2000 and December 31, 1999, the Company has a
payable due to an officer totaling $135,730 and $219,238,
respectively. These amounts represent advances made to the Company
by its Chief Executive Officer ("CEO") for various expenses. This
payable bears interest at the rate of 8% per annum, with interest
only payable in monthly installments beginning on January 1, 1999
continuing until January 1, 2004, at which time the remaining unpaid
principal and interest shall be due in full. During the nine months
ended September 30, 2000, the CEO was advanced approximately $83,500
against this loan.
NOTE 7 - SUBSEQUENT EVENTS
a) As of May 9, 2000, the Company, Silver Ramona Mining Company, a
Delaware corporation ("SRM"), and its wholly-owned subsidiary,
Achievement Tec Acquisition Corporation, a Delaware corporation
("Acquisition"), entered into an Agreement and Plan of Merger,
subsequently amended by a certain Addendum to Agreement and Plan of
Merger, dated as of July 1, 2000, among the Company, SRM and
Acquisition (as amended, the "Merger Agreement"), whereby
Acquisition will merge with and into the Company pursuant to the law
of the State of Delaware and Texas, and the Company will be the
surviving corporation (the "Merger"). Pursuant to the Merger
Agreement, the holders of the common and preferred stock of the
Company will receive an aggregate of 7,014,448 shares of common
stock of SRM, representing approximately 70% of the outstanding
common stock of SRM immediately following such issuance.
b) As per the amended Merger Agreement, the Company issued 139,958
shares of its preferred stock during November 2000, pre-merger
for $200,000.
c) The Company received a short-term convertible promissory note
dated November 9, 2000 totaling $100,000. The note matures on
August 9, 2001.
- F23 -
<PAGE>
SILVER RAMONA MINING COMPANY AND SUBSIDIARY
UNAUDITED PROFORMA CONSOLIDATED FINANCIAL DATA
The Unaudited Proforma Consolidated Balance Sheet of Silver Ramona Mining
Company (the "Company") as of September 30, 2000 (the "Proforma Balance Sheet")
and, together with the Proforma Statements of Operations, the "Proforma
Financial Statements"), has been prepared to illustrate the estimated effect of
the reverse triangular acquisition of Achievement Tec, Inc. and the plan of
reorganization with Achievement Tech Acquisition Corporation and the Company.
The Proforma Financial Statements do not reflect any anticipated cost savings
from the Acquisition, or any synergies that are anticipated to result from the
Acquisition, and there can be no assurance that any such cost savings or
synergies will occur. No Proforma adjustments were made for the Statement of
Operations since it was accounted for as a reorganization with a shell company.
The Proforma Balance Sheet gives proforma effect to certain stock transactions
which occurred prior to the reorganization, but subsequent to September 30,
2000. The Proforma Financial Statements do not purport to be indicative of the
financial position of the Company that would have actually been obtained had
such Acquisitions been completed as of the assumed date. The proforma
adjustments are described in the accompanying notes and are based upon available
information and certain assumptions that the Company believes are reasonable.
- F24 -
<PAGE>
SILVER RAMONA MINING COMPANY AND SUBSIDIARY
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000
Achievement Achievement Silver Pro Forma Pro Forma
Tec, Inc. Tec Ramona Adjustments Consolidated
Acquisition Mining
Corporation Company
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ -- $ -- $ 13,050 (A) $313,050
300,000 (B)
Accounts receivable 146,691 -- -- -- 146,691
Prepaid expenses 79 -- -- -- 79
--------- ------ ------ --------- --------
Total current assets 146,770 -- -- 313,050 459,820
Property and equipment 63,247 -- -- -- 63,247
Investment in subsidiary -- -- -- 437,500 (D) --
903 (E)
(438,403)(F)
Other assets 68,766 -- -- - 68,766
---------- ------ ------ --------- --------
TOTAL ASSETS $ 278,783 $ -- $ -- $ 313,050 $591,833
========== ====== ====== ========= ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Bank overdraft $ 12,123 $ -- $ -- $ -- $ 12,123
Accounts payable and accrued expenses 44,528 -- -- -- 44,528
Notes payable - Current 331,624 -- -- 100,000 (B) 431,624
---------- ------ ------ --------- --------
Total current liabilities 388,275 -- -- 100,000 488,275
Due to officer 135,730 -- -- -- 135,730
Notes payable - Non Current 4,893 -- -- -- 4,893
---------- ------ ------ --------- ---------
TOTAL LIABILITIES
528,898 - - 100,000 628,898
---------- ------ ------ --------- --------
</TABLE>
- F25 -
<PAGE>
SILVER RAMONA MINING COMPANY AND SUBSIDIARY
PRO FORMA CONSOLIDATED BALANCE SHEET (Continued)
<TABLE>
<CAPTION>
STOCKHOLDERS' DEFICIENCY
<S> <C> <C> <C> <C> <C>
Preferred stock - no par value; 1,000,000
shares authorized, 419,874 issued and
outstanding 600,000 -- -- 200,000 (B) --
37,929 (C)
(837,929) (F)
Preferred stock - no par value; 10,000,000
shares authorized, none issued and
outstanding -- -- -- -- --
Common stock - no par value; 1,000,000
shares authorized; 500,000 issued and
outstanding 52,744 -- -- (52,744) (F) --
Common stock - $0.001 par value;
50,000,000 shares authorized; 500,000
issued and outstanding -- 500 -- 2,500 (A) 10,014
7,000 (D)
14 (E)
Additional paid-in capital -- 119,520 -- 22,500 (A) 893,709
430,500 (D)
889 (E)
320,300 (F)
Accumulated deficit (902,859) (120,020) -- (11,950)(A) (940,788)
(37,929)(C)
131,970 (F)
---------- ----------- ----------- ---------- ------------
Total stockholders' deficiency (250,115) -- -- 213,050 (37,065)
---------- ----------- ----------- ---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 278,783 $ -- $ -- $ 313,050 $ 591,833
========== =========== =========== ========== ============
</TABLE>
- F26 -
<PAGE>
ACHIEVEMENT TEC, INC.
NOTES TO UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET
NOTE 1 - For purposes of this Pro Forma Balance Sheet, September 30, 2000
unaudited information was used.
NOTE 2 - The following is a description of the Pro Forma adjustments as
of September 30, 2000 for the Pro Forma Balance Sheet.
A) To record the issuance of 2,500,000 shares of SRM common stock
issued pre-merger valued at $0.01 per share. Of the pre-merger
shares issued, 1,305,000 were issued for cash, which totaled
$13,050, while 1,195,000 were issued as payment for past
services, which totaled $11,950. These shares were valued at
$0.01 per share, which approximated the fair value of the
stock pre-merger.
B) To record the issuance of 139,958 shares of Achievement Tec,
Inc. preferred stock for $200,000 and the issuance of a
$100,000 Convertible Promissory Note.
C) To record the issuance of 26,542 shares of Achievement Tec,
Inc. preferred stock for interest expense totaling $37,929.
D) To record the issuance of 7,000,000 shares of SRM common stock
valued at the last reported bid price for a share of SRM
common stock, which totaled $437,500 or $0.0625 per share as
of November 10, 2000. These shares were issued as
consideration for the 800,000 shares of preferred stock and
500,000 shares of common stock outstanding of Achievement
Tech, Inc. as per the merger agreement dated May 9, 2000,
subsequently amended July 1, 2000.
E) To record the issuance of 14,448 shares of SRM common stock
valued at the last reported bid price for a share of SRM
common stock, which totaled $903 or $0.0625 per share as of
November 10, 2000. These shares were issued as consideration
for the 8% cumulative interest due to the shareholders of the
600,000 shares of preferred stock outstanding of Achievement
Tec, Inc. pre-merger.
F) To record the elimination of the investment in Achievement
Tec, Inc., as well as the related reverse acquisition entries.
- F27 -
<PAGE>
ACHIEVEMENT TEC, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
A Proforma Consolidated Statement of Operations is not applicable due to the
transaction being structured as a public shell reverse acquisition merger.
- F28 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: JANUARY 16, 2001
SILVER RAMONA MINING, INC.
By: /s/ Milton S. Cotter
--------------------------
Name: Milton S. Cotter
Title: Chief Executive Officer
