UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SEURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12 (b)
or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNET CULINARY CORPORATION
FKA CAPITOL SILVER MINES, INC
---------------------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 82-0277068
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
410 BROADWAY, 2ND FLOOR; LAGUANA BEACH, CA 92651
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(949) 376-1554 FAX (49) 376-9117
- --------------------------------
(ISSUER'S TELEPHONE NUMBER)
SECURITIES TO BE REGISTERED UNDER SECTION 12 (b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- --------------------------- ------------------------------
- --------------------------- ------------------------------
SECURITIES TO BE REGISTERED UNDER SECTION 12 (g) OF THE ACT:
Common Stock - .001 Par Value
------------------------------
(TITLE OF CLASS)
<PAGE>
FORWARD LOOKING STATEMENTS
Internet Culinary Corporation, a developmental stage company
("Internet Culinary Corporation," or the "Company") cautions
readers that certain important factors may affect the
Company's actual results and could cause such results to
differ materially from any forward-looking statements that may
be deemed to have been made in this Form 10-SB or that are
otherwise made by or on behalf of the Company. For this
purpose, any statements contained in the Form 10-SB that are
not statements of historical fact may be deemed to be forward-
looking statements. Without limiting the generality of the
foregoing, words such as "may," "expect," "believe,"
"anticipate," "intend," "could," "estimate," "plans," or
"continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-
looking statements. Factors that may affect the Company's
results include, but are not limited to, the Company's limited
operating history, its ability to produce additional products
and services, its dependence on a limited number of customers
and key personnel, its possible need for additional financing,
its dependence on certain industries, and competition from its
competitors. With respect to any forward-looking statements
contained herein, the Company believes that it is subject to a
number of risk factors, including: the Company's ability to
implement its product strategies to develop its business in
emerging markets; competitive actions; and, general economic
and business conditions. Any forward-looking statements in
this report should be evaluated in light of these important
risk factors. The Company is also subject to other risks
detailed herein or set forth from time to time in the
Company's filings with the Securities and Exchange Commission.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
<PAGE>
TABLE OF CONTENTS
Part I 4
Item 1. Description of Business 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 5
Item 3. Description of Property 12
Item 4. Security Ownership of Management and
Others and Certain Security Holders 13
Item 5. Directors, Executives, Officers and
Significant Employees 13
Item 6. Remuneration of Directors and
Executive Officers 15
Item 7. Interest of Management and Others in
Certain Transactions 15
Item 8. Legal Proceedings 15
Part II 15
Item 1. Market Price of and Dividends of the
Registrant's Common Equity and Other
Stockholder Matters 15
Item 2. Recent Sales of Unregistered Securities 15
Item 3. Description of Securities 15
Item 4. Indemnification of Directors and Officers 15
Part F/S 15
Item 1. Financial Statements 15
Item 2. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 15
Part III 16
Item 1. Index to Exhibits 16
Item 2. Description of Exhibits 16
Signatures 16
<PAGE>
Part I
Item 1. Description of Business
Internet Culinary Corporation has been formed to manufacture
and market a series of nutritional, naturally flavored raisin
snack food products produced utilizing a patented process.
This process substantially removes the raisin flavor from
raisins and substitutes the natural flavor of fruits. This
flavoring can be of one fruit, or a combination of fruits in
each raisin.
Although other firms are trying to develop processes to
produce flavored raisins, Internet Culinary Corporation is the
only firm that has succeeded in removing the raisin flavor,
and replacing it using all natural ingredients. The demand for
flavored raisins will be extraordinary, and the management of
Internet Culinary Corporation plans to exploit the rights
gained from its patented process to develop a large portion of
the worldwide fruit-flavored and chocolate-covered fruit-
flavored raisin market though an aggressive plan of promotion,
advertisement, expansion, and international licensing
agreements. Internet Culinary Corporation is poised to become
a major player in the food products industry into the next
millennium.
The founder of the company, Jack Mann, developed an affinity
for dried fruit products over a decade ago. Of particular
interest to the founder were the prospects of producing dried
cherries -a generally unavailable commodity due to the high
costs of removing the pits. However, Mr. Mazin's search did
prove successful when he located a food processing company
that produced dried cherries. The product was exceptional, but
the costs associated with producing large runs of dried
cherries were prohibitive. The founder then began deliberating
the production of flavored raisins.
Mr. Mazin hired a food science research team to develop a
process to produce flavored raisins. Soon, samples were
submitted that had all the promising characteristics (texture,
moisture, sweetness) for consumer consumption. However, a
large-scale production process had to be developed - such a
facility had never been developed before with the express
purpose of turning out large quantities of flavored raisins.
Through trial and error, efforts were made to optimize soaking
and absorption times. Other problems included feeding raisins
into small pouches, weight variances, and the stickiness of
the product. After time, these production variables were
isolated and solved by working with several different contract
manufacturers.
The company has successfully developed a method to produce in
volume, fruit flavored raisins from which the raisin taste has
been substantially extracted and replaced with another flavor.
The company is presently capable of producing raisins with the
4
<PAGE>
following flavors: lemon. orange, pineapple, strawberry,
banana, peach, raspberry, and cherry. Other firms have
attempted to produce flavored raisins, but Internet Culinary
Corporation is the only firm that has been truly successful.
Sun Maid, a California-based grower and marketer of raisins,
presently produces several varieties of flavored dried prunes
(under the brand "Sun Sweet") which involve placing a coating
of flavor on the fruit. The management of Internet Culinary
Corporation believes such processes to be inferior to that of
the company, as the flavor coating cannot completely mask the
flavor of the original fruit. The company's patented process
of raisin flavoring involves the use of citric acid to remove
the raisin flavoring and inserting the substitute flavoring
inside the raisin through the tiny holes in the skin of the
raisin created by the citric acid process.
Item 2. Management's Discussion and Analysis
or Plan of Operation
An in-depth production process has been developed to
facilitate the manufacture of flavored raisins, enabling an
end product that is both appealing to consumers and
sufficiently durable for widespread distribution. The diagram
below briefly illustrates the production process.
Sun-dried raisins are bought from outside channels and enter
into the production process. The raisins are then moved into
the Citric Acid Process, which treats the raisins in a special
manner to substantially remove the raisin flavoring from the
raisins. In addition, this process creates small holes in the
skin of the raisins. The materials are then moved into the
next phase: the Flavoring Process. The raisins are then coated
by all natural fruit flavoring. This flavoring coats the
raisins, but unlike other competing processes, it also enters
the inside of the raisins through the small holes created by
the Citric Acid Process. Once the raisins art flavored, they
are moved to the packaging phase, and then distributed to the
various channels cited later in this plan.
The basic raw materials needed to complete the finished boxes
of Internet Food Corporation are:
Seedless Sun-Dried Raisins
Citric Acid
All Natural Flavors
Webbing (Packets) for Individual packets
Cylindrical and ziplock-type containers for Family Packs
Cardboard Grocery Boxes / Display Boxes
Corrugate Cases
Glue Stretch Wrap
Packaging Tape
In order to facilitate the construction of this unique process
of production, Internet Food Corporation upgraded its facility
5
<PAGE>
in many ways. The following is a summary of these upgrades:
Flavoring Lab
Plant Heating
Water Heating
Propane System
Electrical Modifications to Entrance and Electrical Room
Mechanical Shop Modifications
Air Compressor Room Modifications
Packaging Room Modifications
Various Tools Purchased to Build Custom Machines
Computer System
Quality Assurance Lab to Ensure Safety and Consistency in
Every Shipment
A computer drafting technician was hired in April of 1996 to
aid Mr. Mazin in designing the semi-automatic custom
production line. This led to a new computer system being
purchased to facilitate the Computer Aided Design software and
algorithms.
Office management created specialized operating forms that are
used by operators on the line to ensure that all production is
being performed under the required standards. All levels and
stages of production are scrutinized at all times and testing
occurs at set intervals to greatly facilitate the production
of defect-free products. Quality control occurs on both an
internal and external basis: the process of production is
constantly being examined to further reinforce the production
of a quality product, while frequent testing allows for
minimal returns of bad products and points the way towards
possible inadequacies in the production process- Production
variables are collected and stored in a database to aid in the
research and development of future products and processes.
The current facility has two manufacturing lines and one
packaging machine to service the product demand. For the
purpose of capacity, the following relationship is standard
towards utilizing the equipment on a one-shift basis (or eight
hour day):
[8 hour periods -2 lines] =25,400 packets per hour
[25,400 packets per hour] x 8 hours = 203,200 packets per day
[203,200 packets per day] x 22 days = 4470,400 packets per
month
[4,470,400 packets per month] x 12 months =53,644,800 packets
per year
For each additional two lines established, the capacity
increases upon the basis of the relationship mentioned above
for the purposes of these projections, it is assumed that the
capacity of the plant will increase in relation to the
machinery and equipment purchases illustrated in the above
diagram.
6
<PAGE>
Current and Pending Customers
Grocery and Convenience Stores: Seven-Eleven, Ralphs, Lucky,
Vons, Krogers, Safeway, et al.
Family Packs: Costco, Sam's Club, Wall-Mart, Kellogg's, Post,
Sarah Lee, Entanmen's, et al.
Ralph's: has provided a Letter of Intent illustrating its
commitment to purchase 5.4 million packets over the next year
Airlines: there is currently a pending order by United
Airlines for 36 million packets for sample testing over the
next six months.
Benefiting from its patented process for adding fruit
flavoring to raisins, the company has an opportunity to
develop into a $356 million (CDN) company within three years.
The potential revenue from licensing and royalties is already
in evidence due to interest from Mexico and Germany (EEC).
Management believes that there are additional potential
licensing opportunities in Japan, Hong Kong, China, Taiwan,
Central and South America, and other non EEC countries.
To support the management staff and to facilitate interaction
between management and front line operations, a number of
office employees will be hired to enhance the efficiency of
Internet Culinary Corporation operational structure. The
following is a list of the required positions and the times at
which they will enter:
Year l
Two Clerical Employees in Week 1
Repairs and Maintenance Department Manager in Week 9
Two Clerical Employees in Week 10
Two Repairs and Maintenance Workers in Week 23
Two Clerical Employees in Month 7
Year 2
Two Clerical Employees in Month 1
Year 3
Two Clerical Employees in Month 1
Internet Culinary Corporation will face considerable demand
for its products, and the proper scaling-in of direct labor
employees and supervisors is crucial to the growth of the
company. For each shift on a pair of Production Lines, there
is a need for ten employees and two supervisors. Each pair of
Production Lines are purchased three months in advance of
implementation. One week in advance of production, the
required employees are brought in for training. Two shifts
will be implemented before the purchase of additional
Production lines. For every $302,768 in weekly Original sales,
7
<PAGE>
ten employees and two supervisors are required per shift. For
every $355,600 in weekly Chocolate sales, an additional ten
employees and two supervisors are also required per shift.
Monthly figures are $1,332,179 and $1,564,640, respectively.
Year 1
Week 1 - Five Line Employees and One Supervisor
Week 2- Five Line Employees and One Supervisor
Week 14- Ten Line Employees and Two Supervisors
Week 22- Ten Line Employees and Two Supervisors
Week 23 - Ten Line Employees and Two Supervisors
Month7- Ten Line Employees and Two Supervisors
Month 8 - Ten Line Employees and Two Supervisors
Month 9 - Ten Line Employees and Two Supervisors
Month 11 - Twenty Line Employees and Four Supervisors
Year 2
Month 2- Ten Line Employees and Two Supervisors
Month 4- Ten Line Employees and Two Supervisors
Month 6- Ten Line Employees and Two Supervisors
Month 8- Twenty Line Employees and Four Supervisors
Month 10- Ten Line Employees and Two Supervisors
Month 11 - Ten Line Employees and Two Supervisors
Month 12- Ten Line Employees and Two Supervisors
Year 3
Month 2- Ten Line Employees and Two Supervisors
Month 3 - Ten Line Employees and Two Supervisors
Month 5 - Twenty Line Employees and Four Supervisors
Month 7 - Ten Line Employees and Two Supervisors
Month 8 - Ten Line Employees and Two Supervisors
Month 9 - Ten Line Employees and Two Supervisors
Month 11 - Twenty Line Employees and Four Supervisors
The management of Internet Culinary Corporation plans to
employ a labor force from the local area, Athoville and its
surrounding communities, to fill the necessary positions.
Additionally in the upper management and production sectors in
the company, the management will actively recruit individuals
that will further the management's already considerable
knowledge and experience base in the food products industry.
As the plant evolves its production schedule, additional
employees will be needed to facilitate the marketing,
manufacturing, shipping, and management of the operations.
Market Information
The market for flavored raisins is estimated to be
substantial. Essentially, Internet Food Corporation is
creating its own industry. Management believes that there is
8
<PAGE>
an extensive market for the products in North America. The
following is a list of the potential outlets for Internet Food
Corporation' products:
Grocery stores - fruit snack category and Family Packs
Convenience stores - single unit packages and Family Packs
Vending machines - single unit packages
Institutional use - schools, universities, government
facilities, etc.
Airlines - single unit packages
Industrial - seasoning and flavoring processes
Management believes that the products have the maximum
potential in the snack food category, providing a sugar-free,
healthy alternative to candies and sugar-added snacks.
Possible competing products could be fruit roll-ups, fruit-
flavored snacks, raisins, and other fruit products.
Suppliers
California produces between 500,000 and 600,000 tons of
raisins per year. Australia and Chile each produce
approximately 400,000 tons of raisins annually. The Mid-
Eastern nations, particularly Turkey, are responsible for the
production of 200,OOO tons of raisins per year. A majority of
the raisins purchased by Internet Food Corporation will
originate from Australia and Chile. Due to the large number of
raisin producers, and the relative lack of consolidation
within the raisin industry, Internet Food Corporation will be
able to obtain the raw materials necessary to facilitate the
fulfillment of the company's mission.
Customers
Internet Food Corporation patented process produces a product
of superlative quality. The segment that will be initially
targeted is the Snack Food market. The next target will be
Family Pack sales to large-scale distribution channels, such
as grocery stores, retailers, and convenience stores. These
raisins will be marketed as a healthy alternative to sweets,
and will be extremely popular. Currently, United Airlines is
in the process of organizing the order of 36 million one-ounce
packets, for use in a six month trial period. This is an
indicator of die widespread demand for flavored raisins.
Internet Food Corporation is very favorably positioned in this
industry due to the fact that it essentially the only
supplier. In addition, another market for flavored raisins
that will be vigorously approached is the cereal and baked
goods producers. These companies can greatly diversify their
product lines with flavored raisins with minimal modifications
to their current production processes.
Competition
9
<PAGE>
Although other firms have tried to flavor raisins, none have
been able to produce the results that Internet Food
Corporation has accomplished via its patented process. Due to
Internet Food Corporation patents, and the effectiveness of
its process (currently the only method which removes the
raisin flavor and replaces it with fruit flavoring), the firm
does not have competitors that can produce a product that
matches the quality and flavor of Internet Food Corporation.
External Variables
Governmental
Internet Food Corporation' products fall under the auspices of
the Food and Drug Administration of Canada and the United
States.
Legislative
An external benefit is the North American Free Trade
Agreement, which will facilitate materials procurement and
product distribution by the reduction of tariff and other
trade protocols that interfere with intercontinental trade
practices.
Economic
Raisins are a commodity and are a by-product of grapes. Grapes
are utilized first as wines, second as table grapes, and third
to produce raisins. At the completion of year three, an
estimated cumulative total of 43,000 tons of raisins will have
been consumed for production purposes, with an average of
2,294 tons per month during year three alone- Based on these
significant demands, multinational purchasing agreements are a
necessity.
Conclusion
Internet Food Corporation's unique and patented process has
facilitated the creation of a new industry. Flavored Raisins
will be in demand in large amounts, and the duration of the
patents gives Internet Food Corporation a key advantage in
this arena An aggressive program of sales, promotion, and
licensing will profoundly reinforce Internet Food Corporation'
position at the forefront of this dynamic new industry.
Strategy
When Jack Mazin first began the development of the product as
it exists today, he recognized the multi-dimensional marketing
potential that this product line is capable of. The
manufacturing process entails a high degree of custom-made
10
<PAGE>
machinery, thereby enhancing the flavoring of the product. The
company envisions worldwide market penetration through its own
marketing efforts in conjunction with its licensing arid
royalties efforts.
Marketing Strategy
It is the company's intent to market its products in North
America within the following distribution channels:
Individual Flavored Raisin Packets - a packet consists of one
ounce of flavored raisins. These packets will be distributed
via the following channels:
Airlines
Airline Terminals
Convenience Stores
Grocery Stores
Theme Parks
These packets will be distributed in packs of ~ twelve, or
twenty-four.
Family Packs - these Family Packs hold 1/2, 1, or 2 pound
bundles of raisins.
Raisins will be packaged in cylindrical containers and
ziplock-type bags.
Distribution will be among the following channels:
Grocery Stores - Ralphs, Krogers, Vons, et al
Retailers - Sam's Club, Price/Costco, Wal-Mart
Convenience Stores - Seven Eleven, AM/PM, Pink Dot
Ancillary Markets - flavored raisins distributed in mass
quantities to the following channels:
Cereal Producers (i.e. Kellogg's, Post, and Generic Brands)
Baked Goods Producers (i.e. Sarah Lee, Entanmen's, Duncan
Hines)
Institutional Markets
Schools
Universities
Government Facilities
Advertisement
Effective the first quarter of operations, development of a
comprehensive strategy of consumer advertisements will
commence to enhance the name brand recognition of Internet
Food Corporation.
Joint Ventures
11
<PAGE>
Because of constraints in issues of capacity, the possibility
exists that a Joint Venture licensing agreement with a cereal
manufacturer (i.e. Kellogg's) will be necessary to meet
production demands.
Licensing Agreements
Because Internet Food Corporation has a patented process with
patent applications for Europe and the Pacific Rim, this
source of revenue on both an initial fee and a continued
royalty basis will substantively add to Internet Food
Corporation bottom line. Management has already contacted
sources from Germany and Mexico, and discussions are currently
underway concerning the initial granting of licenses.
Three Year Plan
The current and projected capacity for the first three years
will incorporate capital expenditures for machinery and
equipment of approximately $7.65 million (CDN). At the
completion of the second year, a determination will be made
where to build a supplemental facility; the leading choices
are Canada or the central United States, Sales volume and
location of major customers will be among several determining
factors.
Future Products
Research and Development will begin within the first six
months of operations, and will incorporate a number of
findings from the studies garnered from the production
process. With the additional flavors that are under
development and variations upon the patented process an even
flintier diversified product base will be established. One of
the many avenues that Research and Development will target is
a yogurt flavoring for the raisins. Yogurt products will
provide a product with a higher moisture content and high
relative durability. Since Internet Food Corporation current
position is based upon technological innovations, the company
will continue to support an aggressive Research and
Development program to remain ahead of the competition and in-
step with consumer demands.
Conclusion
Internet Food Corporation has made the commitment to
excellence in the food products industry by utilizing a number
of distinct advantages. Their patented process is currently
the only effective means of producing fruit flavored raisins,
and the duration of the patent positions the company at the
forefront of this dynamic new industry. Anticipated widespread
demand of fruit flavored raisins is already in evidence, due
to the pending orders from United Airlines of 36 million
packets over a six month trial period and Ralph's Letter of
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<PAGE>
Intent for 5.4 million packets over a twelve month period. The
ability to increase capacity to meet demand is enhanced by
worldwide licensing and royalty agreements that will
positively impact the firm's profit structure, and contribute
to the establishment of Internet Food Corporation as a brand
name in the food products industry on a global scale into the
next millennium.
Item 3. Description of Property
To be added
Item 4. Security Ownership of Management and
Others and Certain Security Holders
To be added
Item 5. Directors, Executives, Officers and Significant
Employees
POSITIONS HELD
NAME WITH THE CORPORATION
- -------------------- ----------------------
Tom Reichman President
Stephen Reeder Vice President,
Secretary & Director
Bob Coberly Treasurer & Director
Scott Brake Assistant Vice
President & Director
Kevin Grace Director
Stacy Freidman Director
Further, Internet Culinary Corporation's management team will
be made up of top-flight professionals in their respective job
classifications. This competent group will be responsible for
the operations of Internet Culinary Corporation facilities
and work toward furthering the mission of the company.
Jack Mazin
Jack Mazin is the founder of Amazin Raisins which the company
merged with and has been its President and CEO since the
formation of the company. Mr. Mazin's management experience
began in 1978 when he was employed at Goldcrest Furniture. Mr.
Mazin, following an aggressive plan of sales expansion' grew
Goldcrest from a $9 million (CDN) firm to a $30 million (CDN)
company in less than ten years. Mr. Mann's offshore buying
program in the far east solidified Goldcrest's position as the
first Canadian manufacturer to successfully bind melamine to
particle board for casegood production.
In 1988, Mr. Mann left Goldcrest to establish the Canadian-
13
<PAGE>
Moroccan Chamber of Commerce and facilitated a number of trade
deals between the two countries over the course of his
employment at this location,
Also in 1988, Mr. Mann formed RDI (Royal Domain Incorporated)
and pioneered the Internet Culinary Corporation Concept. Mr.
Mann's experience in the manufacturing industry as well as his
background in international trade will greatly benefit the
company and its future endeavors.
It has been determined from the trial production runs of
Internet Culinary Corporation, that a certain number of
people are required to perform the required management duties
of this operation. The following is a list of the required
personnel, and the times at which they will enter:
Year 1
President and Vice President of Sales in Week 1
Human Resources Director in Week 12
Lab Technician in Week 13
Advertising Manager in Week 23
Sales Manager, Comptroller, and Purchasing Manager in Month 7
Production Manager in Month 9
Vice President of Manufacturing in Month 10
Year 2
Senior Chemist in Month 3
Chief Operating Officer in Month 6
Chief Financial Officer in Month 6
To support the management staff and to facilitate interaction
between management and front line operations, a number of
office employees will be hired to enhance the efficiency of
Internet Culinary Corporation operational structure. The
following is a list of the required positions and the times at
which they will enter:
Year l
Two Clerical Employees in Week 1
Repairs and Maintenance Department Manager in Week 9
Two Clerical Employees in Week 10
Two Repairs and Maintenance Workers in Week 23
Two Clerical Employees in Month 7
Year 2
Two Clerical Employees in Month 1
Year 3
Two Clerical Employees in Month 1
14
<PAGE>
Item 6. Remuneration of Directors and
Executive Officers
Has not yet been established at this time.
Item 7. Interest of Management and Others in
Certain Transactions
To be added
Item 8. Legal Proceedings
To be added
Part II
Item 1. Market Price of and Dividends of the
Registrant's Common Equity and Other
Stockholder Matters
Not available at this time
Item 2. Recent Sales of Unregistered Securities
None
Item 3. Description of Securities
Common shares and Restricted share to be detailed later
Item 4. Indemnification of Directors and Officers
To be added
Part F/S
Item 1. Financial Statements
The audited financial statements of the Company and related
notes which are included in this offering have been examined
by James E Slayton, CPA, and have been so included
in reliance upon the opinion of such accountants given upon
their authority as an expert in auditing and accounting.
The following documents are filed as part of this report:
a) Internet Culinary, Corporation
<PAGE>
Internet Culinary Corporation
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
as at
September 15, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET F-2-3
STATEMENT OF OPERATIONS F-4
STATEMENT OF STOCKHOLDERS' EQUITY F-5
STATEMENT OF CASH FLOWS F-6
NOTES TO FINANCIAL STATEMENTS F-7
<PAGE>
James E. Slayton, CPA
3867 WEST MARKET STREET
SUITE 208
AKRON, OHIO 44333
INDEPENDENT AUDITORS' REPORT
Board of Directors September 27, 1999
Internet Culinary Corporation (The Company)
I have audited the Balance Sheet of Internet Culinary
Corporation (A Development Stage Company), as of September 15,
1999, and the related Statements of Operations, Stockholders'
Equity and Cash Flows for the period January 1, 1999 to
September 15, 1999. These financial statements are the
responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based
on my audit. The financial statements of Internet Culinary
Corporation as of December 31, 1998, were audited by other
auditors whose report dated April 21, 1999, expressed an
unqualified opinion on those statements.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis evidence supporting
the amounts and disclosures in the financial statement
presentation. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Internet Culinary Corporation, ( A Development
State Company), at September 15, 1999, and the results of its
operations and cash flows for the period January 1, 1999 to
September 15, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 3 to the financial statements, The Company
has had limited operations and has not established a long term
source of revenue. This raises substantial doubt about its
ability to continue as a going concern. The financial
statements do not include any adjustments that might result
from the outcome of this uncertainty. Management's plan in
regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ James E. Slayton
- -------------------------
James E. Slayton, CPA
Ohio License ID# 04-1-15582
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
BALANCE SHEET
AS AT
September 15, 1999
<TABLE>
<CAPTION>
(Unaudited)
September 15 December 31 December 31
1999 1998 1997
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash 100.00 23.00 178.00
Prepaid Expenses 0.00 0.00
------------- ------------ ----------
Total Current Assets 100.00 23.00 178.00
PROPERTY AND EQUIPMENT
Property and Equipment
(net of depreciation) 2,500,000.00 0.00 0.00
------------- -------------- ----------
Total Property and Equipment 2,500,000.00 0.00 0.00
OTHER ASSETS
Mining property (Note 1) 454,529.00 454,529.00 454,529.00
Less allowance for
unpatented claims (454,529.00) (454,529.00) (454,529.00)
Deferred tax benefits 503,109.00
------------- -------------- ----------
Total Other Assets 503,109.00 0.00 0.00
------------- -------------- ----------
TOTAL ASSETS $3,003,209.00 $23.00 $178.00
------------- -------------- ----------
------------- -------------- ----------
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
BALANCE SHEET
AS AT
September 15, 1999
<TABLE>
<CAPTION>
(Unaudited)
September 15 December 31 December 31
1999 1998 1997
<S> <C> <C> <C>
LIABILITIES & EQUITY
CURRENT LIABILITES
Accounts Payable 35,762.00 35,762.00 10,750.00
Demand Notes 230,444.00 0.00 0.00
------------- ------------ ----------
Total Current Libilities 266,206.00 35,762.00 10,750.00
OTHER LIABILITES
Due to Shareholder 0.00 0.00
------------- --------------
Total Other Liabilities 0.00 0.00
------------- ------------ ----------
Total Liabilities 266,206.00 35,762.00 10,750.00
EQUITY
Common Stock, $0.001 par value,
authorized 20,000,000 shares; 1,465,180.00 1,444,218.00 1,444,218.00
issued and outstanding at
September 15, 1999,
13,173,844 common shares 0.00 0.00
Additional Paid in Capital 2,419,305.00 0.00
Donated Capital
Retained Earnings (Deficit
accumulated during
development stage) (1,147482.00) (1,479,957.00) (1,454,790.00)
------------- -------------- ----------
Total Stockholders' Equity 2,737,003.00 (35,739.00) (10,572.00)
TOTAL LIABILITIES
& OWNER'S EQUITY $3,003,209.00 $23.00 $178.00
------------- -------------- ----------
------------- -------------- ----------
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
STATEMENT OF OPERATIONS
FOR PERIOD
May 16, 1967 (Date of Inception) to September 15, 1999
<TABLE>
<CAPTION>
(Date of
Inception)
to September 15 September 15
1999 1999
<S> <C> <C>
REVENUE
Services 0.00 0.00
COSTS AND EXPENSES
Selling, General and Administrative 1,085,112.00 120,134.00
Office Services 60,440.00 0.00
Officer and Director's Compensation 50,500.00 50,500.00
Write down in mining claims to
net realizable value 454,529.00
------------- -------------
Total Costs and Expenses 1,650,581.00 170,634.00
------------- -------------
Net Ordinary Income or (Loss)
before taxes (1,650,581.00) (170,634.00)
------------- --------------
------------- --------------
Provision for Income Tax 10.00 0.00
------------- --------------
Net Ordinary Income or (Loss)
after taxes (1,650,591.00) (170,634.00)
-------------- -------------
-------------- -------------
Weighted average number of common
shares outstanding 3,689,375 3,689,375
Net Loss Per Share ($0.45) ($0.05)
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
December 31 December 31
1998 1997
<S> <C> <C>
REVENUE
Services 0.00 0.00
COSTS AND EXPENSES
Selling, General and Administrative 10,137.00 13,886.00
Office Services 15,020.00 15,420.00
Officer and Director's Compensation 50,500.00
Write down in mining claims to
net realizable value 454,529.00
------------- -------------
Total Costs and Expenses 25,157.00 483,835.00
------------- -------------
Net Ordinary Income or (Loss)
before taxes (25,157.00) (483,835.00)
------------- --------------
------------- --------------
Provision for Income Tax 10.00 0.00
------------- --------------
Net Ordinary Income or (Loss)
after taxes (25,167.00) (483,835.00)
------------- --------------
------------- --------------
Weighted average number of common
shares outstanding 288,844 288,844
Net Loss Per Share ($0.09) ($1.68)
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR PERIOD
May 16, 1967 (Date of Inception) to September 15, 1999
<TABLE>
Common Stock
Shares Amount
------------- -------------
<S> <C> <C>
Balances as at December 31, 1996 288,844 1,444,218.00
------------- -------------
Net Loss
Year ended December 31, 1997
------------ -------------
Balances as at December 31, 1997 288,844 $1,444,218.00
Net Loss Year ended December 31, 1998
------------- -------------
Balances as at December 31, 1998 288,844 $1,444,218.00
March 1, 1999 Issued for legal services 90,000 9,000.00
April 6, 1999 Issued for cash 2,795,000 2,795.00
April 6, 1999 received
cash-shares unissued 0.00
May 27, 1999 Issued for cash 5,000,000 4,167.00
September 9, 1999 Issued in asset
purchase agreement-restricted
shares 5,000,000 5,000.00
Net loss January 1, 1999 to
September 15, 1999
Change to retained earnings as
result of recording Net Operating
Loss deferred tax benefits due
to asset purchase agreement
------------ ------------
Balances as at September 15, 1999 13,173,844 $1,465,180.00
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during
paid-in development
capital stage
------------- -------------
<S> <C> <C>
Balances as at December 31, 1996 (970,955.00)
------------- -------------
Net Loss
Year ended December 31, 1997 (483,835.00)
------------ -------------
Balances as at December 31, 1997 $0.00 ($1,454,790.00)
Net Loss Year ended December 31, 1998 (25,167.00)
------------- -------------
Balances as at December 31, 1998 $0.00 ($1,479,957.00)
March 1, 1999 Issued for legal services
April 6, 1999 Issued for cash
April 6, 1999 received
cash-shares unissued 2,205.00
May 27, 1999 Issued for cash 0
September 9, 1999 Issued in asset
purchase agreement-restricted
shares 2,417,100.00
Net loss January 1, 1999 to
September 15, 1999 (170,634.00)
Change to retained earnings as
result of recording Net Operating
Loss deferred tax benefits due
to asset purchase agreement $503,109.00
------------ ------------
Balances as at September 15, 1999 $2,419,305.00 $1,147,482.00)
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Total
Stockholder's
Equity
-------------
<S> <C>
Balances as at December 31, 1996 473,263.00
-------------
Net Loss
Year ended December 31, 1997 (483,835.00)
------------
Balances as at December 31, 1997 (10,572.00)
Net Loss Year ended December 31, 1998 (25,167.00)
-------------
Balances as at December 31, 1998 (35,739.00)
March 1, 1999 Issued for legal services 9,000.00
April 6, 1999 Issued for cash 2,795.00
April 6, 1999 received
cash-shares unissued 2,205.00
May 27, 1999 Issued for cash 4,167.00
September 9, 1999 Issued in asset
purchase agreement-restricted
shares 2,422,100.00
Net loss January 1, 1999 to
September 15, 1999 (170,634.00)
Change to retained earnings as
result of recording Net Operating
Loss deferred tax benefits due
to asset purchase agreement 503,109.00
------------
Balances as at September 15, 1999 $2,737,003.00
------------
------------
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
STATEMENT OF CASH FLOWS
FOR PERIOD
May 16, 1967 (Date of Inception) to September 15, 1999
<TABLE>
<CAPTION>
(Date of
Inception)
to September 15 September 15
1999 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 0.00 0.00
Cash paid to suppliers and employees 1,198,857.00 161,634.00
Cash disbursed for Operating
Activities 1,198,857.00 161,634.00
------------- --------------
Net cash flow provided by (1,198,857.00) (161,634.00)
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets 0.00 0.00
------------- --------------
Net cash used by investing activities 0.00 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 1,010,651.00 9,167.00
Advances from shareholders 35,762.00
Demand Note 152,444.00 152,444.00
------------- --------------
Net cash provided by financing 1,198,857.00 161,611.00
activities
Balances as at beginnig of period 0.00 23.00
Net increase (decrease) in cash 0.00 (23.00)
Balances as at end of period 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
(Unaudited)
December 31 December 31
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 0.00 0.00
Cash paid to suppliers and employees 25,167.00 91,272.00
Cash disbursed for Operating
Activities 25,167.00 91,065.00
------------- --------------
Net cash flow provided by (25,167.00) (91,065.00)
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets 0.00 0.00
------------- --------------
Net cash used by investing activities 0.00 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 0.00 80,700.00
Advances from shareholders 25,012.00 10,750.00
Demand Note 0.00 0.00
------------- --------------
Net cash provided by financing 25,012.00 91,450.00
activities
Balances as at beginnig of period 178.00 207.00
Net increase (decrease) in cash (155.00 385.00)
Balances as at end of period 23.00 (178.00)
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 27, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized May 16, 1967(Date of Inception)
under the laws of the State of Idaho as Capitol Silver Mines,
Inc. (The Company) and is authorized to issue 20,000,000
shares of $.001 par common stock. The Company changed its
state of incorporation and changed its name to Internet
Culinary Corporation (The Company) in September, 1999.
The Company has had limited operations and in accordance
with SFAS #7, the Company is considered a development
stage company.
The Company had 10 unpatented mining claims recorded at
original par value $.10 per share in the amount of
$454,529.00. These claims were written down to net realizable
value in the year ended December 31, 1997.
The Company had 288,844 shares of its common stock issued and
outstanding on December 31, 1998.
On March 1, 1999, the Company issued 90,000 shares of its
common stock in exchange for $9,000.00 in legal services.
On April 6, 1999, the Company issued 2,795,000 shares of its
common stock for cash of $2,795,000. The Company also received
$2,205.00 for 2,205,000 shares which have not been issued yet.
On May 27, 1999, the Company received $4,166.50 for 5,000,000
shares of restricted stock.
On September 9, 1999, the Company completed an asset purchase
of the plant and equipment of Pacific Standard Financial Group
for 5,000,000 shares of its $.001 par value common stock and
an agreement that $450,000.00 of new capital be infused into
the Company and an asset based loan in the amount of
$350,000.00 be obtained.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting polices and procedures have not been determined
except as follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average
number of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding
payment of dividends. No dividends have been paid since
inception.
5. The cost of equipment is depreciated over the estimated
useful life of the equipment utilizing the straight line
method of deprecation. No depreciation has been recorded at
this time. The Company will begin recording depreciation when
planned principal operations begin.
F-7
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 27, 1999
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES (continued)
6. The Company will review its need for a provision for
federal income tax after each operating quarter and each
period for which a statement of operations is issued. The
Company's marginal tax rate is 0, and its effective tax rate
is 0.
7. The Company has net operating losses which expire
$970,955.00 in the year 2012
483,835.00 in the year 2013
25,167.00 in the year 2014
The Company believes that this benefits will more than likely
be utilized and therefore recorded the deferred tax benefits
as part of the business combination resulting from the asset
purchase agreement.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the
generally accepted accounting principles applicable to a going
concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Province of New Brunswick has agreed to provide a
$2,500,000 working capital line of credit to fund the
company's growth.
NOTE 4 - RELATED PARTY TRANSACTION
The officers and directors of the Company are involved in
other business activities and may, in the future, become
involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face
a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy
for the resolution of such conflicts.
NOTE 5 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any
additional shares of common stock.
NOTE 6 - DEBT
American Auditors, LLC, a shareholder has advanced $78,000 to
Pacific Standard for operational expenses. A demand note in
this amount was assumed in the asset purchase agreement. In
addition, American Auditors, LLC, has advanced the Company
$152,444 for operational expenses and the Company has issued a
demand note in this amount at 14% interest payable on or
before January 1, 2000.
F-8
<PAGE>
Internet Culinary Corporation
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 27, 1999
NOTE 7 - YEAR 2000 ISSUE
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may
arise in systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000
issue may be experienced before on, or after January 1, 2000
and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems
failure which could affect an entity's ability to conduct
normal business operations. It is not possible to be certain
that all aspects of the Year 2000 issue affecting the entity,
including those related to the efforts of customers,
suppliers, or other third parties will be fully resolved.
<PAGE>
James E. Slayton, CPA
3867 WEST MARKET STREET
SUITE 208
AKRON, OHIO 44333
To Whom It May Concern: September 27, 1999
The firm of James E. Slayton, Certified Public Accountant
consents to the inclusion of my report of December 31, 1998,
on the Financial Statements of Internet Culinary Corporation
from the inception date of January 11, 1988 through December
31, 1998, in any filings that are necessary now or in the near
future to be filed with the U. S. Securities and Exchange
Commission.
Professionally,
/s/ James E. Slayton
- -------------------------
James E. Slayton, CPA
Ohio License ID # 04-1-15582
<PAGE>
Item 2. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure
None--Not Applicable
<PAGE>
Signatures
In accordance with Section 12 of the Securities
Exchange Act of 1934, the registrant caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Internet Culinary Corporation
(Registrant)
Date: October 9, 1999 BY: /s/ Tom Reichman
--------------------------
Tom Reichman, President
Part III
Item 1. Index to Exhibits
Article of Incorporation
Bylaws
Merger Agreement (to be added)
Item 2. Description of Exhibits
To be added
