SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
CARMINA TECHNOLOGIES INC.
(Exact name of Registrant as specified in its charter)
Utah
(Jurisdiction of incorporation or organization)
810,540 5th Ave. SW, Calgary, Alberta, Canada T2P 0M2
(Address of principal executive offices)
Registrants telephone number: (403) 269-5369 Fax: (403) 261-2866
The number of shares of common stock outstanding as of September 30, 2000, is
20,502,300
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
The following financial statements are filed as part of this report:
The Consolidated Financial Statements of the Company for the nine months ended
September 30 2000 reviewed by HJ & Associates, certified public accountants.
Item 2. - Management's Discussion and Analysis
During the third quarter of 2000 management of Carmina Technologies reviewed
several Application Service Providers (ASP's) with a view to acquiring all or
part ownership. One candidate has subsequently been selected for further study
and is currently the subject of a full due diligence examination.
Development of the GateCommander internet appliance and related products
proceeded on schedule during the third quarter. Launch of its first product is
anticipated in the year end.
PART II
Item 1. - Legal Proceedings. None
Item 2. - Changes in Securities. None
Item 3. - Defaults Upon Senior Securities. None
Item 4. - Submissions of Matters to a Vote of Security Holders. None
Item 5. - Other Information. None
Item 6. - Exhibits and Reports on form 8-K
(a) No Exhibits
(b) No Form 8K filings
Carmina Technologies Inc. 10-QSB (March 31, 2000)
In accordance with requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Carmina Technologies Inc (Registrant)
Dated: November16, 2000 By /s/ _______________________ John M. Alston, President
<PAGE>
CARMINA TECHNOLOGIES, INC.
AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ -- $ 174
Tax refund receivable 1,924 13,486
Accounts receivable 15,244 2,136
--------- ---------
Total Current Assets 17,168 15,796
--------- ---------
PROPERTY AND EQUIPMENT 2,600 --
--------- ---------
OTHER ASSETS
Investment in affiliate (Note 1) -- 2,569
Marketable securities (Note 1) 11,612 --
Securities receivable (net of allowance of $73,656 (Note 1) 55,740 --
--------- ---------
Total Other Assets 67,352 2,569
--------- ---------
TOTAL ASSETS $ 87,120 $ 18,365
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Cash overdraft $ 3,499 $ --
Accounts payable 17,300 24,189
Accrued expenses 59,363 --
--------- ---------
Total Current Liabilities 80,162 24,189
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 40,000,000 shares authorized
no par value, 20,502,300 and 16,000,000
shares issued and outstanding, respectively 905,232 407,406
Deficit accumulated during the development stage (898,274) (413,230)
--------- ---------
Total Stockholders' Equity (Deficit) 6,958 (5,824)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
$ 87,120 $ 18,365
========= =========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended For the Nine Months Ended May 7,
September 30, September 30, 1999 Through
-------------------------- ------------------------------ September 30,
2000 1999 2000 1999 2000
--------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ 2,136
COST OF GOODS SOLD -- -- -- -- 1,942
--------- ---------- --------- ---------- ---------
GROSS PROFIT -- -- -- -- 194
--------- ---------- --------- ---------- ---------
EXPENSES
General and administrative 3,650 -- 19,532 -- 23,624
Research and development 9,398 -- 47,096 -- 55,442
Consulting fees -- -- -- -- 126,974
Management fees 85,242 -- 238,628 -- 502,123
--------- ---------- --------- ---------- ---------
Total Expenses 98,290 -- 305,256 -- 708,163
--------- ---------- --------- ---------- ---------
LOSS FROM OPERATIONS (98,290) -- (305,256) -- (707,969)
--------- ---------- --------- ---------- ---------
OTHER INCOME (EXPENSE)
Loss on investment of affiliate (Note 1) -- -- (2,569) -- (13,000)
(Loss) on sale of investments (Note 1) (48,309) -- (88,653) -- (88,653)
Unrealized gain (loss) on investments 35,332 -- (89,001) -- (89,001)
Interest income 435 -- 435 -- 435
Interest expense -- -- -- -- (86)
--------- ---------- --------- ---------- ---------
Total Other Income (Expense) (12,542) -- (179,788) -- (190,305)
--------- ---------- --------- ---------- ---------
NET LOSS $(110,832) $ -- $(485,044) $ -- $(898,274)
========= ========== ========= ========== =========
BASIC LOSS PER SHARE $ (0.01) $ 0.00 $ (0.02) $ 0.00 0
========= ========== ========= ========== =========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the
-------------------------- Development
Shares Amount Stage
---------- ---------- ----------
<S> <C> <C> <C>
Balance, inception on May 7, 1999 -- $ -- $ --
Common stock issued for services
and cash at $0.02 per share 13,075,200 255,606 --
Common stock issued for cash at
$0.02 per share 2,924,800 57,800 --
Services contributed by officers of the Company -- 94,000 --
Net loss from inception on May 7, 1999
through December 31, 1999 -- -- (413,230)
---------- ---------- ----------
Balance, December 31, 1999 16,000,000 407,406 (413,230)
Contributed capital (unaudited) -- 374,583 --
Common stock issued in
recapitalization 4,502,300 3,243 --
Services contributed by officers of the Company -- 120,000 --
Net loss for the nine months ended
September 30, 2000 (unaudited) -- -- (485,044)
---------- ---------- ----------
Balance, September 30, 2000 20,502,300 $ 905,232 $ (898,274)
========== ========== ==========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the For the Inception on
Three Months Ended Nine Months Ended May 7,
September 30, September 30, 1999 Through
------------------- ------------------- September 30,
2000 1999 2000 1999 2000
--------- ---- --------- ---- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(110,832) $ -- $(485,044) $ -- $(898,274)
Adjustments to reconcile net loss to net cash
used by operating activities:
Stock issued for services -- -- -- -- 256,117
Services contributed by officers of the Company 40,000 -- 120,000 -- 214,000
Non-cash change in securities 5,100 -- 69,408 -- 69,408
Decrease in value of equity investment -- -- 2,569 -- 13,000
Changes in operating assets and liabilities:
(Increase) decrease in receivables 9,718 -- (1,547) -- (17,168)
(Increase) decrease in prepaid expenses -- -- -- -- --
Increase (decrease) in accounts payable (15,746) -- (6,889) -- 17,300
Increase (decrease) in accrued expenses 29,125 -- 59,362 -- 59,362
Increase in bank overdraft 3,499 -- 3,499 -- 3,499
--------- ---- --------- ---- ---------
Net Cash Used by Operating Activities (39,136) -- (238,641) -- (282,756)
--------- ---- --------- ---- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of securities 34,119 -- 165,985 -- 165,985
Purchase of marketable securities -- -- (302,745) -- (315,745)
Purchase of fixed assets -- -- (2,600) -- (2,600)
--------- ---- --------- ---- ---------
Net Cash Provided (Used) by Investing Activities 34,119 -- (139,360) -- (152,360)
--------- ---- --------- ---- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received in recapitalization -- -- -- -- 3,243
Issuance of common stock for cash -- -- -- -- 57,289
Contributed capital -- -- 374,584 -- 374,584
--------- ---- --------- ---- ---------
Net Cash Provided by Financing Activities -- -- 374,584 -- 435,116
--------- ---- --------- ---- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,017) -- (3,417) -- --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,017 -- 3,417 -- --
--------- ---- --------- ---- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ -- $ -- $ -- $ -- $ --
========= ==== ========= ==== =========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows (Continued
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Three Months Ended Nine Months Ended May 7,
September 30, September 30, 1999 Through
------------------ ------------------ September 30,
2000 1999 2000 1999 2000
-------- ---- -------- ---- --------
<S> <C> <C> <C> <C> <C>
CASH PAID FOR:
Interest $ -- $ -- $ -- $ -- $ --
Income taxes $ -- $ -- $ -- $ -- $ --
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ -- $ -- $ -- $ -- $256,117
Services contributed by officers of
the Company $ 40,000 $ -- $ 80,000 $ -- $174,000
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY
The consolidated financial statements presented include those of
Carmina Technologies, Inc. (formerly The Americas Mining Corporation)
(a development stage company) and its wholly-owned subsidiary Rhonda
Networks, Inc. Collectively, they are referred to herein as "the
Company."
Carmina Technologies, Inc. (Carmina) was incorporated under the laws
of the State of Utah on March 5, 1973 under the name of "Investors
Equity, Inc." In 1991, the Company changed its name to "The Americas
Mining Corporation." In January of 2000, the Company changed its name
to "Carmina Technologies, Inc."
On February 9, 2000, the Company completed an Agreement and Plan of
Reorganization whereby Carmina issued 16,000,000 shares of its common
stock in exchange for all of the outstanding common stock of Rhonda
Networks, Inc. (Rhonda). These shares have been presented as if they
were issued in 1999 for services and cash.
The reorganization was accounted for as a recapitalization of Rhonda
because the shareholders of Rhonda control the Company after the
acquisition. Therefore, Rhonda is treated as the acquiring entity.
Accordingly, there was no adjustment to the carrying value of the
assets or liabilities of Carmina. Carmina is the acquiring entity for
legal purposes and Rhonda is the surviving entity for accounting
purposes.
Carmina was incorporated for the purpose of creating a vehicle to
obtain capital to seek out, investigate and acquire interests in
products and businesses which may have a potential for profit. Prior
to the reorganization, Carmina distributed shares of a wholly-owned
subsidiary, American Mining Corp. to its shareholders as a partial
liquidating dividend. At the time of the reorganization, Carmina was a
shell company with minimal assets and no operations.
Rhonda, a wholly owned subsidiary, was incorporated under the laws of
the Province of Alberta, Canada on May 7, 1999. It was incorporated
for the purpose of developing and marketing its low-cost,
high-capability multipurpose communications wizard and Linux based
GateCommander and Smart-Home networking technologies. The
GateCommander 2000 technology combines firewall, virtual private
networking, network and system monitoring, e-mail and domain name
services, paging and fax with voice over IP, and dynamic web services.
The Smart-Home network management system offers homeowners control
over heating, air conditioning, lighting, appliance management,
switches and outlets, home security and motion and fire detection
zones.
The Company's technologies are still in the development stage. None of
the products or services associated with this technology has been
brought to the market or are available for marketing. Because of the
developmental status of the technology, there can be no assurance that
the technology will be brought to market in a commercially viable
form.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
a. Accounting Method
The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has elected a calendar year
end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
c. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares outstanding during the period of
the consolidated financial statements. Common stock equivalents,
consisting of stock warrants and options, have not been included in
the calculation as their effect is antidilutive for the period
presented.
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ----- ------------ -----
<S> <C> <C> <C> <C>
Numerator - loss $ (110,832) $-- $ (485,044) $--
Denominator -
weighted average
number of shares
outstanding 20,502,300 -- 18,251,150 --
------------ ----- ------------ -----
Loss per share $ (0.01) $(0.00) $ (0.02) $(0.00)
============ ===== ============ =====
</TABLE>
d. Provision for Taxes
At September 30, 2000, the Company had net operating loss
carryforwards of approximately $898,000 that may be offset against
future taxable income through 2019. No tax benefit has been reported
in the consolidated financial statements, because the Company believes
there is a 50% or greater chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss carryforwards are
offset by a valuation account of the same amount.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
f. Revenue Recognition
The Company recognizes revenue upon completion and delivery of its
products. However, substantial operations have not yet begun.
g. Principles of Consolidation
The consolidated financial statements include those of Carmina
Technologies, Inc. and its wholly owned subsidiary, Rhonda Networks,
Inc. All significant intercompany accounts and transactions have been
eliminated.
h. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which, in the opinion of management, are necessary for a
fair presentation. Such adjustments are of a normal recurring nature.
i. Securities Receivable
The Company purchased 750,000 shares of Qnetix, Inc.'s common stock
during the six months ended June 30, 2000. At the time of purchase,
450,000 shares of stock were delivered to the Company which have been
deposited into a brokerage account and are classified as trading. The
remaining 300,000 shares, with a value of $55,740 at September 30,
2000, net of an allowance of $73,656 for the decline in market value
as estimated based on quoted market prices, will be delivered in March
2001. These shares are valued at the lower of cost or market.
j. Marketable Securities
The Company held 62,500 shares of Qnetix, Inc.'s common stock as
trading securities at September 30, 2000. The fair value of the
Company's marketable securities is estimated based on quoted market
prices for those investments. During the nine months ended September
30, 2000, the Company sold a portion of the trading securities for a
loss of $88,653. The Company recorded an unrealized loss of $89,001 to
account for the decline in value of the remaining securities. The fair
value of the Company's marketable securities at September 30, 2000 was
$11,612. Because the Company's marketable securities are classified as
trading and reported at fair value, there is no need to evaluate the
securities for impairment.
k. Allowance for Doubtful Accounts
The Company's accounts receivable are shown net of an allowance for
doubtful accounts of $-0- and $-0- at September 30, 2000 and December
31, 1999, respectfully.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
l. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to record
derivatives as assets or liabilities, measured at fair market value.
Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the
derivative and whether it qualifies for hedge accounting. The key
criterion for hedge accounting is that the hedging relationship must
be highly effective in achieving offsetting changes in fair value or
cash flows. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Management believes the
adoption of this statement will have no material impact on the
Company's financial statements.
The Company has adopted the provisions of SOP 98-1 "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use."
Management will begin to capitalize certain costs once the preliminary
project stage is completed and funding for the projects is probable.
The Company has expensed all organization costs per the requirements
of SOP 98-5 "Reporting the costs of Start Up Activities."
m. Warranty Costs
The Company does not offer any warranty on the product which was sold
in 1999. Accordingly, there is no warranty cost expense or accrual.
n. Investment in Affiliate
The Company is accounting for its investment in Remington Financial
Corp., a 39% owned affiliate, by the equity method of accounting under
which the Company's share of the net income (loss) of the affiliate is
recognized as income (loss) in the Company's statement of operations.
The affiliate was audited at October 31, 1999. At that time, the total
net stockholders' equity equaled $6,586. The Company has recognized a
loss on their investment in the in the affiliate of $2,569 to account
for the change in value of the affiliate at September 30, 2000. This
reduces the investment to $-0- at September 30, 2000.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
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. However, the Company
does not have significant cash or other material assets, nor does it
have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It is
the intent of the Company to continue in the development and marketing
of its Linux based GateCommander server appliance and its Smart-Home
technology. Additionally, the Company intends to market support
services for these products and to act as a reseller for other
products which it feels are complimentary to the Company's goals.
Management's plans to continue as a going concern include (1) raising
additional capital through sales of common stock, the proceeds of
which would be used to market and develop the existing software and
related rights, hiring of administrative, sales and marketing
personnel and (2) the use of stock options to pay for employee
compensation and marketing services. However, management cannot
provide any assurances that the Company will be successful in
accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plans described in the
preceding paragraph and eventually secure other sources of financing
and attain profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 3 - WARRANTS AND OPTIONS
The Company applies Accounting Principles Board ("APB") Option 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for all stock option plans. Under APB
Option 25, compensation cost is recognized for stock options granted
to employees when the option price is less than the market price of
the underlying common stock on the date of grant.
FASB Statement 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"), requires the Company to provide proforma information
regarding net income and net income per share as if compensation costs
for the Company's stock option plans and other stock awards had been
determined in accordance with the fair value based method prescribed
in SFAS No. 123. The Company estimates the fair value of each stock
award at the grant date by using the Black-Scholes option pricing
model.
Under the accounting provisions of SFAS No. 123, the Company's net
loss would have been unchanged from the reported net loss.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 3 - WARRANTS AND OPTIONS (Continued)
A summary of the status of the Company's warrants and options as
of September 30, 2000 and changes during the nine months ending
September 30, 2000 are presented below:
Exercise
Options Price
---------- --------
Outstanding, December 31, 1999 . 505,000 $ 0.07
Granted ................... 1,490,000 0.10
Expired ................... -- --
Canceled .................. (505,000) 0.07
Exercised ................. -- --
---------- -----
Outstanding, September 30, 2000 1,490,000 $ 0.10
========== =====
Exercisable, September 30, 2000 1,490,000 $ 0.10
========== =====
NOTE 4 - CONSULTING AND MANAGEMENT FEES
The Company has four officers which contribute about one half of their
time to the Company. The value of their services is estimated at
$40,000 per year for each officer. For the nine months ended September
30, 2000 the Company expensed $120,000 as management fees and showed
the amount as services contributed to the Company on the Consolidated
Statement of Stockholders' Equity. The balance of the management fees
of $118,628 for the nine months ended September 30, 2000 was paid to
outside parties.
