SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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)
(403) 269-5369
(Registrant's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which class
to be so registered is to be registered
------------------- -------------------
N/A N/A
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Title of Class
Carmina Technologies Inc.
Form 10-SB Submission
27/03/00
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I
Item 1. Description of Business.
The Issuer was incorporated under the laws of the State of Utah on March 5,
1973, as Investors Equity Inc. On or about February 24, 1984, the Issuer
effectuated a 1 for 4 reverse split of its common stock. On or about October 15,
1991, the Issuer effectuated a 1 for 5 reverse split of its common stock, and
changed its name to "The Americas Mining Corporation". On January 24, 2000,
pursuant to resolution of the Board of Directors and subsequent action by the
shareholders acting by written consent of more than a majority of the Issuer's
outstanding shares (under Section 16-10a-704 of the Utah Revised Business
Corporation Act) , the Issuer changed its name to "Carmina Technologies Inc."
and increased its authorized capital to 50,000,000 shares (consisting of
10,000,000 preferred shares and 40,000,000 common shares). The Board also
authorized and directed organization of a subsidiary corporation under Utah law,
and transfer of certain mineral properties to that subsidiary with the intent
that the shares of the subsidiary would be distributed to the Issuer's
shareholders pro rata as a partial liquidating dividend, provided the Issuer
received a satisfactory legal opinion that it could legally do so.
Present management of the Issuer are not aware of what business activities
the Issuer might have been engaged in during the interim following its
incorporation and through the early 1980's. In the early 1980's, the Issuer
evaluated several properties, acquired at least three natural resource
properties (principally mineral properties located in Canada and Oregon), and
paid to have exploration work done on them.
During its fiscal 1999 year, however, management determined that due to
several years of depressed mineral prices and adverse developments in the mining
industry in the U.S., it would focus on a different kind of business. Upon
finding the opportunity to develop and market the product discussed herein,
management determined to transfer all of Issuer's mineral property interests to
a wholly owned subsidiary and to issue the subsidiary's shares to its
shareholders in the form of a dividend, all in contemplation of furthering the
new business opportunity while retaining the value of the mining properties for
the benefit of its shareholders. That distribution was completed on February 8,
2000, and the Issuer has not retained any interest in the mineral property
subsidiary. The Issuer then acquired Rhonda Networks Inc. (sometimes referred to
hereafter as "RNI"). The acquisition of RNI was made through a stock for stock
purchase exchange, thereby making RNI a wholly owned subsidiary of Issuer. See
"Market Information" at Item 1 under Part II, below.
The original subscription for RNI shares were for 6,000,000 RNI shares for
$600,000 Canadian accompanied by warrants for an additional 2,000,000 shares
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exercisable at @0.20 per share Canadian. The acquisition price was determined
mainly from the subscription amounts paid into RNI by its shareholders. All of
the warrants were exercised prior to the Agreement of Exchange taking affect.
Under the Agreement of Exchange, Carmina agreed to issue 16,000,000 shares at a
deemed value of $0.05 per share on the basis of 2 shares of Carmina for each
share of RNI submitted. 100% of the RNI shares were submitted for exchange. The
assets of RNI at the time of acquisition were valued by the directors at
$1,200,000 Canadian ($800,000 US) comprising the $1,000,000 Canadian from
subscriptions together with the technological knowledge and expertise
contributed by Stephen Kohalmi, Director of Technology, and valued at $200,000
Canadian. At the time of acquisition the only affiliation between the parties
was through Mr. John M. Alston who was the President and a director of both
Carmina and RNI. See "Agreement of Exchange" at Exhibit 2.
Business of the Issuer.
Not only is this an entirely new business endeavor for the Issuer, the
Issuer presently does not have any products or services, and the availability of
the products and services discussed hereafter will be dependent upon obtaining
additional financing and the ongoing and future development of such products and
services. With the acquisition of RNI, however, the Issuer commenced carrying on
the development and preparation for marketing of RNI's GateCommander 2000 (GC
2000) server appliance. The Issuer also intends to utilize the GC2000 as a key
appliance to enable it to become an Application Services Provider (ASP), with
the anticipation of generating a recurring revenue stream therefrom.
As already noted, at present the Issuer has no product or services on the
market or available for marketing. The Issuer is developing a new product called
the GateCommander 2000, a Linux (operating system) based server appliance which,
when fully developed, will provide an all-in-one solution for managing and
controlling secure Internet access for business and home. The GateCommander 2000
is intended to combine firewall, virtual private networking, voice over Internet
protocol, network and system monitoring, E-mail and domain name services, paging
and fax, dynamic web services and other user-specific options, all within a
Linux environment. In addition to these standard features, the GateCommander
2000 'smart home' server, is also under development, and is planned to include
'smart home' applications, including security monitoring and remote controls of
thermostat, lighting and other appliances. The GC2000, together with a suite of
remote services that customers may opt for to provide more effective use of the
GC2000, will be the initial principal products and services of the Issuer.
Management estimates that it will take an expenditure of $450,000.00 over
six months to complete the development and design of the commercial version of
the GC2000 using contract software and design engineers under the supervision of
the Issuer's Director of Technology. Additionally, an estimated $600,000.00 will
be needed
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to adapt specific applications for the ASP side of the business. An additional
$2,800.000.00 will be required to implement the initial marketing over the first
12 months, including setting up call centers and other services related to
implementing the ASP business. Note that these estimates are based on typical
rates paid in the industry for personnel such as software programmers, engineers
and manual writers. In this regard, the following information is provided:
Total Estimated Cash Requirement for 12-month Period Is US$3,850,000.00
PHASE I:
o Design of 3 ASP ready applications
o Design and Manufacture of 150 Units - Time approximately 3 months
ASP Development
Adaptation of applications for ASP $ 600,000 0-16 weeks
GC2000
Final design and development $ 125,000 0-8 weeks
Technical writing for manuals 20,000 0-8 weeks
Limited production run of 50 units 70,000 0-8 weeks
Set-up of call center and central servers 35,000 to 10 weeks
First production of approximately 100
saleable GC2000 units 200,000 to 12 weeks
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$1,050,000
PHASE II:
o Marketing and Services Program - Time approximately 12 months
Initial marketing program - ASPs $ 700,000
- GC2000 700,000
Second production run of approximately
200 saleable GC2000 units 400,000
Call center management and other services 600,000
Administrative overhead 400,000
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$2,800,000
The technology platform of the GC2000 consists of equipment, software and
communications services integrated into a packaged product that requires minimal
configuration and customization when installed in its base form. Once installed,
the GC2000 can be expanded to serve additional customer needs through optional
pre- packaged components or through remote services which will be provided by
the Carmina
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Technologies service center, currently being set up.
The equipment components of the GC2000 include communications devices,
modems and hubs that connect to the external network providers (telephone,
wireless, satellite and Internet providers) and to the client internal network.
The connection from the GC2000 will normally be an Ethernet connection to the
external network supplier supporting Transmission Control Protocol/Internet
Protocol (TCP/IP). The GC2000 is based on a personal computer architecture with
a Linux operating system and commonly available network tools supplemented by
proprietary software and services to be provided by RNI.
The GC2000's intended basic purpose is to control the information flowing
between the exterior and interior networks passing in and out through it. It
will be responsible for matching and/or packing/unpacking communication
protocols between the connected external and internal networks as well as the
security filtering to prevent unwanted traffic from passing through in either
direction. It will also be a server for resources that straddle between the
interior and exterior such as an electronic mail gateway, WAN access (wide area
network connections to other offices or related parties), file and document
transfer, world wide web (WWW) services and Domain Name Services (DNS).
Planned Features of the GateCommander 2000:
Firewall/Gateway - Will prevent unauthorized Internet users from
accessing private Networks connected to the Internet, especially
Intranets. All messages entering or leaving the Intranet will pass
through the firewall, which will examine each message and blocks those
that do not meet the specified security criteria.
Virtual Private Network (VPN) - Will enable users to create networks
using the Internet as the medium for transporting data. These systems
use encryption and other security mechanisms to ensure that only
authorized users can access the network and that the data cannot be
intercepted, analyzed and tampered with.
Network and System Monitoring - A SMART (Self-Monitoring, Analysis and
Reporting Technology) agent will electronically accumulate data and
monitor status of equipment, network connections, servers,
applications and workstations, and report potential problems. Ideally,
this should allow use of proactive actions to prevent impending system
failures. The SMART agent can be an integral part of a larger SNMP
monitoring and management system providing more aggressive polling
without incurring increased traffic volumes through the network.
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E-mail and Domain Name Services - Will be able to act as the mail
gateway Simple Mail Transfer Protocol (SMTP) and Post Office Protocol
(POP) and Domain Name Server (DNS) for the corporate Local Area
Network (LAN) enabling users to become self-sufficient
(create/administer local E-mail addresses). Will act as a bridge
between internal and external E-mail and can locally control aliases
to IP addresses.
Paging Services - Will be able to provide text paging services to the
corporate LAN allowing users to send alphanumeric messages from
applications or programmatically.
Fax Services - Will be able to provide the corporate LAN with fax
services (send/receive) with notification and possible routing.
Support Services - The Issuer intends to offer a suite of remote
services that customers may opt for to provide more effective use of
the GC2000 as well as provide facilities that would be required by
businesses relying on the Internet for communications. These services
are priced according to desired options under a service contract.
Planned Optional Features of the GC2000
Voice Over Internet Protocol (VOIP) - Will provide real- time,
toll quality voice and fax communication over the existing IP data
network or the Internet without incurring long distance charges. This
will require matching VOIP equipment at each location. These units can
be deployed to provide tie lines, subject to telephone regulation,
allowing users to place local calls through each remote installation.
Video Conferencing - Will take advantage of the high speed and
performance of the cable modem/xDSL Internet access using IP based
video conference products.
Dynamic Web Server - This feature will allow the GC2000 to house
and control the web server and web site within the corporate LAN. This
will make it easier for businesses to connect to databases and
internal applications while offering tighter control over proprietary
information and systems without relying on Internet Service Providers
(ISPs) for services and responsiveness to corporate needs.
Security Alarm Monitoring - This will monitor switches, motion
detectors, smoke and heat sensors of a security system through a
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computer. It will also monitor other equipment which requires
full-time critical operation (i.e. freezer temperatures) for early
warning of problems developing rather than solely reporting after
total failure.
Security Camera Monitoring - Will use the high speed Internet for
remote access to control and/or pipe security camera feeds to local
monitoring or recording stations.
The Issuer has not yet completed design work on the first commercial
version of the GC2000. When completed, the unit, with dimensions of
approximately twelve inches by six and one-quarter inches by four and one-half
inches, will be test marketed for 'Smart home" and small business applications.
Distribution Methods
The GC2000 has been designed to provide bundled complex network
capabilities to smaller networks with no need for Information Technology (IT)
specialists. Management intends to focus on three target markets: (a) households
with two or more computers; (b) small to medium-sized businesses; and (c) large
corporations networking with external employees. The Issuer plans to initially
sell to consumers via telephone, cable, builder and ISPs, with a goal to quickly
gain mass acceptance of the GC2000 and to establish partners such as resellers,
systems integrators and retailers, , to rapidly establish a recognized presence
around the world. Issuer also plans to contract with an established distribution
company to serve as a source of warehousing and banking for such initial tier
selling partners.
Additionally, upon establishing business and consumer references, the
Issuer plans to submit the GC2000 technology to popular industry product
reviewers with the expectation of earning and winning product awards based on
design and performance features. In the event the GC2000 becomes commercially
successful, then the Issuer plans to distribute product and services as, or
through, a full-service Application Service Provider (ASP) for clients who would
prefer to rent, rather than buy, the GC2000 and other new products and services.
The marketing of Issuer's products will be developed and directed by its VP
Marketing and Sales. Current intentions indicate that the basic marketing
generally will involve the following:
GC2000 (Business to Business): Since virtually all businesses with
Internet, Intranet, Extranet, Telephony or Business to Business eCommerce
activities are potential users of the GC2000, the Issuer intends to sell to
businesses throughout North America and then Europe and Asia to obtain critical
customer references and/or case studies.
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GC2000 (Tier One Distribution: Business to Consumer; Direct,
Resellers): Concurrently with this business to business marketing, Issuer
intends to sell to consumers via telco, cable, builder and Internet Service
Providers (ISPs). The marketing goal is to quickly gain mass acceptance of the
GC2000 and establish partners such as resellers, systems integrators and
retailers in order to rapidly increase awareness of the GC2000 throughout major
countries of the world.
GC2000 (Tier Two Distribution: Major Distributors): Marketing will
also focus on obtaining a large international distributor as a source of
warehousing and banking for Tier One "partners". The Issuer intends to institute
a Tier Two distribution strategy early in the marketing process for overseas
markets in order to mitigate any cross border/country issues.
ASPs: The Issuer's marketing plan will focus on those companies that
could utilize the specific applications it offers. The initial focus will be on
the North American market, with expansion worldwide to follow.
Product Review and Competitions: Once business and consumer references
are established, the Issuer intends to submit the GC2000 technology to popular
industry product reviewers with the intention of earning and winning product
awards based on design and performance features. It is believed that the
credibility established by such third-party approval will be a valuable and
cost-effective form of publicity, and will assist in reaching the global market
and increasing sales particularly through use of the Internet.
The Issuer had announced the development of GC2000 via Issuer's Internet
web site (www.carminatech.com/), launched February 29, 2000. The site initially
stated that "Carmina Technologies, Inc. has developed a low cost, high
capability, multi-purpose communications wizard packaged in a new, simple to use
unit . . .", and also that it had "developed the ideal Smart-Home network
management system . . . ." (Emphasis added.) As referenced previously, however,
[see caption, "Principal Products and Services", above], the GC2000 still
requires further development and is not ready for market at this time.
Accordingly, the site has been changed to indicate that Issuer is developing the
GC2000 to do those functions. The site further provides the reader with
information regarding the uses and capabilities of the GC2000, its relationship
with other companies, and background information on the Issuer and its director
of technology, among other things. The site additionally indicates that the
Issuer has a relationship with the Harris Corp. (which, according to the
Issuer's CFO, is a well-known publicly-held software application company ) as a
reseller of that company's "Net Simple" Simple Network Management Protocol
(SNMP) mediation product. Management believes that its planned continued
relationship with the Harris Corp. will assist the Issuer in reaching a target
market for the GC2000 in such areas as telemetry and Supervisory Control and
Data Acquisition (SCADA).
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Competitive Business Conditions
Corporate file server and networking solutions currently require a great
deal of expertise and investment which put them out of range for most
individuals and smaller businesses. Several low end and "do-it-yourself"
products already exist in the marketplace, however. Such products are typically
offered as a feature of another product, such as Windows 98, adding a minimal
routing capability allowing a second PC to share an Internet access, or provide
software and instructions for the components included in the GC2000, some with
minimal cost, some as public domain software. The GC2000 will also include
public domain software products. Hence, far from competing with vendors such as
Novell, Microsoft, Intel and IBM, the Issuer's technology is being developed to
be compatible with these systems.
The competitive value of the GC2000 is designed to be the pre-installation,
pre- configuration and integration of the components into a comprehensive
package supplemented with proprietary software and methods. While many
competitors limit their business to marketing of the hardware, the Issuer also
intends to focus on providing the convenience of an Application Service Provider
(ASP) relationship with clients. Unlike many competing products, when fully
developed the GC2000 will have integrated VOIP capabilities, greater monitoring
abilities, and will be more adaptable to other applications, including ASP
functions through purchases of, and alliances with, software developers, as well
as smart home technology.
Current major competitors include several companies providing components or
integrated components at approximately twice the offering retail price projected
for GC2000, as well as at least one company that provides product at roughly the
equivalent planned retail price. While the projected offering price of the
GC2000 units will be dependant upon the different features required by the
consumer, it is anticipated the price range will be between $750 for the basic
unit up to approximately $4,500 for the advanced unit utilizing all of the
features available.
There are no patents, licenses, franchises or concessions. Trademark status
has been applied for the name GateCommander. With regard to patents, the only
part of the GC2000 that is proprietary is the software that links the different
applications together, and the Issuer intends to apply for such patents,
copyrights and licenses as deemed advisable. The Issuer believes that it will
have a competitive margin over other companies by being among the first to get
its product to market. Similarly, the ASP (applications) feature is a separate
component which will utilize the GC2000 as the security device when users access
the applications. While the Issuer intends to offer services to manage and
monitor the applications in the GC2000, it will not be able to isolate itself
from competitors in this regard, but expects to differentiate itself from
competitors through well-managed marketing campaigns.
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There is no reasonable way to predict the competitive position of the
Issuer or any other entity in the these endeavors; however, the Issuer, having
virtually no assets or cash reserves, will no doubt be at a competitive
disadvantage in competing with entities that are already publicly traded, have
significant cash resources and have operating histories when compared with the
complete lack of any substantive operations by the Issuer.
The GC2000 incorporates and/or integrates components and software from
numerous principal suppliers, including Multi-Tech Systems, Pelco, Sony, Intel,
X10.com, Inc., as well as from the public domain. Major components include:
VOIP, surveillance cameras, Linux operating system, motherboard and Central
Processing Unit (CPU), and home control modules provided by various suppliers.
Since the product is in development stage, there are no major customers at
present.
No government approval is needed for the Issuer's major products and
services aside from the normal appliance safety approvals. Since the products
are assembled from previously approved components, licensing is not a factor.
The Issuer does not believe that existing or probable governmental
regulations will effect its business, nor is it aware of any environmental laws
that apply.
Research and Development
Research and development activity expenditures in the last two fiscal years
amounted to $8,346. (See Exhibit 1, "Consolidated Financial Statements for
December 31, 1999".) Additional expenditures for the interim period to June 30,
2000, bring the total to $46,044. (See Exhibit 1, "Consolidated Financial
Statements for June 30, 2000 and December 31, 1999".) Also, consulting fees
noted in the financial statements should be attributable to research and
development. In addition, attention is drawn to the estimated cash requirements
of the Issuer for the next 12 months as indicated under the subheading, Business
of the Issuer, above. A significant portion of those expenditures (more than
$700,000) is for final design and development of the GC2000 and ASP development.
(See also the comments at 'Need for Outside Financing' under Risk Factors,
below.)
There are currently five employees. Management intends to use subcontracted
labor for the continued development, and future production, of the Issuer's
products.
Reports to security holders
The Issuer is not currently required to deliver annual reports to security
holders but has from time to time provided letter reports (which have included
audited financial statements) to its shareholders, and it now intends to provide
formal annual reports on a regular basis.
The Issuer has not in the past filed reports with the Securities and
Exchange
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Commission. The public may read and copy any materials the Issuer files with the
SEC at SEC's Public Reference Room at 450 Fifth Street, NW, Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet Site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov. The Issuer's Internet address is http://www.carminatech.com.
Risk Factors
The discussion throughout this registration statement contains certain
forward-looking statements which involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Issuer to be materially different from any future results,
performances or achievements expressed or implied by such forward looking
statements. The risks that are known to apply or are reasonably likely to apply
to the Issuer and its business are as follows:
Auditors' Statement as to a "Going Concern". The Auditor's certificate
states the Issuer's consolidated financial statements were 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. Since the certificate's statement also reflects the
Issuer's significant lack of assets and revenues, it is evident that the
financial condition of the Issuer has been, and is, dependent upon the
shareholders for operating capital, and that absent additional financing
arrangements, the company may never achieve its goal of bringing a product to
market and becoming a viable company.
Extremely Limited Assets; No Source of Revenue. The Issuer has virtually no
assets and has had no revenue in either of its two most recent fiscal years or
to the date hereof. Nor will the Issuer receive any revenues until it completes
development of its principal product and begins sales of that product to the
public. The Issuer can provide no assurance that sales of the product will
produce any material revenues for the Issuer or its stockholders or that any
such business will operate on a profitable basis.
Need for Outside Financing; Business and Product Development. As already
noted, $3.85 million in additional capital must be raised to meet the business
development requirements of the Issuer. Note that almost 20% of this amount is
for final design and development of the GC2000 and ASP development. Assuming
that initial financing needs are met, the Issuer still will have to budget for
continued research and development of new, as well as its original, products in
order to maintain technological competitiveness. While the Issuer will seek to
raise the needed funds through either private placements or a secondary
offering, there is no assurance that the required financing can be obtained on
terms favorable to the existing shareholders, or that financing can be obtained
at all. Absent such additional financing, the successful operation of the
Issuer, as well as development of its products, will not be viable.
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Uncertain Demand for Issuers Products. While the Issuer believes that its
products, which assist in providing security for customers' Internet
connections, will have a substantial market, this may not be the case should
superior products be developed by competitors.
Increasing Competition. Because of the nature of the Internet industry and
the lack of barriers preventing competitors from entering the market,
competition will be intense among competing Internet gateway systems.
Lack of Patent Protection. Since the Issuer does not now have patent
protection on any of its planned products or services, other companies may enter
the market with competing products and services. While Issuer believes it's
GC2000 product initially will contain greater capabilities and be more adaptable
to other applications, there currently is nothing to prohibit competitors from
developing in the future similar products with at least equal, if not better,
abilities and adaptabilities. The Issuer will seek to obtain appropriate patents
on patentable intellectual property it develops in the future. Should the Issuer
fail to obtain such patents its ability to be competitive in the marketplace
will be adversely affected.
Uncertainty as to Future Profitability. There is no assurance that the
Issuer will be able to sell its products and services at a profit, given the
competitive nature of the business sector in which it is involved.
Quality of Marketing and Service. Should the Issuer not provide the quality
of marketing and service it proposes to provide, the Issuer's business will lack
the competitiveness required to allow the company to be viable.
Ability to Hire and Retain Qualified Personnel. Due to the high demand for
personnel trained in the Internet field and the competitive nature of the hiring
of these personnel the issuer may not have the ability to hire and retain
sufficient qualified personnel to meet the demands of the company, preventing
the company from getting its products to the market in a timely manner resulting
in a negative impact on cash flows and revenues.
Lack of Minority Shareholder Voting Control. Due to their ownership of a
majority of the shares of the Issuer's outstanding common stock, Mr. John M.
Alston and a small number of other major shareholders have total voting control
of the Issuer including the ability to elect all of the Issuer's directors, who
in turn elect all executive officers, without regard to the votes of other
stockholders. The practical effect, therefore, is that unaffiliated (minority)
shareholders will not have an effective voice in the management and control of
the company.
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No Market for Common Stock. There has been no "established public market"
for the Issuer's common stock in the last five years. (See Caption, "Risks of
Penny Stocks" below.)Although the Issuer intends to submit for listing of its
common stock on the Bulletin Board of the National Association of Securities
Dealers, Inc. (the "NASD"), there is currently no market for such shares; there
can be no assurance that such a market will ever develop or be maintained. Any
market price for shares of common stock of the Issuer is likely to be very
volatile, and numerous factors beyond the control of the Issuer may have a
significant effect. In addition, the stock markets generally have experienced,
and continue to experience, extreme price and volume fluctuations which have
affected the market price of many small capital companies and which have often
been unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political conditions, may
adversely affect the market price of the Issuer's common stock in any market
that may develop.
Risks of "Penny Stock". The Issuer's common stock may be deemed to be
"penny stock" as that term is defined in Reg. Section 240.3a5l-l of the
Securities and Exchange Commission. Penny stocks are stocks: (I) with a price of
less than five dollars per share; (ii) that are not traded on a "recognized"
national exchange; (iii) whose prices are not quoted on the NASDAQ automated
quotation system (NASDAQ-listed stocks must still meet requirement (I) above);
or (iv) in issuers with net tangible assets less than $2,000,000 (if the issuer
has been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average revenues of
less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in the Issuer's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker- dealer to (I) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Issuer's common stock to resell their shares to third parties or to
otherwise dispose of them.
Possible Future Compensation Arrangements. If the Issuer is successful in
developing and marketing its products and services, it may be necessary, in
order to retain qualified management and directors, to enter into arrangements
and agreements which will allow officers and directors to participate in
retirement, deferred compensation and other financial plans, although such
arrangements and agreements are not determined at this time.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Provided the necessary financing is obtained, the Issuer's plans for the
next 12 months include the following activities: (a) final design and
development of the GC2000; (b) technical writing for manuals; (c) limited
production test run of 50 units; (d) set up of call center and central servers;
(e) limited first and second production runs of 300 saleable units; (f)
development of GC2000 models adapted to ASP applications; (g) development and
implementation of the initial marketing program; (h) management of call center
and other services; and (i) expenditures for overhead. Management estimates that
it will require $3.85 million in additional capital to be raised to meet the
requirements of the above activities. (See caption "Business of Issuer" in Item
1, above.) While the Issuer will seek to raise the needed funds through either
private placements or a secondary offering, there is no assurance that the
required financing can be obtained on terms favorable to the existing
shareholders, or that financing can be obtained at all.
Management intends to continue development and production utilizing
subcontractors so that no plant or equipment purchases are contemplated. The
Issuer plans to use contract employees to establish and run the service center
and sales network. Numbers of subcontractors and employees will be dependent on
demand for the service. Production in excess of the first 350 saleable units are
planned to be financed out of cash flow.
Item 3. Description of Property.
At the present time, the Issuer has no real or personal property. The
offices, located at 810, 540 5th Avenue SW, in the city of Calgary in the
province of Alberta, Canada, from which it operates are paid for and maintained,
under a written cost-sharing agreement (see "Certain Relationships and Related
Transactions section), by Rhonda Corporation (prior to June 23, 2000, named
Rhonda Mining Corporation), a Canadian corporation which is a major shareholder
of the Issuer. The space meets the current and foreseeable management
requirements of the Company.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners. The following table sets
out the ownership of all persons known to the Issuer to be the beneficial owner
of more then five percent of any class of the Issuer's voting securities:
14
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Title of Class Name and Address Amount and Percent of Class
of Beneficial Nature of (5)
Owner (1) Beneficial Owner
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
common shares John M. Alston, 12,315,000 shares 60.1%
Cambridge Place (2) (3)
NW, Calgary,
Alberta T2K (4)
------------------------------------------------------------------------------------------
common shares Stephen Kohalmi 4,050,000 shares 19.4%
19 Cavalier (4)
Crescent Thornhill,
Ontario
------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares deemed beneficially owned by virtue of indirect control.
(2) Includes 4,050,000 shares registered in the name of Courage Investments
Limited and 2,000,000 shares registered in the name of Gemexport Limited
which are beneficially owned by the Dorian Trust, a charitable trust of
which John M. Alston's daughter, Yvonne Gillespie, is the Protector with
power to appoint trustees and nominate beneficiaries, and 6,000,000 shares
owned by Rhonda Corporation of which John M. Alston is the Chairman and
CEO. See the caption "Certain Relationships and Certain Transactions".
(3) Includes 40,000 shares which the beneficial owner has the right to acquire
within 60 days from the date of this statement pursuant to options
exercisable at $0.10 per share.
(4) Includes 50,000 shares which the beneficial owner has the right to acquire
within 60 days from the date of this statement pursuant to options
exercisable at $0.10 per share.
(5) Based on 20,502,300 shares outstanding + 427,500 shares which may be issued
within 60 days pursuant to options exercisable at $0.10 per share.
Security Ownership of Management.
The following table sets out as of June 30, 2000 the beneficial ownership
of all directors and nominees of any class of equity securities of the Issuer
and its parent (there are no subsidiaries) and of the directors and executive
officers of the Issuer as a group:
15
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
(1) (2) (3) (4)
------------------------------------------------------------------------------------------
Title of Class Name and Address Amount and Percent of Class
of Beneficial Nature of
Owner Beneficial Owner
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
common shares of John M. Alston, 12,315,000 (1)(6) 60.1 (3)
Issuer Director and CEO.
23 Cambridge
Place NW, Calgary,
Alberta T2K 1P8
------------------------------------------------------------------------------------------
common shares of Stephen Kohalmi, 4,050,000 (2) 19.4 (3)
Issuer Director of
Technology. 10
Cavalier Crescent,
Thornhill, Ontario,
L4J 1K4
------------------------------------------------------------------------------------------
common shares of Glen R. Alston, 265,000 (1) 1.3 (3)
Issuer Director and CFO.
604 MacEwan
Drive NW,
Calgary, Alberta,
T3K 3T9
------------------------------------------------------------------------------------------
common shares of Robert d'Artois, 490,000 (1) 2.3 (3)
Issuer Director and Vice
President. Suite
702 1100 8th Ave.
SW, Calgary,
Alberta T2P 3T9
------------------------------------------------------------------------------------------
common shares of Richard M. Day, 240,000 (1) 1.1 (3)
Issuer Director and
secretary. 342 East
900 South, Salt
Lake City. Utah,
84111
------------------------------------------------------------------------------------------
common shares of Directors and 17,360,000 84.2(3)
Issuer executive officers
above as a group
------------------------------------------------------------------------------------------
common shares of John M. Alston, 125,000 0.5 (5)
parent, Rhonda Director and CEO.
Corporation 23 Cambridge
Place NW, Calgary,
Alberta T2K 1P8
------------------------------------------------------------------------------------------
common shares of Glen R. Alston, 3,522,750 (4) 13 (5)
parent, Rhonda Director and CFO.
Corporation 604 MacEwan
Drive NW,
Calgary, Alberta,
T3K 3T9
------------------------------------------------------------------------------------------
common shares of Robert d'Artois, 113,000 0.4 (5)
parent, Rhonda Director and Vice
Corporation President. Suite
702 1100 8th Ave.
SW, Calgary,
Alberta T2P 3T9
------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
(1) Includes 40,000 shares which the beneficial owner has the right to acquire
within 60 days from the date of this statement pursuant to options exercisable @
$0.10 per share.
(2) Includes 50,000 shares which the beneficial owner has the right to acquire
within 60 days from the date of this statement pursuant to options exercisable @
$0.10 per share.
(3) Based on 20,502,300 shares of the Issuer outstanding + 427,500 shares
issuable within 60 days pursuant to options exercisable @ $0.10 per share.
(4) Includes 60,000 shares of Rhonda Corporation which the beneficial owner has
the right to acquire within 60 days from the date of this statement pursuant to
options exercisable @ $0.25 (Canadian) per share and 1,300,000 shares plus an
additional 1,300,000 shares (all of Rhonda) which the beneficial owner has the
right to acquire within 60 days from the date of this statement pursuant to
warrants exercisable at $0.40 and $0.45 per share (Canadian) owned by Unibanco
Financial Corporation, a company controlled by Glen R. Alston.
(5) Based on 23,406,168 shares outstanding + 2,800,000 shares issuable within 60
days from the date of this statement pursuant to warrants exercisable + 857,500
shares issuable within 60 days from the date of this statement pursuant to
options exercisable (all of Rhonda).
(6) Shares deemed beneficially owned by virtue of indirect control comprising
4,050,000 shares registered in the name of Courage Investments Limited and
2,000,000 shares registered in the name of Gemexport Limited which are
beneficially owned by the Dorian Trust a charitable trust of which John M.
Alston's daughter, Yvonne Gillespie is the Protector with power to appoint
trustees and nominate beneficiaries and 6,000,000 shares owned by Rhonda
Corporation of which John M. Alston is the Chairman and CEO. As determined
elsewhere in this Registration Statement, John M. Alston family members and a
charitable trust operating under the protection of one of his daughters own
shares totaling 69.0% of the issuer's common shares inclusive of the shares
noted above. See the captions "Security Ownership of Certain Beneficial Owners"
and "Transactions with Management and Others" of this Registration Statement.
17
<PAGE>
Changes in Control.
There are no present arrangements or pledges of the Issuer's securities
which may result in a change in control of the Issuer.
Item 5. Directors and Executive Officers, Promoters and Control Persons.
Identification of Directors and Executive Officers.
The following table sets forth the names of all current directors and
executive officers of the Issuer.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Name and Age Position and Offices Term of Office as Director
Period Served
-------------------------------------------------------------------------------------
<S> <C> <C>
John M. Alston, 72 President and Director. March 20, 1999 to present
March 20, 1999 to next
annual meeting
-------------------------------------------------------------------------------------
Stephen Kohalmi, 46 Director of Technology February 25, 2000 to
and Director. February 25, present
2000 to next annual
meeting
-------------------------------------------------------------------------------------
Glen R. Alston, 43 Chief Financial Officer and February 25, 2000 to
Director. February 25, present
2000 to next annual
meeting
-------------------------------------------------------------------------------------
Robert L. d'Artois, 54 Vice President and February 25, 2000 to
Director. February 25, present
2000 to next annual
meeting
-------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<S> <C> <C>
-------------------------------------------------------------------------------------
Richard M. Day, 57 Secretary and Director. March 20, 1999 to present
March 20, 1999 to next
annual meeting
-------------------------------------------------------------------------------------
</TABLE>
John M. Alston resides in Calgary, Alberta, Canada. Mr. Alston is a
graduate of the University of N.B. with a B.Sc. in Arts. He is a
Professional Geologist registered with the Association of Professional
Engineers, Geologists, and Geophysicists of Alberta (since 1966).
Since 1971, Mr. Alston has been the CEO of Savanna Resources Ltd. and
since 1992, of Rhonda Corporation, both junior mineral exploration
companies listed on the Canadian Venture Exchange (formerly the
Alberta Stock Exchange). Since 1996, Mr. Alston was instrumental in
incorporating three junior capital pool companies which were listed on
the Alberta Stock Exchange and subsequently completed reverse
takeovers of two manufacturing companies and one high tech private
network service provider, all of which are listed on the Canadian
Venture Exchange. In 1999 Mr. Alston oversaw the creation of Rhonda
Networks Inc. as an affiliate of Rhonda Corporation to engage in the
development and marketing of an Internet access gateway conceived by
Mr. Stephen Kohalmi. Since the Issuer's takeover of RNI, Mr. Alston is
now devoting approximately 75% of his time to the Issuer. Mr. Alston
is a director of First Step Incorporated, Rhonda Corporation and
Savanna Resources Ltd., all public companies listed on the Canadian
Venture Exchange. Mr. Alston expects to devote approximately 50% of
his time to Issuer's affairs.
Stephen Kohalmi resides in Thornhill, Ontario, Canada. After
graduating from the University of Toronto in 1975 with a Bachelor of
Science (majoring in computer science) Mr. Kohalmi joined I.P. Sharp
and Associates as a programming consultant, later branch manager for
their German subsidiary handling administration, marketing and support
services, and participating in design and implementation of a
portfolio management information system. In 1979, Mr. Kohalmi joined
TTL Systems Limited, assuming responsibility for systems programming
and research and development of its communications terminal and
developing a bond analysis system for their VAX computer. In 1999, he
was cofounder of Rhonda Networks Inc., becoming its Director of
Technology, working on the development of Internet related appliances
for industry and consumers, including the GateCommander 2000 series of
Internet access gateway systems. Mr. Kohalmi is a director of Qnetix
Inc., a public company listed on the Canadian Venture Exchange. Mr.
Kohalmi expects to devote approximately 80% of his time to Issuer's
affairs.
19
<PAGE>
Glen R. Alston resides in Calgary, Alberta, Canada. Mr. Alston is the
son of John M. Alston. Upon graduating from the University of Calgary
with a Bachelor of Commerce degree, Mr. Alston worked with a major
accounting firm. From 1991 to 1993 Mr. Alston was Chief Financial
Officer for a Calgary based financial services firm and was
instrumental in establishing their securities office in Calgary. Since
1993, Mr. Alston has been a director and officer of Rhonda
Corporation, taking over as President and CFO in 1998. Since 1996, Mr.
Alston participated in the organization of the three Alberta junior
capital pool companies referred to in the preceding paragraph on John
M. Alston. In 1999 with the incorporation of Rhonda Networks Inc., an
affiliate of Rhonda Corporation, and it's subsequent takeover by the
Issuer, Mr. Alston became a director and CFO of the Issuer, working on
its business development and the financing. Mr. Alston expects to
devote approximately 50% of his time to Issuer's affairs.
Robert d'Artois resides in Calgary, Alberta, Canada. In his capacity
as financial consultant to Rhonda Corporation and Savanna Resources
Ltd., Mr. d'Artois has assisted the companies in raising capital. Mr.
d'Artois is Vice President of communications of the Issuer. Mr.
d'Artois' background includes many years as Owner/President of a Sales
and Marketing consultancy to the broadcast and publishing industry in
Canada and the United States, and attendance at St. Lawrence College
in Quebec City. Mr. d'Artois expects to devote approximately 50% of
his time to Issuer's affairs.
Richard M. Day resides in Salt Lake City, Utah. Mr. Day has been a
licensed attorney (by the State of Utah) since 1969, having engaged in
private practice until 1993. During 1993 Mr. Day became the sole
owner, officer and director of American Registrar & Transfer Co.
(which is the Issuer's transfer agent), and since that time he has
devoted substantially his full time to running that business and
representing it in various securities matters. Mr. Day is either an
officer or director, or both, of Remington Financial Group, Inc.;
Temple Mountain Industries, Inc.; Altamont Mining Co., Inc.; and Merge
Tech, Inc. None of these just-named companies have any significant
assets. Only Remington Financial has certified financial statements,
and all are, or will be, seeking "reverse acquisition" opportunities.
Mr. Day expects to devote only minimal time to the affairs of the
Issuer.
Significant Employees.
The Issuer's significant employees at the present time are limited to
executive officers.
20
<PAGE>
Family Relationships.
With the exception of John M. Alston and Glen R. Alston who are father and
son, there are no other family relationships between any directors or executive
officers of the Issuer, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Issuer:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy or
two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
No direct compensation was paid to any of the executive officers in the
Issuer's most recent fiscal years ending June 30, 1998, and June 30, 1999 and in
the six month period ended December 31, 1999 (the new fiscal year end.) Through
RNI's cost sharing agreement with Rhonda Corporation (see "Certain Relationships
and Related Transactions" section), indirect compensation was paid to John
Alston, Glen Alston and Robert d'Artois in the total amount of $33,000 for the
12 months ended December 31, 1999 and an estimated total $66,000 will be paid
for the 12 months ended December 31, 2000. Additionally, see Note 4 to each of
the Consolidated Financial Statements made a part hereof at Exhibit 1 to the
effect that the value of the services of each of the four officers of Carmina
who contribute about one half or more of their time to the company (as indicated
in Item 5 above) is $40,000 per year for each officer.
21
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (I)
------------------------------------------------------------------------------------------------------------------
Name Year Salary ($) Bonus ($) Other Restricted Securities LTIP All Other
and Annual Stock Under- Payouts Compens
Principal Compens Award (s) lying ($) ation
Position ation ($) ($) Options/S ($)
ARs ($)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lloyd 1997 Nil Nil Nil Nil Nil Nil Nil
Frizzell,
(1)
President
and CEO
------------------------------------------------------------------------------------------------------------------
1998 Nil Nil Nil Nil Nil Nil Nil
------------------------------------------------------------------------------------------------------------------
1999 Nil Nil Nil Nil Nil Nil Nil
------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Lloyd Frizzell was President until February 9, 2000. Mr. Frizzell was
involved with respect to the mining ventures, and resigned upon the Issuer's
transfer of the mining properties.
In February 2000, non-qualified incentive stock options were granted by the
Issuer to directors, executive officers, employees and contractors of Rhonda
Networks, replacing options previously granted to them by Rhonda Networks and
surrendered for cancellation by them at the time of the acquisition or (in the
case of Richard Day) as a new incentive option.
Executive officers and directors were granted the following options:
Options granted upon acquisition of Rhonda Networks Inc.
(a) Individual Grants
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Name Number of % of Total Exercisable Expiration
Securities Options Price ($/share) Date
Underlying Granted
Options
Granted
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John M. 160,000 shares 10.6% $0.10 February 28,
Alston CEO 2010
and Director
-------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
Stephen 200,000 shares 13.2% $0.10 February 28,
Kohalmi 2010
Director of
Technology
-------------------------------------------------------------------------------------------------------
Glen R. Alston 160,000 shares 10.6% $0.10 February 28,
CFO and 2010
Director
-------------------------------------------------------------------------------------------------------
Robert 160,000 shares 10.6% $0.10 February 28,
d'Artois V-P 2010
and Director
-------------------------------------------------------------------------------------------------------
Richard Day 160,000 shares 10.6% $0.10 February 28,
Secretary and (1) 2010
Director
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options were granted as an incentive rather than as a replacement of
options previously granted by Rhonda Networks Inc. as in the case of the other
individuals noted.
No market for the Issuer's shares existed at the time the options were
granted.
Compensation of Directors.
There are no standard arrangements pursuant to which the Issuer's directors
are compensated for any services provided as director. No additional amounts are
payable to the Issuer's directors for committee participation or special
assignments. There are no arrangements pursuant to which any of the Issuer's
directors was compensated during the Issuer's last completed fiscal year for any
service provided as director.
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements.
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Issuer, with respect to any director
or executive officer of the Issuer which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of employment with the Issuer or its subsidiaries, any change in
control of the Issuer, or a change in the person's responsibilities following a
change in control of the Issuer. The Issuer anticipates that once the Issuer
obtains the necessary financing and its products and services commence, it will
enter into service contract agreements with regard to its officers. Although
such arrangements and agreements are not determined at this time, the terms of
any such arrangements will follow the standards that exist for similar companies
operating in this segment of the industry. See caption, "Risk Factors" under
Item 1, above.
23
<PAGE>
Item 7. Certain Relationships and Related Transactions.
Transactions with Management and Others.
The only transaction in the last two years exceeding $60,000 in which the
Issuer was a party and in which any then director or executive officer of the
Issuer had a material interest was of the acquisition of Rhonda Networks Inc. as
a wholly owned subsidiary by an Agreement Exchange dated February 9, 2000
between the Issuer and the shareholders of Rhonda Networks Inc. (See "Agreement
of Exchange" at Exhibit 2 and "Recent Sales of Unregistered Securities" at Item
4 under Part II, below.) At the time of the takeover, Mr. John Alston was a
director of the Issuer and members of his family and a charitable trust
operating under the protection of one of his daughters were shareholders in the
Issuer as set out below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Name Relationship to Issuer (As Shareholding (%) Shareholding (%)
of February 2000) Prior to After
Transaction Transaction
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John M. Alston Director -- -- 225,000 1.1
-------------------------------------------------------------------------------------------------------------
Waltraud Alston Spouse of John M. Alston 225,000 5.0 450,000 2.2
-------------------------------------------------------------------------------------------------------------
Laurel Eckart Daughter-in-law of John M. 210,250 4.7 435,250 2.1
Alston/Wife of Glen Alston
-------------------------------------------------------------------------------------------------------------
David Cooper Son-in-law of John M. Alston 225,000 5.0 225,000 1.1
-------------------------------------------------------------------------------------------------------------
Maxwell Clark Son-in-law of John M. Alston 221,250 4.9 221,250 1.1
-------------------------------------------------------------------------------------------------------------
Yvonne Gillespie Daughter of John M. Alston 220,250 4.9 220,250 1.1
-------------------------------------------------------------------------------------------------------------
April Arvazzetti Daughter of John M. Alston 204,260 4.5 204,260 1.0
-------------------------------------------------------------------------------------------------------------
Wendy Berger Daughter of John M. Alston 182,300 4.0 182,300 0.9
-------------------------------------------------------------------------------------------------------------
Unibanco Financial Controlled by Glen R. 157,875 3.5 157,875 0.8
Corporation Alston, son of John M.
Alston
-------------------------------------------------------------------------------------------------------------
Gemexport Limited Owned by Dorian Trust (1) 2,000,000 44.4 2,000,000 9.8
Courage Investments Owned by Dorian Trust (1) -- -- 4,050,000 19.8
Limited
-------------------------------------------------------------------------------------------------------------
Rhonda Corporation Company of which John M. -- -- 6,000,000 28.7
Alston is Chairman and CEO
-------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) A charitable trust of which Yvonne Gillespie is the Protector, with the
powers to appoint trustees and nominate beneficiaries.
24
<PAGE>
Parents of the Issuer.
Rule 1-02(p) of Regulation S-X states that "a 'parent' of a specified
person is an affiliate controlling such person directly, or indirectly through
one or more intermediaries." Accordingly, Rhonda Corporation and John Alston are
deemed to be parents of the Issuer. See tables and notes under Captions,
"Security Ownership of Certain Beneficial Owners", "Security Ownership of
Management" and "Transactions with Management and Others" above. Shares of
Rhonda Corporation are widely held and trade on the Canadian Venture Exchange.
Management control 24.64% of the voting shares and no shareholder other than
Glen Alston owns in excess of 5% of the voting shares of Rhonda Corporation.
Transactions with Rhonda Corporation
Under a cost-sharing agreement, the issuer reimburses Rhonda Corporation
for the following office costs: office rent, management expense, courier and
mailing costs, telephone/facsimile expenses, office supplies, reception and
secretarial expenses at a rate of 50% of the actual costs being incurred by
Rhonda Corporation all with third parties without any markup. The term of the
agreement is from January 1 to December 31 with a renewal term for the following
year at the end of each year. This agreement may be terminated by either party
on 60 days written notice. As the issuer is not required to rent its own space,
purchase capital equipment or fill its own staffing requirements this provides a
saving to the company.
Item 8. Description of Securities.
The Issuer has two classes of securities authorized: 10,000,000 shares of
no par value preferred stock, and 40,000,000 shares of no par value common
voting stock. The shares of common stock all have the same rights and
preferences. Stockholders of the Issuer have no pre-emptive rights to acquire
additional shares of common stock or other securities. All shares of the common
stock now outstanding are fully paid and non- assessable. There are 1,890,000
outstanding non-qualified options to purchase shares of common stock of the
Issuer. There is no provision in the Issuer's Articles of Incorporation, as
amended, that would delay, defer, or prevent a change in control of the Issuer.
The Issuer has no other securities or debt securities.
PART II
Item 1. Market Price of and Dividends on the Issuer's Common Equity and Related
Stockholder Matters.
Market Information.
There is no public trading market for the Issuer's shares as of the date of
this statement. The Issuer's Directors understand that one or more broker
dealers were publishing quotations on the Issuer's shares as recently as late
1996, but the Directors have no knowledge as to whether any trading market in
realistic terms in either volume or price existed for such shares. The Issuer
intends to submit for listing on the National Association of Securities Dealers,
Inc. (the "NASD") Bulletin Board. In any event, no assurance can be given that
any market for the Issuer's common stock will develop or maintain. If a public
market ever develops in the future, the sale of "unregistered" and "restricted"
shares of common stock pursuant to Rule 144 of the Securities Act by members of
management or others may have a substantial adverse impact on any such public
market.
There are 1,890,000 options outstanding (inclusive of the 840,000 options
25
<PAGE>
exercisable by management) to purchase shares of the Issuer's common stock. See
Item 6 under Part I, above.
The only sales of any securities of the Issuer during the past three years
were sales of 18,400,000 "unregistered" and "restricted" shares of common stock,
all of which could be sold pursuant to Rule 144 under the Securities Act at such
time as the holding period and other requirements of that rule are met.
2,400,000 of those shares were for assignment of certain mining claims, and the
remaining 16,000,000 shares were in exchange for shares of Rhonda Networks Inc.
See the caption "Recent Sales of Unregistered Securities" of this Registration
Statement.
Holders of Common Stock.
As of the date of this Registration Statement, the Issuer has approximately
400 of-record shareholders.
Dividends.
The Issuer has not declared any cash dividends in the last two fiscal years
with respect to its common stock and does not intend to declare dividends in the
foreseeable future. The future dividend policy of the Issuer cannot be
ascertained with any certainty, and if and until the Issuer has sales of
products and services and achieves a profit, no such policy will be formulated.
Aside from the Issuer's lack of assets and the fact that the Issuer's
principal product is in the development stage and has no sales (as further
discussed under the caption "Business of the Issuer" above), there are no
material restrictions limiting, or that are likely to limit, the Issuer's
ability to pay dividends on its profits when and if profits are achieved.
Item 2. Legal Proceedings.
The Issuer is not a party to any pending legal proceeding. To management's
knowledge, no federal, state or local governmental agency is presently
contemplating any proceeding against the Issuer. No director, executive officer
or affiliate of the Issuer or owner of record or beneficially of more than five
percent of the Issuer's common stock is a party adverse to the Issuer or has a
material interest adverse to the Issuer in any proceeding.
Item 3. Changes in and Disagreements with Accountants.
There have been no changes in, or disagreements with, the Issuer's
principal independent accountant in the Issuer's two most recent fiscal years or
as of the date of this Registration Statement.
26
<PAGE>
Item 4. Recent Sales of Unregistered Securities.
On January 18, 1999, 2,400,000 common shares were issued for an assignment
of the TAB 99-1 through TAB 99-16 and TAB 99-25 mining claims located in
Josephine County, Oregon and the TAB 99-17 through TAB 99-24 and TAB 99-26
mining claims in Del Norte County, California. The offers and sales of these
securities are believed to have been exempt from the registration requirements
of Section 5 of the Securities Act of 1933 pursuant to Section 4(2) thereof (for
transactions not involving any public offering), and from similar states'
securities laws, rules and regulations. See "Tab 99 Assignment Agreement" at
Exhibits.
Further, on February 8, 2000, 16,000,000 common shares were issued pursuant
to an Agreement of Exchange with the Shareholders of Rhonda Networks Inc. which
became a wholly owned subsidiary of the Issuer. The offers and sales of these
securities are believed to have been exempt from the registration requirements
of Section 5 of the Securities Act of 1933 pursuant to Section 4(2) thereof (for
transactions not involving any public offering), and from similar states'
securities laws, rules and regulations. See "Agreement of Exchange" by and
between Issuer and Rhonda Networks Inc. at Exhibits.
Item 5 Indemnification of Directors and Officers.
The Articles of Incorporation of the Issuer state that:
"The Corporation shall indemnify any person who is or was a director
to the maximum extent provided by statute."
"The Corporation shall indemnify any person who is or was an officer,
employee or agent of the Corporation who is not a director to the
maximum extent provided by law, or to a greater extent if consistent
with law and if provided by resolution of the Corporation's
shareholders or directors, or in a contract."
"The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, fiduciary or agent
of the Corporation and who while a director, officer, employee,
fiduciary or agent of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, trustee,
employee, fiduciary or agent of any other foreign or domestic
corporation, partnership, joint venture, trust, other enterprise or
employee benefit plan against any liability asserted against or
incurred by him in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify
him against such liability under provisions of the statute."
27
<PAGE>
and that
"A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (I) for any breach
of the director's duty of loyalty to the Corporation or to its
shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation op law, (iii)
for acts specified under Section 16-10-44 of the Utah Revised Business
Corporation Act or any amended or successor provision thereof, or (iv)
for any transaction from which the directors derived an improper
personal benefit. If the Utah Revised Business Corporation Act is
amended after this Article is adopted to authorize corporate action
further eliminating or limiting the personal liability of directors,
then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Utah
Revised Business Corporation Act, as so amended."
"Any repeal or modification of the foregoing paragraph by the
shareholders of the Corporation shall not adversely affect any right
or protection of a director of the Corporation existing at the time of
such repeal or modification."
Further, Section 16-10a-841, Utah Code Annotated (U.C.A.), specifically
authorizes a Utah corporation to indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if his conduct was in good faith; and he reasonably believed that his
conduct was in, or not opposed to, the corporation's best interests; and in the
case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. In addition, it also authorizes a Utah corporation to
limit the liability of a director to the corporation or to its shareholders for
monetary damages for any action taken or any failure to take any action as a
director, except for: liability for the amount of a financial benefit received
by a director to which he is not entitled; an intentional infliction of harm on
the corporation or the shareholders; a violation of section 16-10a-842, U.C.A.;
or an intentional violation of criminal law.
PART F/S
Included herewith is the financial information of Carmina Technologies,
Inc. and Subsidiary (Formerly The Americas Mining Corporation)(A Development
Stage Company), together with the following index to such information:
1. Independent Auditors' Report (Jones, Jensen & Company, Certified
Public Accountants)
2. Consolidated Financial Statements for Carmina Technologies, Inc. and
Subsidiary (Formerly The Americas Mining Corporation)(A Development Stage
28
<PAGE>
Company), for the following periods: December 31, 1999; March 31, 2000 and
December 31, 1999; June 30, 2000 and December 31, 1999; and September 30, 2000
and December 31, 1999, respectively, including:
-- Consolidated Balance Sheets
-- Consolidated Statement of Operations (unaudited)
-- Consolidated Statement of Stockholders' Equity
-- Consolidated Statement of Cash Flows (unaudited)
-- Notes to the Consolidated Financial Statements
PART III
Item 1. Index to Exhibits.
The exhibits listed and described below in Item 2 are filed as a part of this
Registration Statement:
Item 2. Description of Exhibits.
Exhibit
Number Description
------- -----------
1 Financial Statements as indicated above
2 Agreement of Exchange w/ Carmina Technologies Inc. Stock Option Plan
and Stock Option Agreement
3 Restated Articles of Incorporation of Carmina Technologies Inc. with
Articles of Amendment to Articles of Incorporation of The Americas
Mining Corporation. (Note: No By-Laws created)
10.1 TAB 99 Assignment Agreement
10.2 Syndicate Agreement (TAB 99)
21 Rhonda Networks Inc. - Articles of Incorporation
Summaries of all exhibits contained within this Registration Statement are
modified in their entirety by reference to these Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has
29
<PAGE>
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
CARMINA TECHNOLOGIES INC.
Date: _____________ By /s/
--------------------------------------
John M. Alston, Director and President
Date: _____________ By /s/
--------------------------------------
Robert d'Artois, Director and Vice President
Date: _____________ By /s/
--------------------------------------
Richard M. Day, Director and Sec/Treasurer
30
<PAGE>
CARMINA TECHNOLOGIES, INC.
AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report.............................................. 3
Consolidated Balance Sheet ............................................... 4
Consolidated Statement of Operations...................................... 5
Consolidated Statement of Stockholders' Equity (Deficit).................. 6
Consolidated Statement of Cash Flows...................................... 7
Notes to the Consolidated Financial Statements............................ 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Carmina Technologies, Inc. and Subsidiary
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Calgary, Canada
We have audited the accompanying consolidated balance sheet of Carmina
Technologies, Inc. and Subsidiary (formerly The Americas Mining Corporation) (a
development stage company) as of December 31, 1999 and the related consolidated
statements of operations, stockholders' equity and cash flows from inception on
May 7, 1999 to December 31, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Carmina
Technologies, Inc. and Subsidiary (formerly The Americas Mining Company) (a
development stage company) as of December 31, 1999 and the consolidated results
of their operations and their cash flows from inception on May 7, 1999 to
December 31, 1999 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company is a development stage company
and has no operating capital which together raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
April 8, 2000
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Balance Sheet
December 31,
1999
-----------
CURRENT ASSETS
Cash $ 174
Accounts receivable 2,136
Tax refund receivable 13,486
---------
Total Current Assets 15,796
---------
OTHER ASSETS
Investment in affiliate (Note 1) 2,569
---------
Total Other Assets 2,569
---------
TOTAL ASSETS $ 18,365
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 24,189
---------
Total Current Liabilities 24,189
---------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 40,000,000 shares authorized
of no par, 16,000,000 shares issued and outstanding 407,406
Deficit accumulated during the development stage (413,230)
---------
Total Stockholders' Equity (Deficit) (5,824)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 18,365
=========
4
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Operations
From
Inception on
May 7,
1999 Through
December 31,
1999
------------
REVENUES $ 2,136
COST OF GOODS SOLD 1,942
---------
GROSS PROFIT 194
---------
EXPENSES
General and administrative 4,142
Research and development 8,346
Consulting fees 126,974
Management fees 263,445
---------
Total Expenses 402,907
---------
LOSS FROM OPERATIONS (402,713)
---------
OTHER INCOME (EXPENSE)
Loss on investment in affiliate (10,431)
Interest expense (86)
---------
Total Other Income (Expense) (10,517)
---------
NET LOSS $(413,230)
=========
BASIC LOSS PER SHARE $ (0.03)
=========
5
<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)
========== ========== ==========
</TABLE>
6
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
From
Inception on
May 7,
1999 Through
December 31,
1999
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(413,230)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock issued for services 255,606
Services contributed by officers of the Company 94,000
Decrease value of equity investment 10,431
Changes in operating assets and liabilities:
(Increase) decrease in receivables (15,622)
Increase (decrease) in accounts payable 24,189
---------
Net Cash Used by Operating Activities (44,626)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equity investment (13,000)
---------
Net Cash Used by Investing Activities (13,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 57,800
---------
Net Cash Provided by Financing Activities 57,800
---------
NET INCREASE IN CASH 174
CASH AT BEGINNING OF PERIOD --
---------
CASH AT END OF PERIOD $ 174
=========
CASH PAID FOR:
Interest $ --
Income taxes $ --
NON-CASH FINANCING ACTIVITIES
Common stock issued for services $ 255,606
Services contributed by officers of the Company $ 94,000
</TABLE>
7
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
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.
8
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
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
505,000 options have not been included in the calculation as their effect
is antidilutive for the period presented.
From
Inception on
May 7,
1999 Through
December 31,
1999
---------
Numerator - loss $ (413,230)
Denominator - weighted average number of
shares outstanding 16,000,000
----------
Loss per share $ (0.03)
==========
d. Provision for Taxes
At December 31, 1999, the Company had net operating loss carryforwards of
approximately $413,000 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 because of the
uncertainty of the Company generating any net income. Accordingly, the
potential tax benefit of $139,000 of the loss carryforwards is offset by a
valuation account of the same amount.
9
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
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, substantive operations have not yet began.
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. Allowance for Doubtful Accounts
The Company's accounts receivable are shown net of an allowance for
doubtful accounts of $-0- at December 31, 1999.
i. 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."
10
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
j. 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.
k. 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 affiliate of $10,431 to reduce the amount of the
investment to $2,569 at 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.
11
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
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 with the following assumptions: The U.S.
Treasury rate for the period equal to the expected life of the option was
used as the risk-free interest rate. The expected life of the options was
estimated at six months since the options were later canceled. The
volatility is expected to be minimal as the stock is not trading and stock
has been at only one price. There are no expected dividends.
Under the accounting provisions of SFAS No. 123, the Company's net loss
would have been unchanged from the reported net loss.
A summary of the status of the Company's warrants and options as of
December 31, 1999 and changes during the period ending December 31, 1999 is
presented below:
Weighted
Average
Exercise
Warrants Options Price
---------- ---------- ----------
Outstanding, May 7, 1999 -- -- $ --
Granted 3,350,000 505,000 0.13
Expired -- -- --
Exercised (3,350,000) -- 0.14
---------- ---------- ----------
Outstanding, December 31, 1999 -- 505,000 $ 0.07
========== ========== ==========
Exercisable, December 31, 1999 -- 505,000 $ 0.07
========== ========== ==========
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------- ------------------------------
Number Weighted Number Weighted
Outstanding Average Exercisable Average
at Exercise at Exercise
Exercise Price 12/31/99 Price 12/31/99 Price
-------------- --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
$0.07 505,000 $ 0.07 505,000 $ 0.07
</TABLE>
On February 9, 2000 the 505,000 options were canceled and 1,490,000 options
at $0.10 per share were issued.
12
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
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. The Company began operations in May of 1999 with the
officers contributing services for about seven months of the year. In 1999,
the Company expensed $94,000 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 $169,445 and
consulting fees of $126,974 were paid to outside parties.
NOTE 5 - SUBSEQUENT EVENT
On February 9, 2000, the Company issued 4,503,300 shares of common stock as
part of the recapitalization of Rhonda.
13
<PAGE>
CARMINA TECHNOLOGIES, INC.
AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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>
March 31, December 31,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 17,486 $ 174
Tax refund receivable 16,020 13,486
Accounts receivable 2,321 2,136
Prepaid expenses (Note 1) 10,320 --
--------- ---------
Total Current Assets 46,147 15,796
--------- ---------
OTHER ASSETS
Investment in affiliate (Note 1) 1,284 2,569
Marketable securities (Note 1) 168,626 --
Securities receivable (net of allowance of $16,512) (Note 1) 117,646 --
--------- ---------
Total Other Assets 287,556 2,569
--------- ---------
TOTAL ASSETS $ 333,703 $ 18,365
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 32,022 $ 24,189
--------- ---------
Total Current Liabilities 32,022 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 825,232 407,406
Deficit accumulated during the development stage (523,551) (413,230)
--------- ---------
Total Stockholders' Equity (Deficit) 301,681 (5,824)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 333,703 $ 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 May 7,
March 31, 1999 Through
----------------------- March 31,
2000 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ 2,136
COST OF GOODS SOLD -- -- 1,942
--------- --------- ---------
GROSS PROFIT -- -- 194
--------- --------- ---------
EXPENSES
General and administrative 5,568 -- 9,710
Research and development 5,778 -- 14,124
Consulting fees -- -- 126,974
Management fees 77,188 -- 340,633
--------- --------- ---------
Total Expenses 88,534 -- 491,441
--------- --------- ---------
LOSS FROM OPERATIONS (88,534) -- (491,247)
--------- --------- ---------
OTHER INCOME (EXPENSE)
Loss on investment in affiliate (Note 1) (1,285) -- (11,716)
Gain on sale of investments (Note 1) 3,165 -- 3,165
Unrealized loss on investments (Note 1) (23,667) -- (23,667)
Interest expense -- -- (86)
--------- --------- ---------
Total Other Income (Expense) (21,787) -- (32,304)
--------- --------- ---------
NET LOSS $(110,321) $ -- $(523,551)
========= ========= =========
BASIC LOSS PER SHARE $ (0.01) $ 0.00
========= =========
</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 -- 40,000 --
Net loss for the three months ended
March 31, 2000 (unaudited) -- -- (70,321)
---------- ---------- ----------
Balance, March 31, 2000 20,502,300 $ 825,232 $ (523,551)
========== ========== ==========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the Three Months Ended May 7,
March 31, 1999 Through
------------------------- March 31,
2000 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(110,321) $ -- $(523,551)
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 -- 134,000
Non-cash change in securities 7,502 -- 7,502
Decrease in value of equity investment 1,285 -- 11,716
Changes in operating assets and liabilities:
(Increase) decrease in receivables (2,719) -- (18,341)
(Increase) decrease in prepaid expenses (10,320) -- (10,320)
Increase (decrease) in accounts payable 7,832 -- 32,021
Proceeds from sale of securities 8,971 -- 8,971
Purchase of marketable securities (302,745) -- (315,745)
--------- --------- ---------
Net Cash Used by Operating Activities (360,515) -- (417,630)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
--------- --------- ---------
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 IN CASH AND CASH EQUIVALENTS 14,069 -- 17,486
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 3,417 -- --
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,486 $ -- $ 17,486
========= ========= =========
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 $ -- $ 134,000
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 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
March 31, 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
1,690,000 warrants, have not been included in the calculation as their
effect is antidilutive for the period presented.
For the Three Months Ended
March 31,
--------------------------
2000 1999
----------- -----------
Numerator - loss $ (110,321) $ --
Denominator - weighted average number of
shares outstanding 18,523,267 --
----------- -----------
Loss per share $ (0.01) $ (0.00)
=========== ===========
d. Provision for Taxes
At March 31, 2000, the Company had net operating loss carryforwards of
approximately $523,000 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.
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.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
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. Prepaid Expenses
During the three months ended March 31, 2000, the Company prepaid $10,320
to Falter Engineering for services to be provided in future periods.
j. Securities Receivable
The Company purchased 750,000 shares of Qnetix, Inc's common stock during
the three months ended March 31, 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 $117,646 at March 31, 2000, net of an
allowance of $16,511 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.
k. Marketable Securities
The Company held 420,000 shares of Qnetix, Inc.'s common stock as trading
securities at March 31, 2000. The fair value of the Company's marketable
securities is estimated based on quoted market prices for those
investments. During the three months ended March 31, 2000, the Company sold
a portion of the trading securities for a gain of $3,165. The Company
recorded an unrealized loss of $23,667 to account for the decline in value
of the remaining securities. The fair value of the Company's marketable
securities at March 31, 2000 was $168,626. 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.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly the Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2000 and December 31, 1999
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
l. Allowance for Doubtful Accounts
The Company's accounts receivable are shown net of an allowance for
doubtful accounts of $-0- and $-0- at March 31, 2000 and December 31, 1999,
respectively.
m. 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."
n. 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.
o. 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 affiliate of $1,285 to account for the change in
value of the affiliate at March 31, 2000. This reduces the investment to
$1,284 at March 31, 2000.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly the Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 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 using the following assumptions. The
U.S. Treasury rate for the period equal to the expected life of the options
was used as the risk-free interest rate. The expected life of the options
is five years. The volatility is expected to be minimal as the stock is not
trading and has been issued at only one price. There are no expected
dividends.
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)
CONSOLIDATED FINANCIAL STATEMENTS
June 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>
June 30, December 31,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 5,017 $ 174
Tax refund receivable 16,263 13,486
Accounts receivable 10,623 2,136
--------- ---------
Total Current Assets 31,903 15,796
--------- ---------
PROPERTY AND EQUIPMENT 2,600 --
--------- ---------
OTHER ASSETS
Investment in affiliate (Note 1) -- 2,569
Marketable securities (Note 1) 45,731 --
Securities receivable (net of allowance of $73,656 (Note 1) 60,840 --
--------- ---------
Total Other Assets 106,571 2,569
--------- ---------
TOTAL ASSETS $ 141,074 $ 18,365
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 33,046 $ 24,189
Accrued expenses 30,238 --
--------- ---------
Total Current Liabilities 63,284 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 865,232 407,406
Deficit accumulated during the development stage (787,442) (413,230)
--------- ---------
Total Stockholders' Equity (Deficit) 77,790 (5,824)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
$ 141,074 $ 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 Six Months Ended May 7,
June 30, June 30, 1999 Through
------------------------ ------------------------ June 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 10,314 -- 15,882 -- 19,974
Research and development 31,920 -- 37,698 -- 46,044
Consulting fees -- -- -- -- 126,974
Management fees 76,198 -- 153,386 -- 416,881
---------- ---------- ---------- ---------- ----------
Total Expenses 118,432 -- 206,966 -- 609,873
---------- ---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (118,432) -- (206,966) -- (609,679)
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Loss on investment of affiliate (Note 1) (1,284) -- (2,569) -- (13,000)
(Loss) on sale of investments (Note 1) (43,509) -- (40,344) -- (40,344)
Unrealized loss on investments (Note 1) (100,666) -- (124,333) -- (124,333)
Interest expense -- -- -- -- (86)
---------- ---------- ---------- ---------- ----------
Total Other Income (Expense) (145,459) -- (167,246) -- (177,763)
---------- ---------- ---------- ---------- ----------
NET LOSS $ (263,891) $ -- $ (374,212) $ -- $ (787,442)
========== ========== ========== ========== ==========
BASIC LOSS PER SHARE $ (0.01) $ 0.00 $ (0.02) $ 0.00
========== ========== ========== ==========
</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 -- 80,000 --
Net loss for the six months ended
June 30, 2000 (unaudited) -- -- (374,212)
---------- ---------- ----------
Balance, June 30, 2000 20,502,300 $ 865,232 $ (787,442)
========== ========== ==========
</TABLE>
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
For the For the Inception on
Three Months Ended Six Months Ende May 7,
June 30, June 30, 1999 Through
---------------------- ---------------------- June 30,
2000 1999 2000 1999 2000
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(263,891) $ -- $(374,212) $ -- $(787,442)
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 -- 80,000 -- 174,000
Non-cash change in securities 56,806 -- 64,308 -- 64,308
Decrease in value of equity investment 1,284 -- 2,569 -- 13,000
Changes in operating assets and liabilities:
(Increase) decrease in receivables (8,545) -- (11,264) -- (26,886)
(Increase) decrease in prepaid expenses 10,320 -- -- -- --
Increase (decrease) in accounts payable 1,025 -- 8,857 -- 33,046
Increase (decrease) in accrued expenses 30,237 -- 30,237 -- 30,237
--------- --------- --------- --------- ---------
Net Cash Used by Operating Activities (132,764) -- (199,505) -- (243,620)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of securities 122,895 -- 131,866 -- 131,866
Purchase of marketable securities -- -- (302,745) -- (315,745)
Purchase of fixed assets (2,600) -- (2,600) -- (2,600)
--------- --------- --------- --------- ---------
Net Cash Provided (Used) by Investing Activities 120,295 -- (173,479) -- (186,479)
--------- --------- --------- --------- ---------
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 (12,469) -- 1,600 -- 5,017
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 17,486 -- 3,417 -- --
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 5,017 $ -- $ 5,017 $ -- $ 5,017
========= ========= ========= ========= =========
</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
Inception on
For the For the May 7,
Three Months Ended Six Months Ended 1999 Through
June 30, June 30, June 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
June 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
June 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
1,690,000 warrants, 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 Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Numerator - loss $ (263,891) $ -- $ (374,212) $ --
Denominator -
weighted average
number of shares
outstanding 20,502,300 -- 19,512,784 --
------------ ------------ ------------ ------------
Loss per share $ (0.01) $ (0.00) $ (0.02) $ (0.00)
============ ============ ============ ============
</TABLE>
d. Provision for Taxes
At June 30, 2000, the Company had net operating loss carryforwards of
approximately $787,000 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
June 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 225,500 shares of Qnetix, Inc.'s common stock as trading
securities at June 30, 2000. The fair value of the Company's marketable
securities is estimated based on quoted market prices for those
investments. During the six months ended June 30, 2000, the Company sold a
portion of the trading securities for a loss of $43,509. 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 June 30, 2000 was $45,731. 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 June 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
June 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 June 30, 2000. This reduces the
investment to $-0- at June 30, 2000.
<PAGE>
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARY
(Formerly The Americas Mining Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 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 using the following assumptions. The
U.S. Treasury rate for the period equal to the expected life of the options
was used as the risk-free interest rate. The expected life of the options
is five years. The volatility is expected to be minimal as the stock is not
trading and has been issued at only one price. There are no expected
dividends..
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
June 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 June
30, 2000 and changes during the six months ending June 30, 2000 are
presented below:
Exercise
Options Price
---------- ----------
Outstanding, December 31, 1999 505,000 $ 0.07
Granted 1,690,000 0.15
Expired -- --
Canceled (505,000) 0.07
Exercised -- --
---------- ----------
Outstanding, June 30, 2000 1,690,000 $ 0.15
========== ==========
Exercisable, June 30, 2000 1,690,000 $ 0.15
========== ==========
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------- -------------------------------
Number Weighted Number Weighted
Outstanding Average Exercisable Average
at Exercise at Exercise
Exercise Price 6/30/00 Price 6/30/00 Price
-------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
$0.10 1,490,000 $ 0.10 1,490,000 $ 0.10
$0.50 200,000 0.50 200,000 0.50
--------------- --------------- -------------- ---------------
1,690,000 $ 0.15 1,690,000 $ 0.15
=============== =============== ============== ===============
</TABLE>
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 six months ended June 30, 2000 the Company
expensed $80,000 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 $73,386 for the six months
ended June 30, 2000 were paid to outside parties.
<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
========= ========= ========= =========
</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>
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 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
Proceeds from sale of securities 34,119 -- 165,985 -- 165,985
Purchase of marketable securities -- -- (302,745) -- (315,745)
--------- --------- --------- --------- ---------
Net Cash Used by Operating Activities (5,017) -- (375,401) -- (432,516)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets -- -- (2,600) -- (2,600)
--------- --------- --------- --------- ---------
Net Cash Provided (Used) by Investing Activities -- -- (2,600) -- (2,600)
--------- --------- --------- --------- ---------
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
1,690,000 warrants, have not been included in the calculation as their
effect is antidilutive for the period presented using the following
assumptions. The U.S. Treasury rate for the period equal to the expected
life of the options was used as the risk-free interest rate. The expected
life of the options is five years. The volatility is expected to be minimal
as the stock is not trading and has been issued at only one price. There
are no expected dividends..
<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 using the following assumptions. The
U.S. Treasury rate for the period equal to the expected life of the options
was used as the risk-free interest rate. The expected life of the options
is five years. The volatility is expected to be minimal as the stock is not
trading and has been issued at only one price. There are no expected
dividends.
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 1,690,000 0.15
Expired -- --
Canceled (505,000) 0.07
Exercised -- --
---------- ----------
Outstanding, September 30, 2000 1,690,000 $ 0.15
========== ==========
Exercisable, September 30, 2000 1,690,000 $ 0.15
========== ==========
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------- -------------------------------
Number Weighted Number Weighted
Outstanding Average Exercisable Average
at Exercise at Exercise
Exercise Price 9/30/00 Price 9/30/00 Price
-------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
$0.10 1,490,000 $ 0.10 1,490,000 $ 0.10
$0.50 200,000 0.50 200,000 0.50
--------------- --------------- -------------- ---------------
1,690,000 $ 0.15 1,690,000 $ 0.15
=============== =============== ============== ===============
</TABLE>
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.
