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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999. Commission file number: 000-08918
CARNEGIE INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
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Colorado 13-3692114
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(State or other jurisdiction) (I.R.S. Employer of incorporation or organization)
Identification No.)
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11350 McCormick Rd., Executive Plaza 3, Suite 1001, Hunt Valley, Maryland 21031
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 785-7400
Securities registered pursuant to Section 12(b) of the Act)
Title of Class Name of Each Exchange on Which Registered
Common Stock NONE
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(Securities registered pursuant to Section 12(g) of the Act)
None
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No X
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Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.
State the issuer's revenues for the most recent fiscal year: 20,329,354.
The aggregate market value of the voting stock held by non-affiliates of the
registrant on February 29, 2000 was approximately $354,600,000 computed by
reference to the last publicly quoted trading price of $6.875 on April 29, 1999
when trading of the Company's securities was halted on the American Stock
Exchange.
The number of shares of the registrant's common stock outstanding as of February
29, 2000 was 60,364,015.
Transactional Small Business Disclosure Format (check one):
Yes No X
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DOCUMENTS INCORPORATED BY REFERENCE. No documents are incorporated by reference
into this Report except those Exhibits so incorporated as set forth in the
Exhibit Index.
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Upon further review of the 10-KSB/A, certain 1998 Balance Sheet asset numbers
were not carried forward on the edgarized version, whereby necessitating
Amendment #2. Additionally, on page 7 typos were noticed under section "Adverse
Circumstances"
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as a tag included at the end of the recording the customer hears on the long
distance call advertised by Talidan Print or Talidan TV. When the customer calls
the 0900 number, they are making a local call for which they are charged a
premium rate per minute to engage in "chat" with a live person or hear
additional, typically more explicit, recordings. When a customer calls one of
the numbers provisioned to Talidan Local, Telecom Brazil, pursuant to an oral
agreement with Talidan, pays Talidan an agreed-to amount per call minute. As
consideration for the tag, part of the money received by Talidan Local is
remitted to WWT, or is credited against the amounts due Talidan TV from WWT for
shared advertising costs.
There are approximately 30 regional phone companies operating in Brazil.
The national telecom service provider is Embratel, which was state owned prior
to its being acquired by MCI/Worldcom on July 2, 1998. When a customer makes a
0900 call on one of the numbers provisioned to Talidan Local, the customer is
charged and money is collected by the regional phone company who remits a
portion of such funds to Embratel. Embratel then remits a portion of the funds
it receives to Telecom Brazil as owner of the number, who remits a portion to
Talidan. Talidan then remits (or credits for advertising costs) a portion to
WWT.
Adverse Circumstances. Several adverse circumstances negatively impacted
Talidan's business in 1998 and 1999. Long distance rates increased in Brasil in
February 1998 from 0.0028 SDR or $.40 to $.59. SDR (Standard Drawing Right) is
an International Money Unit used by the telephone companies. It is equal to
about 1.44 US dollars (i.e. .0028 SDR =$.40). Also social, religious and
political pressures to curtail the adult telephone business increased
significantly during 1998 in Brasil, and the content of both television
advertising and messages heard by a caller were restricted in the fall of 1998.
The rate increase and restricted content pressures resulted in a decrease in
call volume.
Moreover, Embratel was having difficulty in collecting funds from regional
phone companies, and estimated a $40 million payment imbalance at the time of
its privatization resulting in Embratel "temporarily suspending" its payments to
Telecom Brazil, and others under existing contracts, after its last payment in
August of 1998. In October 1998, a judge in Sao Paolo blocked access to 0900
numbers, so callers could not connect to 0900 services. At that point, it was
uncertain whether other Brazilian jurisdictions would follow suit. Although the
judge's October 1998 decision was ultimately appealed in the state and federal
courts of Brazil, the outcome and timing of such ongoing appeals were and still
are difficult to determine. By November 1998, Embratel cancelled its existing
contracts and planned to enter into new contracts with the regional phone
companies. But in August 1999 some 0900 service providers that accused Embratel
of withholding payment sought legal action to force Embratel into bankruptcy.
Shortly thereafter, Embratel cancelled contracts it had with approximately 30
such providers, including its contract with Telecom Brazil.
In addition, while Talidan TV continued to advertise throughout 1998 and
the first four months of 1999, amounts spent on ads varied in each month of 1999
and were significantly lower in January and March as the Company attempted to
manage the uncertainties facing Talidan's business. Advertising was cancelled
in late April 1999 due to lack of response. Although advertising ceased,
payments continued to be received through December 1999, albeit at a decreasing
rate. Some payments are expected to continue short-term since it is likely that
some customers have retained telephone numbers, which are still active, from
earlier TV advertisements. In December 1999, WWT notified Talidan that it was
withdrawing the use of Talidan's premium long distance telephone numbers as of
January 1, 2000, later moved to March 15, 2000. The
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INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
CARNEGIE INTERNATIONAL CORPORATION AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of Carnegie
International Corporation and Subsidiaries as of December 31, 1999 and 1998 and
the related consolidated statements of operations, comprehensive loss,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Carnegie
International Corporation and Subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and cash flows for the years then ended in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 23 to the
financial statements, the Company has suffered recurring losses from operations
and its limited capital resources raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 23. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
MERDINGER, FRUCHTER, ROSEN & CORSO, P.C.
Certified Public Accountants
New York, New York
March 18, 2000
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CARNEGIE INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
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1999 1998
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CURRENT ASSETS (Restated)
Cash and cash equivalents $ 463,374 $ 837,649
Accounts receivable, net of allowance for
doubtful accounts of $931,417 and $48,000 2,634,755 699,688
Due from former subsidiaries - 1,568,937
Loans receivable 104,119 2,173,711
Inventory 353,993 145,128
Prepaid expenses and other current assets 97,263 56,589
Prepaid income taxes 26,046 -
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Total current assets 3,679,550 5,481,702
PROPERTY AND EQUIPMENT, less
accumulated depreciation and amortization of
$570,980 and $162,506 1,258,026 901,423
SOFTWARE DEVELOPMENT COSTS, less accumulated
amortization of $2,098,741 and $156,263 3,728,695 5,671,174
OTHER ASSETS
Intangibles, less accumulated amortization of
$2,966,502 and $195,539 39,720,405 3,374,992
Due from related parties 21,244 51,986
Due from former subsidiaries 206,112 -
Security deposits and other assets 28,552 50,756
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TOTAL ASSETS $48,642,584 $15,532,033
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The accompanying notes are an integral part of these consolidated financial
statements.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
CARNEGIE INTERNATIONAL CORPORATION
Date: April 27, 2000 By: /s/
_______________________________
Lowell Farkas
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
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Signature Title Date
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/s/
______________________________ Chairman of the Board and Director April 27, 2000
E. David Gable
/s/
______________________________ President, Chief Executive Officer April 27, 2000
Lowell Farkas and Director
/s/
______________________________ Director April 27, 2000
Barry N. Hunt
______________________________ Director April 27, 2000
Adnan Khan
/s/
______________________________ Director April 27, 2000
Walt Nawrocki
/s/
______________________________ Director April 27, 2000
Allan Jay Kovitz
/s/ Vice President, Corporate Secretary April 27, 2000
______________________________ and Acting Chief Financial Officer
Richard Greene
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