UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE PERIOD ENDED June 30, 2003
Commission File number 0-30685
CARMINA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Utah
870305395
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
810, 540 5th Avenue SW, Calgary, Alberta, Canada
(Address of principal executive officers)
T2P-0M2
(Zip Code)
(403) 269-5369
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No
ISSUER HAS NOT BEEN INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
ISSUER IS A CORPORATION
Common stock, No par value - 24,593,500 shares issued and outstanding as of August 23, 2003.
Transitional Small Business Disclosure Format (Check One):
Yes [ ] No [X]
Part I
Item 1. Interim Financial Statements
CARMINA TECHNOLOGIES INC.
AND SUBSIDIARIES
(in US Dollars)
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
FINANCIAL STATEMENTS TABLE OF CONTENTS
Page
Consolidated Balance Sheets
3
Interim Consolidated Statements of Operations
4
Interim Consolidated Statements of Comprehensive Loss
5
Interim Consolidated Statements of Capital Deficit
6
Interim Consolidated Statements of Cash Flows
7
Notes to Interim Consolidated Financial Statements
8-17
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in US Dollars)
As at | June 30, 2003 (unaudited) | December 31, | ||
CURRENT ASSETS | ||||
Cash | $ | 8,169 | $ | 42,930 |
Accounts receivable (net of allowance of $6,750 and $5,766) | 57,878 | 33,430 | ||
Other receivable | 11,165 | 15,648 | ||
Prepaid expenses (Note 6(g)) | 171,821 | 12,524 | ||
Inventory | 16,111 | 17,760 | ||
Marketable securities (Note 1(a)) | 6,750 | 9,048 | ||
Total Current Assets | 271,894 | 131,340 | ||
PROPERTY AND EQUIPMENT (net of accumulated depreciation) | 111,279 | 95,031 | ||
GOODWILL (Note 3) | 495,065 | 495,065 | ||
TOTAL ASSETS | $ | 878,238 | $ | 721,436 |
LIABILITIES AND CAPITAL DEFICIT | ||||
CURRENT LIABILITIES | ||||
Accounts payable | $ | 425,804 | $ | 238,195 |
Due to related party (Note 1(b)) | 852,645 | 486,743 | ||
Accrued expenses | 22,169 | 20,627 | ||
Capital lease | 11,846 | 5,702 | ||
Deferred revenues | 31,969 | 24,462 | ||
Total Current Liabilities | 1,344,433 | 775,729 | ||
CAPITAL DEFICIT | ||||
Common stock: 40,000,000 shares authorized no par value, 24,593,500 shares (December 31, 2002 - 23,467,300) | 2,510,832 | 2,288,482 | ||
Additional paid-in capital | 2,957,206 | 1,350,229 | ||
Accumulated other comprehensive income -foreign exchange losses | (134,062) | (17,668) | ||
Accumulated deficit | (5,800,171) | (3,675,336) | ||
Total Capital Deficit | (466,195) | (54,293) | ||
TOTAL LIABILITIES & CAPITAL DEFICIT | $ | 878,238 | $ | 721,436 |
See accompanying notes to the interim consolidated financial statements.
-3-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Interim Consolidated Statements of Operations
(in US Dollars)
(unaudited)
For the three months ended June 30 | For the six months ended June 30 | |||||||||||
2003 | 2002(1) | 2002(2) | 2003 | 2002(1) | 2002(2) | |||||||
REVENUES | ||||||||||||
Hosting and access | $ | 77,517 | $ | -- | $ | 49,764 | $ | 152,131 | $ | -- | $ | 96,672 |
Consulting | 66,977 | -- | 135,936 | 114,890 | -- | 254,737 | ||||||
Hardware sales | 194,102 | -- | 145,496 | 228,767 | -- | 188,468 | ||||||
338,596 | -- | 331,196 | 495,788 | -- | 539,877 | |||||||
COST OF REVENUES | ||||||||||||
Hosting and access | 63,683 | -- | 40,830 | 117,194 | -- | 74,471 | ||||||
Consulting | 51,330 | -- | 103,876 | 89,210 | -- | 197,800 | ||||||
Hardware | 171,767 | -- | 119,670 | 201,763 | -- | 158,989 | ||||||
Depreciation | 2,832 | -- | 3,131 | 5,462 | -- | 5,756 | ||||||
289,612 | -- | 267,507 | 413,629 | -- | 437,016 | |||||||
GROSS PROFIT | 48,984 | -- | 63,689 | 82,159 | -- | 102,861 | ||||||
EXPENSES | ||||||||||||
General and administrative | 760,666 | 160,376 | 27,145 | 1,896,232 | 267,114 | 52,863 | ||||||
Selling and marketing | 181,695 | -- | 10,977 | 256,095 | -- | 34,202 | ||||||
Depreciation | 6,150 | 743 | 1,046 | 11,202 | 1,455 | 1,919 | ||||||
Research and development | 10,692 | (8) | -- | 35,562 | 321 | -- | ||||||
Total Expenses | 959,203 | 161,111 | 39,168 | 2,199,091 | 268,890 | 88,984 | ||||||
INCOME (LOSS) FROM OPERATIONS | (910,219) | (161,111) | 24,521 | (2,116,932) | (268,890) | 13,877 | ||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Unrealized loss on investments | (2,298) | (24,738) | -- | (2,298) | (49,394) | -- | ||||||
Writedown of advances | -- | (213,461) | -- | -- | (213,461) | -- | ||||||
Interest and other income | 902 | 20 | 349 | 1,081 | 20 | 856 | ||||||
Interest expense | (4,922) | (40) | -- | (6,686) | (2,600) | -- | ||||||
Total Other Income (Expense) | (6,318) | (238,219) | 349 | (7,903) | (265,435) | 856 | ||||||
NET INCOME (LOSS) | $ | (916,537) | $ | (399,330) | $ | 24,870 | $ | (2,124,835) | $ | (534,325) | $ | 14,733 |
BASIC AND DILUTED PER SHARE | $ | (0.04) | $ | (0.02) | $ | 0.01 | $ | (0.09) | $ | (0.02) | $ | 0.01 |
WEIGHTED AVERAGE SHARES OUTSTANDING | 24,335,115 | 21,917,300 | 1,764,706 | 24,903,605 | 21,917,300 | 1,764,706 | ||||||
(1) Represents the results of operations of Carmina Technologies Inc. (the successor company).
(2) Represents the results of operations of WorldWide Online Corp. (the predecessor company).
See accompanying notes to the interim consolidated financial statements.
-4-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Interim Consolidated Statements of Comprehensive Loss
(in US Dollars)
(unaudited)
For the three months ended June 30 | For the six months ended June 30 | |||||||||||
2003 | 2002(1) | 2002(2) | 2003 | 2002(1) | 2002(2) | |||||||
NET INCOME (LOSS) | $ | (916,537) | $ | (399,330) | $ | 24,870 | $ | (2,124,835) | $ | (534,325) | $ | 14,733 |
OTHER COMPREHENSIVE INCOME ( LOSS) | ||||||||||||
Foreign exchange translation gains (losses) | (85,192) | (30,047) | 14,483 | (116,394) | (29,655) | 16,436 | ||||||
COMPREHENSIVE INCOME (LOSS) | $ | (1,001,729) | $ | (429,377) | $ | 39,353 | $ | (2,241,229) | $ | (563.980) | $ | 31,169 |
(1) Represents the comprehensive loss of Carmina Technologies Inc. (the successor company).
(2) Represents the comprehensive loss of WorldWide Online Corp. (the predecessor company).
See accompanying notes to the interim consolidated financial statements.
-5-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Interim Consolidated Statements of Capital Deficit
(in US Dollars)
(unaudited)
Common Stock No. of Shares Amount | Additional | Accumulated Other | Accumulated | Total | |||||||
Balance, Jan 1, 2003 | 23,467,300 | $ | 2,288,482 | $ | 1,350,229 | $ | (17,668) | $ | (3,675,336) | $ | (54,293) |
Common stock issued for | 710,500 | -- | 348,000 | - | -- | 348,000 | |||||
Options exercised for cash | 240,700 | 24,350 | - | -- | 24,350 | ||||||
Common stock issued to | 75,000 | 120,000 | -- | 120,000 | |||||||
Common stock issued to | 100,000 | 78,000 | -- | 78,000 | |||||||
Compensation expense on | - | -- | 1,141,650 | - | -- | 1,141,650 | |||||
Issuance of warrants for | -- | -- | 57,327 | -- | -- | 57,327 | |||||
Services contributed by | - | -- | 60,000 | - | -- | 60,000 | |||||
Other comprehensive losses | - | - | -- | (116,394) | -- | (116,394) | |||||
Net loss for the period | - | - | -- | -- | (2,124,835) | (2,124,835) | |||||
Balance, June 30, 2003 | 24,593,500 | $ | 2,510,832 | $ | 2,957,206 | (134,062) | $ | (5,800,171) | $ | (466,195) | |
See accompanying notes to the interim consolidated financial statements.
-6-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Interim Consolidated Statements of Cash Flows
(in US Dollars)
(unaudited)
For the six months ended June 30 | ||||||
2003 | 2002(1) | 2002(2) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net income (loss) | $ | (2,124,835) | $ | (534,325) | $ | 14,733 |
Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||||||
Depreciation | 16,664 | 1,455 | 7,675 | |||
Services contributed by officers (Note 5) | 60,000 | 80,000 | -- | |||
Unrealized loss on securities | 2,298 | 49,394 | -- | |||
Writedown of advances | -- | 213,461 | -- | |||
Stock issued for services | 92,996 | -- | -- | |||
Issuance of warrants for consulting services | 7,170 | -- | -- | |||
Compensation expense through issuance of options (Note 4 (b)) | 1,141,650 | 13,300 | -- | |||
Compensation expense on cashless exercise of options | 348,000 | - | -- | |||
Changes in operating assets & liabilities: | ||||||
(Increase) decrease in receivables | (18,772) | 6,313 | (133,945) | |||
Increase in prepaid expenses | (1,997) | (3,322) | -- | |||
Decrease in inventory | 2,337 | -- | -- | |||
Increase (decrease) in accounts payable & accrued expenses | 181,590 | (16,392) | 60,387 | |||
Increase (decrease) in deferred revenues | 3,353 | -- | (13,786) | |||
Net Cash Used in Operating Activities | (289,546) | (190,116) | (64,936) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Purchase of property and equipment | (15,144) | (12,509) | (12,127) | |||
Proceeds on sale of property and equipment | -- | -- | 4,275 | |||
Net Cash Used in Investing Activities | (15,144) | (12,509) | (7,852) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Advances from related party (Note 1 (b)) | 288,146 | 190,573 | -- | |||
Capital lease payments | (11,480) | -- | (987) | |||
Issuance of common stock for cash | 24,350 | - | -- | |||
Net Cash Provided by (Used in) Financing Activities | 301,016 | 190,573 | (987) | |||
NET DECREASE IN CASH | (3,674) | (12,052) | (73,775) | |||
Effect of currency fluctuation on cash | (31,087) | -- | (16,436) | |||
CASH AT BEGINNING OF PERIOD | 42,930 | 16,326 | 161,854 | |||
CASH AT END OF PERIOD | $ | 8,169 | $ | 4,274 | $ | 71,643 |
*See Note 7 for Statement of Cash Flows supplementary information. | ||||||
(1) Represents the cash flows of Carmina Technologies Inc. (the successor company).
(2) Represents the cash flows of WorldWide Online Corp. (the predecessor company).
See accompanying notes to the interim consolidated financial statements
-7-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Carmina Technologies, Inc. (Carmina) was incorporated under the laws of the State of Utah on March 5, 1973.
The interim consolidated financial statements presented include those of Carmina Technologies, Inc., its wholly
owned subsidiaries Carmina Canada Inc. (CCI), Assured Performance Monitoring, Inc. (APM) and WorldWide
Online Corp. (WWO). Collectively, they are referred to herein as “the Company.”
Upon completion of the acquisitions described below, the Company develops and markets technological services
in the performance monitoring sector.
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 Carmina Canada
Inc. The reorganization was accounted for as a recapitalization of CCI because the shareholders of CCI control
the Company after the acquisition. Therefore, the financial statements are presented as a continuation of CCI.
APM
APM develops and markets the ASSUR family of monitoring services. Using proprietary software, the ASSUR
products facilitate the planning and scheduling and monitor the execution of critical services and confirm proof of
delivery and execution.
WWO
Effective October 1, 2002, the Company acquired all the issued shares of WorldWide Online Corp. (WWO), from
WorldWide Data Inc, for consideration of 650,000 restricted shares of the Company valued at $357,500. An
additional 350,000 or 600,000 shares were to be delivered by September 30, 2003 (extended to January 31, 2004)
provided WWO achieves specific gross revenue, gross margin and earnings before income tax, depreciation and
amortization (EBITDA) targets during the twelve month period ending August 31, 2003 and the value of
consideration will be adjusted accordingly. The agreement has been amended to read the targets are to be
achieved during the twelve month period ending December 31, 2003 (Note 3). As a result of the acquisition,
WWO is considered to be the predecessor business.
WWO is a Toronto-based, Managed Service Provider offering business-to-business solutions for clients in
Canada, the USA and Europe. Supported by a team of seven design and development professionals, WWO hosts,
manages and builds corporate solutions covering a wide range including web hosting, application development, e-
commerce infrastructures, knowledge management and business process improvement complemented by a suite
of internet working solutions involving design, implementation and management of client networks. WWO is the
implementation, support and technical services provider for APM and other company subsidiaries.
The interim consolidated financial statements included herein have been prepared by the Company, without audit,
in accordance with accounting principles generally accepted in the United States and pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading.
-8-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of
management, are necessary for fair presentation of the information contained therein. It is suggested that these
interim consolidated financial statements be read in conjunction with the consolidated financial statements for the
year ended December 31, 2002 and notes thereto included in the Company’s Annual report on Form 10-KSB. The
Company follows the same accounting principles in preparation of interim reports.
Results of operations for the interim periods may not be indicative of annual results.
Information summarizing certain of the Company’s significant accounting policies are set out below:
a. Marketable Securities
The Company held 362,500 (December 31, 2002 - 362,500) shares of Qnetix, Inc.’s common stock as trading
securities at June 30, 2003. The fair value of the Company’s marketable securities is estimated based on quoted
market prices for those investments. The fair value of Qnetix, Inc. marketable securities based on the last quoted
market price at June 30, 2003 was $nil (December 31, 2002 - $2,298). Accordingly, the Company recognized an
unrealized loss on investment of $2,298 for the six months ended June 30, 2003.
The Company also held 225,000 (December 31, 2002 - 225,000) shares of Power Interactive Media Inc. (formerly
Power Kiosk, Inc.) as trading securities at June 30, 2003. The fair value of Power Interactive Inc. marketable
securities based on the last market priced sale of shares at June 30, 2003 was $6,750 (December 31, 2002 -
$6,750).
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.
b. Related Party Transactions
Amounts Due to a Related Party consist of $810,393 (December 31, 2002 - $439,501) due to Rhonda
Corporation, a party related by virtue of being a significant shareholder of the Company, and $42,252 (December
31, 2002 - $47,242) due to directors and officers of the Company. These amounts are unsecured, non-interest
bearing and with no terms of repayment. During the six month period ended June 30, 2003 the Company paid
$12,386 (six months ended June 30, 2002 - $nil) in consulting fees to directors of the Company.
c. Stock-based Compensation
The Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for all stock option plans. Under APB Opinion No. 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. Such compensation is amortized on a straight-
line basis over the respective vesting periods.
SFAS No. 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.
-9-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
Stock options granted to non-employees are accounted for in accordance with the fair value based method
prescribed in SFAS No. 123 using the Black-Scholes option pricing model. Stock compensation for non-
employees is re-measured quarterly until such options vest.
The Company does not plan to adopt the fair value based method of accounting for stock-based compensation to
employees. Had full compensation cost for the Company’s stock options issued to employees, directors and
officers been recorded using the fair value based method related pro-forma information required under SFAS No.
123 would have been as follows:
For the three months June 30, 2003 | For the six months June 30, 2003 | |
Reported net loss | $ (916,537) | $ (2,124,835) |
Add: stock-based compensation expense included | 312,207 | 1,103,257 |
Deduct: total stock-based compensation expense | (89,092) | (281,458) |
Proforma net loss | $ (693,422) | $ (1,303,036) |
Reported loss per share, basic and diluted | $ (0.04) | $ (0.09) |
Proforma loss per share, basic and diluted | $ (0.03) | $ (0.05) |
For the proforma disclosures, fair value of the options was determined using the Black-Scholes option pricing
model using the following assumptions: No dividends. The expected holding period for the options was between
2 and 5 years. The US treasury rate for the period equal to the expected life of the options (5.0%) was used as the
risk-free rate. The volatility used was 110% based on historical price per share of shares sold. The value is also
recognized over the vesting terms of the options.
During the six months ended June 30, 2003, the Company permitted certain individuals holding stock options to
exercise the options on a cashless basis pursuant to terms and conditions of the Stock Option Plan. By virtue of
accepting the exercise on a cashless basis, stock options granted to employees pursuant to the Plan are now being
accounted for following variable accounting provisions. Under variable accounting, compensation expense is first
recognized for the difference between the quoted market price of the Company’s underlying common shares and
the exercise price (plus any intrinsic value calculated on the initial grant of the options) of the options on the date
variable accounting first applies. On March 3, 2003, the quoted market price was $1.55 which resulted in
compensation expense of $348,000 pertaining to 240,000 options exercised by employees on that date. After that
date, compensation expense on remaining employee options outstanding is recalculated on a quarterly basis until
the options are exercised or are cancelled. Compensation expense of $755,257 pertaining to 1,210,000 options
held by employees was recognized in the six months ended June 30, 2003.
-10-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
New Accounting Pronouncement
On May 15, 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standard ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be
classified as liabilities (or assets in some circumstances) in the balance sheet. Further, SFAS No. 150 requires
disclosure regarding the terms of those instruments and settlement alternatives. SFAS No. 150 affects an entity's
classification of the following freestanding instruments: a) Mandatorily redeemable instruments b) Financial
instruments to repurchase an entity's own equity instruments c) Financial instruments embodying obligations that
the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments
based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own
equity instruments d) SFAS No. 150 does not apply to features embedded in a financial instrument that is not a
derivative in its entirety. The guidance in SFAS No. 150 is generally effective for all financial instruments entered
into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period
beginning after June 15, 2003.
The implementation of these new standards is not expected to have a material effect on the Company’s
consolidated financial statements.
NOTE 2 - GOING CONCERN
The Company’s interim consolidated financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the liquidation of assets and satisfaction of liabilities
and commitments in the normal course of business. The Company incurred a net loss of $2,124,835 for the six
months ended June 30, 2003, has an accumulated deficit of $5,800,171, has negative working capital of
$1,072,539 (including $852,645 due to related company) and has insufficient revenues to cover its operating
costs. Management’s plans to continue as a going concern include (1) continued growth of its sales revenues
through APM and WWO, (2) 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 (3) 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. These conditions raise substantial doubt about the Company’s ability to continue as a
going concern. The accompanying interim financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary
if the Company is unable to continue as a going concern.
-11-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
NOTE 3 - BUSINESS COMBINATION
Effective October 1, 2002, the Company acquired all the issued shares of WorldWide Online Corp. (WWO), from
WorldWide Data Inc, for a consideration of 650,000 restricted shares of the Company valued at $357,500. An
additional 350,000 or 600,000 shares will be delivered by January 31, 2004, (as amended from September 30,
2003) provided WWO achieves specific gross revenue, gross margin and earnings before income tax, depreciation
and amortization (EBITDA) targets during the twelve month period ending December 31, 2003 (as extended from
August 31, 2003) and the value of consideration will be adjusted accordingly. To obtain the maximum of
1,250,000 shares, WWO must achieve gross revenues of CAN $1,400,000 (approximately $895,000), gross
margins of CAN $500,000 (approximately $320,000) and cumulative EBITDA of CAN $60,000 (approximately
$38,000) in the twelve month period. The amount of consideration was arrived at in arm’s length negotiations
with the vendor and the price per share was based on the most recent sale price of the Company’s stock on the
OTCBB prior to signing the letter of intent on August 26, 2002.
The acquisition of WWO provided Carmina with the technical personnel, operational capacity and support
framework needed to bring APM products to market. Additionally, WWO products and services are
complementary to those offered by APM, thereby providing an opportunity to integrate WWO products and
services with those of APM.
The acquisition of WWO has been accounted for by the purchase method, with the Company being the acquirer,
based on the fair values of the assets or liabilities acquired, as follows:
Book Value | Fair Value | Discrepancy | ||||
Current assets | $ | 105,215 | $ | 105,215 | $ | -- |
Current liabilities | (296,351) | (296,351) | -- | |||
Negative working capital | (191,136) | (191,136) | -- | |||
Fixed assets | 55,753 | 55,753 | -- | |||
Long-term portion of capital lease obligations | (2,182) | (2,182) | ||||
Goodwill | -- | 495,065 | (495,065) | |||
Net assets acquired | $ | (137,565) | $ | 357,500 | $ | (495,065) |
Purchase price being the value attributed to the | $ | 357,500 | $ | 357,500 |
-12-
CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
NOTE 4 - WARRANTS AND OPTIONS
a. Warrants
A summary of the status of the Company’s warrants as of December 31, 2002 and changes during the six months
ending June 30, 2003 are presented below:
Warrants | Weighted | |
Outstanding and exercisable, December 31, 2002 | 700,000 | $ 1.00 |
Granted | 75,000 | 3.18 |
Outstanding, June 30, 2003 | 775,000 | $ 1.21 |
Exercisable, June 30, 2003 | 775,000 | $ 1.21 |
The warrants that are vested at June 30, 2003 are summarized as follows:
Outstanding | Weighted | Exercisable | |||
Exercise Price | Number | Weighted | Number | Weighted | |
Range - $1.00 | 700,000 | $ 1.00 | 1.44 years | 700,000 | $ 1.00 |
Range - $3.18 | 75,000 | 3.18 | 2.87 years | 75,000 | 3.18 |
775,000 | $ 1.21 | 775,000 | $ 1.21 | ||
During the six months ended June 30, 2003, the Company issued 75,000 warrants to a non-employee for financial
consulting services. Each warrant entitles the holder to purchase one common share of the Company at $3.18 for
a three-year period (Note 6 (g)). The fair value of each warrant was $0.76 and was calculated using the following
assumptions: No dividends. The expected life of the warrants of 3 years. The US treasury rate for the period
equal to the expected life of the warrants (1.86%) was used as the risk-free rate. The volatility used was 110%
based on historical price per share of shares sold. Compensation costs of $57,327 was recognized and amortized
over the service period. For the six months ended June 30, 2003, $7,170 was charged as general and
administrative expenses.
b. Stock Options
On February 12, 2000 (as amended on August, 26, 2002), the Company's Board of Directors approved a Stock
Option Plan. The Plan provides for the granting of stock options to key employees, directors and consultants to
purchase up to 3,000,000 common shares of the Company. Under the Plan, the granting of incentive and
non-qualified stock options, exercise prices and terms are determined by the Company's Board of Directors. For
incentive options, the exercise price shall not be less than the fair market value of the Company's common stock
on the grant date. (In the case of options issued to an employee who owns stock possessing more than 10% of the
voting power of all classes of the Company's stock on the date of grant, the option price must not be less than
110% of the fair market value of common stock on the grant date.). Options granted are not to exceed terms
beyond ten years (5 years in the case of an incentive stock option granted to a holder of 10 percent of the
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CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
Company's common stock). Unless otherwise specified by the Board of Directors, stock options shall vest at the
rate of 25% per year starting one year following the granting of options.
Employees
The Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for all stock option plans. Under APB Opinion No. 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. Such compensation is recognized on a
straight-line basis over the vesting periods of the respective options. By virtue of the exercise of options on a
cashless basis on March 3, 2003, the options outstanding to employees are being accounted for prospectively as
variable (Note 1 (c)).
A summary of the status of the Company’s options accounted for under APB No. 25 as at December 31, 2002 and
changes during the six months ending June 30, 2003 is presented below:
Options | Weighted | Weighted | |
Outstanding, December 31, 2002 | 1,490,000 | $ 0.42 | |
Granted | 200,000 | 1.50 | $ 0.95 |
Exercised | (480,000) | 0.10 | |
Outstanding, June 30, 2003 | 1,210,000 | $ 0.72 | |
Exercisable, June 30, 2003 | 302,500 | $ 0.72 | |
Exercisable, December 31, 2002 | 410,000 | $ 0.22 |
Options accounted for in accordance with APB No. 25 as at June 30, 2003 are summarized as follows:
Outstanding | Weighted | Exercisable | |||
Exercise Price | Number June 30, 2003 | Weighted | Number Exercisable at June 30, 2003 | Weighted | |
Range - $0.55 | 610,000 | $ 0.55 | 4.17 years | 152,500 | $ 0.55 |
Range - $0.60 | 400,000 | $ 0.60 | 4.32 years | 100,000 | $ 0.60 |
Range - $1.50 | 200,000 | $ 1.50 | 4.73 years | 50,000 | $ 1.50 |
1,210,000 | $ 0.72 | 302,500 | $ 0.72 | ||
For the six months ended June 30, 2003, compensation expense of $1,103,257 (2002 - $nil) was recognized in
respect of exercised and unexercised options to employees, calculated using variable accounting. Of which
$348,000 (2002 - $nil) was compensation expenses recognized in respect of options exercised by employees on a
cashless basis.
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CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
Non-employees
FASB Statement 123, “Accounting for Stock-Based Compensation” (SFAS No. 123"), requires the Company to
record compensation costs for the Company’s stock option plans and other stock awards to consultants
determined in accordance with the fair value based method prescribed in SFAS No. 123. Unvested stock options
are measured quarterly for the purpose of determining stock option compensation.
A summary of the status of the Company’s options accounted for under SFAS No. 123 as at December 31, 2002
and changes during the six months ending June 30, 2003 is presented below:
Options | Weighted | |
Outstanding, December 31, 2002 | 1,170,000 | $ 0.32 |
Granted | 800,000 | $ 1.25 |
Exercised | (520,700) | 0.10 |
Outstanding, June 30, 2003 | 1,449,300 | $ 0.91 |
Exercisable, June 30, 2003 | 724,300 | $ 0.71 |
Exercisable, December 31, 2002 | 715,000 | $ 0.31 |
Options accounted for under SFAS No. 123 as at June 30, 2003 are summarized as follows:
Outstanding | Weighted | Exercisable | |||
Exercise Price | Number June 30, 2003 | Weighted | Number June 30, 2003 | Weighted | |
Range - $0.50 | 649,300 | $ 0.50 | 2.62 years | 524,300 | $ 0.50 |
Range - $1.25 | 800,000 | $ 1.25 | 4.83 years | 200,000 | $ 1.25 |
1,449,300 | $ 0.91 | 724,300 | $ 0.71 | ||
Compensation expense of $386,393 (2002 - $5,000) has been recognized for the six months ended June 30, 2003
in respect of options granted in the current and prior periods, under SFAS 123 based on the value attributable to
these options as described above. Fair value of the options was determined using the Black-Scholes option
pricing model using the following assumptions for options vesting in the period and those still unvested at June
30, 2003: No dividends. The US treasury rate for the period equal to the expected life of the options (2.36%)
(2002 - 5.00%) was used as the risk-free rate. The volatility used was 110% (2002 - 1%) The value is also
recognized over the vesting terms of the options. The weighted average grant date fair value per option was $0.58
for the 800,000 options granted during the six months ended June 30, 2003.
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CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
NOTE 5 - MANAGEMENT FEES
The Company has three (2002 - four) officers, which contribute about one half of their time to the Company.
Although no cash was paid for their services, the value of their services is estimated at $40,000 per year for each
officer. For the six month period ended June 30, 2003 the Company expensed $60,000 (2002 - $80,000) as
management fees and showed the amount as services contributed to the Company on the Interim Consolidated
Statements of Capital Deficit.
NOTE 6 - COMMON STOCK
During the six month period ended June 30, 2003 common stock of the Company was issued:
a) on February 28, 2003, a director and officer of the Company exercised 40,000 options at $0.10 per share for
total cash proceeds of $4,000,
b) on March 3, 2003, a director and officer of the Company exercised 40,000 options at $0.10 per share for total
cash proceeds of $4,000,
c) on March 3, 2003, directors, officers and consultants exercised 760,000 options at $0.10 per share. As
payment, per Section 8 (e) (ii) of the Stock Option Plan As Amended August 26, 2002, 49,500 shares were used as
payment to the Company in settlement of the option exercise price at the market price of $1.55 per share and the
Company issued net 710,500 shares to the optionees at a net value of $1,100,550. As a result of the cashless
exercise, variable accounting was used to calculate compensation expenses for options granted to employees.
Under variable accounting, stock option compensation for options to employees was remeasured quarterly until
such options were exercised, forfeited or expired. On March 3, 2003, $348,000 was recognized as additional
compensation expense for 240,000 options exercised by employees on a cashless basis,
d) on April 1, 2003, a consultant of the Company exercised 700 options at $0.50 per share for total cash of $350,
e) on April 9, 2003, a director of the Company exercised 160,000 options at $0.10 per share for cash of $16,000,
f) on May 5, 2003 the Company issued 100,000 restricted shares to an officer of WorldWide Online in
recognition of his contributions and to provide inducement to continue to serve as an officer of WWO. These
shares were expensed at $0.78 per share, being the quoted market value of the Company’s common stock on that
date, and
g) on May 13, 2003, the Company issued 75,000 restricted shares and warrants to a non- employee of the
Company in consideration for financial consulting services for a one year period. These shares were recorded at
$1.60 per share, being quoted market value of the Company’s common stock on that date for a total of $120,000.
The warrants are exercisable immediately at $3.18 per share and expire on May 13, 2006. The fair value of the
warrants totaling $57,327 was calculated based on an option pricing model. Compensation costs relating to the
issuance totaling $177,327 was recognized and is being amortized over the service period. As at June 30, 2003,
$155,161 (2002 - $nil) was recorded as prepaid expenses on the balance sheet and $22,166 (2002 - $nil) was
amortized as consulting fees for the six months ended June 30, 2003 (Note 4 (a)).
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CARMINA TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
June 30, 2003
(In US Dollars)
(unaudited)
NOTE 7 - STATEMENT OF CASH FLOWS
For the six June 30, 2003 | For the six June 30, 2002 (1) | For the six June 30, 2002 (2) | |
CASH PAID FOR: | |||
Interest | $ 6,686 | $ -- | $ -- |
Income taxes | $ -- | $ -- | $ -- |
Non-cash investing and financing activities | |||
Stock issued for services | $ 198,000 | $ -- | $ -- |
Stock option compensation | $ 1,141,650 | $ -- | $ -- |
Compensation expense on cashless exercise of options | $ 348,000 | $ -- | $ -- |
Warrants issued for consulting services | $ 57,327 | $ -- | $ -- |
Capital leasing of property and equipment | $ 16,274 | $ -- | $ -- |
(1) Represents the cash flows of Carmina Technologies Inc. (the successor company).
(2) Represents the cash flows of WorldWide Online Corp. (the predecessor company).
NOTE 8 - SEGMENTED INFORMATION
Operating Segment:
The Company has 2 operating segments, WWO and APM.
Three months ended June 30, 2003 | Six Months ended June 30, 2003 | |||||||||||||||
APM | WWO | Corporate | Total | APM | WWO | Corporate | Total | |||||||||
Revenues | $ | 1,781 | $ | 336,815 | $ | -- | $ | 338,596 | $ | 1,781 | $ | 494,007 | $ | -- | $ | 495,788 |
Depreciation | 4,591 | 3,777 | 614 | 8,982 | 8,700 | 7,283 | 681 | 16,664 | ||||||||
Interest | -- | 2,637 | 2,285 | 4,922 | -- | 4,401 | 2285 | 6,686 | ||||||||
Segment loss | 142,663 | 88,686 | 685,188 | 916,537 | 250,550 | 142,594 | 1,731,691 | 2,124,835 | ||||||||
Capital | 1,696 | -- | 820 | 2,516 | 14,087 | 237 | 820 | 15,144 | ||||||||
Segment assets | 80,944 | 128,002 | 669,292 | 878,238 | ||||||||||||
The Company had not acquired the WWO segment and had not generated any sales in APM in the six months
ended June 30, 2002.
Substantially all of the Company’s sales are to customers based in Canada. All of the Company’s property and
equipment are located in Canada.
Major Customers
For the three months ended June 30, 2003, (three months ended June 30, 2002 - nil) 77% of sales were to one
customer. For the three months ended June 30, 2002, 11% of WWO sales were to one customer. 69% of sales for
the first two quarters of 2003 (six months ended June 30, 2002 - nil) were sales to one customer. During the six
months ended June 30, 2002, 28% of WWO’s revenue was earned from one customer.
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Item 2. Management’s Discussion, Analysis and Plan of Operations.
FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-QSB constitute “forward-looking statements” within the meaning of The
Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or
achievements of our company to be materially different from any future results, performance, or achievements
expressly stated or implied by such forward-looking statements. Such factors include, among others, the
following: force major events, competition, financial and commercial viability, lack of patents, licenses,
franchises and concessions, and uncertain demand for our products.
The following discussion should be read in conjunction with our financial statements and the related notes that
appear elsewhere in this quarterly report.
Our interim consolidated financial statements are stated in United States Dollars and are prepared in accordance
with United States Generally Accepted Accounting Principles.
General - Explanation of Comparative Periods
Our interim consolidated financial statements include Carmina Technologies Inc., as well as our wholly owned
subsidiaries Carmina Canada Inc. (CCI), Assured Performance Monitoring Inc.(APM) and WorldWide Online
Corp. (WWO), for the period ended June 30, 2003. As WWO is considered to be our predecessor business by
virtue of the acquisition effective October 1, 2002, information and results of operations has been provided for
each of Carmina and WWO for the comparative three months ended and six months ended June 30, 2002.
For the three months ended June 30, 2003 and 2002, the following discussion relates to the interim
consolidated operations of Carmina Technologies and WWO:
Results of Operations
We incurred a net loss of $916,537 during the three month period ended June 30, 2003 compared with a loss of
$399,330 during the three month period ended June 30, 2002. WWO’s net income for the three months ending
June 30, 2002 was $24,870.
Revenues
Consolidated gross revenues for the three months ended June 30, 2003 increased to $338,596 from $nil compared
to the three months ended June 30, 2002. WWO’s revenues for the three months ended June 30, 2002 were
$331,196. The 2003 increase in consolidated revenue was a result of the acquisition of WWO, effective October
1, 2002. APM generated revenues of $1,781 for the three months ended June 30, 2003. WWO experienced a
modest increase in revenue to $336,815 for the three months ended June 30, 2003 over 2002. Revenue was
earned in 2002 from a number of customers while 77% of revenue earned in 2003 was in respect of a contract
with the Toronto Real Estate Board (“TREB”) for the sale of computer hardware and to provide maintenance
services.
Gross Profit
Total costs of revenue were $289,612 (including depreciation and amortization of $2,832), leaving a gross profit
of $48,984 (14%) for the three months ended June 30, 2003, compared to a gross profit of $nil for the three
months ended June 30, 2002. WWO’s gross profit for the three months ended June 30, 2002 was $63,689 (19%).
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The weakening in gross profit for the three months ended June 30, 2003 is primarily due to a change in sales mix
whereby a greater percentage of revenue was generated by lower margin hardware revenue as opposed to higher
margin hosting and consulting activities.
General and administrative expenses
For the three months ended June 30, 2003, general and administrative expenses totaled $760,666 compared to
consolidated $160,376 and WWO’s $27,145 for the three months ended June 30, 2002. In the three months
ended June 30, 2003, general and administrative expenses include the recognition of expenses related to the
issuance of common shares to an employee and a consultant totaling $92,996 and $510,845 in respect of
compensation related to stock options and warrants. Minimal expenses were incurred in the comparative period
in 2002 ($13,300) and result from us commencing activity upon completion of our acquisitions later in 2002.
Despite the fact that we did not grant a significant number of options in the current quarter, our financial
statements continue to reflect the effects of stock option compensation for options granted in previous periods due
to vesting periods. As well, our decision (pursuant to our Option Plan) to allow certain option holders to exercise
options on a cashless basis results in variable accounting being applied to our employee options. Under variable
accounting, we will continue to recognize stock option compensation on such employees options until the options
are exercised, forfeited or expire.
Selling and marketing expenses
Selling and marketing expenses were $181,695 for the three months ending June 30, 2003 compared to $nil for
the consolidated total and $10,977 for WWO during the three months ended June 30, 2002. Although APM
generated only $1,781 in sales revenue during the period, APM incurred $107,490 of expenses to promote its
products. Our marketing activities for the quarter included hiring additional sales staff, travel to trade shows and
web-based advertising.
Research and development
During the first quarter of 2003 the first working model of our products were delivered to prospective customers
and we have expensed an additional $10,692 (2002 - $nil) during the three months ended June 30, 2003.
Research and development activities were largely consummated upon completion of acquisitions of APM and
WWO in 2002
Other income/expenses
Net other expenses for the three months ended June 30, 2003 was $6,318 compared to net other expenses of
$238,219 in 2002 and to $349 of net other income in WWO for the comparative period in 2002. The decline in
2003 is primarily due to there being a significant write-down of uncollectiblilty in 2002 in advances made to
TravelActive.com Marketing Inc. of $213,461. As well, our marketable securities (which are carried at market
value) were written down by $2,298 in 2003 compared to a write-down of $24,738 as the market price of these
securities continues to decline.
For the six months ended June 30, 2003 and 2002, the following discussion relates to the interim consolidated
operations of Carmina Technologies and WWO:
Results of Operations
We incurred a net loss of $2,124,835 during the six month period ended June 30, 2003 compared with a loss of
$534,325 during the six month period ended June 30, 2002, WWO’s net income for the six months ending June
30, 2002 was $14,733.
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Revenues
Consolidated gross revenues for the six months ended June 30, 2003 increased to $495,788 from $nil compared to
the consolidated six months ended June 30, 2002. WWO’s revenues for the six months ended June 30, 2002 were
$539,877. The 2003 increase in consolidated revenue was a result of the acquisition of WWO, effective October
1, 2002. APM generated revenues of $1,781 for the six months ended June 30, 2003. WWO experienced a net
decrease in revenue to $494,007 for the six months ended June 30, 2003 from $539,877 during the six months
ended June 30, 2002 to some extent due to a softening of the managed service provider sector. The decline in
sales due to the softening managed service provider sector was mitigated by a large sale made to TREB in the
second quarter of 2003. Sales to this customer in the six months ended June 30, 2003 represented 69% of total
revenue, whereas the largest customer of WWO in 2002 represented approximately 28% of revenue.
Gross Profit
Total costs of revenue were $413,629 (including depreciation and amortization of $5,462), leaving a gross profit
of $82,159 (17%) for the six months ended June 30, 2003, compared to a gross profit of $nil for the three months
ended June 30, 2002. WWO recorded total costs of revenue of $437,016 and a gross profit of $102,861(19%) for
the six months ended June 30, 2002. The weakening in gross profit for the six months ended June 30, 2003 is
primarily due to a change in sales mix whereby a greater percentage of revenue was generated by lower margin
hardware revenue as opposed to higher margin consulting and hosting activities.
General and administrative expenses
For the six months ended June 30, 2003, general and administrative expenses totaled $1,896,232 compared to
consolidated $267,114 for June 30, 2002 and WWO’s $52,863 for the six months ended June 30, 2002. In the six
months ended June 30, 2003, general and administrative expenses include the recognition of expenses related to
the issuance of common shares to an employee and a consultant totaling $92,996 and $1,496,820 in respect of
compensation related to stock options and warrants. Minimal such expenses were incurred in the comparative
period in 2002 and result from us commencing activity upon completion of our acquisition later in 2002. Despite
the fact we did not grant a significant number of options in the current quarter, our financial statements continue
to reflect the effects of stock option compensation for options granted in previous periods due to vesting periods.
As well, our decision (pursuant to our Stock Option Plan) to allow certain option holders to exercise options on a
cashless basis results in variable accounting being applied to our employee options. Under variable accounting,
we will continue to recognize stock option compensation on such employee options until the options are
exercised, forfeited or expire.
Selling and marketing expenses
Selling and marketing expenses were $256,095 for the six months ending June 30, 2003 compared to $nil for the
consolidated total and $34,202 for WWO during the six months ended June 30, 2002. Although APM generated
only $1,781 in sales revenue during the period, APM incurred $148,357 of expenses to promote its products. Our
marketing activities for the six months ended June 30, 2003 included hiring additional sales staff, travel to trade
shows and web-based advertising.
Research and development
During the first quarter of 2003 the first working model of our products were delivered to prospective customers
and we have expensed $35,562 (2002 - $321) during the six months ended June 30, 2003. Research and
development activities were largely consummated upon completion of acquisitions of APM and WWO in 2002.
-20-
Other income/expenses
Net other expenses for the six months ended June 30, 2003 was $7,903 compared to net other expenses of
$265,435 in 2002 and to $856 of net other income in WWO for the comparative period in 2002. The decline in
2003 is primarily due to there being a significant write-down of uncollectiblilty in 2002 in advances made to
TravelActive.com Marketing Inc. of $213,461. As well, our marketable securities (which are carried at market
value) were written down by $2,298 in 2003 compared to a write-down of $49,394 as the market price of these
securities continues to decline.
Liquidity and Capital Resources
We have continued to finance our activities primarily through the issuance and sale of securities and advances
from a major shareholder. We have incurred recurring losses since inception and our current liabilities exceed our
current assets. As of June 30, 2003 we had an accumulated deficit of $5,800,171 and a working capital deficiency
of $1,072,539 (including $852,645 due on a non-interest bearing basis to Rhonda Corporation, a significant
stockholder).
Our cash position at June 30, 2003 was $8,169 compared to $42,930 at December 31, 2002. This decrease was
due to the following:
Cash used in operating activities was $289,546 for the six months ended June 30, 2003. Our 2003 net loss
includes non-cash charges of $16,664 for depreciation, $92,996 for shares issued for consulting and employee
services, $60,000 for services contributed by officers and $1,496,820 for compensation expense on exercise and
outstanding options and warrants. Additionally, to help manage our cash, we increased our accounts payable and
accrued liabilities by $181,590 over December 31, 2002. Cash used in operating activities for the six months
ended June 30, 2002 was $190,116, largely consisting of cash paid expenses incurred in the first six months of
2002. Cash used by WWO in the six months ended June 30, 2002 was $64,936 consisting of the loss for the
period as adjusted for an increase in unpaid sale at that date of $133,945 offset by an increase in accounts payable
of $60,387.
Investing activities consisted of cash purchases of property and equipment of $15,144 compared to cash purchases
of $12,509 in 2002. WWO purchased $12,127 of property and equipment during the comparable period in 2002,
but sold certain property and equipment for proceeds of $4,275.
Financing activities consisted of advances from Rhonda Corporation of $288,146, capital lease payments of
$11,480 and $24,350 from the issuance of 240,700 shares of common stock on exercise of stock options. An
additional 710,500 common shares were issued on exercise of 760,000 options on a cashless basis pursuant to our
stock option plan, 100,000 shares were issued as a bonus to an officer for his contributions to our company and
75,000 for financial consulting. During the six months ended June 30, 2002, we borrowed $190,573 from related
parties, primarily Rhonda Corporation. Financing activities by WWO for the comparable period in 2002 were
relatively insignificant.
Continuing Operations
We will continue our plans to focus on rolling out applications of APM’s technology to industry and
governmental regulatory bodies in the public health and safety field. Industries such as transport and food
processing that are subject to regulatory reporting requirements will also be targeted. Opportunities to incorporate
customized appliances based on the GC2000 platform, developed in 2001, as a key component of APM’s services
will be sought.
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The tentative minimum budget for the next 12 months is, in order of priority:
Customization and packaging of intellectual property | $100,000 |
Future acquisitions (1) | $200,000 |
General and administrative costs | $800,000 |
$1,100,000 |
(1) These estimated expenditures are to identify and negotiate the potential acquisitions of businesses that
complement the current operations of our Company.
Any additional capital required will be raised primarily through the private placement of our securities.
Management anticipates that financing of this budget can be arranged with existing shareholders and from the sale
of marketable securities. Should the required financing not be forthcoming we would face liquidation.
Upon additional funding becoming available, they will be directed toward developing and growing of APM’s
business.
We do not anticipate making any significant purchases of plant or equipment. We do anticipate the addition of
three sales and five technical staff during the latter half of 2003.
The remaining portion of 2003 and 2004 will be challenging. The ability to expand our market of the Assur
products is dependent on additional financing which, in the current economic climate, may not be available. No
forecast of commercial revenue is possible at this time.
There is substantial doubt about our ability to continue as a going concern as the continuation of our business is
dependent upon obtaining further financing, successful and sufficient market acceptance of our current service
offerings and any new service offerings that we may introduce, the continuing successful development of our
service offerings and related technologies, and, finally, achieving a profitable level of operations. The issuance of
additional equity securities by us could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities
and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. We are
pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be
no assurance that additional financing will be available to us when needed or, if available, that it can be obtained
on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will
not be able to meet our other obligations as they become due.
Due to the uncertainty about our ability to continue as a going concern, in their report on the annual consolidated
financial statements for the year ended December 31, 2002, our independent auditors included an explanatory
paragraph regarding concerns about our ability to continue as a going concern. Our consolidated financial
statements contain note disclosures describing the circumstances that lead to this disclosure by our independent
auditors.
Critical Accounting Policies
Our interim consolidated financial statements and accompanying notes are prepared in accordance with generally
accepted accounting principles in the United States. Preparing interim financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses.
These estimates and assumptions are affected by management’s application of accounting policies. We believe
that understanding the basis and nature of the estimates and assumptions involved with the following aspects of
our interim consolidated financial statements is critical to an understanding of our financials.
-22-
Information summarizing certain of our company’s significant accounting policies follows.
Revenue Recognition
We recognize revenue from hosting and access services as the services are performed, generally on a straight-line
basis over the hosting contracts. Deferred revenue results from amounts received for co-location and bandwidth
services as well as web hosting services prior to the revenue being earned. Consulting revenue is recognized as
the services are performed. Sales of hardware are recognized as revenue on the date the products are delivered to
the customers’ premises, at which time title to the hardware transfers to the purchaser.
Software Development Costs
We follow the provisions of SFAS No. 2 in recording research and development expenses related to their online
services. Under SFAS No. 2, all such expenses are charged to the Statement of Operations as incurred. In
accordance with SFAS No. 86, Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise
Marketed, development costs incurred in the research and development of products containing the our software
development costs incurred in the development of software are expensed as incurred until technological feasibility
in the form of a working model has been established and after the product is available for general release to the
customer.
Going Concern
Our interim consolidated financial statements are prepared using generally accepted accounting principles
applicable to a going concern which contemplates the liquidation of assets and satisfaction of liabilities and
commitments in the normal course of business. The ability of our company to continue as a going concern is
dependent upon its ability to successfully accomplish it’s plans, secure sources of financing and attain profitable
operations which raises substantial doubt about our ability to continue as a going concern. The accompanying
interim financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be necessary if the Company is unable to
continue as a going concern.
Risk Factors
Much of the information included in this quarterly report includes or is based upon estimates, projections or other
“forward-looking statements”. Such forward-looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these forward-looking statements, and
any assumptions upon which they are based, are made in good faith and reflect our current judgement regarding
the direction of our business, actual results will almost always vary, sometimes materially, from any estimates,
predictions, projections, assumptions or other future performance suggested herein. We undertake no obligation
to update forward-looking statements to reflect events or circumstances occurring after the date of such
statements.
Such estimates, projections or other “forward-looking statements” involve various risks and uncertainties as
outlined below. We caution readers of this quarterly report that important factors in some cases have affected
and, in the future, could materially affect actual results and cause actual results to differ materially from the
results expressed in any such estimates, projections or other “forward-looking statements”. In evaluating us, our
business and any investment in our business, readers should carefully consider the following factors.
We have a history of net losses and a lack of established revenues and as a result we expect to incur net losses in
the future. We have had a history of losses and expect to continue to incur losses, and may never achieve or
maintain profitability. We have incurred losses since we began operations, including a loss of $2,124,835 for the
six-months ended June 30, 2003. As of June 30, 2003, we have an accumulated deficit of $5,800,171. Our ability
to achieve profitability in the future will depend upon our ability to complete the development of our products,
create a customer base, increase our market presence and enhance and maintain our proprietary technology. To
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achieve these goals, we will need to increase spending on marketing, technology, product development and other
operating costs. We expect to have net losses and negative cash flow and expect to spend significant amounts of
capital to enhance our services and technologies and fund research and development. As a result, we will need to
generate significant revenue to break even or achieve profitability. Even if we do achieve profitability, we may
not be able to sustain or increase profitability on a quarterly or annual basis. If we do not achieve and maintain
profitability, the market price for our common stock may decline, perhaps substantially.
Although we anticipate that we will be able to generate revenues, we also expect that development costs and
operating costs will increase as well. Consequently, we expect to incur operating losses and negative cash flow
until our existing services gain sufficient market acceptance to generate a commercially viable and sustainable
level of sales which are expected by 2004, and/or additional services are developed and commercially released
and sales of such services made so that we are operating in a profitable manner. To the extent that such expenses
are not followed in a timely manner by increased revenues, our business, results of operations, financial condition
and prospects would be materially adversely affected.
Need for Outside Financing; Business and Product Development. To date, we have had negative cash flows from
operations and have depended on sales of our common stock to meet cash requirements. We will continue to
require additional funding to carry out our business plan. While we 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 our Company, as well as development and marketing of our products, may
not be viable.
Competition. Because of the nature of our business and the lack of barriers preventing competitors from entering
the market, competition may become intense amongst competing monitoring systems. Competitors may have
longer operating histories, greater name recognition and greater financial, technical and marketing resources and
thus, may be able to adopt more aggressive pricing policies, respond to new technologies, industry standards and
customer demands, expand globally and make more attractive offers to potential employees and consultants.
Lack of Patent Protection. Due to the nature of the APM products, we do not have patent protection on these
products and services. There are limited barriers to prevent other companies entering the market with competing
products and services. Where possible, we will seek to obtain appropriate patents on patentable intellectual
property developed in the future. Should we fail to obtain such patents our ability to be competitive in the
marketplace will be adversely affected.
Uncertainty as to Future Profitability. There is no assurance that we will be able to sell our 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 we not provide the quality of marketing and service which we propose
to provide, our business will lack the competitiveness required to allow us to be viable.
Loss of Services of Key Employees. Our key personnel include John Alston (President and Chief Executive
Officer), Glen Alston (Chief Financial Officer), and Stephen Kohalmi (Director of Technology). The loss of the
services of any of the above mentioned or other key employees, or the services of any future key employees for
any reason may have a materially adverse effect on our prospects. There can be no assurance that we would be
able to find a suitable replacement in the event that the services of any of these key employees, or of a future key
employee, is lost. Furthermore, we do not presently maintain "key man" life insurance on the lives of our key
personnel. We rely upon the continued service and performance of a relatively small number of key senior
management personnel, and our future success depends on our retention of these key employees whose
knowledge of our business and technical expertise would be difficult to replace. At this time, none of our key
personnel are bound by employment agreements, and as a result, any of these employees could leave with little or
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no prior notice. If we lose any of our key personnel, our business may be adversely affected.
If we are unable to hire and retain technical, sales and marketing and operational personnel, our business could be
materially adversely affected. We intend to hire a significant number of additional personnel, including software
engineers, sales and marketing personnel and operational personnel in the future. Competition for these
individuals is intense, and we may not be able to attract, assimilate, or retain additional highly qualified personnel
in the future. The failure to attract, integrate, motivate and retain these employees could harm our business.
Lack of Minority Shareholder Voting Control. Due to their ownership of a majority of the shares of our
company's outstanding common stock, Mr. John M. Alston and a small number of other major shareholders have
total voting control of our company, including the ability to elect all of our directors, who in turn elect all
executive officers, without regard to the votes of other stockholders.
Infringement by our services on other intellectual property. Our services may inadvertently infringe upon the
intellectual property rights of others, and resulting claims against us could be costly and require that we enter into
disadvantageous license or royalty arrangements. The software industry is characterized by the existence of a
large number of patents and frequent litigation based on allegations of patent infringement and the violation of
intellectual property rights. Although we attempt to avoid infringing known proprietary rights of third parties, we
may be subject to legal proceedings and claims for alleged infringement of third-party proprietary rights, such as
patents, trade secrets, trademarks or copyrights, from time to time in the ordinary course of business. Any claims
relating to the infringement of third-party proprietary rights, even if not successful or meritorious, could result in
costly litigation, divert resources and management's attention or require that we enter into royalty or license
agreements which are not advantageous to us. In addition, parties making these claims may be able to obtain
injunctions, which could prevent us from selling our services.
Market for Common Stock. Our common stock is quoted on the Bulletin Board of the National Association of
Securities Dealers, Inc. (the "OTCBB"). Any market price for shares of our common stock is likely to be very
volatile, and numerous factors beyond our control 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 our common stock in any market that may develop.
Risks of "Penny Stock". Our 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 companies with net tangible assets less than $2,000,000 (if our company 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
our 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
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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 our common stock to
resell their shares to third parties or to otherwise dispose of them.
Possible Future Compensation Arrangements. If we are successful in developing and marketing our 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.
Inability to protect any proprietary technology and intellectual property rights against infringement and any
related litigation could be time-consuming and costly . Our success and ability to compete depend to a significant
degree on the proprietary technology. If any of our competitors copies or otherwise gains access to the proprietary
technology or develops similar technology independently, we would not be able to compete as effectively. We
also consider our service marks invaluable to our ability to continue to develop and maintain the goodwill and
recognition associated with our brand. The measures we take to protect the proprietary technology and other
intellectual property rights, which presently are based upon a combination of copyright, trade secret and
trademark laws, may not be adequate to prevent their unauthorized use. Further, the laws of foreign countries may
provide inadequate protection of such intellectual property rights. We may need to bring legal claims to enforce or
protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could result in
substantial costs and diversions of resources. In addition, notwithstanding the rights we have secured in our
intellectual property, other persons may bring claims against us that we have infringed on their intellectual
property rights, including claims based upon the content we license from third parties or claims that our
intellectual property right interests are not valid. Any claims against us, with or without merit, could be time
consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill
associated with our service marks or require us to make changes to our websites or other of our technologies.
Item 3- Controls and Procedures.
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this report, we
carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures. This evaluation was carried out under the supervision, and with the participation of management,
including the President. Based upon that evaluation, the President concluded that our disclosure controls and
procedures are effective. There have been no significant changes in our internal controls or in other factors,
which could significantly affect internal controls subsequent to the date we carried out the evaluation.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information
required to be disclosed in our reports filed or submitted under the Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules
and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including the President and Chief Executive Officer as appropriate, to allow
timely decisions regarding the required disclosure.
-26-
Part II
Item 1. Legal Proceedings.
We know of no material, active or pending legal proceedings against our company, nor are we involved as a
plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors,
officers, or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest
adverse to our interest.
Item 2. Changes in securities
Recent Sales of Unregistered Securities
On April 1, 2003 a consultant to our company exercised 700 options at $0.50 per share for total cash of $350. On
April 9, 2003 a director and officer exercised 160,000 options at $0.10 per share for total cash of $16,000.
On May 5, 2003 an employee of our company was issued 100,000 common shares at a value of $78,000 as
compensation for his contributions to our company. The shares were valued at the market based price on the day
of issuance.
On May 13, 2003 the we issued 75,000 common shares at a value of $1.60 per share and warrants exercisable for
an equal number of common shares in consideration of financial consulting services. The warrants are
exercisable at $3.18 per share and expire May 13, 2006. The shares were valued at the market based price on the
day of issuance.
For the above transactions, unless otherwise noted, we relied upon Regulation S Exemption and no state
exemption, as the recipients are all located in Canada.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of our shareholders, through the solicitation of proxies or otherwise, during the
six month period ended June 30, 2003.
Item 6- Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this Report:
1. Exhibits required to be filed by Item 601 of Regulation S-B. Exhibits 99.1, 99.2 are filed
herewith.
All other exhibits are incorporated by reference as indicated below.
Exhibit No.
Exhibit Description
(2)
Agreement of Exchange (incorporated herein by reference to Exhibit 2 of
the report on Form 10-SB12G/A filed 23 March 2001, file No. 1.000-
30685)
(3)(i)
Restated Articles of Incorporation of the Registrant (incorporated
herein by reference to Exhibit 3 of the report on Form 10-SB12G/A of file
No. 1.000-30685. (Note no By-Laws created)
-27-
(10)
Stock Option Plan, As Amended August 26, 2002 (incorporated herein by
reference to Exhibit 10 of the report on Form 10-KSB file No. 1.000-30685
filed on May 9, 2003).
(31)
Certifications pursuant to Section 302
(32)
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
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, thereunto duly authorized.
CARMINA TECHNOLOGIES INC.
By: ___/s/ John M. Alston______ Date: August 19, 2003
John M. Alston, President,
Chief Executive Officer and Director
-28-
CERTIFICATIONS
I, John M. Alston, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Carmina Technologies Inc., and subsidiaries;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of
Carmina Technologies Inc. as of, and for, the periods presented in this quarterly report;
4. Carmina Technologies Inc.’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Carmina
Technologies Inc. and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to Carmina Technologies Inc.,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) evaluated the effectiveness of the Carmina Technologies Inc.’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this quarterly report based on such evaluation; and
d) disclosed in this report any change in Carmina Technologies Inc.’s internal control over financial reporting
that occurred during Carmina Technologies Inc.’s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, Carmina Technologies Inc.’s internal control over financial reporting;
and
5. Carmina Technologies Inc.’s other certifying officers and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to Carmina Technologies Inc.’s auditors and the audit committee of
Carmina Technologies Inc.’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting which are reasonably likely to adversely affect Carmina Technologies Inc.’s ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant
role in Carmina Technologies Inc.’s internal controls over financial reporting.
Date: August 19, 2003
/s/ JOHN M. ALSTON
John M. Alston,
President and Chief Executive Officer
-29-
I, Glen R. Alston, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Carmina Technologies Inc., and subsidiaries;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of
Carmina Technologies Inc. as of, and for, the periods presented in this quarterly report;
4. Carmina Technologies Inc.’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Carmina
Technologies Inc. and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to Carmina Technologies Inc.,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) evaluated the effectiveness of the Carmina Technologies Inc.’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this quarterly report based on such evaluation; and
d) disclosed in this report any change in Carmina Technologies Inc.’s internal control over financial reporting
that occurred during Carmina Technologies Inc.’s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, Carmina Technologies Inc.’s internal control over financial reporting;
and
5. Carmina Technologies Inc.’s other certifying officers and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to Carmina Technologies Inc.’s auditors and the audit committee of
Carmina Technologies Inc.’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting which are reasonably likely to adversely affect Carmina Technologies Inc.’s ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant
role in Carmina Technologies Inc.’s internal controls over financial reporting.
Date: August 19, 2003
/s/ GLEN R. ALSTON
Glen R. Alston,
Chief Financial Officer
-30-
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Quarterly Report of Carmina Technologies Inc. (the "Company") on Form 10-QSB for the
quarter ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, John M. Alston, President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of
my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report for the quarter ended June 30, 2003 fairly presents, in all material
respects, the financial condition and results of operations of the Company in accordance with such requirements.
/s/ John M. Alston
John M. Alston
President and Chief Executive Officer
August 19, 2003
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002.
In connection with the Quarterly Report of Carmina Technologies Inc. (the "Company") on Form 10-QSB for the
quarter ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Glen R. Alston, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and
belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report for the quarter ended June 30, 2003 fairly presents, in all material
respects, the financial condition and results of operations of the Company in accordance with such requirements.
/s/ Glen R. Alston
Glen R. Alston
Chief Financial Officer
August 19, 2003
-31-
CARMINA TECHNOLOGIES INC.
CORPORATE INFORMATION
BOARD OF DIRECTORS JOHN M. ALSTON, B.Sc. P.Geol. President and Chief Executive Officer BERNARD BENNING, M.Ed., M.B.A., C.M.A., * VP Corporate Development, Bow Valley College RICHARD M. DAY, BS, JD, * Owner and Officer, American Registrar and Transfer Co. STEPHEN KOHALMI, B.Sc. Director of Technology THOMAS W. WHITTINGHAM, B.Sc. * Business Consultant * Audit Committee, Compensation Committee and OFFICERS AND KEY PERSONNEL JOHN M. ALSTON, B.Sc. P.Geol. President and Chief Executive Officer GLEN R. ALSTON, B.Comm Treasurer and Chief Financial Officer ROBERT d’ARTOIS, CAAP Vice-President STEPHEN KOHALMI, B.Sc. Director of Technology THERESE JOHNSON, CMA Corporate Secretary | TRANSFER AGENT AMERICAN REGISTRAR AND TRANSFER CO. P.O. Box 1798 Salt Lake City, Utah 54110 AUDITORS BDO DUNWOODY LLP #1500, 800 - 6 Avenue, SW Calgary, Alberta T2P 3G3 BANKERS ZIONS BANK 310 South Main Broadway Office Salt Lake City, Utah 84101 ROYAL BANK OF CANADA 355 - 8 Avenue, SW Calgary, Alberta T2P 2N5 INVESTOR CONTACT ROBERT d’ARTOIS Toll Free: 1-800-793-8370 Telephone: (403) 269-5369 Facsimile: (403) 261-2866 E-Mail: invest@carminatech.com HEAD OFFICE CARMINA TECHNOLOGIES, INC. #810, 540 - 5th Avenue SW, Calgary, Alberta T2P 0M2 Toll Free: 1-800-793-8370 Telephone: (403) 269-5369 Facsimile: (403) 261-2866 E-Mail: info@carminatech.com |