AMARIUM TECHNOLOGIES, INC. (AMMG) - Description of business

Company Description
BUSINESS DEVELOPMENT We were originally incorporated in the State of Nevada on April 6, 2000 to engage in the business of providing Internet-based email-to-mail printing and delivery services. We established the website which had not yet commenced providing an Internet-based email-to-mail service. The network, which was still under construction, was intended to consist of a consumer-based, software product that would have a number of strategically located international distribution centers enabling users to send email as standard mail. We did not generate any revenue and therefore only sustained losses. As a result of our lack of profitability and the receipt of numerous inquires from entities seeking to merge with us, our operational focus expanded beyond our email-to-mail service to include reviewing potential merger or acquisition candidates. On November 25, 2003, we acquired all of the issued and outstanding capital stock of Cirond Networks Inc., a Nevada corporation ("CNI"), in exchange for 17,000,000 shares of our common stock. As a result of this share exchange, the parent company of CNI owned approximately 51.2% of our issued and outstanding shares and CNI became our wholly-owned subsidiary. We changed our name to Cirond Corporation as of October 14, 2003. CNI was founded in March 2001 to develop technologies designed to enhance the performance and security of wireless networking technologies, with an initial specific focus on 802.11b Wireless Local Area Network ("WLAN") technology. A WLAN is one in which a mobile user can connect to a local area network ("LAN") through a wireless (radio) connection. The 802.11b standard for WLANs - often called "WiFi" - is part of the 802.11 series of WLAN standards from the Institute of Electrical and Electronics Engineers. CNI conducts its research and development activities through its subsidiary, Cirond Networks (Canada) Inc., a British Columbia corporation. CNI's initial product set, which was announced in late 2002 and shipped in 2003, included a wireless network management and security solution, known as Winc Manager, and a pair of wireless connectivity utilities, known as WiNc and pocketWiNc. In late 2003, we announced a new family of products dedicated primarily to the goal of securing wired networks against the threat of unauthorized wireless devices (such as wireless-equipped laptop computers and wireless access points). These products were announced under the AirPatrol name and included AirPatrol Enterprise(TM) and AirPatrol Mobile(TM). AirPatrol Enterprise(TM) is a network security product aimed at securing an organization's network against the wireless threat around the clock and capable of being repurposed as a wireless network management solution at such time as the customer implements a wireless network. AirPatrol Mobile(TM) is a software-only solution that allows customers to detect and locate unauthorized wireless devices and access points without the use of any specialized hardware. CNI also developed and introduced a line of products under the AirSafe name. In December 2004, we obtained financing through the sale of shares of our convertible preferred stock. However, the proceeds of the financing were not sufficient to fund the marketing of these products. Due to lack of sales revenues and external financing, we were forced to reduce our personnel. On January 19, 2006, CNI entered into a Source Code Licensing Agreement with Air Patrol Corporation, a Nevada corporation controlled by one of our shareholders. We granted AirPatrol Corporation a worldwide license for the WiNc, AirPatrol and AirSafe software products and for the associated trademarks and tradenames. We agreed not to grant any licenses to any third parties so long as we receive at least $250,000 from AirPatrol Corporation by January 19, 2007. In consideration for the licenses, AirPatrol Corporation has agreed to pay us a royalty equal to 20% of the gross sales of the licensed software products that utilize the Windows 2000, Windows XP, or Windows Mobile 4.0 operating systems that are generated during the first year of the agreement. The percentage declines with each year, going to 15% during the second year, 10% during the third year, 8% during the fourth year, and 5% thereafter. The royalty is 5% for the sales of licensed software products that utilize operating systems other than Windows 2000, WindowsXP, or Windows Mobile 4.0. AirPatrol Corporation paid us $50,000 upon execution of the agreement as an advance against this royalty obligation. The agreement continues until terminated (1) by either party in the event of breach of the agreement, or (2) by either party in the event of the other party's bankruptcy, liquidation, insolvency, or assignment for the benefit of creditors. On April 4, 2006, we entered into a Foreclosure Sale Agreement (the "Agreement") among Sand Hill Finance, LLC ("Sand Hill"), the Company, ServGate Technologies, Inc. ("ServGate"), and BSGL, LLC ("BSGL"), pursuant to which the Company agreed to acquire certain of the personal property assets of ServGate, consisting primarily of intellectual property, and assume certain of ServGate's liabilities from Sand Hill and BSGL, who were secured senior lenders holding those assets as collateral on existing loans that were in default. ServGate had developed unified threat management software and had more than 100 employees in the United States, Canada, and China. The Company also issued 9,000,000 shares of the Company's Common Stock to BSGL in accordance with the terms of the Agreement. The acquisition was made pursuant to a private foreclosure sale under Section 9610 of the California Uniform Commercial Code. On April 10, 2006, the Company completed its acquisition of the assets and the assumption of the specified liabilities of ServGate pursuant to the terms of the Agreement. While we purchased the intellectual property rights (patents, domain names, and product trade marks) to the ServGate products, we did not acquire ServGate's distributor and importer agreements or sales force. Roughly half of ServGate's employees are likely to continue with us. We plan to continue as an Intellectual Property licensing and services company under the new name of "Amarium Technologies" and use the ServGate assets to establish a Unified Threat Management network security division, called "EdgeForce". The unified threat management (UTM) market has been defined as the combination of firewall/VPN and minimally antivirus software. UTM represents significant market adoption of consolidated security functionality that introduces ease-of-use, convenience, performance while reducing cost and time associated with implementation and maintenance. It also results in significantly tighter security at the perimeter and multiple edges of the network, minimizing the probability of failure by point solutions defending against blended threat attacks. UTM is the third shift in network consolidation (firewall/Virtual Private Networks was the first) constituting a major roll up of gateway functionality. We believe that UTM represents comprehensive unique security, ease of management and total cost of ownership advantages. We perceive that the UTM Market is growing rapidly and point solution providers are being left behind (firewall/Virtual Private Networks, Internet Provider Security, Secure Sockets Layer Virtual Private Networks, etc.). Further, we believe that the market is ripe for consolidation of additional gateway functionality and services, and only EdgeForce is uniquely poised to take advantage of third party, best of breed application integration.CUSTOMERS During the fiscal year ended December 31, 2004, a source code licensing agreement with Computer Associates generated 83% of our revenues. During the fiscal year ended December 31, 2005, we were not dependent on any key customers.COMPETITION The UTM market is characterized by intense competition. There are several companies, both public and private, offering UTM solutions. Our solutions cover a broad range of competitors. These competitors include companies such as Watchguard, McAfee, Cisco, Sonic Wall, and Fortinet. Most of these firms have products that are proficient as firewalls or anti-virus software, acting independently of each other. We believe that our most significant competitive advantage is that our product adds core networking functionality (load balancing, for example) while continuing to attract and integrate third party best of breed applications in antivirus and other future threat protection areas. The UTM market is now rapidly adding any functionality that makes sense at the gateway: spyware protection, IPS, policy enforcement, switching (for small office/branch office), compression, acceleration, SSLVPN, and even antispam. Accordingly, we believe that UTM represents by far the quickest and largest growing gateway sector. We believe that we provide proven performance, intellectual property coverage, and unmatchable customer choice as well as strong differentiation. We are moving into the execution and tactical phase of the market, which is about selecting the proper relationships, executing on a go-to-market strategy and continuing to lock in third party, best of breed, proven and trusted security brands. We offer customers proven performance, per appliance pricing (no per seat), best of breed technology at prices competitive to Open Source-based products. Many, if not most of our competitors, however, have greater financial resources and have been able to market their products more extensively. Some of our competitors have existing customer bases for non-competitive products, which provide them with the advantage of greater market recognition.RESEARCH AND DEVELOPMENT During the fiscal years ended December 31, 2005, 2004, and 2003, we spent $216,692, $576,894, and $404,886, respectively, on research and development activities.GOVERNMENT REGULATION We do not anticipate that any government regulations will significantly affect our business.EMPLOYEES As of June 26, 2006, we employed a total of 65 persons, of which 63 were full-time and 2 were consultants. None of our employees is covered by a collective bargaining agreement.