UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 30549
FORM 10-QSB
(Mark One)
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 30, 2002
[ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number: 0-21275
Enter Tech Corp.
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(Exact name of small business issuer as specified in its charter)
Nevada 84-1349553
- --------------------------------- -------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
430 East 6th Street, Loveland, Colorado 80537
---------------------------------------------
(Address of principal executive offices)
(970) 669-4918
---------------------------
(Issuer's telephone number)
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(Former name, former address and former fiscal year
(if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a Court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of common
equity, as of March 31, 2002 was 17,089,984 shares of common stock.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
Page
Number
------
Part I. Financial Information
Item I. Financial Statements
Review Report of Independent Certified
Public Accountant 3
Consolidated Balance Sheets as of
March 31, 2002 and December 31, 2001 4
Consolidated Statements of Operations,
Three Months Ended March 31, 2002 and
March 31, 2001 5
Consolidated Statements of Operations,
Three Months Ended March 31, 2002 and
March 31, 2000 6
Consolidated Statements of Cash Flows,
Three Months Ended March 31, 2002 and
March 31, 2000 7
Notes to Consolidated Financial Statements 8
Item 2. Plan of Operation 14
Part II. Other Information 18
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security
Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
2
PART 1 - FINANCIAL STATEMENTS
- -----------------------------
REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The Board of Directors
Enter Tech Corporation
(A Development Stage Company)
Loveland, Colorado
We have reviewed the accompanying consolidated balance sheet of Enter Tech
Corporation (A Development Stage Company) as of March 31, 2002, and the related
consolidated statements of operations and cash flows for the three months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Enter Tech Corporation
A review of interim financial statements consists principally of inquiries of
Company personnel responsible for financial matters and analytical procedures
applied to financial data. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the United
States of America, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
As discussed in the notes to the financial statements, certain conditions
indicate that the Company may be unable to continue as a going concern. The
accompanying financial statements do not include any adjustments to the
financial statements that might be necessary should the Company be unable to
continue as a going concern.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
2525 Fifteenth Street, Suite 3H
Denver, Colorado 80211
May 13, 2002
3
ENTER TECH CORPORATION
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
March 31, December 31,
2002 2001
Current Assets $ - $ -
----------- ----------
Total Current Assets - -
Equipment, net of accumulated
depreciation of $13,431 9,276 10,411
Other 48 48
----------- ----------
Total Assets $ 9,324 $ 10,459
=========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 365,650 $ 341,965
Stock compensation payable 27,450 27,450
Customer deposits 60,000 60,000
Notes payable, related parties 1,179,677 1,143,544
Notes payable, other 250,000 250,000
----------- ----------
Total Current Liabilities 1,882,777 1,822,959
----------- ----------
Total Liabilities 1,882,777 1,822,959
----------- ----------
Commitments and contingencies
(Notes 2,3,4,5,6,7,8,9,10,11,12 and 13) - -
Stockholders' (Deficit):
Preferred Stock, $.0001 par value,
5,000,000 shares authorized
1,000,000 issued and outstanding 100 100
Common Stock, $.0001 par value,
100,000,000 shares authorized
17,089,984 shares issued at
March 31, 2002 December 31, 2001 1,709 1,709
Additional paid-in capital 4,982,584 4,982,584
Stock subscriptions receivable,
services (52,705) (115,120)
Accumulated deficit (6,804,859) (6,681,491)
----------- ----------
(1,873,171) (1,812,218)
Treasury Stock, 2,825,000 shares (282) (282)
----------- ----------
Total Stockholders' (Deficit) (1,873,453) (1,812,500)
----------- ----------
Total Liabilities and Stockholders'
(Deficit) $ 9,324 $ 10,459
=========== ==========
The accompanying notes are an integral part of the financial statements.
4
ENTER TECH CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2002 2001
Revenues $ - $ -
------------ -----------
Operating Expenses:
Depreciation 1,135 1,135
Professional fees 24,709 115,714
Stock issued for services 62,414 655,933
Other 1,292 1,587
------------ -----------
Total Operating Expenses 89,550 774,369
------------ -----------
Net Operating (Loss) (89,550) (774,369)
Other (Expenses):
Interest (expense) (33,818) (21,039)
------------ -----------
Net Loss to Common Shareholders $ (123,368) $ (795,408)
============ ===========
Net Loss Per Common Share $ (.01) $ (.05)
============ ===========
Weighted Average Number
of Shares Outstanding 17,089,984 17,089,984
============ ===========
The accompanying notes are an integral part of the financial statements.
5
ENTER TECH CORPORATION
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2002 2001
Cash Flows Operating Activities:
Net (loss) $ (123,368) $ (795,408)
Adjustment to reconcile net
(loss) to net cash provided
by operating activities:
Depreciation 1,135 1,135
Stock for services 62,414 655,933
Increase in accounts payable
and accrued expenses 23,686 44,908
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Net Cash (Used in) Operating
Activities (36,133) (93,432)
---------- ----------
Cash Flows from Investing Activities
(Acquisition) of furniture
and equipment - (1,192)
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Net Cash (Used in) Investing
Activities - (1,192)
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Cash Flows from Financing
Activities:
Increase in payable, related
parties 36,133 94,542
----------- ----------
Net Cash Provided by Financing
Activities 36,133 94,542
----------- ----------
Increase (decrease) in Cash - (82)
Cash, Beginning of Period - 421
=========== ==========
Cash, End of Period $ - $ 339
=========== ==========
Interest Paid $ 33,818 $ 21,039
=========== ==========
Income Taxes Paid $ - $ -
=========== ==========
The accompanying notes are an integral part of the financial statements.
6
ENTER TECH CORPORATION
(A Develop ment Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(1) Condensed Financial Statements
------------------------------
The financial statements included herein have been prepared by Enter Tech
Corporation (A Development Stage Company) without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted as allowed by such rules and regulations, and Enter Tech Corporation
believes that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the December 31, 2001 audited financial statements and the
accompanying notes included in the Annual Report Form 10-KSB. While management
believes the procedures followed in preparing these financial statements are
reasonable, the accuracy of the amounts are in some respect's dependent upon the
facts that will exist, and procedures that will be accomplished by Enter Tech
Corporation later in the year.
The management of Enter Tech Corporation believes that the accompanying
unaudited condensed financial statements contain all adjustments (including
normal recurring adjustments) necessary to present fairly the operations and
cash flows for the periods presented.
(2) Business Combinations
---------------------
On June 2, 1998, Enter Tech Corp. (Company), completed a business combination
with Links, Ltd., a development stage company. Pursuant to the business
combination, 3,235,000 shares of the Company's common stock were issued for 100%
of the issued and outstanding stock of Links, Ltd. Subsequently, 835,000 of the
shares issued pursuant to this business combination were canceled resulting in
2,400,000 net shares issued. Since the controlling shareholders of Links, Ltd.
own approximately 65.7% of the Company, a controlling interest in the Company,
the transaction was accounted for as a reverse acquisition whereby, the equity
accounts of Links, Ltd. were carried over into the accompanying financial
statements. Links, Ltd. was incorporated on August 18, 1997.
On January 7, 2000, the Company entered into an agreement with Shopping Mall
Online, Inc. and an individual whereby the Company acquired 80% of the
outstanding common stock of Shopping Mall Online. The consideration for the
acquisition was 2,400,000 shares of the Company's common stock. The agreement
also provided that if for any reason the Company's common stock was not trading
above a $1.00 bid price at the time the Rule 144 restrictive legend on the stock
certificate for the 2,400,000 shares of the Company's common stock is removed,
the Company would issue additional shares of its common stock to the individual.
The value of the additional shares to be issued will be equal to the difference
between $2.4 million and the value of the 2,400,000 shares of common stock
issued under the agreement based on the then existing bid price.
7
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(2) Business Combinations, continued
--------------------------------
The business combination has been accounted for as a purchase. No goodwill has
been recorded in the transaction because the former owner of Shopping Mall
Online, Inc. now owns 31% of the Company. The 2,400,000 shares of common stock
have been recorded at predecessor cost of Shopping Mall Online, Inc. All costs
related to development of Shopping Mall Online, Inc. have been expensed.
The agreement also provided the voting rights with respect to the common stock
of Shopping Mall Online would remain with the individual until the restrictive
legend on the 2,400,000 shares of the Company's common stock is removed.
On October 27, 2000, the Company agreed to sell the controlling interest in
Shopping Mall Online back to its management. The Company redeemed 1,920,000
shares of the Company's common stock from the president of Shopping Mall Online,
Inc. in exchange for 1,440,000 shares of Shopping mall Online's common stock
being held by the Company. The president of Shopping Mall online retained
480,000 restricted shares of the Company's common stock, and the Company
retained 480,000 shares of Shopping Mall Online's common stock.
On April 19, 2000, the Company acquired 80% of the outstanding shares of common
stock of WavePower, Inc., a development stage company, in exchange for 5,000,000
restricted shares of the Company's common stock under an Acquisition Agreement.
In addition, the Company agreed to reserve 3,000,000 shares of its 5,000,000
authorized shares of preferred stock for issuance as further payment for the
acquisition to the former sole shareholder of WavePower, Inc. These shares would
be issued upon exercise of an option to be granted to the shareholder. The
option would provide:
(a) For a three year term ending April 30, 2003;
(b) For an exercise price of $.001 per share;
(c) For the exercise of up to 1,000,000 shares during each of the following
periods during the term of the employment agreement with the option holder:
12th and 13th months, 24th and 25th months, and 35th and 36th months. The
option further provides that its exercise of the stated amounts during the
respective periods is further conditioned upon WavePower, Inc. meeting
stated amounts of net pre tax profits. The acquisition agreement also
provides that The remaining 2,000,000 authorized shares of the Company's
preferred stock may be issued to the existing member of the Company's
management and significant consultants.
The 5,000,000 shares of restricted common stock that were issued to WavePower,
Inc. increased the Company's outstanding shares of common stock to 12,783,000.
The transaction was recorded at predecessor cost since the 5,000,000 shares were
approximately 39% of the Company's total issued and outstanding shares of common
stock.
Effective September 26, 2000, the Company rescinded this Plan of Reorganization
and Acquisition. The former shareholders of WavePower, Inc. have not returned
the Company's common stock nor funds advanced to WavePower during the period
from April 19, 2000 through the date of rescission. The 5,000,000 shares are
shown as outstanding at December 31, 2000. A contingency exists with respect to
this matter, the ultimate resolution of which cannot presently be determined.
8
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(2) Business Combinations, continued
--------------------------------
Effective December 19, 2000, QuickGold 2000 LLC was formed to further the
business of the joint venture agreement discussed in note 13, and became a
wholly owned subsidiary of the Company.
(3) Marketing and Administration of Sales Agreement
-----------------------------------------------
The Company has entered into an agreement with a previous director of the
Company for the marketing and administration of sales through certain identified
locations and the division of profits after the director has recovered related
costs. The Company currently has orders for the purchase of thirty kiosk
software vending units at $50,000 per unit from a previous director. The Company
received $60,000 of deposits related to these orders. The Company is uncertain
whether it will be able to deliver the units and it is not determinable at this
time whether a refund will be required. A contingency exists with respect to
this matter, the ultimate resolution of which cannot presently be determined.
(4) Basis of Presentation - Going Concern
-------------------------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. However, the Company has sustained operating losses
since its inception and has a negative working capital and a net capital
deficiency. This fact raises substantial doubt about the Company's ability to
continue as a going concern. Management is attempting to raise additional
capital.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its future
operations.
Management is in the process of attempting to raise additional capital and
reduce operating expenses. Management believes that its ability to raise
additional capital and reduce operating expenses provide an opportunity for the
Company to continue as a going concern.
(5) Preferred Stock
---------------
On April 10, 2000, the board of directors of the Company agreed to establish two
voting trusts in which the Company would place 5,000,000 shares of the Company's
preferred stock. The first trust initially had 3,000,000 preferred shares being
held in reserve for the acquisition of WavePower, Inc. as outlined in the
definitive agreement. Because of the rescission of the WavePower acquisition,
the board of directors elected to hold the 3,000,000 preferred shares for future
use. The second trust contains 2,000,000 preferred shares of Company stock that
will be used for the benefit and distribution to the officers, directors and
significant consultants to the Company with the option of a distribution of up
to 1,000,000 of these preferred shares for additional compensation as they may,
from time to time, come available to the Company. As of December, 2000, these
1,000,000 preferred shares were issued to two directors and a consultant of the
Company. The 1,000,000 preferred shares were recorded as compensation in the
amount of $250,000. The director of the Company will retain sole voting rights
for both trusts.
9
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(5) Preferred Stock, Continued
--------------------------
(a) It is convertible into two shares of common stock for each share of
preferred, and;
(b) It is callable by the Company upon 30 days written notice at $.001 per
share, provided that the holder may convert the preferred into common stock
during the 30-day period.
The 5,000,000 shares of preferred stock have the following rights, privileges
and limitations:
(a) Liquidation preference to receive any distributions in liquidation of the
Company up to the amount of $0.10 per share, but does not participate in
any additional distributions,
(b) Right to vote five votes per share on all issues considered by the
shareholders
(c) Convertible into two shares of common stock for each share of preferred,
and;
(d) Callable by the Company upon 30 days written notice at $.001 per share,
provided that the holder may convert the preferred into common stock during
the 30-day period.
(6) Equity Financing Agreement
--------------------------
On March 15, 2000, the Company entered into a stock purchase and subscription
agreement with the Reserve Foundation Trust, whereby the trust is to purchase
6,000,000 restricted shares of the Company's common stock in exchange for
$10,000,000. When the agreement was signed the trust provided the Company with
$50,000 in interim debt financing. That amount was subsequently increased to a
total of $250,000. The interim financing the trust provided the Company in the
amount of $250,000 is to be repaid in full as per the terms of the Stock
Purchase and Subscription agreement on or before May 15, 2000. As of September
30, 2000, the Company has not paid this debt.
On May 4, 2000, the Trust indicated that all conditions to the stock purchase
had been satisfied and that it would go forward with providing the $10,000,000
in funds to the Company. As of June 12, 2000, $600,000 of the subscribed funds
had been received. On July 19, 2000, the Board of Directors of the Company met
to discuss banking/funding problems with the Reserve Foundation Trust. As of
August 1, 2000, the Company instructed corporate counsel to prepare to take
whatever action it deemed is appropriate and in the best interest of the
Company. As of April 11, 2001, counsel had not yet taken action on the matter.
The stock certificates for the 6,000,000 shares of common stock were canceled
during the last quarter of 2000. A contingency exists with respect to this
matter, the ultimate resolution of which cannot presently be determined.
10
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(7) Litigation
----------
Litigation against the Company has been threatened during May, 2000 by a
corporation which alleges that the Company has not fulfilled an agreement to
issue 1,000,000 shares of the Company's common stock in consideration of the
waiver of any rights by the corporation or affiliated entities to acquire
WavePower, Inc., which the Company acquired on April 19, 2000. The Company is of
the view that the conditions precedent to the issuance of such stock were not
fulfilled and that the agreement was repudiated. The Company filed an answer to
the complaint on June 29, 2000. Due to the preliminary stage of the matter, the
ultimate resolution of this contingency cannot presently be determined.
(8) Litigation-Former Officer
-------------------------
During February, 2000 the Company commenced litigation against a former officer
of the Company alleging failure of the former officer to meet certain
performance standards. The Company is seeking cancellation of the agreement to
issue 750,000 shares of Company common stock and the payment of $500 per month
compensation to the former officer and the return of 500,000 shares of stock
previously issued. A contingency exists with respect to this matter, the
ultimate resolution of which cannot presently be determined.
(9) Employment/Consulting Contracts
-------------------------------
Effective July 1, 1998, the Company entered into a one year contract with the
Vice President of the Company, which required this individual to provide
consulting services for fees of $500 per month and 750,000 shares of stock to be
issued pursuant to a Form S-8 Registration Statement. The Company has paid no
compensation to this individual to date and has not issued the 750,000 shares of
stock. The December 31, 2000 financial statements include an accrual of stock
and services payable in the amount of $7,500 related to services performed by
this individual.
Effective August 25, 1999, the Company entered into an agreement with a
consultant to provide management consulting services to assist in developing the
Company. The consultant was to be paid $75 per hour plus 1,000 restricted shares
of common stock for every hour worked. In addition, the Company agreed to
compensate the consultant for other services with restricted common stock. This
agreement has been terminated.
Effective January 1, 2000, the Company entered into an agreement with a
consultant to provide consulting services for assistance in completing a private
placement or secondary offering, and other consulting services. The consultant
was to be paid $10,000 per month plus 200,000 shares of restricted common stock
per year provided the business plan established for the Company is met. This
agreement has been terminated.
Effective January 1, 2000, the Company entered into an agreement with a director
of the Company, to attempt to build revenues of the Company and assist in the
development of the Company's product. The director was to be paid $10,000 per
month plus expenses. This agreement has been terminated.
11
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(9) Employment/Consulting Contracts, continued
------------------------------------------
Effective May 15, 2000, the Company entered into an employment agreement with an
individual to research market conditions and conduct feasibility studies of
projects being considered by the Company. The employee was to be paid $18,000
per year plus certain benefits. The agreement expired on May 15, 2001.
Effective May 22, 2000, the Company entered into an executive compensation
agreement with the Company's prior president. The president was to be paid
$10,000 per month plus certain benefits. The term was for two years with an
option to renew for an additional two year period on June 30, 2002. This
agreement was terminated in February 2002.
Effective August 1, 2000, the Company entered into an agreement with an attorney
to provide legal services to the Company. The attorney was to be paid $5,000 per
month plus $5,000 per month in publicly traded stock of the Company. The
agreement expired on August 1, 2001.
Effective September 1, 2000, the company entered into an agreement with a
consultant to provide assistance in developing business opportunities and
revenue. The consultant was to be paid $8,000 monthly plus expenses. The
agreement expired on August 31, 2001.
(10) Marketing and Other Services Agreements
---------------------------------------
On June 6, 2000, the Company entered into agreements with various companies to
provide various marketing and other services. The Company issued 3,125,000
shares of restricted common stock in exchange for their promise to perform these
services during the 12-18 month period following the execution of the
agreements. The Company has recorded 90% of the market value of these shares at
the time of issuance totaling $5,273,437 as stock subscriptions
receivable-services, and has charged $62,414 to an expense representing the
services performed for the three months ended March 31, 2002. In November 2000,
the Company rescinded these agreements and requested the 3,125,000 shares be
returned to the Company. During the quarter ended June 30, 2001, 2,825,000 of
these shares were returned to the Company and recorded as treasury stock.
(11) Common Stock
------------
During the year ended December 31, 1999, the Company issued 200,000 shares of
its restricted common stock in exchange for services. Also during the year ended
December 31, 1999, the Company committed to issuing 1,543,000 shares of its
restricted common stock in exchange for services. A total of $1,103,574 was
accrued to reflect the stock compensation payable at December 31, 1999. All but
20,000 of these shares were issued during 2000.
During the year ended December 31, 2000, the Company issued 3,428,598 of its
restricted common stock in exchange for services. Also during the year ended
December 31, 2000, the Company committed to issuing 50,000 shares of its
restricted common stock in exchange for services. The total accrued stock
12
ENTER TECH CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)
(11) Common Stock, continued
-----------------------
compensation payable at December 31, 2000 was $19,950. Also during the year
ended December 31, 2000, the Company issued 1,129,286 shares of its restricted
common stock for $132,500 cash. Also during the year ended December 31, 2000,
the Company issued 7,500 to its president as an adjustment to a previous
issuance.
Also during the year ended December 31, 2000, the Company issued 3,125,000
shares of its restricted common stock to various entities in exchange for future
marketing and other services to be performed during the 12-18 month period
following the execution of the agreements.
During November 2000, the Company rescinded these agreements due to concern
regarding possible violations of various securities and common laws. The Company
has requested the return of the 3,125,000 shares, of which 2,825,000 have been
returned. The marketing and other services were being amortized over the
agreement periods.
Also during the year ended December 31, 2000, the Company hired an entity to
procure additional short-term funding. As a result, the Company issued 2,000,000
shares of its restricted common stock. The entity sold 370,000 shares of such
stock to a third party for $60,000. The Company has received $10,000, the entity
received $15,000 in commissions, and the balance of $35,000 remains due and
owing to the Company. The remaining 1,630,000 shares were returned to the
Company and canceled.
During the year ended December 31, 2001, the Company issued 77,100 shares of its
restricted common stock to two individuals in exchange for services valued at
$5,783.
(12) Licensing Agreement
-------------------
Effective October 27, 2000, the Company entered into a licensing venture
agreement with an entity whereby the Company agreed to purchase 30 dual terminal
digital vending machines at a price of $125,000 plus expenses and 60 single
terminal digital vending machines at a purchase price not yet determined within
three months. The Company agreed to purchase an additional 30 dual terminal
digital vending machines at a price of $125,000 plus expenses and 60 single
terminal digital vending machines at a purchase price not yet determined within
nine months. The Company is also responsible to license this technology and to
promote, develop a market, sell and distribute custom music CD products created
by the digital vending machines. The term of this agreement shall become
effective on the date the manufacturer receives the first purchase order and
shall continue for five years, unless terminated in accordance with the terms of
the agreement. This license was transferred to another entity during the three
months ended March 31, 2002.
(13) Joint Venture Agreement
-----------------------
Effective October 13, 2000, the Company entered into a joint venture agreement
with an entity, whereby the entity would be the exclusive provider of
communications needs for the Company's projects including all communications
installation and management for the kiosk purchased and deployed by the Company.
On June 15, 2001, The Company licensed its portion of the joint venture
agreement to another entity.
13
ITEM 2. PLAN OF OPERATION
The following discussion of our plan of operation should be read together
with the financial statements and the related notes in Item 1 of Part I above.
As discussed in the notes to the financial statements, there are circumstances
that indicate that Enter Tech may be unable to continue as a going concern. We
cannot assure you that our plans in that regard will be successful and that we
will be able to continue as a going concern.
OVERVIEW
The Company is a successor to Links, Ltd. a Wyoming corporation, and
neither entity has had revenues from operations from its inception. Links, Ltd.
was incorporated for the purpose of developing kiosks or vending machines that
would market computer software, music and possibly digital video stored on
discs. For several years, the Company unsuccessfully attempted to develop a
commercially viable kiosk to provide such services
In the third quarter of 2000, the Company's management elected to change
their business plans to encompass a third-party agreement with HitDisc.com,
Inc., a manufacturer of a kiosk compatible with the concept and design of the
company. The agreement calls for Enter Tech to purchase and deploy the Hitdisc
kiosks and to provide the communications infrastructure for those units.
Hitdisc.com, Inc. will provide management for the entire kiosk system including
management of royalties, software development and all normal operational
aspects.
To facilitate communications infrastructure for this agreement and for
other market segments that the Company has targeted, Enter Tech entered into a
joint venture agreement with Northern Communications Group, Inc. ("NCG") on
October 13, 2000, whereas they will be the exclusive provider of communications
needs for Enter Tech projects including all communications installation and
management for the Hitdisc kiosk purchased and deployed by Enter Tech. We cannot
assure you that we will ever be able to develop a commercially successful kiosk,
nor can we assure you that any kiosk concept licensed from another company will
be a commercially viable product. Hitdisc is currently continuing its beta tests
prior to attempting further market penetration. The Hitdisc project was put on
the back burner for lack of a beneficial beta test.
The Company has since changed its focus to facilitate the infrastructure
and marketing of high-speed Internet access, wireless ISP and related
appliances, equipment, software and services in the business-to-business market
segment. The Company has researched and projected costs for installation and
operation of a basic high-speed Internet access for the hospitality industry.
NCG has researched and projected costs of equipment acquisition for this market
segment
On June 15, 2001, the Company licensed its portion of the Joint Venture
Agreement with Northern Communications Group, Inc. (NCG) to Global Marketing
Consultants. Under the agreement, Enter Tech has licensed their 50% position in
the Joint Venture with NCG in exchange for 40% of the net income produced by the
Joint Venture. Global will retain 10% of the net income for its management,
sales and marketing efforts. The Joint Venture intends to market its'
Custom-Room-Connect (TM) high speed Internet access, web appliance and Video on
Demand systems to multi-unit dwellings and the hospitality industry. The
Custom-Room-Connect (TM) system provides unique solutions to the hospitality and
Multi-Unit Dwellings that involve a variety of high-speed Internet access
systems, certain co-marketing and revenue sharing models for web appliances,
advertising sales and unique Video on Demand systems that have VCR
functionality. As part of the agreement, Global will sell, and manage the
Custom-Room-Connect (TM) program in conjunction with NCG. Enter Tech will
participate when needed in certain marketing and sales efforts as defined by the
Joint Venture partners. Global was formed in 1988 to provide marketing expertise
to new businesses. The Company has specialized in market research and channel
sales implementation. GMC has also consulted to companies for funding
methodologies and business expansion. Management felt that licensing their
portion of the joint venture may be the right approach to fulfilling the
immediate needs and opportunities that the Joint Venture has to penetrate the
market with its unique systems. On February 11, 2002 Global Marketing
Consultants notified Enter Tech Corporation that it was terminating its
Comprehensive License Agreement due to the many misinterpretations that exist in
the Agreement. Currently, Global is restructuring the License Agreement to
remove any misunderstanding that currently exist. The new agreement should be in
place within the next 30 days.
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The Company intends to re-establish its infrastructure over the next 120
days so that it may participate with the Joint Venture as a marketing contractor
or in other such role that would increase the Joint Venture's revenue. Enter
Tech has been able to establish several potential clients for the
Custom-Room-Connect program in Europe and Latin America and intends to pursue
them to broker potential foreign licenses for use of the system.
RECENT SIGNIFICANT EVENTS
On March 9, 2002, D. William Thomas assumed the duties of President and
director on an interim basis. The company is pursuing other business entities to
acquire with substantial long term revenues that will fit the other business
plans of the company.
On June 30, 2001 Enter Tech received stock returned by 3 of the 4 companies
that had entered into marketing and service agreements for various parts of the
world with the Company on June 6, 2000. On September 13, 2000 Enter Tech
formally notified each group that their contracts were cancelled because of lack
of performance and potential legal issues and 3,100,000 restricted common stock
issued for future services be returned to Enter Tech immediately. Those
companies are:
Profile Venture, Ltd, 800,000 shares
The Challenge, Ltd, 900,000 shares
Skyline Marketing Associates, Ltd. 825,000 shares
The Wall Street Relations Group has not yet returned the 300,000 shares issued
to them as part of this transaction
In a related transaction, on August 2, 2000 Enter Tech entered in an
agreement with Profile Venture, Ltd to establish several possible investment
groups or partners for immediate funding needs of the company the Company. Enter
Tech issued 2,000,000 shares of restricted common stock to Profile for this
pending activity. Enter Tech found that an agreement had been consummated and
that funds for 100,000 shares at $0.60 per share of Enter Tech restricted stock
had been exchanged between Profile and a third party. On further investigation
Enter Tech found that 270,000 additional restricted shares were committed as
part of this contract as an escrow agreement held against registration of the
stock for public trading. The funds resulting from that transaction were not
delivered to Enter Tech. The company immediately demanded delivery of the funds
and all remaining stock. Profile management returned all but 270,000 shares and
the 100,000 shares that had been sold to the third party. The board of Enter
Tech Corporation received 2,825,000 shares from the 3 companies listed above and
have authorized the return of the shares of stock related to this transaction to
treasury. The management and legal counsel for Enter Tech are working towards a
complete solution in this matter.
On June 15, 2001, the Company licensed its portion of the Joint Venture
Agreement with Northern Communications Group, Inc. (NCG) to Global Marketing
Consultants (an entity owned by D. William Thomas, President/ Director of Enter
Tech Corporation) . Under the agreement, Enter Tech has licensed their 50%
position in the Joint Venture with NCG in exchange for 40% of the net income
produced by the Joint Venture. Global will retain 10% of the net income for its
management, sales and marketing efforts. The Joint Venture intends to market
its' Custom-Room-Connect (TM) high speed Internet access, web appliance and
Video on Demand systems to multi-unit dwellings and the hospitality industry.
The Custom-Room-Connect (TM) system provides unique solutions to the hospitality
and Multi-Unit Dwellings that involve a variety of high-speed Internet access
systems, certain co-marketing and revenue sharing models for web appliances,
advertising sales and unique Video on Demand systems that have VCR
functionality. As part of the agreement, Global will sell and manage the
Custom-Room-Connect (TM) program in conjunction with NCG. Enter Tech will
participate when needed in certain marketing and sales efforts as defined by the
Joint Venture partners. Global was formed in 1988 to provide marketing expertise
to new businesses. Global has specialized in market research and channel sales
implementation. GMC has also consulted to companies for funding methodologies
and business expansion. Management felt that licensing their portion of the
joint venture might be the right approach to fulfilling the immediate needs and
opportunities that the Joint Venture has to penetrate the market with its unique
systems.
15
On March 15, 2000, Enter Tech entered into a stock purchase and
subscription agreement with the Reserve Foundation Trust under which the trust
is to purchase 6,000,000 restricted shares of Enter Tech common stock in
exchange for cash of $10 million. When the agreement was signed, the Trust
provided Enter Tech with $50,000 in interim debt financing. That amount was
subsequently increased to a total of $250,000. On May 4, 2000, the Trust
indicated that all conditions to the stock purchase had been satisfied and that
it would go forward with providing the $10 million in funds to Enter Tech. As of
June 12, 2000, at total of $600,000 of the subscribed funds had been received.
On July 19, 2000, the Board of Directors of Enter Tech met to discuss
banking/funding problems with the Reserve Foundation Trust. As of August 1,
2000, Enter Tech instructed corporate counsel to prepare to take whatever action
is deemed is appropriate and in the best interest of the officers, directors,
management, employees and shareholders of Enter Tech. Counsel delivered an
opinion letter to the management of Enter Tech on this issue on August 17, 2000.
After review, a formal letter from Enter Tech counsel was forwarded to the known
agents of the Trust on September 4, 2000 notifying them of default and a demand
to perform. The Agents for the Trust and Company management continue to work
towards resolution of this matter, but as of November 13, 2001 no agreement has
been reached.
The Trust has advised Enter Tech Management that an agreement for issuing
stock for the funds that have been invested would be considered. It is
anticipated that a final agreement will be reached within the next 60 days.
The current number of shares issued and outstanding as of November 13, 2001
was 17,089,984 shares, which includes 5,000,000 shares of restricted common
stock issued as part of the initial WavePower, Inc. acquisition, which was
rescinded on September 12, 2000. These shares have not been returned to treasury
and are being treated by the Company as is explained in footnotes attached to
the 10-KSB report for the year ending December 31, 2001 and to those contained
in the financial statements filed herewith.
DESCRIPTION OF OUR CURRENT PLAN OF OPERATION
Enter Tech has been able to establish several potential products for
potential license rights in Europe and South America and intends to pursue them
as long term revenue sources. Management also intends to clarify and resolve all
outstanding issues with the WavePower, Inc. rescission, remaining monetary
issues with Profile Ventures Group, and with the Reserve Foundation Trust.
Although we plan to proceed with what we believe is an appropriate level of due
diligence in implementing any such agreements, we cannot assure you that any
alliance will be successful or that we will achieve the expected benefits from
any of these transactions or agreements.
COMPETITION
The area of business related to high-speed Internet access, wireless
Internet Service Providers (ISP) related telecommunications equipment, and
related software and services is crowded with many vendors and marketers,
ranging from small to some of the largest multi-national companies. There can be
no guarantee that the Company will be able to successfully market any product or
service it may develop or to become profitable. At this time, the Company has no
patent or proprietary protection with respect to any of its concepts and there
is nothing to prevent anyone else from pursuing these potential lines of
business.
LIQUIDITY AND CAPITAL RESOURCES
As of March 30, 2002, Enter Tech had no cash on hand, and current
liabilities of $1,882,777. This represented a working capital deficit of
$1,882,777
As of March 30, 2002, Enter Tech had no material commitments for capital
expenditures and no plans to pay dividends to its shareholders.
CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
This discussion contains forward-looking statements that involve risks and
uncertainties. All statements included in this report, other than statements of
historical facts, that address activities, events or developments that we
expect, believe or anticipate will or may occur in the future, are
forward-looking statements. These forward-looking statements include statements
about:
16
The future anticipated direction of the high technology and e-commerce
industries,
Planned licensing agreements with operating companies
Planned acquisitions of operating companies,
Planned capital and operating expenditures,
Future funding sources,
Anticipated revenues and sales growth, and
Overall business strategies.
These forward-looking statements are subject to a number of assumptions,
risks and uncertainties, including such factors as:
Technological developments and consumer preferences in the high technology
and e-commerce industries,
Expected benefits from development, expansion and integration of alliance
companies,
Competition in the markets for our planned businesses,
The availability of adequate financing,
Dependence on existing management, and
Changes in laws or regulations affecting our plan of operation.
We caution you that our forward-looking statements are not guarantees of
future performance and that actual results or developments may differ materially
from those expressed or implied by the forward-looking statements.
17
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Except as set forth herein the Company is not a party to any material
pending legal proceedings; nor are any such proceedings involving the Company
contemplated by a governmental authority to the knowledge of the Company.
On February 24, 2000, the Company initiated a civil action by it against
Jerry Stiles, a/k/a Gerald C. Stiles, a former officer of and consultant to the
Company, in the District Court of Douglas County, Colorado and Stiles answered
with a counterclaim as described in the 10QSB filing for the period ending March
31, 2000. As of August 6, 2001, there has been no material change in the status
of this suit.
On May 25, 2000, claimant David M. Matus in District Court of Larimar
County, Colorado named Enter Tech as a party in a suit along with 7 other
defendants as described in the Second Quarter 10-QSB, for the period ended June
30, 2000. There has been no discovery to date and the case is in its early
stages. Accordingly, we cannot predict the outcome of this litigation at this
time.
ITEM 2. CHANGES IN SECURITIES.
RECENT SALES OF UNREGISTERED SECURITIES
For the period January 1, 2002 through March 30, 2002, there has been no
security transaction authorized by Enter Tech without registration under the
Securities Act of 1933.
ITEM 3. DEFAULTS IN SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION.
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following Exhibits are furnished as part of this
report:
NONE
(b) Form 8-K
Form 8-K filed March 14, 2002 reporting resignation of Company's
directors under Item 6.
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SIGNATURES
----------
In accordance with the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ENTER TECH CORP.
Dated: May 15, 2002 By: /s/ Mark Thomas
--------------------------------------
Mark Thomas, Secretary/Treasurer
By: D. William Thomas
--------------------------------------
D. William Thomas, President/ Director
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