<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
---------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission file number: 0-21241
Enter Tech Corp.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 84-1349553
- ------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
430 East 6th Street, Loveland, Colorado 80537
---------------------------------------------------------------
(Address of principal executive offices including zip code)
(970) 669-5292
-------------------------------
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: On August 16, 1999, the issuer had
----------------------------------
3,650,000 shares of common stock outstanding.
- --------------------------------------------
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
Number
<C> <S> <C>
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 1999
(Unaudited) and December 31, 1998 3
Statements of Operations, Three Months
Ended June 30, 1999 and June 30, 1998
(Unaudited) 4
Statements of Operations, Six Months
Ended June 30, 1999 and June 30, 1998
(Unaudited) 5
Statements of Cash Flows, Three Months
Ended June 30, 1999 and June 30, 1998
(Unaudited) 6
Statements of Cash Flows, Six Months
Ended June 30, 1999 and June 30, 1998
(Unaudited) 7
Notes to Financial Statements 8
Item 2. Plan of Operation 11
Part II. Other Information
Item 1. Legal Proceedings. 15
Item 2. Changes in Securities. 15
Item 3. Defaults Upon Senior Securities. 15
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 5. Other Information. 16
Item 6. Exhibits and Reports on Form 8-K. 16
</TABLE>
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ENTER TECH CORP.
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1999 1998
<S> <C> <C>
Current Assets
Cash $ - $ -
--------- ---------
Total Current Assets - -
Equipment 5,092
License and other intangible assets,
net of valuation allowance of $227,943 - -
--------- ---------
Total Assets $ 5,092 $ -
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable $ 3,500 $ 1,125
Customer deposits 60,000 60,000
Payable, related parties 207,187 72,724
--------- ---------
Total Current Liabilities 270,687 133,849
--------- ---------
Stockholders' (Deficit):
Preferred Stock, $.0001 par value,
5,000,000 shares authorized
none issued and outstanding - -
Common Stock, $.0001 par value,
100,000,000 shares authorized
3,650,000 shares issued and
outstanding 365 365
Additional paid-in capital 219,638 219,638
Accumulated deficit (485,598) (353,852)
--------- ---------
Total Stockholders' (Deficit) (265,595) (133,849)
--------- ---------
Total Liabilities and
Stockholders' (Deficit) $ 5,092 $ -
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
ENTER TECH CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Revenues $ - $ -
----------- -----------
Operating Expenses:
Management fees - 3,750
Supplies 704 416
Professional fees 40,150 10,431
Rent 4,350 1,994
Travel 11,412 1,560
Telephone 1,508 918
Sales promotion 20,500 -
Other 4,358 8,972
----------- -----------
Total Operating Expenses 82,982 28,041
----------- -----------
Net Loss $ (82,982) $ (28,041)
----------- -----------
----------- -----------
Per Share $ (.02) $ (.01)
----------- -----------
----------- -----------
Weighted Average Number
of Shares Outstanding 3,650,000 3,650,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
ENTER TECH CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Revenues $ - $ -
----------- -----------
Operating Expenses:
Management fees - 7,500
Supplies 1,200 832
Professional fees 79,350 20,862
Rent 7,050 3,987
Travel 13,666 3,119
Telephone 3,517 1,837
Sales promotion 20,500 -
Other 6,462 17,943
----------- -----------
Total Operating Expenses 131,745 56,080
----------- -----------
Net Loss $ (131,745) $ (56,080)
----------- -----------
----------- -----------
Per Share $ (.04) $ (.02)
----------- -----------
----------- -----------
Weighted Average Number
of Shares Outstanding 3,650,000 3,650,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ENTER TECH CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Cash Flows Operating Activities:
Net (loss) $ (82,982) $ (28,041)
Decrease in other current asset - 250
Increase in accounts payable 800 5,234
-------- --------
Net Cash (Used in) Operating
Activities (82,182) (22,557)
-------- --------
Cash Flows from Investing
Activities:
(Investment) in equipment (5,092) -
-------- --------
Net Cash (Used in) Investing
Activities (5,092) -
-------- --------
Cash Flows from Financing
Activities:
Common stock issued and
additional paid-in capital - 19,425
Increase in payable, related
parties 87,274 3,750
-------- --------
Net Cash Provided by Financing
Activities 87,274 23,175
-------- --------
Increase in Cash - 618
-------- --------
Cash, Beginning of Period - 386
-------- --------
-------- --------
Cash, End of Period $ - $ 1,004
-------- --------
-------- --------
Interest Paid $ - $ -
-------- --------
-------- --------
Income Taxes Paid $ - $ -
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
ENTER TECH CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
<S> <C> <C>
Cash Flows Operating Activities:
Net (loss) $ (131,745) $ (56,080)
Decrease in other current asset - 500
Increase in accounts payable 2,375 5,234
--------- ---------
Net Cash (Used in) Operating
Activities (129,370) (50,346)
--------- ---------
Cash Flows from Investing
Activities:
(Investment) in equipment (5,092) -
--------- ---------
Net Cash (Used in) Investing
Activities (5,092) -
--------- ---------
Cash Flows from Financing
Activities:
Common stock issued and
additional paid-in capital - 38,850
Increase in payable, related
parties 134,462 7,500
--------- ---------
Net Cash Provided by Financing
Activities 134,462 46,350
--------- ---------
(Decrease) in Cash - (3,996)
--------- ---------
Cash, Beginning of Period - 5,000
--------- ---------
--------- ---------
Cash, End of Period $ - $ 1,004
--------- ---------
--------- ---------
Interest Paid $ - $ -
--------- ---------
--------- ---------
Income Taxes Paid $ - $ -
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
ENTER TECH CORP.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999 (Unaudited)
(1) CONDENSED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Enter Tech
Corp. 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 Corp. 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, 1998 audited financial statements and the accompanying notes
thereto.
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 Corp. later in the year.
The management of Enter Tech Corp. 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 COMBINATION
On June 2, 1998, Enter Tech Corp. (Company), (formerly Walnut Capital, Inc.)
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. Since the controlling shareholders of Links, Ltd. owned
over a majority of the outstanding common stock of the Company after the
merger, 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.
(3) LICENSE AND OTHER INTANGIBLE ASSETS
The former parent company of Links, Ltd. acquired certain technology and
license rights from an unrelated third party for $227,943. These intangible
assets were contributed to Links, Ltd. Management of the Company reviewed the
intangible assets for impairment and provided a valuation allowance for the
total $227,943.
8
<PAGE>
(4) ALLOCATED EXPENSES
Links, Ltd. was charged with various operating expenses allocated from its
former parent company. The expenses were recorded in the Statement of
Operations and shown as additional paid-in capital.
(5) PAYABLE, RELATED PARTY
During the year ended December 31, 1998, the Company incurred $30,000 of
management fees payable to a related party. Related party payables totaled
$72,724 at December 31, 1998.
(6) CONSULTING AGREEMENT
Effective July 1, 1998, the Company entered into a one year contract with the
Vice President of the Company, which would require 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. This individual has
never become an officer of the Company, and the Company has paid no
compensation to this individual to date and has not issued the shares of
stock. The December 31, 1998 financial statements include an accrual of
$10,000 related to services performed by this individual.
Effective January 1, 1999, the Company entered into an agreement with a
consultant to assist in completing a private placement or secondary offerings
in the amount of $5,000,000 for the purpose of adding capital for the
Company, and other consulting services. The consultant is to be paid $5,000
per month and 200,000 restricted shares of common stock per year. The
agreement expires on December 31, 2001.
Effective January 5, 1999, the Company entered into an agreement with a
consultant to attempt to build revenues of the Company and assist in the
development of the Company's product. The consultant is to be paid $5,000 per
month plus expenses. The term is for two years, expiring December 31, 2001,
with an option to renew for two additional years.
(7) MARKETING AND ADMINISTRATION OF SALES AGREEMENT
The Company has entered into an agreement with a former 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 units at $50,000 per unit from the former director. The Company
received $60,000 of deposits related to these orders.
9
<PAGE>
(8) RELATED PARTY TRANSACTIONS
From inception until June 2, 1998, the Company had maintained its office in
space provided by its former President at no charge. After the business
combination, the Company moved its office to Loveland, Colorado. The Company
currently pays $1,450 per month for this space.
(9) TRANSFER OF SHARES IN AN UNREGISTERED TRANSACTION
See description of unregistered transaction in the narrative disclosure in
Part II, Item 2 of Form 10-QSB.
10
<PAGE>
ITEM 2. PLAN OF OPERATION.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ
TOGETHER WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES INCLUDED IN
ANOTHER PART OF THIS REPORT AND WHICH ARE DEEMED TO BE INCORPORATED INTO THIS
SECTION. THIS DISCUSSION CONTAINS FORWARD LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THOSE FORWARD LOOKING STATEMENTS. ALL STATEMENTS, OTHER THAN
STATEMENTS OF HISTORICAL FACTS, INCLUDED IN THIS REPORT THAT ADDRESS
ACTIVITIES, EVENTS OR DEVELOPMENTS THAT WE EXPECT, BELIEVE OR ANTICIPATE WILL
OR MAY OCCUR IN THE FUTURE, INCLUDING THE FOLLOWING MATTERS ARE FORWARD
LOOKING STATEMENTS:
- FUTURE CAPITAL COSTS OF RESEARCH AND
DEVELOPMENT,
- THE SIZE OF VARIOUS MARKETS,
- MARKET SHARE,
- PROJECT MARGINS,
- REPAYMENT OF DEBT,
- BUSINESS STRATEGIES, AND
- EXPANSION AND GROWTH OF OUR OPERATIONS.
THESE STATEMENTS ARE BASED ON ASSUMPTIONS AND ANALYSES MADE BY US IN LIGHT OF
OUR EXPERIENCE AND OUR PERCEPTION OF:
- HISTORICAL TRENDS,
- CURRENT CONDITIONS,
- EXPECTED FUTURE DEVELOPMENTS, AND
- OTHER FACTORS WE BELIEVE ARE APPROPRIATE
IN THE CIRCUMSTANCES.
THOSE STATEMENTS ARE AFFECTED BY A NUMBER OF ASSUMPTIONS INCLUDING:
- RISKS AND UNCERTAINTIES,
- GENERAL ECONOMIC AND BUSINESS CONDITIONS,
- THE BUSINESS OPPORTUNITIES THAT MAY BE
PRESENTED TO AND PURSUED BY US,
- CHANGES IN LAWS OR REGULATIONS AND OTHER
FACTORS, MANY OF WHICH ARE BEYOND OUR
CONTROL, AND
- AVAILABILITY TO OBTAIN PROJECT FINANCING
ON FAVORABLE CONDITIONS.
YOU ARE CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND THAT ACTUAL RESULTS OR DEVELOPMENTS MAY DIFFER
MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
11
<PAGE>
OVERVIEW
We were organized in Nevada on July 1, 1996. We have been a
development stage company since our inception and we have not earned any
revenues from operations since our inception. As of August 16, 1999, we had
cash balance of $0. Our capital requirements to conduct our plan of operation
as described in this report is significant, and there is not any assurance
that we will be able to obtain those funds or obtain the required capital on
terms favorable to us. We plan to attempt to satisfy our capital requirements
for the next 12 months by selling our securities and obtaining financing from
third parties. We also may form joint ventures with third parties to conduct
our plan of operation. If we are unable to obtain financing from third
parties, the sale of our securities or some other source, or form joint
ventures with third parties to conduct our plan of operation, it is unlikely
that we will continue as a going concern.
We previously reported in early 1999 that we were seeking funding
from independent sources in the amount of $500,000. As described under "Item
2. Changes in Securities," we sold $200,000 of our Series A Preferred Stock
in April 1999 as contemplated by that funding. We, however, repurchased in
July 1999 all of the Series A Preferred Stock sold in that transaction for
$200,000. We did not otherwise finalize the terms of that funding with any
other persons or locate purchasers committed to the funding. We have
terminated our attempts to obtain that particular funding.
DESCRIPTION OF OUR PLAN OF OPERATION
We completed a merger with Links, Ltd. on June 2, 1998 in which we
were the surviving corporation. Links, Ltd., which was a wholly owned
subsidiary of Mach One Corporation, was a development stage company at the
time of the merger and had not earned any revenues from operations since its
inception on August 18, 1997. Links, Ltd. was incorporated for the purpose of
developing kiosks, or vending machines, through which it planned to market
computer software, music and possibly digital video products. We adopted
Links, Ltd.'s plan of operation to develop those kiosks as our plan of
operation after the merger.
We have not as of August 16, 1999 developed a kiosk that may be
produced and sold to the public. Links, Ltd. had, through outside vendors and
some in-house expertise, constructed a prototype of a proposed kiosk at the
time of the merger transaction with us. That prototype became obsolete and
may not be mass produced on terms commercially favorable to us. Since that
time our concept for a prototype underwent further refinement and
modification. During 1998 we had an outside vendor/engineering firm located
in Broomfield, Colorado develop a case with a touch screen for the prototype
of the kiosk. That case did not have any components or internal software and
was not a functional kiosk. We planned to purchase that case from that vendor
before we began producing the kiosks. During 1998 and 1999 we hired another
vendor/engineering firm to design plans for the components and software to be
used in the kiosks. That firm developed a design for the kiosk but did not
purchase any components to construct a prototype of the kiosk. That design
for the kiosk has not been tested. We previously reported that we were
hopeful that we could commence production of kiosks during 1999.
12
<PAGE>
However, the technology that was used in the case with the touch screen and
the technology upon which the designs for the kiosk was based has become
obsolete. We therefore do not currently have a prototype of a kiosk that may
be mass produced on terms commercially favorable to us.
We will need to construct an entirely new prototype of the kiosk
based on our concept for the kiosk and have that prototype tested before we
are able, if at all, to mass produce the kiosks. We will not be able to begin
construction of a prototype of a kiosk during the next 12 months unless we
are able to raise funds or form a joint venture with a third party to
construct the prototype of the kiosk. We have in the past used software and
hardware developed by third parties to construct prototypes of the kiosks. We
anticipate that any future prototypes of the kiosk that we may construct, of
which there is not any assurance, will be made with software and hardware
developed by third parties.
As conceived, each kiosk vending machine would have software, music
and eventually digital video stored on disks or hard drives and potential
customers would place an order into the machine to purchase software, music
and eventually digital television from a menu, triggering the machine to
imprint the product on a compact disk. As conceived, the CD imprint time is
expected to take approximately 3 to 4 minutes, at which time the CD would be
ejected from the kiosk to the waiting customer. Purchases would be made by
use of credit cards or so-called smart cards read by the kiosk. As conceived,
each kiosk would be linked by telephone line and computer modem to our
administrative offices to permit monitoring, performance analysis, addition
and subtraction of software and music selections and eventually digital
television selections. Further the telephone and computer modem would permit
confirmation of credit card and smart card purchases.
There is no assurance that the kiosks will function as planned if we
are able to develop the kiosks or be manufactured at a unit cost commercially
favorable to us. All of these factors will bear on our ability to generate
revenues from sales, if any.
COMPETITION
The area of business in which we intend to engage is crowded with
many vendors and marketers, ranging from small to some of the largest retail
companies. There can be no guarantee that we will be able to successfully
market any product we may develop or become profitable.
WE MAY BE ADVERSELY AFFECTED BY THE TRANSFER OF SHARES OF OUR COMMON
STOCK IN AN UNREGISTERED TRANSACTION
We issued a stock certificate representing 3,235,000 shares of our
common stock to Mach One Corporation as part of the merger transaction with
Links, Ltd. That certificate had a restrictive legend providing that the
shares represented by that certificate were "restricted securities" as that
term is defined under Rule 144 of the Securities Act of 1933. Those
restricted securities could only be sold by Mach One Corporation by a
registration statement under the Securities Act or under another exemption
under the Securities Act.
13
<PAGE>
In October 1998, we and our transfer agent permitted Mach One
Corporation to transfer 835,000 shares of our common stock represented by its
certificate to seven persons. The stock certificates received by those seven
persons should have contained a restrictive legend similar to the restrictive
legend on Mach One Corporation's certificate because the transfer of the
835,000 shares of common stock was not made in a registered transaction under
the Securities Act. Those seven persons however received certificates without
restrictive legends and some of those persons have subsequently transferred
some of their shares of our common stock to other persons in unregistered
transactions.
As of August 16, 1999, we had entered into agreements with some of
our shareholders to whom the 835,000 shares were transferred that will
require those shareholders to surrender the stock certificates without
restrictive legends that they hold in exchange for stock certificates with
restrictive legends. Those agreements apply to 595,966 shares of the 835,000
shares of our common that were previously issued without a restrictive
legend. We currently are in the process of obtaining the stock certificates
issued without restrictive legends and exchanging those certificates with
certificates with restrictive legends. We are taking whatever actions are
necessary to attempt to exchange all of the stock certificates without
restrictive legends representing the 835,000 shares of our common stock with
stock certificates with restrictive legends.
As of August 16, 1999, 3,650,000 shares of our common stock were
issued and outstanding. Our transfer agent's records as of that date provide
that 2,400,000 shares of our outstanding common stock are "restricted
securities" as that term is defined under Rule 144 of the Securities Act.
However, that amount does not include any of the previously discussed 835,000
shares of our common stock that should be classified as "restricted
securities."
Our financial condition and plan of operations will be adversely
affected if any claims or actions are brought against us by the SEC, the NASD
or other persons concerning the transfer of the 835,000 shares of our common
stock in an unregistered transaction. As of August 16, 1999, no claims or
actions had been brought against us concerning that matter. We currently are
evaluating what further actions we may take with respect to this matter.
YEAR 2000 READINESS DISCLOSURE
Computer programs or other embedded technology that have been
written using two digits (rather than four) to define the applicable year and
that have time-sensitive logic may recognize a date using "00" as the year
1900 rather than the year 2000, which could result in widespread
miscalculations or system failures. Both information technology systems and
non-IT systems may be affected by the Year 2000. We do not use any
proprietary computer software programs or proprietary operating systems but
use commercially available computer programs such as Microsoft Word and
Microsoft's Windows NT operating system. We believe that those products are
Year 2000 but we have not confirmed with Microsoft whether those products are
Year 2000 compliant.
14
<PAGE>
We have completed our assessment of the Year 2000 issue and
currently believe that we will not incur any material costs associated with
the Year 2000 issue. We have not automated many of our operations with IT
systems and non-IT systems because of our current size, and presently believe
that our existing computer systems, computer software, non-IT equipment will
not need to be upgraded to mitigate the Year 2000 issues. We have not
incurred any costs associated with our assessment of the Year 2000 problem.
To the extent we begin constructing a prototype of the kiosks during
the next 12 months we will obtain representations from the vendors of the
hardware components and software used in the prototype that those products
are Year 2000 compliant.
We do not have a contingency plan concerning the Year 2000 problem
as we believe it is unnecessary. If we are unable to address any Year 2000
issues in a timely manner, it could result in a material financial risk to
us, including loss of revenue and substantial unanticipated costs.
Accordingly, we plan to devote all resources required to resolve any
significant Year 2000 issues in a timely manner.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
We sold 66,667 shares of our Series A Preferred Stock for $200,000
in April 1999 to one person. We did not pay any commissions to anyone in
connection with that transaction. We did not register that transaction in
reliance upon Section 4(2) under the Securities Act of 1933. In July 1999, we
repurchased all of the shares of Series A Preferred Stock sold in that
transaction for $200,000. There currently are not any shares of our Series A
Preferred Stock outstanding.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Effective June 28, 1999, Roger R. Myatt resigned from his position
as one of our directors. Effective July 24, 1999, Charles D. Mullin and
Arthur W. Hogan resigned from their positions as our officers and directors.
We did not have any remaining officers and directors after those persons
resigned from their positions with us. The Executive Compensation
15
<PAGE>
Agreement dated May17, 1999 between us and Mr.Mullin, which is included as
Exhibit10.1 to this Form10-QSB, terminated on the date he resigned.
Effective July 28, 1999 our majority stockholder, Mach One
Corporation, took action by written consent without holding a meeting to
elect the following persons as our directors:
- Sam Lindsey,
- David Matus, and
- Cliff Pettee.
On July 30, 1999, our board of directors appointed Sam Lindsey as
our Chairman of the Board and President and David Matus as our Secretary.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
10.1 Executive Compensation Agreement dated May 17, 1999
between us and Charles D. Mullin. Filed herewith.
10.2 Consulting Agreement dated January
1, 1999 between us and Advance
Marketing Analysis. Filed herewith.
10.3 Agreement dated January 5, 1999 between us and Sam
Lindsey. Filed herewith.
27.1 Financial Date Schedule. Filed herewith.
</TABLE>
(b) Form 8-Ks
We did not file any Current Reports on Form 8-K during the quarter
ended June 30, 1999.
16
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: August 18, 1999 ENTER TECH CORP.
By: /s/ Sam Lindsey
----------------------------------
Sam Lindsey, President and Chief
Financial Officer
17
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Exhibit 10.1
Executive Compensation Agreement
This Agreement made and entered into effective as of May 17, 1999, by and
between Enter Tech Corporation, a Nevada corporation ("Employer") and Charles
D. Mullin ("Employee").
WITNESSETH
A) Recitals
1) Employer is a Nevada corporation in good standing which is
authorized to transact business in the State of Colorado. It
maintains its principal office at 430 E. 6th Street, Loveland,
Colorado 80537.
2) Employee has agreed to accept employment with the Employer on the
terms and condition recited herein.
NOW, THEREFORE, IT IS AGREED,
B) Terms and Conditions
1) Employer hereby engages Employee in the capacity of President and
Chief Executive Officer, Employee's address and Social Security
number are as follows:
Address: Charles D. Mullin
2079 Churchill Avenue, S.E.
Salem, Oregon 97302
Social Security: ###-##-####
2) The general duties assigned to Employee shall be (Refer to
Exhibit A): plus such other duties compatible with the foregoing
as may be assigned, from time to time, by the Board Executive
Committee or the Board of Directors.
3) Employee's base compensation shall be; $6,667.000 per month.
4) Escalation clause beginning January 1, 2000, shall be a minimum
of 10% per month above the previous monthly average in revenue.
Example: If revenue in November is 1 Million and in December is
1.1 Million the $100,000 increase X 10% = $10,000 additional
bonus.
5) Executive benefits granted to the Employee, as and when adopted
by the Board of Directors of Employer, shall be;
<PAGE>
B) Terms and Conditions (Continued)
a. Participation in a major medical, dental and vision plans
for family coverage;
b. Participation in a disability and life insurance plan;
c. Participation in a cash and/or stock bonus plan attached as
Exhibit "B";
d. Employee shall be entitled to a reasonable expense account
which shall be fixed, from time to time, by the Board of
Directors.
6) Employer shall reimburse Employee all reasonable and necessary
business expenses with limitations on travel, meals and
entertainment as established by the Board of Director's from time
to time, for all executive officers of Employer.
7) Employee shall serve as a defacto member of the Board of
Directors and Board Executive Committee and have voting rights on
both Boards.
8) The term of Employee's employment shall be two (2) years subject
to the following:
a. Employee shall be allowed at any one time six (6)
consecutive weeks of absence from his normal due to serious
illness or physical disability;
b. Employee may be terminated only for cause, which shall be
defined as meaning gross negligence in the performance of
his duties or an act of malfeasance.
c. Executive Compensation Agreement will automatically renew
each two years unless: either party informs the other by
certified mail 90 days before the renewal date of the
intention to renegotiate this agreement.
d. Review of this agreement for salary and compensation
increases will be on the agenda for the Board Executive
Committee from time to time, but no less than annually. Any
increases will be implemented as of the date of the meeting
or by date specified by the Committee.
9) Employee shall be entitled to annual vacation with pay and
benefits as follows:
a. Employee shall be allowed at any time two (2) Consecutive
weeks of vacation from his normal duties with pay and
benefits. With a total of four (4) weeks of vacation
annually from his first year of employment to his third year
of employment. After three years of employment the employee
will have five (5) weeks of vacation annually. After six
years of employment the employee will have six (6) weeks of
annual vacation.
2
<PAGE>
b. Employee shall be allowed six holidays annually with pay and
benefits.
c. Employee shall accumulate sick leave at 1/2 day per month to
a total of 21 days.
10) Employee shall be required to utilize his best efforts, in
accordance with his educational and professional background, in
carrying out his duties and shall not engage in any conduct which
may be considered in the business community as being a conflict
of interest with the Employer.
10) Should a dispute arise between the parties, it shall be referred
to the American Arbitration Association at Denver, Colorado, for
resolution and the decision of the Arbitrator shall be binding
and conclusive and may be entered in any court of jurisdiction as
a judgment.
11) If it becomes necessary for either party to give formal notice to
the other concerning any term or condition of the Agreement,
notices shall be mailed postage prepaid to the employer and
Employee address of record at the time of employment.
12) The benefits hereunder may not be assigned by Employee, nor may
he delegate any of the duties assigned to him/her by the Employer
without the specific prior approval of the Board Executive
Committee, or Board of Directors.
13) This agreement shall be construed; under and pursuant to the laws
of the State of Colorado.
14) This Agreement shall be executed in counterparts, each which
shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first
day and year set forth above.
Employer: Employee:
Enter Tech Corporation
Board Chairman, Art Hogan Charles D. Mullin
BY: /s/ Art Hogan BY: /s/ Charles D. Mullin
------------------- --------------------------
3
<PAGE>
"EXHIBIT A"
MANAGEMENT RESPONSIBILITIES AS PRESIDENT & CHIEF EXECUTIVE OFFICER WILL
INCLUDE THE FOLLOWING:
The primary job of the President/CEO of Enter Tech Corporation is to build
and maintain the profitability of the company by building the subdivision
business and growing, developing, planning and managing the Enter Tech Corp.
business opportunities. To build the business the President must work to
develop a cooperative and supportive attitude among personnel and customers
that creates a feeling of joint responsibility for growth and performance.
The President is responsible for planning and attaining target financial
results for the company. He monitors company operations and directs the
planning and execution of marketing and sales strategies. He supervises and
develops company personnel to insure effective company operation. He
maintains an open line of communication with the subdivision management and
insures that necessary reporting is accurate and submitted on time.
THE KEY FOUR AREAS OF MANAGEMENT
MANAGING PROFITS, MANAGING OPERATIONS, MANAGING ASSETS, MANAGING EMPLOYEES
1. Implement the management skills necessary to fulfill the fiscal goals laid
out by the Board of Directors.
2. Oversee the daily activities of all subdivisions of the company.
3. Establish all sales goals for the current fiscal year. Work directly with
all subdivisions to establish their sales goals that will allow for a
consolidated expectation of revenues for the current fiscal year.
Managing Profits:
a) Review the products that will be sold and in what markets.
b) Measure the business climate.
c) Forecast production & sales capabilities.
d) Involve all managers and sales staff.
e) Discuss each P&L entry listed in the financial record.
f) Analyze all the information in each record.
g) Evaluate the expected profitability of the company.
1
<PAGE>
"EXHIBIT B"
CORPORATE INCENTIVE PLAN
PRESIDENT
Monthly Bonus = 5% of the Gross Revenue of the Company provided it exceeds the
BP-1 (Business Plan)
Yearly Bonus = 7.5% of the Gross Sales Over BP-1 (Business Plan Gross Sales)
Example: If Gross Sales exceed the Business Plan by $2 Million Dollars X 5%
= $100,000 additional bonus.
Stock Option: 33% of Gross Yearly Income is Convertible to Enter Tech
Corporation Common Stock at a Conversion Ration of $2.00 per share. Holder
must advise Enter Tech Corporation by January 1, of the following year if
they intend to exercise the option.
Stock Incentive: If the Business Plan is obtained 50,000 shares of Enter
Tech Corporation common stock will be issued and for every 1% over the
Business plan an additional 1,000 shares will be earned. (These shares will
be restricted common shares.)
Stock Purchase Option after one year of employment: Stock will be made
available for purchase to Mullin after one year of employment.
50,000 shares of stock at $8.00 per share after the first year of employment.
50,000 shares of stock at $12.00 per share after two years of employment.
50,000 shares of stock at $18.00 per share after 3 years of employment.
50,000 shares of stock at $22.00 per share after 4 years of employment.
<PAGE>
Exhibit 10.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT dated as of this 1st day of January, 1999,
is entered into by and between Enter Tech Corporation (the "Company") a
Nevada corporation and Advance Marketing Analysis ("Consultants") a
proprietorship.
Whereas, the Company desires to retain Consultant and Consultant has
consented to provide personal consulting services for the Company,
specifically for assistance in developing and coordinating the following:
1. Work directly with all investment bankers, individuals,
institutions on completion of a private placement or secondary offerings in
the amount of $5,000,000 for the purpose of adding capital for the Company.
2. Work directly with the President of the Company in planning for
growth, business planning, personnel placement. Oversee all sales activities
of the company. Attend all board meetings.
3. Assist in negotiations for investment banker for the company.
4. Oversee and negotiate all acquisition contracts for the company.
NOW, THEREFORE, the Company and Consultants agree to the following terms and
conditions of Agreement.
AGREEMENT
1. Retention. Beginning on the Effective Date, which is the 1st of
January, 1999, the Company will retain Consultants, and Consultants will
accept retention by the Company, as Consultants reporting to the Company
board of directors in accordance with the terms of this Agreement.
2. Duties.
2.1 Consultants primary duties will be to assist in finding the
people necessary to build the capital base of the company, which will include
strategic planning, acquisitions, assistance in building management, sales
promotion, and such reasonable other duties as may be required.
2.2 Consultants will assist the Company management in the
development of an investment banking relationship.
<PAGE>
2.3 The President will report directly to the Consultants
and the Consultants will answer directly to the Board of Directors.
2.4 Consultants will directly with the marketing team selling
quickgold programs. Consultants will be paid a 10% commission on all sales
made specifically by consultants as any sales person would be paid. If
Consultants commission exceeds the monthly fee paid to consultants,
consultants will not be owed a monthly fee.
3. Time Obligations. Consultants will devote approximately 100% of his
normal working month to their duties hereto. Consultants will devote his best
efforts to the Company business as outlined above.
4. Compensation. For all services rendered by Consultant under this
Agreement, the Company has and will compensate Consultant as follows from the
Effective Date.
4.1 The Company will compensate Consultants with restricted shares of
common stock at a rate of 200,000 shares a year for two years provided the
business plan established for the Company is met. The final business plan will
be submitted and attached hereto prior to the second quarter of the fiscal year
the business plan is projected for.
4.2 The Company will pay Consultants $5,000.00 per month. (If the
commission paid to consultants exceeds the $5,000.00 per month, no monthly fee
will be due Consultants).
4.3 Consultants expenses for reasonable business related travel,
entertainment and other expenses will be paid monthly.
5. Term and Termination.
5.1 Unless otherwise terminated as provided in Section 5, this
Agreement shall expire on December 31, 2001.
5.2 This Agreement shall be terminated upon the following:
5.2.1 Inability of Consultants to perform the duties for a
period of sixty (60) days in any one calendar year due to
sickness, disability or any other cause unless Consultant is
granted a leave of absence by the Company.
5.2.2 For a cause as provided in Sections 6.1, 6.2 and 6.3.
6. Cause and Breach.
6.1 Where reference is made in this Agreement to termination being by
the Company with or without cause, "cause" shall mean cause given by Consultants
to the Company and is limited to the following:
2
<PAGE>
6.1.1 Repeated failure or refusal to carry out the reasonable
directions of the Board as it relates to the projects provided
for in this Agreement and such directions are consistent with
the business plans of the Company;
6.1.2 Violation of a state or federal law involving the
commission of a crime against the Company or a felony
materially adversely affecting the Company; or
6.1.3 Consultants dependence on or abuse of alcohol or any
controlled substance; or
6.1.4 Any breach of this Agreement or of any covenant herein
or the falsity of any representation or warranty not corrected
as provided in Section 6.3 hereof.
6.2 Where reference is made in this Agreement to termination being
by Consultants with or without cause, "cause" shall mean any breach of this
Agreement by the Company not corrected as provided in Section 6.3 hereof.
6.3 Whenever a breach of this Agreement by either party is relied
upon as a justification for any action taken by a party pursuant to any
provision of this Agreement, before such action is taken, the party asserting
the breach shall give the other party written notice of the existence and
nature of the breach and the opportunity to correct such breach during the
period of five (5) business days following such notice.
7. Notice. All notices and requests in connection with this Agreement
shall be in writing and may be given by personal delivery, registered or
certified mail, return receipt requested, telegram or any other customary
means of communications addressed as follows:
Consultant: Advance Marketing Analysis Company: Enter Tech Corp.
937 E. 7th St. 430 E. 6th St.
Loveland, CO 80537 Loveland, CO 80537
8. Assignment. The rights of either party shall not be assigned or
transferred either voluntarily or by operation of law without the other
party's written consent, nor shall the duties of either party be delegated in
whole or in part either voluntarily or by operation of law without the other
party's written consent. Any unauthorized assignment, transfer or delegation
shall be of no force or effect.
9. Consultants Counsel. Consultant has retained independent legal
counsel to advise him with respect to this Agreement and is not relying on
the Company or its counsel for legal or tax advice.
10. Miscellaneous.
3
<PAGE>
10.2 Waiver. No waiver of any of the provisions of this Agreement
shall be valid unless in writing, signed by the party against whom such
waiver is sought to be enforced, signed by the party against whom such waiver
is sought to be enforced, nor shall failure to enforce any right hereunder
constitute a continuing waiver of these same or a waiver of any other right
hereunder.
10.3 Amendments. All amendments of this Agreement shall be made in
writing, signed by the parties, and no oral amendment shall be binding on the
parties.
10.4 Relationship of Parties. Consultants are independent
contractors and not an employee of the Company and agrees to comply with
federal and state tax and social security legislation as applicable to such
independent contractors. Consultants have no authority to bind the Company or
incur any obligation on behalf of the Company.
10.5 Integration. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes and
cancels any other prior agreements and understandings of the parties in
connection with such subject matter.
10.6 Severability. The unenforceability or invalidity of any provision
or provisions of this Agreement shall not render any other provision or
provisions hereof for any reason be excessively broad as to duration, scope,
activity or subject, it shall be construed by reducing such provisions, so as to
be enforceable to the extent compatible with applicable law.
10.7 Headings. The headings or titles in this Agreement are for the
purpose of reference only and shall not in any way affect the interpretation or
construction of this Agreement.
10.8 Governing Law. This Agreement will be governed by the laws of the
State of Colorado, applicable to agreements between Colorado residents to be
performed where the Company has need within the United States of America.
10.9 Attorneys' Fees. In the event of litigation to enforce this
Agreement, the prevailing party will be entitled to recover its reasonable
attorneys' fees as determined by the court.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: Enter Tech Corporation
By: /s/ AW Hogan
-----------------------------
CONSULTANTS:
By: /s/ DW Thomas
-----------------------------
4
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT dated as of this 1st day of January, 1999, is
entered into by and between Enter Tech Corporation, (the "Company") a Nevada
corporation and Sam Lindsey ("Consultant") an individual.
Whereas, the Company desires to retain Consultant and Consultant has consented
to provide personal consulting services for the Company, specifically for
assistance in developing revenues through QuickGold Joint Ventures.
NOW, THEREFORE, the Company and Consultant agree to the following terms and
conditions of Agreement.
AGREEMENT
1. RETENTION. Beginning on the Effective Date, which is the 5th of
January, 1999, the Company will retain Consultant, and Consultant will accept
retention by the Company, as a consultant reporting to the Company's Senior
Consultant, in accordance with the terms of this Agreement.
2. Duties
2.1 Consultant's primary duties will be to build the revenues of
the Company, which will include strategic planning, sales coordination,
assistance in building sales management, marketing, promotion, and such
reasonable other duties as may be required.
2.2 Consultant will assist the Company management in the
development of the QuickGold 2000 promotion.
3. Time Obligations. Consultant will devote approximately 100% of his
normal working month to his duties hereunder. Consultant will devote his best
efforts to the Company's business as outlined above.
4. Compensation. For all services rendered by Consultant under this
Agreement, the Company has and will compensate Consultant as follows from the
Effective Date.
4.1 The Company will compensate Consultant $5,000.00 monthly.
4.2 Consultant be paid for all expenses for reasonable business
related travel, entertainment and other expenses.
4.3 Consultant will participate in a commission and stock option
plan when available.
<PAGE>
5. Term and Condition.
5.1 Unless otherwise terminated as provided in Section 5, this
Agreement has an option for renewal for an additional two year period on
December 31, 2001.
5.2 [sic Ninty] days prior to the [sic experation] of this
agreement, the Consultant will notify the company in writing his intentions to
extend this agreement for an additional two years.
5.3 Consultant shall be entitled to compensation earned through
the date of termination.
6. Cause and breach.
6.1 Where reference is made in this Agreement to termination being
by the Company with or without cause, "cause" shall mean cause given by
Consultant to the Company and is limited to the following:
7. Notice. All notices and requests in connection with this Agreement
shall be in writing and may be given by personal delivery, registered or
certified mail, return receipt requested, telegram or any other customary means
of communications addressed as follows.
Consultant: Sam Lindsey Company: Enter Tech Corporation
430 Whistler Rd. 430 E. 6th St.
Steamboat, CO 80477 Loveland, CO 80437
8. Assignment. The rights of either party shall not be assigned or
transferred either voluntarily or by operation of law without the other party's
written consent, nor shall the duties of either party be delegated in whole or
in part either voluntarily or by operation of law without the other party's
written consent. Any unauthorized assignment, transfer or delegation shall be of
no force or effect.
9. Miscellaneous.
9.1 Waiver. No waiver of any of the provisions of this Agreement
shall be valid unless in writing, signed by the party against whom such waiver
is sought to be enforced, nor shall failure to enforce any right hereunder
constitute a continuing waiver of these same or a waiver of any other right
hereunder.
9.2 Amendments. All amendments of this Agreement shall be made in
writing, signed by the parties, and no oral amendment shall be binding on the
parties.
9.3 Relationship of Parties. Consultant is an independent
contractor and not an employee of the Company and agrees to comply with federal
and state tax and social security
2
<PAGE>
legislation as applicable to such independent contractors. Consultant has no
authority to bind the Company or incur any obligation on behalf of the Company.
9.4 Integration. This Agreement constitutes the entire agreement
between the parties relating to the subject matter hereto and supersedes and
cancels any other prior agreements and understandings of the parties in
connection with such subject matter.
9.5 Severability. The unenforceability or invalidity of any
provision or provisions of this Agreement shall not render any other provision
or provisions hereof for any reason be excessively broad as to duration, scope,
activity or subject, it shall be construed by reducing such provisions, so as to
be enforceable to the extent compatible with applicable law.
9.6 Headings. The headings or titles in this Agreement are for the
purpose of reference only and shall not in any way affect the interpretation or
construction of this Agreement.
9.7 Governing Law. This Agreement will be governed by the laws of
the State of Colorado, applicable to agreements between Colorado residents to be
performed where the Company has need within the United States of America.
9.8 Attorneys' Fees. In the event of litigation to enforce this
Agreement, the prevailing party will be entitled to recover its reasonable
attorneys' fees as determined by the court.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
Company: Enter Tech Corporation
BY: /s/ A.W. Hogan Director
---------------------------
CONSULTANT:
BY: /s/ S. Lindsey
---------------------------
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM
10-QSB FOR THE YEAR TO DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,092
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,092
<CURRENT-LIABILITIES> 270,687
<BONDS> 0
0
0
<COMMON> 365
<OTHER-SE> (265,960)
<TOTAL-LIABILITY-AND-EQUITY> 5,092
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 131,745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131,745)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
