UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 30549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 17, 2000
------------
ENTER TECH CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 0-21275 84-1349553
--------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
430 East 6th Street, Loveland, Colorado 80537
-------------------------------------------------------
(Address of principal executive offices) Zip Code)
Registrant's telephone number, including area code 970-669-4918
------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As reported in Item 2 of Part I and Item 5 of Part II of the registrant's
Quarterly Report of Form 10-QSB for the quarterly period ended March 31, 2000,
on April 19, 2000, Enter Tech Corp. acquired 80% of the outstanding shares of
common stock of WavePower, Inc., a development stage company, in exchange for
the issuance to Vernon C. Kendrick of 5,000,000 restricted shares of Enter Tech
common stock. In addition, Enter Tech 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 Wave Power in the event
that certain performance objectives related to future gross income and net
pre-tax profit of WavePower are met. The additional 3,000,000 shares of
preferred stock would be issued through exercise of an option to purchase the
preferred stock, contingent on meeting the performance objectives, and would be
convertible into shares of Enter Tech common stock at the rate of 2 shares of
common stock for each share of preferred stock. The agreement also contemplates
that the remaining 2,000,000 authorized shares of Enter Tech preferred stock may
be issued to the existing members of Enter Tech management and a significant
consultant.
WavePower plans to become an application service provider and is in the
process of developing a network which move traditional computer applications out
of the conventional personal computer and onto a central network. WavePower
intends that users will then be able to freely access all of the power,
applications and connectivity of a series of networked computers form their own
individual terminals.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The financial statements and pro forma financial information listed below
are filed as a part of this report and relate to the acquisition by Enter Tech
Corp. of 80% of the outstanding stock of WavePower, Inc. reported in Item 2 of
PART I and Item 5 of the registrant's Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 2000.
Page No.
-----------
(a) Audited Financial Statements of 2M Systems, Inc.as of
December 31, 1999:
Report of Independent Certified Public Accountants F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' (Deficit) F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-9
(b) Audited Financial Statements of WavePower, Inc. as of
December 31, 1999:
Report of Independent Certified Public Accountants F-10
Balance Sheet F-11
Statement of Operations F-12
Statement of Changes in Stockholders' Equity F-13
Statement of Cash Flows F-14
Notes to Financial Statements F-15 - F-17
-2-
<PAGE>
(c) Unaudited Financial Statements of WavePower, Inc. as of
March 31, 2000:
Balance Sheet F-18
Statement of Operations F-19
Statement of Changes in Stockholders' Equity F-20
Statement of Cash Flows F-21
Notes to Financial Statements F-22 - F-24
(d) Pro Forma Financial Statements for WavePower, Inc. (WP) -
Ener Tech Corp. and Consolidated Subsidiary (ETC) -
2M Systems, Inc. (2M) (unaudited):
Pro Forma Balance Sheet F-25
Pro Forma Statements of Operations (WavePower, Inc.
(WP) - Enter Tech Corp. and Consolidated
Subsidiary (ETC)) F-26
Pro Forma Statements of Operations (WavePower, Inc.
(WP) - Enter Tech Corp. and Consolidated
Subsidiary (ETC) - 2M Systems, Inc. (2M) F-27
Notes to Pro Forma Financial Statements F-28
-3-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENTER TECH CORP.
Dated: July 17, 2000 By: /s/ Sam Lindsey
------------------------------------------
Sam Lindsey, President and Chief Financial
Officer
-4-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page No.
-----------
(a) Audited Financial Statements of 2M Systems, Inc.as of
December 31, 1999:
Report of Independent Certified Public Accountants F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' (Deficit) F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-9
(b) Audited Financial Statements of WavePower, Inc. as of
December 31, 1999:
Report of Independent Certified Public Accountants F-10
Balance Sheet F-11
Statement of Operations F-12
Statement of Changes in Stockholders' Equity F-13
Statement of Cash Flows F-14
Notes to Financial Statements F-15 - F-17
(c) Unaudited Financial Statements of WavePower, Inc. as of
March 31, 2000:
Balance Sheet F-18
Statement of Operations F-19
Statement of Changes in Stockholders' Equity F-20
Statement of Cash Flows F-21
Notes to Financial Statements F-22 - F-24
(d) Pro Forma Financial Statements for WavePower, Inc. (WP) -
Ener Tech Corp. and Consolidated Subsidiary (ETC) -
2M Systems, Inc. (2M) (unaudited):
Pro Forma Balance Sheet F-25
Pro Forma Statements of Operations (WavePower, Inc.
(WP) - Enter Tech Corp. and Consolidated
Subsidiary (ETC)) F-26
Pro Forma Statements of Operations (WavePower, Inc.
(WP) - Enter Tech Corp. and Consolidated
Subsidiary (ETC) - 2M Systems, Inc. (2M) F-27
Notes to Pro Forma Financial Statements F-28
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
2M Systems, Inc.
Delray Beach, FL
We have audited the accompanying balance sheet of 2M Systems, Inc. (a
development stage company) as of December 31, 1999, and the related statements
of operations, stockholders' (deficit) and cash flows for the period from
February 22, 1999 (date of inception) through December 31, 1999. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of 2M Systems, Inc. (a development
stage company) as of December 31, 1999, and the results of its operations,
changes in stockholders' (deficit) and cash flows for the period from February
22, 1999 (date of inception) through December 31, 1999 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2, the Company
has sustained operating losses since inception and has no current business
operations or plans for business operations that raise substantial doubts about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
2525 Fifteenth Street, Suite 3H
Denver, Colorado 80211
July 7, 2000
F-2
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
BALANCE SHEET
December 31, 1999
ASSETS
------
Current Assets:
Cash $ 10
-----------
Total Current Assets 10
-----------
TOTAL ASSETS $ 10
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
Current Liabilities:
Accounts payable 3,641
-----------
Total Current Liabilities 3,641
-----------
TOTAL LIABILITIES 3,641
-----------
Commitments and contingencies -
(Notes 1,3 and 5)
Stockholders' (Deficit):
Common stock, $.001 par value
5,000,000 shares authorized,
5,000,000 issued and outstanding 500
Additional Paid-in Capital 154,743
Accumulated (Deficit) (158,874)
-----------
TOTAL STOCKHOLDERS' (DEFICIT) (3,631)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 10
===========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from February 22, 1999 (date of inception)
through December 31, 1999
Revenue:
$ -
-----------
Operating Expenses
Salaries and consulting 97,672
Depreciation 2,802
Research and development 25,119
Rent 6,937
Administrative and other 26,344
-----------
Total Operating Expenses 158,874
-----------
Net (Loss) $ (158,874)
===========
Per Share $ (.03)
===========
Weighted Average Number of Shares $ 5,000,000
===========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
For the period from February 22, 1999 (date
of inception) through December 31, 1999
Additional
Preferred Stock Common Stock Paid-in Accumulated
No./Shares Amount No./Shares Amount Capital (Deficit) Total
---------- ------ ---------- ------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at February 22,
1999 - $ - - $ - $ - $ - $ -
Common stock issued for
cash, at inception, at
$.001 per share - - 5,000,000 500 - - 500
Additional paid-in capital - - - - 154,743 - 154,743
Net loss for the period
ended December 31, 1999 - - - - - (158,874) (158,874)
------ ------ --------- ---- --------- --------- ---------
Balance at December 31,
1999 - $ - 5,000,000 $500 $ 154,743 $(158,874) $ (3,631)
====== ====== ========= ==== ========= ========== =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-5
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from February 22, 1999 (date of
inception) through December 31, 1999
Cash Flows from Operating Activities:
Net (Loss) $ (158,874)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 2,802
Increase in accounts payable
and accrued expenses 3,641
----------
Net Cash (Used in) Operating
Activities (152,431)
----------
Cash Flows from Investing Activities:
Investment in property and equipment (56,023)
----------
Net Cash (Used in) Investing
Activities (56,023)
----------
Cash Flows from Financing Activities:
Common stock issued 500
Additional paid-in capital 207,964
----------
Net Cash Provided by Financing
Activities 208,464
----------
Increase in Cash 10
Cash, Beginning of Period -
----------
Cash, End of Period $ 10
==========
Interest Paid $ -
==========
Income Taxes Paid $ -
==========
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(1) Summary of Accounting Policies
------------------------------
This summary of significant accounting policies of 2M Systems, Inc. (a
development stage company) (Company) is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Description of Business
-----------------------
The Company was organized on February 22, 1999 as a Florida
corporation to offer a variety of Internet based services and
solutions. The Company was a technology development company and as
described in Note 2 sold its assets and technology to a related party
on June 30, 1999. The Company currently has no business operations.
The Company is a development stage company since principle planned
operations have not yet commenced.
The Company has selected December 31 as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(c) 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 no current
business operations or plans for business operations.
F-7
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(c) Basis of Presentation - Going Concern, Continued
------------------------------------------------
In view of these matters, continuing as a going concern is dependent
upon the company's ability to meet its financing requirements,
(d) Income Taxes
------------
As of December 31, 1999, the Company had net operating losses
available for carryover to future years of approximately 158,874,
expiring in various years through 2019. Utilization of these carry
overs may be limited if there is a change in control of the Company.
As of December 31, 1999, the company has total deferred tax assets of
approximately $31,775 due to operating loss carry forwards. However,
because of the uncertainty of potential realization of these tax
assets, the Company has provided a valuation allowance for the entire
$31,775. Thus, no tax assets have been recorded in the financial
statements as of December 31, 1999.
(2) Sale of Assets
--------------
On June 30, 1999, WavePower, Inc., a related party acquired the assets of
the Company. WavePower, Inc. is 100% owned by the Company's President and
100% stockholder. The fair market value of the assets sold were estimated
to be $53,221. WavePower, Inc. purchased the assets of the Company for $10
and other consideration which included 5,000,000 ($.001 par value) shares
of the WavePower's common stock and a personal indemnity and assumption of
all seller's liabilities by the president, individually. The Company
immediately transferred the Company's stock to the president in exchange
for the personal indemnity aforesaid. After the sale of the assets of the
Company, the President directly controlled 100% of the outstanding common
stock of the Company.
(3) Contingencies
-------------
The Company ceased operations on June 30, 1999. All liabilities were paid
or assumed by the Company's President and the Company sold its assets to
WavePower, Inc., a related party.
(4) Common Stock
------------
From the Company's date of inception until December 31, 1999, the Company
had issued an aggregate of 5,000,000 shares of its common stock to its
President for $500.
F-8
<PAGE>
2M SYSTEMS, INC.
----------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(5) Related Party Transactions
--------------------------
The Company subleased office space from an entity owned by the Company's
President. There is no written agreement related to the sublease. The
related party's lease began February 1, 1998 and covers a three year
period. Monthly rent was approximately $2,337.
During the period ended December 31, 1999, the Company paid compensation to
the Company's President totaling $90,114.
(6) Technology Assignment and Subsequent Termination Agreement
----------------------------------------------------------
Effective February 26, 1999, the Company entered into an agreement with an
entity whereby the Company assigned certain technology in exchange for a
$1,000,000 funding commitment. After having received approximately
$185,000, the company terminated this assignment with the mutual consent of
the other entity in exchange for the Company's President signing a
promissory note to the other entity in the amount of $185,000. The Company
has no liability related to this note. The company has accounted for this
$185,000 as additional paid-in capital, net of the $53,221 value of
WavePower, Inc. common stock received by the Company for the sale of its
assets, subsequently distributed to the Company's sole stockholder.
F-9
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
WavePower, Inc.
Delray Beach, FL
We have audited the accompanying balance sheet of WavePower, Inc. (a development
stage company) as of December 31, 1999, and the related statements of
operations, stockholders' equity and cash flows for the period from June 1, 1999
(date of inception) through December 31, 1999. These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of WavePower, Inc. (a development
stage company) as of December 31, 1999, and the results of its operations,
changes in stockholders' equity and cash flows for the period from June 1, 1999
(date of inception) through December 31, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2, the Company
has sustained operating losses since inception and has a working capital
deficiency that raise substantial doubts about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
2525 Fifteenth Street, Suite 3H
Denver, Colorado 80211
July 7, 2000
F-10
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
BALANCE SHEET
December 31, 1999
ASSETS
------
Current Assets: $ -
-----------
Total Current Assets -
-----------
Equipment, net of accumulated
depreciation of $5,608 50,018
-----------
TOTAL ASSETS $ 50,018
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable 12,650
-----------
Total Current Liabilities 12,650
-----------
TOTAL LIABILITIES 12,650
-----------
Commitments and contingencies -
(Notes 1,2,4 and 6)
Stockholders' Equity:
Preferred stock, $.001 par value
5,000,000 shares authorized,
none issued and outstanding -
Common stock, $.001 par value
20,000,000 shares authorized,
5,000,000 issued and outstanding 5,000
Additional Paid-in Capital 91,341
Accumulated (Deficit) (58,973)
-----------
TOTAL STOCKHOLDERS' EQUITY 37,368
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,018
===========
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from June 1, 1999 (date of inception)
through December 31, 1999
Revenue: $ -
-----------
Operating Expenses
Depreciation 5,608
Rent 12,018
Research and development 13,440
Professional fees 11,844
Telephone 11,092
Other 4,971
-----------
Total Operating Expenses 58,973
-----------
Net (Loss) $ (58,973)
===========
Per Share $ (.01)
===========
Weighted Average Number of Shares $ 5,000,000
===========
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE>
<TABLE>
<CAPTION>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from June 1, 1999 (date of inception) through
December 31, 1999
Additional
Preferred Stock Common Stock Paid-in Accumulated
No./Shares Amount No./Shares Amount Capital (Deficit) Total
---------- ------ ---------- ------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1999
- $ - - $ - $ - $ - $ -
Common stock issued for
cash, at inception, at
$.001 per share - - 5,000,000 5,000 - - 5,000
Additional paid-in capital - - - - 91,341 - 91,341
Net loss for the period
ended December 31, 1999 - - - - - (58,973) (58,973)
------ ------ --------- ------ - ------- -------- --------
Balance at December 31,
1999 - $ - 5,000,000 $5,000 $91,341 $(58,973) $ 37,368
====== ====== ========= ====== ======= ======== ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-13
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from June 1, 1999 (date of inception)
through December 31, 1999
Cash Flows from Operating Activities:
Net (Loss) $ (58,973)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 5,608
Increase in accounts payable
and accrued expenses 12,650
----------
Net Cash (Used in) Operating
Activities (40,715)
----------
Cash Flows from Investing Activities:
Investment in property and equipment (55,626)
----------
Net Cash (Used in) Investing
Activities (55,626)
----------
Cash Flows from Financing Activities:
Common stock issued 5,000
Additional paid-in capital 91,341
----------
Net Cash Provided by Financing
Activities 96,341
----------
Increase in Cash -
Cash, Beginning of Period -
----------
Cash, End of Period $ -
==========
Interest Paid $ -
==========
Income Taxes Paid $ -
==========
The accompanying notes are an integral part of the financial statements.
F-14
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(1) Summary of Accounting Policies
------------------------------
This summary of significant accounting policies of WavePower, Inc. (a
development stage company) (Company) is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Description of Business
-----------------------
The Company was organized on June 1, 1999 as a Florida corporation to
offer a variety of Internet based services and solutions. The services
are expected to include those of an Internet Service Provider ("ISP")
and an Application Service Provider ("ASP") as well as other services.
Effective June 30, 1999, the Company acquired the net assets of 2M
Systems, Inc. as described in Note (2). The Company is a development
stage company since principle planned operations have not yet
commenced.
The Company has selected December 31 as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(c) 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 working
capital deficiency. See Note 6 for a description of subsequent event
business combination.
F-15
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(1) Summary of Accounting Policies, Continued
-----------------------------------------
(c) Basis of Presentation - Going Concern, Continued
------------------------------------------------
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.
The business combination provides an opportunity for the Company to
continue as a going concern.
(d) Income Taxes
------------
As of December 31, 1999, the Company had net operating losses
available for carryover to future years of approximately $58,973,
expiring in various years through 2019. Utilization of these
carryovers may be limited if there is a change in control of the
Company. As of December 31, 1999, the company has total deferred tax
assets of approximately $11,795 due to operating loss carryforwards.
However, because of the uncertainty of potential realization of these
tax assets, the Company has provided a valuation allowance for the
entire $11,795. Thus, no tax assets have been recorded in the
financial statements as of December 31, 1999.
(2) Asset Acquisition
------------------
On June 30, 1999, the Company acquired the assets of 2M Systems, Inc. (2M),
a related party. 2M is 100% owned by the Company's President and 100%
stockholder. The acquisition was recorded as a purchase. Accordingly, the
assets were recorded at fair market value, which was determined to
approximate the original cost less accumulated depreciation of 2M. The fair
market value of the assets purchased were estimated to be $53,221. The
Company purchased the assets of 2M for $10 and other consideration which
included 5,000,000 ($.001 par value) shares of the Company's common stock
and a personal indemnity and assumption of all seller's liabilities by the
president, individually. 2M immediately transferred the WavePower, Inc.
stock to the president in exchange for the personal indemnity aforesaid.
After the purchase of the assets of 2M, the President directly controlled
100% of the outstanding common stock of the Company.
F-16
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
(3) Equipment
---------
At December 31, 1999, equipment and accumulated depreciation in the
accompanying balance sheet include the following:
Office Furniture & Equipment $ 25,512
Computer hardware and software 30,114
--------
Total Equipment 55,626
Less Accumulated Depreciation 5,608
--------
Net Equipment $ 50,018
========
(4) Related Party Transactions
--------------------------
Total Company expenses of $58,973 were paid by the Company's founder,
President and sole stockholder as of December 31, 1999. This amount was
recorded as paid-in capital. The assets purchased in Note 2 of the
financial statements were acquired from 2M, wholly owned by the Company's
President. All amounts relating to the purchase were recorded at the cost
to that entity less accumulated depreciation, 2M paid $26,797 for office
furniture and equipment which was owned by the President. The Company is of
the belief that all such purchases and aggregate consideration paid were at
fair value.
The Company subleases office space from an entity owned by the Company's
President. There is no written agreement related to the sublease. The
related party's lease began February 1, 1998 and covers a three year
period. Monthly rent is approximately $2,337.
(5) Common Stock
------------
From the Company's date of inception until December 31, 1999, the Company
had issued an aggregate of 5,000,000 shares of its common stock to its
President for $5,000.
(6) Subsequent Events
-----------------
On April 19, 2000, the Company was acquired by Enter Tech Corp. Enter Tech
Corp. issued 5,000,000 shares of restricted common stock for 80% ownership
of the Company.
F-17
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
BALANCE SHEET
March 31, 2000
(Unaudited)
ASSETS
------
Current Assets:
Cash $ 8,077
Other 1,200
----------
Total Current Assets 9,277
----------
Equipment, net of accumulated
depreciation of $10,881 44,745
----------
TOTAL ASSETS $ 54,022
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable 8,410
Related party payables 23,515
----------
Total Current Liabilities 31,925
----------
TOTAL LIABILITIES 31,925
----------
Commitments and contingencies -
(Notes 1,2,3,5 and 7)
Stockholders' Equity:
Preferred stock, $.001 par value
5,000,000 shares authorized,
none issued and outstanding -
Common stock, $.001 par value
20,000,000 shares authorized,
5,000,000 issued and outstanding 5,000
Additional Paid-in Capital 95,923
Accumulated (Deficit) (78,826)
----------
TOTAL STOCKHOLDERS' EQUITY 22,097
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 54,022
===========
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the three months ended March 31, 2000
(Unaudited)
Revenue: $ -
-----------
Operating Expenses
Depreciation 5,273
Rent 1,963
Research and development 900
Professional fees 2,000
Other 9,717
-----------
Total Operating Expenses 19,853
-----------
Net (Loss) $ (19,853)
===========
Per Share $ nil
===========
Weighted Average Number of Shares $ 5,000,000
===========
The accompanying notes are an integral part of the financial statements.
F-19
<PAGE>
<TABLE>
<CAPTION>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period from June 1, 1999 (date of inception) through
March 31, 2000 (Unaudited)
Additional
Preferred Stock Common Stock Paid-in Accumulated
No./Shares Amount No./Shares Amount Capital (Deficit) Total
---------- ------ ---------- ------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1999 - $ - - $ - $ - $ - $ -
Common stock issued for
cash, at inception, at
$.001 per share - - 5,000,000 5,000 - - 5,000
Additional paid-in capital - - - - 91,341 - 91,341
Net loss for the period
ended December 31, 1999 - - - - - (58,973) (58,973)
------ ------ --------- ------- --------- -------- --------
Balance at December 31,
1999 - - 5,000,000 5,000 91,341 (58,973) 37,368
Additional paid-in capital - - - - 4,582 - 91,341
Net loss for the three
months ended March 31,
2000 (Unaudited) - - - - - (19,853) (19,853)
------ ------ --------- ------ -------- -------- --------
Balance at March 31, 2000
(Unaudited) - $ - 5,000,000 $5,000 $95,923 $(78,826) $ 22,097
====== ====== ========= ====== ======= ======== ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-20
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the three months ended March 31, 2000
(Unaudited)
Cash Flows from Operating Activities:
Net (Loss) $ (19,853)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 5,273
Increase in accounts receivabl (1,200)
Increase in accounts payable
and accrued expenses 19,275
-----------
Net Cash Provided by Operating
Activities 3,495
-----------
Net Cash (Used in) Investing
Activities -
----------
Cash Flows from Financing Activities:
Additional paid-in capital 4,582
----------
Net Cash Provided by Financing
Activities 4,582
----------
Increase in Cash 8,077
Cash, Beginning of Period -
----------
Cash, End of Period $ 8,077
==========
Interest Paid $ -
==========
Income Taxes Paid $ -
==========
The accompanying notes are an integral part of the financial statements.
F-21
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
(1) Summary of Accounting Policies
------------------------------
This summary of significant accounting policies of WavePower, Inc. (a
development stage company) (Company) is presented to assist in
understanding the Company's financial statements. The financial statements
and notes are representations of the Company's management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
(a) Description of Business
-----------------------
The Company was organized on June 1, 1999 as a Florida corporation to
offer a variety of Internet based services and solutions. The services
are expected to include those of an Internet Service Provider ("ISP")
and an Application Service Provider ("ASP") as well as other services.
Effective June 30, 1999, the Company acquired the net assets of 2M
Systems, Inc. as described in Note (2). The Company is a development
stage company since principle planned operations have not yet
commenced.
The Company has selected December 31 as its year end.
(b) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
(c) 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 working
capital deficiency. See Note 6 for a description of subsequent event
business combination.
F-22
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
(1) Summary of Accounting Policies, Continued
-----------------------------------------
(c) Basis of Presentation - Going Concern, Continued
------------------------------------------------
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.
The business combination provides an opportunity for the Company to
continue as a going concern.
(d) Income Taxes
------------
As of March 31, 2000, the Company had net operating losses available
for carryover to future years of approximately $78,826, expiring in
various years through 2019. Utilization of these carryovers may be
limited if there is a change in control of the Company. As of March
31, 2000, the company has total deferred tax assets of approximately
$15,765 due to operating loss carry forwards. However, because of the
uncertainty of potential realization of these tax assets, the Company
has provided a valuation allowance for the entire $15,765. Thus, no
tax assets have been recorded in the financial statements as of March
31, 2000.
(2) Asset Acquisition
-----------------
On June 30, 1999, the Company acquired the assets of 2M Systems, Inc. (2M),
a related party. 2M is 100% owned by the Company's President and 100%
stockholder. The acquisition was recorded as a purchase. Accordingly, the
assets were recorded at fair market value, which was determined to
approximate the original cost less accumulated depreciation of 2M. The fair
market value of the assets purchased were estimated to be $53,221. The
Company purchased the assets of 2M for $10 and other consideration which
included 5,000,000 ($.001 par value) shares of the Company's common stock
and a personal indemnity and assumption of all seller's liabilities by the
president, individually. 2M immediately transferred the WavePower, Inc.
stock to the president in exchange for the personal indemnity aforesaid.
After the purchase of the assets of 2M, the President directly controlled
100% of the outstanding common stock of the Company.
F-23
<PAGE>
WAVEPOWER, INC.
---------------
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
(3) Unaudited Financial Statements
------------------------------
The balance sheet as of March 31, 2000, the statement of operations, the
statement of cash flows and the statement of changes in stockholders'
equity for the three month period ended March 31, 2000, have been prepared
by management without audit. In the opinion of management all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, cash flows and
changes in stockholders equity at March 31, 2000 and for all periods
presented have been made.
(4) Equipment
---------
At March 31, 2000, equipment and accumulated depreciation in the
accompanying balance sheet include the following:
Office Furniture & Equipment $ 25,512
Computer hardware and software 30,114
--------
Total Equipment 55,626
Less Accumulated Depreciation 10,881
--------
Net Equipment $ 44,745
========
(5) Related Party Transactions
--------------------------
The assets purchased in Note 2 of the financial statements were acquired
from 2M, wholly owned by the Company's President. All amounts relating to
the purchase were recorded at the cost to that entity less accumulated
depreciation, 2M paid $26,797 for office furniture and equipment which was
owned by the President. The Company is of the belief that all such
purchases and aggregate consideration paid were at fair value.
The Company subleases office space from an entity owned by the Company's
President. There is no written agreement related to the sublease. The
related party's lease began February 1, 1998 and covers a three year
period. Monthly rent is approximately $2,337.
(6) Common Stock
------------
From the Company's date of inception until March 31, 2000, the Company had
issued an aggregate of 5,000,000 shares of its common stock to its
President for $5,000.
(7) Subsequent Events
-----------------
On April 19, 2000, the Company was acquired by Enter Tech Corp. Enter Tech
Corp. issued 5,000,000 shares of restricted common stock for 100% ownership
of the Company.
F-24
<PAGE>
<TABLE>
<CAPTION>
WAVEPOWER, INC. (WP)
--------------------
ENTER TECH CORP. AND CONSOLIDATED SUBSIDIARY (ETC)
PRO FORMA BALANCE SHEET
(Unaudited)
WP ETC
March 31, March 31,
2000 2000 Adjustments Combined
---------------- ----------------- ---------------- -----------------
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash 8,077 42,011 - 50,088
Other $ 1,200 $ - $ - $ 1,200
---------------- ----------------- ---------------- ----------------
Total Current Assets 9,277 42,011 - 51,288
Receivable, WavePower - 23,515 (23,515) -
Property and equipment, net of accumulated
depreciation 44,745 6,963 - 51,708
---------------- ----------------- ---------------- ----------------
Total Assets $ 54,022 $ 72,489 $ (23,515) $ 102,996
================ ================= ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 8,410 $ 52,171 $ - $ 60,581
Stock compensation payable - 23,700 - 23,700
Customer deposits - 60,000 - 60,000
Related party payables 23,515 357,794 (23,515) 357,794
Notes payable, other - 115,806 - 115,806
---------------- ----------------- ---------------- ----------------
Total Current Liabilities 31,925 609,471 (23,515) 617,881
Minority interest in consolidated subsidiary - - 4,319 4,319
Total Liabilities 31,925 609,471 (19,196) 622,200
Stockholders' Equity (Deficit)
Common stock 5,000 778 (1) (5,000)
(2) 500 1,278
Additional paid-in capital 95,923 1,470,099 (1) (95,923)
(2) 17,278 1,487,377
Accumulated (deficit) (78,826) (2,007,859) (1) 78,826 (2,007,859)
---------------- ----------------- ---------------- ----------------
Total Stockholders' Equity (Deficit) 22,097 (536,982) (4,319) (519,204)
---------------- ----------------- ---------------- ----------------
Total Liabilities and Stockholders' Equity (Deficit) $ 54,022 $ 72,489 $ (23,515) $ 102,996
================ ================= ================ ================
The accompanying notes are an integral part of the proforma financial statements.
</TABLE>
F-25
<PAGE>
<TABLE>
<CAPTION>
WAVEPOWER, INC. (WP)
ENTER TECH CORP. AND CONSOLIDATED SUBSIDIARY (ETC)
PRO FORMA STATEMENTS OF OPERATIONS
(Unaudited)
WP ETC
Three Months Three Months
Ended March Ended March Pro Forma Pro Forma
31, 2000 31, 2000 Adjustments Combined
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
--------------- -------------- --------------- ---------------
Operating Expenses 19,853 96,342 - 116,195
--------------- -------------- --------------- ---------------
Net (Loss) $ (19,853) $ (96,342) $ - $ (116,195)
=============== ============== =============== ===============
Net (Loss) per Common Share $ (.01)
===============
Weighted Average Number of
Common Shares Outstanding 12,783,000
===============
The accompanying notes are an integral part of the proforma financial statements.
</TABLE>
F-26
<PAGE>
<TABLE>
<CAPTION>
WAVEPOWER, INC. (WP)
ENTER TECH CORP. AND CONSOLIDATED SUBSIDIARY (ETC)
2M SYSTEMS, INC. (2M)
PRO FORMA STATEMENTS OF OPERATIONS
(Unaudited)
WP ETC 2M
Year Ended Year Ended Year Ended
December December December Pro Forma Pro Forma
31, 1999 31, 1999 31,1999 Adjustments Combined
--------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue $ - $ - $ - $ - $ -
--------------- -------------- --------------- -------------- ---------------
Operating Expenses 58,973 1,557,665 158,874 - 1,775,512
--------------- -------------- --------------- -------------- ---------------
Net (Loss) $ (58,973) $ (1,557,665) $ (158,874) $ - $ (1,775,512)
=============== ============== =============== ============== ===============
Net (Loss) per Common Share $ (.14)
===============
Weighted Average Number of
Common Shares Outstanding 12,783,000
===============
The accompanying notes are an integral part of the proforma financial statements.
</TABLE>
F-27
<PAGE>
WAVEPOWER, INC. (WP)
ENTER TECH CORP. AND CONSOLIDATED SUBSIDIARY (ETC)
2M SYSTEMS, INC. (2M)
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
(1) General
-------
On April 19, 2000, ETC issued 5,000,000 shares of its common stock pursuant
to the acquisition of WavePower, Inc. This business combination will be
accounted for as a purchase.
(2) Pro Forma Information
---------------------
The pro forma financial statements give effect to the acquisition of
WavePower, Inc. by ETC as if the acquisition had taken place at the
beginning of the respective periods.
(3) Pro Forma Adjustments
---------------------
(1) This entry gives effect to eliminating WavePower, Inc. stockholders'
equity.
(2) This entry gives effect to issuing 5,000,000 shares of ETC common
stock pursuant to the WavePower, Inc. business combination agreement
with the shares recorded at the predecessor cost of the assets of
WavePower, Inc. The 5,000,000 shares issued for WavePower, Inc.
approximated 39% of the issued and outstanding shares of ETC.
(4) WavePower, Inc. Acquisition of 2M Systems, Inc.
-----------------------------------------------
On June 30, 1999, WavePower, Inc. acquired the assets and technology of 2M
Systems, Inc. 2M Systems, Inc. was a related party and owned 100% by
WavePower, Inc.'s 100% stockholder and President. 2M Systems, Inc. is
considered to be a predecessor to WavePower, Inc. for accounting purposes
and therefore, the operations of 2M Systems, Inc. from February 22, 1999
(date of inception) through December 31, 1999 have been included in the
proforma statement of operations. 2M Systems, Inc. had no operations after
the June 30, 1999 sale of assets.
F-28
