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As filed with the Securities and Exchange Commission on December 3, 1999
Registration No. 333-82277
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 4
To
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
GENTRY RESOURCES, INC.
(Exact name of registrant as specified in its charter)
---------------
<TABLE>
<S> <C> <C>
Nevada 4959 76-0594911
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
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1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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<S> <C>
Agent for Service: With a Copy to:
Michael Kirsh, President James L. Vandeberg
Gentry Resources, Inc. Vandeberg Johnson & Gandara
1177 West Hastings, Suite 2110 600 University Street, Suite 2424
Vancouver, British Columbia V6E 2K3, CANADA Seattle, Washington 98101
(604) 687-2199 (206) 386-8080
</TABLE>
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
Proposed Proposed
Title of each class of Amount maximum maximum
securities to be to be offering price aggregate Amount of
registered registered per unit offering price registration fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock........... 2,500,000 shares $0.05 per share(1) $125,000.00 $34.75(2)
============================================================================================
</TABLE>
(1) No exchange or over-the-counter market exists for Gentry's common stock.
The most recent sale of Gentry's common stock from one investor to
another occurred on May 11, 1999, when a total of 700,000 shares of
Gentry common stock were sold at a price of $0.047 per share. Gentry
believes this transaction supports a bona fide estimate of $0.05 per
share as the maximum offering price solely for the purpose of calculating
the amount of the registration fee pursuant to Rule 457(a) under the
Securities Act of 1933.
(2) Previously paid
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to such section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. Although we +
+are permitted by US federal securities law to offer these securities using +
+this prospectus, we may not sell them or accept your offer to buy them until +
+the documentation filed with the sec relating to these securities has been +
+declared effective by the SEC. This prospectus is not an offer to sell these +
+securities or our solicitation of your offer to buy these securities in any +
+jurisdiction where that would not be permitted or legal. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION December 3, 1999
Prospectus
, 1999
GENTRY RESOURCES, INC.
1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
2,500,000 Shares of Common Stock
to be sold by current shareholders
This is the initial public offering of common stock of Gentry Resources,
Inc., and no public market currently exists for shares of Gentry's common
stock. None of the proceeds from the sale of stock in this offering will be
available to Gentry. This prospectus is part of a registration statement that
permits selling shareholders to sell their shares on a continuous or delayed
basis in the future. Selling shareholders may sell their shares to the public
immediately upon the effectiveness of the registration statement, or they may
elect to sell some or all of their shares at a later date. As a result, it is
impracticable to state either the number of shares that will be available to
the public or their price. The most recent sale of Gentry's common stock from
one investor to another occurred on May 11, 1999, when a total of 700,000
shares of Gentry common stock were sold at a price of $0.047 per share. The
principal operations of Gentry have not yet commenced.
This is not an underwritten offering, and Gentry's stock is not listed on any
national securities exchange or the Nasdaq Stock Market. Gentry intends to
apply to have its shares traded on the OTC bulletin board under the symbol:
"GNTR"
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Nor have they made, nor will they make, any determination as to
whether anyone should buy these securities. Any representation to the contrary
is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors.............................................................. 1
Use of Proceeds........................................................... 9
Determination of Offering Price........................................... 9
Dilution.................................................................. 9
Selling Shareholders...................................................... 9
Plan of Distribution...................................................... 10
Description of Capital Stock.............................................. 10
Interests of Named Experts and Counsel.................................... 11
Description of Business................................................... 11
Description of Property................................................... 16
Legal Proceedings......................................................... 16
Market Price of and Dividends on Capital Stock and Related Stockholder
Matters.................................................................. 17
Selected Financial Data................................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure............................................................... 19
Directors and Executive Officers.......................................... 20
Executive Compensation.................................................... 20
Security Ownership of Certain Beneficial Owners and Management............ 21
Certain Relationships and Related Transactions............................ 22
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities.............................................................. 22
Index to Financial Statements............................................. F-1
</TABLE>
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing the common stock of
Gentry Resources, Inc. Investing in Gentry's common stock involves a high
degree of risk. Any of the following risks could adversely affect Gentry's
business, financial condition and results of operations and could result in a
complete loss of your investment.
You Should Not Rely on Forward-Looking Statements Because They Are Inherently
Uncertain
You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates", "believes", "plans",
"expects", "future", "intends" and similar expressions to identify these
forward-looking statements. This prospectus also contains forward-looking
statements attributed to certain third parties relating to their estimates
regarding the potential uses of Biocatalyst and markets for it. Prospective
investors should not place undue reliance on these forward-looking statements,
which apply only as of the date of this prospectus. Gentry's actual results
could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by Gentry described in
"Risk Factors" and elsewhere in this prospectus.
Risks Related to Gentry's Business
Gentry Is In Its Earliest Stages Of Development And May Never Become
Profitable
Gentry is in the extreme early stages of development and could fail before
implementing its business plan. It must be regarded as a "start up" venture
that will incur net losses for the foreseeable future. Gentry has no operating
history or revenues from operations, and it faces unforeseen costs, expenses,
problems and difficulties that could easily prevent it from ever becoming
profitable. Gentry's success is dependent on a number of factors that should
be considered by prospective investors. Gentry has only recently acquired its
principal asset. It is a relatively young company and has no history of
earnings or profit and there is no assurance that it will operate profitably
in the future. As such, there is no assurance that Gentry will provide a
return on investment in the future.
Application of Biocatalyst Technology to Sewage and Waste Water Remediation
May Not Be Feasible
Gentry was formed in July of 1998 for the purpose of exploiting an unproven
new technology called Biocatalyst into a practical and viable business in the
field of waste treatment. (For a discussion of the Biocatalyst technology,
license, and applications, please see "Description of Business" starting at
page 10). This new technology may not prove to be either technically or
economically feasible. Any failure to establish the technical and economic
feasibility of the Biocatalyst sewage and waste water remediation application
would prevent Gentry from implementing its business plan, and could cause its
stock to be worthless.
In a license agreement with David R. Mortenson & Associates, Gentry acquired
the rights to distribute and produce Biocatalyst, an oxygen-enriched water
product, for remediation of sewage and waste water, whether in septic tanks or
waste water treatment facilities. No Biocatalyst generator has been
successfully installed and operated at any waste treatment facility, even on a
test basis. The initial step that Gentry plans to take, in conjunction with
Mortenson & Associates and other licensees, is to identify a waste treatment
facility interested in participating in a trial. No direct revenues will be
generated from installing test generators, and Gentry will not be in a
position to earn any revenues until it has completed all necessary testing and
development of Biocatalyst. Gentry has not been able and may not be able to
locate a waste treatment facility willing to test the technology. Gentry has
not been able and may not be able to reach an agreement with other licensees
regarding collaboration and sharing of expenses. Even if a trial is conducted,
the Biocatalyst sewage and waste water
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remediation application may not prove to be either technically or economically
feasible. There is no guarantee that sewage and waste water treatment
facilities, Gentry's primary target market, will conclude that reduced noxious
odors are worth the price Gentry would have to charge to make money producing
and selling Biocatalyst.
Gentry Will Lose Its Biocatalyst License If It Fails To Meet Its Minimum
Purchase Requirements By April 2001 and April 2002 or Exercise Its Right to
Become A Producer
Gentry may be unable to meet the minimum purchase requirements under its
license with Mortenson & Associates. Loss of its license could prevent Gentry
from implementing its business plan, and could cause its stock to be worthless.
Gentry has the exclusive right to distribute and market Biocatalyst under a
private label in Alabama, Arkansas, Louisiana, and Mississippi for a period of
three years, expiring April 28, 2002. To retain this right, Gentry must
purchase a minimum amount of product based on pricing established in the
license agreement during each of the first two years of its license. Gentry is
required to purchase $125,000 of Biocatalyst by April 28, 2001, and a further
$175,000 by April 28, 2002, to retain its license. The current price for
Biocatalyst is $2.00 per gallon; Mortenson & Associates may change the price on
10 days' notice.
Gentry currently has no prospective purchasers lined up, and does not yet
know if the Biocatalyst sewage and waste water remediation application will
even be feasible. Gentry does not intend to meet its minimum purchase
requirement simply by stockpiling an inventory of Biocatalyst. If Gentry does
not meet its minimum purchase requirement and does not exercise its right to
become a producer of Biocatalyst, Gentry may be deemed to be in default under
its License Agreement with Mortenson & Associates. Mortenson & Associates would
then be able to terminate Gentry's license rights to Biocatalyst, which would
prevent Gentry from implementing its business plan, and could cause its stock
to be worthless.
If Gentry meets certain requirements, it has the right to become a producer
of Biocatalyst. However, it may not be feasible for Gentry to obtain a producer
license, and failure to obtain a producer license may limit Gentry's ability to
implement its business plan to distribute Biocatalyst, and could cause its
stock to be worthless. To become a producer, Gentry either would have to
purchase a minimum of 5,000 gallons of Biocatalyst per month for a minimum
period of six consecutive months (which is highly unlikely), or it would have
to demonstrate its financial capability by paying Mortenson & Associates a one-
time fee of $25,000, an additional one-time payment of $10,000 to reimburse
unspecified expenses, and a minimum annual royalties of $20,000. Gentry's
business plan will likely require it to become a producer, because any waste-
treatment client would probably need a Biocatalyst generator installed on its
premises.
Gentry has no current plans for obtaining the financing necessary to meet its
obligations under the license. No commitments to provide additional funds have
been made by management or other shareholders. Accordingly, there can be no
assurance that any additional funds will be available on terms acceptable to
Gentry or at all. Gentry's auditors express substantial doubt regarding
Gentry's ability to continue as a going concern.
It May not Be Feasible for Gentry to Maintain, or Even to Obtain, a Producer
License
Any termination of a producer license or any failure to obtain a producer
license would severely limit Gentry's ability to implement its license in the
waste remediation business, and could cause its stock to be worthless. There is
no guarantee that sewage and waste water treatment facilities, the primary
target market, will conclude that reduced noxious odors are worth the price
Gentry would have to charge to make money producing and selling Biocatalyst.
Even if Gentry obtains a producer license, it may be unable to make the minimum
royalty payments. Although the final terms of the right to produce are subject
to future negotiation, presumably the failure to pay minimum royalties would be
a default that would allow Mortenson & Associates to terminate the production
license.
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Gentry May Lose Its Biocatalyst License If Mortenson Defaults Under Its
Agreement with N.W. Technologies
Mortenson & Associates granted the Biocatalyst license to Gentry based on an
agreement Mortenson & Associates has with N.W. Technologies, Inc., the owner of
the Biocatalyst technology. If a Mortenson & Associates default under its
agreement with N.W. Technologies results in Mortenson & Associates losing its
Biocatalyst rights, the rights Mortenson & Associates has granted Gentry would
become meaningless. Similarly, any dispute between Mortenson & Associates and
N.W. Technologies (or their successors) could impair Gentry's ability to fully
exploit its license rights. Any termination or impairment of Gentry's license
rights due to circumstances under the control of Mortenson & Associates, N.W.
Technologies or others with an interest in the Biocatalyst technology could
prevent Gentry from implementing its business plan, thereby limiting its
profitability and decreasing the value of its stock.
Increases in Biocatalyst Prices Could Destroy Gentry's Potential for Future
Profitability
There can be no guarantee that Gentry ever will be profitable. Mortenson &
Associates has the right to increase Biocatalyst prices on 10 days notice by
revising its published pricing schedule. If Gentry becomes a producer of
Biocatalyst, the final terms governing pricing of raw materials will be subject
to future negotiation. Assuming Mortenson & Associates retains the right to set
prices for Biocatalyst and the raw materials necessary to produce Biocatalyst,
Mortenson & Associates could raise prices to its licensees. Any material price
increases could decrease or eliminate Gentry's profitability.
Gentry May Undertake Investment Risks That Are Dilutive and That Shareholders
Might Not Otherwise Accept
Gentry's business plan is to determine the feasibility of the Biocatalyst
sewage and waste remediation application, and, if Biocatalyst proves to be
feasible for this application, become a Biocatalyst producer. Because Gentry
has a limited time to develop a highly speculative and unproven technology,
Gentry's management will spend a significant portion of the time it devotes to
Gentry evaluating other business opportunities that may be available to Gentry.
These opportunities may be related to the Biocatalyst product, or they may be
in a completely unrelated field. Gentry has had discussions with a number of
third parties regarding business opportunities, but none of these discussions
have reached the stage where an agreement in principle is imminent and there
currently are no business acquisitions that are probable. In any business
opportunity reviewed by Gentry thus far, significant business and economic
issues would have to be resolved in order to reach an agreement. Any asset
acquisition or business combination would likely include the issuance of a
significant amount of Gentry's common stock, which would dilute the ownership
interest of holders of existing shares of Gentry's common stock. Depending on
the nature of the transaction, Gentry's stockholders may not have an
opportunity to vote on whether to approve it. As a result, Gentry's management
could enter into a transaction that an investor would not want to invest in. In
such a case, an investor could not only lose its entire investment, but could
lose its entire investment on a business decision it did not get to evaluate at
the time of investing in Gentry. For example, Gentry may consider a future
financing or business combination that, because of the size of the related
stock issuance, would result in a majority of the voting power being
transferred to the investor(s). The result could be that new shareholder(s)
would control Gentry and persons unknown could replace Gentry's management. It
is uncertain whether any such replacements would continue to implement Gentry's
current business plan. In addition, Gentry's significant shareholders could
sell their control block to an outside party, resulting in the same type of
situation.
Gentry May Compensate Service Providers By Issuing Stock
Gentry might seek to compensate providers of services by issuance of stock in
lieu of cash. Any such stock issuance would dilute ownership interests of
shareholders. For example, it is possible that Gentry would grant stock to a
waste treatment facility used as a test site as compensation for its
participation in a trial of
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Biocatalyst. In addition, if Gentry establishes the feasibility of Biocatalyst,
it may compensate its marketing and sales personnel with stock options.
Irrespective of whether Gentry's cash assets prove to be inadequate to meet its
operational needs, Gentry might seek to compensate providers of services by
issuance of stock in lieu of cash, which again would dilute ownership interests
of shareholders.
Potential Business Combinations Could Be Difficult To Integrate, Disrupt
Business, Dilute Stockholder Value and Adversely Affect Operating Results.
Gentry may make investments in or acquire complementary products,
technologies and businesses, or businesses completely unrelated to Gentry's
current business plan. These acquisitions and investments could disrupt its
ongoing business, distract management and employees and increase its expenses.
If Gentry acquires a company, it could face difficulties in assimilating that
company's personnel and operations. In addition, the key personnel of the
acquired company may decide not to work for Gentry. Acquisitions also involve
the need for integration into existing administration, services, marketing, and
support efforts. If the acquisition is financed by issuing equity securities,
interests of existing stockholders could be diluted. Any amortization of
goodwill or other assets, or other charges resulting from the costs of these
acquisitions, could adversely affect Gentry's operating results. Gentry cannot
predict the extent to which its liquidity and capital resources will be
diminished prior to consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which Gentry may eventually acquire.
Gentry May Enter In To New Line of Business Which Investors Could Not
Evaluate
In the event of a business combination, acquisition, or change in shareholder
control, Gentry may enter in to a new line of business which an investor did
not anticipate and in which that investor may not want to participate. Gentry
may make investments in or acquire complementary products, technologies and
businesses, or businesses completely unrelated to Gentry's current business
plan. Similarly, an asset acquisition or business combination would likely
include the issuance of a significant amount of Gentry's common stock, which
may result in a majority of the voting power being transferred to new
investors. New investors may replace Gentry's management. New management may
decide not to continue to implement Gentry's current business plan, and may
decide to enter into a business completely unrelated to Gentry's current
business plan which an investor did not anticipate and in which that investor
may not want to participate. In such case, an investor could not only lose its
entire investment, but could lose its entire investment on a business decision
it did not get to evaluate at the time of investing in Gentry. Gentry has
engaged in discussions concerning potential business combinations, but has not
entered into any agreement for such a combination and there currently are no
business acquisitions that are probable.
Competitors Could Develop Alternative and More Cost-Effective Products to
Solve the Sewage and Waste Water Remediation Noxious Odor Problem
It is possible that an unknown competitor may have or develop a product that
could achieve results similar to or better than Biocatalyst. Any development of
a competing product could limit the marketability of Biocatalyst, thereby
limiting or eliminating the profitability of Gentry's business. It is possible
that a genetic engineering company could develop a microbe that could
anaerobically process sewage and waste water while at the same time minimizing
noxious odors. In addition, it is also possible that another company could
develop a product similar to Biocatalyst that would minimize noxious odor by
injecting additional oxygen into the sewage and waste water remediation
process. Gentry may have to compete with such companies in the future if it
succeeds in establishing the feasibility of the Biocatalyst sewage and waste
water remediation application.
Government Regulation Could Adversely Affect Viability of Biocatalyst
Application
Waste treatment processes are subject to regulation by local, state and
federal environmental agencies. There can be no assurance that further
regulation and/or licensing will not emerge in the future. Any new
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regulations or licensing could damage Gentry's business, affect the
profitability and perhaps the viability of Gentry's business plan, and cause
the price of its common stock to decline. Further regulation or licensing could
prove to be burdensome, and impose significant additional costs on Gentry's
business or subject Gentry to additional liabilities.
Heavy Dependence on One Individual Who Will Not Devote His Full Time and
Attention to Gentry's Affairs Could Result in Delays or Business Failure
Michael Kirsh is serving as Gentry's sole officer and director. Loss of Mr.
Kirsh's services may hamper Gentry's ability to implement its business plan,
and could cause its stock to be worthless. Gentry is heavily dependent upon the
skills, talents and abilities of Mr. Kirsh to implement its business plan.
Gentry has found and may continue to find that Mr. Kirsh's inability to devote
his full time and attention to Gentry's affairs results in delays in progress
towards the implementation of its business plan or in a failure to implement
its business plan. Moreover, Gentry does not have an employment agreement with
Mr. Kirsh and as a result, there is no assurance that he will continue to
manage Gentry's affairs in the future. Mr. Kirsh has registered all of his
shares of Gentry common stock for sale in this offering, and it is possible
that he may sell all of his shares. If he sells all of his shares, it is
unlikely that he will continue to manage Gentry's business affairs. Gentry has
not obtained a key man life insurance policy on Mr. Kirsh. If Gentry loses the
services of Mr. Kirsh, or if he should decide to join a competitor or otherwise
compete directly or indirectly with Gentry, this could have a significant
adverse effect on Gentry's business and could cause its stock to be worthless.
The services of Mr. Kirsh would be difficult to replace. Because investors will
not be able to evaluate the merits of Gentry's business decisions, they should
carefully and critically assess Mr. Kirsh's background. See "Directors and
Executive Officers".
Heavy Dependence on One Individual Who Has No Experience in the Biocatalyst
Line of Business
Mr. Kirsh has no experience in Biocatalyst applications, or in the sale of
Biocatalyst. Mr. Kirsh is not a scientist, chemist, or solid waste professional
by trade. As a result, Gentry will likely need to rely on others, including
scientists and solid waste experts, who understand the potential applications
of Biocatalyst. Because of lack of experience in this line of business, Gentry
may overestimate the marketability of Biocatalyst and may underestimate the
costs and difficulties associated with selling and distributing Biocatalyst.
Any such unanticipated costs or difficulties could prevent Gentry from
implementing its business plan, thereby limiting its profitability and
decreasing the value of its stock.
There May Be A Complete Change in Control of Gentry As A Result of this
Offering
All of Gentry's outstanding shares are being registered for sale pursuant to
this offering. It is possible that all of the voting power will be transferred
to new investors. Such new investors may replace Gentry's management. New
management may decide not to continue to implement Gentry's current business
plan, and may decide to enter into a business completely unrelated to Gentry's
current business plan which an investor did not anticipate and in which that
investor may not want to participate. In such case, an investor could lose its
entire investment on a business decision the investor did not get to evaluate
at the time of investing in Gentry.
Year 2000 Issues Could Result in Sales or Inventory Difficulties
There may also be risk due to Year 2000 issues. (For a discussion of Year
2000 issues, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources"). It is
not possible to be certain that all aspects of the Year 2000 Issue affecting
Gentry, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved. It is possible that one of
Gentry's suppliers, such as a utility or the producer of Biocatalyst or Biomas,
or one of Gentry's clients may become inoperative, and cause Gentry to incur
heavy expenses or losses. Gentry cannot
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be certain that it will not experience unanticipated negative consequences from
Year 2000 problems, or that it will be able to make any such modifications as
may become necessary in a timely, cost-effective and successful manner, and the
failure to do so could interfere with Gentry's ability to do business.
Financial Risks
Gentry Has No Operating History and Financial Results Are Uncertain
Gentry has not achieved profitability, and expects to incur net losses for
the foreseeable future. Gentry is a relatively young company with no history of
earnings or profit and there is no assurance that it will operate profitably in
the future. As a result of Gentry's limited operating history, it is difficult
to accurately forecast its potential revenue, and there is no meaningful
historical financial data upon which to base planned operating expenses. Its
revenue and income potential is unproven and its business model is still
emerging. As such, there is no assurance that Gentry will provide a return on
investment in the future.
An investor in Gentry's common stock must consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets. Gentry's ability to achieve and then sustain favorable operating
results will depend on a number of factors, including costs related to:
1) identifying a waste treatment facility to test the Biocatalyst
application;
2) testing the Biocatalyst application;
3) identifying and marketing to prospective purchasers;
4) purchasing the amounts of Biocatalyst or Biomas necessary for
operation and required by the license agreement, and increases in the cost
of product;
5) licensing and royalty fees;
6) loss of licensing rights;
7) evaluation and expense of entering into a new business opportunity;
8) the expense of delays in introducing or making any necessary
improvements to the Biocatalyst application; and
9) general economic conditions, as well as those specific to the related
industries.
Gentry expects to significantly increase its operating expenses to test,
market, distribute and produce Biocatalyst. As a result it will need to
generate significant revenue and/or raise additional funds to achieve
profitability. If Gentry does not become profitable, it may be unable to
maintain its Biocatalyst License, which would adversely affect its financial
condition and prospects. If Gentry does achieve profitability, it cannot be
certain that it will sustain or increase it.
Gentry May Need Additional Financing Which May Not Be Available, or Which May
Dilute the Ownership Interests of Investors
Gentry has very limited funds, and its funds are inadequate to implement its
business plan. Gentry will require substantial working capital to fund its
business. If Gentry raises additional funds through the issuance of equity,
equity-related or convertible debt securities, these securities may have
rights, preferences or privileges senior to those of the rights of its common
stock and its stockholders may experience additional dilution.
Gentry's ultimate success will depend on its ability to raise additional
capital. No commitments to provide additional funds have been made by
management or other shareholders. Gentry has not investigated the availability,
source or terms that might govern the acquisition of additional financing. When
additional capital
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is needed, there is no assurance that funds will be available from any source
or, if available, that they can be obtained on terms acceptable to Gentry. If
not available, Gentry's operations would be severely limited, and it would be
unable to implement its business plan.
Gentry May Be Unable to Continue As A Going Concern
In its Independent Auditor's Report, Gentry's accountants state that Gentry's
failure to generate revenues and conduct operations since its inception raise
substantial doubt about Gentry's ability to continue as a going concern.
Risks Related to the Securities Market
Gentry Common Stock Has No Prior Market, And Prices May Decline After The
Offering
There is no public market for Gentry's common stock and no assurance can be
given that a market will develop or that any shareholder will be able to
liquidate his investment without considerable delay, if at all. The trading
market price of Gentry's common stock may decline below the offering price. If
a market should develop, the price may be highly volatile. In addition, an
active public market for Gentry's common stock may not develop or be sustained.
All of Gentry's outstanding shares are being registered for sale pursuant to
this offering. If Gentry's selling stockholders sell substantial amounts of
common stock in the public market, the market price of Gentry's common stock
could fall. Factors such as those discussed in this "Risk Factors" section may
have a significant impact on the market price of Gentry's securities. Owing to
the low price of the securities many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in Gentry's common stock, the combination of
brokerage commissions, state transfer taxes, if any, and other selling costs
may exceed the selling price. Further, many lending institutions will not
permit the use of such securities as collateral for loans. Thus, a purchaser
may be unable to sell or otherwise realize the value invested in Gentry stock.
Investors May Face Significant Restrictions on the Resale of Gentry Stock Due
to State Blue Sky Laws
Because Gentry's securities have not been registered for resale under the
blue sky laws of any state, the holders of such shares and those persons
desiring to purchase them in any trading market that may develop in the future
should be aware that there may be significant state blue sky law restrictions
on the ability of investors to sell and on purchasers to buy Gentry's
securities. Investors may be unable to sell their stock in Gentry. Accordingly,
investors should consider the secondary market for Gentry's securities to be a
limited one. Investors may be unable to resell their stock without the
significant expense of state registration or qualification.
Investors May Face Significant Restrictions on the Resale of Gentry Stock Due
to Federal Penny Stock Regulations
The Securities and Exchange Commission has adopted a number of rules to
regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3,
15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of
1934. The rules require broker-dealers to make certain disclosures regarding
penny stocks to potential buyers, and make a determination based upon
information provided by the potential buyer about such buyer's suitability for
investing in penny stocks. For a more detailed discussion regarding the penny
stock regulations, please see "Plan of Distribution--Regulation of Penny
Stocks." Because Gentry's securities will constitute "penny stock" within the
meaning of the rules, the rules would apply to Gentry and its securities. The
rules may further affect the ability of owners of Gentry's shares to sell their
securities in any market that may develop for them. There may be a limited
market for penny stocks, due to the regulatory burdens on broker-dealers. The
market among dealers may not be active. Investors in penny stock often are
unable to sell stock back to the dealer that sold them the stock. The mark ups
or commissions charged by the
7
<PAGE>
broker-dealers may be greater than any profit a seller may make. Because of
large dealer spreads, investors may be unable to sell the stock immediately
back to the dealer at the same price the dealer sold the stock to the investor.
In some cases, the stock may fall quickly in value. Investors may be unable to
reap any profit from any sale of the stock, if they can sell it at all.
If the Biocatalyst Technology Does Not Prove To Be Feasible, Gentry May Be
Considered a Blank Check Company
If the Biocatalyst sewage and waste water remediation application does not
prove to be either technically or economically feasible, Gentry may decide to
issue stock with no specific business plan in place. In that event, Gentry
would be considered a "blank check company" which could limit an investor's
ability to sell its stock, thereby decreasing the value of the stock. A
development stage company that has no specific business plan or purpose, or
whose business plan is to engage in a merger or acquisition with an
unidentified entity is called a "blank check company" and is subject to Rule
419 of the Securities Act. Pursuant to Rule 419, a blank check company must
issue a registration statement which includes disclosures about blank check
offering procedures. All funds raised by and securities issued in connection
with such an offering must be held in escrow, and any such securities may not
be transferred. Many states have also enacted statutes, rules and regulations
limiting the sale of securities of blank check companies within their
respective jurisdictions. Gentry's sole officer and director, Mr. Kirsh, is
currently involved with a blank check company, Mezuma Inc., located in Alberta,
Canada and traded on the Alberta Stock Exchange under the symbol "MZI". Gentry
has engaged in discussions concerning potential business combinations or
acquisitions with third parties engaged in businesses unrelated to the
Biocatalyst technology. Gentry has not entered into any agreement for such a
combination or acquisition and there currently are no business combinations or
acquisitions that are probable.
8
<PAGE>
USE OF PROCEEDS
This prospectus is part of a registration statement that permits selling
shareholders to sell their shares on a continuous or delayed basis in the
future. Because this prospectus is solely for the purpose of selling
shareholders, Gentry will not receive any proceeds from the sale of stock being
offered.
DETERMINATION OF OFFERING PRICE
This offering is solely for the purpose of allowing Gentry's shareholders to
sell their stock. The selling shareholders may sell their shares when the
registration statement becomes effective, or they may elect to sell some or all
of their shares at a later date. As the market develops, the selling
shareholders will determine the price for the stock. Gentry has 2,500,000
shares of common stock issued and outstanding, of which 500,000 shares were
issued on July 30, 1998, and 2,000,000 shares were issued on April 28, 1999.
All stock was issued based on a valuation by the Board of Directors of $0.001
per share. The most recent sale of Gentry's common stock from one investor to
another occurred on May 11, 1999, when a total of 700,000 shares of Gentry
common stock were sold by J.P. Beehner, Dorothy Mortenson, and David Mortenson
to Michael Kirsh at a price of $0.047 per share.
DILUTION
This offering is for sales of stock by existing Gentry shareholders on a
continuous or delayed basis in the future. Sales of common stock by
shareholders will not result in any substantial change to the net tangible book
value per share before and after the distribution of shares by the selling
shareholders. There will be no change in net tangible book value per share
attributable to cash payments made by purchasers of the shares being offered.
Prospective investors should be aware, however, that the price of Gentry's
shares may not bear any rational relationship to net tangible book value per
share.
SELLING SHAREHOLDERS
The following are the shareholders for whose accounts the shares are being
offered: the amount of securities owned by such shareholder prior to this
offering; the amount to be offered for such shareholder's account; and the
amount to be owned by such shareholder following completion of the offering.
Other than as disclosed below, no selling shareholder holds or has held during
the past three years any position, office, or other material relationship with
Gentry.
<TABLE>
<CAPTION>
Number
of Number of Number of
Position with Shares Shares Shares After
Name Company Owned Offered Sale(1)
---- --------------------- ------- --------- ------------
<S> <C> <C> <C> <C>
Michael Kirsh........... President, Secretary,
Treasurer, Director 700,000 700,000 0
David Goldman........... None 200,000 200,000 0
Peter Finck............. None 200,000 200,000 0
Michael Robinson........ None 200,000 200,000 0
Brian Grussan........... None 200,000 200,000 0
Brent Lokash............ None 200,000 200,000 0
Mark R. Epstein Law
Corp................... None 200,000 200,000 0
Terry Kirshenbaum....... None 200,000 200,000 0
Randi Kirshenbaum....... None 200,000 200,000 0
Plantation Capital...... None 200,000 200,000 0
</TABLE>
- --------
(1) This table assumes that each shareholder will sell all of its shares
available for sale during the effectiveness of the registration statement
that includes this prospectus. Shareholders are not required to sell their
shares. See "Plan of Distribution."
9
<PAGE>
PLAN OF DISTRIBUTION
This is not an underwritten offering. This prospectus is part of a
registration statement that permits selling shareholders to sell their shares
on a continuous or delayed basis in the future. Selling shareholders may sell
their shares to the public when the registration statement becomes effective,
or they may elect to sell some or all of their shares at a later date. Gentry
has not committed to keep the registration statement effective for any set
period of time.
While the registration statement is effective, selling shareholders may sell
their shares directly to the public, without the aid of a broker or dealer, or
they may sell their shares through a broker or dealer if Gentry's stock is
authorized for inclusion on the OTC bulletin board. Any commission, fee or
other compensation of a broker or dealer would depend on the brokers or dealers
involved in the transaction.
No public market currently exists for shares of Gentry's common stock. Gentry
intends to apply to have its shares traded on the OTC bulletin board under the
symbol "GNTR". Gentry has not taken any actions to have its shares traded on
the OTC bulletin board.
Regulation of Penny Stocks
Gentry's securities will constitute "penny stock" pursuant to Rules 3a51-1,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7 and 15g-9 of the Securities and
Exchange Act of 1934. The rules may affect the ability of owners of Gentry's
shares to sell their securities in any market that may develop for them. The
rules require broker-dealers to make disclosures regarding the risks of penny
stocks to potential buyers, and obtain a signed acknowledgment of receipt of
the disclosure from potential buyers. In addition, a broker-dealer must obtain
from a potential buyer information concerning such person's financial
situation, investment experience, and investment objectives, and make a
reasonable determination based on the information that the person has
sufficient knowledge and experience in financial matters such that the person
is capable of evaluating the risks of transactions in penny stocks. Finally,
the broker-dealer must obtain from the buyer a signed statement agreeing to the
transaction.
Shareholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
. control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
. manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
. ""boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
. excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
. the wholesale dumping of the same securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
DESCRIPTION OF CAPITAL STOCK
The following description of Gentry's capital stock is a summary of the
material terms of Gentry's capital stock. This summary is subject to and
qualified in its entirety by Gentry's articles of incorporation and bylaws,
which are included as exhibits to the registration statement of which this
prospectus forms a part, and by the applicable provisions of Nevada law.
10
<PAGE>
Gentry's authorized capital consists of 10,000,000 shares of common stock,
par value $.001 per share. Immediately prior to this offering, 2,500,000 shares
were issued and outstanding. Each record holder of common stock is entitled to
one vote for each share held on all matters properly submitted to the
shareholders for their vote. The articles of incorporation do not permit
cumulative voting for the election of directors, and shareholders do not have
any preemptive rights to purchase shares in any future issuance of Gentry's
common stock.
Because the holders of shares of Gentry's common stock do not have cumulative
voting rights, the holders of more than 50% of Gentry's outstanding shares,
voting for the election of directors, can elect all of the directors to be
elected, if they so choose. In such event, the holders of the remaining shares
will not be able to elect any of Gentry's directors.
The holders of shares of common stock are entitled to dividends, out of funds
legally available therefor, when and as declared by the Board of Directors. The
Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the future. In the event of liquidation, dissolution or
winding up of the affairs of Gentry, holders are entitled to receive, ratably,
the net assets of Gentry available to shareholders after payment of all
creditors.
All of the issued and outstanding shares of common stock are duly authorized,
validly issued, fully paid, and non-assessable. To the extent that additional
shares of Gentry's common stock are issued, the relative interests of existing
shareholders may be diluted.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither Elliott Tulk Pryce Anderson nor Vandeberg Johnson & Gandara was
employed on a contingent basis in connection with the registration or offering
of Gentry's common stock.
DESCRIPTION OF BUSINESS
General
Gentry was incorporated under the laws of the State of Nevada on July 17,
1998, and is in its early developmental and promotional stages. To date,
Gentry's only activities have been organizational, directed at acquiring its
principal asset, raising its initial capital and developing its business plan.
Gentry has not commenced commercial operations. Gentry has no full time
employees and owns no real estate.
The License
On April 28, 1999, Gentry acquired from David R. Mortenson & Associates the
rights to distribute and produce the oxygen-enriched water product
"Biocatalyst" for the purpose of remediating sewage and waste water, whether in
septic tanks or waste water treatment facilities. Gentry, which at the time was
owned by two investor-participants in Mortenson & Associates, paid for the
license by issuing stock to the general partner and nine other investor-
participants in Mortenson & Associates. There were no negotiations between the
parties with regard to the acquisition.
Gentry's business plan is to determine the feasibility of the Biocatalyst
sewage and waste remediation application, and, if Biocatalyst proves to be
feasible for this application, become a Biocatalyst producer.
Under its license with Mortenson & Associates, Gentry has the exclusive right
to distribute and market Biocatalyst under a private label in Alabama,
Arkansas, Louisiana, and Mississippi for a period of three years, expiring
April 28, 2002. To retain this right, Gentry must purchase a minimum amount of
product based on pricing established in the license agreement. Gentry is
required to purchase $125,000 of Biocatalyst by
11
<PAGE>
April 28, 2001, and a further $175,000 by April 28, 2002, to retain its
license. The current price for Biocatalyst is $2.00 per gallon; Mortenson &
Associates may change the price on 10 days' notice.
If Gentry meets certain requirements, it has the right to become a producer
of Biocatalyst. To become a producer, Gentry either would have to purchase a
minimum of 5,000 gallons of Biocatalyst per month for a minimum period of six
consecutive months (which is highly unlikely), or it would have to demonstrate
its financial capability, by paying Mortenson a one-time fee of $25,000, an
additional one-time payment of $10,000 to reimburse unspecified expenses, and a
minimum annual royalties of $20,000. Once it becomes a producer, Gentry will no
longer be subject to minimum purchase requirements. Gentry believes that it
will need to become a producer of Biocatalyst to successfully implement its
business plan.
Although Gentry currently has no specific plans for obtaining the financing
necessary to meet its obligations under the license, it may raise funds through
capital contributions by current shareholders or through an offering. No
commitments to provide additional funds have been made by management or other
shareholders. Accordingly, there can be no assurance that any additional funds
will be available on terms acceptable to Gentry or at all.
The license agreement is for a term of three years, and may be renewed by
Gentry for an additional three year period so long as Gentry is not in default.
The agreement may be terminated by Gentry at any time upon notice to Mortenson
& Associates, and by Mortenson & Associates for cause, which includes breach of
the agreement; the bankruptcy or insolvency of Gentry; or the conviction of
Gentry, its officers or directors, of any crime involving moral turpitude. Upon
termination of the agreement for any reason, Gentry, its officers and employees
may not, for a period of 12 months, engage or hold any interest in any
enterprise engaged in the sale, manufacture, or distribution of any products
manufactured, sold or distributed by Mortenson & Associates at the time of
termination.
Other Licensees
Mortenson & Associates has granted licenses for uses of Biocatalyst in waste
remediation to seven other licensees: Sibun River Group, Inc., whose territory
is New Jersey; Texas Scientific, Inc., whose territory is Texas; K-2 logistics,
Inc., whose territory is Kentucky and Tennessee; Howard Llewellyn Argentina
Group, Inc., whose territory is Florida; Xunantunich, Inc., whose territory is
Arizona and Nevada; Cambridge Creek Companies, LTD., whose territory is
California; and Orme River Group, Ltd., whose territory is Oregon and
Washington. All of these companies were formed by Mortenson & Associates, and
at one time had common shareholders, officers and directors. The outstanding
shares of each of these companies, with the exception of Cambridge Creek
Companies, Ltd. and Orme River Group, Ltd., have been sold to independent, new
investors who are not affiliated with one another or with Mortenson &
Associates. Cambridge Creek Companies, Ltd. and Orme River Group, Ltd. are
still owned by Mortenson & Associates.
Mortenson & Associates has also granted licenses for use of Biocatalyst in
other applications. The following companies have licenses for use of
Biocatalyst for fish farming and aquarium uses: Amazon Scientific, Inc.; Brazos
Scientific Inc.; Callista Logistics Inc.; Growtex Inc.; Sarteneja Group, Inc.;
Xaibe, Inc.; Texmont, Inc.; and TRC Acquisitions, Inc. The following companies
have licenses for use of Biocatalyst for feed lot remediation and poultry
husbandry: Callogic Inc.; Indus Solutions Inc.; Kettle River Group Inc.;
Kilimanjaro Group Inc.; Sabine Pass Group Ltd.; and XIT Solutions Inc. The
following companies have licenses for use of Biocatalyst for garbage
remediation: Chocolate Bayou Scientific Inc.; Denali Strategies Inc.; Everest
Solutions Inc.; Hall's Creek Partners Inc.; Hedgehog Strategies Inc.; Iowa
Industrial Technologies Inc.; New Hampshire Industrials Inc.; Oyster Creek
Group Inc.; and Texas E-Solutions Inc. The following companies have licenses
for use of Biocatalyst for industrial waste remediation: Pacific Rim Solutions
Inc.; Paragon Polaris Strategies Inc.; Peru Partners Ltd.; Pikes Peak
Acquisitions Inc.; Portage Partners Ltd.; Savannah River Group Inc.; and The
Lake Charles Group Inc. Biotechnical Solutions, Inc. has the exclusive license
for use of Biocatalyst for animal and human consumption. Euro Strategies Inc.
has a license for use of
12
<PAGE>
Biocatalyst for sewage and industrial waste remediation and use in mining in
Albania and Kosovo. Moran Dome Explorations, Inc. has a license for use of
Biocatalyst in mining, mineral extraction and processing.
Background to Development of Biocatalyst
Mortenson & Associates acquired its rights to the marketing and distribution
of Biocatalyst from the inventor of the product, a Houston, Texas based company
named N.W. Technologies, Inc., under a distribution agreement. The N.W.
Technologies license agreement may be terminated by N.W. Technologies for
default, which includes a knowing and deliberate breach of the agreement; the
bankruptcy or insolvency of Mortenson & Associates, or the conviction of any of
its officers or directors of any crime involving moral turpitude. Gentry is not
aware of a danger a default by Mortenson & Associates.
The Biocatalyst technology's purpose is to improve the effectiveness of
existing processes that include an oxygenation process that takes place in a
liquid or solid environment. N.W. Technologies' Biocatalyst technology is
proprietary and not patented. The technology behind Biocatalyst was developed
in 1993 by N.W. Technologies for the bioremediation of oil spills. N.W.
Technologies discovered that by breaking the oil into colloidal (microscopic)
particles using a contact emulsifier, which also acts as a host for oil-eating
microbes, it could speed up the process of bioremediating spilled oil. By
breaking the oil into colloidal (microscopic) particles, the microbes have
access to an increased surface area of spilled oil (better access to the food
source). This increased access to the food source allows the microbes to
consume spilled oil more quickly.
The microbes need a ready supply of oxygen in order to consume the spilled
oil. Below six to twelve inches of soil depth, depending on soil type, oxygen
exchange is virtually non-existent, yet many oil spills reach far below that
level. Remediation companies have historically used a process called sparging
to oxygenate soils where bioremediation is being used. Sparging utilizes
perforated pipes placed in the affected area. Air is then pumped into them and
released through the perforations. Sparging is an expensive process to
implement and may result in the release of some of the volatile compounds to be
remediated, thus causing secondary air pollution.
To counter the problems with sparging, N.W. Technologies created Biocatalyst.
This is a water product with oxygen organically bonded to the water molecule.
When the microbe's extra-cellular enzymes come in contact with the water/oxygen
molecule structure, they release this oxygen, making it available to the
microbes. This process provides a means to deliver oxygen to the microbes at
depths below six to twelve inches of soil. N.W. Technologies and their
distributors/applicators have found that the use of Biocatalyst substantially
speeds up oil spill bioremediation times. When it developed Biocatalyst in
1993, N.W. Technologies ceased using ordinary water in the formulation of its
products. Instead it uses Biocatalyst because N.W. Technologies feels that
Biocatalyst does everything that the water does, while also providing extra
oxygen needed by the oil-eating microbes.
N.W. Technologies was formed in October, 1992. It manufactures and sells non-
toxic, non-hazardous, and non-irritating products for remediation of oil in
soil, water, and on hard surfaces through the use of microbes as emulsifiers.
These products include cleaners for heavy equipment, automotive and weapons
parts, and concrete floors; solvents for spill clean-up on shorelines,
highways, and in fueling stations; water treatment products for cleaning
bilges, engine rooms, grease traps, municipal lift stations, and circulating
water systems; soil remediation products with enhancement agents for cleaning
soil contamination, rocks, gravel, marshes and beaches; and sludge and tank
cleaning treatments.
Formed in 1998, Mortenson & Associates is a Texas general partnership,
although there is no written partnership agreement. Mortenson & Associates is
an investment vehicle with certain license rights (the Biocatalyst distribution
rights) that form the basis for the investment projects it undertakes. The
investor-
13
<PAGE>
participants in Mortenson & Associates do not take an active role in the
business of Mortenson & Associates; they have granted Mr. Mortenson the
authority to represent and bind Mortenson & Associates. Mortenson & Associates
has no employees.
Production of Biocatalyst
Biocatalyst is produced through an organic process combining water and an
initial culture of "Biomas", a proprietary product of N.W. Technologies. When
water passes through Biomas, Biomas gives off a waste byproduct, organically
attaching additional oxygen to water molecules, thereby creating a new molecule
called Biocatalyst. The organic process takes place in a generator, which
circulates water through the Biomas to create the oxygen-enriched water or
Biocatalyst. When the microbe's extra-cellular enzymes come in contact with the
water/oxygen molecule structure, they release this oxygen, making it available
to the microbes. This process provides a means to deliver oxygen to the
microbes. The additional oxygen contained in Biocatalyst enhances the ability
of the microbes, or bacteria, to break down sewage. To keep producing
Biocatalyst, the generator requires a regular supply of Biomas.
The generator may be built using standard off-the-shelf tankage, pumps and
plumbing supplies. The generator uses a six-foot by ten-foot print, and the
total cost of an industrial grade generator is approximately $5,000 per unit.
With proper care and maintenance, generators should last for years. The
generators are composed of tanks, pipes and pumps, and are not exposed to
corrosive or caustic materials which might cause deterioration. Once a
generator is set up and producing, production continues for the life of the
generator, provided that water is available (minimum of 15 gallons per hour,
maximum 30 gallons per hour), that the generator is protected from freezing,
and that biomas is added at least 5 days per week. Mortenson & Associates has
told Gentry's officer and director that it is willing to furnish end-users a
production package consisting of the generator, the initial culture to create
the oxygen enriched water, and a regular supply of "biomas" for the generator.
Gentry's client, the waste treatment facility purchasing the Biocatalyst, will
supply a source of usable water, electrical power and staff to operate the
generator(s). The process requires approximately 700 gallons of water per day,
which is supplied by the client through its standard water source. In addition,
Gentry's client must supply a minimal amount of electrical power. A biomas
capsule must be dropped in 5 times per week, either by an employee of Gentry's
client or through an automatic feeding device. As currently configured, each
generator can produce 720 gallons of raw undiluted product per day. Where more
than this volume is needed, multiple generators can be supplied.
Although environmental regulations do not pose any material operational
constraints on Gentry's business as it is proposed to be conducted, waste
treatment processes are subject to regulation by local, state and federal
environmental agencies. There can be no assurance that further regulation
and/or licensing will not emerge in the future which may prove to be obstacles
to the sale of Biocatalyst, or diminish Gentry's competitive position. No
expenditures for environmental control facilities are anticipated during the
current or upcoming fiscal year.
Application of Biocatalyst to Sewage and Waste Water Remediation
Gentry believes that Biocatalyst can be used in the remediation of sewage and
waste water. Sewage and waste water is remediated, or broken down, by microbes
or bacteria. These microbes need oxygen to live, grow and work. The additional
oxygen attached to the Biocatalyst molecule "feeds" the microbes, thereby
enhancing their growth and efficiency. As a general scientific principle, an
aerobic process, as opposed to an anaerobic process, produces less noxious
odor. A constant supply of oxygen-enriched water to a treatment system can
theoretically supply enough oxygen to sustain aerobic microbe/bacterial growth.
By using an aerobic process, as opposed to an anaerobic process, Gentry
believes the noxious odor sometimes associated with sewage processing should be
substantially reduced. As Biocatalyst is pumped into the treatment system,
select microbes that target the waste as a food source can be added to assure
optimal microbe population. Once a good colony of microbes is established, no
additional microbes should be needed unless the colony is somehow killed.
14
<PAGE>
Short-Term Plan of Operation For the Period Ending October 31, 2000
The license agreement with Mortenson & Associates that provides the rights to
distribute and produce Biocatalyst includes a minimum purchase requirement that
must be met by April 28, 2001. Because the offering under this prospectus is
solely for selling shareholders, Gentry will need to raise funds to develop its
license rights. By raising additional funds through the sale of common stock or
securities convertible into common stock, the ownership interest of holders of
existing shares of Gentry's common stock will be diluted.
Gentry plans to cooperate with Mortenson & Associates and the seven other
licensees that have Biocatalyst sewage and waste water remediation license
rights in other territories to economize on the costs of product research and
development. No generator has been successfully installed and operated at any
waste treatment facility, even on a test basis. The initial step that Gentry
plans to take in conjunction with Mortenson & Associates and other licensees is
to identify a waste treatment facility interested in participating in a trial.
Once the facility is identified, Gentry, Mortenson & Associates and the other
licensees will develop a budget for installing the test generator and agree on
an allocation of its costs. Each participant would then raise its required
contribution, and in exchange it would have access to the trial run results to
be used in its marketing and for business planning purposes. Gentry anticipates
that it would raise its share by one or more private offerings of its common
stock. There is no written agreement to ensure this cooperation, but all the
licensees have informally agreed to a share the expense of testing and as well
as any knowledge gained as a result from the testing. To date, Gentry, through
its president, Michael Kirsh, has been discussing the location of a test
facility with Mortenson & Associates and other licensees. Until a trial proves
successful, Gentry does not anticipate any material acquisition of equipment or
changes in the number of its employees
If the trial is successful from a technical standpoint, Gentry would have to
assess the economic feasibility of proceeding further. Although Gentry's
production rights are subject to negotiation of a definitive agreement, prices
for the biomas used to produce Biocatalyst will likely be subject to change
following notice from Mortenson & Associates. There is no guarantee that sewage
and waste water treatment facilities, the primary target market, will conclude
that reduced noxious odors are worth the price Gentry would have to charge to
make money producing and selling Biocatalyst.
Gentry recognizes that the Biocatalyst sewage and waste water remediation
application may turn out not to be feasible. To address this possibility,
Gentry continually evaluates other business opportunities that may be available
to it, whether in the form of asset acquisitions or business combinations.
Currently, Gentry's sole officer and director, Michael Kirsh, devotes
approximately 25 hours per week to Gentry's business. He will spend a
significant portion of the time he devotes to Gentry evaluating other business
opportunities that may be available to Gentry. These opportunities may be
related to the Biocatalyst product, or they may be in a completely unrelated
field. Gentry has had discussions with a number of third parties engaged in
businesses unrelated to the Biocatalyst technology regarding business
opportunities, but none of these discussions have reached the stage where an
agreement in principle is imminent. In any business opportunity reviewed by
Gentry thus far, significant business and economic issues would have to be
resolved in order to reach an agreement. Any asset acquisition or business
combination would likely include the issuance of a significant amount of
Gentry's common stock, which would dilute the ownership interest of holders of
existing shares of Gentry's common stock.
Industry Conditions and Competition
Gentry does not yet know whether the Biocatalyst sewage and waste water
remediation application will be a feasible money-making venture. It does know,
however, that if the application turns out to be successful, it will hold an
exclusive license in Alabama, Arkansas, Louisiana and Mississippi until April
28, 2002, as long as it meets its minimum purchase requirements or becomes a
producer. Gentry is currently unaware of any other product that holds the
potential to mitigate the noxious odors associated with sewage and waste water
remediation. It is not unthinkable, however, that a genetic engineering company
could develop a microbe that could anaerobically process sewage and waste water
while at the same time minimizing noxious odors. In addition, it is also
possible that another company could develop a product similar to Biocatalyst
that would
15
<PAGE>
minimize noxious odor by injecting additional oxygen into the sewage and waste
water remediation process. Gentry may have to compete with such companies in
the future if it succeeds in establishing the feasibility of the Biocatalyst
sewage and waste water remediation application.
Employees
Gentry is a development stage company and currently has no employees. Gentry
is currently managed by Michael Kirsh, its sole officer and director. Gentry
looks to Mr. Kirsh for his entrepreneurial skills and talents. Mr. Kirsh has
extensive entrepreneurial experience, covering a broad spectrum of businesses.
His experience includes managing an independent investment group for whom he
oversees acquisitions, operations, and financing, and ownership and management
of successful private sector service companies. for a complete discussion of
Mr. Kirsh's experience, please see "Directors and Executive Officers."
Management plans to use consultants, attorneys and accountants as necessary and
does not plan to engage any full-time employees in the near future. Once Gentry
establishes the feasibility of the Biocatalyst sewage and waste water
remediation
application, its priority will shift to developing and implementing a plan for
marketing. The marketing plan would focus on two major goals: identifying the
most likely prospects for installing generators and retaining one or more
qualified individuals to market the Biocatalyst sewage and waste water
remediation application to those prospects. Gentry would hire marketing
employees based on the projected size of the market and the compensation
necessary to retain qualified sales employees. A portion of any employee
compensation likely would include the right to acquire stock in Gentry, which
would dilute the ownership interest of holders of existing shares of Gentry's
common stock.
Available Information
Gentry has filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement or the exhibits and schedules which are part of the
registration statement. For further information with respect to Gentry and its
common stock, see the registration statement and the exhibits and schedules
thereto. Any document Gentry files may be read and copied at the Commission's
Public Reference Room located at 450 Fifth Street N.W., Washington, D.C. 20549,
and the public reference rooms in New York, New York, and Chicago, Illinois.
Please call the Commission at 1-800-SEC-0330 for further information about the
public reference rooms. Gentry's filings with the Commission are also available
to the public from the Commission's website at http://www.sec.gov.
Upon completion of this offering, Gentry will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
and, accordingly, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the
Commission's public reference rooms, and the website of the Commission referred
to above.
DESCRIPTION OF PROPERTY
Gentry currently maintains limited office space, occupied by Mr. Kirsh, for
which it pays no rent. Its address is 1177 West Hastings, Suite 2110,
Vancouver, British Columbia V6E 2K3, CANADA, and its phone number is (604) 687-
2199. Gentry does not believe that it will need to obtain additional office
space at any time in the foreseeable future until its business plan is more
fully implemented, at which time it may need office or storage facilities in
Alabama, Arkansas, Louisiana, and Mississippi.
LEGAL PROCEEDINGS
Gentry is not a party to any material pending legal proceedings, and none of
its property is the subject of a pending legal proceeding. Further, the officer
and director knows of no legal proceedings against Gentry or its property
contemplated by any governmental authority.
16
<PAGE>
MARKET PRICE OF AND DIVIDENDS ON CAPITAL
STOCK AND OTHER SHAREHOLDER MATTERS
No established public trading market exists for Gentry's securities. Gentry
has no common equity subject to outstanding purchase options or warrants.
Gentry has no securities convertible into its common equity. There is no common
equity that could be sold pursuant to Rule 144 under the Securities Act or that
Gentry has agreed to register under the Securities Act for sale by
shareholders. Except for this offering, there is no common equity that is
being, or has been publicly proposed to be, publicly offered by Gentry. The
principal operations of Gentry have not yet commenced.
Gentry has 2,500,000 shares of common stock issued and outstanding, of which
500,000 shares were issued on July 30, 1998, and 2,000,000 shares were issued
on April 29, 1999. All stock was issued based on a valuation by the Board of
Directors of $0.001 per share. The most recent sale of Gentry's common stock
from one investor to another occurred on May 11, 1999, when a total of 700,000
shares of Gentry common stock were sold at a price of $0.047 per share.
Upon effectiveness of the registration statement that includes this
prospectus, all of Gentry's outstanding shares will be eligible for sale.
To date Gentry has not paid any dividends on its common stock and does not
expect to declare or pay any dividends on its common stock in the foreseeable
future. Payment of any dividends will depend upon Gentry's future earnings, if
any, its financial condition, and other factors as deemed relevant by the Board
of Directors.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements appearing elsewhere in this
prospectus. The statement of operations data set forth below for the period
from July 17, 1998, (inception) to April 30, 1999 and the three months ended
July 31, 1999, and the balance sheet data at April 30, 1999 and July 31, 1999,
are derived from Gentry's audited financial statements included elsewhere in
this prospectus. The historical results are not necessarily indicative of
results to be expected for any future period.
<TABLE>
<CAPTION>
Three Months Ended Inception to
July 31, 1999 April 30, 1999
------------------ --------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................... $ -- $ --
====== ======
Loss from continuing operations............. $ (500) $ (587)
====== ======
Loss per share from continuing operations... $ -- $ --
====== ======
<CAPTION>
As of As of
July 31, 1999 April 30, 1999
------------------ --------------
<S> <C> <C>
BALANCE SHEET DATA:
Total assets................................ $1,500 $2,000
====== ======
</TABLE>
Gentry is in its early developmental and promotional stages. To date,
Gentry's only activities have been organizational, directed at acquiring its
principal asset, raising its initial capital and developing its business plan.
Gentry has not commenced commercial operations. As a result, the selected
financial data presented above bear no resemblance to the results that Gentry
expects when it begins operations. See "Risk Factors," "Description of
Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This prospectus contains forward-looking statements, the accuracy of which
involve risks and uncertainties. We use words such as "anticipates,"
"believes," "plans," "expects," "future," "intends" and similar expressions to
identify forward-looking statements. This prospectus also contains forward-
looking statements attributed to certain third parties relating to their
estimates regarding the potential uses of Biocatalyst and markets for it.
Prospective investors should not place undue reliance on these forward-looking
statements, which apply only as of the date of this prospectus. Gentry's actual
results could differ materially from those anticipated in these forward-looking
statements for many reasons, including the risks faced by Gentry described in
"Risk Factors" and elsewhere in this prospectus. The following discussion and
analysis should be read in conjunction with Gentry's Financial Statements and
Notes thereto and other financial information included elsewhere in this
prospectus.
Results of Operations
During the period from July 17, 1998, (inception) through April 30, 1999 and
the three months ended July 31, Gentry has engaged in no significant operations
other than organizational activities, acquisition of the rights to market
Biocatalyst and preparation for registration of its securities under the
Securities Act of 1933. No revenues were received by Gentry during this period.
For the current fiscal year, Gentry anticipates incurring a loss as a result
of organizational expenses, expenses associated with registration under the
Securities Act of 1933, and expenses associated with setting up a company
structure to begin implementing its business plan. Gentry expects that expenses
such as state annual report fees, qualifications to do business and the like,
including related attorney fees, will not exceed $10,000. Because the selling
shareholders are bearing the costs associated with filing this registration
statement, Gentry's expenses associated with registration will arise primarily
in the context of applying for Gentry's shares to trade on the OTC bulletin
board. The extent of these costs will depend primarily on the states in which a
market maker would want Gentry's shares to be qualified. With respect to costs
of implementing its business plan, it is difficult to estimate Gentry's share
of testing costs without knowing the identity or location of the waste
remediation test facility. Presumably, however, the total cost of installing a
test generator, assuming difficulty in engineering its installation and other
unforeseen difficulties, would not exceed $50,000 (ten times the estimated
$5,000 per unit cost). Gentry's share of these costs would depend on the
arrangement agreed upon with Mortenson & Associates and other licensees. Gentry
anticipates that until these procedures are completed, it will not generate
revenues, and may continue to operate at a loss thereafter, depending upon the
performance of the business.
Liquidity and Capital Resources
Gentry remains in the development stage and, since inception, has experienced
no significant change in liquidity or capital resources or shareholders'
equity. Consequently, Gentry's balance sheet as of July 31, 1999, reflects
total assets of $1,500, in the form of a license and capitalized organizational
costs.
Gentry's only current material commitments for capital expenditures are
testing Biocatalyst in a waste treatment facility, and meeting the minimum
purchase requirements under its distribution license. As discussed more fully
in "Short-Term Plan of Operation For the Period Ending October 31, 2000",
Gentry, in conjunction with Mortenson & Associates and other licensees, plans
to identify a waste treatment facility interested in participating in testing
Biocatalyst. No direct revenues will be generated from installing test
generators, and Gentry will not be in a position to earn any revenues until it
has completed all necessary testing and development of Biocatalyst.
Pursuant to its license to distribute Biocatalyst granted by Mortenson &
Associates, Gentry must meet a minimum purchase requirement to purchase
$125,000 of Biocatalyst by April 28, 2001, and $175,000 of
18
<PAGE>
Biocatalyst by April 28, 2002. Gentry currently has no specific plans for
obtaining the financing necessary to meet these obligations. It may raise funds
through capital contributions by current shareholders or through an offering.
However, no shareholder has made a commitment to provide additional funds, and
there can be no assurance that additional funds will be available on acceptable
terms or at all.
In addition, Gentry may engage in a combination with another business. Gentry
cannot predict the extent to which its liquidity and capital resources will be
diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity with which Gentry may eventually combine. Gentry has engaged in
discussions concerning potential business combinations, but has not entered
into any agreement for such a combination and there currently are no business
acquisitions that are probable.
Gentry will need additional capital to carry out its business plan or to
engage in a business combination. No commitments to provide additional funds
have been made by management or other shareholders. Accordingly, there can be
no assurance that any additional funds will be available on terms acceptable to
Gentry or at all. Gentry has no commitments for capital expenditures. Gentry's
auditors' report expresses substantial doubt regarding Gentry's ability to
continue as a going concern.
Gentry has assessed its potential risks due to Year 2000 issues. These issues
arise because many computerized systems use two digits rather than four digits
to identify a year. Date-sensitive systems may recognize the year 2000 as 1900
or some other date, resulting in errors when information using the year 2000
date is processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 issue may be experienced before, on, or after January
1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which
could affect an entity's ability to conduct normal business operations.
Although Gentry itself has no critical systems that must be tested for Year
2000 compliance, it is imperative that it assess the compliance of third
parties with whom it has material relationships. Gentry's business plan and
profitability could be jeopardized by an inability to obtain the necessary
supply of biomas and Biocatalyst. Gentry has obtained written certifications of
Year 2000 readiness from its primary suppliers, Mortenson & Associates and N.W.
Technologies, ensuring that there will be no interruption to Gentry's supply of
biomas and Biocatalyst. In addition, Gentry will require certification of Year
2000 readiness from any waste treatment facility with whom Gentry is doing
business, including the Year 2000 readiness of the utilities upon which such
facilities depend for the necessary water and power to operate the generators.
Because Gentry has no systems vulnerable to Year 2000 problems and has no
current customers, it has no Year 2000 contingency plan.
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Elliott Tulk Pryce Anderson has served as Gentry's independent auditor since
inception, and Gentry has not had any dispute with Elliott Tulk Pryce Anderson
over accounting or financial disclosure.
19
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each director
and executive officer of Gentry:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael Kirsh.................. 46 President, Secretary, Treasurer, Director
</TABLE>
Mr. Kirsh became Gentry's sole director and officer in May 1999. Mr. Kirsh is
also the sole officer and director of Growtex Inc., a company with a license to
distribute Biocatalyst for fish farming and aquarium uses. Mr. Kirsh also
serves as a director of Mezuma Inc., a blank check company located in Alberta,
Canada and traded on the Alberta Stock Exchange under the symbol "MZI". A
"blank check company" is a development stage company that has no specific
business plan or purpose, or whose business plan is to engage in a merger or
acquisition with an unidentified entity.
During the past five years, Mr. Kirsh has worked with a group of independent
investors that acquires private companies and conducts reverse takeovers.
(Because the investment group is not a formal entity, it has no name and no
employees.) In a reverse takeover, the shareholder of an acquired company
generally ends up owning all or most of the resulting combined company. Mr.
Kirsh devotes approximately 20% of his time to his position in the group,
overseeing acquisitions, operations, and financing. Since its inception, the
group has made one acquisition, Neptune Society, Inc. Neptune Society was
acquired through a reverse takeover in March, 1999. Neptune Society has
approximately 45 employees. Neptune Society now trades on the OTC bulletin
board under the symbol "NPTN". The principal business focus of Neptune Society
is cremations. Before forming his investment group, Mr. Kirsh had invested in
both real estate and the stock market. From approximately 1986 to 1992 Mr.
Kirsh developed two dental practices in Vancouver, British Columbia, CANADA,
which he sold in 1992 before forming his investment group.
The director named above will serve until the first annual meeting of
Gentry's shareholders. Thereafter, directors will be elected for one-year terms
at the annual shareholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement. No
employment agreements currently exist or are contemplated. There is no
arrangement or understanding between the director and officer of Gentry and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer.
The director and officer of Gentry will devote his time to Gentry's affairs
on an "as needed" basis. As a result, the actual amount of time which he will
devote to Gentry's affairs is unknown and is likely to vary substantially from
month to month.
EXECUTIVE COMPENSATION
No officer or director has received any remuneration from Gentry. Although
there is no current plan in existence, it is possible that Gentry will adopt a
plan to pay or accrue compensation to its officers and directors for services
related to the implementation of Gentry's business plan. Gentry has no stock
option, retirement, incentive, defined benefit, actuarial, pension or profit-
sharing programs for the benefit of directors, officers or other employees, but
the Board of Directors may recommend adoption of one or more such programs in
the future. Gentry has no employment contract or compensatory plan or
arrangement with any executive officer of Gentry. The director currently does
not receive any cash compensation from Gentry for his service as a member of
the board of directors. There is no compensation committee, and no compensation
policies have been adopted. See "Certain Relationships and Related
Transactions."
20
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1999, Gentry's outstanding
common stock owned of record or beneficially by each executive officer and
director and by each person who owned of record, or was
known by Gentry to own beneficially, more than 5% of Gentry's common stock, and
the shareholdings of all executive officers and directors as a group.
<TABLE>
<CAPTION>
Shares Percentage of
Name Owned Shares Owned
- ---- ------- -------------
<S> <C> <C>
Michael Kirsh, President, Secretary, Treasurer, and
Director
5076 Angus Drive
Vancouver, B.C. Canada V6M 3M5......................... 700,000 28%
David Goldman
910 Richards Street
Vancouver, B.C. Canada V6B 3C1......................... 200,000 8%
Peter Finck
124-3989 Henning Drive
Burnaby, B.C. Canada V5C 6N5........................... 200,000 8%
Michael Robinson
3147 West 8th Avenue
Vancouver, B.C. Canada V6K 2C4......................... 200,000 8%
Brian Grussan
bce Place
181 Bay Street, Suite 3100
Toronto, Ontario, Canada M5J 2T3....................... 200,000 8%
Brent Lokash
1708-808 Nelson Street
Vancouver, B.C. Canada V6Z 2H2......................... 200,000 8%
Mark R. Epstein Law Corp.(1)
650-1500 West Georgia Street
Vancouver, B.C. Canada V6G 3A9......................... 200,000 8%
Terry Kirshenbaum
350 Acletarde Street West
Toronto, Ontario, Canada M5V 1R7....................... 200,000 8%
Randi Kirshenbaum
3-59a Admiral Road
Toronto, Ontario M5R 2L4............................... 200,000 8%
Plantation Capital Corp.(2)
302-1132 Hamilton Street
Vancouver, B.C. Canada V6B 2S2......................... 200,000 8%
Mark R. Epstein(1)
650 - 1500 West Georgia Street
Vancouver, B.C. Canada V6G 3A9......................... 200,000 8%
Tim Gamble(2)
302-1132 Hamilton Street
Vancouver, B.C. Canada V6B 2S2......................... 200,000 8%
ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP
(1 Individual)......................................... 700,000 28%
</TABLE>
- --------
(1) Mark R. Epstein is the sole beneficial owner of shares held by the Mark R.
Epstein Law Corp.
(2) Tim Gamble is the sole beneficial owner of shares held by Plantation
Capital Corp.
All shares are held of record and each record shareholder has sole voting and
investment power. Gentry knows of no one who has the right to acquire
beneficial ownership in Gentry common stock. Other than the sale of Gentry
stock contemplated by this prospectus, there are no arrangements known to
Gentry the operation of which may at a subsequent date result in a change of
control of Gentry.
21
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director, executive officer or nominee for election as a director of
Gentry, and no owner of five percent or more of Gentry's outstanding shares or
any member of their immediate family has entered into or proposed any
transaction in which the amount involved exceeds $60,000. The initial
shareholders, J.P. Beehner and Dorothy A. Mortenson, are investor-participants
in David R. Mortenson & Associates, the licensor of Gentry's right to
distribute and produce the Biocatalyst oxygen-enriched water product. Mr.
Beehner and Ms. Mortenson served as directors of Gentry, and the president and
secretary-treasurer, respectively, from July, 1998 (inception) until May, 1999.
They are no longer directors, officers or shareholders of Gentry. If Gentry
succeeds in implementing its business plan, Gentry will make payments to David
R. Mortenson & Associates in the future that will exceed $60,000, although the
resulting benefits to Mr. Beehner and Ms. Mortenson may not individually exceed
$60,000.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Gentry's bylaws provide that Gentry will indemnify its officers and directors
for costs and expenses incurred in connection with the defense of actions,
suits, or proceedings against them on account of their being or having been
directors or officers of Gentry, absent a finding of negligence or misconduct
in the performance of duty.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling Gentry
pursuant to the forgoing provisions, Gentry has been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in that Act and is, therefore,
unenforceable.
22
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Gentry Resources, Inc.
(A Development Stage Company)
<TABLE>
<S> <C>
Independent Auditor's Report........................................ F-2
Balance Sheet as of April 30, 1999 and July 31, 1999................ F-3
Statement of Operations from July 17, 1998 (Date of Inception) to
April 30, 1999 and the three months ended July 31, 1999............ F-4
Statement of Cash Flows from July 17, 1998 (Date of Inception) to
April 30, 1999 and the three months ended July 31, 1999............ F-5
Statement of Stockholders' Equity from July 17, 1998 (Date of
Inception) to April 30, 1999 and the three months ended July 31,
1999............................................................... F-6
Notes to the Financial Statements................................... F-7 to F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Gentry Resources, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Gentry Resources, Inc. (A
Development Stage Company) as of April 30, 1999 and July 31, 1999 and the
related statements of operations, stockholders' equity and cash flows for the
period from July 17, 1998 (Date of Inception) to July 31, 1999 and the periods
from July 17, 1998 (Date of Inception) to April 30, 1999 and the three months
ended July 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 U.S. 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 aforementioned financial statements present fairly, in
all material respects, the financial position of Gentry Resources, Inc. (A
Development Stage Company), as of April 30, 1999 and July 31, 1999, and the
results of its operations and its cash flows for the period from July 17, 1998
(Date of Inception) to July 31, 1999 and the periods from July 17, 1998 (Date
of Inception) to April 30, 1999 and the three months ended July 31, 1999, in
conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has not generated any revenues or conducted any
operations since inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Elliott, Tulk, Pryce, Anderson
Chartered Accountants
Vancouver, Canada
September 21, 1999
F-2
<PAGE>
GENTRY RESOURCES, INC.
(A Development Stage Company)
BALANCE SHEET
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
July 31, April 30,
1999 1999
$ $
-------- ---------
<S> <C> <C>
ASSET
-----
License (Note 3)............................................ 1,500 2,000
====== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities......................................... -- --
------ -----
Contingent Liability (Note 1)
Stockholders' Equity
Common Stock, 10,000,000 shares authorized with a par
value of $.001; 2,500,000 shares issued and outstanding.. 2,587 2,587
Deficit Accumulated During the Development Stage.......... (1,087) (587)
------ -----
1,500 2,000
------ -----
1,500 2,000
====== =====
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-3
<PAGE>
GENTRY RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated from From July 17, 1998
July 17, 1998 Three months ended (Date of Inception)
(Date of Inception) July 31, 1999 to April 30, 1999
to July 31, 1999 $ $
------------------- ------------------ -------------------
<S> <C> <C> <C>
Revenues................ $ -- -- --
-------- ------- ------
Expenses
Amortization of
license.............. 500 500 --
Organization
Expenses............. 587 -- 587
-------- ------- ------
1,087 500 587
-------- ------- ------
Net Loss ............... (1,087) (500) (587)
======== ======= ======
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-4
<PAGE>
GENTRY RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated from
July 17, 1998 From July 17, 1998
(Date of Inception) Three months ended (Date of Inception)
to July 31, 1999 July 31, 1999 to April 30, 1999
$ $ $
------------------- ------------------ -------------------
<S> <C> <C> <C>
Cash Flows to Operating
Activities
Net loss.............. (1,087) (500) (587)
Non-Cash Item......... 587 500 87
------ ----- -----
Net Cash Used by
Operating Activities... (500) -- (500)
------ ----- -----
Cash Flows from
Financing Activities
Increase in shares
issued............... 500 -- 500
------ ----- -----
Net Cash Provided by
Financing Activities... 500 -- 500
------ ----- -----
Change in cash.......... -- -- --
Cash--beginning of
period................. -- -- --
------ ----- -----
Cash--end of period..... -- -- --
====== ===== =====
Non-Cash Financing
Activities
A total of 2,000,000
shares were issued at
a fair market value
of $0.001 per share
for the acquisition
of a License (Note
3)................... 2,000 -- 2,000
Organization costs
paid for by a
director for no
consideration treated
as additional paid in
capital.............. 87 -- 87
------ ----- -----
2,087 -- 2,087
====== ===== =====
Supplemental Disclosures --
Interest paid......... -- -- --
Income tax paid....... -- -- --
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-5
<PAGE>
GENTRY RESOURCES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
From July 17, 1998 (Date of Inception) to July 31, 1999
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock During the
---------------- Development
Shares Amount Stage
# $ $
--------- ------ -----------
<S> <C> <C> <C>
Balance--July 17, 1998 (Date of Inception)........ -- -- --
Stock issued for $500 of organizational
expenses....................................... 500,000 500 --
Additional paid in capital for organizational
expenses incurred by a director on behalf of
the Company.................................... -- 87 --
Stock issued for "The Biocatalyst License" at a
fair market value of $0.001 per share.......... 2,000,000 2,000 --
Net loss for the period......................... (587)
--------- ----- ------
Balance--April 30, 1999........................... 2,500,000 2,587 (587)
--------- ----- ------
Net loss for the period......................... -- -- (500)
Balance--July 31, 1999............................ 2,500,000 2,587 (1,087)
========= ===== ======
</TABLE>
(The accompanying notes are an integral part of the financial statements)
F-6
<PAGE>
GENTRY RESOURCES, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(expressed in U.S. dollars)
1. Development Stage Company
Gentry Resources, Inc. herein (the "Company") was incorporated in the State
of Nevada, U.S.A. on July 17, 1998. The Company has acquired a license to
market and distribute a product as discussed in Note 3.
In a development stage company, management devotes most of its activities to
establishing these new businesses. Planned principal activities have not yet
begun nor produced any revenues. The ability of the Company to emerge from the
development stage with respect to any planned principal business activity is
dependent upon its successful efforts to raise additional equity financing and
develop a market for its products. There is no guarantee that Gentry will be
able to raise any equity financing or develop a market for its products. There
is substantial doubt regarding Gentry's ability to continue as a going concern.
2. Summary of Significant Accounting Policies
(a) Year end
The Company's fiscal year end is April 30.
(b) Licenses
Costs to acquire licenses are capitalized as incurred. These costs will be
amortized on a straight-line basis over their remaining estimated useful lives.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three
months or less at the time of issuance to be cash equivalents.
(d) Use of Estimates
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 revenues and expenses during the periods. Actual
results could differ from those estimates.
3. License
On April 28, 1999 the Company acquired a license for a product called
Biocatalyst. The Company has the exclusive right to distribute and market the
product under a private label in the States of Alabama, Arkansas, Louisiana and
Mississippi for a period of three years expiring April 28, 2002. Biocatalyst is
an oxygen enriched water product used to enhance the growth of microbes in
soils located underground. The Company issued 2,000,000 shares at a fair market
value of $.001 or $2,000. The shares were issued to the licensor whose general
partner is also a spouse of a former director and former officer of the
Company. Once the Company purchases a minimum of 5,000 gallons of product for a
minimum period of six consecutive months, then a license will be granted to the
Company to produce the product in a location to be mutually agreed upon. A
producer license will also be granted if the Company can demonstrate its
financial capability, pay the licensor a one time fee of $25,000, an additional
one-time payment of $10,000 to reimburse unspecified expenses, and pay minimum
annual royalties of $20,000. If no producing license is granted then the
Company is committed to purchase $125,000 of Biocatalyst by April 28, 2000, and
a further $175,000 by April 28, 2001, to retain its
F-7
<PAGE>
distribution license. The current price for Biocatalyst is $2.00 per gallon;
Mortenson & Associates may change the price on 10 days' notice. The license
will be amortized to operations over one year starting May 1, 1999.
<TABLE>
<CAPTION>
July 31, 1999 April 30, 1999
$ $
------------- --------------
<S> <C> <C>
License
Cost......................................... 2,000 2,000
Accumulated amortization..................... 500 --
------- -------
1,500 2,000
======= =======
</TABLE>
4. Related Party Transaction
The License referred to in Note 3 was sold to the Company by a partnership
whose general manager is the spouse of the Secretary/Treasurer of the Company
and a director for consideration of 2,000,000 shares for total fair market
consideration of $2,000. These shares were paid evenly to the ten partners.
5. Uncertainty Due to the Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information
using the year 2000 dates is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent something other
than a date. The effects of the Year 2000 Issue may be experienced before, on,
or after January 1, 2000, and, if not addressed, the impact on operations and
financial reporting may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal business operations.
It is not possible to be certain that all aspects of the Year 2000 Issue
affecting the Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
F-8
<PAGE>
Prospectus
, 1999
GENTRY RESOURCES, INC.
1177 West Hastings, Suite 2110
Vancouver, British Columbia V6E 2K3, CANADA
(604) 687-2199
2,500,000 Shares of Common Stock
to be sold by current shareholders
Gentry has not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or a
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor
any sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Gentry have
not changed since the date hereof.
Until , 1999 (90 days after the date of this prospectus), all
dealers that effect transactions in these shares of common stock may be
required to deliver a prospectus. This is in addition to the dealer's
obligation to deliver a prospectus when acting as an underwriter and with
respect to their unsold allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The securities are being registered for the account of selling shareholders,
and all of the following expenses will be borne by such shareholders. The
amounts set forth are estimates except for the SEC registration fee:
<TABLE>
<S> <C>
SEC registration fee................................................ $ 35
Printing and engraving expenses..................................... 5,000
Attorneys' fees and expenses........................................ 9,000
Accountants' fees and expenses...................................... 1,500
Transfer agent's and registrar's fees and expenses.................. 500
Miscellaneous....................................................... 965
-------
Total............................................................. $17,000
=======
</TABLE>
Item 14. Indemnification of Directors and Officers.
Pursuant to Nevada law, a corporation may indemnify a person who is a party
or threatened to be made a party to an action, suit or proceeding by reason of
the fact that he or she is an officer, director, employee or agent of the
corporation, against such person's costs and expenses incurred in connection
with such action so long as he or she has acted in good faith and in a manner
which he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, in the case of criminal actions, had no
reasonable cause to believe his or her conduct was unlawful. Nevada law
requires a corporation to indemnify any such person who is successful on the
merits or defense of such action against costs and expenses actually and
reasonably incurred in connection with the action.
The bylaws of Gentry, filed as Exhibit 3.2, provide that Gentry will
indemnify its officers and directors for costs and expenses incurred in
connection with the defense of actions, suits, or proceedings against them on
account of their being or having been directors or officers of Gentry, absent a
finding of negligence or misconduct in office. Gentry's Bylaws also permit
Gentry to maintain insurance on behalf of its officers, directors, employees
and agents against any liability asserted against and incurred by that person
whether or not Gentry has the power to indemnify such person against liability
for any of those acts.
Item 15. Recent Sales of Unregistered Securities.
Set forth below is information regarding the issuance and sales of Gentry's
securities without registration since its formation. No such sales involved the
use of an underwriter and no commissions were paid in connection with the sale
of any securities.
(a) On July 30, 1998, Gentry issued 500,000 shares of common stock to two
shareholders in satisfaction of certain organizational costs (approximately
$500) and activities performed by the shareholders. The issuance of the
shares was exempt from registration under Rule 506 of Regulation D, and
sections 3(b) and 4(2) of the Securities Act of 1933, due to the
shareholders being Gentry's founders and serving as its initial management,
and the limited number of investors (two).
(b) On April 28, 1999, Gentry issued a total of 2,000,000 shares of
common stock to ten shareholders, one of whom (David Mortenson) is the
general partner of, and nine of whom are investor participants in, the
licensor of Gentry's Biocatalyst rights. The issuance was compensation for
the license of the Biocatalyst rights. The issuance of the common stock was
exempt from registration under Rule 504 of Regulation D and section 3(b) of
the Securities Act of 1933. Gentry's shares were valued at $0.001 per
share, and they were issued to accredited investors according to an
exemption from registration under
II-1
<PAGE>
Texas law that permits general solicitation and general advertising so long
as sales are made only to accredited investors. Texas law defines
"accredited investor" as a natural person whose individual net worth, or
joint net worth with the person's spouse, at the time of purchase exceeds
$1 million, or whose income during the past two years exceeds $200,000
individually or $300,000 jointly with spouse and who expects to continue
the same income level in the current year. If the exemption under Rule 504
of Regulation D is not available, Gentry believes that the issuance was
also exempt under Rule 506 of Regulation D and Sections 3(b) and 4(2) under
the Securities Act of 1933, due to limiting the manner of the offering,
promptly filing notices of sales, and limiting the issuance of shares to a
small number of accredited investors (ten).
Item 16(a). Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Name
------- ----
<C> <S>
3.1* Articles of Incorporation
3.2* Bylaws
5.1 Opinion re: Legality
10.1*+ License Agreement
10.2* Amendment No. 1 to License Agreement
10.3 Amendment No. 2 to License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1* Financial Data Schedule
</TABLE>
- --------
* Previously filed
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment; omitted material has been filed with the
Commission.
Item 16(b). Financial Statement Schedules.
As of April 30, 1999, Gentry:
. has no valuation or qualifying accounts
. does not have a substantial portion of its business devoted to acquiring
and holding for investment real estate or interests therein
. has no subsidiaries
. has no investments in mortgage loans on real estate.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
II-2
<PAGE>
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver, Province of
British Columbia, CANADA, on December 3, 1999.
GENTRY RESOURCES, INC.
/s/ Michael Kirsh
By: ___________________________
Michael Kirsh
Its President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Kirsh President, Secretary, December
____________________________________ Treasurer, and Director 3, 1999
Michael Kirsh
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Name
------- ----
<C> <S>
3.1* Articles of Incorporation
3.2* Bylaws
5.1 Opinion re: Legality
10.1*+ License Agreement
10.2* Amendment No. 1 to License Agreement
10.3 Amendment No. 2 to License Agreement
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (see Exhibit 5.1)
27.1* Financial Data Schedule
</TABLE>
- --------
* Previously filed
+ Portions of the exhibit have been omitted pursuant to a request for
confidential treatment; omitted material has been filed with the
Commission.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF VANDEBERG JOHNSON & GANDARA]
December 3, 1999
Gentry Resources, Inc.
1177 West Hastings
Suite 2110
Vancouver, BC V6E 2K3
CANADA
Re: Gentry Resources, Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel for Gentry Resources, Inc., a Nevada corporation
(the "Company"), in connection with the preparation of the registration
statement on Form S-1 (the "Registration Statement") filed with the Securities
and Exchange Commission(the "Commission") pursuant to the Securities Act of
1933, as amended (the"Act"), relating to the public offering (the "Offering") of
up to 2,500,000 shares (the "Shares") of the Company's common stock, $.001 par
value (the "Common Stock"), to be sold by the selling stockholders. This
opinion is being furnished pursuant to Item 601(b)(5) of Regulation S-K under
the Act.
In rendering the opinion set forth below, we have reviewed (a) the
Registration Statement and the exhibits thereto; (b) the Company's Articles of
Incorporation; (c) the Company's Bylaws; (d) certain records of the Company's
corporate proceedings as reflected in its minute books; and (e) such statutes,
records and other documents as we have deemed relevant. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and conformity with the originals of all
documents submitted to us as copies thereof. In addition, we have made such
other examinations of law and fact as we have deemed relevant in order to form a
basis for the opinion hereinafter expressed.
Based upon the foregoing, we are of the opinion that the Shares are validly
issued, fully paid and nonassessable.
<PAGE>
Gentry Resources, Inc.
December 3, 1999
Page 2
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to all references to this Firm under the caption
"Interests of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
VANDEBERG JOHNSON & GANDARA
/s/ James L. Vandeberg
James L. Vandeberg
VEO:lmt
<PAGE>
EXHIBIT 10.3
AMENDMENT NO. 2
TO
LICENSE AGREEMENT
This AMENDMENT NO. 2 TO LICENSE AGREEMENT ("Amendment No. 2") dated
November 30, 1999 is by and between David R. Mortenson & Associates, a Texas
general partnership ("Grantor"), and Gentry Resources, Inc., a Nevada
corporation ("Licensee").
WHEREAS, Grantor and Licensee are parties to that certain License Agreement
(the "License Agreement") dated April 28, 1999, granting Licensee an exclusive
private label license for the Biocatalyst and Biomas products for, sewage and
waste water remediation in Alabama, Arkansas, Louisiana and Mississippi; and
WHEREAS, Grantor and Licensee are parties to that certain Amendment No. 1
to License Agreement ("Amendment No. 1") dated May 12, 1999, amending the
License Agreement; and
WHEREAS, Grantor and Licensee wish to confirm, clarify and modify certain
terms of the License Agreement and Amendment No. 1 (collectively referred to as
the "Preexisting Agreements");
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions; References.
-----------------------
Capitalized terms not defined in this Amendment No. 2 shall have the
meanings given them in the Preexisting Agreements. References in the Preexisting
Agreements and this Amendment No. 2 to the "Agreement" shall refer to the
Preexisting Agreements as amended by this Amendment No. 2, and words such as
"herein", "hereinafter" or other words of similar import shall likewise be
construed as referring to the Preexisting Agreements as amended by this
Amendment No. 2.
<PAGE>
2. Confirmation of Agreement.
-------------------------
This Amendment No. 2 amends the Preexisting Agreements. Terms of the
Preexisting Agreements not amended by this Amendment No. 2 continue in full
force and effect, and are hereby ratified and confirmed by the parties.
3. Minimum Purchase Requirements.
-----------------------------
The Purchase Obligations set forth on Exhibit C of the License Agreement
are hereby modified so that Licensee's minimum purchase requirement shall be
$125,000 by April 28, 2001 and $175,000 by April 28, 2002, rather than $50,000
and $75,000 for the 1st 6 months and the 2nd 6 months, respectively. In
addition, the following sentence is hereby added after the last sentence on
Exhibit C: "Grantor shall have no right to enforce, and no action shall accrue
in respect of, Licensee's Purchase Obligations until April 28, 2001."
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
GRANTOR: LICENSEE:
DAVID R. MORTENSON & ASSOCIATES GENTRY RESOURCES, INC.
/s/ David R. Mortenson /s/ Michael Kirsh
- ------------------------------- --------------------------------
By David R. Mortenson By Michael Kirsh
Its General Partner Its President
Amendment No. 1 to License Agreement
Page 2 of 2
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Accountants On
Accounting And Financial Disclosure" and "Interests Of Named Experts And
Counsel" and to the use of our report dated September 21, 1999, in the
Registration Statement Amendment No. 4 to Form S-1 and related Prospectus of
Gentry Resources, Inc. for the registration of shares of its common stock.
Vancouver, Canada
December 3, 1999
Elliot, Tulk, Pryce, Anderson
CHARTERED ACCOUNTANTS
/s/ Elliot, Tulk, Pryce, Anderson
