UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
ENTERTECH MEDIA GROUP, INC.
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(Name of Small Business Issuer in its Charter)
Nevada 88-036858
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(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
50 West Liberty Street, Suite 880
Reno, Nevada 89501
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (775)324-6655
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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(Title of Class)
<PAGE>
PART I
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
EnterTech Media Group, Inc. (the "Company" or the "Registrant" ) is a
Nevada corporation which was originally incorporated on November 17, 1986 under
the name of Stones Stores, Inc. The Company is filing a registration statement
for its issued and outstanding shares of common stock on a voluntary basis. It
is the Company's understanding that such registration is required in order for a
price for the Company's shares to be quoted on the NASDAQ over-the-counter
Bulletin Board system. Most of the Company's records prior to 1995 have been
lost or destroyed. The information in this sevction on business development
which relates to time periods before 1995 is taken from surviving minutes of
shareholder and directors meetings and from public records such as Articles of
Incorporation and amendments to such articles on file with the State of Nevada.
The Company's transfer agent also has records relating to stock ownership and
transfers. The Company anticipates no adverse consequences as a result of the
loss of business records prior to 1995 as the Company intends to engage in
business unrelated to any business in which the Company was involved.
The Company was originally incorporated with one class of stock. The
Company had 50,000,000 shares of capital stock with a par value of $0.001 per
share authorized. The Company was incorporated to engage in the business of the
retail and wholesale sales of men's and women's furnishings and related
products.
In February of 1987, the Company made a public offering of its
securities pursuant to the provisions of Rule 504 adopted under the Securities
Act of 1933, as amended. The Company sold 500,000 shares at $0.10 per share for
a total of $50,000. The organizers of the Company purchased 100,000 shares at
$5,000. Thus, at the conclusion of the offering there were issued and
outstanding 600,000 shares of common stock with a par value $0.001 per share.
On March 30, 1987, the shareholders approved the acquisition of all of
the issued and outstanding shares of stock of PFI, Inc., a Washington
corporation engaged in the business of financial planning. As a result of the
corporate reorganization, on May 1, 1987, the Company changed its name to Stone
International, Inc. and effected a five (5) to one (1) forward split of the
stock and increased the par value to $0.005 per share. The Company's 600,000
shares of outstanding stock with the five (5) to one (1) forward split became
3,000,000 shares outstanding with a par value of $0.005. The Company then issued
12, 789,474 shares of it common stock for of all of the issued and outstanding
stock of PFI, Inc. The Company then had 15,789,474 shares of its common stock
issued and outstanding. There was no chnage in the Company's management as a
result of this transaction.
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On May 1, 1990, the Company underwent another corporate reorganization.
The Company's named was change to Armas Intl. Mfg. Co., Inc. and a reverse split
of the issued and outstanding shares at the rate of twenty (20) to one (1) was
effected. From September 4, 1990 through March 9, 1993, the Company acquired
assets in exchange for stock. It issued 1,852,749 shares to acquire property,
cash and services. Current management assumes that any assets so acquired were
lost as part of the failure of the Company's past business operations.
At some point after 1993, the Company became inactive and remained
inactive until current management took over operations. Current management
became involved with the Company in the fall of 1998 when it inquired of
surviving past management of the availability of the Company for operation of a
new business. At that point in time the Company basically was a "shell"
corporation.
In October of 1998, current management reorganized the Company once
again. On October 23, 1998, the Company's name was changed to Inter-Link
Communications Group, Inc. and the Company's issued and outstanding shares
underwent a six (6) for one (1) reverse split. The Company's articles also were
amended to authorize the Company to issue 100,000,000 shares of common stock
with a par value of $0.001 per share.
In late 1998, Management entered into acquisition agreements with two
entities for the acquisition of assets. The parties contracting with the Company
breached those agreements and as a result no assets were acquired pursuant to
those agreements. The circumstances surrounded those agreement are the subject
of litigation commenced by the Company in the State of Nevada and in Great
Britain. This litigation in detailed in Item 2 of Part II below.
During April of 1999, management entered into an Exchange Agreement
with a Nevada corporation named EnterTech Limited. Under the terms of that
Exchange Agreement, the Company was obligated to issue a minimum of 11,500,000
shares and a maximum of 15,000,000 shares of it common stock in exchange for all
the issued and outstanding shares of EnterTech Limited. The transaction with
EnterTech Limited was not arms length. No fairness opinion was obtained. The
transaction was framed to be a tax free exchange whereby stockholders of
EnterTech Limited would have obtained 92% of the issued stock of the Company. At
the time of the Exchange Agreement, EnterTech Limited had 10,000,000 shares of
common stock issued and outstanding. EnterTech Limited also was in the process
of offering a minimum of 1,500,000 shares and a maximum of 5,000,000 shares of
its common stock pursuant to a private placement memorandum. Because the Company
was obligated to issue a minimum of 11,500,000 pursuant to the Exchange
Agreement, it issued 11,500,000 shares of its common stock to an exchange agent
who was charged under the terms of the Exchange Agreement with assuring that the
appropriate number of the Company's shares were issued to the shareholders of
EnterTech Limited once EnterTech Limited's private placement was complete.
10,000,000 of these initial 11,500,000 shares were issued for the 10,000,000
shares of EnterTech Limited issued and outstanding apart from the private
placement offering, and the remain 1,500,000 shares were issued for the exchange
of the minimum number of shares EnterTech Limited is offering pursuant to its
private placement memorandum. Since the filing of the Company's Form 10-SB in
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June of 1999, this private placement of EnterTech Limited's shares has been
terminated with no funds raised. Accordingly, the 1,500,000 shares issued as
part of this transaction have been returned to the Company. As described in Item
2 of this Part I, management will fund the activities of business using capital
contributions by management. Because no consideration was paid for these
1,500,000 shares, their issuance and return are not reflected on the Company's
financial statements, though the issuance and return of these shares do appear
on the Company's stock transfer records.
EnterTech Limited owns 100% of the issued and outstanding shares of two
subsidiaries, EnterTech Picture Corporation and EnterTech Releasing Corporation,
also Nevada corporations. EnterTech Releasing Corporation was incorporated on
December 18, 1998 and EnterTech Pircutre Corporation and EnterTech Limited were
incorporated on December 31, 1998. Mark Tolner, the President of the Company, is
the only officer and director of EnterTech Picture Corporation and EnterTech
Releasing Corporation. Mr. Tolner also is the sole director and officer of
EnterTech Limited. The Company is the sole owner of all of the issued and
outstanding stock of each of these corporations, having purchased 1,000 shares
in EnterTech Limited for $1,000, 1,000 shares in EnterTech Releasing Corporation
for $1,000 and 500 shares in EnterTech Picture Corporation for $500. Thus, each
of these three corproations is a wholly-owned subsidiary of the Company. All of
the subsidiaries will operate out of the Company's offices.
On April 22, 1999, as part of its transaction with EnterTech Limited,
the Company's board of director approved the changed of the Company's name to
EnterTech Media Group, Inc. Now operating as EnterTech Media Group, Inc., the
business shall be the business EnterTech Limited, as described below.
As of September 30, 1999, 11,150,000 shares of the Company's
100,000,000 authorized shares of common stock were issued and outstanding.
The Company has not been subject to bankruptcy, receivership or any
similar proceedings, nor have any of its subsidiaries.
(b) Business of the Issuer
(1) Principal Products and Services and Their Markets
The business of EnterTech Limited is now being operated as the business
of EnterTech Media Group, Inc. Accordingly, hereafter the business of EnterTech
Media Group, Inc. and that of EnterTech Limited shall be described as the
business of "EnterTech."
EnterTech intends to establish itself as a film production and
distribution company. It intends to utilize technology such as High Definition
Digital Video ("HDDV") to reduce the cost of film making in order to make,
produce and distribute its films. The Company also intends to acquire other
independent films that will provide the Company with a growing film library.
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Management has observed the current trends in the film industry whereby
feature films are being made at huge costs often in excess of sixty million
dollars with an additional sum for marketing that makes each major film's total
cost an average of around one hundred million dollars plus. The Company believes
that this is excessive and in most cases unprofitable and therefore has decided
to focus its time and energy on creating films that have been recorded on a new
format, High Definition Digital Video ("HDDV"). The intention is to then
transfer each film onto 35 mm and release them theatrically. Subsequently the
Company will distribute them in all other formats i.e. Video, DVD, Cable and
Television.
The cost of filming on HDDV is attractive for a variety of economical
reasons. The savings derive from many different areas including a much shorter
production schedule which therefore requires talent for a period shorter than
the norm, set-up times, small crews and the cost of film itself and the
associated processing and delivery costs.
The Company has formed a subsidiary called EnterTech Picture
Corporation ("EPC") to make a target of six feature films per annum with budgets
of under one million dollars per film. Each film will use the HDDV format.
The Company's overall philosophy will be to produce programming with a
heavy emphasis being placed on the youth market with music playing a key role in
the finished films. The market is there to be addressed and the Company's
challenge is to provide it with carefully targeted productions and soundtracks.
(2) Distribution Methods
The Board of EnterTech has formed a domestic distribution company
called EnterTech Releasing Corporation, and has secured the services of Peter
Marai to oversee its growth. From 1998 to the present, Mr. Marai has been the
Domestic Distribution Vice President of Cinequanon Pictures International where
he has worked on releasing foreign language and independent films in the United
States. From 1988 through 1997, Mr. Marai was the President of Connoisseur Video
Collection, a company which he founded to release foreign language films on
video. While at Connoisseur Video, Mr. Marai acquired and distributed over 100
titles, including Francoise Truffant's "Shoot the Piano Player" and "The Bolshoi
at the Bolshoi-Sleeping Beauty." Films will be produced and or acquired for
release in all formats. Initially theatrically and then on Video, DVD, Cable and
Television and eventually the Internet.
The Company also intends to form a unique and specialized DVD label
which will develop an associated brand name for DVD releasing. This business may
seek to establish a "DVD of the week or month Club" style of operation in order
to develop customer loyalty.
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Production, Prints and Advertising (P and A)
The Company's policy with regard to the necessary funding of
productions and associated promotion, releasing and distribution costs will be
to make use of any "off balance sheet financing." Generally speaking, "off
balance sheet financing" refers to the use of funds from venture partners or
from subsidies from third parties. By using such financing, the Company does not
intend to use its own funds for the production of the films it produces. It will
use established methods of film financing to avoid as far as possible any
financial risk or burden to its shareholders in relation to such costs. For
example, it is common practice in the film industry to bring in joint venture
partners who provide the necessary production funds in return for a profit
participation in the film. Additionally, the Company intends to make use of any
appropriate tax subsidies and grants that are available for film making in
various parts of the world.
(3) Status of Publicly Announced New Products or Services
To date, the Company has not publicly announced the availability of its
services or products.
(4) Competitive Business Conditions
The Company faces well-established and well-funded competition. Motion
pictures are producted and marketed by major film studios as well as a large
number of smaller independent production companies. The Company will compete
with these smaller independent production companies in the production and
marketing of feature films. Many of the Company's competitors are well
established organizations with extensive knowledge of the industry, marketing
staffs and organizations, and financial resources greatly in excess of those
available to the Company.
Many of the Company's current and potential competitors have longer
operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than the Company.
Increased competition may result in reduced operating margins, loss of market
share and a diminished brand franchise. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors. New technologies and the expansion of existing technologies may
increase the competitive pressures of the Company in this area of its
operations.
(5) Dependence on Major Customers
As indicated throughout this Item I, the Company is a reorganizational
stage and is in the process of developing its new entertainment products and
services. At this point in time, the Company has no major customers. Of course,
the Company intends to develop a broad base of customers so its success is not
dependent upon a few sources of revenue.
(6) Intellectual Property
The Company will regard its trade secrets and similar intellectual
property as valuable to its business, and will rely on trademark and copyright
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law, trade secret protection and confidentiality and/or license agreements with
its employees, partners and others to protect its proprietary rights. There can
be no assurance that the steps taken by the Company will be adequate to prevent
misappropriation or infringement of its intellectual property. The Company
expects that it may license in the future, certain of its proprietary rights,
such as trademarks or copyrighted material, to third parties. While the Company
attempts to ensure that the quality of its brand is maintained by such
licensees, there can be no assurance that such licensees will not take actions
that might materially adversely affect the value of the Company's proprietary
rights or reputation, which could have a material adverse effect on the Company.
As of the time of the filing of the Amended Form 10-SB, the Company has no
intellectual property rights.
(7) Governmental Approval, Regulation and Environmental Compliance
At this point in time, there is no need for governmental approval of
the Company's intended principal products or services. However, recent high
profile events have focused attention on the content of products and services
offered by the entertainment industry. Specifically, some governmental review of
a link, if any, between the violent content of some movies and crimes committed
by members of the society viewing those movies has emerged. While the Company
believes that it is unlikely that such scrutiny will result in governmental
restrictions placed on the content of products in the entertainment industry,
including those the Company intends to produce, such governmental restrictions
have rarely been given such consideration and it is possible that restrictions
on entertainment content could be imposed. At the time of the filing of this
Form 10-SB, however, it is unclear what form any such restrictions would take or
how they would be enforced. Nonetheless, the Company is mindful of the fact that
such matters are being reviewed on a national level.
The Company anticipates that it will have no material costs associated
with compliance with either federal, state or local environmental law.
(8) Research and Development
The Company intends to establish a small Research and Development team,
composed of both core and rotating engineering and marketing personnel, who will
develop and adopt new products, services, equipment, software and tools. The
Company believes that the results of this work will allow the Company to enhance
its services as well as its ability to provide those services effectively.
During the last two years, EnterTech has not incurred costs in connection with
research and development.
(9) Employees and Facilities
As of March 31, 1999, EnterTech had 3 full-time and 3 part time
employees. The Company also employs independent contractors and other temporary
employees. Such individuals perform basic business office clerical work such as
answering the phones, producing correspondence and filing. The Company's
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consulting agreement with Peter Marai calls for Mr. Marai to oversee the growth
of the Company's film distribution activities. None of the Company's employees
is represented by a labor union, and the Company considers its employee
relations to be good. The Company expects the number of employees to grow
significantly over the next twelve months. Competition for qualified personnel
in certain areas of the Company's industry is intense, particularly among
software development and other technical staff. The Company believes that its
future success will depend in part on its continued ability to attract, hire and
retain qualified personnel.
While the Company maintains a business office in Reno, Nevada the
Company's executive offices are located in, and substantially all of its
operating activities are conducted from office space located in Los Angeles,
California. The Company also has a branch office in London, England. The Company
believes that additional space will be required as its business expands and
believes that it will be able to obtain suitable space as needed. The Company
does not own any real estate.
(c) Reports to Security Holders
Prior to filing its Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Now that the Company has
become a reporting company, it is required to file Forms 3, 4, 5, 10K-SB,
10Q-SB, 8-K and Schedules 13D along with appropriate proxy materials. If the
Company issues additional shares, the Company may file additional registration
statements for those shares.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
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(d) Year 2000 Disclosure
State of Readiness
The Company does not anticipate any problems in dealing with year 2000
issues. All of the Company's computer systems have been acquired within the last
year and are year 2000 compliant. In this regard, the Company uses computers
(PC's) owned by management. All such systems have computer processors capable of
properly recognizing dates past 1999. The Company's computer systems are used
primarily for word processing, bookkeeping and Internet communications. The
Company keeps current with all updates and revisions of all software used in
connection with the Company's business. The Company's current word processing
accounting and Internet communications software is year 2000 compliant. From an
internal standpoint, the Company is year 2000 ready.
The Company's business may be impacted by the year 2000 readiness of
third parties with whom the Company has a material relationship. Such parties
include banks, telephone companies, attorneys, accountants and transfer agents.
The Company has made inquiry of its transfer agent, Nevada Agency and Trust
Company, its attorneys and its accountant regarding their year 2000 readiness.
All of the Company's attorneys, its acccountant and its transfer agent are year
2000 compliant. Larger vendors, such as banks and telecommunications companies,
have represented themselves as year 2000 compliant.
Costs of Year 2000 Issues
The Company's costs of remediating any year 2000 issues has been
inconsequential. Such costs total no more than a few thousand dollars and have
been borne by the members of the Company's mangement which own the computer
systems the Company uses. Indeed, the general need to upgrade and replace
computer systems was more of a factor in recent computer hardware and software
acquisitions than the year 2000 was in connection with the computer systems the
Company uses.
Year 2000 Issues, Risks and Contingency Plans
The most reasonable worst case scenario the Company faces as a result
of year 2000 issues is the failure of third party service providers, such as
banks or telecommunications companies, failing as a result of their failure to
properly remediate any year 2000 problem they may have. If that happens, the
Company will deal with service providers who have not failed to remediate their
year 2000 issues. Management does not anticipate that the costs of changing such
third party service providers will be significant.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATION
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Plan of Operation
During the twelve-month period following the filing of this Amended
Form 10-SB, the Company intends to develop its operations from capital
contributions made by management. At this point in time the success of the
Company's future operation is entirely dependent on managements funding of
operations. Management believes that it can provide sufficient funding for the
Company's operations for the next 12 months. Also management will attempt to
finance the production of its films through "off balance sheet" financing.
Generally speaking, "off balance sheet financing" refers to the use of funds
from venture partners or from subsidies from third parties. By using such
financing, the Company does not intend to use its own funds for the production
of the films it produces. It will use established methods of film financing to
avoid as far as is possible any financial risk or burden to its shareholders in
relation to such costs. For example, it is common practice in the film industry
to bring in joint venture partners who provide the necessary production funds in
return for a profit participation in the film. Additionally, the Company intends
to make use of any appropriate tax subsidies and grants that are available for
film making in various parts of the world. If such funding is insufficient to
operate the Company, management will look to outside sources of funding such
offerings of debt and equity securities. If management is unable to raise funds
from sources outside of management, it is unlikely that the Company will be able
to fund its plans to produce and market films and the Company's business plan
will fail. The Company has no liquidation plans if appropriate funding is not
received. The Company has not produced any films to date and its only basis for
indicating that a any profit may be realized from its endeavors is the past
experience of management, specifically John Daly, in the film industry.
Management anticipates that the Company will require funds to operate
as planned as follows: approximately $850,000 for acquiring feature films, on
productions and co-productions of feature films and music production and
licensing, $175,000 on technology development and infrastructure including
creating a web site for the Company, $100,000 on sales and marketing, $100,000
for general and administration and $125,000 for working capital and other
general corporate purposes. Additional funds will be needed for broader sales
and marketing efforts required in connection with the Company's plan.
The Company intends to employ approximately 12 people in the first six
months, of which 5 will be directly related to film and soundtrack production, 3
to film distribution, 1 will be directly related to the design and development
of the Company's web site, 1 will be directly related to technology support and
development and 2 will be directly related to general and administrative.
From time to time the Company may evaluate potential acquisitions
involving complementary businesses, content, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition.
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ITEM 3. DESCRIPTION OF PROPERTY
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While the Company maintains a business office in Reno, Nevada the
Company's executive offices are located in, and substantially all of its
operating activities are conductedfrom office space located in Los Angeles,
California. Nevada Agency and Trust Company, the Company's resident agent and
transfer agent, maintains an office Reno, Nevada and provides its corporate
clients, including the Company, with office space as necessary. The Company also
has a branch office in London, England. The Company believes that additional
space will be required as its business expands and believes that it will be able
to obtain suitable space as needed. The Company does not own any real estate,
nor is the Company engaged in the business of investing in real estate or real
estate mortgages.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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(a) 5% Shareholders:
The following information sets forth certain information as of Sept 30,
1999 about each person who is known to the Company to be the beneficial owner of
more than five percent (5%) of the Company's Common Stock:
<TABLE>
<CAPTION>
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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<S> <C> <C>
Common John Daly 4,000,000 35.8%
1255 Norman Place, Brentwood
Los Angeles, CA 90049
Common Whyteburg Limited 3,500,000 31.3%
P.O. Box 3463 Road Town
Tortola BVI
Common Mark Tolner 1,500,000 13.4%
1009 N. Carol Dr., Apt. #4
Los Angeles, CA 90049
Common Cullen Trading LTD 1,000,000 8.9%
c/o Kerman & Co. Wentworth
House S St. James Square
London, England SW1 Y4JU
</TABLE>
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<TABLE>
(b) Security Ownership of Management:
<CAPTION>
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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<S> <C> <C>
Common John Daly 4,000,000 35.8%
1255 Norman Place, Brentwood
Los Angeles, CA 90049
Common Mark Tolner 1,500,000 13.4%
4929 Wilshire Blvd., #830
Los Angeles, CA 90010
Alexander H. Walker, Jr. 528,181(1) 5%
1700 Coronet Drive
Reno, Nevada
All Directors and 6,028,181 54%
Officers as a Group
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</TABLE>
(1) Of this amount 106,750 shares are owned by a Nevada corporation
named Hidden Splendor Resources, Inc., of which Mr. Walker is an officer and
director and 21,431 shares are owned by a Nevada corporation named Nevada Agency
& Trust Company, of which Mr. Walker also is an officer and director. With his
wife, Mr. Walker owns a controlling interest in both Nevada Agency and Trust and
Hidden Splendor. The remaining 400,000 shares are owned by Mr. Walker in his own
name.
(c) Changes in Control:
There is no arrangement which may result in a change in control.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
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<TABLE>
(a) Directors and Executive Officers
As of September 30, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows: <CAPTION>
Period Served As
Name Age Position Director
- ------------------------ ----- ------------- ---------------------
<S> <C> <C>
John Daly 62 Chairman of the October 1999 to present
Board and a Director
Mark Tolner 43 President, March 1999 to present
Treasurer and
Director
Alexander H. Walker, Jr. 73 Secretary and March 1999 to present
Director
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</TABLE>
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
John Daly, age 62, is Chairman of the Board and a Director of the
Company. He has dedicated his life to the entertainment industry. With a
partner, Mr. Daly formed Hemdale which has packaged, financed and produced
motion pictures. Through Hemdale, Mr. Daly has been involved in the production
of many motion pictures including the Oscar- winning Best Pictures, "Platoon"
and "Last Emperor", the award winning "Hoosiers" and "At Close Range". Other
films in which he and Hemdale participated include "The Terminator", the Cannes
award winner "Images," "The Triple Echo", "The Falcon and the Snowman" and
"Hidden Agenda".
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Mark Tolner, age 43, is the President, Treasurer and a Director of the
Company. Mr. Tolner background is in international business, financial and
investment management, areas in which he generally has worked during the last
eight years. In this regard, Mr. Tolner has been involved with the
conceptualizing, negotiating, funding and managing the joint venture vehicle
used in the expansion of the a chain of specialist sandwich retailers in London,
England. He has negotiated the acquisition from a Danish Venture Capital company
of a controlling interest in an company with joint ventures in television data
broadcasting with CNN and Reuters. He also has worked on a debt restructuring
for the Brazilian State owned shipping line Lloyd Brasiliero cn.
Alexander H. Walker, Jr., age 73, is the Secretary and a Director of
the Company. He received his B.A. from Waynesburg College in 1950 and his J.D.
from the University of Pittsburgh School of Law in 1952. Since 1956, Mr. Walker
has been a practicing attorney, with his practice including trial and
transactional work, with an emphasis on corporate securities matters. From 1955
to 1956, he served as the Attorney in Charge of the Salt Lake City, Utah Branch
of the United States Securities and Exchange Commission, first serving as the
Attorney Advisor for the Division of Corporate Finance in Washington, D.C. from
1954 to 1955. From 1956 through the present, Mr. Walker has maintained a private
practice. He maintains licenses in both Utah and Pennsylvania. Mr. Walker also
in an owner of Nevada Agency and Trust Company, the Company's transfer agent,
and Hidden Splendor Resources, Inc., a Company shareholder. Hidden Splendor owns
mining properties in Utah, Colorado and Nevada. Mr. Walker devotes part of his
time to businesses of Nevada Agency and Trust Company and Hidden Splendor
Resources, Inc.
(c) Directors of Other Reporting Companies:
Mr. Walker also is a director of Talk Visual Corp. whose shares are
traded under the symbol TVCP on the OTC Bulletin Board market.
(d) Employees:
The officers and directors who are identified above are the current
significant employees of the Company. Mr. Tolner spends a majority of his time
on the business operations of the Company, but performs services for the Company
on a non-exclusive basis. Mr. Walker spends whatever time is required on the
Company's business, also on a non-exclusive basis. Neither Mr. Tolner nor Mr.
Walker have any experience in film production. The Company will rely on Mr.
Daly's experience in the film industry in connection with its operations. Mr.
Daly spends whatever time is required of him on the Company's business, but does
so on a non-exclusive basis.
(e) Family Relationships:
There are no family relationships between the directors, executive
officers or any other person who may be selected as a director or executive
officer of the Company.
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<PAGE>
(f) Involvement in Certain Legal Proceedings:
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
(1) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior
to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, or any Court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws
or commodities law, and the judgment has not been reversed,
suspended, or vacated.
- --------------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The Company has not compensated its management in the last three years
due to the fact that the Company has not been engaged in business since 1993.
However, the following table sets forth information about compensation paid or
accrued during the years ended December 31, 1998, 1997 and 1996 to the Company's
officers and directors. None of the Company's Executive Officers earned more
than $100,000 during the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
Position Year $ ($) ($) ($) SARs(#) ($) ($)
- -------- ------ ------ ----- ------ ----- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
John Daly
President 1998 $None $None $None $None None None None
and Director 1997 $None $None $None $None None None None
1996 $None $None $None $None None None None
Mark Tolner
V. P. 1998 $None $None $None $None None None None
and Director 1997 $None $None $None $None None None None
1996 $None $None $None $None None None None
Alexander H. Walker, Jr.
Secretary 1998 $None $None $None $None None None None
and Director 1997 $None $None $None $None None None None
1996 $None $None $None $None None None None
</TABLE>
-14-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's common stock, except as
disclosed in the following paragraphs. The Company has no policy as such of
entering into transactions with affiliates.
Also, John Daly, Mark Tolner and Alexander H. Walker, Jr. can be deemed
as promoters of the Company. They have received compensation from the Company as
disclosed below.
During April of 1999, management entered into an Exchange Agreement
with a Nevada corporation named EnterTech Limited. Under the terms of that
Exchange Agreement, the Company was obligated to issue a minimum of 11,500,000
shares and a maximum of 15,000,000 shares of it common stock in exchange for all
the issued and outstanding shares of EnterTech Limited. At the time of the
Exchange Agreement, EnterTech Limited had 10,000,000 shares of common stock
issued and outstanding. EnterTech Limited also was in the process of offering a
minimum of 1,500,000 shares and a maximum of 5,000,000 shares of its common
stock pursuant to a private placement memorandum. Because the Company was
obligated to issue a minimum of 11,500,000 pursuant to the Exchange Agreement,
-15-
<PAGE>
it issued 11,500,000 shares of its common stock to an exchange agent who was
charged under the terms of the Exchange Agreement with assuring that the
appropriate number of the Company's shares are issued to the shareholders of
EnterTech Limited once EnterTech Limited's private placement was complete.
10,000,000 of these initial 11,500,000 shares were issued for the 10,000,000
shares of EnterTech Limited issued and outstanding apart from the private
placement offering, and the remain 1,500,000 shares were issued for the exchange
of the minimum number of shares EnterTech Limited was offering pursuant to its
private placement memorandum. Because no consideration was paid for these
1,500,000 shares, their issuance and return are not refelcted on the Company's
financial statements, though the issuance and return of these shares do appear
on the Company's stock transfer records. Mr. Tolner, the Company's President
signed the exchange agreement on behalf of both the Company and EnterTech
Limited. The private placement was terminated following the filing of the
Company's Form 10-SB. The 1,500,000 shares issued in connection with the
EnterTech Limited private placement will be returned to the Company. The
10,000,000 shares issued pursuant to the Exchange Agreement were issued as
follows:
John Daly 4,000,000
Mark Tolner 1,500,000
Whyteburg Limited 3,500,000
Cullen Trading Limited 1,000,000
The principals of Whyteburg Limited are Christopher Langenauer and
Margrith Burer. The principals of Cullen Trading are Jason Tabone and Stephen
Hirst.
EnterTech Limited owns 100% of the issued and outstanding shares of two
subsidiaries, EnterTech Picture Corporation and EnterTech Releasing Corporation,
also Nevada corporations.
On or about May 21, 1999, the Company issued 400,000 shares to
Alexander H. Walker, Jr., an officer and director, in exchange for legal and
business services to the Company. The shares issued to Mr. Walker were issued in
reliance on the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended, and the certificate representing such shares
bears a restrictive legend reflecting the limitations on future transfer of
those shares.
On July 31, 1998, prior to the six for one reserve split of the
Company's shares, the Company issued a total or 700,000 to the following
individuals in consideration of the payment of the Company's debt of
approximately $1,333 to Nevada Agency and Trust Company, the Company's transfer
agent and resident agent:
Amanda Cardinalli 96,000 pre-split shares
Alexander H. Walker III 96,000 pre-split shares
Timotha Kent 96,000 pre-split shares
Hidden Splendor Resources 288,000 pre-split shares
Nevada Agency 124,000 pre-split shares
and Trust Company
-16-
<PAGE>
This stock was issued in accordance with the exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended. The amount
of debt extinguished was less than $60,000.
Also, the Company intends to enter into 2-year employment agreements
individuals the Company deems vital the Company's operations. These individuals
are Mark Tolner, an officer and director and John Daly. Pursuant to these
employment agreements, Mark Tolner will be compensated for his services at the
rate of $120,000 per year, and John Daly will be compensated for his services at
the rate of $120,000. The Company's board of directors may increase the base
salary of these individuals, as it deems appropriate.
The employment agreements will provide that if Messrs. Tolner and Daly
are terminated by the Company without Just Cause (as defined in the employment
agreements), each will be
entitled to receive the lesser of (i) his base salary for one year from the
termination plus the value of any benefits, or(ii) the aggregate amount of his
base salary plus the value of any benefits during the balance of the agreements.
The employment agreements also will provide that Messrs. Tolner and
Daly will not, during the term of the Agreements or thereafter, disclose any
confidential information of the Company without prior approval of the Company.
The agreements also will provide that Messrs. Tolner, Daly and Smallcombe will
not, during the term of the Agreements and for a period of one year thereafter,
participate in any business that competes with the Company or solicit any of the
Company's employees or customers or otherwise interfere with the relations of
the Company. State and or federal courts may or may not enforce such
restrictions. Currently, no such agreement have been signed.
- --------------------------------------------------------------------------------
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. On September
30, 1999, there were 11,150,000 shares of stock issued and outstanding.
-17-
<PAGE>
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of all debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
The Company may, if approved at the general meeting of shareholders,
resolve to authorize the Board of Directors to declare and pay dividends to the
Company's shareholders in the form of bonus shares. The shareholders would
receive bonus shares in lieu of cash dividends, if any, declared and paid by the
Company.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
Authorized but Unissued Shares. The Company has authorized 100,000,000
shares of common stock, par value $0.001 per share. These shares were authorized
for the purpose of providing the Board of Directors of the Company with as much
flexibility as possible to issue additional shares for proper corporate purposes
including equity financing, acquisitions, mergers, stock dividends, stock
splits, stock options and other purposes. The Company has no agreements,
commitments or plans at this time for the sale or use of its shares of common
stock except as described herein. Through September 30, 1999, the Company had
issued 11,150,000 shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
Bylaws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
-18-
<PAGE>
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights Except as set forth below, every holder of shares present
in person or by proxy or by representative, attorney or proxy appointed under
the Company's By-laws at a meeting of shareholders has one vote on a vote taken
by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
of the share, the only one of the holders entitled to vote is the senior who
tenders a vote, seniority being determined by the order of names in the
company's list of stockholders; (b) if the terms upon which the shares was
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that share was
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days' notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
-19-
<PAGE>
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
Preferred Stock. The Articles of Incorporation provide that the Board
of Directors shall adopt resolutions as to the preferences granted to preferred
stockholders. No such action has been taken to date by the Board.
PART II
- --------------------------------------------------------------------------------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND RELATED SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
The common stock of the Company currently is not trading on any
exchange. Management anticipates that the Company's shares will be qualified on
the system of the National Association of Securities Dealers, Inc. ("NASD")
known as the Bulletin Board.
There has been no market for the Company's stock in the last two years.
Accordingly, the Company has no range of high and low bid prices for the
Company's common stock to report.
-20-
<PAGE>
There is no public market for the shares of the Company and there can
be no assurance that an active public market for the shares will develop or be
sustained. In addition, the shares of the Company are subject to various
governmental and regulatory body rules which affect the liquidity of the shares.
Holders:
There were approximately 108 holders of record of the Company's common
stock as of September 30, 1999.
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
Options and Warrants.
There are no outstanding options or warrants to purchase additional
stock.
"Penny Stock"
The Company's common stock is a "penny stock" as defined by the rules
and regulations promulgated by the Securities and Exchange Commission. Pursuant
to Section 3(a)(51)(A) of the Exchange Act of 1934, as amended, any equity
security is considered to be a "penny stock" unless that security is:
- Registered and traded on a national securities exchange
meeting specified SEC criteria;
- authorized for quotation on NASDAQ;
- issued by a registered investment company;
- excluded, on the basis of price of the issuer's net tangible
assets, from the definition of the term by SEC rule; or
- exempted from the definition by the SEC.
Currently, the Company's common stock does not fall within any of these
non-penny stock categories.
-21-
<PAGE>
The Commission's rules and regulations imposed disclosure, reporting
and other requirements on brokers-dealers in penny stock transactions. In
summary, these requirements are as follows:
Brokers and dealers, prior to effecting any penny stock transactions, must
provide customers with a document that discloses the risks of investing in the
penny stock market. Section 15(g)(2) requires such risk disclosure documents to:
- contain a description of the nature and level of risk involved
in the penny stock market;
- fully describe the duties of the broker-dealer to the
customer, and the rights and remedies available;
- explain the nature of "bid" and "ask" prices in the penny
stock market;
- supply a toll-free telephone number to provide information on
disciplinary histories;
- describe all significant terms used in the risk disclosure
document.
Also, prior to the transaction the broker-dealer must obtain from the
customer a manually signed and dated written acknowledgment of receipt of the
disclosure document. The broker-dealeris required to preserve a copy of the
acknowledgment as part of its records.
Brokers and dealers must disclose the bid and ask prices for penny
stocks, the number of shares to which the prices apply, and the amount and
description of any compensation received by the broker or dealer. Also, brokers
and dealers are to provide each customer whose account contains penny stocks
with a monthly statement indicating the market value of those stocks.
- --------------------------------------------------------------------------------
ITEM 2. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceedings, except as noted below:
1. Interlink Communications Group, Inc. v. Unisat, Inc., Sam Lupton,
Richard Elliot- Square and Does 1 through 50. On or about April 1,
1999, the Company filed a complaint in the District Court, Washoe
County, State of Nevada naming itself as the plaintiff and
-22-
<PAGE>
prejudice. Unisat, Inc., Sam Lupton and Richard Elliot-Square as
defendants. The allegations in the complaint involve an agreement the
Company had with an entity named Telforce Communications, Ltd. and an
individual named Christopher James Clark to acquire all of the issued
and outstanding shares of Telforce. The Company alleges that the
individual defendants, one of whom was a director of the Company at the
time of the Company's agreement with Telforce, caused Telforce to
breach its agreement with the Company and enter into a different
agreement with Unisat for the acquisition of Telforce. The Company
alleges that defendants intentionally interfered with the Company's
contractual rights, breach their fiduciary duties to the Company,
engaged in unfair business practices, and were unjustly enriched by
their actions, among other things. The complaint in that action does
contain a specific dollar amount for monetary damages. The Company
seeks an accounting of defendants' profits in the Unisat agreement for
the acquisition of Telforce and seeks damages against the defendants.
No counterclaim has been filed.
2. Interlink Communications Group, Inc. v. Christopher James Clark. On or
about April 22, 1999, the Company commenced an action in the High Court
of Justice, Queen's Bench Division, in Great Britain naming itself as
plaintiff and Christopher James Clark as the defendant. In that action,
the Company alleges that Clark breached his agreement to sell the
Company all of the issued and outstanding shares of Telforce
Communications, Ltd., a Nevada corporation. The Company seeks an order
of specific performance requiring Clark to honor his agreement to sell
or, in the alternative, an award of damages against Clark for his
failure to honor his agreement. This action has been dismissed without
prejudice.
- --------------------------------------------------------------------------------
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountant is W. Dale McGhie, Town & Country Plaza, 1539
Vasser Street, Reno, Nevada 89502.
- --------------------------------------------------------------------------------
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On July 31, 1998, prior to the six for one reserve split of the
Company's shares, the Company issued a total or 700,000 to the following
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<PAGE>
individuals in consideration of the payment of the Company's debt of
approximately $1,333 to Nevada Agency and Trust Company, the Company's transfer
agent and resident agent:
Amanda Cardinalli 96,000 pre-split shares
Alexander H. Walker III 96,000 pre-split shares
Timotha Kent 96,000 pre-split shares
Hidden Splendor Resources 288,000 pre-split shares
Nevada Agency 124,000 pre-split shares
and Trust Company
Such debt was less than $60,000 and ws incurred as the result of the
accumulation of transfer fees and resident agent and transfer agent fees. This
stock was issued in accordance with the exemption from registration contained in
Section 4(2) of the Securities Act of 1933, as amended. All persons who received
such stock were sophisticated investors and were able to acquire any information
about the Company they so desired.
On or about May 21, 1999, the Company issued 400,000 shares to
Alexander H. Walker, Jr., an officer and director, in exchange for legal and
business services to the Company. The shares issued to Mr. Walker were issued in
reliance on the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended, and the certificate representing such shares
bears a restrictive legend reflecting the limitations on future transfer of
those shares. All persons who received such stock were sophisticated investors
and were able to acquire any
information about the Company they so desired.
In April of 1999, the Company authorized the issuance of 11,500,000 to
John Daly as the Exchange Agent for the shareholders of EnterTech Limited in
connection with the Exchange Agreement between EnterTech Media Group, Inc. and
EnterTech Limited. Under the terms of that Exchange Agreement, the Company was
obligated to issue a minimum of 11,500,000 shares and a maximum of 15,000,000
shares of it common stock in exchange for all the issued and outstanding shares
of EnterTech Limited. At the time of the Exchange Agreement, EnterTech Limited
had 10,000,000 shares of common stock issued and outstanding. EnterTech Limited
also was in the process of offering a minimum of 1,500,000 shares and a maximum
of 5,000,000 shares of its common stock pursuant to a private placement
memorandum. Because the Company was obligated to issue a minimum of 11,500,000
pursuant to the Exchange Agreement, it issued 11,500,000 shares of its common
stock to John Daly, the exchange agent who was charged under the terms of the
Exchange Agreement with assuring that the appropriate number of the Company's
shares are issued to the shareholders of EnterTech Limited once EnterTech
Limited's private placement was complete. 10,000,000 of these initial 11,500,000
shares were issued for the 10,000,000 shares of EnterTech Limited issued and
outstanding apart from the private placement offering, and the remaining
1,500,000 shares were issued for the exchange of the minimum number of shares
EnterTech Limited was offering pursuant to its private placement memorandum. The
private placement was terminated following the filing of the Company's Form
10-SB. The 1,500,000 shares issued in connection with the EnterTech Limited
-24-
<PAGE>
private placement have been returned to the Company. Because no consideration
was paid for these 1,500,000 shares, their issuance and return are not refelcted
on the Company's financial statements, though the issuance and return of these
shares do appear on the Company's stock transfer records. The 10,000,000 shares
of EnterTech Limited for which 10,000,000 of the initial issuance of 11,500,000
shares of EnterTech Media Group, Inc. was made are owned as follows:
John Daly 4,000,000
Mark Tolner 1,500,000
Whyteburg Limited 3,500,000
Cullen Trading Limited 1,000,000
All persons who received such stock were sophisticated investors and were able
to acquire any information about the Company they so desired. The shares issued
and not returned were issued in reliance on the exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended. The
principals of Whyteburg Limited are Christopher Langenauer and Margrith Burer.
The principals of Cullen Trading are Jason Tabone and Stephen Hirst.
- --------------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an action by or
in the right of the corporation, by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses including attorneys fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with the action, suit or proceeding if such person acted in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of the corporation, and that, with respect to any criminal action or proceeding,
such person had reasonable cause to believe that his conduct was unlawful.
Section 78.751 of the Nevada General Corporation Law also allows the
Company to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
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<PAGE>
right of the corporation to procure a judgment in the corporation's favor by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses including amount paid
in settlement and attorneys fees actually and reasonable incurred by such person
in connection with the defense or settlement of the action or suit if such
person acted in good faith and in a manner which such person reasonably believed
to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which such
a person has been adjudged by a court of competent jurisdiction determining,
after exhaustion of all appeals therefrom, to be liable to the corporation or
for amount paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 78.751 of the Nevada General Corporation Law also provides that
to the extent that a director, officer, employee or agent of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraphs above, or in defense of any claim, issue or
matter therein, the corporation shall indemnify him against expenses, including
attorneys fees, actually and reasonably incurred by such person in connection
with the defense.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
-26-
<PAGE>
PART F/S
- --------------------------------------------------------------------------------
Financial Statements
- --------------------------------------------------------------------------------
-27-
<PAGE>
ENTERTECH MEDIA GROUP, INC
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
FINANCIAL STATEMENTS
APRIL 30, 1999, DECEMBER 31, 1998 AND 1997
<PAGE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
TABLE OF CONTENTS
Page No.
ACCOUNTANT'S AUDIT REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operation F-3
Statements of Changes in Stockholder's Equity F-4
Statements of Cash Flows F-5
NOTES TO FINANCIAL STATEMENTS F6 - F7
<PAGE>
W. DALE Mcghie Town & Country Plaza
CERTIFIED PUBLIC ACCOUNTANT 1539 Vassar St. Reno, Nevada 89502
Tel: 775-332-7744
Fax: 775-332-7747
To the Board of Directors
EnterTech Media Group, Inc., and Subsidiaries,
(Formerly Armas International Corporation, Inc.)
Reno, Nevada
ACCOUNTANT'S AUDIT REPORT
I have audited the accompanying balance sheets of EnterTech Media Group, Inc.,
and Subsidiaries -- A Development Stage Enterprise (formerly Armas Intl. Mfg.
Co., Inc.) as of April 30, 1999, December 31, 1998 and 1997, and the related
statements of operations, changes in stockholders' equity and cash flows for the
4 months (inception of the development stage) and years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above, revised as described
in Notes 3 and 4, present fairly in all material respects the financial position
of EnterTech Media Group, Inc., and Subsidiaries -- A Development Stage
Enterprise (formerly Armas Intl. Mfg. Co., Inc.), as of April 30, 1999, December
31, 1998 and 1997, and the results of their operations, changes in stockholders'
equity and their cash flows for the 4 months and years then ended in conformity
with generally accepted accounting principals.
/s/ W.Dale Mcghie
- ----------------
W. Dale Magee
Certified Public Accountant
Reno, Nevada
June 7, 1999 except for Notes 3 and 4 dated September 7, 1999
F-1
<PAGE>
<TABLE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
BALANCE SHEETS
April 30, 1999, December 31, 1998 and 1997
<CAPTION>
ASSETS
30-Apr-99 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 217,820 $ -- $ --
--------- --------- ---------
EQUIPMENT
Equipment 1,966 -- --
Vehicles 57,000 -- --
--------- --------- ---------
58,966
Less accumulated depreciation - Note 1 -- -- --
58,966 -- --
--------- --------- ---------
OTHER ASSETS
Investments - Securities 440 -- --
--------- --------- ---------
Total Assets $ 277,226 $ -- $ --
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $ 6,211 $ -- $ --
--------- --------- ---------
STOCKHOLDERS' EQUITY- Note 1
Common Stock ($0.001 par
value) 100,000,000 Shares Authorized; 10,900,000 Issued and Outstanding
on April 30, 1999, 500,000 on December 31, 1998,
and 383,333 on December 31, 1997 10,900 500 383
Additional Paid in Capital, 329,457 56,891 55,758
Retained Earnings (deficit) Accumulated
Before the Development Stage (57,391) (57,391) (56,141)
Deficit Accumulated During the
Development Stage (11,951) -- --
--------- --------- ---------
Total Stockholder's Equity 271,015 -- --
--------- --------- ---------
Total Liabilities and
Stockholder's Equity $ 277,226 $ -- $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-2
<PAGE>
<TABLE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
STATEMENTS OF OPERATIONS
FOR THE FOUR MONTHS ENDING APRIL 30, 1999
AND FOR THE YEARS ENDING DECEMBER 31, 1998 AND 1997
<CAPTION>
Inception of
Development
Stage
30-Apr-99 1998 1997 Cumulative
<S> <C> <C> <C> <C>
REVENUE $ -- $ -- $ --
-------- -------- -------- ---------------
EXPENSE
Advertising and Promotion 2,500 -- -- 2,500
Auto Expenses 952 -- -- 952
Legal & Accounting 3,254 1,250 -- 3,254
Outside Services 3,000 -- -- 3,000
Telephone 1,069 -- -- 1,069
Dues & Subscription 140 -- -- 140
Meals & Entertainment 577 -- -- 577
Bank Charges 459 -- -- 459
-------- -------- -------- --------
Total Expense 11,951 1,250 -- 11,951
-------- -------- -------- --------
Net Income (Loss) $(11,951) $ (1,250) $ -- $(11,951)
======== ======== ======== ========
Net Income Per Share (Note 1) $ (0.016) $ (0.003) $ N/A
======== ======== ========
</TABLE>
The accompany notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE FOUR MONTHS ENDING APRIL 30, 1999
AND FOR THE YEARS ENDING DECEMBER 1998 AND 1997
<CAPTION>
Retained Deficit Accum.
Common Additional Earnings During the
Stock paid in Capitol (Deficit) Developmt. Stg.
----- --------------- --------- ---------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995,
2,063,749 Shares $ 10,319 $ 45,822 $ (56,141) $ --
Retroactive restatement of par value
in common stock (8,255) 8,255 -- --
Retroactive restatement of 6 for 1
reverse stock split (1,720) 1,720 -- --
--------- --------- --------- ---------
Restated Balance, January 1, 1995,
343,958 shares 344 55,797 (56,141) --
Issue of 39,375 shares of common
stock for services on May 22, 1995
recorded at no value 39 (39) -- --
--------- --------- --------- ---------
Balance, December 31, 1995, 383,333 shares 383 55,758 (56,141) --
Net income for the year ending
December 31, 1996 and 1997 -- -- -- --
Issue of 116,667 shares of common
stock for services on July 31, 1998 117 1,133
Net income for the year ending
December 31, 1998 -- -- (1,250) --
--------- --------- --------- ---------
Balance December 31, 1998,
500,000 Shares 500 56,891 (57,391) --
Issue of 400,000 shares of common
stock for services on April 21, 1999,
recorded at invoice amount 400 600
Sale of 10,000,000 shares of common stock
for cash on April 22, 1999 (Note 2),
10,000,000 shares 10,000 271,966 -- --
Net (loss) for the four months
ending April 30, 1999 -- -- -- (11,951)
--------- --------- --------- ---------
Balance April 30, 1999,
12,400,000 shares $ 10,900 $ 329,457 $ (57,391) $ (11,951)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
<TABLE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
STATEMENT OF CASH FLOWS
FOR THE FOUR MONTHS ENDING APRIL 30, 1999
AND YEARS ENDING DECEMBER 31, 1998 AND 1997
<CAPTION>
Deficit
from
Inception of
Development
30-Apr-99 1998 1997 Stage
<S> <C> <C> <C> <C>
Cash Flows Operating Activities
Net Loss $ (11,951) $ (1,250) $-- $ (11,951)
Changes in Operating Assets and
liabilities:
Stock issued for services 1,000 1,250 -- $ 1,000
Increase in Accounts Payable 6,211 -- -- 6,211
--------- --------- --------- ---------
Net Cash used by Operating Activities (4,740) -- -- (4,740)
--------- --------- --------- ---------
Cash Flows Investing Activities
Purchase of Equipment and Vehicle (58,966) -- -- (58,966)
Purchase of Securities (440) -- -- (440)
--------- --------- --------- ---------
Net Cash used by Investing Activities (59,406) -- -- (59,406)
--------- --------- --------- ---------
Cash Flows Financing Activities
Proceeds from Issuance of
Common Stock 281,966 -- -- 281,966
--------- --------- --------- ---------
Net Increase (Decrease) in Cash 217,820 -- -- 217,820
Cash at Beginning of Period -- -- -- --
--------- --------- --------- ---------
Cash at End of Period $ 217,820 $ -- $-- $ 217,820
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1999, DECEMBER 31, 1998 AND 1997
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND ORGANIZATION:
EnterTech Media Group, Inc., and Subsidiaries (formerly Armas Intl. Mfg. Co.,
Inc., dba Inter-Link Communications Group, Inc.), hereafter referred to as the
Company, is a Nevada Corporation and a Development Stage Enterprise as defined
by FASB's Statements of Financial Accounting Standards ("SFAS") 7. Since the
beginning of 1999, the Company devoted all of its efforts to establishing a new
business. Planned principal operations to produce and distribute films have not
yet commenced. The Company plans to reactivate its business operations in the
last half of 1999.
The Company was incorporated November 17, 1986, under the name Stones Stores,
Inc. The Company changed its name in 1987 to Stone International, Inc., and
again in 1990 to Armas Intl. Mfg. Co., Inc. The Company became inactive in 1989
and remained inactive until 1999. On April 22, 1999, the Company charged it's
name to EnterTech Media Group, Inc., and authorized capital stock of 100,000,000
shares with a par value of $.001 per share (following a 6 to 1 reverse split in
October 1998). These financial statements reflect the changes made in the
Company's name and the par value of common stocks retroactively. See also Note
2.
Prior to 1995, all books and records were destroyed. Federal income tax returns
have been prepared for the years ending December 31, 1998 and 1997 based on
these financial statements.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company was inactive during the prior years, therefore, many accounting
policies have yet to be determined. There was no depreciation recorded on assets
acquired in April of 1999. Depreciation will be computed using estimated lives
on a straight line basis. The Company will incorporate standard accounting
policies for the film production and/or retail sales industries as Company
policies become applicable. The application of such standards is not expected to
have any effect on the current financial statements.
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
Entertech Media Group, Inc., and its wholly-owned subsidiary, EnterTech Limited
(along with EnterTech Limited's subsidiaries, EnterTech Picture Corporation and
EnterTech Releasing Corporation). See also notes 2 and 3. All significant
intercompany balances and transactions have been eliminated.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect certain reported accounts and disclosures. Accordingly, actual results
could differ from these estimates.
EARNINGS PER SHARE:
The earnings per share calculation is based on the weighted average number of
shares outstanding during the period: 723,125 shares in April 1999; 431,944
shares in 1998; and 383,333 shares in 1997.
DIVIDEND POLICY:
The company has not paid dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company and other
relevant factors.
F-6
ENTERTECH MEDIA GROUP, INC.
AND SUBSIDIARIES
A DEVELOPMENT STAGE ENTERPRISE
(FORMERLY ARMAS INTL. MFG. CO., INC.)
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1999, DECEMBER 31, 1998 AND 1997
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES:
A deficit of $57,391 reflected on the financial statements from prior losses
will not be available as a net operating loss carry forward because of change in
ownership and business purpose. The current period loss of $11,951 will be
available to offset future taxable income for 15 years.
NOTE 2 - BUSINESS ACQUISITIONS
On April 22, 1999, the Company acquired EnterTech Limited, a Nevada corporation,
in a business combination accounted for as a combination of entities under
common control. EnterTech Limited had previously been known as EnterTech Media
Group, but exchanged names with the Company in conjunction with the business
combination. EnterTech Limited, which plans to engage in film production and
distribution, became a wholly-owned subsidiary of the Company through the
exchange of 10,000,000 shares of the Company's common stock for all of the
outstanding stock of EnterTech Limited. The acquisition has been accounted for
as a combination of entities under common control which is similar to a pooling
of interests. Accordingly, the accompanying financial statements are restated
for all periods presented to give effect to the combination. Assets and
liabilities are reflected at their original cost bases using the pooling of
interests method.
NOTE 3 - PRIVATE PLACEMENT
On March 31, 1999, EnterTech Limited (then known as EnterTech Media Group as
discussed in Note 2) offered a minimum of 1,500,000 shares and a maximum of
5,000,000 chares of its common stock in units of 25,000 at a price of $1.00 per
share pursuant to a Private Placement Memorandum. Subsequently, this private
placement was cancelled.
NOTE 4 - REVISED FINANCIAL STATEMENTS
The financial statements and the auditors' report dated July 7, 1999, for the
periods ending December 31, 1998 and 1999, and the four months ending April 30,
1999, have been recalled, the following items were adjusted.
Recognition that the Company is a development stage enterprise.
Valuation of stock for services was changed to $1,000 from 0 in 1999
and $1,250 from 0 in 1998.
Recognition that the Company expects to adopt current and future
accounting principles applicable to the film production and retail
sales markets.
The net effect of the above change is as follows:
Net loss increased by $1,250 1n 1998 and $1,000 in 1999 No effect on
net assets or liabilities.
F-7
PART III
- --------------------------------------------------------------------------------
ITEM 1. Index to Exhibits
- --------------------------------------------------------------------------------
The exhibits filed with the Company's Form 10-SB dated June 11, 1999
are incorporated herein by this reference. The following exhibits also are filed
with this Amended Form 10-SB:
Assigned Number Description
- --------------- ------------------------------------------------
(3)(i) Articles of Incorporation dated November 17, 1986;
Amendment to Articles of Incorporation dated May 1,
1987; Amendment to Articles of Incorporation dated
May 10, 1990; Amendment to Articles of Incorporation
dated October 23, 1998; ; and Amendment to Articles
of Incorporation dated June 1, 1999.
(10) Material Contracts: Consulting Agreement dated March
1, 1999.
(11) Statement regarding computation of per share
earnings: Computations can be determined from the
financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: October 29, 1999.
ENTERTECH MEDIA GROUP, INC.
By:/s/ Mark R. Tolner
-----------------------
Mark R. Tolner
President
29
FILED ARTICLES OF INCORPORATION
IN THE OFFICE OF
THE SECRETARY OF OF
STATE OF THE STATE
OF NEVADA STONES STORES, INC.
NOV 17 1986
No. 8059-86 * * * * * *
The undersigned, acting as incorporator, pursuant to the
provisions of the laws of the State of Nevada relating to private corporations,
hereby adopts the following Articles of Incorporation:
ARTICLE ONE. [NAME]. The name of the corporation is:
STONE STORES, INC.
ARTICLE TWO: [LOCATION]. The address of the
corporation's principal office is Suite 310, 333 East Fifth Street, Carson City,
State of Nevada 89701. The initial agent for service of process at that address
is NATCO.
ARTICLE THREE. [PURPOSES]. The purposes for
which the corporation is organized are to engage in any activity or business not
in conflict with the laws of the State of Nevada or of the United States of
America.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation
shall have authority to issue an aggregate of FIFTY MILLION (50,000,000) Common
Capital Shares, par value ONE MIL ($0.001) per share, for a total capitalization
of $50,000.
The holders of shares of capital stock of the corporation
shall not be entitled to pre-emptive or preferential rights to subscribe to any
unissued stock or any other securities which the corporation may now or
hereafter be authorized to issue.
The corporation's capital stock may be issued and sold from
time to time for such consideration as may be fixed by the Board of Directors,
provided that the consideration so fixed is not less than par value.
1
<PAGE>
The stockholders shall not possess cumulative voting rights at
all shareholders meetings called for the purpose of electing a Board of
Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the
corporation shall be governed by a Board of Directors of not less than three (3)
persons. The names and addresses of the first Board of Directors are:
NAME ADDRESS
DONALD SMYTHE 4555 HAMILTON AVENUE, #3
SAN JOSE, CALIFORNIA 95130
JAMES MCGINNIS 24651 LEONA DRIVE
HAYWARD, CALIFORNIA 94542
FRED HELMKE P.O. BOX 2414
SUNNYVALE, CALIFORNIA 94087
ARTICLE SIX. [ASSESSMENT OF STOCK]. The capital stock of
the corporation, after the amount of the subscription price or par value has
been paid in, shall not be subject to pay debts of the corporation, and no paid
up stock and no stock issued as fully paid up shall ever be assessable or
assessed.
ARTICLE SEVEN. [INCORPORATOR] The name and address
of the incorporator of the corporation is as follows:
NAME ADDRESS
LINDA GILLESPIE Suite 310
333 EAST FIFTH STREET
CARSON CITY, NEVADA 89701
ARTICLE EIGHT. [PERIOD OF EXISTENCE] The period of
existence of the corporation shall be perpetual.
ARTICLE NINE. [BY-LAWS] The initial By-laws
of the corporation shall be adopted by its Board of Directors. The power to
alter, amend, or repeal the By-laws, or to adopt new By-laws, shall be vested in
the Board of Directors, except as otherwise may be specifically provided in the
By-laws.
2
<PAGE>
ARTICLE TEN. [STOCKHOLDERS' MEETINGS]. Meetings of stockholders
shall be held at such place within or without the State of Nevada as may be
provided by the By-laws of the corporation. Special meetings of the stockholders
may be called by the President or any other executive officer of the
corporation, the Board of Directors, or any member thereof, or by the record
holder or holders of at least ten percent (10%) of all shares entitled to vote
at the meeting. Any action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by
stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. [CONTRACTS OF CORPORATION]. No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any director of this corporation, individually, or any firm
of which such director may be a member, may be a party to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has hereunto
affixed her signature at Carson City, Nevada this 17th day of November, 1986.
/s/ Linda Gillespie
-------------------
LINDA GILLESPIE
STATE OF NEVADA }
: ss.
CARSON CITY }
On the 17th day of November, 1986, before me, the undersigned,
a Notary Public, personally appeared LINDA GILLESPIE, known to me to be the
person described in and who executed the foregoing instrument, and who
acknowledged to me that she executed the same freely and voluntarily for the
uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ C. Joyce Speck
-------------------------------
C. Joyce Speck
NOTARY PUBLIC
RESIDING IN CARSON CITY, NEVADA
My Commission Expires:
SEPTEMBER 12, 1989
- ----------------------
4
FILED AMENDMENT
IN THE OFFICE
OF THE TO THE ARTICLES OF INCORPORATION OF
SECRETARY OF
STATE OF NEVADA STONES STORES, INC.
MAY 1, 1987
No. 8059-86
* * * * * *
Pursuant to the provisions of Section 78.385 of the
Nevada Revised Statutes, Stones Stores, Inc. adopts the following
amendments to its Articles of Incorporation:
1. The undersigned hereby certify that on Friday, March 20,
1987, a Special Meeting of the Board of Directors of Stones Stores, Inc. was
duly held and convened at which there was present a quorum of the Board of
Directors acting throughout all proceedings, and at which time the following
resolution was duly adopted by the Board of Directors: BE IT RESOLVED: That the
Board of Directors does hereby authorize and direct its Secretary, Ronald W.
Webb, to execute a Notice to be sent to all stockholders of the corporation as
their names and addresses appear on the stockholders' list as of the close of
business on March 20, 1987, calling a Special Stockholders' Meeting to be held
at Suite 980, Valley Bank Plaza,50 West Liberty Street, Reno, Nevada, on Monday,
March 30, 1987 at 10:00 o'clock a.m., local time, for the following purposes:
a. To amend Article One to provide that the
name of the corporation shall be changed
from Stones Stores, Inc. to Stone
International, Inc.
1
<PAGE>
b. To amend Article Four to provide that the capitalization shall be
changed from 50,000,000 shares with a par value of $0.005 per share
with all other rights of stockholders to remain such as to provide that
each share of stock shall remain non-assessable and the stockholders
shall not have pre-emptive rights to acquire additional stock. The
effect of the amendment to the Articles of Incorporation being that
there is a forward split and each one (1) share of $0.001 par value
stock is equal to five (5) shares of $0.005 par value stock.
2. A Special Meeting of the Shareholders of Stones Stores,
Inc.was held on Monday, March 30, 1987, at Suite 980, Valley Bank Plaza, 50 West
Liberty Street, Reno, Nevada at 10:00 a.m., local time, and with regard thereto,
the undersigned certify as follows:
a. Notice of the Special Meeting of Shareholders was
mailed to each shareholder on March 20, 1987.
b. There were present in person or by proxy 329,600
shares of the 600,000 shares outstanding in the
corporation.
c. The proposal to amend the Articles of Incorporation
which is set forth below, was adopted by 329,600
shares. There were no shares voting against the
proposal and no shares abstained from voting.
2
<PAGE>
ARTICLE ONE: [NAME] The name of the corporation is:
STONE INTERNATIONAL, INC.
ARTICLE FOUR: [CAPITAL STOCK] The corporation shall have
authority to issue FIFTY MILLION SHARES (50,000,000) of Common Stock with
each shares having a par value of FIVE MIL ($0.005) per share. All stock
when issued shall be fully paid and non-assessable. No holder of shares of
common stock of the corporation shall be entitled, as such, to any
pre-emptive or preferential rights to subscribe to any unissued stock, or
any other securities which the corporation may now or hereafter be
authorized to issue. Each share of common stock shall be entitled to one
vote at stockholders' meetings, either in person or by proxy. Cumulative
voting and elections of directors and all other matters brought before
stockholders' meetings, whether they be annual or special, shall not be
permitted. Each one (1) share of par value $0.001 per share shall be
exchanged for five (5) shares of $0.005 par value common stock.
IN WITNESS WHEREOF, the undersigned hereunto
affix their signatures this 29th day of April, 1987.
3
<PAGE>
STONES STORES, INC.
By /s/ Donald R. Smythe
--------------------
Donald R. Smythe
President
By /s/ Frederick K. Helmke
------------------------
Frederick K. Helmke
Secretary and Treasurer
STATE OF NEVADA }
: ss.
COUNTY OF WASHOE }
On the 29th day of April, 1987, before me, the undersigned, a
Notary Public in and for the State of Nevada, personally appeared Donald R.
Smythe, the duly elected President, and Frederick K. Helmke, the duly elected
Secretary of Stones Stores, Inc., known to me to be the persons described in and
who executed the foregoing Amendment to the Articles of Incorporattion and who
acknowledged to me that they executed the same freely and voluntarily on behalf
of and in their capacities as President and Secretary, respectively, of Stones
Stores, Inc. I have hereunto set my hand and affixed my official seal the day
and year first above written.
/s/ Linda Gillespie
--------------------
NOTARY PUBLIC
Residing in Douglas County
My Commission Expires:
April 29 1990
4
FILED AMENDMENT
IN THE OFFICE
OF THE TO THE ARTICLES OF INCORPORATION OF
SECRETARY OF
STATE OF NEVADA STONE INTERNATIONAL, INC.
MAY 10, 1990
No. 8059-86
* * * * * *
We, the undersigned, being the directors and officers of
the corporation, and in pursuance of the corporate laws of the
State of Nevada, being Chapter 78 of the Nevada Revised Statutes,
do hereby adopt the following Amendment to its Articles of
Incorporation:
1. The name of the corporation is Armas Intl. Mfg. Co., Inc.
The above amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation on the 1st day of May, 1990, by a majority vote
of the shareholders of the corporation.
DATED this 7th day of May, 1990.
By /s/ Fred Haile
----------------
Fred Haile
President & Director
By /s/ Ramiro E. Romo, Jr.
-----------------------
Ramiro E. Romo, Jr.
Secretary & Director
1
<PAGE>
STATE OF TEXAS }
: ss.
COUNTY OF HARRIS }
On this 7th day of May, 1990, personally appeared before me, a
notary public, Fred Haile, and Ramiro E. Romo, who executed the foregoing
Amendment to the Articles of Incorporation and who acknowledged that they
executed the above instrument.
/s/ Rudolph E. Serna
----------------------
NOTARY PUBLIC
State of Texas
My Commission Expires 3/31/93
2
FILED AMENDMENT
IN THE
OFFICE OF TO THE ARTICLES OF INCORPORATION OF
THE
SECRETRY OF ARMAS INTL. MFG. CO., INC.
STATE OF NEVADA
OCT. 23, 1998 * * * * * *
No. C8059-86
Pursuant to the provisions of the Nevada Revised Statutes,
ARMAS INTL. MFG. CO., INC., a Nevada corporation, adopts the following
amendments to its Articles of Incorporation:
1. The undersigned hereby certifies that on the 23rd day of
October, 1998, a Special Meeting of the Board of Directors of ARMAS INTL. MFG.
CO., Inc. was duly held and convened in accordance with the Nevada Revised
Statutes and at which time the following resolutions were unanimously adopted by
the Board of Directors: BE IT RESOLVED: That the Secretary of the corporation is
hereby authorized and directed to obtain the written consent of a majority of
the outstanding stock of the corporation to convene a Special Meeting of
Stockholders to be held on Friday, October 23, 1998, at 9:00 o'clock a.m., local
time, pursuant to Nevada law for the following purposes:
To call a Special Stockholders Meeting to consider and vote upon a proposal to
amend the Articles of Incorporation to:
a. Change the corporate name to:
INTER-LINK COMMUNICATIONS GROUP, INC.
b. To increase the capital stock to 100,000,000 shares with a par
value of $0.001 per share.
1
<PAGE>
c. To effect a reverse split of the common stock of the
corporation on a basis of six (6) shares of the presently
outstanding stock surrendered for one (1) share of the newly
authorized common stock.
2. Pursuant to the provisions of the Nevada Revised Statutes,
a majority of the stockholders holding 1,600,000 shares of the 3,000,000 shares
outstanding of Armas Intl. Mfg. Co., Inc. gave their written consent that a
Special Meeting of the Shareholders be held on Friday, October 23, 1998, at
10:00 o'clock a.m., and with regard thereto, the undersigned certify as follows:
a. The proposal to amend Article One which is set forth
below was adopted by 1,600,000 shares. There were no
shares voting against the proposal and no shares
abstained from voting.
b. The proposal to amend Article Four of the Articles of
Incorporation, which is set forth below, was adopted
by 1,600,000 shares. There were no shares voting
against the proposal and no shares abstained from
voting.
ARTICLE ONE. [NAME] The name of the corporation is:
-----------
INTER-LINK COMMUNICATIONS GROUP, INC.
ARTICLE FOUR. [CAPITAL STOCK] The corporation shall have
-----------
authority to issue an aggregate of ONE HUNDRED MILLION (100,000,000) shares of
Common Stock, Par Value $0.001 per share.
2
<PAGE>
All common stock when issued shall be fully paid and non-assessable.
No holder of shares of common stock of the corporation shall be entitled as such
to any pre-emptive or preferential rights to subscribe to any unissued stock, or
any other securities which the corporation may now or hereafter be authorized to
issue.
The corporation's common stock may be issued and sold from time to
time for such consideration as may be fixed by the Board of Directors, provided
that the consideration so fixed is not less than par value.
Holders of the corporation's Common Stock shall not possess
cumulative voting rights at any shareholders meetings called for the purpose of
electing a Board of Directors or on other matters brought before stockholders
meetings, whether they be annual or special.
c. The proposal to effect a reverse split of the common stock
of the corporation on the basis of the surrender of six (6) shares of the
presently outstanding stock for one (1) share of the newly authorized Common
Stock was adopted by 1,600,000 shares. There were no shares voting against the
proposal and no shares abstained from voting.
IN WITNESS WHEREOF, the undersigned being the President and
Secretary of Armas Intl. Mfg. Co., Inc., a Nevada corporation, hereunto affix
their signatures this 23 day of October, 1998.
ARMAS INTL. MFG. CO., INC.
By /s/ Alexander H. Walker, Jr.
-----------------------------
Alexander H. Walker, Jr.
President
By /s/ Amanda W. Cardinalli
-------------------------
Amanda W. Cardinalli
Secretary
3
<PAGE>
STATE OF NEVADA )
: ss.
COUNTY OF WASHOE )
On the 23rd day of October, 1998, before me, the undersigned,
a Notary Public in and for the State of Nevada, personally appeared ALEXANDER H.
WALKER, JR., President and AMANDA W. CARDINALLI, of ARMAS INTL. MFG. CO., INC.,
a Nevada corporation, known to me to be the persons described in and who
executed the foregoing instrument, and who acknowledged to me that they executed
the same freely and voluntarily, in behalf of and in their capacities as
President and Secretary respectively of ARMAS INTL. MFG. CO., INC. for the uses
and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
/s/ Margaret A. Oliver
----------------------
NOTARY PUBLIC
Residing in Reno, Nevada
My Commission Expires:
Oct. 10, 2002
4
FILED AMENDMENT
IN THE OFFICE
OF THE TO THE ARTICLES OF INCORPORATION OF
SECRETARY
OF STATE INTER-LINK COMMUNICATIONS GROUP, INC.
OF NEVADA
JUN 01 1999 * * * * * *
C8059-86
Pursuant to the provisions of the Nevada Revised Statutes,
INTER-LINK COMMUNICATIONS GROUP, INC., a Nevada corporation, adopts the
following amendment to its Articles of Incorporation:
1. The undersigned hereby certify that on the 22nd day of May,
1999, a Special Meeting of the Board of Directors was duly held and convened at
which there was present a quorum of the Board of Directors acting throughout all
proceedings, and at which time the following resolution was duly adopted by the
Board of Directors: BE IT RESOLVED: That the Secretary of the corporation is
hereby ordered and directed to obtain the written consent of stockholders owning
at least a majority or the voting power of the outstanding stock of the
corporation for the following purpose:
To amend Article One to provide that the name of the
corporation shall be changed from INTER-LINK
COMMUNICATIONS GROUP, INC. to EnterTech Media
Group, Inc.
2. Pursuant to the provisions of the Nevada Revised Statutes,
a majority of the stockholders holding 9,500,000 shares common stock of the
10,650,000 shares outstanding of INTER-LINK COMMUNICATIONS GROUP, INC. gave
their written consent to the adoption of the Amendment to Article One of the
Articles of Incorporation as follows:
1
<PAGE>
ARTICLE ONE. [NAME]. The name of the corporation is:
EnterTech Media Group, Inc.
IN WITNESS WHEREOF, the undersigned being the President and
Secretary of INTER-LINK COMMUNICATIONS GROUP, INC., a Nevada corporation,
hereunto affix their signatures this 22ND day of MAY, 1999.
INTER-LINK COMMUNICATIONS GROUP, INC.
By /s/ Mark Tolner
----------------
Mark Tolner
President
By /s/ Toni Obee
--------------
Toni Obee
Assistant Secretary
STATE OF CALIFORNIA }
: ss.
COUNTY OF Los Angeles }
On the 27th day of May, 1999, before me, the undersigned, a
Notary Public, personally appeared MARK TOLNER, President and Toni Obee,
Assistant Secretary of INTER-LINK COMMUNICATIONS GROUP, INC., a Nevada
corporation, known to be the persons described in and who executed the foregoing
instrument, and who acknowledged to me that they executed the same freely and
voluntarily and for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year first above written.
/s/ Linda R. Rosen
------------------
NOTARY PUBLIC
Residing In Encino, CA
My Commission Expires:
2-10-00
- ----------------------
2
Consulting Agreement
This Agreement is entered into as of March 1, 1999 between EnterTech Media
Group, Inc., of 50 West Liberty Street, suite 880, Reno, Nevada 89501
("EnterTech"), and the Cygnus Group ("Cygnus").
1. Engagement. EnterTech hereby engages Cygnus to furnish Peter Marai's services
as a consultant to consult with EnterTech Releasing Corporation during the Term
regarding the acquisition of and U.S theatrical distribution of independent and
foreign films. Cygnus hereby accepts such engagement. Cygnus will not without
the prior written approval of EnterTech Media Group enter into any agreements
oral or otherwise for the acquisition and distribution of such films or any
other commitments. The terms of any acquisitions are to be approved in advance
by John Daly of EnterTech Media Group and in particular any Keyman provisions
are to be specifically approved.
2. Term. The term of this agreement shall be three years commencing on the date
set forth above. The parties agree to review the agreement after 6 months. After
6 months of the term the engagement of Cygnus hereunder will be converted to
direct employment of Peter Marai by EnterTech.
3. Fee. Cygnus' fee shall be US$1,500 per week for the first six months payable
in advance, at the beginning of each week of the Term. This fee will be
renegotiated at the end of the 6th month. This non-refundable fee will be in
addition to Cygnus having the right to a 10% share of the Profits generated by
EnterTech Releasing Corporation. The definition of Profits will be separately
agreed in writing between the parties.
4. Office, Assistant. EnterTech will provide Peter Marai with a suitable office.
EnterTech will if it deems it necessary also provide Peter Marai with an
assistant who will work with him to assist him in his acquisitions work.
5. Travel, Expenses. EnterTech will advance and pay for Peter Marai's travel to
film markets and festivals when required and related expenses, as well as his
customary day-to-day business expenses, in accordance with mutually approved
budgets prior to expenditure.
6. Exclusivity. EnterTech Releasing and Cygnus acknowledge that the engagement
hereunder is on an exclusive basis except that Cygnus and /or Peter Marai may
render outside consulting services as long as they re not conflicting with the
services rendered at EnterTech Releasing and are approved in writing by John
Daly of EnterTech Media Group.
7. Stock Options. It is contemplated by the parties that a more extensive
agreement reflecting the terms contained herein will be prepared in due course
and that such agreement will provide a performance related stock options
package.
8. Miscellaneous. This agreement shall be governed by the laws of the State of
California. This agreement contains the entire agreement of the parties with
respect to the subject matter hereof, supersedes any and all prior agreements
and negotiations and shall be amended or modified only in writing signed by both
parties. This agreement is personal to both parties and may not be assigned by
either party without the other party's prior written consent. All matters
relating to EnterTech and any associated companies and their respective business
affairs are confidential and should be treated as such.
AGREED:
ENTERTECH MEDIA GROUP, INC. THE CYGNUS GROUP.
By: /s/ John Daly By: /s/ Peter Marai
------------- ---------------
John Daly Peter Marai