U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the transition period from _________________ to _________________
Commission file number: 0-28471
ENTRADA SOFTWARE, INC.
(Name of small business issuer in its charter)
Nevada 86-0968364
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7825 E. Gelding Drive
Scottsdale, Arizona 85260
(Address of principal executive offices)
(480) 607-3535
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
[ ] Yes [X] No
The number of shares outstanding of the registrant's common equity as of
March 31, 2000 was 7,151,840 shares of common stock, par value $.001.
Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]
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ENTRADA SOFTWARE, INC.
INDEX TO FORM 10-KSB FILING
FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial statements.............................................. 3
Balance sheet at March 31, 2000................................... 3
Statement of operations for the three months ended
March 31, 2000 .................................................. 4
Statement of cash flows for the three months ended
March 31, 2000................................................... 5
Notes to the financial statements................................. 6
Item 2. Management's discussion and analysis of financial condition
and results of operations......................................... 7
PART II. OTHER INFORMATION
Item 2. Changes in securities............................................. 8
Item 5. Other information................................................. 8
Item 6. Exhibits and reports of Form 8-K.................................. 8
Signatures................................................................. 9
Exhibits................................................................... 9
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENTRADA SOFTWARE, INC.
BALANCE SHEET
MARCH 31, 2000
ASSETS
Current assets
Cash and cash equivalents $ 646,843
Prepaid expenses and deposits 43,065
-----------
Total current assets 689,908
-----------
Furniture, fixtures and equipment 63,783
Less accumulated depreciation (4,203)
-----------
Net furniture, fixtures and equipment 59,580
-----------
Deposits 22,091
Intellectual property, net of accumulated amortization of $455 13,786
-----------
Total assets $ 785,365
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 58,124
Deferred revenue 16,335
Note payable to officer 49,100
-----------
Total current liabilities 123,559
-----------
Other liabilities 14,864
-----------
Total liabilities 138,423
-----------
Stockholders' equity
Serial preferred stock, $.001 par value; authorized
5,000,000 shares Series A convertible preferred
stock, $.001 par value; $1.00 liquidation preference,
250,000 shares authorized, issued and outstanding 250
Common stock; $.001 par value, authorized 70,000,000
shares, 7,151,840 shares issued and outstanding 7,152
Paid in capital 1,257,299
Accumulated deficit (617,759)
-----------
Total stockholders' equity 646,942
-----------
Total liabilities and stockholders' equity $ 785,365
===========
The accompanying notes are an integral part of these financial statements.
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ENTRADA SOFTWARE, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Support revenue $ 6,999
Selling, general and administrative expenses 330,450
-----------
Loss from operations (323,451)
-----------
Other income (expense)
Interest expense (1,102)
Interest income 3,550
-----------
Total other income 2,448
-----------
Net loss $ (321,003)
===========
Loss per common share
Basic $ (.047)
===========
Diluted $ (.047)
===========
Weighted average number of common shares outstanding
Basic 6,885,563
===========
Diluted 6,885,563
===========
The accompanying notes are an integral part of these financial statements.
4
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ENTRADA SOFTWARE, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Cash flows from operating activities:
Net loss $(321,003)
Adjustments to reconcile loss to net cash used in
operating activities:
Depreciation and amortization 2,685
Common stock issued for services 6,000
Changes in assets and liabilities:
Prepaid expenses and deposits (38,753)
Deferred revenue (6,999)
Payables, accruals and other liabilities 31,073
---------
Net cash used in operating activities (326,997)
---------
Cash flows from financing activities:
Sale of common stock 795,201
---------
Net cash provided by financing activities 795,201
---------
Cash flows from investing activities:
Purchase of furniture, fixtures and equipment (26,067)
Cash paid for intangible assets (6,382)
---------
Net cash used in investing activities (32,449)
---------
Net increase in cash 435,755
Cash, beginning of period 211,088
---------
Cash, end of period $ 646,843
=========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,102
=========
The accompanying notes are an integral part of these financial statements.
5
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ENTRADA SOFTWARE, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2000
(1) BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles "GAAP" for interim
financial information and the instructions to Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary for a fair presentation of
the results for the interim period presented have been made. The results for the
three-month period ending March 31, 2000 may not necessarily be indicative of
the results for the entire fiscal year. These financial statements should be
read in conjunction with the Company's Form 10-KSB for the year ended December
31, 1999.
(2) STOCKHOLDERS' EQUITY:
EMPLOYEE STOCK OPTION PLAN
The 1999 Equity Incentive Plan reserves 2,100,000 shares of common stock
for option and stock grants, and expires September 30, 2009. As of March 31,
2000, the Company had granted options for 705,000 shares with a four year
vesting and exercise prices of $.50 to $2.50 per share. Options to purchase
5,000 shares had vested and were exercisable at March 31, 2000, and none had
been exercised.
COMMON STOCK WARRANTS
In March 2000 the Company sold 181,200 shares of common stock in a private
placement for $2.50 per share.
COMMON STOCK WARRANTS
All outstanding warrant units were called for redemption by the Company on
March 10, 2000, and holders have until April 14, 2000 to exercise the units. The
Company will redeem all unexercised warrant units at $.06 per unit. For the
three months ended March 31, 2000, approximately 228,000 warrant units had been
exercised. For the period April 1, 2000 to April 14, 2000 an additional 197,544
warrants were exercised.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Except for historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements include, but are not limited to,
statements regarding future events and our plans and expectations. Our actual
results could differ materially from those discussed. Factors that could cause
or contribute to differences include, but are not limited to, those discussed
elsewhere in this Form 10-QSB, or incorporated by reference. See "Special Note
on Forward-Looking Statements" below.
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
Our operations commenced on a very limited basis in September 1999. Our
activities have been focused entirely on establishing our corporate offices,
completing development of our Kinnosa product suite, preparing marketing
materials and hiring and training our core staff. As planned, sales of our
Kinnosa software products commenced in January 2000. Since our sales cycle is
lengthy - from three to six months - we do not plan to generate any significant
revenues from customer sales until the middle of the second quarter. As a
result, we had an operating loss of $321,003 for the three months ended March
31, 2000. Of the $330,450 of operating expenses for the period, approximately
$203,000 were related to salaries and other personnel expenses, $34,000 was
spent on our marketing program and the remainder of $93,450 was for occupancy,
administrative and other costs.
LIQUIDITY AND CAPITAL RESERVES
Since our sales activities commenced at the beginning of January 2000, we
had minimal revenues and generated no significant working capital from
operations for the quarter ended March 31, 2000. As anticipated, our sales cycle
to new customers is from three to six months. Consequently, we planned to fund
operations, until sales revenues begin, by raising additional equity capital.
During the period ended March 31, 2000 approximately 228,000 warrants were
exercised, bringing $342,000 in new funds to the Company. Subsequent to March
31, 2000 an additional 197,544 warrants were exercised, raising $296,316 in new
capital. Also, we raised $453,000 in new capital through the private placement
of 181,200 shares of common stock at $2.50 per share. Subsequent to March 31,
2000 we sold an additional 15,000 shares and raised $37,500 in additional
capital. The new capital raised, plus remaining cash from prior fund raising,
resulted in working capital reserves of $646,843 at March 31, 2000.
PLAN OF OPERATIONS FOR FISCAL YEAR 2000
We believe that working capital reserves at March 31, 2000 plus the funds
received from the subsequent warrant exercises and common stock sales, will be
sufficient to fund our operations until August 31, 2000, even if no significant
revenues are generated from customer sales. During this period, we plan to hire
up to 15 additional employees, and spend significant amounts on our marketing
program. If we are able to complete customer sales as planned, we believe that
we will have sufficient working capital to reach a level of operations that will
generate a positive cash flow in 2000.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Except for historical information, this Form 10-QSB contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and we intend that these
forward-looking statements be subject to the safe harbors created by these
statutes to the extent they apply.
We may make written or oral forward-looking statements from time to time in
filings with the Securities and Exchange Commission "SEC", in press releases,
quarterly conference calls or otherwise. Wherever possible, we have identified
these forward-looking statements by words such as "anticipates," "believes,"
7
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"estimates," "expects," "intends" and similar expressions. These statements
reflect our current views about future events and financial performance or
operations, and are applicable only as of the date the statements are made.
Forward-looking statements involve risks and uncertainties and readers are
cautioned not to place undue reliance on forward-looking statements. Our actual
results may differ materially from these statements. Factors that cause or
contribute to differences include, but are not limited to, those discussed
elsewhere in this Form 10-QSB, as well as those discussed in our Form 10-KSB,
including those in the Notes to Financial Statements and in the MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION and FACTORS AFFECTING FUTURE
PERFORMANCE sections which are incorporated by reference in this Form 10-QSB.
Although we believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate. There
can be no assurance that the results contemplated in forward-looking statements
will be realized. The inclusion of forward-looking information should not be
regarded as a representation that future events, plans or expectations
contemplated in these statements will be achieved. We undertake no obligation to
publicly update, review or revise any forward-looking statement to reflect any
change in our expectations or any change in events, conditions or circumstances
on which these statements are based. Our filings with the SEC, including the
Form 10-KSB, may be accessed at the SEC's Web site, www.sec.gov.
PART II: OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
During March 2000 the Company sold 181,200 shares of its common stock, at a
price of $2.50 per share, in a private placement. The shares were sold to 33
investors, each of which qualified as an "accredited investor" as defined in
Rule 501(a) of Regulation D. The placement was made in reliance on the exemption
from registration afforded under Rule 506 of Regulation D, and the shares sold
are "restricted securities." The shares were sold by officers of the Company and
no commissions or placement fees were paid.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Number Description
------ -----------
27 Financial data schedule.
b. Reports on Form 8-K
None.
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Entrada Software, Inc.
By /s/ Bruce D. Williams
--------------------------------
Bruce D. Williams, Chief Executive Officer
Date: April 21, 2000
9
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EXHIBIT INDEX
Number Description
------ -----------
27 Financial data schedule.
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ENTRADA SOFTWARE, INC. FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 646,843
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 689,908
<PP&E> 63,783
<DEPRECIATION> 4,203
<TOTAL-ASSETS> 785,365
<CURRENT-LIABILITIES> 123,559
<BONDS> 0
0
250
<COMMON> 7,152
<OTHER-SE> 639,540
<TOTAL-LIABILITY-AND-EQUITY> 785,365
<SALES> 0
<TOTAL-REVENUES> 6,999
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 330,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,102
<INCOME-PRETAX> (321,003)
<INCOME-TAX> 0
<INCOME-CONTINUING> (321,003)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (321,003)
<EPS-BASIC> (.047)
<EPS-DILUTED> (.047)
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