<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000
For the transition period from _____________ to _____________
Commission file number 012612
CALENDAR CAPITAL, INC.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1442918
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Riverplace, 65 Main Street SE, Suite 136
Minneapolis, MN 55414
(Address of Principal Executive Officer)
(612) 676-1436
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal
year, if changed since last report)
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 12,976,418.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
PART I
FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS.................................................................................. 3
Condensed Consolidated Balance Sheets at September 30, 2000 (unaudited)
and March 31, 2000............................................................................................. 3
Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended
September 30, 2000 and 1999..................................................................................... 4
Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended
September 30, 2000 and 1999..................................................................................... 5
Notes to Condensed Consolidated Financial Statements (unaudited)................................................ 6
ITEM 2. PLAN OF OPERATIONS.................................................................................... 12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................................................................... 14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................................. 14
ITEM 3. DEFAULTS UPON SENIOR NOTES............................................................................. 14
ITEM 4. SUBMISSION OF MATTERS TO SECURITY HOLDERS.............................................................. 14
ITEM 5. OTHER INFORMATION..................................................................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................................... 15
</TABLE>
2
<PAGE>
Part I - Financial Information
ITEM 1. Financial Statements
CALENDAR CAPITAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
----- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 194 $ 22,040
Prepaid and other 66,113 46,098
Property and equipment, net of
accumulated depreciation
of $4,481 32,504 *25,353
Investments 1,107,352 1,384,534
Goodwill, net of accumulated
amortization of $48,752 -0- 292,512
----------- -----------
Total assets $ 1,206,163 $ 1,770,537
=========== ===========
(*in March, net of $1,125 of depreciation)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 118,804 172,795
Accrued Expenses 275,606 259,807
Due to related parties 560,410 14,800
Convertible Debentures 873,750 500,000
Notes Payable:
Bank 250,000 242,000
Other 230,000 200,000
----------- -----------
Total current liabilities 2,308,570 1,389,402
=========== ===========
Stockholders' equity:
Preferred stock:
Series B, par value $.01 per share,
authorized 2,000,000 shares,
1,763,200 shares issued and outstanding 17,632 17,632
Series C, par value $01 per share,
authorized 4,000,000 shares,
3,992,128 shares issued and outstanding 39,921 39,921
Common stock, par value $.01 par value;
authorized 14,000,000 shares,
12,976,418 shares issued and outstanding 129,764 129,764
Additional paid-in capital 665,663 667,749
Stock subscriptions receivable (124,000) (124,000)
Accumulated deficit (1,831,387) (349,931)
----------- -----------
Total stockholders' equity (1,102,407) 381,135
=========== ===========
Total liabilities and
stockholders' equity $ 1,206,163 $ 1,770,537
=========== ===========
</TABLE>
3
<PAGE>
CALENDAR CAPITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------ ------------------------------------
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
NET SALES $-0- $-0- $ 47,937 $-0-
Costs and expenses:
General & adminis-
trative expenses 514,565 11,004 825,119 11,004
------------------ ------------------ ------------------ ------------------
LOSS FROM OPERATIONS (1,130,355) (11,004) (1,392,872) (11,004)
------------------ ------------------ ------------------ ------------------
Other income (expense)
Interest:
Income 10,320 -0- 24,773 -0-
------------------ ------------------ ------------------ ------------------
Expense (40,224) (8,162) (65,224) (16,325)
------------------ ------------------ ------------------ ------------------
Equity in losses of
affiliated companies (21,698) -0- (48,033) -0-
------------------ ------------------ ------------------ ------------------
NET LOSS (1,130,355) (19,166) (1,481,456) (27,329)
================== ================== ================== ==================
LOSS PER SHARE
Basic $ (.09) -0- $ (.11) -0-
Diluted $ (.09) -0- $ (.11) -0-
------------------ ------------------ ------------------ ------------------
Weighted average
number of shares $ 12,976,418 $ 11,089,461 $ 12,976,418 $ 9,243,985
================== ================== ================== ==================
</TABLE>
4
<PAGE>
CALENDAR CAPITAL, INC.
STATEMENTS OF CASH FLOW
Increase (Decrease) in Cash and Cash Equivalents
for the six months ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(1,481,456) $ (27,329)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Warrant value adjustment (2,086) -0-
Depreciation 3,356 -0-
Amortization 292,512 -0-
Write-off investments 615,790 -0-
Equity in losses of affiliated companies 48,033 -0-
Changes in current assets and liabilities:
Prepaids and other (20,015) (2,500)
Accounts Payable (35,601) (47,718)
Accrued Payroll -0- (10,000)
Accrued expenses 15,799 16,325
----------- -------------
Net cash used in operating activities (563,668) (71,222)
=========== =============
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (10,507) -0-
Investments:
Cash paid for common stock (20,000) -0-
Advances to affiliates (216,641) -0-
Cash paid for convertible note (150,000) -0-
----------- -------------
Net cash used in investing activities (397,148) -0-
=========== =============
CASH FLOWS FROM FINANCING ACTIVATES:
Proceeds from:
Issuance of Stock -0- 141,000
Note payable, bank 8,000 -0-
Notes payable, other 40,000 -0-
Advance from related parties 527,220 -0-
Convertible debentures 373,750 -0-
Payments on notes payable, other (10,000) -0-
----------- -------------
Net cash provided by financing activities 938,970 141,000
NET INCREASE IN CASH AND CASH EQUIVALENTS -0- 69,778
Cash and cash equivalents at beginning of period -0- -0-
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ -0- $ 69,778
=========== =============
</TABLE>
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Three and six months ended September 30, 2000
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Nature of operations:
Calendar Capital, Inc. and Subsidiary dba Entrenaut, Inc. (Company) located
in Minneapolis, Minnesota, was founded on July 1, 1999 with the purpose of
starting, developing, and managing Internet-related businesses. It is
designed to incubate development-stage companies through management
oversight of a concept, cooperative partnership, or passive investment, and
to bring these concepts to launch quickly and successfully.
On January 1, 2000, Calendar Capital, Inc. acquired all of the outstanding
common stock (1,996,064 shares) of Entrenaut, Inc. for 3,992,128 shares of
Series C Preferred Convertible Stock. Each share of Series C Preferred
Convertible Stock has twelve and one-half votes and is convertible into
twelve and one-half shares of the Company's common stock, subject to
availability. For legal purposes, Entrenaut, Inc. is a wholly-owned
subsidiary of Calendar Capital, Inc. For accounting purposes, the
acquisition has been treated as an acquisition by Entrenaut, Inc. of
Calendar Capital, Inc. and as a recapitalization of Entrenaut, Inc. All
intercompany transactions have been eliminated. Calendar Capital, Inc. had
residual assets and liabilities but essentially had no activity between
1994 and 1999. The assets were transferred and liabilities were assumed at
the date of the acquisition. All share and per share information has been
restated for this transaction.
Subsequent to September 30, 2000, the Company plans to transfer all assets
of Entrenaut, Inc. to Calendar Capital, Inc., dissolve Entrenaut, Inc. and
change the name of Calendar Capital, Inc. to Entrenaut, Inc. In addition,
the Company plans to seek shareholder approval to increase the number of
authorized common shares to enable the holders of the Series C Preferred
Convertible Stock to convert their shares to common stock.
Interim financial statements:
The condensed financial statements of the Company for the three and six
month periods ended September 30, 2000 have been prepared by the Company
without audit by the Company's independent auditors. In the opinion of the
Company's management, all adjustments necessary to present fairly the
financial position, results of operations, and cash flows of the Company as
of September 30, 2000 and for the periods then ended have been made. Those
adjustments consist only of normal and recurring adjustments.
Certain information and note disclosures normally included in the Company's
annual financial statements have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with a
reading of the financial statements and notes thereto included in the
Company Form 10KSB for March 31, 2000 filed with the Securities and
Exchange Commission.
The results of operations for the three and six month periods ended
September 30, 2000 are not necessarily indicative of the results to be
expected in a full year.
6
<PAGE>
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED):
Cash:
The Company maintains its cash at a financial institution in Minnesota. At
times, the bank balance exceeds limits insured by Federal agencies.
Property and equipment:
Property and equipment are recorded at cost. Depreciation is calculated on
a straight-line basis over the estimated useful lives of the respective
assets.
<TABLE>
<CAPTION>
The estimated useful lives are as follows:
<S> <C>
Computer software 3 years
Office equipment 5 years
Furniture and fixtures 7 years
</TABLE>
Investments in common stock:
The Company has investments in the common stock of five companies. These
investments are summarized as follows:
Equity method:
Chefinabox, Inc. - The Company paid cash of $215,000 to acquire 21.18% of
the common stock of Chefinabox, Inc., a development stage virtual
restaurant that intends to sell restaurant quality, semi-prepared meals
to the consumer via the Internet. As of September 30, 2000, the net
investment, advances to Chefinabox, Inc., and net goodwill aggregating
approximately $488,000 were written-off as the web site was shut down.
Equity method (continued):
OfficeCause.com, Inc. - The Company paid cash of $200,000 to acquire
22.22% of the common stock of OfficeCause.com, Inc., a development stage
virtual storefront. As of September 30, 2000, the net investment,
advances to OfficeCause.com, Inc. and net goodwill aggregating
approximately $404,000 were written-off as the web site was shut down.
Cost method:
Commission Junction, Inc. - The Company paid cash of $500,000 to acquire
approximately 2% of the common stock of Commission Junction, Inc., a
company that provides a mechanism for affiliates and merchants to find
each other over the Internet and track transactions between the two
companies. During the six months ended September 30, 2000, the Company
swapped 40,000 shares (or 40 percent of shares owned) of Commission
Junction, Inc. stock for 4,000 shares of Idealab! Holdings, L.L.C
preferred stock, which is convertible into common stock at a 10:1 ratio.
StoreItOnLine.com, Inc. - The Company paid cash of $75,000, issued
300,000 shares of its Series C preferred stock and issued stock warrants
to purchase 200,000 additional Series C preferred shares to acquire
approximately 9% of the common stock of StoreItOnLine.com, Inc., a high
capacity, web-based storage business. The Company also received warrants
to purchase an additional 150,000 shares of Store ItOnLine.com, Inc.
common stock as part of the stock
7
<PAGE>
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED):
purchase. Included in investments at September 30, 2000 is $45,000 of
outstanding advances made to StoreIt Online.com, Inc.
Superior Broadband, Inc. - The Company paid cash of $95,000 to acquire
7.5% of the common stock of Superior Broadband, Inc., a premium access
Internet service provider of wireless broadband to high band width demand
customers.
Stock compensation:
The Company accounts for its stock-based compensation awards to employees
under Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and will disclose the required pro forma effect
on net loss as recommended by Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation.
Basis of presentation:
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business.
The Company has incurred losses of approximately $1,800,000 through
September 30, 2000 and will incur additional costs as it continues to
develop and market Internet based companies. Also, a substantial amount of
the Company's assets are investments in and advances to start-up companies,
the realization of which is entirely dependent on these companies either
developing profitable operations or on the Company obtaining strategic
partners to either purchase or further enhance the concepts. The Company's
ability to continue as a going concern is also largely dependent on its
ability, as well as the ability of the companies in which it has
investments, to raise additional capital. As a result of these factors,
among others, the Company may be unable to continue as a going concern. The
financial statements do not include any adjustments relating to
recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might result if the Company is
unable to continue as a going concern.
From July 1, 1999 through March 31, 2000, the Company raised approximately
$1,175,000 through the sale of stock to private investors. On January 3,
2000, the Board of Directors undertook a private offering of 200 units of
convertible debentures at $5,000 per unit in connection with raising up to
$1,000,000 in debt financing. Each unit is convertible into 20,000 shares
of the common stock of the Company at $.25 per share bearing an annual
interest rate of 9% and is to be sold solely to accredited investors.
Through September 30, 2000, the Company has issued $488,750 of these
debentures. If additional debentures are issued, the Company plans to use
the proceeds to continue present operations, as well as support the
development of IQTrust, a wholly-owned company. This new venture will allow
college students to make merchandise purchases via the Internet and a
rebate will be credited into the students account to help pay college
costs.
The Company intends to seek further financing but has not yet determined
whether this round will be public or private and has not yet determined the
amount of the offering.
8
<PAGE>
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED):
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Significant estimates inherent in the preparation of the accompanying
financial statements include management's estimates of the collectibility
of advances made to affiliates and the valuation of investments in common
stock. It is reasonably possible that a change in these estimates could
occur in the near term.
Earnings (loss) per share:
Basic earnings (loss) per common share are based on the weighted average
number of common shares outstanding in each year. Diluted earnings (loss)
per common share is calculated by adjusting outstanding shares, assuming
conversion of all potential dilutive stock options and warrants,
convertible debentures, and convertible preferred stock.
Stock options to purchase 827,750 shares of common stock at September 30,
2000 were not used in the calculation of diluted earnings (loss) per share
because they were anti-dilutive. Potential conversion of preferred stock,
convertible debentures, and warrants and options to purchase preferred
stock, into approximately 63,000,000 shares of common stock at September
30, 2000 were not used in the calculation of diluted earnings (loss) per
share because they were anti-dilutive.
2. RELATED PARTIES:
During 1999, the Company entered into incubation agreements with Chefinabox,
Inc. and OfficeCause.com, Inc. Under these agreements, the Company provided
incubation services to these affiliates, including developing business strategy,
brand, market positioning, creative design, web site and setting up back-end
operations. The Company charged these affiliates for consulting time at $125 per
hour with a maximum of 2,000 hours. The Company also contracted with outside
consultants to provide services to bring the concept to market and added a 15%
mark up to these consulting fees. The Company also pays for standard business
operating expenses on behalf of its affiliates, which are charged back with no
additional mark up. The affiliates can choose to continue using Company services
such as marketing, customer service, accounting, use of office equipment, phones
and space. Use of these services will incur additional charges and are not
included in the charges noted above.
Total amounts charged under these incubation agreements since inception through
September 30, 2000 were $612,780 to Chefinabox, Inc. and $547,278 to
OfficeCause.com, Inc. The Company charges interest of 9% on all amounts due from
these affiliates that have been outstanding for more than 30 days. The Company
has also advanced Chefinabox, Inc. $20,500 independent of the incubation
agreement. The amount outstanding bears interest at 9%. During the second
quarter of fiscal year 2001 the Company determined that its investments in
Chefinabox, Inc. and OfficeCause.com, Inc. did not have continuing value as
those entities did not develop sustained profitable operations. Accordingly, the
Company wrote-off its investments of $615,790 and goodwill of $276,261 in the
quarter ended September 30, 2000.
9
<PAGE>
2. RELATED PARTIES (CONTINUED):
The majority shareholder of Chefinabox, Inc. and OfficeCause.com, Inc. is also
the Chief Executive Officer and Chairman of the Board of Directors of the
Company.
During the six months ended September 30, 2000, the Company borrowed $3,000 from
Net Medical, Inc., which has the same Chief Executive Officer as the Company.
Due to related parties includes approximately $546,000 advanced to the Company
by the Chief Executive Officer. The amounts are due on December 31, 2000 and
bear interest at 9%.
Calendar Capital, Inc. entered into an employment agreement in September of 1993
with its then chief executive officer. The agreement, which expired in August
1998, called for among other items, a base salary of $120,000 annually with
increases of at least 10% per annum as well as granting options to purchase
100,000 shares of common stock each year of the agreement. The Company is
currently in negotiations with the former chief executive officer to settle
amounts due under the agreement. As of September 30, 2000, the maximum potential
liability under this agreement is approximately $600,000. The former chief
executive officer is the Company's current special securities counsel.
3. NOTES PAYABLE:
Notes payable includes borrowings from a bank under a $250,000 line-of-credit,
of which $250,000 was used at September 30, 2000. Interest only payments at an
interest rate of 1.5% over prime are due monthly to December 2000 at which time
the principal balance is due. The line-of-credit is secured by all business
assets of the Company, a bank account pledged by a shareholder of the Company
and a personal guarantee for the entire amount of the credit facility by the
same shareholder.
Notes payable also includes borrowings from a shareholder in the amount of
$50,000. The note bears interest at 10% and is due December 31, 2000. The note
is secured by 5,000 shares of Commission Junction stock held by the Chief
Executive Officer of the Company. In addition, the Chief Executive Officer of
the Company also agreed to transfer 500 shares of Commission Junction stock held
by him to the lender within 90 days of the time that Commission Junction goes
public. The Company also issued warrants to purchase 10,000 shares of stock at
$1.50 per share and options to purchase 40,000 shares of stock at $1.25 per
share. The warrants and options expire on December 31, 2002.
Notes payable also includes borrowings from a shareholder in the amount of
$30,000. The note bears interest at 9% with principal and interest payments due
at various dates through December 15, 2000.
Notes payable also includes borrowings from an unrelated party in the amount of
$150,000, with no stated rate of interest. The amount was due on June 1, 1995
and the Company is currently in default on the note.
10
<PAGE>
4. CONVERTIBLE DEBENTURES:
The Company has outstanding convertible debentures totaling $873,750 as follows:
<TABLE>
<CAPTION>
Conversion
price per
Expiration date of Conversion Amount Interest rate share
----------------------------- ------ ------------- -----------
<S> <C> <C> <C>
October 1, 1993 $60,000 9% $ .50
September 15, 1994 (1) 125,000 9% .50
October 3, 1994 200,000 8% .40
February 14, 2001 through May 18, 2001 213,000 9% .25
July 1, 2003(2) 265,000 10% .25
July 31, 2001 through September 27, 2001 10,750 9% .25
</TABLE>
(1) An individual debenture holder has sued the Company for repayment of the
debenture claiming that the Company defaulted by not paying agreed-upon
monthly interest payments in a timely manner. The Company elected not to
defend the suit, thus a default judgement in favor of the debenture holder
was awarded.
(2) Holders of these debentures also received one Quickwit, Inc. (a company
being developed by the Chief Executive Officer) warrant for each dollar
invested. The warrants are exercisable at $.50 per Quickwit, Inc. stock
unit, each unit consisting of one share and an additional detachable
warrant that exercises at $1. A holder of $100,000 of these debentures also
received one share of Quickwit, Inc. stock for each dollar of funds loaned,
a personal guarantee of the payment of the debenture by the Chief Executive
Officer of the Company by allowing the holder to hold as collateral 10,000
shares of Commission Junction common stock owned by the Chief Executive
Officer. The holder was also granted an option to acquire up to 200,000
shares of the Company owned by the Chief Executive Officer at a price of
$.05 per share.
5. COMMITMENTS:
During fiscal year 1995, Calendar Capital, Inc. defaulted on a note payable that
was originally due in September of 1995. The Company has not had contact with
the lender for several years and is uncertain as to whether the collateral was
obtained by the lender or whether the lender will seek payment on the note. The
potential liability as of March 31, 2000 includes $166,286 in principal and
$116,400 in accrued interest. These amounts are not reflected in the
accompanying balance sheets based on the uncertainty of future payment.
Employment agreements:
During 1999, the Company entered into employment agreements with two of its
officers which requires the payment of annual compensation and certain
fringe benefits through 2000. One of the agreements contains provisions for
the payment of bonuses based on the amount of equity capital that the
officer secures for the Company. One of these officers terminated
employment with the Company in July 2000.
11
<PAGE>
6. SUBSEQUENT EVENTS:
Subsequent to September 30, 2000, the Company issued warrants for 402,000 shares
of common stock at $1.00 per share to holders of warrants for stock in
OfficeCause.com, Inc. and Chefinabox, Inc.
The majority shareholder of OfficeCause.com, Inc., also the Chief Executive
Officer of the Company rescinded his subscription for stock and the Company
became the sole owner of OfficeCause.com, Inc. Since the Company previously
wrote-off its investment in OfficeCause.com, Inc. this does not have a material
affect on the September 30, 2000 financial statements. Also, the Company
purchased an additional 75,000 shares of StoreItOnline.com, Inc. Advances of
$45,000 included in investments at September 30, 2000, served as the
consideration for such purchase.
ITEM 2. Plan of Operations
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH ITEM 1
OF THIS FORM 10-QSB. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE
DISCUSSION IN THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS,
OBJECTIVES, EXPECTATIONS AND INTENTIONS. THESE FORWARD-LOOKING STATEMENTS OF THE
COMPANY ARE BASED ON THE CURRENT EXPECTATIONS OF THE COMPANY, AND THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE THIS INFORMATION. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HERE.
CALENDAR CAPITAL, INC. - OVERVIEW
From December 1994 until July 1, 1999, Calendar Capital was an inactive public
shell company. In July 1999, a new Board of Directors and management assumed
control of the Company and proceeded to make a cash infusion to bring the
Company current in its filings as well as having a fresh audit prepared and
certain liabilities addressed.
Effective January 1, 2000, the Company entered into a stock exchange agreement
to acquire all of the outstanding common stock of Entrenaut, Inc. in what will
eventually be finalized as a reverse merger. Currently, Entrenaut operates as a
wholly-owned subsidiary and all of the operations of the Company take place
through Entrenaut.
ENTRENAUT, INC.
Entrenaut Inc. is a Minnesota corporation formed in July, 1999 to act as an
incubator for early stage internet related business concepts by providing seed
capital and management oversight to internet companies that Entrenaut believes
have viable business concepts in exchange for consulting fees and equity in the
companies. Entrenaut also provides its services including strategic planning,
corporate development and market research to operating companies on a fee for
services arrangement. Additionally, Entrenaut holds equity positions in certain
portfolio companies in which it has made a direct investment without providing
additional incubator services.
As a result of the Company's inability to raise additional equity funding due in
large part to general decline in the market value of Internet-related companies
and incubator companies specifically,
12
<PAGE>
management has decided to discontinue its incubator business model and
concentrate its resources on the development of a concept initially being
referred to as IQ Trust.
At the same time, the Company has shut down the operations of the two start-up
companies in its incubator model (Chefinabox, Inc. and OfficeCause.com, Inc.)
and has written off its investment in these two companies. Additionally, the
Company is exploring the possible sale of its interests in the five direct
investments made in the Investor Model portfolio (Commission Junction, Inc.,
StoreItOnline, Inc., Superior Broadband, Inc., J Cafe, Inc. and idealab!
Holdings, L.L.C.). TO date the Company has not been successful in locating a
purchaser for these holdings. If and when any or all of the holdings can be
liquidated, the proceeds will be invested in the IQ Trust business concept.
IQ TRUST
Management believes that its new Internet-based program geared towards colleges,
students, and alumni known as IQ Trust offers a significant business
opportunity. IQ Trust's technology provides the capability for individual
rebates to be deposited into selected student accounts to help pay their
tuition.
The IQ Trust technology has the ability to aggregate merchant rebates normally
paid by online stores and direct them to colleges and universities when students
and their families shop online. IQ Trust retains a nominal fee on every merchant
transaction and student accounts are rewarded with purchase rebates ranging from
2-30%.
Rebates on purchases made by alumni will be donated to the school.
By providing the program free to higher educational institutions, the Company
expects to gain marketing access to a coveted market. It is believed that this
access can be parlayed into a residual revenue stream through transaction fees,
exclusivity agreements, promotional advertising, sponsorships, and partnership
marketing agreements.
The Company anticipates having its first two higher educational institutions
on-line during the next quarter. Ultimately, the Company believes there is a
potential of reaching 37 million individuals and realizing significant revenue
with only modest participation.
During the next twelve months, the Company plans to complete the reverse merger
between Calendar Capital, Inc. and Entrenaut, Inc.; seek shareholder approval of
additional authorized common stock and pursue a private or public equity
offering to fund its operations and growth.
The Company has most recently been funding its operations through personal loans
from Paul Crawford, the Company's Chief Executive Officer. Future funding is
anticipated from the sale of investment assets and new investors. The Company's
long-term success depends upon its ability to attract capital and it may not be
able to obtain such financing on acceptable terms, in which case the Company's
ability to execute its business strategy will be seriously impaired.
During the last quarter, the Company continued to reduce its staffing due to
working capital restraints and does not anticipate any new hires until
additional funding is realized.
13
<PAGE>
Part II - Other Information
ITEM 1. LEGAL PROCEEDINGS.
As of the date hereof, the Company is not involved in any material
legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
There are no changes to report in the second quarter of 2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
(a) The Company has outstanding convertible debentures totaling
$385,000, upon which it has defaulted as follows:
<TABLE>
<CAPTION>
Conversion
price per
Expiration date of conversion Amount Interest Rate Share
----------------------------- ------ ------------- ----------
<S> <C> <C> <C>
October 1, 1993 $60,000 9% $.50
September 15, 1994 (1) 125,000 9% .50
October 3, 1994 200,000 8% .40
</TABLE>
(1) An individual debenture holder has sued the Company for repayment of the
debenture claiming that the Company defaulted by not paying agreed-upon
monthly interest payments in a timely manner. The Company elected not to
defend the suit, thus a default judgement in favor of the debenture holder
was awarded.
(b) The Company has a note payable at December 31, 1999 and 1998, for
$150,000, with no stated rate of interest. The amount was due on June 1, 1995,
and the Company is currently in default on the note. The note is secured by
certain gaming equipment that was transferred by the Company to the Lightning
Casino St. Maarten in 1994.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to security holders during the second quarter
of 2000.
ITEM 5. OTHER INFORMATION.
None.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(a) EXHIBITS
<S> <C>
Exhibit Number Description
-------------- -----------
27 Financial Data Sheet
(b) Reports on Form 8-K: The Company did not file any current
reports on Form 8-K the first quarter of the Company's fiscal
year.
</TABLE>
15
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Calendar Capital, Inc.
By: /s/ Paul D. Crawford
-----------------------------------------
Paul D. Crawford
Its: Chief Executive Officer
Date: November 17, 2000
16
