<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-KSB
(Mark one)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (Fee required)
For the fiscal year ended March 31, 2000
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No fee required)
For the transition period from ___________ to ___________
Commission File Number 0-12612
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CALENDAR CAPITAL, INC.
(Exact name of Small Business Issuer in its Charter)
Minnesota 41-1442918
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
Riverplace
43 Main Street SE, Suite 230
Minneapolis, Minnesota 55414
(Address of principal executive offices)
(612) 362-8411
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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/
Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is contained in this form, and no disclosure will be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. /x/
The issuer's revenues for its most recent fiscal year were $1,016,646.
The aggregate market value of the shares of common stock as of March 31, 2000
(based upon a bid price of $.06 per share) held by nonaffiliates of the
registrant was approximately $442,585.00.
Transitional Small Business Disclosure Format: Yes No X
--- ---
As of March 31, 2000, there were 12,976,418 shares of common stock outstanding.
<PAGE>
PART I
ITEM 1. BUSINESS
BUSINESS DEVELOPMENT
Calendar Capital, Inc., is a corporation organized under Minnesota law. The
corporation was formerly named AorTech, Inc. ("AorTech"). Angicor Limited
("Angicor'), incorporated under Minnesota law November 16, 1981, was a
predecessor of the Company. Angicor commenced operations in January of 1983, as
a manufacturer and marketer of mechanical heart valves and sought protection
from its creditors by means of commencing a bankruptcy proceeding under Chapter
11 of the United States Bankruptcy Code on July 15, 1988. On February 2, 1990, a
plan of reorganization of Angicor was approved by order of a bankruptcy court.
Pursuant to the plan of reorganization; effective March 5, 1990, Angicor was
merged with Medical Funding Corporation ("MFC"), a Minnesota corporation
incorporated on October 19, 1989. MFC had been organized to raise capital from
investors which would be made available to Angicor upon approval of the plan of
reorganization, by the bankruptcy court. Pursuant to the Articles of Merger, the
filing of which caused the merger between Angicor and MFC to be effective,
Angicor became the surviving corporation in the merger and its name was changed
to AorTech, Inc.
Effective June 30, 1991, the Company, in a merger transaction, acquired the
operating assets and the business of A-1 Engineering, Inc., a Minnesota
corporation ("A-1 Engineering"). The majority of those assets were later sold
back to the previous owners of A-1 Engineering.
During 1992, AorTech experienced significant financial difficulties. After
considering numerous alternatives to remedy the Company's problems, management
of AorTech decided to sell substantially all of the Company's operating assets.
Effective November 2, 1992, AorTech entered into an agreement to sell
substantially all of its operating assets to Followmotion Limited, a Scotland
corporation (the "Purchaser").
The sale of substantially all of AorTech's operating assets was approved at a
Special Meeting of Shareholders held on March 26, 1993. At such meeting, the
shareholders also approved a change in the name of the Company and on March 31,
1993, the name of the corporation was changed to Calendar Capital, Inc. The
Company trades in the pink sheets under the symbol CCAP.
After the sale, and operating with minimal staff, the Company proceeded to
explore opportunities in the gaming industry in the Caribbean and elsewhere.
Beginning in July 1993, the Company sought to operate a cruise ship with Casino
gaming aboard in the coastal waters of the island nation of Antigua, West
Indies. The effort was abandoned in November, 1993 due to an inability to reach
an agreement with the government of Antigua for the necessary permit with
satisfactory terms.
Effective April 2, 1994, the Company entered into a series of agreements
resulting in the acquisition of fifty-one percent (51%) of the stock of
Lightning Casino St. Maarten N.V. a limited liability company incorporated under
the laws of St. Maarten, Netherlands Antilles. The Company also entered into a
one-year renewable Operating Management Agreement with the Lightning Casino St.
Maarten N.V. whereby it agreed to engage for the Casino professional casino
management and to assume operational control of the facility. The Company
transferred the casino managers it had contracted with to operate the casino
aboard the ship it planned to operate in Antigua to the Lightning Casino in
April 1994 and subsequently transferred the gaming equipment from the ship to
the Lightning Casino location as well.
The Company operated the Lightning Casino from April 1994 through October of
that year. The Company relinquished its operating rights when it became apparent
that the Company's plans for raising additional equity capital to enable it to
pay the remaining balance due on its commitment to pay for its interest by March
31, 1995, were not going to be achieved. On April 2, 1995, the Company was
formally noticed of its default under the terms of the Stock Purchase Agreement
and subsequently forfeited its investment to date. By the terms of the
Agreement, its shares in the Lightning Casino were returned to the casino
company by the escrow agent for cancellation.
In December, 1994, faced with the lack of any cash flow and an inability to
raise additional equity capital, the Company closed down its offices, released
its remaining employees and ceased operations. The Company remained dormant
until July 1999.
BUSINESS OF THE ISSUER
In July 1999, a new Board of Directors was appointed which arranged for a cash
infusion sufficient to bring the Company current in its obligations as a public
company including SEC filings, auditors reports, stock transfer functions and
the election of new officers. Equity in the amount of $160,000 was received in
exchange for 5,000,000 shares of common stock. The Board then arranged for the
acquisition of a privately-held company known as Entrenaut, Inc., a company
founded to be an incubator for internet-related companies and to act as a
holding company for equity investments in such companies. In an exchange of
convertible preferred stock for all of the outstanding common stock of
Entrenaut, Inc., the Company acquired a wholly-owned operating subsidiary. Paul
Crawford, the Company's President and Chief Executive Officer, was at the time
of the acquisition and continues to be the Chief Executive Officer and was the
largest shareholder of Entrenaut. The acquisition involved the exchange of two
shares of Calendar Capital, Inc. Series C preferred convertible voting stock for
each one share of Entrenaut, Inc. common stock. Each share of the Series C
preferred is convertible into 12.5 shares of Calendar Capital common stock thus
the exchange ratio becomes 25 shares of Calendar Capital, Inc. common for each
one share of Entrenaut, Inc. common. The Series C cannot be converted until such
time as additional common stock is authorized by a vote of the Calendar Capital
shareholders, however, each share of Series C preferred is entitled to 12.5
votes for each share in matters subject to a vote of the shareholders. The
transaction was intended to accomplish a reverse merger.
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<PAGE>
COMPETITION
Calendar Capital through its operating subsidiary Entrenaut, Inc. utilizes a
business model that to one extent or another is being followed by many companies
that identify themselves as incubators or internet holding companies. Several,
such as CMGI, Internet Capital Group and eVentures, are well known publicly-held
companies that are well capitalized and generally have had recognized successes
in the form of companies they have developed. The best known internet incubator
company is idealab! which developed several, mostly consumer focused, internet
companies. In addition, there are an unknown number of smaller incubator
companies located all over the country all with varying resources and skills.
While Entrenaut does not currently have the financial resources of most of its
competitors, it believes that the expertise of management and its skilled staff
enable it to attract sufficient candidates for its services.
PERSONNEL
Calendar Capital employs only its Chief Executive Officer, Paul Crawford. The
operating subsidiary, Entrenaut as of June 1, 2000, employed eleven full-time
employees and two part-time employees.
ITEM 2. DESCRIPTION OF PROPERTY.
The Company and its subsidiary, as of June 1, 2000, lease 4,872 square feet of
office space at 43 Main Street SE, Minneapolis, Minnesota, pursuant to three
different leases with total payments of approximately $6,259 per month expiring
in August 2002, March 2001 and June 2001.
ITEM 3. LEGAL PROCEEDINGS.
The Company is in default on $385,000 in convertible debentures. One debenture
holder has a judgment against the Company for $125,000 face amount of his
debenture plus accrued interest. The Company is also in default on an employment
contract it had with its former Chief Executive Officer. (See Executive
Compensation at Item 10).
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is listed in the "Pink Sheets" under the symbol CCAP.
Until October 1, 1999, the stock traded on the OTC: Bulletin Board. From July
15, 1991 until June 9, 1994, the Company's common stock had been traded on the
NASDAQ Small-Cap Market System under the symbol "CCAP". On June 9, 1994, the
stock was de-listed by NASDAQ for failure to maintain an adequate bid price.
From September 5, 1990, when trading was reestablished, until July 15, 1991, the
common stock was traded in the Minneapolis/St. Paul Local Over-the-Counter
Market. The Company is currently seeking to be reinstated on the OTC Bulletin
Board.
The following table sets forth, for the periods indicated, the range of high and
low bid prices of the Company's common stock. The prices represent quotations
between dealers without adjustment for retail markups, markdowns or commissions
and may not represent actual transactions.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Fiscal Year Ended Fiscal Year Ended
March 31, 1999 High Low March 31, 2000 High Low
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First Quarter $ .020 $ .010 First Quarter $ .005 $ .005
--------------------------------------------------------------------------------
Second Quarter $ .010 $ .005 Second Quarter $ .812 $ .005
--------------------------------------------------------------------------------
Third Quarter $ .020 $ .005 Third Quarter $ .750 $ .010
--------------------------------------------------------------------------------
Fourth Quarter $ .005 $ .001 Fourth Quarter $ .562 $ .062
--------------------------------------------------------------------------------
</TABLE>
The Company has never paid a cash dividend on its capital stock and does not
expect to pay a cash dividend in the foreseeable future. No dividends may be
paid on common stock unless adequate provision has been made for payment of all
dividends, if any, due with respect to Series B Convertible Preferred Stock.
As of March 31, 2000, the Company had approximately 1,220 shareholders of
record.
RECENT SALES OF UNREGISTERED SECURITIES.
In July 1999, the Company issued five million shares of its common stock to two
different entities in exchange for $160,000 in cash consideration and six
hundred thousand shares of its common stock to two different individuals
pursuant to subscription agreements agreeing to pay a total of $24,000, all in a
private placement pursuant to Section 4(2) of the 1933 Securities Act.
Effective January 1, 2000, the Company entered into a stock exchange agreement
to acquire all of the outstanding common stock of Entrenaut, Inc. The Company
relied on the exemption provided by Rule 506 of Regulation D for exemption from
registration of the Series C Preferred Stock issued in the exchange.
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<PAGE>
Pursuant to a private placement memorandum dated February 4, 2000, the Company
undertook to sell up to $1,000,000 in 9% Convertible Subordinated Debentures of
which $115,000 had been placed as of March 31, 2000. The Company is relying on
Rules 505/506 of Regulation D for its exemption from registration of this
offering.
ITEM 6. PLAN OF OPERATION
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE
IN THIS REPORT. 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.
Currently Entrenaut has two start-up companies in its incubator model as
described below. Both companies are Internet concepts conceived by Paul
Crawford, the CEO of the Company and Entrenaut, who is also the largest
shareholder of each of them.
CHEFINABOX. INC
One of the start-ups known as Chefinabox, Inc. has been temporarily shelved
pending a reworking of the model and the possible identification of a strategic
partner to further fund development. The concept of Chefinabox, Inc. is the
delivery of Bistro-style meals to e-consumers at their home. Key to this site is
the contextual affiliate links to sell wines, flowers, gifts, kitchenware, etc.
Entrenaut invested $215,000 to acquire 21% of Chefinabox.
OFFICECAUSE.COM, INC.
This concept is based upon a model that offers Business-to-Business shoppers the
opportunity to redeem a percentage of online purchases through its site and
donate a substantial portion of the proceeds to charity. A more recent strategy
developed by OfficeCause.com, Inc. is `The Giving E" which is for major
charities and provides the backend software for a dedicated site operated by a
single charity. OfficeCause.com, Inc. is on line and generating significant
traffic. Entrenaut invested $200,000 to acquire 22% of OfficeCause.com, Inc.
The next step is to find a strategic partner for the business or to sell it.
The Investor model of Entrenauts' portfolio contains four direct investments.
These include:
1. The ownership of approximately 2% of the shares of Commission Junction,
Inc. for which it paid $500,000. Commission Junction was co-founded by Paul
Crawford. Commission Junction orchestrates a cost affiliate-marketing network
that pays web site owners when they include links that feed other web sites and
drive e-commerce. Commission Junction currently has a valuation of $100-145
million based upon recent equity investments.
2. StoreItOnline, Inc. a Company in which Entrenaut owns approximately a 9%
interest, is an online provider of data storage services.
3. Superior Broadband, Inc. is a high bandwidth access provider (a
wireless, last mile solution) focused on providing service in rural Minnesota.
Entrenaut holds a 7.5% interest in Superior Broadband.
4. J Cafe, Inc. is a recently finalized investment in a local company that
has completed development of a new software engine to serve as an Internet or
Intranet, interactive education and development platform. Entrenaut's investment
in the form of a convertible debenture is equal to approximately a four percent
interest on a fully-diluted basis. This transaction occurred after the fiscal
year end and is not reflected on the financial statements.
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<PAGE>
StoreItOnline, Superior Broadband, Inc. and J Cafe are all early stage
development companies none of which have realized any significant revenues.
During the next twelve months, the Company plans to seek strategic partners to
add funding to Chefinabox, Inc. and OfficeCause.com and in the case of
OfficeCause.com to further develop the back-end software that will enable the
Company to provide and operate dedicated web sites for larger charities. The
Company believes that such software will also be a saleable product. In the case
of StoreItOnline, the Company will be providing assistance in marketing the
Company's service. Entrenaut will also be seeking to leverage its staff of
highly skilled and experienced personnel by marketing their skills on a
consulting basis to companies that are not portfolio companies of Entrenaut. The
Company anticipates making further investment in interactive education companies
probably as spin-offs from J Cafe, Inc.
The Company has most recently been funding its operations through the private
placement sale of convertible subordinated debentures and personal loans from
Paul Crawford, the Company's CEO. The Company believes that the completion of
the debenture offering will provide sufficient funds to operate through the
second quarter of Calendar 2000. The Company plans to seek additional funds in
the private or public equity or debt markets in order to maintain and expand
acquisitions of ownership interests and to create, build and operate portfolio
companies. The Company is also seeking to increase fee-based revenue from
consulting projects which would minimize the need to rely solely on the sale of
convertible subordinated debentures and personal loans from Paul Crawford for
funding operations. The Company's long-term success depends upon its ability to
attract capital and it may not be able to obtain such financing when needed or
on acceptable terms in which case the Company's ability to execute its business
strategy will be seriously impaired.
In addition to its current staffing, the Company is seeking to increase its
technical staff and anticipates hiring at least two additional full-time
employees as they can be identified.
ITEM 7. FINANCIAL STATEMENTS.
See Appendix.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS AND EXECUTIVE OFFICERS
Stated following are the names, ages and positions of each of the directors and
executive officers of Calendar Capital, Inc, the year when each director became
a member of the Board of Directors and information regarding the business
experience of each of the identified persons during the past five years. Under
the provisions of the Bylaws of the Company, directors are elected to serve for
a term expiring at the next annual meeting of shareholders and until their
successors are elected and qualify. Officers are elected to serve for an
indefinite term.
<TABLE>
<CAPTION>
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NAME AGE DIRECTOR SINCE POSITION
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul D. Crawford 64 1999 Director and Chief Executive Officer
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Daniel C. Neisen 37 1999 Director
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Wayne Atkins 32 2000 Director and President
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</TABLE>
Paul D. Crawford is the Chief Executive Officer of Calendar Capital, Inc. and
its subsidiary Entrenaut, Inc. From July 1995 to June 1996, he was Chief
Executive Officer of Restaurant Concepts, Inc. From July 1993 through January
1996, he was also a registered securities representative. On September 15, 1997,
without admitting or denying the allegations, Crawford accepted a censure and
two years suspension from the securities industry by agreement with NASD
Regulation, Inc. In December 1996, Mr. Crawford declared personal bankrtupcy and
was discharged in March 1997. Mr. Crawford has been involved in numerous early
stage companies through Crawford Capital Corporation. Mr. Crawford has been an
entrepreneur as well as a venture capitalist. In 1981, he founded Cellcom
Corporation to file for the first Twin Cities wireless cellular telephone
license. Cellcom was funded by a small group of Twin Cities entrepreneurs,
Cellcom subsequently entered into a strategic relationship with MCI. MCI/Cellcom
was issued the license by the F.C.C. in 1983 and began operating in 1984. The
MCI/Cellcom cellular license was acquired by McCaw Communication in July, 1986.
Daniel C. Neisen, along with his brother, Dennis, founded Neisen Brothers
Partnership in 1980. The Partnership acquires and manages several on and off
sale municipal liquor establishments in Minnesota and also owns extensive
farmland in Central Minnesota.
Wayne Atkins is President of the Company and President and Chief Operating
Officer of Entrenaut, Inc. a wholly-owned subsidiary of the Company. From 1995
to 1999, Mr. Atkins was employed by Deluxe Corporation where he was most
recently responsible for Deluxe Corporation's largest market segment, Major
Banks; including P&L Management of over $400 million of revenue with major
strategic customers. Prior to his employment with Deluxe Corporation, Mr. Atkins
was employed at Gemini Consulting's strategy practice to develop corporate,
marketing and distribution strategies for high-tech, Fortune 500 companies.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of
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<PAGE>
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended March 31, 2000, all Section 16(a) filing
requirements applicable to its officers and directors were compiled with.
ITEM 10. EXECUTIVE COMPENSATION
The following table summarizes the executive compensation for the persons who
served as Chief Executive Officers of the Company during the fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term
Compensation
Awards
Fiscal Other Annual ------------
Name and Principal Positions Year Salary Compensation Options
---------------------------- ----- ------ ------------ -------
<S> <C> <C> <C> <C>
Paul Crawford CEO of Calendar Capital,
Inc. and its subsidiary Entrenaut
received no compensation in 1999 or 2000. 2000 0 0 0
Wayne Atkins, President of Calendar
Capital, Inc. and its subsidiary Entrenaut, Inc. 2000 $100,800 0 Warrants to purchase 25,000
shares of Entrenaut, Inc.
</TABLE>
The following table summarized grants of options to the person who served as
Chief Executive Officer of the Company during fiscal 2000.
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Percent of
Total
Options
Granted to
Options Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (No.) Year ($/Share)(1) Date
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul D. Crawford 0 0 0 0
------------------------------------------------------------------------------------
</TABLE>
The following table summarized the purchases of the Company's common stock
pursuant to the exercise of options (as well as the number and value of
unexercised options) granted to the person who served as the Chief Executive
Officer of the Company during fiscal 2000.
AGGREGATED OPTION EXERCISE IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Value FY-End (No.) FY-End (1)
on Exercise Realized Exercisable/ Exercisable/
Name (No.) (1) Unexercisable Unexercisable
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul D. Crawford None None None None
--------------------------------------------------------------------------------------
</TABLE>
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(1) Options are "in-the-money" if the fair market value of the underlying shares
at fiscal year end is greater than the exercise price.
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<PAGE>
EMPLOYMENT AGREEMENT
On August 1, 1993, Vincent G. Ella, the then Chairman of the Board of Directors
of the Company, was elected Chief Executive Officer of the Company. Effective as
of September 1, 1993, the Company entered into a five-year employment agreement
with Mr, Ella. Pursuant to that agreement, Mr. Ella was to receive a base salary
of not less than $120,000 per year together with yearly increases of not less
that 10% The Agreement also provided that Mr. Ella shall receive options to
purchase not less than 100,000 shares on September 1 of 1994, 1995, 1996 and
1997 at the then current market value. All such options to be immediately
exercisable and to expire ten years from the date of grant. If the agreement is
terminated by Mr. Ella for good cause, as defined in the agreement, the Company
must pay him an amount equal to his base salary for the remaining term of the
agreement. On October 20, 1994, Mr. Ella notified the Board of Directors that
the Company was in breach of the agreement by virtue of its inability to pay him
his salary or reimburse expenses as they became due. Mr. Ella advised the Board
that unless the breach was cured, he would treat the situation as a constructive
termination without cause, thus leaving him free to seek other employment, which
he did. The Company has an ongoing obligation under the terns of the agreement.
At March 31, 1995, the Company had $39,230 in unpaid compensation due Mr. Ella
accrued for calendar year 1994, for which the Company is indebted to him along
with his contract salary for calendar years 1995, 1996 and 1997 totaling
approximately $600,000. In fiscal 2000, the Company paid Mr. Ella $15,000 of the
accrued 1994 unpaid compensation.
DIRECTORS' FEES
Directors of the Company receive no cash compensation for serving as directors.
Directors may be paid a fee of $100 per hour for extraordinary services beyond
normal duties as a director. No such fees were paid in fiscal 2000.
Directors who are not officers of the Company participate in the Outside
Directors' Option Plan. This plan provides for an annual non-discretionary grant
of an option to purchase 2,000 shares (5,000 shares if the director has not
previously received an option from the Company) to each non-employee director of
the Company who is a Company director at the time of the first Board of
Directors meeting after each annual meeting of shareholders. The exercise price
is the mean between the bid and ask price on the date of grant. The options are
exercisable six months after the date of grant and expire ten years after the
date of grant, subject to earlier cancellation 30 days after termination as a
director. The maximum number of shares that may be issued upon exercise of
options granted under the plan is 100,000. No such options were granted during
fiscal year 2000.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information is given as of March 31, 2000, with respect to each
person who is known to the Company to be the beneficial owner of more than 5
percent of any class of its capital stock, each director of the Company
individually, and by all directors and executive officers of the Company as a
group. Unless otherwise indicated, each such beneficial owner is believed to
hold the common stock with sole voting and investment power.
AS OF MARCH 31, 2000:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Amount and Nature
of Beneficial Percent of
Title of Class Name and Address of Beneficial Owner Ownership Class
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Paul D. Crawford(1) 500,000 .38
7718 Taylor Street NE
Spring Lake Park, MN 55432
------------------------------------------------------------------------------------------------------
Common Stock Daniel and Dennis Neisen(2) 2,500,000 1.92
Partnership
125 North Meridian Street
Belle Plaine, MN 56001
------------------------------------------------------------------------------------------------------
Common Stock K&J Concrete & Masonry, Inc. 2,500,000 1.92
6291 West 230th Street
Belle Plaine, MN 56011
------------------------------------------------------------------------------------------------------
Common Stock All Directors and Executive Officers as 3,000,000 2.3
a Group
(2 persons)
------------------------------------------------------------------------------------------------------
Series B Preferred Managed Venture Fund III 100,000 5.67
c/o Paul Crawford
65 SE Main Street
Minneapolis, MN 55414
------------------------------------------------------------------------------------------------------
Series B Preferred Neisen Farm 120,000 6.81
125 North Meridian Street
Belle Plaine, MN 56011
------------------------------------------------------------------------------------------------------
Series B Preferred John A. Bogard 110,000 6.24
1416 Oregon Avenue North
Golden Valley, MN 55427
------------------------------------------------------------------------------------------------------
Series B Preferred K&J Concrete & Masonry Co. 100,000 5.67
------------------------------------------------------------------------------------------------------
------------------------
(1) Mr. Crawford is the CEO of the Corporation.
(2) Daniel Neisen is a Director of the Company.
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<PAGE>
6291 West 230th Street
Belle Plaine, MN 56011
------------------------------------------------------------------------------------------------------
Series B Preferred William H. Thomas 100,000 5.67
3265 Robinson's Bay Road
Wayzata, MN 55391
------------------------------------------------------------------------------------------------------
Series B Preferred William Bruggeman 100,000 5.67
20 Anemone Circle
North Oaks, MN 55127
------------------------------------------------------------------------------------------------------
Series B Preferred William Bernard 250,000 14.18
Rapid City, SD
------------------------------------------------------------------------------------------------------
Series B Preferred Marilyn G. Erickson 237,200 13.45
Rapid City, SD
------------------------------------------------------------------------------------------------------
Series C Preferred Dolores E. Crawford(3) 400,000 10.02
7118 Taylor Street NE
Spring Lake Park, MN 55432
------------------------------------------------------------------------------------------------------
Series C Preferred Paul D. Crawford(1) 935,200 23.43
7118 Taylor Street NE
Spring Lake Park, MN 55432
------------------------------------------------------------------------------------------------------
Series C Preferred Daniel and Dennis Neisen(2) 250,000 6.26
Partnership
125 North Meridian Street
Belle Plaine, MN 56001
------------------------------------------------------------------------------------------------------
Series C Preferred K&J Concrete & Masonry Co. 250,000 6.26
6291 West 230th Street
Belle Plaine, MN 56011
------------------------------------------------------------------------------------------------------
Series C Preferred Gary Macho 280,000 7.01
24774 East Cedar Lake Drive
New Prague, MN 56071
------------------------------------------------------------------------------------------------------
Series C Preferred StoreItOnLine.Com, Inc. 300,000 7.51
c/o Jean-Paul Lamere
512 Virginia Avenue
Minneapolis, MN 55356
------------------------------------------------------------------------------------------------------
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Upon becoming a director and CEO of the Company in July, 1999, Paul D. Crawford
subscribed to purchase 500,000 shares of common stock at a price of $.04 per
share as part of the reorganization.
Prior to the acquisition of all of the outstanding common stock of Entrenaut,
Inc., Paul D. Crawford, the Chief Executive Officer and Director of the Company
owned 23.43% of Entrenaut, Inc. and as a result of the stock exchange of the
Company's Series C preferred stock for Entrenaut, Inc. common stock, he
individually owns 935,200 shares of the Series C convertible stock making him
the largest holder of this series and when combined with the 400,000 shares of
Series C he assigned to his wife, Delores Crawford, gives him a 33.45% ownership
of the Series C preferred stock. Assuming the conversion of the Series B and
Series C preferred stock, Mr. Crawford owns 18.86% of the common stock of the
Company.
Through its subsidiary, Entrenaut, Inc., the Company has acquired minority
interests in two companies for which it provides incubator services: Chefinabox,
Inc. and OfficeCause.com, Inc. Both of these companies are controlled by Paul D.
Crawford, the Company's Chief Executive Officer and Director who owns 68.96% and
77.77% of the two companies respectively.
Paul D. Crawford was also a co-founder and is a significant shareholder of
Commission Junction, Inc., a company in which the Company has acquired a
minority interest for investment purposes. Mr. Crawford is no longer an officer
or director of Commission Junction, Inc.
-----------------------
(3) Dolores Crawford is the wife of Paul Crawford.
-8-
<PAGE>
ITEM 13. EXHIBIT LIST AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
2.1 Amended Plan of Reorganization, dated October 16, 1989. (Exhibit 2.2) (1) --
2.2 Articles of Merger and Restated Articles of Incorporation, --
dated February 27, 1990 with Medical Funding Corporation.
Exhibit 2.2) (1)
2.3 Agreement and Plan of Merger, dated June 28, 1991 with A-1 --
Engineering, Inc., Gordon Neuman and Clayton Neuman.
(Exhibit 2.1) (3)
3.1 Amendment to Articles of Incorporation (Exhibit 3.1) (7) --
3.2 Bylaws. (Exhibit 3.1) (1) --
4.1 Form of stock purchase warrant. (Exhibit 4.2) (1) --
4.2 Warrant Agreement (Exhibit 4.3) (1) --
4.3 Certificate of Creation of Series A. Convertible Preferred --
Stock. (Exhibit 10.2) (9)
4.4 Designation of Rights and Preferences of Series B Convertible --
Preferred Stock (Exhibit 10.2) (9)
4.5 Certificate of Designation of Additional Shares of Series B --
Convertible Preferred Stock. (Exhibit 10.1) (10)
4.6 Articles of Correction of Designation of Additional Shares --
of Series B Convertible Preferred Stock. (Exhibit 10.2) (10)
4.7 Statement of Cancellation of Designation of Series A --
Convertible Preferred Stock. (Exhibit 4.7) (12)
10.1 Amended and Restated 1990 Stock Option Plan. (5) ** --
10.2 Outside Directors' Option Plan. (Exhibit 10.10) (2) ** --
10.3 First Amendment to Outside Directors' Option Plan. --
Exhibit 10.9) (4) **
10.4 Non-qualified, Non-Plan Option granted to John B. Knauff, --
March 31, 1994. * **
10.5 Non-qualified, Non-Plan Option granted to Lewis N. Mirviss, --
March 31, 1994. * **
10.6 Employment Agreement dated effective September 1, 1993, by --
and between Vincent G. Ella and Calendar Capital, Inc.
(Exhibit 10.3) (10) **
10.7 Employment Agreement with Robert J. Keyport, dated --
November 2, 1992. (Exhibit 10.10) (7) **
10.8 Severance Agreement with Gregory J. Ruehle, dated --
November 2, 1992. (Exhibit 10.11) (7) **
10.9 Employment Agreement, dated effective July 19, 1993, by --
and between John B. Hendricks and Caribbean Casinos, Ltd.
(Exhibit 10.20) (12)
10.10 Employment Agreement, dated effective July 19, 1993, by --
and between Valerie B. Hendricks and Caribbean Casinos, Ltd.
(Exhibit 10.21) (12)
-9-
<PAGE>
10.11 Employment Agreement, dated effective July 19, 1993, by --
and between Philip H. Plowright and Caribbean Casinos, Ltd.
(Exhibit 10.22) (12)
10.12 Asset Purchase Agreement with Followmotion Limited, --
dated December 12, 1992. (6)
10.13 Amendment #1 to Asset Purchase Agreement, effective --
September 30, 1993. (13)
10.14 Amendment #2 to Asset Purchase Agreement, effective --
April 28, 1994. (13)
10.15 Lease with NWC Limited Partnership, dated May 18, 1993. --
(Exhibit 10.12) (7)
10.16 Sublease with Faegre & Benson, a Minnesota general partner- --
ship, dated May 7, 1993. (Exhibit 10.13) (7)
10.17 Assignment of Lease and Consent to Assignment, dated --
May 16 19 (13)
10.18 Lease by and between MEPC American Properties, Inc. and --
the Company, dated April 20, 1994. (13)
10.19 Share Purchase Agreement, dated April 2, 1994, with --
Lightning Bingo (Exhibit 2.1) (11)
10.20 Escrow Agreement, with respect to Lightning Casino. --
(Exhibit 2.2) (11)
10.21 Promissory Note with respect to Lightning Casino. --
(Exhibit 2.3) (11)
10.22 Unanimous Shareholders Agreement with respect to Lightning --
Casino. (Exhibit 2.4) (11)
10.23 Operating Management Agreement with respect to Lightning --
Casino. (Exhibit 10.1) (11)
10.24 Plan of Reorganization of Lilly Belle's, Inc. proposed by --
the Debtor in Possession and Calendar Capital, Inc., dated
January 31, 1994. (Exhibit 10.24) (12)
10.25
Disclosure Statement to Accompany Plan of Reorganization, --
dated January 31, 1994. (Exhibit 10.25) (12)
10.26 Amended Disclosure Statement to accompany the Plan of --
Reorganization of Lilly Belle's, Inc. proposed by the Debtor
and Calendar Capital, Inc., dated January 31, 1994. (13)
10.27 Letter Agreement dated July 6, 1993, by and among Calendar --
Capital, Inc., Mark J. Kallenbach and Johnnie L. Ransom.
Exhibit 10.14) (12)
10.28 Cabinet Decision, dated June 26, 1991, permitting casino --
vessel operation. (Exhibit 10.16) (12)
10.29 Cabinet Decision, dated October 8, 1993, with respect to casino --
vessel operation. (Exhibit 10.16) (12)
10.30 Bareboat Charter Agreement, dated July 19, 1993, by and --
between Sea Dancer, Inc. and Alpha Travel (Antigua) Limited.
(Exhibit 10.17) (12)
10.31 Assignment and Assumption Agreement, dated July 21, 1993, --
by and between Alpha Travel (Antigua) Limited. (Exhibit 10.18) (12)
10.32 Contract for Sale and Purchase, dated September 3, 1993, by --
and between Emerald Syndicate, Inc. and Calendar Capital,
Inc. (Exhibit 10.19) (12)
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C>
10.33 Stock exchange Agreement, dated January 1, 2000, between --
Calendar Capital, Inc. and Entrenaut, Inc. (Exhibit 10.1)(14)
16.1 Letter of Ernst & Young. (Exhibit 10.1) (8) --
21.1 Subsidiaries of Registrant. (13) --
</TABLE>
-------------------
(1) Incorporated by reference to the specified exhibit to the Form 8-K dated
July 5, 1990.
(2) Incorporated by reference to the specified exhibit to the Form 10-K Annual
Report for the fiscal year ended March 31, 1991.
(3) Incorporated by reference to the specified exhibit to the Form 8-K dated
July 11, 1991.
(4) Incorporated by reference to the specified exhibit to the Form 10-K Annual
Report for the fiscal year ended March 31, 1992.
(5) Incorporated by reference to the Proxy Statement for the August 20, 1992
Annual Meeting of Shareholders.
(6) Incorporated by reference to the Proxy Statement for the March 26, 1993
Annual Meeting of Shareholders.
(7) Incorporated by reference to the specified exhibit to the Form 10-KSB,
Annual Report for the fiscal year ended April 3, 1993.
(8) Incorporated by reference to the specified Form 8-K, dated August 10, 1993.
(9) Incorporated by reference to the specified exhibit to the Form 10-QSB/A
Quarterly Report for the quarter ended October 2, 1993.
(10) Incorporated by reference to the specified exhibit to the Form 10-QSB/A
Quarterly Report for the quarter ended January 1, 1994.
(11) Incorporated by reference to the Form 8-K, dated April 2, 1994.
(12) Incorporated by reference to the specified exhibit to the Registration
Statement on Form S-1, filed with the Commission on March 4, 1994.
(13) Incorporated by reference to the specified exhibit to the Form 10-KSB,
Annual Report for the fiscal year ended April 2, 1994.
(14) Incorporated by referenced to the Specified exhibit to the Form 8-K dated
February 1, 2000.
A copy of any of the exhibits listed or referred to herein will be furnished at
a reasonable cost to any person who was a stockholder of the Company as of June
30, 1999, upon receipt from any such person of a written request for any such
exhibit. Such request should be sent to Calendar Capital, Inc., 43 Main Street
SE, Suite 230, Minneapolis, Minnesota 55414.
(b) REPORTS ON FORM 8-K. During the last quarter of the period covered by this
report, a Form 8-K was filed February 4, 2000, regarding the acquisition of
Entrenaut, Inc. by the Company, and on March 14, 2000, a Form 8-K/A was filed
containing the audited financial statements for Entrenaut, Inc. for the period
ending December 31, 1999 as well as an unaudited proforma balance sheet of the
merged companies as of December 31, 1999 and the proforma statement of
operations for the period April 1, 1999 through December 31, 1999.
-11-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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.
Dated: July 14, 2000. By: /s/ Paul D. Crawford
------------------------------
Paul D. Crawford
Its: Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
/s/ Paul D. Crawford Chairman of the Board July 14, 2000
--------------------------- of Directors
Paul D. Crawford
/s/ Wayne Atkins President and Director July 14, 2000
---------------------------
Wayne Atkins
<PAGE>
FINANCIAL STATEMENTS FOR:
CALENDAR CAPITAL, INC.
AND SUBSIDIARY
DBA ENTRENAUT, INC.
Period from July 1, 1999
(inception) through
March 31, 2000
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Calendar Capital, Inc. and
Subsidiary dba Entrenaut, Inc.
St. Paul, Minnesota
We have audited the balance sheet of Calendar Capital, Inc. and Subsidiary dba
Entrenaut, Inc. as of March 31, 2000, and the related statements of operations,
shareholders' equity and cash flows for the period from July 1, 1999 (inception)
through March 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Calendar Capital, Inc. and
Subsidiary dba Entrenaut, Inc. as of March 31, 2000, and the results of its
operations and its cash flows for the period then ended, in conformity with
generally accepted accounting principles.
As discussed in Note 1 and Note 2, a significant portion of the Company's assets
are investments in start-up companies. The ultimate recovery of these
investments is based on these companies developing profitable operations. The
financial statements do not include any adjustments to write-down these
investments, however, it is at least reasonably possible that estimates of the
recoverability of these investments will change in the near term.
<PAGE>
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's losses incurred during the period ending
March 31, 2000, the nature of its investments and advances to affiliates as well
as its need to raise additional capital raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Schechter, Dokken, Kanter, Andrews & Selcer Ltd.
May 25, 2000, except for Footnote 12, which is dated June 27, 2000 Minneapolis,
Minnesota
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
BALANCE SHEET - MARCH 31, 2000
<TABLE>
<S> <C>
ASSETS:
Current assets:
Cash $ 22,040
Prepaid and other 46,098
---------------
Total current assets 68,138
---------------
Property and equipment, net of accumulated depreciation
of $1,125 25,353
Investments 1,384,534
Goodwill, net of accumulated amortization of $32,501 292,512
---------------
1,702,399
---------------
Total assets $ 1,770,537
===============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Note payable, bank $ 242,000
Notes payable, other 200,000
Convertible debentures 500,000
Accounts payable 172,795
Accrued expenses 259,807
Due to related party 14,800
---------------
Total current liabilities 1,389,402
---------------
Shareholders' equity:
Preferred stock:
Series B convertible, $.01 par value, 2,000,000 shares authorized;
1,763,200 shares issued and outstanding 17,632
Series C convertible, $.01 par value, 4,000,000 shares authorized;
3,992,128 shares issued and outstanding 39,921
Common stock, $.01 par value, 14,000,000 shares authorized;
12,976,418 shares issued and outstanding 129,764
Additional paid-in capital 667,749
Stock subscriptions receivable (124,000)
Accumulated deficit (349,931)
---------------
381,135
---------------
Total liabilities and shareholders' equity $ 1,770,537
===============
</TABLE>
See notes to financial statements.
2
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
STATEMENT OF OPERATIONS
Period from July 1, 1999 (inception) through March 31, 2000
<TABLE>
<S> <C>
Management and consulting fees $ 1,016,646
Less direct costs 466,063
---------------
Net revenues 550,583
General and administrative expenses 656,163
---------------
Loss from operations (105,580)
---------------
Other income (expenses):
Interest:
Income 7,604
Expense (23,357)
Equity in losses of affiliated companies (225,298)
---------------
(241,051)
---------------
Loss before income taxes (346,631)
Income tax expense 3,300
---------------
Net loss $ (349,931)
===============
Loss per common share, basic and diluted $ (.08)
===============
Weighted average number of common shares, basic and diluted 4,325,473
===============
</TABLE>
See notes to financial statements.
3
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
Period from July 1, 1999 (inception) through March 31, 2000
<TABLE>
<CAPTION>
PREFERRED STOCK, PREFERRED STOCK,
SERIES B CONVERTIBLE SERIES C CONVERTIBLE COMMON STOCK
------------------------------- ------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------------- -------------- --------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of stock
(from $.13 to $2.50
per share) 3,992,128 $ 39,921
Issuance of stock
options and
warrants
Reverse acquisition
of Calendar Capital,
Inc. 1,763,200 $ 17,632 12,976,418 $ 129,764
Net loss
--------------- -------------- --------------- ------------- --------------- --------------
1,763,200 $ 17,632 3,992,128 $ 39,921 12,976,418 $ 129,764
=============== ============== =============== ============= =============== =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADDITIONAL STOCK
PAID-IN SUBSCRIPTIONS ACCUMULATED
CAPITAL RECEIVABLE DEFICIT TOTAL
--------------- --------------- --------------- ---------------
<S> <C> <C> <C>
$ 1,434,034 $ (100,000) $ 1,373,955
57,253 57,253
(823,538) (24,000) (700,142)
$ (349,931) (349,931)
--------------- --------------- --------------- ---------------
$ 667,749 $ (124,000) $ (349,931) $ 381,135
=============== =============== =============== ===============
</TABLE>
See notes to financial statements.
4
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
STATEMENT OF CASH FLOWS
Period from July 1, 1999 (inception) through March 31, 2000
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (349,931)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 1,125
Amortization 32,501
Equity in losses of affiliated companies 225,298
Issuance of stock warrants 19,753
Change in operating assets and liabilities:
Prepaids and other 602
Accounts payable 171,797
Accrued expenses 23,013
---------------
Net cash provided by operating activities 124,158
---------------
Cash flows from investing activities:
Purchase of property and equipment (26,478)
Cash acquired in reverse acquisition of Calendar Capital, Inc. 5,950
Investments:
Cash paid for common stock (1,071,000)
Advances to affiliates (1,031,345)
Payments received from affiliates 412,500
---------------
Net cash used in investing activities (1,710,373)
---------------
Cash flows from financing activities:
Proceeds from:
Note payable, bank 242,000
Issuance of stock 1,186,455
Notes payable, other 100,000
Advance from related party 14,800
Convertible debentures 115,000
Payments on notes payable, other (50,000)
---------------
Net cash provided by financing activities 1,608,255
---------------
Net increase in cash 22,040
Cash, beginning 0
---------------
Cash, ending $ 22,040
===============
</TABLE>
See notes to financial statements.
5
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
STATEMENT OF CASH FLOWS
Period from July 1, 1999 (inception) through March 31, 2000
<TABLE>
<S> <C>
Supplemental disclosure of cash flow information: Cash paid for:
Interest $ 13,282
===============
Income taxes $ 3,300
===============
Supplemental schedule of non-cash investing and financing activities:
Investments acquired through:
Issuance of:
Preferred stock $ 187,500
Warrants 37,500
---------------
$ 225,000
===============
Stock warrants and options issued for debt guarantee and consulting $ 19,753
===============
Assets acquired and liabilities assumed in reverse acquisition of Calendar
Capital, Inc.:
Assets acquired:
Prepaid and other $ 46,700
Investments 20,000
---------------
$ 66,700
===============
Liabilities assumed:
Note payable, other $ 150,000
Accounts payable 998
Accrued expenses 236,794
Convertible debentures 385,000
---------------
$ 772,792
===============
</TABLE>
See notes to financial statements.
6
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Reverse acquisition:
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.
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. The historical
financial statements prior to January 1, 2000 are those of Entrenaut, Inc.
All share and per share information has been restated for this transaction.
Subsequent to March 31, 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.
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.
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.
The estimated useful lives are as follows:
Computer software 3 years
Office equipment 5 years
Furniture and fixtures 7 years
7
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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. The difference between the cost of the
investment and the amount of underlying equity in net assets of the
investee of $169,458 is being amortized over 60 months and is included in
goodwill. Included in investments at March 31, 2000 is $373,586 of
outstanding advances made to Chefinabox, Inc. during the period ended
March 31, 2000.
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 consisting of more than 50 well-known merchants and a
representation of national and local charities. When a customer makes a
purchase through OfficeCause.com, Inc., a percentage is contributed to a
charity of the customer's choice. The difference between the cost of the
investment and the amount of underlying equity in net assets of the
investee of $155,556 is being amortized over 60 months and is included in
goodwill. Included in investments at March 31, 2000 is $251,786 of
outstanding advances made to OfficeCause.com, Inc. during the period
ended March 31, 2000.
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.
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 It On Line.com, Inc.
common stock as part of the stock purchase.
Superior Broadband, Inc. - The Company paid cash of $75,000 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.
8
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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 Company's financial statements for the year ended March 31, 2000 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 $350,000 through March 31,
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 developing
profitable operations. 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. These
factors, among others, raise substantial doubt about the Company's ability
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. If
the offering is successful, the Company plans to use the proceeds to
continue present operations as well as support OfficeCause.com, Inc. and
Chefinabox, Inc. Through March 31, 2000, the Company has issued $115,000 of
these debentures.
The Company is waiting for the NASD to put its public common stock back on
the OTC Bulletin Board. A local brokerage firm has applied with the NASD to
become a market maker in this stock. Once the stock is trading on the OTC
Bulletin Board, the Company intends to seek another round of financing. The
Company has not yet determined whether this round will be public or private
and has not yet determined the amount of the offering. In addition,
OfficeCause.com, Inc. and Chefinabox, Inc. plan to begin raising additional
private financing in the next three to six months. Although the Company may
invest further in these companies, management expects that a majority of
future funding of these companies will come from unrelated third parties.
9
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Basis of presentation (continued):
The Company is also actively seeking personnel to fill critical roles,
including technical personnel and chief executives of incubated companies.
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.
Fair value of financial instruments:
Statements of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other value
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated by
comparison to independent markets and in many cases, could not be realized
in immediate settlement of the instruments. Statement No. 107 excludes
certain financial instruments and all non-financial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
For cash, the carrying value is a reasonable estimate of its fair value. It
was not practicable to estimate the fair value of non-marketable
investments because of the lack of quoted market prices and the inability
to estimate fair values without incurring excessive costs. The fair values
for debentures and notes payable are estimated to approximate the carrying
amount as the interest stated in those agreements approximates interest
rates currently being offered on similar instruments.
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.
10
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Earnings (loss) per share (continued):
Stock options to purchase 827,750 shares of common stock at March 31, 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 March 31,
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 through March 31, 2000
were $567,854 to Chefinabox, Inc. and $448,991 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 also advanced
Chefinabox, Inc. $14,500 during the current fiscal year independent of the
incubation agreement. The amount outstanding bears interest at 9%. Total
interest charged to these affiliates through March 31, 2000 was $4,232 to
Chefinabox, Inc. and $2,294 to OfficeCause.com, Inc. Amounts due from these
affiliates at March 31, 2000, included in investments, were $373,586 from
Chefinabox, Inc. and $251,786 from OfficeCause.com, Inc.
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 year, the Company borrowed $10,000 from Net Medical, Inc., which has
the same Chief Executive Officer as the Company. Net Medical Inc. also paid
$13,164 of payroll costs on behalf of the Company. The Company also incurred
approximately $21,000 during fiscal year 2000 to determine whether the Net
Medical, Inc. concept has the potential to be incubated. If the concept is
developed, these costs may be charged back to Net Medical, Inc. as outside
consultant fees subject to a 15% mark-up.
11
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
2. RELATED PARTIES (CONTINUED):
Crawford Capital Corp., which is owned by the Chief Executive Officer of the
Company, paid $5,000 of professional fees on behalf of the Company during fiscal
year 2000. The amount was reimbursed prior to March 31, 2000.
Due to related party includes amounts advanced to the Company by the Chief
Executive Officer. The amount is due on December 31, 2000 and bears no interest.
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 March 31, 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. INVESTMENTS IN AFFILIATES:
The Company has investments in Chefinabox, Inc. and Office Cause.com, Inc. that
are accounted for on the equity method. The table below summarizes the unaudited
financial information of these companies as of and for the period ended March
31, 2000:
Assets $ 4,422
===============
Liabilities $ 630,885
Shareholders' deficit (626,463)
---------------
$ 4,422
===============
Revenue $ 1,795
Expenses 1,043,258
---------------
Net loss $ 1,041,463
===============
12
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
4. NOTES PAYABLE:
Notes payable includes borrowings from a bank under a $250,000 line-of-credit,
of which $242,000 was used at March 31, 2000. Interest only payments at an
interest rate of 1.5% over prime (10.5% at March 31, 2000) are due monthly
through October 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. Interest payments made
under the line-of-credit were $7,389 during the period ended March 31, 2000.
Notes payable also includes borrowings from a shareholder in the amount of
$50,000. The note bears interest at 10% and is due September 30, 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.
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.
5. CONVERTIBLE DEBENTURES:
The Company has outstanding convertible debentures totaling $500,000 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 March 31, 2001 115,000 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.
Interest expense related to these debentures was $9,040 for the period ended
March 31, 2000.
13
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
6. INCOME TAXES:
The income tax provision consists of the following:
Current income taxes:
Federal $ 2,000
State 1,300
---------------
3,300
---------------
Deferred income taxes:
Federal (27,587)
State (8,815)
---------------
(36,402)
---------------
Valuation allowance 36,402
---------------
Income tax expense $ 3,300
===============
Deferred income taxes arise from temporary differences resulting from income and
expense items reported for financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or noncurrent, depending on
the classification of the assets and liabilities to which they relate. Deferred
taxes arising from temporary differences that are not related to an asset or
liability are classified as current or noncurrent depending on the periods in
which the temporary differences are expected to reverse. Temporary differences
giving rise to the deferred tax asset consist primarily of net operating loss
carryforwards. Temporary differences giving rise to the deferred tax liability
consist primarily of the excess of depreciation expense for tax purposes over
the amount for financial reporting purposes.
The income tax provision for continuing operations varied from the federal
statutory tax rate as follows for the period ended March 31, 2000:
U.S. statutory rate (34.00)%
Equity in net losses of affiliates 22.30
Goodwill amortization 3.19
Valuation allowance 9.11
---------
.60%
=========
The current income taxes relate to taxable income generated by the Company from
July 1, 1999 through December 31, 1999, the year-end for income tax purposes
prior to the reverse acquisition.
14
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
6. INCOME TAXES (CONTINUED):
During fiscal years 1990 and 2000, Calendar Capital, Inc. experienced
significant ownership changes, resulting in a limitation of future utilization
of pre-ownership change net operating losses. Utilization of net operating
losses generated prior to the ownership change in fiscal year 1990 is limited to
$68,000 per year plus amounts not utilized in prior years, and $1,020,000 in the
aggregate, through the year 2005. Subsequent to this change in ownership,
Calendar Capital, Inc. accumulated additional net operating losses and had
cumulative losses of approximately $5,000,000 prior to the fiscal year 2000
change in ownership. The Company has not yet determined the amount of these
cumulative losses that will be available to offset future taxable income.
Accordingly, no deferred tax asset and related valuation allowance has been
recorded relating to these cumulative losses. The Company has not recomputed its
compliance with Section 382 of the Internal Revenue Code since 1990.
At March 31, 2000, for income tax return purposes, the Company has net operating
loss carryforwards of approximately $100,000 available to offset future taxable
income. If not used, these carryforwards will begin to expire in 2020.
The components of deferred tax assets and liabilities are as follows at March
31, 2000:
<TABLE>
<S> <C>
Deferred tax liability, temporary differences related to depreciation $ 3,551
Tax effect of net operating loss carryforwards (39,953)
---------------
Tax effect of future temporary differences and carryforwards (36,402)
Less net deferred tax asset valuation allowance 36,402
---------------
Net deferred tax asset $ 0
===============
</TABLE>
The valuation allowance was recorded to reflect the estimated amount of deferred
tax assets which may not be realized in future years.
7. 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.
15
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
7. COMMITMENTS (CONTINUED):
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.
8. STOCK WARRANTS:
The Company has issued warrants to certain debt holders, guarantors, vendors,
and an investee in exchange for accepting shares of the Company's stock as
partial consideration for the purchase of the investee's stock. The fair value
of these warrants was recorded as additional paid-in capital. The Company has
also issued warrants to employees. At March 31, 2000 the Company had issued
warrants to purchase 730,000 shares of Series C Preferred Convertible Stock at
$1.50 per share. The warrants are exercisable and expire at various dates
through December 2002. No warrants have been exercised as of March 31, 2000. The
weighted average remaining life of warrants outstanding at March 31, 2000 is
2.47 years.
The Company accounts for stock-based compensation using the intrinsic value
method prescribed by APB Opinion No. 25 and related interpretations. No
compensation cost has been recognized for warrants issued to employees when the
exercise price of the warrants issued are at least equal to the fair value of
the stock on the date of the issue. Had compensation costs for these warrants
been determined consistent with SFAS No. 123, the Company's net loss would have
been unchanged as the warrants were determined to have no fair value on the date
of issuance. The fair value of each warrant for the proforma disclosures
required by SFAS No. 123 is estimated on the grant date using the Black-Scholes
option-pricing model with the following assumptions:
Dividend yield None
Expected volatility None
Expected life of option 3 years
Risk-free interest rate 6.00%
9. STOCK OPTIONS:
The Company has a stock option plan reserving 15% of the outstanding shares of
the Company's common stock for future issuance. Under the terms of this stock
option plan, the Company may grant to its employees and consultants options to
purchase shares with a term not to exceed ten years.
16
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
9. STOCK OPTIONS (CONTINUED):
The Company also has a stock option plan reserving 100,000 shares of the
Company's common stock for issuance to outside directors. Under the terms of
this plan, eligible directors receive an option for 5,000 shares in the first
year elected a director; in subsequent years eligible directors receive an
option for 2,000 shares. The exercise price of the options shall be 100% of the
current market price on the date of the grant. The term of the options is ten
years.
In consideration for providing a loan to the Company, the Company issued an
option to acquire up to 80,000 shares of Series C Preferred Convertible Stock at
$1.25 per share. The option shall not expire until the later of six months
beyond the payoff of the loan or December 31, 2000. The fair value of this
option is included in additional paid-in capital. The option has not been
exercised as of March 31, 2000.
A summary of the status of the Company's stock options are presented in the
table below:
<TABLE>
<CAPTION>
Weighted Weighted
average average
exercise Price remaining
Shares price range life
-------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Options for preferred stock:
Granted during the period
ended March 31, 2000 80,000 $ 1.25 $1.25 .75 years
========= ======= ===== =====
Options for common stock:
Options related to the reverse
acquisition of Calendar
Capital, Inc. 827,750 $ 1.09 $.19 - $7.25 2.97 years
========= ======= ============ =====
</TABLE>
All of the above options are outstanding and exercisable at March 31, 2000.
10. PREFERRED STOCK:
The Company's preferred stock consists of Series B Convertible Preferred Stock
(Series B) and Series C Convertible Preferred Stock (Series C).
The holders of Series B stock are entitled to receive cumulative dividends at
the rate of four percent of the stated value ($.50) of such shares payable
annually, when and if declared by the Board of Directors. Each share of Series B
is convertible at the option of the holder into one share of common stock. The
holders of Series B have one vote per share. The Series B shares have a
liquidation preference of $.50 per share plus any accumulated and unpaid
dividends.
17
<PAGE>
CALENDAR CAPITAL, INC. AND SUBSIDIARY
DBA ENTRENAUT, INC.
NOTES TO FINANCIAL STATEMENTS
Period from July 1, 1999 (inception) through March 31, 2000
10. PREFERRED STOCK (CONTINUED):
The holders Series C stock are not entitled to receive dividends. Each share of
Series C is convertible at the option of the holder into twelve and one-half
shares of common stock. The holders of Series C have twelve and one-half votes
per share. On or after January 1, 2001, the Company may redeem in whole or in
part the shares of Series C at a redemption price of $25 per share. The Series C
shares have a liquidation preference of $25 per share.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
Carrying Fair
amount value
----------------- -----------------
<S> <C> <C>
Financial assets:
Cash $ 22,000 $ 22,000
Financial liabilities:
Convertible debentures $ 500,000 $ 500,000
Notes payable $ 442,000 $ 442,000
</TABLE>
12. SUBSEQUENT EVENTS:
Stock swap:
Subsequent to March 31, 2000, the Company swapped 40,000 shares 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.
Investment:
Subsequent to March 31, 2000, the Company agreed to lend $150,000 to JCafe,
which recently launched a proprietary solution for managing the delivery of
training and educational content over the Internet. The note is convertible
into 150,000 shares of JCafe common stock. The Company also received
warrants to purchase an additional 150,000 shares of JCafe common stock at
$.625 per share.
18
