SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File Number:
MAY 31, 1996 1-13360
Enteractive, Inc.
( Name of Small Business Issuer as Specified in its Charter)
DELAWARE 22-3272662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 WEST 40TH STREET, SUITE 2100
NEW YORK, NY 10018
(Address of principal executive offices) (Zip Code)
(212) 221-6559
(Issuer's telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Exchange
Act: Common Stock and Warrants to
purchase Common Stock, par
value $.01 per share
Securities Registered pursuant to Section 12(g)of the Exchange
Act: None
Check whether the Issuer (1) has 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 / /
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of 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 /
Revenues for the Fiscal year ended May 31, 1996 were $853,200
The aggregate market value of the voting stock held by non- affiliates of the
Registrant, based upon the closing price of the Common Stock on September
11,1996, was approximately $14,798,924 As of September 11, 1996, the Registrant
had outstanding 7,656,435 shares of Common Stock.
<PAGE>
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Enteractive, Inc. (the "Company"
or "Enteractive") as of September 15, 1996 are as follows:
NAME AGE POSITION
Andrew Gyenes..... 60 Chairman of the Board and Chief Executive Officer
Michael Alford.... 50 Vice President, Executive Producer and Director
Rino Bergonzi..... 50 Director
Peter Gyenes...... 51 Director
Harrison Weaver... 62 Director
Kenneth Gruber.... 44 Vice President, Chief Financial Officer and
Secretary
Randal Hujar...... 36 Vice President Marketing and Sales
Gary Skiba........ 34 Vice President, Chief Technology Officer
Jon Singer..........33 Vice President, Director of Development
Andrew Gyenes has been Chairman of the Board and Chief Executive Officer
of the Company since May 1994. He was Chief Executive Officer, President and a
director of Enteractive from January 1994 through May 1994. For more than five
years before joining Enteractive, Mr. Gyenes was Vice President of Gyenes & Co.,
a computer software consulting company, and Marketing Manager of Ann-Mar
Manufacturing, Inc. ("Ann-Mar"), a family owned textile company. Mr. Gyenes
continued in such position on a part-time basis through January 1995, and since
January 1995, has been a consultant to Ann-Mar (approximately 5% of his time).
Mr. Gyenes can continue to serve in such capacity so long as it does not prevent
him from performing his duties on behalf of the Company. Most of Mr. Gyenes'
career has been in the computer industry, including positions with Warner
Communications (most recently as an Assistant Vice President responsible for
Worldwide Information Systems), with IBM Corporation (most recently as Eastern
Regional Manager for Scientific Systems at Service Bureau Corporation, a former
wholly-owned IBM subsidiary), and with Western Union (most recently as Assistant
Vice President of Data Processing).
Michael Alford has been Vice President, Executive Producer of the
Company since July 1996, a director of the Company since May 1994 and served as
Vice President Development of the Company from May 1994 to July 1996. From 1992
through May 1994, he was the Vice President Development and a director of Sonic.
Prior to 1992, Mr. Alford was department head of Versar Incorporated, an
environmental consulting firm, for more than five years.
Rino Bergonzi has served as a director of the Company since January 1995.
Since November 1993, Mr. Bergonzi has served as Vice President and Division
Executive of Corporate Information Technology Services at AT&T, and has 25 years
of experience in the information services field that includes working for such
companies as Western Union, United Parcel Service Information Services and EDS
Corp.
Peter Gyenes has served as a director of the Company since January
1995. Mr. Gyenes has served as Executive Vice President of International
Operations of VMARK Software, Inc., a client/server software and services firm
since May 1996. Mr. Peter Gyenes served as President and Chief Executive Officer
of Racal InterLan, Inc., a leading supplier of local area networking products,
from May 1995 to May 1996. Since January 1986 he also served as a director of
Axis Computer Systems, Inc. From January 1994 to April 1994 he was President of
the Americas Division of Fibronic International, Inc. and from August 1990 to
December 1993 Vice President and General Manager of Data General Corporation's
international operations and mini-computer business unit. Mr. Peter Gyenes has
also held management, marketing, sales and technical positions with Encore
Computer,
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<PAGE>
Prime Computer, Xerox and IBM. Mr. Peter Gyenes is the brother of Andrew Gyenes,
Chairman of the Board and Chief Executive Officer of the Company.
Harrison Weaver has been a director of the Company since December 1993. He
was a Vice President of the Company from December 1993 through May 1994. He has
been a director of The Continuum Group, Inc. ("Continuum") since 1987, the
Chairman of the Board and Chief Executive Officer of Continuum since December
1991 and the President of Continuum since August 1994. In September 1995
Continuum applied for protection under Chapter 11 of the United States
Bankruptcy Code. Mr. Weaver is the founder and President of Weaver Associates, a
diversified printing concern located in Cranford, New Jersey, which has been
business for over 25 years. He served for thirteen years as President of the New
Jersey State Opera, becoming President Emeritus in 1987. Mr. Weaver has received
many distinguished achievement awards, including the Governor's Award Medal for
outstanding contributions to the Arts for the State of New Jersey in 1978.
Kenneth Gruber has been Vice President, Chief Financial Officer and
Secretary of the Company since November 7, 1994. Prior to joining the Company,
Mr. Gruber was employed by Children's Television Workshop ("CTW") since 1984,
and served as CTW's Vice President and Chief Financial Officer from 1993 to
November 1994, as CTW's Vice-President of Finance and Administration (1989-1993)
and as Vice-President of Finance (1988-1989).
Randal Hujar has been a Vice President of the Company since February 29,
1996 and Vice President of Marketing and Sales since April 1996. Prior to
joining the Company, Mr. Hujar was President and Chief Executive Officer of
Lyriq International Corp ("Lyriq") since its founding in December 1991. From
February 1991 to March 1991, Mr. Hujar was the Managing Director of the Lyriq
Group, a marketing consulting firm. From January 1989 to January 1990 he was
director of 1-2-3 Product Line Marketing at Lotus Development Corporation.
Gary Skiba has been a Vice President of the Company since February 29, 1996
and Chief Technology Officer since July 16, 1996. Prior to joining the Company,
Mr. Skiba was Chairman and Chief Technical Officer of Lyriq since its founding
in December 1991. From 1989 to 1991, he was manager of Advanced Word Processing
Products at IBM Corporation.
Jon Singer has been Vice President, Director of Development since July,
1996. From May 1994 to June 1996 he was the Vice President of Software
Development for the Company. From December 1992 to May 1994 he held a similar
position with Sonic Images Productions, Inc. ("Sonic"), the Company's
predecessor in interest. From December 1990 to December 1992 he was a software
engineer with Sonic.
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth, for fiscal 1996, 1995 and 1994, all
compensation awarded to, earned by or paid to Andrew Gyenes, the Chairman of the
Board and Chief Executive Officer of the Company, Kenneth J. Gruber, Vice
President, Chief Financial Officer and Secretary and John Ramo formerly
President and Chief Operating Officer, the only executive officers of the
Company whose salary and bonus exceeded $100,000 with respect to the fiscal
years ended May 31, 1996 (the "Named Executive Officers.")
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION UNDERLYING
POSITION YEAR ($) ($) (1) OPTIONS
- -------- ---- --- --- --- -------
<S> <C> <C> <C> <C> <C>
Andrew Gyenes 1996 $100,000 $13,357 100,000 (2)
Chairman of the 1995 $100,000
Board and Chief 1994 $41,700 225,000 (3)
Executive
Officer
John Ramo 1996 $105,000
President and 1995 $105,000
Chief Operating 1994 $104,330
Officer (4)
Kenneth Gruber 1996 $80,000 $20,000 $11,787 25,000 (6)
Vice President, 1995(5) $11,667 75,000 (7)
Chief Financial 1994
Officer
</TABLE>
(1) Certain of the officers of the Company routinely receive other benefits
from the Company, including additional medical coverage and payments for
leased cars and insurance thereon. The Company has concluded, after
reasonable inquiry, that the aggregate amounts of such benefits during
fiscal, 1995 and 1994, did not exceed the lesser of $50,000 and 10% of the
compensation set forth above as to any named individual.
(2) Represents options to purchase 100,000 shares of the Company's Common
Stock $.01 par value (the "Common Stock") granted on June 12, 1995 under
the 1994 Incentive and Nonqualified Stock Option Plan (the "1994 Plan"),
of which one-third became exercisable June 12, 1996. None of such options
have been exercised.
(3) Represents options to purchase 125,000 shares of Common Stock granted on
January 3, 1994 under the 1994 Plan, which became exercisable January 3,
1995 and 100,000 options to purchase Common Stock granted February 1, 1994
under the 1994 Plan, which became exercisable February 1, 1995. None of
such options have been exercised
(4) Mr. Ramo served as President and Chief Executive Officer of the Company
until his resignation from such positions on August 8, 1996. At that time
the Company and Mr. Ramo agreed to the terms of a separation agreement
under which, Mr. Ramo received a payment of $132,461 representing the
remaining balance under his employment agreement. (See "Certain
Relationships and Related Transactions".)
(5) Mr. Gruber's employment commenced November 7, 1994.
(6) Represents options granted to purchase 25,000 shares of Common Stock on
June 12, 1995 under the 1994 Plan, of which one-third became exercisable
June 12, 1996. None of such options have been exercised.
(7) Represents options to purchase 75,000 shares of Common Stock granted on
November 7, 1994 under the 1994 Plan, of which one-third became
exercisable November 7, 1995.
None of such options have been exercised.
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<PAGE>
STOCK OPTION GRANTS
The following table provides further information with respect to the options
granted in fiscal 1996 to Mr. Gyenes and Mr. Gruber under the 1994 Plan
STOCK OPTION TABLE
<TABLE>
<CAPTION>
% of
Total Potential Value At
Options Assumed Annual Rates
Granted of Stock Price
Number of to Appreciation For
Name and Securities Employees Exercise Option Term
Principal Underlying in Fiscal or Base Expiration -------------------------
Position Option Year Price Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Andrew Gyenes
Chairman of
the Board and
Chief
Executive
Officer 100,000 63% $3.00 6/12/00 $82,884 $183,153
Kenneth Gruber
Vice
President,
Chief
Financial
Officer 25,000 16% $3.00 6/12/00 $ 20,721 $ 45,788
</TABLE>
(1) The potential realizable portion of the foregoing table is determined by
using the market price of the Company's Common Stock on the date of grant.
The potential realizable portion of the foregoing table illustrates value
that might be realized upon exercise of option immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the option,
These numbers do not take into account provisions providing for
termination of the option following termination of employment,
nontransferability or differences in vesting periods. Regardless of the
theoretical value of an option, its ultimate value will depend on the
market value of the Common Stock at a future date, and that will depend on
a variety of factors, including the overall condition of the stock market
and the Company's results of operations and financial condition. There can
be no assurance that the values reflected in this table will be achieved.
FISCAL YEAR END OPTION VALUES
No options were exercised by the Named Executive Officers during fiscal
1996. The following table shows, for Mr. Gyenes and Mr. Gruber, the number
of shares covered by both exercisable and unexercisable employee stock
options as of May 31, 1996, and the values for "in-the-money" options,
which represent the positive spread between the exercise price of any
outstanding stock option and the price of the Common Stock as of May 31,
1996, which was $4.375.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised in-the-Money
Unexercised Options at FY End(#) Options at FY-End($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Andrew Gyenes 225,000/100,000 $390,625/$137,500
Kenneth Gruber 25,000/ 75,000 $ 15,625/$ 65,625
</TABLE>
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<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth beneficial ownership of the Common Stock as
of September 15, 1996 by (a) each stockholder known by the Company to be the
beneficial owner of five percent or more of the outstanding Common Stock, (b)
each director and Named Executive Officer of the Company individually, and (c)
all directors and executive officers as a group. Except as otherwise indicated
in the footnotes below, (x) the Company believes that each of the beneficial
owners of the Common Stock listed in the table, based on information furnished
by such owner, has sole investment and voting power with respect to such shares,
and (y) the address of the beneficial owner is the address of the principal
executive offices of the Company.
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- ------------------------------------ ------------------------ --------
<S> <C> <C>
John Ramo 896,577(2) 11.7%
1237 Providence Terrace
McLean, VA 22101
Jolie Barbiere 896.577(3) 11.7%
1237 Providence Terrace
McLean, VA 22101
Barry Rubenstein
68 Wheatley Road
Brookville, NY 11545 965,092 (4) 12.8%
Irwin Lieber
767 Fifth Avenue
New York, NY 10153 535,826 (5)(15) 7.3%
21st Century Communications Foreign
Partners, L.P.
c/o Fiduciary Trust(Cayman)Limited
P.O. Box 1062
Grand Cayman, B.W.I 411,522 (6) 5.6%
21st Century Communications Partners, LP
767 Fifth Avenue-45th Floor
New York, NY 10053
411,522 (7) 5.6%
21st Century Communications T-E
Partners, LP
767 Fifth Avenue-45th Floor
New York, NY 10053 411,522 (8) 5.6%
Michael J. Marocco
767 Fifth Avenue 45th floor
New York, NY 10153 411,522 (9)(15) 5.6%
Barry Lewis
767 Fifth Avenue 45th floor
New York, NY 10153 411,522 (10)(15) 5.6%
John Kornreich
767 Fifth Avenue 45th floor
New York, NY 10153 411,522 (11)(15) 5.6%
Harvey Sandler
767 Fifth Avenue 45th floor
New York, NY 10153 411,522 (12)(15) 5.6%
Andrew Sandler
767 Fifth Avenue 45th floor
New York, NY 10153 411,522 (13)(15) 5.6%
Barry Fingerhut
767 Fifth Avenue
New York, NY 10153 513,826 (14)(15) 5.6%
Michael Alford 163,275 2.1%
Andrew Gyenes 258,333 (16) 3.3%
Ken Gruber 58,333 (17) *
Harrison Weaver 30,000 (18) *
Rino Bergonzi 20,000 (19) *
Peter Gyenes 16,000 (20) *
All directors and executive officers as
a group 1,102,126 (21) 13.8%
</TABLE>
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<PAGE>
* less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("Commission") and generally
includes voting or investment power with respect to securities. Shares
of Common Stock Isabel upon the exercise of options, warrants and
convertible notes currently exercisable or convertible, or exercisable
or convertible within 60 days, are deemed outstanding for computing the
percentage ownership of the person holding such options or warrants or
convertible notes but are not deemed outstanding for computing the
percentage ownership of any other person.
(2) Includes 741,993 shares of Common Stock owned by John Ramo and 816,993
shares of Common Stock owned by his wife, Jolie Barbiere. Upon
consummation of this Offering, the Company will repurchase 315,271 and
347,138 Contribution Shares from Mr. Ramo and Ms. Barbiere,
respectively. Mr. Ramo disclaims beneficial ownership of all shares
held by Ms. Barbiere.
(3) Includes 816,993 shares of Common Stock owned by Jolie Barbiere and
741,993 shares of Common Stock owned by John Ramo, husband of Jolie
Barbiere. Upon consummation of this Offering, the Company will
repurchase 315,271 and 347,138 Contribution Shares from Mr. Ramo and
Ms. Barbiere, respectively. Ms. Barbiere disclaims beneficial ownership
of all shares held by Mr. Ramo.
(4) Based on a Schedule 13D filed on July 31, 1996 by Barry Rubenstein,
Woodland Venture Fund ("Woodland Fund"), Seneca Ventures ("Seneca"),
Woodland Services Corp. ("Woodland Corp."), 21st Century Communications
Partners, L.P. ("21st Partners"), 21st Century Communications T-E
Partners, L.P. ("21st T-E"), 21st Century Communications Foreign
Partners, L.P. ("21st Foreign"), Michael J. Marocco, Barry Lewis, John
Kornreich, Harvey Sandler, Andrew Sandler, Barry Fingerhut and Irwin
Lieber, Barry Rubenstein has sole power to vote and dispose of 232,500
shares of Common Stock (including shares of Common Stock underlying
presently exercisable options) and also may be deemed to have shared
power to vote and dispose of 732,592 shares of Common Stock calculated
as follows. Mr. Rubenstein is a shareholder, officer and director of
InfoMedia Associates, Ltd. ("InfoMedia") which is a general partner of
21st Partners, 21st T-E and 21st Foreign which collectively hold
411,522 shares of Common Stock. Mr. Rubenstein is also a general
partner of each of Applewood Associates, L.P. ("Applewood"), Seneca and
the Woodland Fund and a trustee of The Marilyn and Barry Rubenstein
Family Foundation ("Foundation") and by virtue of such positions may be
deemed to have shared power to vote and to dispose of an additional
321,070 shares of Common Stock. Mr. Rubenstein disclaims beneficial
ownership of the securities, except to the extent of his equity
interest therein.
(5) Irwin Lieber has sole power to vote and dispose of 5,000 shares of
Common Stock and 37,000 shares of Common Stock underlying Common Stock
Warrants (the "Warrants"). By virtue of being a shareholder, officer
and director of InfoMedia and a general partner of Applewood, Irwin
Lieber may be deemed to have shared power and to dispose of 493,826
shares of Common Stock.
(6) Includes 32,922 shares of Common Stock. 21st Foreign disclaims
beneficial ownership of 279,835 shares of Common Stock owned by 21st
Partners and 98,765 shares of Common Stock owned by 21st T-E.
(7) Includes 279,835 shares of Common Stock. 21st Partners disclaims
beneficial ownership of 98,765 shares of Common Stock owned by 21st T-E
and 32,922 Shares of Common Stock owned by 21st Foreign.
(8) Includes 98,765 shares of Common Stock. 21st T-E disclaims beneficial
ownership of 279,835 shares of Common Stock owned by 21st Partners and
32,922 shares of Common Stock owned by 21st Foreign.
(9) By virtue of being the sole shareholder, officer and director of an
entity which is a general partner of an entity which is a general
partner of 21st Partners, 21st T-E and 21st Foreign, Michael J. Marocco
may be deemed to have shared power to vote and to dispose of 411,522
shares of Common Stock.
(10) By virtue of being the majority shareholder and director of an entity
which is a general partner of an entity which is a general partner of
21st Partners, 21st T-E and 21st Foreign, Barry Lewis may be deemed to
have shared power to vote and to dispose of 411,522 shares of Common
Stock.
(11) By virtue of being the majority shareholder and director of an entity
which is a general partner of an entity which is a general partner of
21st Partners, 21st T-E and 21st Foreign, John Kornreich may be deemed
to have shared power to vote and to dispose of 411,522 shares of Common
Stock.
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<PAGE>
(12) By virtue of being the majority shareholder and director of an entity
which is a general partner of an entity which is a general partner of
21st Partners, 21st T-E and 21st Foreign, Harvey Sandler may be deemed
to have shared power to vote and to dispose of 411,522 shares of Common
Stock.
(13) By virtue of being the majority shareholder and director of an entity
which is a general partner of an entity which is a general partner of
21st Partners, 21st T-E and 21st Foreign, Andrew Sandler may be deemed
to have shared power to vote and to dispose of 411,522 shares of Common
Stock.
(14) Barry Fingerhut has sole power to vote and dispose of 20,000 shares of
Common Stock underlying the Warrants. By virtue or being a shareholder,
officer and director of InfoMedia and a general partner of Applewood,
Barry Fingerhut may be deemed to have shared power to vote and to
dispose of 493,826 shares of Common Stock.
(15) The shareholder disclaims beneficial ownership of these securities,
except to the extent of their or his equity interest therein.
(16) Consists of 258,333 shares of Common Stock issuable upon exercise of
presently exercisable options. Excludes 66,667 shares of Common Stock
issuable upon the exercise of presently non-exercisable options.
(17) Consists of 58,333 shares of Common Stock issuable upon exercise of
presently exercisable options. Excludes 41,667 shares of Common Stock
issuable upon the exercise of presently non-exercisable options.
(18) Consists of 20,000 shares of Common Stock issuable upon exercise of
presently exercisable options and 10,000 shares of Common Stock
issuable upon exercise of presently exercisable options granted
pursuant to the Directors Plan. Excludes 50,000 presently exercisable
options held by Continuum, which options Mr. Weaver disclaims
beneficial ownership.
(19) Consists of 5,000 shares of Common Stock owned by Mr. Bergonzi, 5,000
shares of Common Stock issuable upon exercise of presently exercisable
warrants and 10,000 shares of Common Stock issuable upon exercise of
presently exercisable options granted pursuant to the Directors Plan.
(20) Consists of 3,000 shares of Common Stock owned by Mr. Peter Gyenes,
3,000 shares of Common Stock issuable upon exercise of presently
exercisable warrants and 10,000 shares of Common Stock issuable upon
exercise of presently exercisable options granted pursuant to the
Directors Plan.
(21) Also, includes presently exercisable options to purchase 17,673 shares
of Common Stock and 777,793 shares of Common Stock held by certain
executive officers who are not Named Executive Officers.
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<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In a bridge financing consummated in January 1996, 21st Foreign, 21st
Partners, 21st T-E, Seneca, Woodland Fund, the Foundation, Applewood and
Dalewood Associates, L.P. (an entity in which Barry Rubeinstein is a shareholder
and officer) purchased $100,000, $850,000, $300,000, $100,000, $200,000,
$100,000, $250,000 and $200,000 principal amount of Unsecured Convertible
Promissory Notes ("Convertible Notes"), respectively and 20,000, 170,000,
60,000, 20,000, 40,000, 20,000, 50,000 and 40,000 warrants (the "January 1996
Warrants"), respectively. Upon the consummation of the Company's public offering
in May 1996 all the January 1996 Warrants were converted into the same number of
Common Stock Purchase Warrants. In addition, the Convertible Notes held by 21st
Foreign, 21st Partners, 21st T-E, Applewood, Seneca and Woodland Fund were
converted into (a) 32,922; 279,835; 98,765; 82,305; 32,922; and 65,844 shares of
Common Stock, respectively, and (b) 65,844; 559,671; 197,531; 164,608; 65,844;
and 131,688 Warrants, respectively. The Company was advised that on May 16, 1996
such entities sold Warrants held by them. The Company has been advised that 21st
Foreign, 21st Partners and 21st T-E and Barry Rubenstein beneficially own more
than 5% of the outstanding Common Stock. A further description of Mr.
Rubenstein's relationship with the above-described entities is provided in
"Security Ownership of Certain Beneficial Owners and Management."
In May 1996 the Company repurchased under a previously announced
agreement, from John Ramo, Zenon Slawinski, Michael Alford and Jolie Barbiere,
each of whom, at the time was a director and/or executive officer of the
Company, an aggregate of 1,000,000 shares of Common Stock. Under the purchase
agreement one third of the purchase price was paid at the closing and the
balance was to be paid on the first and second anniversaries of the closing. In
August 1996, in connection with a previously announced reorganization, the
Company, John Ramo, president and chief operating officer and Jolie Barbiere, a
vice president, mutually agreed to the terms of a separation agreement under
which: Mr. Ramo resigned his position and received a payment of $132,461
representing the remaining balance under his employment agreement; both Mr. Ramo
and Ms. Barbiere resigned as members of the company's board of directors; Ms.
Barbiere's employment agreement, which expires July 16, 1996, was not renewed
and she received a lump sum severance payment of $40,000. In addition, a
substantial portion of the remaining 1997 and 1998 payments ($220,800 each
year), in respect of company stock purchased from Mr. Ramo and Ms. Barbiere,
under the previously announced Stock Purchase Agreement, will be accelerated.
Under the revised payment schedule $386,400 will be paid in fiscal 1997 and
$55,200 will be paid in fiscal 1998.
All of the above transactions resulted from arms-length negotiations
and were approved by the independent members of the Company's Board of Directors
who did not have an interest in the transaction. The Company believes that the
terms of such transaction were on terms that were no less favorable than were
available from unaffiliated third parties. Future and ongoing transactions with
affiliates of the Company, if any, will be on terms believed by the Company to
be no less favorable than are available from unaffiliated third parties and will
be approved by a majority of the independent members of the Company's Board of
Directors who do not have an interest in the transaction.
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<PAGE>
SIGNATURES
Pursuant to the requirements of 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.
ENTERACTIVE, INC.
Date: September 30, 1996 By: /s/ Andrew Gyenes
--------------------------------
Andrew Gyenes
Chairman of the Board and
Chief Executive Officer
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