10QSB 1 f10q_sept2001.txt FORM 10-QSB - 9/30/01 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 30549 FORM 10-QSB (Mark One) [ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 [ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to ---------- ------------ Commission file number: 0-21275 Enter Tech Corp. ---------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 84-1349553 --------------------------------- ------------------- (State or Other Jurisdiction (IRS Employer of Incorporation or Organization) Identification No.) 430 East 6th Street, Loveland, Colorado 80537 --------------------------------------------- (Address of principal executive offices) (970) 669-4918 --------------------------- (Issuer's telephone number) --------------------------------------------------- (Former name, former address and former fiscal year (if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a Court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of each of the issuer's classes of common equity, as of November 13, 2001 was 17,089,984 shares of common stock. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] INDEX Page Number ------ Part I. Financial Information Item I. Financial Statements Review Report of Independent Certified Public Accountant 3 Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000 4 Consolidated Statements of Operations, Three Months Ended September 30, 2001 and September 30, 2000 5 Consolidated Statements of Operations, Nine Months Ended September 30, 2001 and September 30, 2000 6 Consolidated Statements of Cash Flows, Nine Months Ended September 30, 2001 and September 30, 2000 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations 15 Part II. Other Information 19 Item 1. Legal Proceedings 19 Item 2. Changes in Seurities 19 Item 3. Defaults upon Senior Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 19 Signatures 20 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT The Board of Directors Enter Tech Corporation Loveland, Colorado We have reviewed the accompanying consolidated balance sheet of Enter Tech Corporation as of September 30, 2001, and the related consolidated statements of operations and cash flows for the Nine months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Enter Tech Corporation A review of interim financial statements consists principally of inquiries of Company personnel responsible for financial matters and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. As discussed in the notes to the financial statements, certain conditions indicate that the Company may be unable to continue as a going concern. The accompanying financial statements do not include any adjustments to the financial statements that might be necessary should the Company be unable to continue as a going concern. /s/ Schumacher & Associates, Inc. Schumacher & Associates, Inc. Certified Public Accountants 2525 Fifteenth Street, Suite 3H Denver, Colorado 80211 November 13, 2001 3 ENTER TECH CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS September 30 December 31 2001 2000 Current Assets Cash $ - $ 421 ----------- ---------- Total Current Assets - 421 Equipment, net of accumulated depreciation of $9,967 12,740 14,953 Other 48 48 ----------- ---------- Total Assets $ 12,788 $ 15,422 =========== ========== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current Liabilities: Accounts payable and accrued expenses $ 431,809 $ 251,557 Checks in excess of bank balance 123 - Stock compensation payable 27,450 27,450 Customer deposits 60,000 60,000 Notes payable, related parties 919,431 668,989 Notes payable, other 250,000 250,000 ----------- ---------- Total Current Liabilities 1,688,813 1,257,996 ----------- ---------- Total Liabilities 1,688,813 1,257,996 ----------- ---------- Commitments and contingencies (Notes 2,3,4,5,6,7,8,9,10,11,12 and 13) - - Stockholders' (Deficit): Preferred Stock, $.0001 par value, 5,000,000 shares authorized 1,000,000 issued and outstanding 100 100 Common Stock, $.0001 par value, 100,000,000 shares authorized 17,089,984 shares issued at September 30, 2001 and 17,012,884 at December 31, 2000 1,709 1,701 Additional paid-in capital 4,982,584 7,823,778 Stock subscriptions receivable, services (302,363) (3,799,764) Accumulated deficit (6,357,773) (5,268,389) ----------- ---------- (1,675,743) (1,242,574) Treasury Stock, 2,825,000 shares (282) - ----------- ---------- Total Stockholders' (Deficit) (1,676,025) (1,242,574) ----------- ---------- Total Liabilities and Stockholders' (Deficit) $ 12,788 $ 15,422 =========== ========== The accompanying notes are an integral part of the financial statements. 4 ENTER TECH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Three Months Ended Ended September 30, September 30, 2001 2000 Revenues $ - $ - ------------ ----------- Operating Expenses: Depreciation 1,136 3,824 Professional fees 80,872 208,766 Rent 13,615 136,688 Stock issued for services - 515,150 Travel - 50,254 Telephone - 8,567 Other 223 19,046 ------------ ----------- Total Operating Expenses 95,846 942,295 ------------ ----------- Net Operating (Loss) (95,846) (942,295) Other (Expenses): Interest (expense) (24,438) (16,850) ------------ ----------- Net Loss to Common Shareholders $ (120,284) $ (959,145) ============ =========== Net Loss Per Common Share $ (.01) $ (.04) ============ =========== Weighted Average Number of Shares Outstanding 17,089,984 22,319,549 ============ =========== The accompanying notes are an integral part of the financial statements. 5 ENTER TECH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Nine Months Nine Months Ended Ended September 30, September 30, 2001 2000 Revenues $ - $ - ------------ ----------- Operating Expenses: Salaries - 129,943 Depreciation 3,406 7,984 Professional fees 316,766 494,555 Rent 40,615 169,820 Stock issued for services 655,933 1,133,148 Travel - 117,770 Telephone 2,259 19,989 Other 3,572 98,124 ------------ ----------- Total Operating Expenses 1,022,551 2,171,333 ------------ ----------- Net Operating (Loss) (1,022,551) (2,171,333) Other (Expenses): Interest (expense) (66,833) (54,351) ------------ ----------- Net Loss to Common Shareholders $ (1,089,384) $(2,225,684) ============ =========== Net Loss Per Common Share $ (.06) $ (.10) ============ =========== Weighted Average Number of Shares Outstanding 17,089,984 22,319,549 ============ =========== The accompanying notes are an integral part of the financial statements. 6 ENTER TECH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Nine Months Ended Ended September 30, September 30, 2001 2000 Cash Flows Operating Activities: Net (loss) $ (1,089,384) $ (2,225,684) Adjustment to reconcile net (loss) to net cash provided by operating activities: Depreciation 3,406 7,984 Stock for services 655,933 1,133,148 (Increase) in note receivable related parties - (7,002) Increase in accounts payable and accrued expenses 180,374 131,684 Other - 28,500 ---------- ----------- Net Cash (Used in) Operating Activities (249,671) (931,370) ---------- ----------- Cash Flows from Investing Activities (Investment) in equipment (1,192) (68,272) Deferred offering costs - (100,000) ---------- ---------- Net Cash (Used in) Investing Activities (1,192) (168,272) ---------- ---------- Cash Flows from Financing Activities: Common stock issued and additional paid-in capital - 732,500 Increase in notes payable - 234,194 Increase in payable, related parties 250,442 144,979 ----------- ---------- Net Cash Provided by Financing Activities 250,442 1,111,673 ----------- ---------- Increase (decrease) in Cash (421) 12,031 Cash, Beginning of Period 421 14 =========== ========== Cash, End of Period $ - $ 12,045 =========== ========== Interest Paid $ 66,833 $ 54,351 =========== ========== Income Taxes Paid $ - $ - =========== ========== The accompanying notes are an integral part of the financial statements. 7 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (1) Condensed Financial Statements ------------------------------ The financial statements included herein have been prepared by Enter Tech Corporation without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and Enter Tech Corporation believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the December 31, 2000 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respect's dependent upon the facts that will exist, and procedures that will be accomplished by Enter Tech Corporation later in the year. The management of Enter Tech Corporation believes that the accompanying unaudited condensed financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations and cash flows for the periods presented. (2) Business Combinations --------------------- On June 2, 1998, Enter Tech Corp. (Company), completed a business combination with Links, Ltd., a development stage company. Pursuant to the business combination, 3,235,000 shares of the Company's common stock were issued for 100% of the issued and outstanding stock of Links, Ltd. Subsequently, 835,000 of the shares issued pursuant to this business combination were canceled resulting in 2,400,000 net shares issued. Since the controlling shareholders of Links, Ltd. own approximately 65.7% of the Company, a controlling interest in the Company, the transaction was accounted for as a reverse acquisition whereby, the equity accounts of Links, Ltd. were carried over into the accompanying financial statements. Links, Ltd. was incorporated on August 18, 1997. On January 7, 2000, the Company entered into an agreement with Shopping Mall Online, Inc. and an individual whereby the Company acquired 80% of the outstanding common stock of Shopping Mall Online. The consideration for the acquisition was 2,400,000 shares of the Company's common stock. The agreement also provided that if for any reason the Company's common stock was not trading above a $1.00 bid price at the time the Rule 144 restrictive legend on the stock certificate for the 2,400,000 shares of the Company's common stock is removed, the Company would issue additional shares of its common stock to the individual. The value of the additional shares to be issued will be equal to the difference between $2.4 million and the value of the 2,400,000 shares of common stock issued under the agreement based on the then existing bid price. 8 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (2) Business Combinations, continued -------------------------------- The business combination has been accounted for as a purchase. No goodwill has been recorded in the transaction because the former owner of Shopping Mall Online, Inc. now owns 31% of the Company. The 2,400,000 shares of common stock have been recorded at predecessor cost of Shopping Mall Online, Inc. All costs related to development of Shopping Mall Online, Inc. have been expensed. The agreement also provided the voting rights with respect to the common stock of Shopping Mall Online would remain with the individual until the restrictive legend on the 2,400,000 shares of the Company's common stock is removed. On October 27, 2000, the Company agreed to sell the controlling interest in Shopping Mall Online back to its management. The Company redeemed 1,920,000 shares of the Company's common stock from the president of Shopping Mall Online, Inc. in exchange for 1,440,000 shares of Shopping mall Online's common stock being held by the Company. The president of Shopping Mall online retained 480,000 restricted shares of the Company's common stock, and the Company retained 480,000 shares of Shopping Mall Online's common stock. On April 19, 2000, the Company acquired 80% of the outstanding shares of common stock of WavePower, Inc., a development stage company, in exchange for 5,000,000 restricted shares of the Company's common stock under an Acquisition Agreement. In addition, the Company agreed to reserve 3,000,000 shares of its 5,000,000 authorized shares of preferred stock for issuance as further payment for the acquisition to the former sole shareholder of WavePower, Inc. These shares would be issued upon exercise of an option to be granted to the shareholder. The option would provide: (a) For a three year term ending April 30, 2003; (b) For an exercise price of $.001 per share; (c) For the exercise of up to 1,000,000 shares during each of the following periods during the term of the employment agreement with the option holder: 12th and 13th months, 24th and 25th months, and 35th and 36th months. The option further provides that its exercise of the stated amounts during the respective periods is further conditioned upon WavePower, Inc. meeting stated amounts of net pre tax profits. The acquisition agreement also provides that The remaining 2,000,000 authorized shares of the Company's preferred stock may be issued to the existing member of the Company's management and significant consultants. The 5,000,000 shares of restricted common stock that were issued to WavePower, Inc. increased the Company's outstanding shares of common stock to 12,783,000. The transaction was recorded at predecessor cost since the 5,000,000 shares were approximately 39% of the Company's total issued and outstanding shares of common stock. Effective September 26, 2000, the Company rescinded this Plan of Reorganization and Acquisition. The former shareholders of WavePower, Inc. have not returned the Company's common stock nor funds advanced to WavePower during the period from April 19, 2000 through the date of rescission. The 5,000,000 shares are shown as outstanding at December 31, 2000. A contingency exists with respect to this matter, the ultimate resolution of which cannot presently be determined. 9 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (2) Business Combinations, continued -------------------------------- Effective December 19, 2000, QuickGold 2000 LLC was formed to further the business of the joint venture agreement discussed in note 13, and became a wholly owned subsidiary of the Company. (3) Marketing and Administration of Sales Agreement ----------------------------------------------- The Company has entered into an agreement with a previous director of the Company for the marketing and administration of sales through certain identified locations and the division of profits after the director has recovered related costs. The Company currently has orders for the purchase of thirty kiosk software vending units at $50,000 per unit from a previous director. The Company received $60,000 of deposits related to these orders. The Company is uncertain whether it will be able to deliver the units and it is not determinable at this time whether a refund will be required. A contingency exists with respect to this matter, the ultimate resolution of which cannot presently be determined. (4) Basis of Presentation - Going Concern ------------------------------------- The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. However, the Company has sustained operating losses since its inception and has a net capital deficiency. This fact raises substantial doubt about the Company's ability to continue as a going concern. Management is attempting to raise additional capital. In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. Management is in the process of attempting to raise additional capital and reduce operating expenses. Management believes that its ability to raise additional capital and reduce operating expenses provide an opportunity for the Company to continue as a going concern. (5) Preferred Stock --------------- On April 10, 2000, the board of directors of the Company agreed to establish two voting trusts in which the Company would place 5,000,000 shares of the Company's preferred stock. The first trust initially had 3,000,000 preferred shares being held in reserve for the acquisition of WavePower, Inc. as outlined in the definitive agreement. Because of the rescission of the WavePower acquisition, the board of directors elected to hold the 3,000,000 preferred shares for future use. The second trust contains 2,000,000 preferred shares of Company stock that will be used for the benefit and distribution to the officers, directors and significant consultants to the Company with the option of a distribution of up to 1,000,000 of these preferred shares for additional compensation as they may, from time to time, come available to the Company. As of December, 2000, these 1,000,000 preferred shares were issued to two directors and a consultant of the Company. The 1,000,000 preferred shares were recorded as compensation in the amount of $250,000. The director of the Company will retain sole voting rights for both trusts. 10 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (5) Preferred Stock, Continued -------------------------- (a) It is convertible into two shares of common stock for each share of preferred, and; (b) It is callable by the Company upon 30 days written notice at $.001 per share, provided that the holder may convert the preferred into common stock during the 30-day period. The 5,000,000 shares of preferred stock have the following rights, privileges and limitations: (a) Liquidation preference to receive any distributions in liquidation of the Company up to the amount of $0.10 per share, but does not participate in any additional distributions, (b) Right to vote five votes per share on all issues considered by the shareholders (c) Convertible into two shares of common stock for each share of preferred, and; (d) Callable by the Company upon 30 days written notice at $.001 per share, provided that the holder may convert the preferred into common stock during the 30-day period. (6) Equity Financing Agreement -------------------------- On March 15, 2000, the Company entered into a stock purchase and subscription agreement with the Reserve Foundation Trust, whereby the trust is to purchase 6,000,000 restricted shares of the Company's common stock in exchange for $10,000,000. When the agreement was signed the trust provided the Company with $50,000 in interim debt financing. That amount was subsequently increased to a total of $250,000. The interim financing the trust provided the Company in the amount of $250,000 is to be repaid in full as per the terms of the Stock Purchase and Subscription agreement on or before May 15, 2000. As of September 30, 2000, the Company has not paid this debt. On May 4, 2000, the Trust indicated that all conditions to the stock purchase had been satisfied and that it would go forward with providing the $10,000,000 in funds to the Company. As of June 12, 2000, $600,000 of the subscribed funds had been received. On July 19, 2000, the Board of Directors of the Company met to discuss banking/funding problems with the Reserve Foundation Trust. As of August 1, 2000, the Company instructed corporate counsel to prepare to take whatever action it deemed is appropriate and in the best interest of the Company. As of April 11, 2001, counsel had not yet taken action on the matter. The stock certificates for the 6,000,000 shares of common stock were canceled during the last quarter of 2000. The Company is attempting to make another agreement with the Reserve Foundation Trust whereby the trust would provide additional funding in exchange for restricted shares of the Company's common stock. A contingency exists with respect to this matter, the ultimate resolution of which cannot presently be determined. 11 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (7) Litigation ---------- Litigation against the Company has been threatened during May, 2000 by a corporation which alleges that the Company has not fulfilled an agreement to issue 1,000,000 shares of the Company's common stock in consideration of the waiver of any rights by the corporation or affiliated entities to acquire WavePower, Inc., which the Company acquired on April 19, 2000. The Company is of the view that the conditions precedent to the issuance of such stock were not fulfilled and that the agreement was repudiated. The Company filed an answer to the complaint on June 29, 2000. Due to the preliminary stage of the matter, the ultimate resolution of this contingency cannot presently be determined. (8) Litigation-Former Officer ------------------------- During February, 2000 the Company commenced litigation against a former officer of the Company alleging failure of the former officer to meet certain performance standards. The Company is seeking cancellation of the agreement to issue 750,000 shares of Company common stock and the payment of $500 per month compensation to the former officer and the return of 500,000 shares of stock previously issued. A contingency exists with respect to this matter, the ultimate resolution of which cannot presently be determined. (9) Employment/Consulting Contracts ------------------------------- Effective July 1, 1998, the Company entered into a one year contract with the Vice President of the Company, which required this individual to provide consulting services for fees of $500 per month and 750,000 shares of stock to be issued pursuant to a Form S-8 Registration Statement. The Company has paid no compensation to this individual to date and has not issued the 750,000 shares of stock. The December 31, 2000 financial statements include an accrual of stock and services payable in the amount of $7,500 related to services performed by this individual. Effective August 25, 1999, the Company entered into an agreement with a consultant to provide management consulting services to assist in developing the Company. The consultant is to be paid $75 per hour plus 1,000 restricted shares of common stock for every hour worked. At December 31, 1999, the Company owed $3,750 in consulting fees. In addition, the Company agreed to compensate the consultant for other services with restricted common stock. Effective January 1, 2000, the Company entered into an agreement with a consultant to provide consulting services for assistance in completing a private placement or secondary offering, and other consulting services. The consultant is to be paid $10,000 per month plus 200,000 shares of restricted common stock per year provided the business plan established for the Company is met. The term is for two years, expiring on December 31, 2001. Effective January 1, 2000, the Company entered into an agreement with a director of the Company, to attempt to build revenues of the Company and assist in the development of the Company's product. The director is to be paid $10,000 per month plus expenses. At December 31, 2000, the Company owed $133,104 in consulting fees to the director. The term is for two years, expiring December 31, 2002, with an option to renew for two additional years. 12 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (9) Employment/Consulting Contracts, continued ------------------------------------------ Effective May 15, 2000, the Company entered into an employment agreement with an individual to research market conditions and conduct feasibility studies of projects being considered by the Company. The employee is to be paid $18,000 per year plus certain benefits. The agreement expires on May 15, 2001. Effective May 22, 2000, the Company entered into an executive compensation agreement with the Company's current president. The president is to be paid $10,000 per month plus certain benefits. The term is for two years with an option to renew for an additional two year period on June 30, 2002. Effective August 1, 2000, the Company entered into an agreement with an attorney to provide legal services to the Company. The attorney is to be paid $5,000 per month plus $5,000 per month in publicly traded stock of the Company. The agreement expires on August 1, 2001 with an automatic renewal of one year unless terminated earlier. Effective September 1, 2000, the company entered into an agreement with a consultant to provide assistance in developing business opportunities and revenue. The consultant is to be paid $8,000 monthly plus expenses. The agreement expires on August 31, 2001 with an option to renew for two additional years. (10) Marketing and Other Services Agreements --------------------------------------- On June 6, 2000, the Company entered into agreements with various companies to provide various marketing and other services. The Company issued 3,125,000 shares of restricted common stock in exchange for their promise to perform these services during the 12-18 month period following the execution of the agreements. The Company has recorded 90% of the market value of these shares at the time of issuance totaling $5,273,437 as stock subscriptions receivable-services, and has charged $823,523 to an expense representing the services performed as of September 30, 2001. In November 2000, the Company rescinded these agreements and requested the 3,125,000 shares be returned to the Company. During the quarter ended June 30, 2001, 2,825,000 of these shares were returned to the Company and recorded as treasury stock. (11) Common Stock ------------ During the year ended December 31, 1999, the Company issued 200,000 shares of its restricted common stock in exchange for services. Also during the year ended December 31, 1999, the Company committed to issuing 1,543,000 shares of its restricted common stock in exchange for services. A total of $1,103,574 was accrued to reflect the stock compensation payable at December 31, 1999. All but 20,000 of these shares were issued during 2000. During the year ended December 31, 2000, the Company issued 3,428,598 of its restricted common stock in exchange for services. Also during the year ended December 31, 2000, the Company committed to issuing 50,000 shares of its restricted common stock in exchange for services. The total accrued stock 13 ENTER TECH CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2001 (Unaudited) (11) Common Stock, continued ----------------------- compensation payable at December 31, 2000 was $19,950. Also during the year ended December 31, 2000, the Company issued 1,129,286 shares of its restricted common stock for $132,500 cash. Also during the year ended December 31, 2000, the Company issued 7,500 to its president as an adjustment to a previous issuance. Also during the year ended December 31, 2000, the Company issued 3,125,000 shares of its restricted common stock to various entities in exchange for future marketing and other services to be performed during the 12-18 month period following the execution of the agreements. During November 2000, the Company rescinded these agreements due to concern regarding possible violations of various securities and common laws. The Company has requested the return of the 3,125,000 shares, of which 2,825,000 have been returned. The marketing and other services were being amortized over the agreement periods. Also during the year ended December 31, 2000, the Company hired an entity to procure additional short-term funding. As a result, the Company issued 2,000,000 shares of its restricted common stock. The entity sold 370,000 shares of such stock to a third party for $60,000. The Company has received $10,000, the entity received $15,000 in commissions, and the balance of $35,000 remains due and owing to the Company. The remaining 1,630,000 shares were returned to the Company and canceled. (12) Licensing Agreement ------------------- Effective October 27, 2000, the Company entered into a licensing venture agreement with an entity whereby the Company agreed to purchase 30 dual terminal digital vending machines at a price of $125,000 plus expenses and 60 single terminal digital vending machines at a purchase price not yet determined within three months. The Company agreed to purchase an additional 30 dual terminal digital vending machines at a price of $125,000 plus expenses and 60 single terminal digital vending machines at a purchase price not yet determined within nine months. The Company is also responsible to license this technology and to promote, develop a market, sell and distribute custom music CD products created by the digital vending machines. The term of this agreement shall become effective on the date the manufacturer receives the first purchase order and shall continue for five years, unless terminated in accordance with the terms of the agreement. (13) Joint Venture Agreement ----------------------- Effective October 13, 2000, the Company entered into a joint venture agreement with an entity, whereby the entity would be the exclusive provider of communications needs for the Company's projects including all communications installation and management for the kiosk purchased and deployed by the Company. On June 15, 2001, The Company licensed its portion of the joint venture agreement to another entity. 14 ITEM 2. PLAN OF OPERATION The following discussion of our plan of operation should be read together with the financial statements and the related notes in Item 1 of Part I above. As discussed in the notes to the financial statements, there are circumstances that indicate that Enter Tech may be unable to continue as a going concern. We cannot assure you that our plans in that regard will be successful and that we will be able to continue as a going concern. OVERVIEW The Company is a successor to Links, Ltd. a Wyoming corporation, and neither entity has had revenues from operations from its inception. Links, Ltd. was incorporated for the purpose of developing kiosks or vending machines that would market computer software, music and possibly digital video stored on discs. For several years, the Company unsuccessfully attempted to develop a commercially viable kiosk to provide such services In the third quarter of 2000, the Company management elected to change their business plans to encompass, among other things, the provision of high-speed-access (HSA) to certain market segments that include hospitality and multi-unit dwellings. To facilitate communications infrastructure for the this agreement and for other market segments that the Company has targeted, Enter Tech entered into a joint venture agreement with Northern Communications Group, Inc. ("NCG") on October 13, 2000, whereas NCG will be the exclusive provider of high-speed Internet access, wireless ISP and related appliances, equipment, software and services in the targeted market segments. The Company has researched and projected costs for installation and operation of a basic high-speed Internet access for the hospitality industry. NCG has researched and projected costs of equipment acquisition for this market segment. The Company is currently evaluating the market for services to the hospitality, apartment and office building market segments. We cannot assure you that we will ever be able to develop a high speed access system for the hospitality and multi-unit dwelling market segments, nor can we assure you that any related concept licensed from another company will be a commercially viable product. RECENT SIGNIFICANT EVENTS On August 10, 2001 Gregory J. Kaiser resigned as President of Enter Tech to pursue other opportunities. He will remain a Director of the company. On June 30, 2001 Enter Tech received stock returned by 3 of the 4 companies that had entered into marketing and service agreements for various parts of the world with the Company on June 6, 2000. On September 13, 2000 Enter Tech formally notified each group that their contracts were cancelled because of lack of performance and potential legal issues and 3,100,000 restricted common stock issued for future services be returned to Enter Tech immediately. Those companies are: Profile Venture, Ltd,. 800,000 shares The Challenge, Ltd, 900,000 shares Skyline Marketing Associates, Ltd. 825,000 shares The Wall Street Relations Group has not yet returned the 300,000 shares issued to them as part of this transaction In a related transaction, on August 2, 2000 Enter Tech entered in an agreement with Profile Venture, Ltd to establish several possible investment groups or partners for immediate funding needs of the company the Company. Enter Tech issued 2,000,000 shares of restricted common stock to Profile for this pending activity. Enter Tech found that an agreement had been consummated and that funds for 100,000 shares at $0.60 per share of Enter Tech restricted stock had been exchanged between Profile and a third party. On further investigation Enter Tech found that 270,000 additional restricted shares were committed as part of this contract as an escrow agreement held against registration of the stock for public trading. The funds resulting from that transaction were not delivered to Enter Tech. The company immediately demanded delivery of the funds and all remaining stock. Profile management returned all but 270,000 shares and the 100,000 shares that had been sold to the third party. The board of Enter Tech Corporation received 2,825,000 shares from the 3 companies listed above and 15 have authorized the return of the shares of stock related to this transaction to treasury. The management and legal counsel for Enter Tech are aggressively working towards a complete solution in this matter. On June 15, 2001, the Company licensed its portion of the Joint Venture Agreement with Northern Communications Group, Inc. (NCG) to Global Marketing Consultants. Under the agreement, Enter Tech has licensed their 50% position in the Joint Venture with NCG in exchange for 40% of the net income produced by the Joint Venture. Global will retain 10% of the net income for its management, sales and marketing efforts. The Joint Venture intends to market its' Custom-Room-Connect (TM) high speed Internet access, web appliance and Video on Demand systems to multi-unit dwellings and the hospitality industry. The Custom-Room-Connect (TM) system provides unique solutions to the hospitality and Multi-Unit Dwellings that involve a variety of high-speed Internet access systems, certain co-marketing and revenue sharing models for web appliances, advertising sales and unique Video on Demand systems that have VCR functionality. As part of the agreement, Global will sell and manage the Custom-Room-Connect (TM) program in conjunction with NCG. Enter Tech will participate when needed in certain marketing and sales efforts as defined by the Joint Venture partners. Global was formed in 1988 to provide marketing expertise to new businesses. Global has specialized in market research and channel sales implementation. GMC has also consulted to companies for funding methodologies and business expansion. Management felt that licensing their portion of the joint venture might be the right approach to fulfilling the immediate needs and opportunities that the Joint Venture has to penetrate the market with its unique systems. On March 15, 2000, Enter Tech entered into a stock purchase and subscription agreement with the Reserve Foundation Trust under which the trust is to purchase 6,000,000 restricted shares of Enter Tech common stock in exchange for cash of $10 million. When the agreement was signed, the Trust provided Enter Tech with $50,000 in interim debt financing. That amount was subsequently increased to a total of $250,000. On May 4, 2000, the Trust indicated that all conditions to the stock purchase had been satisfied and that it would go forward with providing the $10 million in funds to Enter Tech. As of June 12, 2000, at total of $600,000 of the subscribed funds had been received. On July 19, 2000, the Board of Directors of Enter Tech met to discuss banking/funding problems with the Reserve Foundation Trust. As of August 1, 2000, Enter Tech instructed corporate counsel to prepare to take whatever action is deemed is appropriate and in the best interest of the officers, directors, management, employees and shareholders of Enter Tech. Counsel delivered an opinion letter to the management of Enter Tech on this issue on August 17, 2000. After review, a formal letter from Enter Tech counsel was forwarded to the known agents of the Trust on September 4, 2000 notifying them of default and a demand to perform. The Agents for the Trust and Company management continue to work towards resolution of this matter, but as of November 13, 2001 no agreement has been reached. The current number of shares issued and outstanding as of November 13, 2001 was 17,089,984 shares, which includes 5,000,000 shares of restricted common stock issued as part of the initial WavePower, Inc. acquisition, which was rescinded on September 12, 2000. These shares have not been returned to treasury and are being treated by the Company as is explained in footnotes attached to the 10-KSB report for the year ending December 31, 2000. DESCRIPTION OF OUR CURRENT PLAN OF OPERATION On June 15, 2001, the Company licensed its portion of the Joint Venture Agreement with Northern Communications Group, Inc. (NCG) to Global Marketing Consultants. Under the agreement, Enter Tech has licensed their 50% position in the Joint Venture with NCG in exchange for 40% of the net income produced by the Joint Venture. Global will retain 10% of the net income for its management, sales and marketing efforts. The Joint Venture intends to market its' Custom-Room-Connect (TM) high speed Internet access, web appliance and Video on Demand systems to multi-unit dwellings and the hospitality industry. The Custom-Room-Connect (TM) system provides unique solutions to the hospitality and Multi-Unit Dwellings that involve a variety of high-speed Internet access systems, certain co-marketing and revenue sharing models for web appliances, advertising sales and unique Video on Demand systems that have VCR functionality. As part of the agreement, Global will sell, and manage to 16 Custom-Room-Connect (TM) program in conjunction with NCG. Enter Tech will participate when needed in certain marketing and sales efforts as defined by the Joint Venture partners. Global was formed in 1988 to provide marketing expertise to new businesses. The Company has specialized in market research and channel sales implementation. GMC has also consulted to companies for funding methodologies and business expansion. Management felt that licensing their portion of the joint venture may be the right approach to fulfilling the immediate needs and opportunities that the Joint Venture has to penetrate the market with its unique systems. The Company intends to re-establish its infrastructure over the next 120 days so that it may participate with the Joint Venture as a marketing contractor or in other such role that would increase the Joint Venture's revenue. Enter Tech has been able to establish several potential clients for the Custom-Room-Connect program in Europe and Latin America and intends to pursue them to broker potential foreign licenses for use of the system. Management also intends to clarify and resolve all outstanding issues with the WavePower, Inc. rescission, remaining monetary issues with Profile Ventures Group, and with the Reserve Foundation Trust. Although we plan to proceed with what we believe is an appropriate level of due diligence in implementing any such agreements, we cannot assure you that any alliance will be successful or that we will achieve the expected benefits from any of these transactions or agreements. COMPETITION The area of business related to high-speed Internet access, wireless Internet Service Providers (ISP) related telecommunications equipment, and related software and services is crowded with many vendors and marketers, ranging from small to some of the largest multi-national companies. There can be no guarantee that the Company will be able to successfully market any product or service it may develop or to become profitable. At this time, the Company has no patent or proprietary protection with respect to any of its concepts and there is nothing to prevent anyone else from pursuing these potential lines of business. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2001, Enter Tech had no cash on hand, and current liabilities of $1,688,813. This represented a working capital deficit of $1,688,813 As of September 30, 2001, Enter Tech had no material commitments for capital expenditures and no plans to pay dividends to its shareholders. CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS This discussion contains forward-looking statements that involve risks and uncertainties. All statements included in this report, other than statements of historical facts, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, are forward-looking statements. These forward-looking statements include statements about: The future anticipated direction of the high technology and e-commerce industries, Planned licensing agreements with operating companies Planned acquisitions of operating companies, Planned capital and operating expenditures, Future funding sources, Anticipated revenues and sales growth, and Overall business strategies. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, including such factors as: 17 Technological developments and consumer preferences in the high technology and e-commerce industries, Expected benefits from development, expansion and integration of alliance companies, Competition in the markets for our planned businesses, The availability of adequate financing, Dependence on existing management, and Changes in laws or regulations affecting our plan of operation. We caution you that our forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those expressed or implied by the forward-looking statements. 18 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Except as set forth herein the Company is not a party to any material pending legal proceedings; nor are any such proceedings involving the Company contemplated by a governmental authority to the knowledge of the Company. On February 24, 2000, the Company initiated a civil action by it against Jerry Stiles, a/k/a Gerald C. Stiles, a former officer of and consultant to the Company, in the District Court of Douglas County, Colorado and Stiles answered with a counterclaim as described in the 10QSB filing for the period ending March 31, 2000. As of August 6, 2001, there has been no material change in the status of this suit. On May 25, 2000, claimant David M. Matus in District Court of Larimar County, Colorado named Enter Tech as a party in a suit along with 7 other defendants as described in the Second Quarter 10-QSB, for the period ended June 30, 2000. There has been no discovery to date and the case is its early stages. Accordingly, we cannot predict the outcome of this litigation at this time. ITEM 2. CHANGES IN SECURITIES. RECENT SALES OF UNREGISTERED SECURITIES For the period January 1, 2001 through September 30, 2001, there has been only one security transaction authorized by Enter Tech without registration under the Securities Act of 1933. On May 31, 2001 Enter Tech Corporation entered into a Compromise Settlement Agreement and Mutual Release with Northern Communications Group, Inc. (NCG) where Enter Tech agreed to pay NCG 60,000 shares of the company's restricted common stock in exchange for release of $13,150 in past due accounts. No person acted as an underwriter with respect to this issuance and no underwriting discounts or commissions were paid therefore. These securities were sold in reliance upon the exemption from the registration requirements of Section 5 of the Securities Act as a transaction no involving a public offering under Section 4(2) of the Securities Act. The securities were: (I) acquired for investment; (ii) issued to a supplier of the Company familiar with the Company; and (iii) issued as "restricted securities" as defined under the Securities Act. The Certificates issued to represent these securities contain a restrictive legend denoting their status as restricted securities. ITEM 3. DEFAULTS IN SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION. Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. The following Exhibits are furnished as part of this report: NONE (b) Form 8-K No reports on Form 8-K were filed during the three-month period ended September 30, 2001. 19 SIGNATURES ---------- In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENTER TECH CORP. Dated: November 13, 2001 By: /s/ Sam Lindsey ------------------------------------------- Sam Lindsey, Chairman and Chief Financial Officer 20