10QSB 1 form10q.txt QUARTERLY REPORT FOR PERIOD ENDED SEPT. 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 2001 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _______ Commission file number: 000-30156 ENTHEOS TECHNOLOGIES, INC. -------------------------- (exact name of small business issuer as specified in its charter) NEVADA 98-0170247 ------------- ---------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) Suite 311 - 15 Wertheim, Richmond, Ontario L4B 3H7 ------------------------------------------ ------- (Address of principal executive offices) Registrant's telephone number, including area code: (905) 709-8240 -------------- Check whether the issuer: (1) has filed all reports required by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No State the number of shares outstanding of each of the Issuer's classes of common equity as of the latest practicable date: as of October 30, 2001, there were 1,970,592 shares of the Issuer's Common Stock, $0.00001 par value per share outstanding. Transitional Small Business Disclosure Format (Check One): Yes [ ] No [x] ENTHEOS TECHNOLOGIES, INC. FORM 10-QSB, QUARTER ENDED SEPTEMBER 30, 2001 INDEX
PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets as of September 30, 2001.............................................. 3 Consolidated Statements of Operations for the Quarter Ended September 30, 2001 and 2000........... 4 Consolidated Statements of Cash Flows for the Quarter Ended September 30, 2001.................... 5 Notes to Interim Consolidated Financial Statements................................................ 6 All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Item 2 Management's Discussion and Analysis....................................................... 7 PART II OTHER INFORMATION Item 1 Legal Proceedings........................................................................... 9 Item 2 Changes in Securities....................................................................... 9 Item 3 Defaults Upon Senior Securities............................................................. 9 Item 4 Submission of Matters to a Vote of Security Holders......................................... 9 Item 5 Other Information........................................................................... 9 Item 6 Exhibits and Reports on Form 8-K............................................................ 10 Signatures.................................................................................. 10
ITEM 1 Financial Statements ENTHEOS TECHNOLOGIES, INC. INTERIM CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(Unaudited) ASSETS Sept. 30, 2001 Dec. 31, 2000 -------------- ------------- Current Assets Cash $830,806 $938,147 Accounts Receivable 105,134 153,711 Other Receivable 100 0 ----------------------------------------- ----------------------------------------- Total Current Assets $936,040 $1,091,858 Property and Equipment, Net (Note 2) 271,923 305,862 Other Assets Due from Officer 40,000 0 Goodwill-net of amortization of $30,000 and $22,500 31,250 38,750 ----------------------------------------- ----------------------------------------- Total Assets $1,279,213 $1,436,470 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ 188,575 $ 105,049 ---------- --------- Stockholders' Equity Preferred Stock: $0.0001 Par Value; Authorized Shares, 5,000,000 shares; Issued and None None Outstanding, None Common Stock: $0.00001 Par Value; Authorized Shares, 200,000,000; Issued and Outstanding, 1,970,592 20 20 Additional Paid In Capital 3,556,396 3,556,396 Loss Accumulated During the Development Stage (2,465,778) (2,224,995) ----------- ----------- Total Stockholders' Equity 1,090,638 1,331,421 --------- --------- Total Liabilities and Stockholders' Equity $1,279,213 $1,436,470 =========== ==========
ENTHEOS TECHNOLOGIES, INC. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000, AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Unaudited)
For The Three For The Three For The Nine For The Nine Months Ended Months Ended Months Ended Months Ended Sept. Sept. 30, 2001 Sept. 30, 2000 Sept. 30, 2001 30,2000 -------------- -------------- -------------- ------- Revenues $ 105,134 $ 0 $ 311,279 $ 0 Cost of Revenues 72,968 159,546 Gross Profit 32,166 $ 0 151,733 $ 0 Expenses General and Administrative 107,733 137,228 423,482 518,386 Other Income Interest Income 7,522 31,774 30,966 77,880 Net Loss Available to Common Stockholders $ (68,045) $ (105,454) $ (240,783) $ (440,506) Basic Loss Per Common Share $ (0.035) $ (0.054) $ (0.122) $ (0.22) Basic Weighted Average Common Shares Outstanding 1,970,592 1,970,592 1,970,592 1,970,592
ENTHEOS TECHNOLOGIES, INC. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Unaudited)
Nine Months Ended Nine Months Ended September September 30, 2001 30, 2000 -------- -------- Cash Flows From Operating Activities Net Loss $ (240,783) $ (440,506) Adjustments to Reconcile Net Loss to Net Cash Used By Operating Activities Depreciation 50,772 13,023 Changes in Assets and Liabilities (Increase) Decrease in Accounts Receivable 48,577 (Increase) Decrease in Other Receivable (100) 0 (135) (Increase) Decrease in Prepaid Rent 0 (10,819) (Increase) Decrease in Security Deposits 0 (4,896) Increase (Decrease) in Accounts Payable 83,526 5,952 ----------------------------------------- Total Adjustments 182,775 3,125 ----------------------------------------- Net Cash Used By Operating Activities (58,008) (437,381) Cash Flows From Investing Activities Advances to Officers (40,000) 0 Investment in Subsidiary 0 (283,000) Purchase of Property and Equipment (9,333) (27,645) ----------------------------------------- ----------------------------------------- Net Cash Flows From Investing Activities (49,333) (310,645) Cash Flows From Financing Activities 0 0 - - Increase (Decrease) in Cash and Cash Equivalents (107,341) (748,026) Cash and Cash Equivalents, Beginning of Year 938,147 1,905,478 ----------------------------------------- Cash and Cash Equivalents, End of Year $ 830,806 $ 1,157,452 =================== ==================== Supplemental Information: Cash Paid For: Interest $ 0 $ 0 ============= ========== Income Taxes $ 0 $ 0 ============= ==========
ENTHEOS TECHNOLOGIES, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2001 AND 2000 NOTE 1 - PRESENTATION OF INTERIM INFORMATION The accompanying unaudited interim financial statements have been prepared in accordance with Form 10QSB and in the opinion of management of Entheos Technologies, Inc. (the Company), include all normal adjustments considered necessary to present fairly the financial position as of September 30, 2001 and the results of operations for the nine months ended September 30, 2001 and 2000. These results have been determined on the basis of generally accepted accounting principles and practices and applied consistently with those used in the preparation of the Company's 2000 Annual Report on Form 10KSB. Certain information and footnote disclosures normally included in the financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that the accompanying unaudited interim financial statements be read in conjunction with the financial statements and notes thereto incorporated by reference in the Company's 2000 Annual Report on Form 10KSB. Certain accounts have been reclassified to conform to the current period's presentation. These changes have no effect on previously reported results of operations or total stockholders' equity. NOTE 2 - PROPERTY AND EQUIPMENT Property and Equipment consists of the following at September 30, 2001:
Computer Equipment $ 423,141 Computer Software 70,890 Furniture and Fixtures 11,614 Total $ 505,645 Less Accumulated Depreciation 233,722 Net Book Value $ 271,923
Depreciation expense charged to operations during 2001 was $50,722. NOTE 3 - EARNINGS PER SHARE Basic earnings or loss per share is based on the weighted average number of shares outstanding during the period of the financial statements. Diluted earnings or loss per share are based on the weighted average number of common shares outstanding and dilutive common stock equivalents. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value, when applicable. All earnings or loss per share amounts in the financial statements are basic earnings or loss per share. The computation of basic loss per share is as follows:
3 m/e 9 m/e 3 m/e 9 m/e 9/30/01 9/30/01 9/30/00 9/30/00 ------- ------- ------- ------- Numerator $ (68,045) $ (240,783) $ (105,454) $ (440,506) Denominator 1,970,592 1,970,592 1,970,592 1,970,592 Basic loss per share $ (0.035) $ (0.122) $ (0.054) $ (0.22)
ITEM 2. Management's discussion and analysis of financial condition and results of operations When used in this discussion, the words "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Actual results, performance or achievements could differ materially from those anticipated in such forward looking statements as a result of numerous factors, including but not limited to the Company's ability to continually expand its subscriber base and opt-in email lists, market its services to potential advertisers, the regulatory environment in which the Company operates, future acceptance of its services and other factors described in the company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company's business, in this report, as well as the Company's periodic reports on Forms 10-KSB, 10QSB and 8-K filed with the Securities and Exchange Commission. Overview -------- Entheos Technologies Inc. ("Entheos" or the "Company"), through its wholly owned subsidiary, Email Solutions, Inc., operates as an Application Service Provider developing reliable, scalable, real time, high volume outsourced email services. RESULTS OF OPERATIONS Revenues. The Company generated $105,134 and $311,279 in revenues for the three and nine months ended September 30, 2001, respectively, versus $0 for the same periods in 2000. To date, the Company has not relied on revenues for funding. Cost of Revenues. The Company incurred $72,968 and $159,546 in cost of revenues for the three and nine months ended September 30, 2001, respectively, versus $0 for the same periods in 2000. These cost of revenues were 69.4% and 51.2% of revenues for the three and nine month periods ended September 30, 2001. General and Administrative Expenses. During the three and nine months ended September 30, 2001, the Company incurred $107,733 and $423,482, respectively, in general and administrative expenses, a decrease of 21.5% and 18.3% from the same periods in 2000. These decreases are primarily due to lower salary expenses and reflect a reduction in the ongoing costs of developing and maintaining the Company's operations. Interest Income. Interest income was $7,522 and $30,966, and $31,774 and $77,880 for the three and nine month periods ended September 30, 2001 and 2000, respectively, a decrease of $24,252 or 76.3%, and $46,914 or 60.2% from the same periods in 2000. The decrease in interest income is a direct result of the Company maintaining lower cash balances and changes in interest rates. Interest earned in the future will be dependent on Company funding cycles and prevailing interest rates. Provision for Income Taxes. As of September 30, 2001, the Company's accumulated deficit was $2,465,778 and as a result, there has been no provision for income taxes to date. Net Loss. For the three and nine months ended September 30, 2001, the Company recorded net losses of $68,045 and $240,783, respectively, compared to net losses of $105,454 and $440,506, for the same periods in 2000. During the three and nine months ended September 30, 2001, the Company's net losses decreased by $37,409 or 35.5%, and $199,723 or 45.3%, when compared to the same periods in 2000. These decreases in net losses are a result of the Company's ongoing efforts to reduce operating expenses. LIQUIDITY AND CAPITAL RESOURCES As at September 30, 2001, the Company had a cash balance of $830,806, compared to $938,147 as at December 31, 2000. The Company has financed its operations primarily through cash on hand during the three and nine month periods ending September 30, 2001. Net cash used by operating activities was $58,008 for the nine month period ending September 30, 2001, compared to net cash used of $437,381 for the same period in 2000. This change was primarily due to a decrease in net losses offset by a decrease in accounts receivable and an increase in accounts payable. The Company's future funding requirements will depend on numerous factors. These factors include the Company's ability to operate its business profitably in the future, recruit and train qualified management, technical and sales personnel, and the Company's ability to compete against other, better capitalized corporations. The Company has adequate cash to satisfy its cash requirements over the next twelve months. The Company may raise additional funds through private or public equity investment in order to expand the range and scope of its business operations. There is no assurance that such additional funds will be available for the Company to finance its operations on acceptable terms, if at all. RECENT ACCOUNTING PRONOUNCEMENTS -------------------------------- In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141 "Business Combinations". SFAS No. 141 requires that all business combinations be accounted for under the purchase method of accounting. SFAS No. 141 also changes the criteria for the separate recognition of intangible assets acquired in a business combination. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001. This statement is not expected to materially affect the financial statements. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 addresses accounting and reporting for intangible assets acquired, except for those acquired in a business combination. SFAS No. 142 presumes that goodwill and certain intangible assets have indefinite useful lives. Accordingly, goodwill and certain intangibles will not be amortized but rather will be tested at least annually for impairment. SFAS No. 142 also addresses accounting and reporting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. This statement does not have a material affect on the financial statements. In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. This statement is not expected to have a material affect on the financial statements. In August 2001, tbe FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which supersedes SFAS No. 121. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. This statement is not expected to have a material affect on the financial statements. PART II - Other Information Item 1 Legal Proceedings None Item 2 Changes in Securities None Item 3 Defaults Upon Senior Securities None Item 4 Submission of Matters to a Vote of Security Holders On July 12, 2001, at the Company's annual general meeting, the shareholders approved the following: (i) ratification of its 2001 independent accountants, (ii) adoption of the 2001 stock option plan with 20,000,000 common shares reserved for issuance thereunder, and (iii) approval of 25:1 reverse split in common stock, with the par value remaining the same. Item 5 Other Information None Item 6 Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K On July 23, 2001, the Company filed an 8-K with the Securities and Exchange Commission under Item 5 to report the results of its annual general meeting held on July 12, 2001. Signature Page 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. ENTHEOS TECHNOLOGIES, INC /s/ Kesar S. Dhaliwal --------------------- Kesar S. Dhaliwal CEO and President /s/ Harmel S. Rayat ------------------- Harmel S. Rayat Director /s/ Herdev S. Rayat ------------------- Herdev S. Rayat Director, Secretary & Treasurer Dated: November 12, 2001