UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES ACT
OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 0-9083
----------------------------
Enercorp, Inc.
----------------
(Exact name of Registrant as specified in its Charter)
Colorado 84-0768802
--------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
32751 Middlebelt Road, Suite B
Farmington Hills, Michigan 48334
---------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
(248) 851-5651
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of common stock outstanding at September 24, 2002 : 695,897
Enercorp, Inc.
Form 10-QSB Filing for the First Quarter Ended September 30, 2001
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Statements of Assets and Liabilities
September 30, 2001 (Unaudited) and June 30, 2001 4
Schedule of Investments September 30, 2001 (Unaudited)
and June 30, 2001 5-8
Statements of Operations (Unaudited) for the Three
Months Ended September 30, 2001 and 2000 9
Statements of Cash Flows (Unaudited) for the Three
Months Ended September 30, 2001 and 2000 8
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11-12
Item 6. Exhibits and Reports on Form 8-K 13
Signature Page 14
2
Enercorp, Inc.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
The accompanying interim unaudited condensed financial statements have
been prepared in accordance with the instructions to Form 10-QSB and
do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of the management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation
have been included, and the disclosures are adequate to make the
information presented not misleading. Operating results for the three
months ended September 30, 2001 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2002. These
statements should be read in conjunction with the financial statements
and notes thereto included in the Annual 10-K Report (filed with the
Securities and Exchange Commission) for the year ended June 30, 2001.
3
Enercorp, Inc.
Statements of Assets and Liabilities
(Unaudited)
September 30 June 30
2001 2001
---------- -----------
ASSETS
Investments, at fair value, cost of $1,231,638
And $1,231,638 at September 30,
2001 and June 30,2001 $ 886,523 $ 984,214
Cash 8,317 342
Furniture and fixtures, net of accumulated
depreciation of $11,736 at Sept. 30, 2001
and 11,503 at June 30, 2001 respectively 700 933
Other assets 0 0
----------- ---------
$ 895,540 $ 985,489
========== =========
LIABILITIES AND NET ASSETS
Liabilities
Note payable-Related Party $ 1,500 $ 0
Accounts payable and accrued liabilities 63,621 54,634
Deferred tax liability 0 0
---------- --------
65,121 54,634
---------- --------
Net assets
Common stock, no par value: 10,000,000
shares authorized, 695,897 shares issued
and outstanding at September 30, 2001 and
June 30, 2001 1,888,251 1,888,251
Preferred stock, no par value: 1,000,000
shares authorized, -0- issued and
outstanding -0- -0-
Accumulated deficit (712,547) (709,802)
Unrealized net loss on investments, net of
deferred income taxes at September 30, and
June 30, 2001 (345,285) (247,594)
---------- --------
830,419 930,855
--------- ---------
$ 895,540 $ 985,489
=========== ===========
See notes to financial statements
4
Enercorp, Inc.
Schedule of Investments
September 30, 2001(Unaudited)
Affiliated Description Expir. No. of Share Cost
Fair Mkt Net Fair
Companies of Business Date Restrictions Shares Price Equity
Value Discount Market Value
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
CompuSonics Video
Corp Digital Video
Product & Web 1,751 0.02
35 35
Site Dev. 10,000,000 0.02 106,477
200,000 (100,000) 100,000
Ajay Sports, Golf & Casual 294,118 0.029 600,000
8,529 8,529
Furniture
Manufacturer 16,667 0.029 37,500
483 483
Preferred Stocks-Public Market Method of Valuation
--------------------------------------------------
Ajay Sports, Golf & Casual 2,000 0.029 20,000
58 58
Furniture Manufacturer
Common Stocks-Board Appraisal Method of Valuation
-------------------------------------------------
Pro Golf Franchisor of a & b 7,450 195,000
447,000 (44,700) 402,300
Intern'l Retail Golf Stores
ProGolf.com, Web Sales of a & b 300,000 2.5 252,000
750,000 (375,000) 375,000
Inc. Golf Equipment
Subtotal $1,210,977
1,406,106 (519,700) 886,406
Warrants and Stock Options-Board Appraisal Method of Valuation
==============================================================
CompuSonics Digital Video
Video Product
Corporation 300,000
Williams Manuf. Of Sensors &
Controls, Control Systems
Inc. 08/04/04 b 25,000
05/03/05 b 25,000
09/13/06 b 50,000
03/12/06 b 50,000
10/02/08 b 50,000
5
Unaffiliated Companies
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
Vitrio Diagnostics 300 .39 1,500
117 117
Proconnextions, Inc.-Sports Memor'blia a 191,610 19,161
-
Total All Companies $1,231,638
$1,406,223 (519,700) $886,523
a No public market for this security
b Subject to Rule 144
See notes to financial statements
6
Enercorp, Inc.
Schedule of Investments
June 30, 2001
,
Affiliated Description No. of Share Cost Fair Mkt
Net Fair
Companies of Business Restrictions Shares Price Equity Value
Discount Market Value
Common Stocks-Public Market Method of Valuation
------------------------------------------------
CompuSonics Video
Corp Digital Video
Product & Web 1,751 28
28
10,000,000 $0.03 106,477 300,000
(100,000) 200,000
Ajay Sports, Golf & Casual 294,118 $0.02 600,000 5,882
5,882
Furniture
Manufacturer 16,667 $0.02 37,500 333
333
Preferred Stocks-Public Market Method of Valuation
==================================================
Ajay Sports, Golf & Casual 2,000 20,000 500
500
Common Stocks-Board Appraisal Method of Valuation
-------------------------------------------------
Pro Golf Franchisor of a & b 7,450 195,000 447,000
(44,700) 402,300
Intern'l Retail Golf Stores
ProGolf.com, Web Sales of b 300,000 2.5 252,000 750,000
(375,000) 375,000
Inc. Golf Equipment
Subtotal $1,210,977 1,503,744
(519,700) 984,044
Unaffiliated Companies
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
Viro Diagnostics 300 1,500 170
170
Proconnextions, Inc.-Sports Memor'blia 191,610 19,161
Total All Companies $1,231,638 $1,503,914
$(519,700) $984,214
a No public market for this security
b Subject to Rule 144
See notes to financial statements
7
Enercorp, Inc.
Statements of Operations
(Unaudited)
For the three Months ended,
Sept 30,2001 Sept 30,2000
------------- ------------
REVENUES
Interest Income $ -0- $ -0-
Interest income from related entities -0- 823
Consulting fees from related companies -0- -0-
Net realized gain on sale of investments -0- 8,464
Divided income form affiliated company -0- -0-
Miscellaneous Income 2,175 -0-
-0- -0-
----------- ----------
2,175 9,287
EXPENSES
Salaries - officer -0- -0-
Bonus expense - officer -0- -0-
Directors' fees -0- -0-
Staff salaries -0- -0-
Legal, accounting and other professional
Fees 4,202 1,281
Interest expense - other 50 57,509
Bad debt expense -0- 735
Other general and administrative expenses 669 4,253
-------- --------
4,921 63,779
Net gain (loss) from operations
before taxes (2,746) (54,492)
Income taxes -0- -0-
--------- ---------
Net gain (loss) from operations
after taxes (2,746) (54,492)
--------- ----------
Net unrealized gain (loss) on investments
Before Taxes (97,691) (442,230)
Income taxes -0- -0-
---------- -----------
Net unrealized gain (loss) on
investment after taxes (97,691) (442,230)
---------- -----------
Increase (decrease) in net assets
resulting from operations $ 100,437) $ (496,722)
========= =============
Increase (decrease) in net assets
per share $ (0.14) $ (0.71)
========= =============
See notes to financial statements
8
Enercorp, Inc.
Statements of Cash Flows
(Unaudited)
For Three Months Ended September 30
2001 2000
----------- ---------
Cash flows from operating activities
Increase (decrease) in net assets $ (100,437) $ (496,722)
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation 233 467
Bad debt provision on notes receivable
and interest net of write offs -0- (82)
Gain on sale of investments -0- (8,464)
(Gain) Loss on sale of fixed assets -0- -0-
Unrealized (gain) loss on
Investments 97,691 442,230
(Increase) Decrease in other assets -0- 320
Increase (Decrease) in accounts payable
and accrued expenses 8,987 (8,617)
Increase (Decrease) in deferred taxes -0- -0-
------- --------
Total adjustments 106,912 425,855
--------- -----------
Net cash (used) by operating activities 6,474 (70,867)
--------- ---------
Cash flows from investing activities:
Purchase of investments -0- -0-
---------- ---------
Net cash provided (used) by investing
Activities -0- -0-
---------- -----------
Cash flows from financing activities:
Proceeds from notes payable 1,500- 47,500
Net cash provided by investing activities -0- -0-
-------- ---------
Net cash provided by investing
Activities 1,500 47,500
-------- ----------
Increase (Decrease) in cash 7,975 ( 23,367)
Cash, beginning of period 342 23,844
------- ---------
Cash, end of period $ 8,317 $ 478
========== ========
Supplemental disclosures of cash flow
information:
Interest paid $ 34 $ 56,099
========== ============
Taxes Paid $ -0- $ -0-
========== ===========
See notes to financial statements
9
Notes to Financial Statements
Item 1: Investments
------------
On March 7, 2001, the Registrant sold 1,077,800 shares of the common stock it
held in its largest investee, Williams Controls, Inc., and on March 12, 2001
the Registrant sold an additional 574,529 shares of Williams Controls, Inc.,
for a total of 1,652,329 shares, representing all the shares of Williams
Controls, Inc. common stock owned by the Registrant at the time of this filing.
These shares were acquired by the Registrant in transactions between April 1991
and August 1998. The shares were sold in open market transactions through an
unaffiliated broker. Upon settlement of the trades, the Registrant received
total net proceeds of approximately $2,424,800. These proceeds were used to
pay off the Company's demand loan from a bank with a balance of $2,141,649
plus accrued interest, and make payments of or toward other debt obligations
and payables that the Company had outstanding. This explains the reason for
the decrease in interest expense during the quarter ending September 2001.
The Registrant continues to hold its other principal common stock investments
in CompuSonics Video Corporation (10,001,751 shares), Ajay Sports, Inc.
(310,785 common and 2,000 preferred shares), ProGolf.com (300,000 common
shares) and Pro Golf International, Inc. (7,450 shares), and continues to
hold 200,000 warrants in Williams Controls, Inc., which are fully vested at
the time of this filing.
Item 2: Capital Stock Transactions
--------------------------
On September 14, 2001, the Registrant entered into a Subscription Agreement
With Jack Wen, authorized agent for an investing group of qualified
individuals which included Jack Wen ("Wen Group"). Under this Subscription
Agreement, on September 26, 2001 upon the first payment, the Wen Group was
to purchase 240,000 shares of common stock of the Registrant, representing
approximately 26.4% of the Registrant's common stock issued and outstanding
following the transaction. These shares were to be purchased for $1.25 per
share, the book value at that time, with aggregate gross proceeds of $300,000
paid to the Registrant. Under the Subscription Agreement, the Wen Group was
committed to make additional equity investments in the Registrant of
$3,000,000 for the purchase of 2,000,000 shares at $1.50 per share, with
$1,000,000 being invested on or before November 5, 2001 as the second
payment; and, in the third payment, $2000,000,000 was to be invested
at $1.50 per share on or before February 5, 2002. Prior to this transaction,
no single shareholder or shareholder group owned more than 10% of the
Registrant's issued and outstanding common stock. However, this transaction
was not completed. The deal was rescinded, and the stock was never issued.
Item 3: Board of director changes subsequently rescinded.
------------------------------------------------
Upon the Registrant's receipt of $300,000 on September 26, 2001, the
following changes in the Board of Directors and officers of the Registrant
were effected. Under terms of the Subscription Agreement, in addition to
Directors Thomas W. Itin and H. Samuel Greenawalt, Jack Wen and George Burmann
of the Wen Group were elected to serve as Directors and, additionally, Jack Wen
was elected Chairman of the Board, Chief Executive Officer and President and Don
Johnson of the Wen Group was elected Treasurer and Chief Financial Officer.
10
Upon receipt of the first payment of $300,000 from the Wen Group under the
Subscription Agreement, Jack Wen requested that $240,000 be invested in TIDE, a
PRC company headquartered in Shanghai. This investment was completed. However,
upon the recession the $ 240,000 investment was returned to the Wen group,
therefore the investment in Tide has not been and is not reflected in financial
statements.
Item 4. Management's Discussion and Analysis of Financial Condition / Results
of Operations
---------------------------------------------------------------------
Material Changes in Financial Condition:
---------------------------------------
The Registrant's liquidity is affected primarily by the business success,
securities prices and marketability of its investee companies and by the amount
and timing of new or incremental investments it makes, as well as the
availability of borrowing under the credit line.
The Registrant received $300,000 for the sale of 240,000 shares of the
Company's common stock, with commitments for future funding in November 2001
of $1,000,000 and in February of 2002 of $2,000,000, as a result of the
Subscription Agreement with the Wen Group. As a condition of the
Subscription Agreement, $240,000 of the $300,000 was invested at the
request of the Wen Group in a PRC company, TIDE, leaving the Registrant
with a total of $60,000 cash on hand remaining from the Wen Group's
initial investment.
There are no general terms as to how the $30,000 note will be paid or how
the Registrant intends to raise the funds for repayment or how to fund
current operations. The Registrant's current plan is to bring in other
investors, borrow against collateral or sell a portion of its holdings.
Material Changes in Results of Operations:
-----------------------------------------
The Registrant's revenues were $2,175 and $9,287 for the first quarter ended
September 30, 2001 and 2000, respectively. The changes in revenues were mainly
due to the decrease in net realized gain on investment from $ 8,464 for the
quarter ended Sep. 2000 to $ 0 for the quarter ended Sep. 2001. There was no
sale of investment for this quarter. The Registrant interest expenses were
$ 50 and $ 57,509 for the quarter ended Sep. 2001 and 2000 respectively. The
change is due to the payment of Company's demand loan to a bank, therefore,
there was no interest expense paid for the quarter ended Sep. 2001. The
Registrant recorded general and administrative expenses of $ 669 for this
quarter ended Sep. 2001 compare to general and administrative expenses of
$ 4,253 the quarter ended Sep. 2000. This change is due to the decrease in
company's activity related to such expenses. General and administrative
expenses include travel, telephone and other miscellaneous expenses.
The Registrant recorded an unrealized Loss on investments of $97,691 for the
first quarter ended September 30, 2001 compared to a loss of $442,330 for the
first quarter ended September 30, 2000. This is mainly due to the changes in
investment portfolio and fair market value of the Registrant's investment in
the publicly traded companies CompuSonics Video Corporation and Ajay Sports,
Inc.
11
Item 5 Footnote: Subsequent events
-----------------------------
The funds subscribed for and the money to be invested on November 5, were not
forthcoming and the Wen Group advised us that the money was not coming in. The
deal was rescinded by mutual agreement.
Related Party Note Payable
--------------------------
The Registrant has Note Payable to TICO Partnership in which the Chairman is
the partner. The note was issued on June 15, 2001 at 12% interest rate per
annum, and is due on demand.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
----------------
None
Item 2. Changes in Securities
---------------------
On September 14, 2001, the Wen Group purchased 240,000 shares of common stock
of the Registrant, representing approximately 26.4% of the Registrant's common
stock issued and outstanding following this transaction. These shares were
purchased for $1.25 per share with aggregate gross proceeds of $300,000 paid
to the Registrant.
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
In early November of 2001, the Wen Group informed Registrant that the second
and third payments under the Subscription Agreement would not be forthcoming
and the Registrant accepted that conclusion. On November 26, 2001, a
Settlement Agreement was signed by the Registrant, Jack Wen, and the
investment group that Jack Wen represented to vacate the Subscription
Agreement signed on September 14, 2001. In a Settlement Agreement signed and
put into effect by Registrant and the Wen Group, funds paid in by the Wen Group
were returned less any expenses incurred by the Registrant and less the
$240,000 investment into the PRC company, TIDE. The common stock that was
part of the September 14, 2001 Subscription Agreement was not issued. The
September 14, 2001 Subscription Agreement was rescinded. A payment of
$30,000 less expenses of $2,174.50 of the Registrant was returned to
the Wen Group and a note for the remaining $30,000 was executed by the
Registrant subject to certain conditions.
12
In a meeting of the Board of Directors of Registrant, it was resolved that the
Subscription Agreement of September 14, 2001 be declared null and void, and
that a request be submitted for resignations from the Wen Group officers and
directors. Resignations to be requested included Jack Wen as Chairman,
Director, President, CEO and COO, Don Johnson as CFO and Treasurer, George
Burmann as Director, and Paul Feng as Vice President of Marketing. Further,
during this meeting, Thomas W. Itin was elected to fill offices left vacant,
with the exception of Vice President of Marketing, due to resignations by
members of the Wen Group.
Item 6. Exhibits and Reports on Form 8-K
---------------------------------
A) Exhibits
1. Subscription Agreement with the Jack Wen Group
included in Form 8-K of September 26, 2001.
B) Form 8-K
Form 8-K dated September 26, 2001 (which includes the
Jack Wen Group Subscription Agreement).
13
Enercorp, Inc.
Form 10-QSB
For the First Quarter Ended September 30, 2001
Signature Page
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Enercorp, Inc.
------------------
(Registrant)
By:/s/ Thomas W. Itin
--------------------
Thomas W. Itin
President
Date: October 8, 2002
14
Exhibits A. 1.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
September 26, 2001
(Date of Report)
ENERCORP, INC.
(Exact Name of Registrant as specified in its charter)
Colorado 0-9083 84-0768802
---------------- ------------ ------------
(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification Number)
incorporation or
organization)
32751 Middlebelt Road, Suite B
Farmington Hills, Michigan 48334
------------------------------ ---------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (248) 851-5651
--------------------------
Former name or former address, if changed from last report: N/A
Item 1. Changes in Control of Registrant.
On September 14, 2001, the Registrant entered into an agreement with Jack
Wen, authorized agent for an investing group of qualified individuals which
includes Jack Wen.(the "Wen Group"). Under this Agreement, on September 26,
2001, the Wen Group purchased 250,000 shares of common stock of the
Registrant, representing approximately 26.4% of the Registrant's common stock
issued and outstanding following this transaction.. These shares were
purchased for $1.25 per share with aggregate gross proceeds of $300,000 paid
to the Registrant. Under the Agreement, the Wen Group has committed to make
additional equity investments in the Registrant of $3,000,000 for the purchase
of 2,000,000 shares at $1.50 per share, with $1,000,000 being invested on or
before November 5, 2001 and $2,000,000 being invested on or before February 5,
2002. Prior to this transaction, no single shareholder or shareholder group
owned more than approximately 8.6% of the Registrant's issued and outstanding
common stock.
15
Upon the Registrant's receipt of the $300,000 on September 26, 2001, the
following changes in the Board of Directors and officers of the Registrant
were effected. The number of members consisting of the full Board of
Directors was changed from two to four and Jack Wen and George Burmann were
appointed to fill the newly created positions. Additionally, Jack Wen was
elected Chairman of the Board, Chief Executive Officer and President; and Don
Johnson was elected Treasurer and Chief Financial Officer.
As a result of this change in control, the Registrant expects that its
corporate offices will be moved from Farmington Hills, Michigan to the Los
Angeles, California area within the next several months.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
10.1 Subscription Agreement, dated September 14, 2001, between Jack Wen
and a group of investors and the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: October 10, 2001
ENERCORP, I
By: \s\ Don Johnson
-----------------------
Don Johnson, Chief Financial Officer
Exhibit 10.1
SUBSCRIPTION AGREEMENT
BETWEEN JACK WEN AND A GROUP OF INVESTORS
WITH ENERCORP, INC.
This agreement, dated and executed on, and with effective date of September
14, 2001, between Jack Wen, a resident of California, USA, individually
("Wen"), and, as authorized agent for the investing group of qualified
individuals which includes Jack Wen, identified here as "Wen Group," and
Enercorp, Inc., ("ENCP"), a Colorado corporation with reference to the
following facts, terms and conditions.
A. Wen has extensive business interests and plans for expanding the
same in the
Peoples Republic of China ("PRC") and the United States ("US").
B. ENCP has substantial interest in increasing its business in these two
geographic regions, PRC and the US, noting particularly expansion of
commercial activities in PRC.
16
C. A close working relationship among the parties will substantially
improve opportunities for expanding their respective business operations
in PRC and the US.
D. On April 30, 2001, Enercorp had liabilities of less than $50,000, and had
substantial stock holdings comprising ten million (10,000,000) shares in
CompuSonics Video Corporation ("CPVD"); four hundred twenty thousand
(420,000) shares of ProGolf.com, Inc., ("PG.com"); and seven thousand four
hundred and fifty (7,450) shares of Pro Golf International, Inc. ("PGI")
[to become seventy four thousand and five hundred (74,500) shares after a
planned ten for one (10 for 1) stock split].
E. ENCP is prepared to assist in funding franchisees in HK/PRC. Additional
further expenses or liabilities will be incurred as a result of the normal
course of continuing business and the nominal requirements of being a
regulated US public company.
IN CONSIDERATION OF THE FOREGOING, the parties agree, as follows:
1. Sale of Stock. ENCP will issue to Wen and Wen Group, upon
execution of this agreement by the parties, two hundred fifty
thousand (250,000) shares of common shares in ENCP for three
hundred thousand US dollars (US$300,000.00), payable by September
20, 2001. On or prior to November 5, 2001, Wen and Wen Group will
invest an additional one million dollars (US$1,000,000.00), and by
February 5, 2002, will put in another two million dollars
(US$2,000,000.00). ENCP will sell its shares at $1.50/share for
this $3,000,000.00 investment. Should the full $3,300,000.00
not be invested on the dates as agreed, then the Board may take
appropriate action.
2. George Burmann, Tom Itin, Samuel Greenawalt and the current
management have the opportunity to purchase up to 250,000 shares
of ENCP for $1.25/share up to September 30, 2001, and to purchase
concurrent to and alongside Wen and Wen Group at a price of $1.50
per share.
3. Verification of Stock Transaction Documentation. Wen and Wen
Group will be provided with verification of ownership interest of
ENCP in seven thousand four hundred fifty (7,450) shares of PGI, [
PGI currently owns one hundred percent (100%) of Pro Golf of
America, and approximately eighty seven per cent (87%) of PG.com],
and ten million (10,000,000) shares of CPVD, and four hundred
twenty thousand (420,000) shares of PG.com.
4. Development of HK/PRC, US and Canadian Business Opportunities.
The parties shall collaborate closely to develop HK/PRC, US and
Canadian business opportunities. ENCP will assist in the
financing of PGOA, PG.com and PG Domes in the US, Canada, HK/PRC
and other Far East nations or other locations deemed potentially
viable and profitable.
5. ENCP will consider investing $2,000,000 cash in Ajay Sports, Inc.
or Pro Golf International, Inc., and CompuSonics Video
Corporation. The investment terms and conditions will be
evaluated based on the benefits which will accrue to ENCP's
shareholders.
6. ENCP will assist CompuSonics Video Corporation ("CPVD") to expand
its business into China.
17
7. PGI Corporate Opportunity. ENCP agrees to assist PGI and its
related affiliates to sell or broker PGI's exclusive franchise
rights, and to facilitate manufacturing alliances for China and
the Hong Kong territories for Pro Golf franchise retail stores and
PG Domes. The terms and conditions will be mutually agreed upon
at a future date.
8. Officers and Directors. ENCP directors H. Samuel Greenawalt and
Thomas W. Itin will retain directorships of ENCP and Wen and
George Burmann will be elected directors and will be seated on the
board of ENCP when the agreement is fully executed by Wen and Wen
Group and ENCP and when the first three hundred thousand dollars
(US$300,000.00) is received. Following signing this Agreement,
and, further, upon confirmation of receipt of the deposit of the
initial funding of three hundred thousand US dollars
(US$300,000.00) into the ENCP bank account, Wen will be elected
Director and elected Chairman, President and Chief Executive
Officer ("CEO"). Don Johnson will be elected Treasurer and Chief
Financial Officer ("CFO"), and Paul Feng, Vice President
Marketing. Upon receipt by ENCP of the US$1,000,000.00 (second
tranche), Paul Feng will be elected a director. All the
foregoing elections are subject to satisfactory completion of this
Subscription Agreement.
9. The company will maintain at all times appropriate Directors and
Officers liability insurance ("D&O insurance"), as provided in the
corporate Bylaws of ENCP.
10. Any funds received by ENCP from sale of its investments in CPVD or
Ajay/PGI and/or monies paid in by Itin, Greenawalt and Burmann
will be invested in the existing investee companies as decided by
the Board. Any investment in or divestiture of any investee
company would require prior Board approval.
11. Upon receipt by ENCP of the first $300,000.00, the Board will
elect Paul Feng, as a director and VP Marketing. Wen, Johnson and
Feng will each be paid a $2,000 salary per month commencing
October 1, 2001. ENCP will move its offices to California as soon
as practicable.
12. ENCP will continue to plan to form ENCP Capital and raise venture
money.
13. Enercorp Disclosure. As an attachment to this Agreement and
incorporated herein is a disclosure indicating any liabilities or
exposure to liabilities that existed for Enercorp other than
approximately $28,000.00 as of April 30, 2001. At the current time,
expenses have been running approximately $3,000.00 to $4,000.00 per
month.
14. Total Agreement. This Agreement (including attached Exhibits)
constitutes the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior
agreements. The terms of this Agreement cannot be changed, modified,
released or discharged orally. No delay or failure on the part of
any party in exercising any rights hereunder, and no partial or
single exercise thereof, will constitute a waiver of such rights or
of any other rights hereunder.
18
15. Governing Law. This Agreement shall be interpreted in accordance with
the laws of the State of Colorado.
16. Notices. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered,
either personally or by facsimile transmission with receipt
confirmed, or mailed by US or HK/PRC registered mail, return receipt
requested, postage prepaid, addressed as follows:
16.1. If to Enercorp
Thomas W. Itin, Director
Enercorp, Inc.
32751 Middlebelt Rd., ste.B
Farmington Hills, Michigan 48334-1726 USA
Telephone: 248 851 5651
Fax: 248 851 9080
Email: twitin@aol.com
Cellphone: 248 981 8230
16.2 With a copy to Legal Counsel for Enercorp:
Charles W. Centner, Attorney at Law 934 Harcourt
Grosse Pointe Park, Michigan 48230
Telephone: 313 824 9699
Fax: 313 824 3415
Email:
Cellphone:
16.3. With a copy to Legal Counsel for Enercorp:
Mary M. Maikoetter, Attorney at Law
MAIKOETTER LAW OFFICE
609 East Speer Blvd., 3rd floor
Denver, Colorado 80203
Telephone: 303 744 3580
Fax: 303 744 3050
Email: mmmaik@aol.com
Cellphone: 303 550 9596
16.4 If to Jack Wen:
Mr. Jack Wen: Chairman
2668 Steeple Chase
Diamond Bar, California 91765
Telephone: 909 263 8326
Fax: 909 843 6350 or 909 861 5073
Email: jackwen123@yahoo.com
Cellphone: 909 861 5813
16.5 If to (Jack Wen Attorney)
------------------
------------------
------------------
Telephone:
Fax:
Email:
Cellphone:
19
Or to such party as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
17. Authorization. Parties to this Agreement represent that they have all
requisite corporate power and authority, and have taken all corporate
action necessary, to execute and deliver this Agreement and the
Ancillary Agreements to which they are parties, to consummate the
transactions contemplated hereby and to perform their obligations
hereunder.
18. Binding Effect. The terms and provisions of this Agreement are
binding on and shall inure to the benefit of the parties and their
respective heirs, representatives, successors and assigns permitted by
the other party. In the presence of the undersigned witnesses, the
parties have executed this agreement on the date first above written.
WITNESS Jack Wen and Investment Group
By: /s/ Jack Wen
-------------------------- -------------------------------
Jack Wen , Individually
/s/ Jack Wen
--------------------------------
Date: September 18, 2001
By: /s/ Jack Wen
----------------------------------
Jack Wen,
Authorized Agent for the
Investing Group of Qualified
Investors (Wen Group")
Date: September 18, 2001
WITNESS: ENERCORP, INC.
By:/s/ Shirley B. Itin By: /s/Thomas W. Itin
----------------------------- ---------------------------------
Thomas W. Itin, Director
Acting Chairman and President
Date: September 18, 2001
20
EXHIBITS:
A. Corporate Resolutions for Signature Authority and Subscription Agreement
For Enercorp
For
----------------
B. Corporate Minutes
For Enercorp dated April 30, 2001, May 1, 2001 and May 3, 2001
For
---------------
C. Articles of Incorporation
For Enercorp
For
D. Corporate By-Laws
For Enercorp
For
----------------
E. Resumes of Directors and Officers
Verification of Citizenship (Passports), Residence Addresses, Business
Addresses, Telephone, Cellphone, Fax and Email Addresses of Directors
and Officers
For Enercorp
For
---------------
G. Audits & Financials
For Enercorp
For
----------------
H. Bank Letter for Credit Facility of
-----------------
I. PGI Business Plan "L"
J. Enercorp Bank Account No., Name, Address and ABA No.
K. Enercorp 10-K and 10-Q, most recent
21