**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

** **

**Washington,D.C.  20549**

** **

**FORM 10-Q**

** **

** **

**[MarkOne]**

** **

**ý        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES**

**EXCHANGE ACT OF 1934**

** **

**For thequarterly period ended March 31, 2002**

** **

**OR**

** **

**o        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES**

**EXCHANGE ACT OF 1934**

** **

**For thetransition period from                   to**

** **

**CommissionFile Number 0-23315**

** **

** **

**enherent Corp.**

** **

** **

| **Delaware**                                         |   | **No.  13-3914972**                      |
|------------------------------------------------------|--------|------------------------------------------|
| (State or other  jurisdiction of incorporation)      |   | (I.R.S. Employer  Identification Number) |
|                                                 |   |                                     |
| **12300  Ford Road, Suite 450  Dallas, Texas 75234** |
| (Address of principal  executive offices)            |
|                                                 |   |                                     |
| **(972)  243-8345**                                  |
| (Telephone number,  including area code)             |

 

 

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Indicate by check mark whether the registrant: (1) has filed allreports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 

                                                                YES  ý   NOo

 

Indicate the number of share outstanding of each of the issuer’sclasses of common stock:

 

| **Class**                      |   | **Shares outstanding as of May 10, 2001** |
|--------------------------------|--------|-------------------------------------------|
| Common stock,  par value $.001 |   | 17,502,188                                |

** **

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** **

**enherent Corp. and Subsidiaries**

 

## **INDEX**

 

 

**PART I.   FINANCIAL INFORMATION**

 
|                                                                                                            |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| **Item 1.  Financial Statements.**                                                                         |   |
|                                                                                                            |   |
| Consolidated Balance Sheets  as of December 31, 2001and March 31, 2002                                          |   |
|                                                                                                            |   |
| Consolidated  Statements of Operationsfor the three months ended March 31, 2002  and 2001                       |   |
|                                                                                                            |   |
| Consolidated  Statements of Cash Flowsfor the three months ended March 31, 2002  and 2001                       |   |
|                                                                                                            |   |
| Notes to  Consolidated Financial Statements                                                                     |   |
|                                                                                                            |   |
| **Item 2.  Management’s  Discussion and Analysis of Financial  Condition and Results of Operations.** |   |
|                                                                                                            |
|                                                                                                            |   |
| **Item  3.  Quantitative and Qualitative  Disclosures about Market Risk.**                                 |   |
|                                                                                                            |   |
| **PART II.  OTHER INFORMATION**                                                                            |   |
|                                                                                                            |   |
| **Item 1.  Legal  Proceedings**                                                                            |   |
|                                                                                                            |   |
| **Item 5.  Other  Information**                                                                            |   |
|                                                                                                            |   |
| **Item 6.  Exhibits  and reports on Form 8-K**                                                             |   |
|                                                                                                            |   |
| **Signatures**                                                                                                  |   |
|                                                                                                            |   |
| **Exhibit Index**                                                                                               |   |

 

 

 

----

 

 

##### **Item 1. Financial Statements**

 

** **

**enherent Corp. and Subsidiaries**

**Consolidated Balance Sheets**

*(In thousands, except number of shares)*

* *
|                                                                                                                                                                                                                                                       |   | **March 31  2002** |       | **December  31 2001** |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|-----------------------|------------|
|                                                                                                                                                                                                                                                       |   | **(unaudited)**    |       |                  |       |
| **Assets**                                                                                                                                                                                                                                                 |   |               | ** ** |                  | ** ** |
| Current assets:                                                                                                                                                                                                                                            |   |               | ** ** |                  | ** ** |
| Cash and  equivalents                                                                                                                                                                                                                                      |   | $                  | 3,757      |                  | $          | 5,269 |   |
| Accounts  receivable, net of allowance of $268 at March 31, 2002 and $256 at December  31, 2001                                                                                                                                                            |   | 3,379              |       | 3,208                 |       |
| Prepaid expenses  and other current assets                                                                                                                                                                                                                 |   | 419                |       | 460                   |       |
| Total current  assets                                                                                                                                                                                                                                      |   | 7,555              |       | 8,937                 |       |
|                                                                                                                                                                                                                                                       |   |               |       |                  |       |
| Fixed assets,  net                                                                                                                                                                                                                                         |   | 1,166              |       | 1,382                 |       |
| Other assets                                                                                                                                                                                                                                               |   | 84                 |       | 95                    |       |
| Total assets                                                                                                                                                                                                                                               |   | $                  | 8,805      |                  | $          | 10,414 |   |
|                                                                                                                                                                                                                                                       |   |               |       |                  |       |
| **Liabilities and stockholders’  equity**                                                                                                                                                                                                             |   |               |       |                  |       |
| Current  liabilities:                                                                                                                                                                                                                                      |   |               |       |                  |       |
| Accrued  compensation                                                                                                                                                                                                                                      |   | $                  | 594        |                  | $          | 680 |   |
| Accounts payable  and other accrued expenses                                                                                                                                                                                                               |   | 1,507              |       | 988                   |       |
| Current portion  of capital lease obligations                                                                                                                                                                                                              |   | 20                 |       | 21                    |       |
| Deferred revenue                                                                                                                                                                                                                                           |   | 102                |       | 144                   |       |
| Total current  liabilities                                                                                                                                                                                                                                 |   | 2,223              |       | 1,833                 |       |
|                                                                                                                                                                                                                                                       |   |               |       |                  |       |
| Capital lease  obligations, net of current portion                                                                                                                                                                                                         |   | 15                 |       | 20                    |       |
| Deferred rent                                                                                                                                                                                                                                              |   | 82                 |       | 91                    |       |
| Total  liabilities                                                                                                                                                                                                                                         |   | 2,320              |       | 1,944                 |       |
|                                                                                                                                                                                                                                                       |   |               |       |                  |       |
| Series A senior  participating redeemable convertible preferred stock, $0.001 par value;  authorized—10,000,000 shares, 7,000,000 shares issues and outstanding at  March 31, 2002 and 8,000,000 shares issued and outstanding December 31, 2001      |   | 5,169              |       | 5,769                 |       |
|                                                                                                                                                                                                                                                       |   |               |       |                  |       |
| Common  stockholders’ equity:                                                                                                                                                                                                                         |   |               |       |                  |       |
| Common stock,  $0.001 par value; authorized—50,000,000 shares; issued—19,351,311 shares,  outstanding—17,502,188 shares at March 31, 2002 and issued—18,351,311  shares,  outstanding—17,502,188  at  December 31, 2001 |   | 19                 |       | 18                    |       |
| Additional  paid-in capital                                                                                                                                                                                                                                |   | 94,411             |       | 94,212                |       |
| Treasury stock,  at cost—1,849,123 shares                                                                                                                                                                                                             |   | (366               | )          | (166                  | )          |
| Accumulated  deficit                                                                                                                                                                                                                                       |   | (92,748            | )          | (91,363               | )          |
| Total common  stockholders’ equity                                                                                                                                                                                                                    |   | 1,316              |       | 2,701                 |       |
| Total  liabilities and stockholders’ equity                                                                                                                                                                                                           |   | $                  | 8,805      |                  | $          | 10,414 |   |

 

 

 

*Seeaccompanying notes.*

 

1

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**enherentCorp. and Subsidiaries**

**ConsolidatedStatements of Operations**

*(In thousands, except per share data)*

(Unaudited)

 

 
|                                                                     |   | **Three  Months Ended March 31** |   |
|--------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                     |   | **2002**                         |   | **2001** |   |
|                                                                     |   |                             |   |   |   |
| Revenues                                                                 |   | $                                | 5,916  |   | $ | 8,164 |   |
| Cost of revenues                                                         |   | 4,724                            |   | 5,979 |   |
| Gross profit                                                             |   | 1,192                            |   | 2,185 |   |
|                                                                     |   |                             |   |   |   |
| Selling, general  and administrative expenses                            |   | 2,988                            |   | 5,371 |   |
| Loss from  operations                                                    |   | (1,796                           | )      | (3,186 | ) |
|                                                                     |   |                             |   |   |   |
| Other income  (expense):                                                 |   |                             |   |   |   |
| Miscellaneous  expense                                                   |   | —                           |   | (290 | ) |
| Interest expense                                                         |   | (5                               | )      | (18 | ) |
| Interest income                                                          |   | 16                               |   | 87 |   |
| Net loss                                                                 |   | (1,785                           | )      | (3,407 | ) |
| Preferred stock  accretion and income applicable to common shareholders  |   | 400                              |   | (122 | ) |
| Net  loss applicable to common stockholders                              |   | $                                | (1,385 | ) | $ | (3,529 | ) |
|                                                                     |   |                             |   |   |   |
| Basic and  diluted net loss per share applicable to common stockholders  |   | $                                | (.08   | ) | $ | (.19 | ) |
| Number  of shares used in computing basic and diluted net loss per share |   | 17,502                           |   | 18,313 |   |

 

 

 

 

*Seeaccompanying notes.*

 

 

2

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**enherentCorp. and Subsidiaries**

**ConsolidatedStatements of Cash Flows**

*(In thousands)*

(Unaudited)

 
|                                                                         |   | **Three  Months Ended March 31** |   |
|------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                         |   | **2002**                         |   | **2001** |   |
| **Cash flows from operating  activities**                                    |   |                             |   |   |   |
| Net  loss                                                                    |   | $                                | (1,785 | ) | $ | (3,407 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |   |                             |   |   |   |
| Depreciation and  amortization                                               |   | 230                              |   | 639 |   |
| Provision for  doubtful accounts                                             |   | 12                               |   | 1,053 |   |
| Loss on disposal  of fixed assets                                            |   | —                           |   | 319 |   |
| Deferred rent                                                                |   | (9                               | )      | (7 | ) |
| Changes in  operating assets and liabilities:                                |   |                             |   |   |   |
| Accounts  receivable                                                         |   | (183                             | )      | 1,108 |   |
| Prepaid expenses  and other current assets                                   |   | 41                               |   | (71 | ) |
| Other assets                                                                 |   | 11                               |   | (30 | ) |
| Accrued  compensation                                                        |   | (86                              | )      | 269 |   |
| Accounts payable  and other accrued expenses                                 |   | 519                              |   | (69 | ) |
| Deferred revenue                                                             |   | (42                              | )      | (57 | ) |
| Net cash used in  operating activities                                       |   | (1,292                           | )      | (253 | ) |
|                                                                         |   |                             |   |   |   |
| **Cash flows from investing  activities**                                    |   |                             |   |   |   |
| Sale of  marketable securities                                               |   | —                           |   | 226 |   |
| Purchases of  fixed assets                                                   |   | (14                              | )      | (6 | ) |
| Proceeds from  sale of fixed assets                                          |   | —                           |   | 16 |   |
| Net cash  provided by investing activities                                   |   | (14                              | )      | 236 |   |
|                                                                         |   |                             |   |   |   |
| **Cash flows from financing  activities**                                    |   |                             |   |   |   |
| Purchase of  treasury stock                                                  |   | (200                             | )      | (36 | ) |
| Principal  payments under capital lease obligations                          |   | (6                               | )      | (6 | ) |
| Net cash  provided by (used in) financing activities                         |   | (206                             | )      | (42 | ) |
|                                                                         |   |                             |   |   |   |
| Net decrease in  cash and equivalents                                        |   | (1,512                           | )      | (59 | ) |
| Cash and  equivalents at beginning of period                                 |   | 5,269                            |   | 5,628 |   |
| Cash and  equivalents at end of period                                       |   | $                                | 3,757  |   | $ | 5,569 |   |
|                                                                         |   |                             |   |   |   |
| **Supplemental disclosure of cash  flow information**                        |   |                             |   |   |   |
| Interest paid                                                                |   | $                                | 5      |   | $ | 18 |   |
|                                                                         |   |                             |   |   |   |

 

 

*Seeaccompanying notes.*

3

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**enherent Corp.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

1.   Basis of Presentation

 

The unaudited consolidated financial statementspresented herein have been prepared in accordance with generally acceptedaccounting principles for interim financial information and with theinstructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of theinformation and footnotes required by generally accepted accounting principlesfor complete financial statements. In the opinion of management, theaccompanying consolidated financial statements include all adjustments(consisting only of normal recurring entries, except as disclosed) considerednecessary for a fair presentation of the financial condition and results ofoperations for the periods presented. The results of operations for thethree-month period ended March 31, 2002 are not necessarily indicative of theresults that may be expected for the year ending December 31, 2002. Thestatements should be read in conjunction with the audited consolidatedfinancial statements and notes thereto included in the enherent Corp. (the“Company”) Annual Report on Form 10-K for the year ended December 31, 2001.

 

In August 2001, the Financial Accounting StandardsBoard (FASB) issued Statement of Financial Accounting Standard No. 144,“Accounting for the Impairment or Disposal of Long-Lived Assets,” (SFAS No.144) which is effective for the Company beginning  January 1, 2002, and supersedes, “Accounting for the Impairmentor Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed of”(SFAS No. 121). SFAS No. 144 provides a single method of accounting forlong-lived assets to be disposed of and retains requirements found in SFASNo.121 with regards to the impairments of long-lived assets.  The implementation of SFAS No. 144 did nothave a material effect on the Company’s results of operations, cash flows orfinancial position in the three-month period ended March 31, 2002.

 

2.   Principles of Consolidation

 

The accompanying financial statements include theaccounts of the Company and its wholly owned subsidiaries.  All significant intercompany balances andtransactions have been eliminated in consolidation.

 

3.               Revenue Recognition

 

On January 1, 2002, the Company adopted FinancialAccounting Standards Board Staff Announcement Topic No. D-103, “IncomeStatement Characterization of Reimbursements Received for “Out-of-Pocket”Expenses Incurred.”  As a result, theCompany began recording revenue and a related cost of revenue in its statementof

 

4

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operations for reimbursements of out-of-pocketexpenses such as airfare, hotel lodging, meals, auto rental and other chargesrelated to providing services to our out-of-town customers.

 

For the three months ended March 31, 2002 theConsolidated Statement of Operations includes approximately $21,000 ofreimbursable expenses recorded as revenue and cost of revenue.  Reimbursable expenses for the three monthsended March 31, 2001 were not significant.

 

4.               Conversion of Preferred Stock

 

On January 30,2002, with the approval of its Board of Directors, enherent entered into aStock Purchase Agreement with The Travelers Indemnity Company (“TheTravelers”). The Travelers converted 1,000,000 shares of its Series A SeniorParticipating Redeemable Convertible Preferred Stock to 1,000,000 shares ofenherent common stock. Under the terms of the Stock Purchase Agreement, TheTravelers then sold the 1,000,000 shares of common stock to enherent for$200,000.  enherent has retired the1,000,000 shares of Series A Senior Participating Redeemable ConvertiblePreferred Stock. The preferred stock was carried at approximately $720,000 atthe date of the transaction.  Becausethe common stock was purchased below the carrying value of the preferred stock,a benefit to common shareholders of approximately $527,000 was recorded.

 

The remainingpreferred stock is being accreted to its liquidation value at April 12, 2005.Accretion of approximately $127,000 was recorded in the three-month periodended March 31, 2002.

 

5.               Loss Per Share

 

The following sets forth the computation of basic and diluted loss  per share (in thousands, except per sharedata):

 

|                                   |   | **Three  months ended** |   |
|----------------------------------------|--------|-------------------------|--------|
|                                   |   | **March 31,  2002**     |   | **March 31,  2001** |   |
| Numerator:                             |   |                    |   |   |   |
| Net loss                               |   | $                       | (1,385 | ) | $ | (3,529 | ) |
| Denominator:                           |   |                    |   |   |   |
| Weighted average of shares outstanding |   | 17,502                  |   | 18,313 |   |
| Basic and diluted loss per share       |   | $                       | (.08   | ) | $ | (.19 | ) |
|                                   |   |                    |   |   |   |

 

The Company has excluded theimpact of the redeemable convertible preferred stock and related warrants andstock options outstanding under the Stock Option Plan as the effect would beanti-dilutive.

 

5

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6.               Contingencies

 

A former ChiefFinancial Officer of the Company filed a Demand for Arbitration on or about October27, 2000, claiming that at the time of his termination he was entitled to stockoptions worth $3,000,000 or the stock option value in cash. The Company filed aMotion for Summary Judgment that was denied on November 13, 2001.  A full evidentiary hearing is scheduled forJune 20 and 21, 2002. The parties are engaged in settlement discussions foramounts substantially less than the amount claimed.  At March 31, 2002, an accrual has been recorded for an amount thatthe Company believes will be adequate to cover the settlement.

 

In the normalcourse of business, various claims are made against the Company. At this time,in the opinion of management, there are no pending claims, including theabove-mentioned Demand for Arbitration, the outcome of which are expected toresult in a material adverse effect on the consolidated financial position orresults of operations of the Company.

 

 

# **Item2**.        Management’s Discussion and Analysis ofFinancial Condition and Results

# **                    of Operations.**

 

**Resultsof Operations**

 

*Revenue.* Revenues decreased $2.3 million during the three-month period endedMarch 31, 2002 to $5.9 million compared to $8.2 million for thethree-month period ended March 31, 2001. The decrease in revenue was a resultof the completion of client projects, non-renewal of certain client assignmentsand billing rate reductions.

 

*Cost ofRevenues.*  Cost of revenues decreased to $4.7 millionfor the three-month period ended March 31, 2002 from $6.0 million in thecomparable period in 2001. The decrease in cost of revenues was attributable tothe overall decrease in revenues. Cost of revenues as a percentage of revenuesincreased to approximately 80% for the three-month period ended March 31, 2002from 73% for the three-month period ended March 31, 2001. The increase in thecost of revenues as a percentage of revenues is due to higher personnel costsand lower billing rates.

 

*GrossProfit.*  Gross profit decreased as a percentage ofrevenues to approximately 20% in the three-month period ended March 31, 2002from 27% for the comparable period in 2001. The decrease in gross profit was attributable to the overall decrease inrevenues, higher personnel costs and lower billing rates.

 

*Selling,General & Administrative Expenses (SG&A).* SG&A expenses decreasedapproximately 44% to $3.0 million in the three-month period ended March 31,2002 from

 

6

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$5.4 million for the comparable period in 2001.  The decrease in SG&A expenses resulteddue to cost-cutting measures, a reduction in bad debt expense of approximately$1 million and expenses incurred in the three months ended March 31, 2001 ofapproximately $455,000 associated with the closing of the New York City officeand the reduction of space in the Windsor, Connecticut facility. SG&A as apercentage of revenue decreased to 51% for the three-month period ended March31, 2002 from 70% for the comparable period in 2001.  These decreases were somewhat offset by the costs associated withongoing litigation and the provision for the potential settlement.

 

*Lossfrom Operations:*For the reasons set forth above, loss from operations for the three monthsended March 31, 2002 decreased to $1.8 million as compared to a loss fromoperations of $3.2 million in the comparable period in 2001. As a percentage ofrevenues, the loss from operations for the three months ended March 31, 2002decreased to 30% as compared to approximately 39% in the comparable period in2001.

 

# **Liquidity and Capital Resources**

 

*WorkingCapital:* TheCompany’s working capital decreased to approximately $5.3 million at March 31,2002 from $7.1 million at December 31, 2001. Cash and equivalents and marketable debt securities were $3.8 million atMarch 31, 2002 compared to $5.3 million at December 31, 2001. The primary useof cash during the three months ended March 31, 2002 was to fund the net lossof $1.8 million and to purchase 1 million shares of the Company’s common stockfor $200,000. The Company’s accounts receivables were $3.4 million at March 31,2002 and $3.2 million at December 31, 2001. Billed days sales outstanding, net of allowance for doubtful accounts,was 51 days at March 31, 2002 and 39 days at December 31, 2001.

 

The Company anticipates that its primary uses ofworking capital in the near term will be to fund the Company’s operations.Management believes that the cash equivalents are sufficient to fund operationsfor the next twelve months.  If cashgenerated from operations is insufficient to satisfy the Company’s liquidityrequirements, the Company may in the future be required to seek additionalsources of financing, including borrowing and/or the sale of equity securitieswhich may result in further dilution to shareholders.  No assurance can be given that any such additional sources offinancing will be available on acceptable terms.

 

**SignificantAccounting Policies**

 

In August 2001, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standard No. 144, “Accounting for theImpairment or Disposal of Long-Lived Assets,” (SFAS No. 144) which is effectivefor the Company beginning  January 1,2002, and supersedes, “Accounting for the Impairment or Disposal of Long-LivedAssets and for Long-Lived Assets to be Disposed of” (SFAS No. 121).  SFAS

 

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No. 144 provides a single method of accounting for long-livedassets to be disposed of and retains requirements found in SFAS No. 121 withregards to the impairments of long-lived assets.  The implementation of SFAS No. 144 did not have a material effecton the Company’s results of operations, cash flows or financial position in thethree-month period ended March 31, 2002.

 

**Item 3. Quantitative****and Qualitative Disclosures About Market Risk**

 

For the period ended March 31, 2002, the Company did not experience anymaterial changes in market risk exposures that affect the quantitative andqualitative disclosures presented in the Company’s 2001 Annual Report on Form10-K.

 

 

**PARTII.  OTHER INFORMATION**

 

**Item 1.  Legal Proceedings.**

 

A former Chief FinancialOfficer of the Company filed a Demand for Arbitration on or about October 27,2000, claiming that at the time of his termination he was entitled to stockoptions worth $3,000,000 or the stock option value in cash. The Company filed aMotion for Summary Judgment that was denied on November 13, 2001.  A full evidentiary hearing is scheduled forJune 20 and 21, 2002. The parties are engaged in settlement discussions foramounts substantially less than the amount claimed.  At March 31, 2002, an accrual has been recorded for anamount that the Company believes will be adequate to cover the settlement.

 

In the normalcourse of business, various claims are made against the Company. At this time,in the opinion of management, there are no pending claims, including theabove-mentioned Demand for Arbitration, the outcome of which are expected to resultin a material adverse effect on the consolidated financial position or resultsof operations of the Company.

 

**Item.5.  Other Information.**

 

On January 30,2002, with the approval of its Board of Directors, enherent entered into aStock Purchase Agreement with The Travelers Indemnity Company (“TheTravelers”). The Travelers converted 1,000,000 shares of its Series A SeniorParticipating Redeemable Convertible Preferred Stock into 1,000,000 shares ofenherent Common Stock. Under the terms of the Stock Purchase Agreement, TheTravelers then sold the 1,000,000 shares of Common Stock to enherent for$200,000.  enherent has retired the1,000,000 shares of Series A Senior Participating Redeemable ConvertiblePreferred Stock.

 

8

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On April 23, 2002,Jack L. Rivkin resigned from the Board of Directors of enherent Corp. effectiveimmediately for personal reasons.

 

On April 30, 2002, RonaldE. Weinberg resigned from the Board of Directors of enherent Corp. effectiveimmediately.  Mr. Weinberg indicated tothe Company in his resignation letter that his goals differed from those ofother members of the Board and that he believes that he can no longer serveeffectively.

 

On April 30, 2002,the Company entered into an employment agreement with Dan S. Woodward for an initialone-year term (“Woodward Agreement”) commencing on January 1, 2002. There shallbe an automatic renewal on January 1, 2003 for an additional 12-monthperiod.  The term of the Agreementincludes the renewal period.

 

Under the agreement, Mr. Woodward shall serve as Chief ExecutiveOfficer and Chairman of the Board, earning a base salary of $318,000, with atarget bonus opportunity of $100,000 and an over-achievement bonus opportunityof $50,000. Mr. Woodward will receive a retention incentive bonus of $50,000upon execution of the Agreement and $50,000 on January 1, 2003.  The Company agreed to pay over the term ofthe Woodward Agreement up to a total of $50,000 as reimbursement for allreasonable and documented costs associated with Mr. Woodward’s travelingto and from his residence, local housing, automobile costs and other costsdirectly related to Mr. Woodward’s housing or travel. The Board of Directors’Compensation Committee will determine future raises and other compensation.

 

If Mr. Woodward’semployment is terminated Without Cause (as defined in the Woodward Agreement),enherent shall pay Mr. Woodward (i) his current annual base salary for theshorter of (a) one (1) year, and (b) the remainder of the term of theAgreement; (ii) any earned performance bonus prorated as of the date oftermination; and (iii) the retention bonus required to be paid January 1, 2003if such termination occurs prior to that date. Payment will be made in accordance with the Company’s current payrollpractices.  Additionally, if Mr.Woodward’s employment is terminated Without Cause, any stock options granted toMr. Woodward shall be exercisable as per the original vesting schedule of theapplicable option grant.

 

A Change in Control inthe Company during the Term of the Woodward Agreement, resulting in a materialadverse change in duties, responsibilities or role, or reporting relationshipsof Mr. Woodward, shall be treated as a termination without cause.  If such termination without cause occursfollowing a change of control, Mr. Woodward shall be entitled to elect toreceive such termination amounts in a single lump sum.

 

On May 8, 2002 MichaelEnthoven resigned from the Board of Directors of enherent Corp. effectiveimmediately for personal reasons.

 

 

9

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On May 10, 2002 RobertMerkl was elected a Director of the Company to replace outgoing DirectorMichael Enthoven.

 

**Item 6. Exhibitsand Reports on Form 8-K**

 

(a)           Exhibits

 

        Thefollowing is a list of exhibits filed as part of this Quarterly report on Form10-Q:

 
| **Exhibit  No.** |   | **Description of Exhibits**                                                                                                                                                                                               |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1              |   | Restated Certificate of Incorporation (Incorporated  by reference to Exhibit 4.1 of the Company’s Form S-8 filed January 22,  1998).                                                                                 |
| 3.2              |   | Certificate of Amendment of Restated Certificate of  Incorporation of enherent Corp. (Incorporated by reference to Exhibit 3.1 of  the Company’s Annual Report on Form 10-K filed April 4, 2001).                    |
| 3.3              |   | Amended and Restated Bylaws (Incorporated by  reference to Exhibit 4.2 of the Company’s Form S-8 filed January 22, 1998).                                                                                            |
| 4.1              |   | Form of Certificate of Common Stock (Incorporated by  reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed  March 22, 2002).                                                                   |
| 4.2              |   | Securities Purchase Agreement dated April 13, 2000,  by and among PRT Group Inc. and the Investors named therein (Incorporated by  reference to Exhibit 99.1 of the Company’s   Form 8-K filed April 14, 2000). |
| 4.3              |   | Form of Certificate of Designations (Incorporated by  reference to Exhibit 99.2 of the Company’s Form 8-K filed April 14, 2000).                                                                                     |
| 4.4              |   | Form of Warrant   (Incorporated by reference to Exhibit 99.3 of the Company’s  form 8-K filed April 14, 2000).                                                                                             |
| 10.1             |   | Stock Purchase Agreement between Travelers Indemnity  Company and enherent, dated January 30, 2002 (Incorporated by reference to  Exhibit 10.7 of the Company’s Annual Report on Form 10-K filed March 22,  2002).   |
| 10.2             |   | Employment Agreement between Dan Woodward and the  Company dated April 30, 2002 (filed herewith).                                                                                                                         |

 

 

(b)          Reports on Form 8-K

 

On January 4, 2002, theCompany filed a Current Report on Form 8-K with the Securities and ExchangeCommission that included disclosure under Item 5 related to the promotion ofGeorge Warman to Executive Vice President and Chief Financial Officer.  The Company further announced that JackMullinax, Executive Vice President, Corporate Services and Chief FinancialOfficer, plans to retire during 2002 and will continue in his role as ExecutiveVice President, Corporate Services until his retirement.  This Current Report on Form 8-K did notinclude financial statements.

 

 

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**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 theundersigned thereunto duly authorized.

 

|   |         | **enherent  Corp.**     |   |
|--------|--------------|-------------------------|--------|
|   |         |                    |   |
| DATE   | May 14, 2002 |                    | BY     |  /s/ Dan S. Woodward |   |
|   |         | Dan S. Woodward         |   |
|   |         | Chief Executive Officer |   |
|   |         |                    |   |
| DATE   | May 14, 2002 |                    | BY     |  /s/ George Warman |   |
|   |         | George Warman           |   |
|   |         | Chief Financial Officer |   |

 

 

 

 

 

 

 

 

 

 

 

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###### Exhibit Index:

 

 
| **Exhibit  No.** |   | **Description of  Exhibits**                                                                                                                                                                                              |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1              |   | Restated Certificate of Incorporation (Incorporated  by reference to Exhibit 4.1 of the Company’s Form S-8 filed January 22,  1998).                                                                                 |
| 3.2              |   | Certificate  of Amendment of Restated Certificate of Incorporation of enherent Corp.  (Incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on  Form 10-K filed April 4, 2001).                   |
| 3.3              |   | Amended and Restated Bylaws (Incorporated by  reference to Exhibit 4.2 of the Company’s Form S-8 filed January 22, 1998).                                                                                            |
| 4.1              |   | Form of Certificate of Common Stock (Incorporated by  reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed  March 22, 2002).                                                              |
| 4.2              |   | Securities Purchase Agreement dated April 13, 2000,  by and among PRT Group Inc. and the Investors named therein (Incorporated by  reference to Exhibit 99.1 of the Company’s   Form 8-K filed April 14, 2000). |
| 4.3              |   | Form of Certificate of Designations (Incorporated by  reference to Exhibit 99.2 of the Company’s Form 8-K filed April 14, 2000).                                                                                     |
| 4.4              |   | Form of Warrant   (Incorporated by reference to Exhibit 99.3 of the Company’s  form 8-K filed April 14, 2000).                                                                                             |
| 10.1             |   | Stock Purchase Agreement between Travelers Indemnity  Company and enherent, dated January 30, 2002 (Incorporated by reference to  Exhibit 10.7 of the Company’s Annual Report on Form 10-K filed March 22,  2002).   |
| 10.2             |   | Employment Agreement between Dan Woodward and the  Company dated April 30, 2002 (filed herewith).                                                                                                                         |

 

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