Friday, September 10, 2004, 1:00 PM

Auction of Entrada Software, Inc, intangible intellectual property bulk bid

map to location (3rd Floor conference room)

NO BUYERS PREMIUM

CLOSING BID: $588,000

ENTRADA SOFTWARE, INC. (“Entrada”)

ASSET AUCTION

The following assets will be sold pursuant to an UCC foreclosure auction:  Entrada is a Nevada corporation.  Terms of purchase – all assets are being sold as a package for cash.

Summary

A.                 Source and object code for the eChange software product.  This software is the subject of a non exclusive license agreement to a wholly owned subsidiary corporation (“ESI”).  100% of all classes of the stock of ESI are also being sold.  See listing “B” following.  The license to ESI is the only license granted to date by Entrada.

B.                 100% of all classes of the stock of ESI., an Arizona corporation.

C.                 Source and object code for the Kinnosa software product.

D.                 Source and object code for the SigmaSim software product and all other Entrada Software, Inc., assets including claims against employees for payroll advances and other claims.  May be subject to offset.  All equipment is owed by ESI.  See detail below.

A.        Source and object code for the eChange software and related license due from ESI.

The eChange product is a collaborative design change and document management software application that provides a secure, scalable, and affordable document control, revision history, and workflow across a global supply chain.  eChange delivers effective design change management by providing secure, anywhere access to design information, automates best practice change processes and seamlessly integrates with CAD and desktop design systems.  The eChange product is the answer to collaborative document management solutions across a user’s entire enterprise. 

The eChange product allows a licensor to:

• Provide data control,

• Reduce engineering change time,

• Increase data available to all users,

• Reduce time to market,

• Reduce development cycles,

• Improve development productivity, and

• Reduce overall engineering costs.

In addition, the eChange product enables a licensor to maintain the revision life cycle of design documents and related drawings.  It allows engineers to collaborate on the same project and easily communicate engineering data and changes to the rest of the organization.

Architecture.  There are no scalability limitations with this out-of-the box application. There are no maximum document and user levels as some competitors openly publicize.  The software uses an enterprise database and a product architecture that provides an open systems framework. This secures a licensor’s most important asset, its corporate and product intellectual property (IP).  MS SQL is already built into the product. There is no need to purchase a 3rd party database.  The eChange product scales to accommodate growth and can satisfy all of a licensor’s document management needs as they develop and as your amount of data increases within your business.

Designed for use over the Internet.  The eChange product easily extends to all entities within a global enterprise or global supplier base.

Easy and cost effective to implement.  The eChange product does not require significant organizational change.  No new skills and no new personnel are necessary to make the eChange product work in a licensor’s environment.  In addition, the eChange product conforms to the common look and feel of other Windows applications so users feel right at home.

The eChange Advantage.  The eChange product empowers a user to take control of its information. It can help users transform their business to achieve the highest level of efficiency by enabling a licensor to:

• Manage the complete life cycle of document-based information;

• Incorporate workflow and process;

• automate business processes;

• Capture design and design-related data inside CAD applications to create, revise, review and release drawings; and

• Acquire a developer's toolkit to create applications that integrate with eChange for further value.

CAD Connectivity.  The eChange product is ideal for desktop and workgroup level applications, and is scalable for departmental and enterprise uses. Autodesk Inventor is included in the suite of Autodesk CAD applications is supported by eChange ante Change is fully compliant with the latest AutoCAD Suites, Inventor, and SolidWorks.

Document management in 3D environments.  As a result of companies moving to 3D CAD environments, there is an emerging demand for collaborative document management capabilities.  eChange quickly, affordably and seamlessly integrates to the Autodesk Inventor product, to create an enhanced 3D CAD environment, supporting the mission-critical demand for document management in effective 3D design.  The true 3D modeling features of Inventor will result in the ability to increase the complexity of designs, creating an increased demand for the robust document management system that eChange Solutions offers.

B.                             100% of all classes of stock of ESI.

History.  ESI was formed on May 5, 2003.  ESI currently has 90 customers worldwide with about 60% in the United States.  ESI provides maintenance support for these customers, usually under pre paid license agreements.  Buyers of the ESI securities indirectly will assume about $600,000 in deferred revenue liabilities.  ESI pays Entrada a 6% royalty on revenues.  This Entrada license is one of the assets being sold.

Employees.  ESI employs a total of __  employees. (3 Maintenance and support, 3 sales, 3 programming, 1 executive.  Financial work was performed by consultants.

Facilities.  Facilities and Bandwidth are supplied under a month-to-month lease.  A longer term lease would have to be negotiated with the landlord before the end of September or ESI would have to vacate the facility. 

Financial performance.  ESI’s revenues for the 12 months ending 7/31/04 were approximately $1,200,000.  Cost of goods are estimated at about 10% but buyers will be responsible for renewing all third party software licenses held by Entrada or ESI that relate to eChange or the eChange license.  Some of these licenses are currently expired.

Balance sheet summary.  ESI has approximately $125,000 of tangible assets, net of reserve for bad debts as discussed below, plus the goodwill associated with its customers.  Most of these customers have been with ESI or its predecessors for more than five years.  ESI owes about $80,000 to its parent, Entrada, and has other notes and accounts payable of about $70,000 to other parties.  Bad Debt.  ESI has reserved $75,000 for receivables due from its largest customer, currently in default and the subject of a collection suit.

Contingent liability.  The President of ESI has a 9 month severance agreement with ESI.  Three key employees have a guaranteed retention bonus accruing at the rate of $2,750 per month.  Total bonus liability remaining at the estimated sale date is $24,840.  This bonus will accrue over the next 9 months and is due at maturity except accelerates upon involuntary termination of such employees.

C.                             Kinnosa source and object code.

Kinnosa is a world-class enterprise software product that enables businesses engaged in manufacturing to increase overall production quality and customer satisfaction through state-of-the-art product traceability solutions. Kinnosa provides complete product traceability between customers, suppliers and products-improving efficiency and workflow processes in these enterprises worldwide.

The Kinnosa product allows businesses to create a pervasive global environment for actively carrying and managing the life history of any product, system, facility or any number of applications - acting as the link between the physical and digital worlds. Kinnosa provides complete traceability, collaboration and authentication. These offerings enable global companies to effectively manage and control their core business information - increasing the quality of goods and services at significantly lower costs.

Kinnosa™ is an enterprise class software solution that gives manufacturers a “Product-Centric” view of their business. Kinnosa™ continuously and directly delivers control and analysis information to manufacturers and their customers and their suppliers. This critical information is integrated globally from engineering, manufacturing and supplier systems during the complete lifecycle of a product.  

Customers.  There are no paying customers currently using Kinnosa.

D.                            Other Assets

The other assets to be sold include all assets listed on the collateral agreement attached as Exhibit A specifically including:

1.                  the rights to all trade names and trade marks;

2.                  the right to SigmaSim; an unreleased software product (source and object code) with no customer or a customer that disputes liability;

3.                  claims totaling more than $200,000 against various prior employees for payroll advances.  These may be subject to claims of offset by such debtors due to unpaid payroll and other claims by these individuals.

4.                  Various potential claims including tortuous interference and breach of fiduciary duty against some of the senior ex-management employees.

5.                  All the books and records of Entrada and ESI.

6.                  All equipment is owned by ESI and therefore is inherent with the stock purchase of ESI.  Total equipment net book value is about $13,000 consisting of office equipment and computers.

EXHIBIT A

COLLATERAL

All Property

            This is Exhibit A to the Security Agreements assigned to VT Acquisition Corp. securing liabilities due from Entrada Software, Inc., a Nevada corporation (“Debtor”).  The collateral consists of the Debtor’s interest in all of the following property, in all cases whether now owned or hereafter owned, presently existing or created, acquired or arising, after the date granted and wherever located:

A.                 All accounts, contract rights, chattel paper, instruments (including certificated securities), letters of credit and documents;

B.                 All inventory, including without limitation:  all goods intended for sale or lease by the Debtor, or for display or demonstration; all work in process; all raw materials and other materials and supplies of every nature and description used or which might be used in connection with the manufacture, printing, packing, shipping, advertising, selling, leasing or furnishing of such goods or otherwise used or consumed in the Debtor’s business; and all documents evidencing and general intangibles relating to any of the foregoing (referred to collectively as “Inventor;.”

C.                 All equipment, machinery, molds, apparatus, fittings, furniture, fixtures, motor vehicles and other tangible personal property (other than inventory) of every kind and description owned by the Debtor or in which the Debtor has an interest, and all parts, accessories and special tools;

D.                 All general intangibles, including without limitation: all choices in action, causes of action, corporate or other business records, deposit accounts, inventions, designs, patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registration, licenses, franchises, customer lists, tax refund, refund claims, and computer programs; all claims under guaranties, security interests or other security held by or granted to the Debtor to secure payment of any obligation owed to the Debtor; all rights to indemnification; and all other intangible property of every kind and nature (other than accounts);

E.                  All monies and other property of any kind, now or at any time or times hereafter, in the possession or under the control of the Secured Party or a bailee of the Secured Party;

F.                  All accessions to, substitutions for, and all replacements, products and cash and non-cash proceeds of A, B, C, D and E above, including, without limitation, proceeds of unearned premiums with respect to insurance policies insuring any of such property or interest;

G.                 All intellectual and copyrighted property, including but not limited to, any source code or other code necessary to operate the Debtor’s web site or web sites subsequently developed by the Debtor (jointly the “Site”), including any programs provided by third parties and such intellectual property shall include all necessary and detailed instructions as to how to compile or operate the Site as well as the rights to any programs that allow the site to operate; and

H.                 All books and records (including, without limitation, customer lists, credit files, computer programs, printouts, and other computer materials and records) of the Debtor pertaining to any of A, B, C, D, E, F or G above.