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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2000
Commission file number: 0-23892
RAINWIRE PARTNERS, INC.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 57-0941152
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Monteith Commons, First Floor
2931 Piedmont Road, N.E.
Atlanta, Georgia 30305
(Address of principal executive offices of Incorporation or
organization and zip code)
Issuer's telephone number: (404) 842-1510
(Registrants telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the last 90 days.
YES [ ] NO [X]
At December 31, 2000, 7,609,886 shares of the Registrant's Common Stock
were issued outstanding and the estimated aggregate market value of the
Registrant's outstanding common stock held by non-affiliates of the Registrant
was approximately $226,876.
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
PART I
I. DESCRIPTION OF BUSINESS.
A. Recent Developments
In February, 2001, Rainwire Partners, Inc. ("Rainwire" or the
"Company") and Oasis Group, Inc., a Georgia corporation ("Oasis"),
began discussions concerning the use of Rainwire as a reverse merger
vehicle to position Oasis in the public market. These initial
discussions did not result in any agreements. After exploring similar
agreements with other parties, the Company re-entered discussions with
Oasis in July, 2001.
On August 29, 2001, Rainwire and Oasis completed negotiations
and the Oasis Share Exchange Agreement was signed. It is a non-binding
agreement subject to the completion of due diligence and exchange of
Schedules outlined in the Oasis Share Exchange Agreement. Prior to the
Closing, Rainwire plans to increase its authorized common stock and
reverse split its present outstanding shares.
The Company is seeking shareholder approval of the Oasis Share
Exchange Agreement and the transactions contemplated by it. The consent
of persons holding a simple majority (over 50%) of the outstanding
Company common stock is needed to approve the closing of the
transaction and authorization of the other transactions identified.
Because current management owns greater than 50% of the outstanding
Company common stock, the Company expects to receive the necessary
shareholder approval and intends to prepare an Information Statement on
Form 14C to inform the remaining shareholders of the majority's
decision. The Company expects to mail the Information Statement to its
shareholders on or about November 25, 2001, and believes that the
transaction will close on or about December 15, 2001.
Upon execution of the Oasis Share Exchange Agreement, Walter
H. Elliott, the President and a director of the Company resigned, and
Ronald A. Potts was elected to the Board of Directors of the Company
and was appointed President and Chief Executive Officer of the Company.
Additionally, Mike McLaughlin and John Hill were elected to the Board
of Directors and Peggy Evans was appointed Chief Financial Officer.
Furthermore, upon execution of the Share Exchange Agreement,
the Company issued 12,000,000 shares of its common stock to Osprey
Investments, LLC (of which Lyne Marchessault is the sole member) in
satisfaction of loans in the principal amount of $60,000.
B. Business Development.
The Company was incorporated on May 10, 1991 in Delaware for
the purpose of consolidating the operations of Azimuth, Inc. (a fully
accredited AIHA Industrial Hygiene Laboratory for testing asbestos,
metals and organic vapors) and certain of its former environmental
products businesses and acquiring the assets of four general
partnerships which were then leasing real estate and laboratory and
other equipment to Azimuth and the products businesses. The Company
formerly had three operating
subsidiaries: Trico Environmetrics, Inc. ("Trico"), Envirometrics
Products Company ("EPC") and Azimuth, Inc.
In 1996, the Company entered into a "Turnaround" phase, and
all of the Company's former operations were divested by the year 2000.
During the course of the Company's "Turnaround" phase, the
Company explored alternative plans for growth that included the
identification of companies in other markets which had greater growth
potential than the Environmental, Health and Safety Market. In
September, 1999, the Company was introduced to The Catapult Group,
Inc., a Georgia corporation ("Catapult"), which was an Internet
integration firm offering intelligent end-to-end e-business solutions
to large and middle-market organizations. In February 2000, the Company
and Catapult reached terms that each felt were fair to the parties and
entered into a non-binding agreement whereby Rainwire would acquire
Catapult, which became binding on March 8, 2000.
Prior to the closing of the Catapult Exchange Agreement, on
July 26, 2000, Registrant effected a 10:1 reverse split of its
outstanding common stock, issued 5,555,064 shares of its common stock
to purchase all of the outstanding common stock of Catapult, changed
its name to The Catapult Group, Inc. and increased its authorized
shares from Ten Million (10,000,000) to Twenty Million (20,000,000). An
amendment to Registrant's Certificate of Incorporation reflecting such
changes was filed with the Secretary of State of Delaware on July 26,
2000. Upon completion of the Catapult Exchange Agreement, Catapult
became a wholly owned subsidiary of the Company and the shareholders of
Catapult became owners of approximately 90% of the outstanding shares
of Common Stock of the Company. The Company subsequently changed its
name to Rainwire Partners, Inc.
On December 31, 2000, management adopted a plan to discontinue
the operations of the Company and to liquidate its assets.
C. Business of Issuer.
Upon completion of the Share Exchange with The Catapult Group,
Inc., Rainwire's business became that of an Internet integration firm
offering intelligent end-to-end e-business solutions to large and
middle-market organizations. However, as of December 31, 2000, Rainwire
adopted a plan to discontinue the operations of the Company and to
liquidate its assets. Additionally, as of that date, Rainwire began to
explore alternative plans for growth, which included the identification
of companies in markets that had greater growth potential than the
market for e-business solutions.
On August 29, 2001, Rainwire entered into a Share Exchange
Agreement with Oasis. Upon completion of the Share Exchange, Rainwire's
business will consist of the business plan of Oasis, which includes the
acquiring, owning and developing of parcels of undeveloped property.
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D. Employees.
Presently, the Company has no full-time employees other than
executive officers. The Company had 20 employees at December 31, 2000.
II. DESCRIPTION OF PROPERTY.
The following includes each of the principal real properties owned or
leased by the Company as of December 31, 2000.
1. 9229 University Boulevard, Charleston, SC(1)
Monthly Base Rental: $5,523.00
2. 4940 Peachtree Boulevard, Suite 350, Norcross, GA(2)
Monthly Base Rental: $3,695.69
3. 665 Pylant Street, Atlanta, GA(3)
Monthly Base Rental: $21,921.00
4. 418 King Street, Suite 301, Charleston, SC(4)
Monthly Base Rental: $3,750.00
Lease Expiration Date: August 31, 2005
(1) Subsequent to December 31, 2000, the Company no longer
occupied this location. The Company is seeking to mitigate
its outstanding lease liabilities.
(2) This lease expired during fiscal year 2000.
(3) Subsequent to December 31, 2000, the Company no longer
occupied this location.
(4) The Company is seeking to mitigate the outstanding lease
liability as the landlord had seized and/or sold some of the
equipment in partial satisfaction of the past due lease
rentals.
III. LEGAL PROCEEDINGS.
The Company is involved with several legal actions, principally as
defendant. These actions involve outstanding liabilities of the Company
including those of subsidiaries. Following are four such actions.
Azimuth Laboratory, Inc., a subsidiary of EVRM, generated hazardous
waste during the time of its operations which ceased in April, 2000. According
to a former landlord, Azimuth was responsible for a hazardous waste cleanup on
the leased premises, and he is seeking recovery of approximately $130,000,
including the cleanup and remaining payments due under the terms of the lease
agreement which is to expire in December, 2001. A motion for summary judgment is
expected to be heard by the end of 2001. Only the remaining lease obligation of
$66,271 has been recorded as of December 31, 2000.
As of December 31, 2000, a judgment against the Company was obtained by
the holder of the remaining Series C redeemable preferred stock for $21,666
relating to the failure by the
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Company to redeem 8,333 of those shares and to pay dividends when due.
Substantially all of that amount was recorded as of December 31, 2000.
IOS Capital, Inc. has made a demand to Rainwire for sums defaulted
upon as a result of an equipment lease signed by Rainwire in February, 1997.
IOS Capital indicated that they would compromise the amounts owed for the sum
of $15,479.20 in full satisfaction of the claim; however, Rainwire failed to
make the payment by the required date.
An action has been filed and reduced to a judgment against Rainwire
Partners, Inc. by H.E. Igoe in the amount of $21,665.96 filed on June 25, 2001.
This matter involved a share purchase agreement between Rainwire and Igoe.
IV. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 18, 2000 the Company filed a definitive Information Statement
soliciting consents from its shareholders concerning four (4) matters:
1. Reverse split of the outstanding shares 10:1;
2. Increase of the Authorized Shares from 10 million to 20
million;
3. Corporate name change to the Catapult Group, Inc.; and
4. Consent to consummate the share exchange with the Catapult
Group.
On June 8, 2000 the Company's transfer agent, Continental Stock Transfer & Trust
Company suspended the consent count because a majority (approximately 60%) of
the consents had been returned. The transfer agent then issued the Company a
confirmation letter tabulating the consent count, 3,264,363 votes were received
with greater than 99% giving consent to the transactions outlined in the
Information Statement.
No other matters were submitted to our security holders for a vote
during the fiscal year ending December 31, 2000.
PART II
V. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
A. Market information.
The Company's Common Stock has been publicly traded separately
and was initially quoted on the Nasdaq Smallcap Market ("Nasdaq") under
the symbol "EVRM" on August 12, 1994. Upon the divestiture of the Trico
subsidiary the Company fell below the listing requirements of Nasdaq.
On December 3, 1996, the Company's
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common stock and warrants were delisted from The Nasdaq SmallCap Market
and were subsequently traded on Over the Counter Bulletin Board. On
January 4, 1999, the Securities and Exchange Commission (SEC) approved
amendments to NASD Rules 6530 and 6540 to limit quotations on the OTC
Bulletin Board(R) ("OTCBB") to the securities of companies that report
their current financial information to the SEC. On November 18, 1999,
the Company's common stock and warrants were delisted from the OTCBB
because of failure to have the required SEC periodic filings submitted
by that date. As of that date, price Quotations could be found on
Electronic Pink Sheets (the "Pink Sheets"). On January 28, 2000 the
Company brought its filings with the SEC current, thus meeting the
requirements for re-listing on the OTCBB. On March 21, 2000 the
Company's common stock began trading on OTCBB. On August 1, 2000, the
Company received a new symbol from NASDAQ. As of that date, Rainwire
was traded on the OTCBB under the symbol RNWR. In 2001, the Company's
common stock was again delisted from the OTCBB because of the Company's
failure to file its required SEC periodic filings. On October 19, 2001,
the last sale price of a share of the Company's common stock on the
Pink Sheets was $0.08.
The following table sets forth the high and low bid prices for
the Common Stock as reported in the trading media and for the periods
reflected above for each fiscal quarter commencing January, 1999
through December, 2000. The quotations listed below reflect
inter-dealer prices, without retail mark-up, mark-down or commissions
and do not necessarily represent actual transactions.
HIGH LOW
----- -----
1999
First Quarter 0.187 0.062
Second Quarter 0.375 0.062
Third Quarter 0.375 0.050
Fourth Quarter 0.375 0.005
2000
First Quarter 0.35 0.08
Second Quarter 0.375 0.06
Third Quarter* 4.25 2.00
Fourth Quarter 2.50 0.50
* The common stock of the Company was consolidated 10 for 1 in
July, 2000.
B. Holders.
On December 31, 2000 there were approximately 103 shareholders
of record the Company's common stock, based on information provided by
the Company's transfer agent. This number may not include individuals
whose shares are held in "street names."
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C. Dividends.
The Company has never paid dividends on its Common Stock and
does not anticipate that it will do so in the foreseeable future. For
the foreseeable future any future earnings or funds otherwise
available, if any, for the payment of dividends will be used to pay
dividends on the outstanding Preferred Stock or for reinvestment in the
Company's business. Any future determination to pay cash dividends on
the Common Stock will be at the discretion of the Board of Directors
and will reflect such other factors (including contractual
requirements) as the Board of Directors deem relevant.
In April, 2000, all of the Series A and B preferred shares,
and 2/3 of the Series C preferred shares were converted into common
stock of the Company, including accrued dividends. Total common shares
issued to effect the conversion was 167,605, valued at $670,420 or
$4.00 per share. As of December 31, 2000, there were 24,959 shares of
Series C preferred stock outstanding valued at $52,913, including
accretion of $2,995.
D. Recent Sales of Unregistered Securities.
In April, 2000, the Registrant issued an aggregate of 186,288
shares of its common stock in settlement of prior accounts payable.
These shares were sold pursuant to Section 4(2) of the Securities Act
and have been marked "restricted."
In July, 2000, the Registrant issued an aggregate of 5,555,064
shares of its common stock to the shareholders of The Catapult Group,
Inc. in exchange for all of the outstanding common shares of The
Catapult Group, Inc. These Shares were sold pursuant to Section 4(2) of
the Securities Act and have been marked "restricted."
In September, 2000, the Registrant issued an aggregate of
900,000 shares of its common stock to four individuals in exchange for
$700,000 or at a price of $0.78 per share. All four individuals were
accredited investors, and these shares were sold pursuant to Section
4(2) of the Securities Act and have been marked "restricted."
In September, 2000, the Registrant issued an aggregate of
120,000 shares of its common stock in settlement of a note payable in
the principal amount of $150,000. These shares were sold pursuant to
Section 4(2) of the Securities Act and have been marked "restricted."
In August, 2001, the Registrant issued 12,000,000 shares of
its common stock in settlement of loans in the principal amount of
$60,000. These shares were sold pursuant to Section 4(2) of the
Securities Act and have been marked "restricted."
In August, 2001, the Registrant issued 100,000 shares of its
common stock to an individual for services provided and to be provided
to the Registrant. The services were valued at $2,500 or $0.025 per
share. These shares were sold pursuant to Section 4(2) of the
Securities Act and have been marked "restricted."
In September, 2001, the Registrant issued 200,000 shares of
its common stock to an individual in exchange for $10,000 or at a
price of $0.05 per share. The individual was an accredited investor,
and these shares were sold pursuant to Section 4(2) of the Securities
Act and have been marked "restricted."
In October, 2001, the Registrant issued 500,000 shares of its
Series D Convertible Preferred Stock to Osprey Investments, LLC in
exchange for 10,000,000 shares of the
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Registrant's common stock. These shares were sold pursuant to Section
4(2) of the Securities Act and have been marked "restricted".
E. Series D Convertible Preferred Stock ("Series D")
Our Amended and Restated Certificate of Incorporation
authorizes 2,500,000 shares of preferred stock and provides that the
Board of Directors may, by resolution, fix the rights and limitations
of our preferred stock. The Board of Directors had previously utilized
this authority to authorize 70,000 shares of Series A Preferred Stock,
208,640 shares of Series B Preferred Stock and 74,878 shares of Series
C Preferred Stock.
On October 15, 2001, our Board of Directors approved the
creation, authorized the issuance, and fixed the designation of 500,000
share of Series D Convertible Preferred Stock. On October 15, 2001, our
Board of Directors further approved the exchange of 500,000 shares of
our Series D Convertible Preferred Stock for 10,000,000 of our common
stock owned by Osprey Investments, LLC. Ms. Marchessault abstained from
the latter director vote. On or about October 26, 2001, we filed a
Certificate of Designation of Series D Convertible Preferred Stock with
the Delaware Division of Corporations. Described below is a summary of
the terms of the Series D Convertible Preferred Stock.
Convertability
The Series D is immediately convertible at the option of the
holder into Ten Million (10,000,000) shares of the common stock of the
Company. If the Company shall fail to pay a dividend to the holders of
the Series D for two consecutive quarters, the Series D shall be
convertible into fifty million (50,000,000) shares of the common stock
of the Company so long as such dividends remain unpaid.
Redemption
The Company may redeem the Series D, in whole or in part, at
any time, at a redemption price equal to the sum of any accrued but
unpaid dividends and $1.00 per share redeemed.
Dividends
The holders of the Series D shall be entitled to receive a
cumulative dividend at a rate of twelve percent (12%) per annum out of
any assets of the Company legally available therefore, when, if and as
declared by our Board of Directors. Dividends on Series D shall be
payable on a quarterly basis.
Liquidation Preference
If the Company were dissolved or liquidated, voluntarily or
involuntarily, the holders of the Series D would be entitled to
receive, prior and in preference to any distribution of our assets to
the holders of any of our other equity securities, other than our
Series C Convertible Preferred Stock, an amount equal to $1.00 per
share.
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Voting Rights
On all matters on which the holders of our common stock are
entitled to vote, each holder of Series D shall be entitled to ten (10)
votes for each share of Series D standing in his or her name on the
books of the Company. In addition, the holders of the Series D shall be
entitled to elect the majority of the Company's Board of Directors.
VI. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
This 10-KSB contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby.
Investors are cautioned that certain statements in this 10-KSB are
"forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve known and unknown
risks, uncertainties and other factors. Such uncertainties and risks
include, among others, certain risks associated with the closing of the
Oasis transaction described herein, government regulation, and general
economic and business conditions. Actual events, circumstances, effects
and results may be materially different from the results, performance
or achievements expressed or implied by the forward-looking statements.
Consequently, the forward-looking statements contained herein should
not be regarded as representations by the Company or any other person
that the projected outcomes can or will be achieved.
The following discussion and analysis should be read in
conjunction with the Consolidated Financial Statements and Notes
thereto, appearing elsewhere in this Form 10-KSB.
A. General Overview
On July 26, 2000 the former company, Environmetrics, Inc.
exchanged approximately ninety percent of newly issued restricted
common stock for all of the outstanding common stock of The Catapult
Group, Inc. On that date, the name was changed to Rainwire Partners,
Inc. for both The Catapult Group, Inc. and the former company. As of
the date of the exchange, the former company's net assets were written
down to a fair market value, as required under generally accepted
accounting principles. The previous historical financial data of The
Catapult Group, Inc. was carried forward since Catapult is considered
the accounting acquirer; therefore the following comments pertain to
the historical financial statements of The Catapult Group, Inc. and
i20, Inc., including the net assets acquired as mentioned above.
B. Results of Operations.
Year ended December 2000 Compared to year ended December 1999
The company lost $419,028 for 1999 compared to a loss of
$1,494,708 in 2000. In addition, in 2000 the company recorded a loss on
the disposal of the business of $578,191. The decision was made on
December 31, 2000 to discontinue the operations
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of the company; accordingly the financial statements for 1999 reflect
the operating loss as a discontinued loss for comparative purposes.
The company commenced its operation in July, 1999 and acquired
i20, Inc. in August, 1999. i20, Inc.'s planned operations for the
period subsequent to its purchase was the basis for the company paying
approximately $500,000 more than the fair value of the assets acquired
at that date. The loss from discontinued operations in year 2000,
includes not only a write off of the unamortized balance of Goodwill of
approximately $460,000 but unsuccessful efforts to sustain the business
during the period when dot.com companies were failing. The loss on the
disposal of the business in 2000 consists mainly of forward looking
expenses, which were obligations of the company as of December 2000 and
obligation incurred as a result of that decision.
C. Financial Condition.
The company's audit report for the year 2000 discloses a
"going" concern paragraph in reference to the company's concern for
continuing its existence in the future. This concern is highlighted by
the fact that the company has negative working capital of approximately
$1,100,000, a deficit since inception of approximately $2,500,000 and a
deficit in stockholders equity of approximately $1,160,000. There are a
number of legal actions against the company for failure to honor its
commitments, which includes an obligation of the company incurred by
Environmetrics, Inc., Azimuth Laboratories, Inc.
D. Certain Risk Factors.
Rainwire Partners, Inc. has entered into a Plan and Agreement
to Exchange Stock by and among Rainwire, Oasis Group, Inc. and the
Shareholders of Oasis (the "Oasis Share Exchange Agreement"). As a
result of the Oasis Share Exchange Agreement, Oasis will become a
wholly-owned subsidiary of Rainwire. Oasis faces various risks that may
prevent Oasis from implementing its business plan. If any of the
following risks actually occur, Oasis' business, financial condition or
results of operations could be materially harmed. If Oasis' business is
harmed, the trading price of Rainwire's Common Stock could decline and
you could lose all or part of your investment.
BECAUSE OF OUR LACK OF FUNDS AND PAST LOSSES, OUR INDEPENDENT
ACCOUNTANT'S AUDIT REPORT STATES THAT THERE IS SUBSTANTIAL DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Rainwire's independent certified public accountants have
raised substantial doubt about our ability to continue as a going
concern. Our ability to continue as a going concern is highly dependent
upon obtaining additional financing for our planned operations, and/or
achieving profitable operations. If we are unable to obtain additional
financing in sufficient amounts or on acceptable terms, our operating
results and prospects could be adversely affected.
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WE HAVE INCURRED SIGNIFICANT LOSSES.
As of December 31, 2000, the end of our most recent fiscal
year, we had incurred significant losses. Additionally, as of December
31, 2000, Rainwire adopted a plan to discontinue the operations of the
Company and to liquidate its assets. Accordingly, we expect to continue
incurring operating losses until we are able to derive meaningful
revenues from Oasis' anticipated operations. There can be no assurance
that Oasis' anticipated operations will ever produce profitable
operations or that we will be able to continue to obtain financing
until Oasis is able to produce profitable operations. Because of the
substantial start-up costs that must be incurred by a new company, we
expect to incur significant operating losses during the initial years
of Oasis' operations. No assurance can be given that the future
operations of Oasis will be successful.
CURRENT RAINWIRE SHAREHOLDERS WILL SUFFER IMMEDIATE AND
SUBSTANTIAL DILUTION UNDER TERMS OF THE SHARE EXCHANGE AGREEMENT.
Under the terms of the Oasis Share Exchange Agreement,
Rainwire will effect a reverse split of its current issued and
outstanding common stock and will issue shares of the Company's Common
Stock to the shareholders of Oasis. As a result, current shareholders
of Rainwire will suffer substantial dilution.
In addition, under the terms of the Oasis Share Exchange
Agreement, Rainwire will amend its Certificate of Incorporation to
increase its authorized shares of Common Stock to One Hundred Million
(100,000,000). The Company's ability to issue additional shares of
Common Stock after the completion of the Oasis Share Exchange will
subject current Rainwire shareholders to additional dilution.
OASIS IS A DEVELOPMENT STAGE COMPANY AND HAS NO SIGNIFICANT
OPERATING HISTORY.
Oasis was founded on November 16, 1999, and to date has had no
business operations. As of the date of this annual report, Oasis has
not had any revenue producing operations on which you can evaluate its
potential for future success. Oasis' activities to date have been
limited to conducting a private offering of its securities and entering
into agreements or letters of intent concerning various real property,
a mortgage brokerage company and an aviation company. As a development
stage company, Oasis is subject to all risks, expenses, and
uncertainties frequently encountered by new companies. Any
unanticipated expenses, problems, or difficulties may result in
material delays both in the completion of the Oasis Share Exchange and
in implementing Oasis' business plan.
WE MAY BE UNABLE TO RAISE ADDITIONAL FUNDING TO PURSUE OUR
STRATEGIES WHICH MAY HARM OUR BUSINESS
The Company anticipates the need for additional capital as it
pursues its business strategy. The Company expects to raise additional
capital through a combination of new debt issuances and equity sales,
from private as well as public sources. Issuance of new debt and/or the
sale of equity will likely have a dilutive effect on the Company and
its shareholders. Implementation of the Company's strategy and its
business plans is contingent upon the availability of such funding
sources. No assurance can be given that
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the Company will be able to raise debt or equity capital, at terms that
are acceptable to the Company, or at all, in order to fund its
operations as set forth above.
OASIS' BUSINESS PLAN MAY NEVER BE IMPLEMENTED.
Oasis' business plan consists of acquiring, owning and
developing parcels of undeveloped property. Oasis has entered into
agreements or letters of intent concerning various real property, a
mortgage brokerage company and an aviation company; however, there is
no assurance that any of the transactions contemplated by the
agreements will ever be completed.
WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS IN THE FORESEEABLE
FUTURE.
We presently anticipate that we will retain all available
funds for use in the operation and expansion of our business and do not
anticipate paying any dividends on our common stock in the foreseeable
future. Any future payment of dividends to our stockholders will depend
on decisions that will be made by our board of directors and will
depend on then existing conditions, including our financial condition,
contractual restrictions, capital requirements and business prospects.
OUR COMMON STOCK CURRENTLY TRADES ON THE PINK SHEETS(R) AND,
AS A RESULT, THERE MAY BE LIMITED TRADING VOLUME IN THE STOCK, AS WELL
AS A GREATER SPREAD BETWEEN "BID" AND "ASKED" PRICES.
Our common stock currently trades on the Pink Sheets(R), a
quotation service operated by Pink Sheets, LLC. The Pink Sheets(R) does
not impose listing standards or requirements, does not provide
automatic trade executions, and does not maintain relationships with
quoted issuers. Issuers whose securities are traded on the Pink
Sheets(R) may experience a greater spread between the "bid" and "asked"
prices of their securities compared with securities traded on a
national securities exchange or Nasdaq, and a limited liquidity in
their securities. In addition, many investors have policies against the
purchase or holding of securities traded in the over-the-counter
markets. Trading in an over-the-counter market such as Pink Sheets(R)
has, and will continue to, affect both the trading volume and the
market value of our common stock for the foreseeable future.
VII. FINANCIAL STATEMENTS.
The following documents are filed as part of this report:
(1) Independent Auditors' Report..........................................F-1
(2) Financial statements:
Consolidated Balance Sheet..........................................F-2
Consolidated Statements of operations...............................F-3
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Consolidated Statements of Changes in Shareholders' Equity..........F-4
Consolidated Statements of cash flows cumulative for the
years ending December 31, 2000 and 1999.........................F-5
Notes to Financial Statements.......................................F-6
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or other notes herein.
VIII. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company engaged the firm of Welch, Roberts & Amburn, LLP to conduct
the audits of its financial statements for the years ended December 31, 1999,
and 1998. Welch, Roberts & Amburn, LLP, resigned on May 31, 2001 due to
outstanding and past due fees owed by the Company.
In connection with Welch, Roberts & Amburn, LLP's audits of the
financial statements of the Company, there were no disagreements with Welch,
Roberts & Amburn, LLP on any matter of accounting principles, financial
disclosure, or auditing scope or procedures, which disagreements if not resolved
to their satisfaction would have caused them to make reference in connection
with their opinion to the subject matter of the disagreement.
The audit reports of Welch, Roberts & Amburn, LLP on the consolidated
financial statements for the years ended December 31, 1999, and 1998 did not
contain any adverse opinion or disclaimer of opinion; however, the unqualified
opinion contained a fourth paragraph with respect to an emphasis of a paragraph
discussing recurring losses from operations and decreases in working capital
issues confronting the Company.
The Company had also engaged the firm of Tauber & Balser, P.C. in
connection with the audit of the consolidated balance sheet of The Catapult
Group, Inc., and Subsidiary as of December 31, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period from July 21, 1999 (inception) to December 31, 1999.
In connection with the audit as of December 31, 1999, and for the
period from July 21, 1999 (inception) to December 31, 1999, there was no
disagreement with Tauber & Balser, P.C. on any matter of accounting principles,
financial disclosure, or auditing scope or procedures, which disagreement if
not resolved to their satisfaction would have caused them to make reference in
connection with their opinion to the subject matter of the disagreement.
The audit report of Tauber & Balser, P.C. on the consolidated financial
statements for the year ended December 31, 1999 was issued with an unqualified
opinion.
On or about September 9, 2001, the Company notified Tauber & Balser,
P.C. that it had engaged the firm of Braverman & Company, P.C., to conduct the
audit of its financial statements for the year ended December 31, 2000.
12
PART III
IX. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The following table sets forth all the directors, executive officers
and significant employees of the Company as of October 25, 2001. In April, 2001,
Bryan M. Johns resigned as an officer and director of the Company. On August 29,
2001, Walter H. Elliott, III resigned as an officer and director of the Company.
In the years prior to December 31, 2000, various officers, directors
and control persons have failed to timely report under section 16(a) of the
Exchange Act. Bryan M. Johns, Lyne Marchessault and Anguilla Equity Partners,
Inc., who were Directors, Officers and/or 10% stockholders, failed to timely
file reports under Section 16 of the Exchange Act with respect to the Company
during the Company's 2000 fiscal year. In February 2001, Mr. Johns and Ms.
Marchessault each filed a Form 5 under Section 16 of the Exchange Act with
respect to their holdings of relevant equity securities of the Company as of the
end of the Company's 2000 fiscal year. Walter H. Elliott III, the Company's
other officer and director as of December 31, 2000, had no transactions during
the Company's 2000 fiscal year subject to Section 16 reporting.
NAME AGE POSITION
Ronald A. Potts 54 President, CEO, and Chairman of the Board
Lyne Marchessault 43 Secretary and Director
Peggy Evans 53 Chief Financial Officer
Michael McLaughlin 58 Director
John Hill 55 Director
Ronald A. Potts, Chairman, President and Chief Executive Officer. Mr.
Potts was elected to our Board of Directors and appointed Chairman, Chief
Executive Officer and President of the Rainwire in August, 2001. From 1996 until
March, 2000, Mr. Potts was President of Londott Investments. Beginning in March,
2000, Mr. Potts was elected to the Board of Directors and was appointed Chairman
and Chief Executive Officer of Oasis Group, Inc. Mr. Potts holds an Economics
degree from the University of Western Ontario.
Lyne Marchessault, Secretary and Director. Ms. Marchessault was elected
to our Board of Directors and appointed Secretary in July, 2000. In addition, in
August, 2001, Ms. Marchessault was elected to the Oasis Board of Directors. From
1996 until January, 1998 Ms. Marchessault was the Director of International
Marketing and Public Relations for Ultimate Technographics. From January, 1998
until the present, Ms. Marchessault has been the managing member of Osprey
Investments, LLC. Ms. Marchessault holds a Marketing degree from Concordia
University and a Masters in Business Administration from McGill University.
Peggy Evans, Chief Financial Officer. Ms. Evans was appointed as our
Chief Financial Officer in August, 2001. Since October 1, 2000, Ms. Evans has
been the Chief Financial Officer for Oasis Group, Inc. Prior to that time, Ms.
Evans served as the President of Yakley
13
Management, Inc. and the Chief Operating Officer of Eston Hospitality, LLC. Ms.
Evans holds a B.S. degree in business from Pepperdine University.
Michael McLaughlin, Director. Mr. McLaughlin was elected to our Board
of Directors in August, 2001. In addition, Mr. McLaughlin was elected to the
Oasis Board of Directors in August, 2000. For the last 14 years, Mr. McLaughlin
has been the owner and President of American Flooring, Inc. Mr. McLaughlin holds
a bachelors degree in business from Florida Atlantic University.
John Hill, Director. Mr. Hill was elected to our Board of Directors in
August, 2001. Mr. Hill has also been a director of Oasis Group, Inc. since July,
2000. From 1996 until 1998, Mr. Hill was a Divisional Claims Superintendent with
State Farm Fire & Casualty Company and from 1998 until the present, Mr. Hill has
been a Section Manager with State Farm. Mr. Hill holds a B.S. in Business
Administration degree from the University of Tennessee.
Directors hold office until the next annual meeting of shareholders.
Officers are elected by the Board of Directors following the Annual meeting of
stockholders.
X. EXECUTIVE COMPENSATION.
The compensation paid in 1999 and 2000 to the Chief Executive Officer of the
Company and to the President of the Company is set forth in the table below. No
executive officers or any officer of a subsidiary had total compensation that
exceeded $100,000.
2000 SUMMARY COMPENSATION TABLE
THE COMPANY
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
NAME AND OTHER ANNUAL RESTRICTED OPTIONS LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION STOCK SARs PAYOUT COMPENSATION
POSITION YEAR ($) ($) ($) AWARDS (#) ($) ($)
----------------- ---- -------- ----- ------------ ---------- ------- ------ ------------
Bryan Johns 2000 $102,000 0 $7,200 0 0 0 0
President and 1999 $ -0- 0 0 0 0 0 0
CEO(1)
Walter H. Elliott 2000 $ 91,249 0 0 0 0 0 0
President and 1999 $ 75,000 0 0 93,174(3) 150,000(4) 0 0
CEO(2)
(1) Mr. Johns entered into an employment agreement with the Company on July
26, 2000, which paid him an annual salary of $102,000 and an annual car
allowance of $7,200. Mr. Johns resigned as President and Chief
Executive Officer in April, 2001.
(2) Mr. Elliott resigned as President and Chief Executive Officer in July
2000. Mr. Elliott's salary was $85,000 per year until his resignation
in July,2000. On July 26, 2000, Mr. Elliott entered into an employment
agreement with the Company that paid him an annual salary of $100,000.
(3) Represents shares of stock issued in lieu of salary for 1997 and 1998
when Mr. Elliott's salary was cut from $85,000 annually to $59,500.
This number does not reflect the 10:1 reverse stock split that occurred
in connection with the Catapult Share Exchange in July, 2000.
(4) Represents stock options granted in December, 1999. This number dos not
reflect the 10:1 reverse stock split that occurred in connection with
the Catapult Share Exchange in July, 2000.
There were no options granted to the Executive Officers of the Company
and its subsidiaries during the year ending December 31, 2000. The Company has
no stock appreciation rights ("SARs") outstanding.
14
XI. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT.
A. Security Ownership.
The following table sets forth information regarding ownership of the
Registrant's common stock by all persons who are known by the Registrant to own
more than 5% of the total outstanding shares, by all officers and directors of
the Company, and by all officers and directors as a group as of December 31,
2000. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to options
held by that person that are currently exercisable or exercisable within sixty
(60) days of the date of this Annual Report are deemed outstanding. These
shares, however are not deemed outstanding for the purposes of computing the
percentage ownership of any other person. Except as indicated in the footnotes
to this table and pursuant to applicable community property laws, each
shareholder named in the table has sole voting and investment power with the
shares set forth opposite such shareholder's name. Except as otherwise indicated
in the table, the address of the stockholders listed below is that of the
Company's principal executive office. Directors not included in the table below
do not hold Company securities.
SHARES BENEFICIALLY OWNED
AS OF DECEMBER 31, 2000
NAME AND ADDRESS NUMBER PERCENT
---------------- --------- -------
Ronald A. Potts(1) 300,000 3.9%
Lyne Marchessault(2) 231,461 3.0%
Osprey Investments, LLC(3) 231,461 3.0%
Monteith Commons, First Floor
2931 Piedmont Road, N.E.
Atlanta, Georgia 30305
Bryan M. Johns(4) 1,296,182 17.0%
Walter H. Elliott III(5) 19,484 *
Arnold Johns(6) 1,064,721 14.0%
320 Cameron Ridge Drive
Atlanta, GA 30328
Jake Cantrell 485,000 6.4%
P.O. Box 1249
Alpharetta, GA 30009
Anguilla Equity Partners, Inc. 1,481,350 19.5%
Keithley F.T. Lake
The Law Building, The Valley
Anguilla, BWI
15
SHARES BENEFICIALLY OWNED
AS OF DECEMBER 31, 2000
NAME AND ADDRESS NUMBER PERCENT
---------------- --------- -------
Cambridge Investments 462,922 6.1%
Keithley F.T. Lake
The Law Building, The Valley
Anguilla, BWI
Cambridge Capital, LLC 648,091 8.5%
3475 Lenox Road, N.E., Suite 995
Atlanta, GA 30326
All officers and directors as a 1,547,127 20.3%
group(7)
* Less than 1%.
(1) Mr. Potts became an officer and director in August, 2001.
(2) Includes 231,461 shares owned by Osprey Investments, LLC of
which Ms. Marchessault is the sole member.
(3) Does not include the 12,000,000 shares issued to Osprey in
August, 2001, and the subsequent exchange of 10,000,000 shares
of Common Stock for 500,000 shares of Series D Convertible
Preferred Stock in October, 2001.
(4) Mr. Johns resigned as an officer and director in April, 2001.
(5) Mr. Elliott resigned as an officer and director on August 29,
2001.
(6) Includes 648,091 shares owned by Cambridge Capital, LLC.
(7) Does include shares owned by Ronald Potts who did not become
an officer and director until August, 2001.
B. Changes in Control.
The Company's Share Exchange Agreement with Oasis Group, Inc. provides
for a change of control of the Company. Upon execution of the Share Exchange
Agreement, Walter H. Elliott, the President and a director of the Company
resigned, and Ronald A. Potts was elected to the Board of Directors of the
Company and was appointed President and Chief Executive Officer of the Company.
Additionally, Mike McLaughlin and John Hill were elected to the Board of
Directors and Peggy Evans was appointed Chief Financial Officer.
Furthermore, upon execution of the Share Exchange Agreement, the
Company issued 12,000,000 shares of its common stock to Osprey Investments, LLC
(of which Lyne Marchessault is the sole member) in satisfaction of loans in the
principal amount of $60,000.
16
XII. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with the Share Exchange Agreement, Rainwire issued
12,000,000 shares of its common stock to Osprey Investments, LLC (of which Lyne
Marchessault, our Secretary and a director, is the sole member) in satisfaction
of loans in the principal amount of $60,000. In addition, in October, 2001,
Rainwire exchanged 500,000 of its Series D Convertible Preferred Stock for
10,000,000 shares of its common stock owned by Osprey. Ms. Marchessault
abstained from the Board of Directors vote concerning this exchange of shares.
Rainwire's officers and directors have ownership interests in Oasis.
Walter H. Elliott, a former officer and director of Rainwire, owns less than
1.0% of the outstanding common stock of Oasis, and Lyne Marchessault, our
Secretary and a director, owns approximately 6.0% of the outstanding common
stock of Oasis. Additionally, Ronald A. Potts, who was appointed to the Board of
Directors and as Chief Executive Officer and President in connection with the
Oasis Share Exchange, owns 11.6% of the outstanding common stock of Oasis.
Furthermore, Peggy Evans, our newly appointed Chief Financial Officer, owns
approximately 4.2% of the outstanding common stock of Oasis and John Hill and
Mike McLaughlin, newly appointed directors each own less than 1.0% of the
outstanding common stock of Oasis.
Additionally, in 2001, Oasis has loaned Rainwire approximately $43,000
to date. As of December 31, 2000, Rainwire had loaned Oasis $12,700.
As a result of the change in control of Rainwire in connection with the
Oasis Share Exchange Agreement, Rainwire has moved its business address to the
offices of Oasis. Until the closing of the Oasis Share Exchange, Oasis has
agreed to allow Rainwire to use Oasis' offices on a rent free basis, although
the parties have not entered into a formal agreement.
XIII. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits
3.1 Amended and Restated Certificate of Incorporation *
3.2 Amended and Restated Bylaws *
3.3 Certificate of Designation of Series A, B, and C Preferred Stock *
3.4 Certificate of Designation of Series D Convertible Preferred Stock
4.1 Rainwire Partners, Inc. 2000 Stock Option Plan
10.1 Plan and Agreement to Exchange Stock by and among Rainwire Partners,
Inc., Oasis Group, Inc. and the Shareholders of Oasis Group, Inc.
16.1 Letter on change in certifying accountant
23.1 Consent of Tauber & Balser, P.C.
* Incorporated by reference, filed as an Exhibit to report on
Form 10-KSB for 1998, filed on January 28, 2000 (SEC File No. 0-23892).
17
B. Reports on Form 8-K
During the fourth quarter of 2000, the Registrant filed no reports on
Form 8-K.
On October 17, 2001, the Registrant filed a Form 8-K report that
reported that the Registrant had abandoned its Information Statement on Schedule
14C filed with the Commission on March 5, 2001.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: 10/26/01 /s/ Ronald A. Potts
-------- --------------------------------------------
Chairman of the Board, President,
Chief Executive Officer
Date: 10/26/01 /s/ Peggy Evans
-------- --------------------------------------------
Chief Financial and Accounting Officer
Date: 10/26/01 /s/ Lyne Marchessault
-------- --------------------------------------------
Secretary and Director
Date: 10/26/01 /s/ Mike McLaughlin
-------- --------------------------------------------
Director
Date: 10/26/01 /s/ John Hill
-------- --------------------------------------------
Director
19
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT F-1
BALANCE SHEET F-2
STATEMENTS OF OPERATIONS F-3
STATEMENTS OF STOCKHOLDERS' EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
RAINWIRE PARTNERS, INC.
ATLANTA, GEORGIA
We have audited the accompanying consolidated balance sheet of Rainwire
Partners, Inc. ( a Delaware corporation) and subsidiary as of December 31, 2000,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The consolidated
financial statements of Rainwire Partners, Inc. as of December 31, 1999, were
audited by other auditors whose report dated March 29, 2000, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Rainwire Partners,
Inc. as of December 31, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with auditing standards generally
accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered substantial
recurring losses and has a deficit working capital and equity as of December 31,
2000. It has also discontinued its entire business operations and is dependent
upon its shareholders for all cash flow requirements. The Company needs the
ability to develop additional sources of capital, and/or achieve profitable
operations through a merger or acquisition. These conditions raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Braverman & Company, P.C.
Phoenix, Arizona
October 14, 2001
F-1
RAINWIRE PARTNERS, INC
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000
ASSETS OF DISCONTINUED BUSINESS
CURRENT ASSETS
Cash $ 2,043
Accounts receivable, net of allowance
for doubtful accounts of $29,575 21,962
Related party advance, unsecured 12,700
------------
TOTAL CURRENT ASSETS 36,705
------------
OTHER ASSETS
Deposits 6,257
------------
------------
$ 42,962
============
LIABILITIES OF DISCONTINUED BUSINESS
CURRENT LIABILITIES
Shareholder loans $ 60,000
Accounts payable 469,517
Accrued business disposal costs and expenses 513,016
Other accrued liabilities 110,361
------------
TOTAL CURRENT LIABILITIES 1,152,894
------------
REDEEMABLE PREFERRED STOCK
Par value $.01; authorized 2,500,000 shares
outstanding, 24,959 shares 52,913
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value; authorized, 20,000,000 shares
outstanding, 7,609,886 shares 7,610
Paid-in capital 1,321,472
Deficit accumulated since inception (2,491,927)
------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,162,845)
------------
$ 42,962
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-2
RAINWIRE PARTNERS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
July 21, 1999
Year Ended (Inception) to
December 31, December 31,
2000 1999
------------ --------------
(Restated)
REVENUES $ -- $ --
OPERATING EXPENSES -- --
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS -- --
DISCONTINUED OPERATIONS
Loss from operations of discontinued business (1,494,708) (419,028)
Provision for loss on disposal of the business (578,191)
------------ ------------
NET LOSS $ (2,072,899) $ (419,028)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 6,198,828 5,555,064
============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE
Income (Loss) from operations $ -- $ --
Loss from discontinued operations (0.24) (0.08)
------------ ------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.24) $ (0.08)
============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-3
RAINWIRE PARTNERS INC.
CONSOLIDATED STATEMENT OF CHANGES IS SHAREHOLDERS' EQUITY
COMMON STOCK
----------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ------ ------------ ------------ ------------
BALANCE, JULY 21, 1999 -- $ -- $ -- $ -- $ --
Issuance of stock July 22, 1999, for:
Cash 1,388,766 1,389 148,611 150,000
Services 3,610,792 3,611 386,389 390,000
Acquisition of subsidiary 555,506 556 74,374 74,930
Net (loss) for the period (419,028) (419,028)
--------- ------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 1999 (RESTATED) 5,555,064 5,555 609,375 (419,028) 195,902
Recapitalization, July 26, 2000 554,822 555 (188,329) (187,774)
Issuance of stock for:
Services at $.11 per share 480,000 480 52,320 52,800
Reduction in note payable at $1.25 per share 120,000 120 149,880 150,000
Cash at $.78 per share 900,000 900 699,100 700,000
Dividends accrued on redeemable preferred
stock (874) (874)
Net (loss) for the year (2,072,899) (2,072,899)
--------- ------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2000 7,609,886 $7,610 $ 1,321,472 $ (2,491,927) $ (1,162,845)
========= ====== ============ ============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-4
RAINWIRE PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING
DECEMBER 31, 2000 AND 1999
2000 1999
------------ ----------
(RESTATED)
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing Operations $ -- $ --
Discontinued Operations
Adjustments to reconcile net loss to net cash flows
used by discontinued activities
Loss from operations of discontinued business (1,494,708) (419,028)
Loss on disposal of the business (578,191)
Stock issued for services 52,880 390,000
Depreciation and amortization 50,089 20,084
Goodwill impairment loss 460,960
Loss on disposal of equipment 11,037
Changes in current assets and liabilities
Accounts receivable (net of i20 purchase for 1999) 199,235 (175,480)
Other current assets 20,000
Accounts payable and accrued expenses (net of i20
purchase for 1999) 464,392 34,556
Provision for loss on disposal of the business 578,191
Net cash flows used by discontinued activities (236,115) (149,868)
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (40,915) (6,358)
Payment for acquisition of subsidiary, net (221,480)
Cash received in recapitalization of the company 15,464
Increase in other assets 1,315
------------ ----------
Net cash flows from (to) investing activities (24,136) (227,838)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 60,000 250,000
Repayment of notes payable (500,000)
Proceeds from issuance of common stock 700,000 130,000
------------ ----------
Net cash flows from financing activities 260,000 380,000
------------ ----------
NET CHANGE IN CASH FLOWS FOR THE YEAR (251) 2,294
CASH, BEGINNING OF PERIOD 2,294 --
------------ ----------
CASH, END OF PERIOD $ 2,043 $ 2,294
============ ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Non-monetary net liabilities assumed in a recapitalization of
the Company on July 26, 2000
Fair value of equipment received $ 19,486
Liabilities assumed (222,724)
------------
Net non-monetary liabilities assumed (203,238)
Less cash received 15,464
------------
Total non-monetary net liabilities assumed $ (187,774)
============
Details of business acquisition
Fair value of assets acquired $ 636,428
Cash paid for the common stock (265,000)
Issuance of common stock (74,930)
Note payable (250,000)
----------
Liabilities assumed $ 46,498
==========
Due from stockholder for purchase of common stock $ 20,000
==========
Other
Accrued dividends on redeemable preferred stock $ 874
Common stock issued in settlement of note payable 150,000
============
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
Interest paid during the year $ 6,187 $ --
============ ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
F-5
RAINWIRE PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 1 -- THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Rainwire Partners, Inc., or RPID or the Company, (formerly
Envirometrics, Inc. or EVRM) was incorporated in Delaware in 1991. The Company
acquired all of the outstanding common stock of The Catapult Group, Inc.,
renamed Rainwire Partners, Inc. (RPIG), a Georgia corporation, on July 26, 2000,
in a qualifying reorganization under Section 368 (a)(1)(B) of the Internal
Revenue Code of 1986. Prior to the stock exchange, the Company's operations had
involved consulting services in environmental and occupational health matters in
addition to providing the services of an American Industrial Hygiene Association
and National Voluntary Laboratory Accreditation Program, principally in the
Charleston, South Carolina area, with sales throughout the United States. RPIG
was formed in July 1999, to provide internet consulting, systems development and
integration as well as marketing and communications solutions to Global 2000 and
middle-market companies. Its operations were discontinued in April 2000.
On December 31, 2000, management adopted a plan to dispose of the
entire business of the Company. Because the Company sustained a loss on the
discontinuation of its business as of December 31, 2000 as well as a loss on the
disposal of the business at that date, the results of operations for the year
2000 have been presented to conform to those results. The financial statements
for the prior year have been restated to conform to the current year's
presentation. The fiscal year end of the Company is December 31.
PRINCIPLES OF CONSOLIDATION
The Company's consolidated financial statements as of December 31, 2000
and 1999 include the financial statements of the Company and subsidiaries for
all periods presented. All significant intercompany accounts and transactions
have been eliminated.
FINANCIAL STATEMENT PRESENTATION
The historical cost basis of all assets and liabilities of RPIG and its
former and present consolidated operating results have been presented from July
21, 1999 (date of inception) to December 31, 2000. For accounting purposes, the
acquisition has been treated as a recapitalization of RPIG. RPIG is considered
the accounting acquirer, because it became the owner of 90% of the total shares
outstanding of the common stock of RPID, on a fully diluted basis. The
consolidated statements of operations included herein are those of RPIG and its
subsidiary i20, Inc. The former operating results of EVRM have been eliminated.
The consolidated balance sheet presented herein includes all assets and
liabilities of EVRM as of the date of recapitalization at fair value, as well as
RPIG and its subsidiary, i20, Inc. at historical cost.
F-6
The accompanying financial statements have given effect to a reverse
stock split of 10 to 1 on July 26, 2000, and the recapitalization mentioned
above, as if they had occurred at the inception of RPIG.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (GAAP) requires
management to make estimates and assumptions that affect the reported amounts
and the disclosure of contingent amounts in the Company's financial statements
and the accompanying notes. Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with the original
maturities of three months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, disclosures about
fair value of financial instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying value of the Company's
financial instruments, which include cash, shareholder advance and loans,
accounts payable and accruals, approximate fair values due to the short-term
maturities of such instruments.
GOODWILL
Goodwill was recorded in 1999 in connection with the acquisition of
i20, Inc. by RPIG. It was being amortized over a 10 year period. During late
2000 this asset became impaired and was written off as of December 31, 2000, due
to the discontinued operations of the business. Amortization expense of goodwill
for the years 2000 and 1999 was $25,143 and $16,762, respectively.
REVENUE RECOGNITION
Revenues were recorded as services were performed and costs were
recorded as incurred. The Company at each reporting date reviewed the status of
major contracts and immediately recorded losses in total, if any. Advance
billings and collections relating to future services, if any, were recorded as
deferred revenue and recognized when revenue was earned.
ADVERTISING EXPENSE
Advertising expense included the cost of sales brochures, print
advertising in trade publications, and trade shows. The cost of advertising was
expensed as incurred. Advertising expense for 2000 and 1999 was $93,268 and
$8,602, respectively.
F-7
INCOME TAXES
Income taxes are provided for using the liability method of accounting
in accordance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes." A deferred tax asset or liability is recorded for
all temporary difference between financial and tax reporting of which
depreciation is the most significant. Deferred tax expense (benefit) results
from the net change during the year of deferred tax assets and liabilities.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to more likely than not realized in future tax
returns. Tax law and rate changes are reflected in income in the period such
changes are enacted.
As of December 31, 1999, RPIG and its subsidiary had a deferred tax
asset of $168,000, principally due to the deferral of a deductible expense for
common stock issued for services. A valuation allowance equal to this amount was
also provided at that date, due to the uncertainty of its ultimate utilization,
which brought the resulting tax expense for 1999 to zero. As of December 31,
1999, the Company had a net operating loss carry-forward of approximately
$30,000, which would expire, if unused in 2019. EVRM had a deferred tax asset as
of the same date of $1,785,860, however, a valuation allowance was recorded for
an equivalent amount resulting in no tax benefit recorded since its inception.
The net operating loss carry-forwards for the Company on a consolidated basis
approximate $6,500,000 as of December 31, 2000 and will expire at various dates
through year 2020, if unutilized. Due to a more than 50% change in ownership of
the Company's outstanding common stock for the latest testing period ended July
26, 2000, a Code Section 382 limitation on use of the loss carry-forwards became
substantially limited. In addition, it is not probable that any of the limited
losses can be utilized, since the Company contemplates that the proposed stock
exchange referred to in the subsequent events footnote will not only result in a
further limitation of the carry-forward losses, but will cause a loss of
continuity of business which is required under that Code Section of the Internal
Revenue Service in order to maintain loss carry-forwards of an acquired company.
For the year ended December 31, 2000, the increase in the deferred tax
asset due for the year 2000 was approximately $800,000. This amount was offset
completely by a valuation allowance of equal amount, since management cannot
determine, at the present time, that it is more likely than not that such
benefit will be utilized in future periods.
LOSS PER SHARE
Net loss per share is provided in accordance with Statement of
Financial Accounting Standards No. 128 (SFAS No. 128) "Earnings Per Share."
Basic loss per share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding during
the period after giving effect to the results of the reverse stock split
referred to above.
GOING CONCERN
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company's
ability to continue in existence is dependent upon its
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ability to develop additional sources of capital, and/or achieve profitable
operations. The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Management's plan is to
acquire a potentially profitable company, such as contemplated by the proposed
stock exchange arrangement referred to in the subsequent events footnote, having
the ability to generate additional cash flows from either the sale of securities
or through operations to sustain the Company's future existence.
NOTE 2 -- REDEEMABLE PREFERRED STOCK
The Company had outstanding as of December 31, 1999, Series A, B and C
preferred stock with a $2 stated value. All shares issued may be "put" to the
Company for a cash price. All shares are convertible in common shares at the
rate of 3 for 1 for Series A, and the balance, 5 for 1. The Series A shares were
issued in 1997 for cash, the remaining shares were issued in 1998 to certain
officers and related parties in exchange for the conversion of outstanding debt
of the Company. In April 2000 all of the Series A and B preferred shares, and
2/3 of the Series C preferred shares were converted to common stock of the
Company, including accrued dividends. Total common shares issued to effect the
conversion was 167,605, valued at $670,420, or $4.00 per share. The conversion
resulted in a gain of $56,000, since the Series A shares were converted at a
value of $.80 less per share than the $2 value previously recorded for those
70,000 preferred shares. As of December 31, 2000, there were 24,959 Series C
preferred shares outstanding valued at $52,913 including accretion of $2,995.
NOTE 3 -- OPTIONS AND WARRANTS
In 1994, the Company adopted a stock option plan under which incentive
and non-qualifying options to purchase the Company's common stock could be
granted to employees. The Company applied Accounting Principles Board Opinion
No. 25 whereby no compensation cost related to stock options is recognized as an
expense until the time the employee is subject to income taxation. Had
compensation cost been determined pursuant to SFAS No. 123 "Accounting for
Stock-Based Compensation" been recorded, the effect on net loss and loss per
share would not have been material.
As of December 31, 2000 the Company had outstanding from 1999, 81,000
options, including 30,000 options with an exercise price of $1.00 per share,
post split. The remaining options have exercise prices in excess of $23.80 per
share, post split. An additional number of options were granted during 2000 at
$1.00 per share, post-split, however, that information is not presently
available, but all options would expire within one-year from the date of
issuance, in the opinion of legal counsel. There were no warrants outstanding at
December 31, 2000.
NOTE 4 -- COMMITMENTS AND CONTINGENCIES
LEGAL ACTIONS
The Company is involved with several legal actions, principally as
defendant. These actions involve outstanding liabilities of the Company
including those of subsidiaries. All known outstanding liabilities, including
anticipated legal fees and costs have been recorded in the accompanying
financial statements. Following are two such actions.
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Azimuth Laboratory, Inc., a subsidiary of EVRM generated hazardous
waste during the time of its operations which ceased in April 2000. According to
a former landlord, Azimuth was responsible for a hazardous waste cleanup on the
leased premises, and he is seeking recovery of approximately $130,000, including
the cleanup and remaining payments due under the terms of the lease agreement
which is to expire in December 2001. A motion for summary judgment is expected
to be heard by the end of 2001. Only the remaining lease obligation of $66,271
has been recorded as of December 31, 2000.
As of December 31, 2000 a judgment against the Company was obtained by
the holder of the remaining Series C redeemable preferred stock for $21,666
relating to the failure by the Company to redeem 8,333 of those shares and to
pay dividends when due. Substantially all of that amount was recorded as of
December 31, 2000.
DISPOSITION OF CORPORATE PROPERTY
Approximately 20 employees of the Company were still employed when the
decision was made to discontinue the operations of the Company on December 31,
2000. Substantially all employees either resigned or were terminated by August
31, 2001. No payroll tax reports have been filed with taxing authorities for any
wages paid in 2001, although related payroll taxes were paid. It is probable
that all compensation has not been reported for equipment, vehicles and other
corporate property obtained by employees when the Company ceased its operations
in 2001. Accordingly, the Company and/or its employees may have some liability
for payroll and/or sales taxes in connection with this matter.
SBA LOAN
Azimuth Laboratories, Inc. sold certain assets to a party in April 2000
who assumed the remaining balance of an underlying loan from the Small Business
Administration. However, the Company's subsidiary was not relieved of liability
on the obligation, and remains contingently liable for its balance until
paid-off in approximately 3 years. The subsidiary was owed approximately $30,000
by the purchaser, however, that obligation has not been paid to the Company, and
some or all of that amount is being held in escrow pending either the payoff of
the SBA loan, or when the purchaser is successful in becoming the only principle
on the note. The outstanding balance of the SBA loan less the amount owed the
Company at December 31, 2000 approximates $50,000, which is included in accrued
liabilities as of December 31, 2000.
NOTE 5 -- OPERATING LEASES
Included in the accrual for estimated loss on disposal of the business
are future rentals on lease obligations totaling approximately $300,000, of
which $ 228,734 relates to the balance owing on a 5 year lease expiring in 2005,
which had annual lease payments of approximately $50,000 per year. The Company
is seeking to mitigate the outstanding lease liability as the landlord had
seized and/or sold some of the equipment in partial satisfaction of the past due
lease rentals.
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NOTE 6 -- CONSULTING AGREEMENTS
In July 2000 RPIG formalized with two individuals, consulting
agreements which provided for their continuing consulting services for a term of
two years from June 1999. They received a total of 650,000 shares of RPID common
stock valued at $.10 per share, which was exchanged in the aforementioned merger
for the Company's common stock. The agreements terminated in July 2001 without
further compensation.
In November 2000 the Company entered into an agreement with a
shareholder of the Company for consulting services to be provided for a period
of one year from November 10, 2000 for a total consideration of 480,000 shares
of the Company's common stock valued by the Board of Directors at $.11 per
share. The shares were issued in November 2000. The shareholder had an existing
agreement which was to expire in June 2001, however, expanded services were
negotiated and the current agreement was adopted to provide for those services
and an extension of time.
NOTE 7 -- EMPLOYMENT AGREEMENTS
The Company entered into two employment agreements covering the
services of its Chief Executive Officer and a Vice President for 3 years from
July 26, 2000, for total minimum annual compensation of $102,000 and $100,000,
respectively, in addition to certain other benefits. As a result of the
discontinued operations, these employees remaining as of December 31, 2000
resigned as of August 31, 2001. No accrual has been provided for any
compensation after February 2001, as current management believes none is owed.
NOTE 8 -- DISCONTINUED OPERATIONS
On December 31, 2000, management adopted a plan to discontinue the
operations of the Company and to liquidate its assets. Accordingly, the
accompanying financial statements for the year 2000 have given effect to this
date as the measurement date, since a loss was sustained for both discontinued
operations and disposal of the business. The disposal loss was provided for all
estimated costs and expenses to be incurred during the post phase-out period.
The financial statements for the prior year have been restated to conform with
the current year's presentation.
NOTE 9- SUBSEQUENT EVENTS
ISSUANCE OF COMMON STOCK
On August 29, 2001, the Company issued in exchange for the $60,000
shareholder loans outstanding as of December 31, 2000, 12,000,000 shares of the
Company's common stock, which is more than 50% of the total outstanding common
stock of the Company after issuance. In addition, it issued 100,000 shares of
common stock to an attorney in exchange for $2,500 of legal services he provided
for the Company.
PROPOSED EXCHANGE OF STOCK
On August 29, 2001, the Company entered into a Plan and Agreement to
exchange stock with Oasis Group, Inc. (Oasis), pursuant to Section 368(a)(1)(B)
of the Internal Revenue Code.
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Oasis is principally owned and controlled by a shareholder of the Company who
became the Company's President and Chief Executive Officer on August 30, 2001.
The exchange is to be transacted after certain conditions precedent have been
accomplished, at which time a formal recapitalization of Oasis is contemplated.
In 2001, Oasis loaned approximately $43,000 to the Company. As of December 31,
2000, Oasis was advanced $12,700.
At the time the definitive closing is completed, all of the outstanding
common stock of Oasis will be acquired by the Company. Oasis will be considered
the accounting acquirer since it will own the majority of the outstanding shares
of the Company. For accounting purposes the historic transactions of Oasis will
replace those of the Company for presentation of results of operations and cash
flows, whereas Oasis will be consolidated with the Company for presentation of
its consolidated financial position. Prior to closing, the Company plans to
increase its authorized common stock and reverse split its present outstanding
shares.
OTHER
As of the date of this report, the Company's filings with the
Securities and Exchange Commission are not current which affected its ability to
provide quotations on the OTC Bulletin Board ("OTCBB").
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