U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FORM TO .
Commission file number: 0-6292
RAIN FOREST - MOOSE, LTD.
(Name of small business issuer in its charter)
Oklahoma 73-1491593
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4031 B Delmon Lane ,Springdale, Arkansas 72762-2179
(Address of principal executive offices) (Zip Code)
(501) 756-8299
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and has
been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
Applicable only to corporate issuers
The number of outstanding of Common Stock as of May 10, 1996, was 7,618,702.
Total Sequentially Numbered Pages: 20
Index to Exhibits on Page: 17
1
<PAGE>
RAIN FOREST - MOOSE, LTD.
Index to Quarterly Report on Form 10-QSB
Part I - FINANCIAL INFORMATION Page
Item 1. Financial Statements.......................................... 3
Consolidated Balance Sheets
As of March 31, 1996, and December 31, 1995.................... 3
Consolidated Statements of Income
For the Three Months Ended March 31, 1996 and 1995............. 4
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995............. 5
Notes to Consolidated Financial Statements....................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation..... 9
Part II - OTHER INFORMATION
Item 1. Legal Proceedings............................................. 11
Item 2. Changes in Securities......................................... 11
Item 3. Defaults Upon Senior Securities............................... 13
Item 4. Submission of Matters to a Vote of Security Holders........... 13
Item 5. Other Information............................................. 13
Item 6. Exhibits and Reports on Form 8-K.............................. 14
Signatures.................................................................. 17
Index to Exhibits........................................................... 18
2
<PAGE>
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements
RAIN FOREST-MOOSE, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1995 and March 31, 1996
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
---- ----
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 3,008 $ 33,487
Accounts receivable............................................... 50,227 90,081
Employee receivables.............................................. 1,972 1,972
Prepaid expenses.................................................. 822 164
Inventory ........................................................ 154,898 136,136
------- -------
Total current assets...................................... 210,927 261,840
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $11,158 in 1995 and $14,550 in 1996............... 57,525 55,185
OTHER ASSETS:
Organization costs, net of accumulated amortization
of $675 in 1995 and $ 900 in 1996.............................. 3,825 3,600
----- -----
Total assets..................................................... $ 272,277 $ 320,625
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft.................................................... $ 2,151 $ -
Accounts payable.................................................. 15,603 5,148
Payroll taxes payable............................................. 32,325 38,954
Accrued interest payable.......................................... 31 312
Accrued income taxes.............................................. 1,313 23,836
Current portion of long-term debt................................. 64,404 54,067
------ ------
Total current liabilities............................................. $ 115,827 $ 122,317
LONG-TERM DEBT, net of current portion................................ 10,477 10,915
STOCKHOLDERS' EQUITY:
Common Stock, $ 0.001 par value, 30,000,000 shares
authorized, 7,618,702 shares issued and outstanding........... 5 7,619
Convertible Preferred Stock, $0.001 par value, 5,000,000
shares authorized, 3,000,000 shares issued and outstanding,
one share convertible for three common shares................. - 3,000
Paid-in capital................................................... 110,495 99,881
Retained earnings................................................. 35,473 76,893
------ ------
Total stockholders' equity.................................... 145,973 187,393
------- -------
Total liabilities and stockholders' equity.................... $ 272,277 $ 320,625
========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
RAIN FOREST-MOOSE, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1995 and 1996
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
------------- -----------
<S> <C> <C>
SALES INCOME..................................... $ 202,507 $ 92,474
COST OF SALES:
Materials.................................... 28,694 21,227
Warehouse labor.............................. 20,759 4,272
Freight...................................... 961 101
------------- -----------
Total cost of sales...................... 50,414 25,600
------------- -----------
Gross profit......................... 152,093 66,874
OPERATING EXPENSES............................... 85,069 52,758
------------- -----------
Income from operations....................... 67,024 14,116
Interest expense................................. (1,768) (624)
------------- -----------
Income before income taxes....................... 65,256 13,492
INCOME TAX EXPENSE............................... (23,836) -
------------- -----------
Net income................................... $ 41,420 $ 13,492
============= ===========
Weighted average common shares and common
share equivalents outstanding................ 16,618,702 16,618,702
============= ===========
Net income per common share and common
share equivalent............................. $ .002 NIL
============= ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
RAIN FOREST-MOOSE, LTD
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................................... $ 41,420 $ 13,492
Adjustments to reconcile net loss to net cash provided
by operating activities-
Depreciation............................................................ 3,392 2,433
Amortization............................................................ 225 -
Impact of changes in assets:
Accounts receivable................................................. (39,854) (6,161)
Prepaid expenses.................................................... 658 -
Inventory........................................................... 18,762 (28,524)
Impact of changes in liabilities:
Bank overdraft...................................................... (2,151) (429)
Accounts payable.................................................... (10,455) (5,489)
Payroll taxes payable............................................... 6,629 2,785
Sales taxes payable................................................. (31) -
Accrued interest payable............................................ (1,001) (711)
Accrued income taxes................................................ 23,836 -
-------- -------
Net cash provided (used) by operating activities................ 41,430 (22,604)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment....................................................... (1,052) (18,171)
-------- --------
Net cash used in investing activities........................... (1,052) (18,171)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
New borrowings-
Long-term............................................................... 2,500 11,568
Short-term.............................................................. 7,500 43,665
Debt reduction-
Long-term............................................................... (19,899) (1,722)
Short-term.............................................................. (-) (6,892)
-------- -------
Net cash provided (used) by financing activities................ (9,899) 46,619
-------- -------
INCREASE IN CASH AND CASH EQUIVALENTS........................................... 30,479 5,844
CASH AND CASH EQUIVALENTS, beginning of period.................................. 3,008 -
-------- -------
CASH AND CASH EQUIVALENTS, end of period........................................ $ 33,487 $ 5,844
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for interest.................................... $ 1,768 $ 624
========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
RAIN FOREST-MOOSE, LTD. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1996 and 1995
1. GENERAL:
Rain Forest - Moose, Ltd., a Nevada corporation (the "Company""), through its
wholly-owned subsidiary, Rain Forest - Moose, Ltd., an Arkansas corporation
("RFM Arkansas"), develops, manufactures, markets and distributes absorbent
products, principally Peat Moose Absorbent, and provides disposal services for
end users of such absorbent products and is licensed to incinerate the absorbent
products. The absorbent products are for both industrial and home use.
Effective March 7, 1996, pursuant to an Agreement and Plan of Merger (the
"Agreement"), dated March 5, 1996, RFM Arkansas merged (the "Merger") with and
into RFM Acquisition Corporation of Oklahoma, Inc., a wholly-owned subsidiary of
the Company. Pursuant to the Agreement, the shareholders of RFM Arkansas
exchanged the issued and outstanding capital stock of RFM Arkansas for 3,012,468
shares of Common Stock and 3,000,000 shares of Series I Convertible Preferred
Stock of the Company and the officers and directors of RFM Arkansas became the
officers and directors of the Company. The Merger was accounted for as a reverse
acquisition of the Company by RFM Arkansas under the purchase method of
accounting.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements of Rain Forest Moose, Ltd. (the "Company") at March 31,
1996, have been prepared on the accrual basis of accounting. Using this method,
revenue and expenses are recognized when occurred.
The financial statements included in this report have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and include all adjustments which are, in the
opinion of management, necessary for a fair presentation. These financial
statements have not been audited by an independent accountant.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations for
interim reporting. The Company believes that the disclosures are adequate.
However, these financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the annual report on
form 10-KSB filed by the Company with the Securities and Exchange Commission on
March 8, 1996. The financial data for the interim periods presented may not
necessarily reflect the results to be expected for the full year.
INVENTORY
---------
Inventory is carried at the lower of cost or market and consists of raw
materials and ready to sell products.
PROPERTY AND EQUIPMENT
----------------------
Property and Equipment are recorded at acquisition cost. Depreciation is
computed using accelerated methods by charging against earnings amounts
sufficient to amortize the cost of the related assets over their estimated
useful lives.
6
<PAGE>
INCOME TAXES
------------
For income tax reporting and financial statement reporting at March 31, 1996,
the Company is using depreciation methods that are the same and therefore there
is no accrual for deferred income taxes at this time. However, because of
various elections available at the time of filing the income tax returns, there
may be future differences between income tax depreciation expense and financial
statement depreciation expense giving rise to accrual of deferred income taxes.
No allowance has been made for income tax expense at March 31, 1995 because the
company was a recognized subchapter S corporation and as such the income from
the corporation is passed through to the stockholders and was taxed on their
personal returns.
3. PROPERTY, PLANT AND EQUIPMENT:
All assets are recorded at original cost. Depreciation is calculated using
accelerated methods, lives are five years for autos and office equipment, seven
years for manufacturing equipment and furniture, and 10 years for Leasehold
Improvements.
The autos are pledged as collateral to Springdale Bank and Trust of Springdale,
Arkansas.
4. LONG-TERM DEBT:
Long-term debt consists of the following at March 31, 1995 and 1996:
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
---- ----
<S> <C> <C>
Anchor Financial, 21% interest, $354.39 per month
Maturity Date: 6-30-1997
Secured by computer printers and a copier.......................................$ 4,681 $ 9,029
Springdale Bank & Trust, 10.25%, $ 534.58 per month
Maturity Date: 5-10-98
Secured by 90 GMC truck......................................................... 14,954 -
Springdale Bank & Trust, 10.25%, Monthly Int. Only Payments
Maturity Date 4-26-96
Secured by inventory and accounts receivable.................................... 30,000 18,018
U. S. Equipment, Inc., 7.5%, Payable on Demand
Maturity Date Payable on Demand
Unsecured....................................................................... 11,063 17,362
Note Payable Dan Pilkington, 7.5%, Payable on Demand
Maturity Date Payable on Demand
Unsecured....................................................................... 4,284 51,743
-------- -------
Current Portion of long-term debt...............................................(54,067) (89,720)
------- -------
Long-term debt, less current portion............................................$10,915 $ 6,432
======= =======
</TABLE>
The following is a summary of principal maturities of long term debt:
March 31, 1996.................. $54,067
March 31, 1997.................. 6,746
March 31,1998................... 4,169
7
<PAGE>
5. RELATED PARTY TRANSACTIONS:
U. S. Equipment, Inc. (Note 2) is 100 % owned by Monica Pilkington who is the
wife of Dan Pilkington the president of Rain Forest-Moose, Ltd. Rain Forest
Moose, Ltd owed to U. S. Equipment, Inc. $ 11,063 and $ 17,362 on March 31, 1996
and 1995, respectively.
Dan Pilkington is the president of Rain Forest-Moose, Ltd. (Note 2). Rain Forest
Moose, Ltd owed $ 4,283 and $ 51,743 to Dan Pilkington on March 31, 1996 and
1995, respectively.
6. EARNINGS PER COMMON SHARE:
Earnings per common share were computed using the weighted average number of
common shares outstanding after adding the dilutive effect of the conversion of
the preferred stock.
SUPPLEMENTAL INFORMATION
March 31, March 31,
1996 1995
Operating expenses:
Accounting..........................$ 2,150 $ 208
Advertising......................... - 2,855
Amortization........................ 225 -
Auto and truck...................... 3,031 7,667
Bank charges........................ 50 328
Credit card fees.................... 35 -
Contributions....................... - 1,000
Depreciation........................ 3,392 2,433
Dues and subscriptions.............. - 313
Entertainment....................... - 50
Equipment rental.................... - 537
Insurance........................... 2,601 1,793
Management expense.................. 92 135
Miscellaneous....................... 108 175
Office expense...................... 4,596 478
Office salaries..................... 20,046 7,164
Payroll tax expense................. 3,066 875
Postage............................. 1,664 50
Rent................................ 6,621 8,283
Repairs............................. 150 100
Sales commission.................... 3,210 9,595
Supplies............................ 649 825
Taxes and licenses.................. 85 894
Telephone........................... 9,983 2,815
Travel.............................. 22,556 3,126
Utilities........................... 759 1,059
------- -------
$85,069 $52,758
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Report.
Rendezvous Trails of America, Inc. (formerly Holiday Resorts International,
Inc.) ("RTA"), the former parent of Rain Forest, was incorporated in April 1970.
Since 1986, RTA became inactive and did not conduct any operations or activities
through 1995 and, as of December 31, 1995, did not have any assets. Pursuant to
an Agreement and Plan of Merger, dated February 23, 1996, RTA merged with and
into Rain Forest as the surviving corporation. The merger of RTA with and into
Rain Forest effectively changed the state of domicile of RTA to Nevada as a
result of Rain Forest being the surviving corporation and was accounted for as a
reorganization of entities under common control which was recorded at historical
cost. Rain Forest - Moose, Ltd., an Arkansas corporation ("RFM Arkansas"), was
formed on March 15, 1994. Pursuant to a Plan of Reorganization and Agreement of
Merger, dated March 5, 1996, RFM Arkansas merged with a wholly-owned subsidiary
of the Company, and as the surviving corporation, RFM Arkansas became a
wholly-owned subsidiary of the Company which was accounted for as a reverse
acquisition of the Company by RFM Arkansas under the purchase method of
accounting (the "RFM Arkansas Acquisition"). Therefore, the following discussion
and analysis of results of operations discussed below are only those of RFM
Arkansas prior to the RFM Arkansas Acquisition.
Results of Operations
---------------------
The following table sets forth selected results of operations for (i) the
period of March 15, 1994, through December 31, 1994, and the fiscal year ended
December 31, 1995, which are derived from the audited financial statements of
the Company, and (ii) the three month periods ended March 31, 1995 and 1996,
which are derived from the unaudited financial statements of the Company.
<TABLE>
<CAPTION>
For the Period
March 15, 1994, For the Fiscal
(Inception) Year Ended
December 31, 1994 December 31, 1995 March 31, 1995 March 31, 1996
Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales income...................$ 97,945 100.0 % $630,194 100.0 % $ 92,474 100.0% $202,507 100.0%
--------- ------ -------- ------- ------- ------ -------- -----
Cost of sales:
Materials.................... 16,112 16.5 % 137,232 21.8 % 21,227 23.0% 28,694 14.2%
Warehouse labor.............. 15,579 15.9 % 105,645 16.8 % 4,272 4.6% 20,759 10.2%
Freight...................... 763 .8 % 2,091 .3 % 101 .1% 961 .5%
--------- ------- -------- ------- -------- ------ -------- ------
Total Cost of Sales........ 32,454 33.2 % 244,968 38.9 % 25,600 27.7% 50,414 24.9%
--------- ------- -------- ------- -------- ------ -------- ------
Gross profit................... 65,491 66.9 % 385,226 61.1 % 66,874 72.3% 152,093 75.1%
--------- ------- -------- ------- -------- ------ -------- ------
Operating expenses............. 79,178 80.8 % 318,069 50.5 % 52,758 57.0% 85,069 42.0%
--------- ------- -------- ------- -------- ------ -------- ------
Income or (loss) from
operations..................... (13,687) (14.0)% 67,157 10.6 % 14,116 15.3% 67,024 33.1%
--------- ------- -------- ------- -------- ------ -------- ------
Other income and (expense):
Interest income.............. - - % 120 - % - - % - - %
Interest expense............. (6,665) 6.8 % (9,365) 1.5 % (624) .7% (1,768) .9%
Penalties.................... - - % (2,087) .3 % - - % - - %
--------- ------- -------- ------- -------- ------ -------- ------
Total other income
and (expense)........... (6,665) 6.8 % (11,332) 1.8 % (624) .7% (1,768) .9%
--------- ------- -------- ------- --------- ------ -------- ------
Income before income taxes..... (20,352) (20.8)% 55,825 8.8 % 13,492 14.6% 65,256 32.2%
Income tax expense............. - - % - - % - - % (23,836) 11.8%
--------- ------- -------- ------- -------- ------ -------- ------
Net Income or (loss)...........$(20,352) (20.8)% $ 55,825 8.8 % $ 13,492 14.6% $ 41,420 20.4%
========= ======= ======== ======= ======== ====== ======== ======
</TABLE>
9
<PAGE>
Comparison of the three months ended March 31, 1995 and 1996
Sales income increased $110,220 to $202,507 in the three months ended March
31, 1996 (the "1996 Interim Period") from $92,474 for the three months ended
March 31, 1995 (the "1995 Interim Period"), an increase of 119 percent. The
increase in revenues was due to an increase in the cubic foot volume of sales of
Peat Moose Absorbent products during the 1996 Interim Period as compared to the
1995 Interim Period. The increase in sales volume was attributable to an
improved and growing distribution system and an increase in the demand for the
Company's products through additional marketing efforts with more focus on
industrial users within particular industries and businesses, especially the oil
and gas and transportation industries. Although the cubic foot volume of sales
increased significantly in the 1996 Interim Period, cost of sales increased
$24,814 from $25,600 in 1995 Interim Period to $50,414 in the 1996 Interim
Period, but decreased as a percent of sales income from 27.7 percent in the 1995
Interim Period to 24.9 in the 1996 Interim Period. The decrease as a percent of
sales income was attributable to a decrease in costs of materials as a percent
of sales from 23 percent in the 1995 Interim Period to 14.2 percent in the 1996
Interim Period, while warehouse labor and freight increased from 4.6 and .1
percent, respectively, during the 1995 Interim Period to 10.2 and .5 percent,
respectively, during the 1996 Interim Period. The decrease in cost of materials
was attributable to higher volume of purchasing, while the increase in warehouse
labor costs was attributable to an increase in the warehouse labor personnel
required to manage the increased sales volume. Gross profit increased $85,219
from $66,874 in the 1995 Interim Period to $152,093 in the 1996 Interim Period,
and as a percent of sales income increased from 72.3 percent in the 1995 Interim
Period to 75.1 percent in the 1996 Interim Period.
Operating expenses increased $32,311 from $52,758 in the 1995 Interim
Period to $85,069 in the 1996 Interim Period, an increase of 61.2 percent, but
decreased as a percent of sales income from 57 percent in the 1995 Interim
Period to 42 percent in the 1996 Interim Period. The increase in operating
expenses was principally attributable to increases in office expense, telephone
and travel expenses.
Income from operations increased to $67,024 in the 1996 Interim Period,
compared to $14,116 in the 1995 Interim Period, a 375 percent increase. Income
from operations was 33.1 percent of sales income in the 1996 Interim Period
compared to 15.3 percent in the 1995 Interim Period, which was principally due
to the increase in sales volume.
Net income before income taxes was $65,256 in the 1996 Interim Period
(which represented 32.2 percent of income from sales), compared to $13,492 in
the 1995 Interim Period (which represented 14.6 percent of income from sales).
Net income after income taxes was $41,420 in the 1996 Interim Period (which
represented 20.4 percent of income from sales), an increase of $27,928 (a 107
percent increase) from $13,492 in the 1995 Interim Period.
Quarterly Results of Operations
The Company's operations are affected by seasonal trends principally based
upon weather conditions affecting the oil and gas and transportation industries.
In the Company's experience, sales volume tends to be higher in the second,
third and fourth calendar quarters and lower in the first quarter. Because the
general and administrative expenses associated with maintaining and adding to
the Company's manufacturing work force are relatively fixed over the short term,
the Company's margins tend to increase in periods of higher sales volume and
decrease in periods of lower sales volume. These effects are not always apparent
because of the impact and timing of factors which are beyond the control of the
Company. Nevertheless, the Company's results of operations for a particular
calendar quarter may not be indicative of the results to be expected during
other quarters.
10
<PAGE>
Income Taxes
Prior to the RFM Arkansas Acquisition, RFM Arkansas, for federal and state
income tax purposes, was taxed as a pass-through entity, and income taxes were
not imposed at RFM Arkansas's level of taxation. Therefore, during the 1995
Interim Period no provision for income taxes was made.
Liquidity and Capital Resources
-------------------------------
Historically, the Company financed its growth from borrowings and
shareholder contributions. Net cash provided by operating activities totaled
$41,430 in the 1996 Interim Period, while net cash used by operating activities
totalled $22,604 in the 1995 Interim Period. As of March 31, 1996, the Company
had working capital of $139,523, compared to working capital of $95,100, at
December 31, 1995. In the event the Company's income from sales increase as
anticipated by management, the Company's working capital requirements will also
increase and such requirements may exceed the net cash provided by operating
activities which may require that cash be used in operating activities from
sources other than operations, including the available cash and cash equivalents
(which were $33,487 at March 31, 1996) and borrowings. The increase in cash used
in operations will principally be due to the timing differential between the
Company's payment for materials and services to its suppliers and employee work
force, and the time at which the Company receives payment from its customers.
RFM Arkansas has two separate notes payable to Springdale Bank & Trust
Company (the "Bank"), which are secured by certain a vehicle and inventory and
accounts receivable and bear interest at 10.25 percent per annum. One note
requires monthly principal and interest installment payments of $535 through May
1998 and the other note requires monthly interest payments and matured on April
26, 1996, respectively. At March 31, 1996, the outstanding principal balance of
these loans were $14,954 and $30,000, respectively. In addition, RFM Arkansas
has an equipment loan with Anchor Financial Corp. which is secured by office
equipment, bears interest at 21 percent per annum, and requires monthly
principal and interest installment payments of $354 through June 1997. The
outstanding principal amount of this loan at March 31, 1996, was $4,681. RFM
Arkansas also has two unsecured loans with U.S. Equipment & Services, Inc.
(which is wholly-owned by Monica Pilkington, an executive officer and the wife
of the President, a Director and major shareholder of the Company) and with Dan
Pilkington (the President, Director and major shareholder of the Company) each
of which bears interest at 7.5 percent per annum, which are due on demand. The
outstanding principal amounts of these loans were $11,063 and $4,284,
respectively, at March 31, 1996.
There can be no assurance that cash flows from operations of RFM Arkansas
will be sufficient to service its obligations under the various financing
arrangements. The Company's cash flows currently are totally dependent upon the
operations of RFM Arkansas, and such dependency may continue indefinitely.
RFM Arkansas and the Company do not currently have any significant capital
commitments. The Company anticipates that existing cash and cash equivalent
balances and short-term investments, and funds to be generated from future
operations will be sufficient to fund operations, and budgeted capital
expenditures through 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
Pursuant to an Agreement and Plan of Merger, dated February 23, 1996,
Rendezvous Trails of America, Inc. (formerly Holiday Resorts International,
Inc.) ("RTA"), the former parent of the Company, merged with and into the
Company as the surviving corporation. The merger of RTA with and into the
Company effectively changed the state of domicile of RTA to Nevada as a result
of the Company being the surviving corporation and was accounted for as a
reorganization of entities under common control which was recorded at historical
cost. Furthermore, on February 26, 1996, the Company split each share of its
outstanding Common Stock into two shares.
11
<PAGE>
Authorized Capital. The Articles of Incorporation of RTA authorized
3,000,000 shares of Common Stock. The Articles of Incorporation of the Company
authorize 30,000,000 shares of common stock. Each share of the Company's Common
Stock has a par value of $.001, compared to the Common Stock of RTA, which was
$.25 per share. The Articles of Incorporation of the Company also authorize a
class of 5,000,000 shares of Preferred Stock, $.001 par value. The Preferred
Stock may be issued from time to time in one or more series, and the Board of
Directors of the Company, without further approval of its shareholders, is
authorized to fix the relative rights, preferences, privileges and restrictions
applicable to each series of Preferred Stock. The Articles of Incorporation of
RTA did not authorize a class of preferred stock. Management of the Company
believes that having such a class of preferred stock will provide the Company
with greater flexibility in financing, acquisitions and other corporate
activities. While there are no current commitments or understandings, written or
oral, to issue any of such Preferred Stock, in the event of any issuance, the
holders of the Company's Common Stock will not have any preemptive or similar
rights to acquire any of such Preferred Stock.
Limitation of Liability of Directors and Officers. Under both Nevada and
Oklahoma corporate law, a corporation may provide in its articles or certificate
of incorporation that directors shall not be liable to the corporation or its
shareholders for monetary damages for breach of their fiduciary duty. In
addition, under Nevada corporate law, a corporation may provide in its articles
of incorporation that officers, as well as directors, shall not be liable to the
corporation or its shareholders for damages for breach of their fiduciary duty.
RTA had not amended its Articles of Incorporation to contain such a provision.
The Articles of Incorporation of the Company contains a provision limiting the
personal liability of directors and officers for damages to the fullest extent
permitted by Nevada corporate law.
Indemnification of Directors and Officers. The Articles of Incorporation of
the Company also differ from the Articles of Incorporation of RTA in that they
expressly provide that the Company shall indemnify its directors, officers,
employees and agents to the fullest extent permitted under Nevada law, while
Articles of Incorporation of RTA did not contain such a provision. Under
Oklahoma law, a corporation is permitted to indemnify its directors and
officers; however, RTA has neither amended its Articles of Incorporation to
contain such a provision, nor adopted bylaws to provide such indemnification,
under circumstances substantially similar to those provided for in the Articles
of Incorporation of the Company.
Material Differences between Nevada and Oklahoma Corporate Laws
---------------------------------------------------------------
The following is a discussion of material ways in which Oklahoma and Nevada
corporate laws differ.
Business Combinations with Substantial Shareholders. The Oklahoma General
Corporation Act and the Nevada General Corporation Law contain statutory
provisions which are intended to curb abusive takeovers of Oklahoma and Nevada
corporations (the "Anti-Takeover Provisions"). However, under Nevada General
Corporation Law, a Nevada corporation is permitted to provide in its articles of
incorporation (as the Articles of Incorporation of the Company provide) or
bylaws that the Anti-Takeover Provisions shall not apply to such Nevada
corporation. The Oklahoma General Corporation Act contains no similar provision.
The Anti-Takeover Provisions of the Oklahoma General Corporation Act prevent
certain business combinations of the Oklahoma corporation with interested
shareholders within three years after such shareholders become interested. In
general, an interested shareholder is one who beneficially owns 15 percent or
more of the voting stock of the Oklahoma corporation. This provision does
provide certain exceptions. For example, an interested shareholder could engage
in a business combination with the Oklahoma corporation if the board of
directors of the Oklahoma corporation, prior to the date the shareholder became
interested, approved the business combination or the transaction by which the
shareholder became interested. Also, an interested shareholder could engage in a
business combination with the Oklahoma corporation if the transaction in which
it became an interested shareholder resulted in it becoming the beneficial owner
of at least 85 percent of the voting stock of the corporation.
12
<PAGE>
Appraisal Rights. The Nevada General Corporation Law also differs from that
of the Oklahoma General Corporation Act in that, in the event an Oklahoma
corporation enters into an agreement to sell all or substantially all of its
assets, its shareholders have a right to dissent from the transaction and seek
appraisal rights for the fair value of their shares. Under Nevada law a
shareholder does not have a right to dissent and seek appraisal in the event the
corporation enters into an agreement to sell all or substantially all of its
assets.
Consideration for Stock. Under the Nevada General Business Corporation Law,
a corporation may issue its capital stock in return for cash, tangible or
intangible property, benefit to the corporation, promissory notes, past
services, or contracts for services to be performed having a value at least
equal to that of the stock, as established by the corporation's board of
directors. Under the Oklahoma General Corporation Act, a corporation may accept
as consideration for its stock a combination of cash, property or past services
in an amount not less than the par value of the shares being issued, and a
promissory note or other binding obligation executed by the subscriber for any
balance, the total of which must equal at least the value of the issued stock,
as determined by the board of directors.
Shareholder Action by Written Consent. Under the Oklahoma General
Corporation Act, unless otherwise provided in the certificate of incorporation,
action by the shareholders of the corporation may be taken without a meeting of
the shareholders by written consent so long as the corporation does not have
1,000 or more shareholders and the stock ownership represented by those
consenting in writing to the action amounts at least to the number of votes that
would have been necessary to approve such action at a meeting of the
shareholders. The Articles of Incorporation of Rendezvous Trails do not prohibit
action by written consent. Under the Nevada General Corporation Law,
shareholders of a corporation may act by written consent without regard to the
number of shareholders, unless otherwise provided in the certificate of
incorporation. The Articles of Incorporation of the Company do not prohibit
action by written consent.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant written consent dated February 23, 1996, the holders of 1,568,480
shares of Common Stock (representing 68 percent of the issued and outstanding
Common Stock) of Rendezvous Trails of America, Inc. ("RTA"), the former parent
of the Company, approved an Agreement and Plan of Merger, dated February 23,
1996, pursuant to which RTA merged with and into the Company as the surviving
corporation (the "Reincorporation Merger"). The Reincorporation Merger was
completed on March 5, 1996, and pursuant thereto RTA merged with and into the
Company effectively changed the state of domicile of RTA to Nevada as a result
of the Company being the surviving corporation. On March 20, 1996, the Company
filed with the Commission a report on Form 8-K with respect to the
Reincorporation Merger.
Item 5. Other Information
None.
13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 Agreement and Plan of Merger between Rendezvous Trails of America,
Inc. and Rain Forest - Moose, Ltd., dated February 23, 1996.*
2.2 Certificate and Articles of Merger of Rendezvous Trails of America,
Inc. with and into Rain Forest - Moose, Ltd.*
2.3 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996.**
2.4 Certificate of Merger of RFM Acquisition Corporation of Oklahoma, Inc.
with and into Rain Forest - Moose, Ltd.**
4.1 Agreement and Plan of Merger between Rendezvous Trails of America,
Inc. and Rain Forest - Moose, Ltd., dated February 23, 1996.*
4.2 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996**.
4.2 Certificate of the Powers Designation, Rights and Preferences for the
Series I Convertible Preferred Stock of Rain Forest - Moose, Ltd.,
dated March 5, 1996.**
4.3 Registration Rights Agreement between Rain Forest - Moose, Ltd. and
Dan Pilkington, dated March 5, 1996.**
10.1 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996.**
10.2 Registration Rights Agreement between Rain Forest - Moose, Ltd. and
Dan Pilkington, dated March 5, 1996.**
27 Financial Data Schedule.
------------
* Incorporated by reference to Form 8-K, dated March 5, 1996, filed with the
Commission on March 20, 1996.
** Incorporated by reference to Form 8-K, dated March 7, 1996, filed with the
Commission on March 22, 1996.
14
<PAGE>
(b) Reports on Form 8-K
On March 20, 1996, the Company file a report on Form 8-K, dated March 5,
1996, reporting the merger of Rendezvous Trails of America, Inc. with and into
the Company as the surviving corporation, and reported therein the following
items:
Item 2. Acquisition or Disposition of Assets
On March 22, 1996, the Company file a report on Form 8-K, dated March 7,
1996, reporting the merger of RFM Acquisition Corporation of Oklahoma, Inc. (a
wholly-owned corporation of the Company) with and into Rain Forest - Moose,
Ltd., an Arkansas corporation, as the surviving corporation, and reported
therein the following items:
Item 1. Changes in Control of Registrant
Item 2. Acquisition or Disposition of Assets
Item 7. Financial statements of businesses acquired
RAIN FOREST - MOOSE, LTD.
Independent Auditors Report
Balance Sheet, December 31, 1995 and 1994
Statements of Income and Retained Earnings for the Twelve Months
Ended December 31, 1995 and the Ten Months Ended December
31, 1994
Statements of Cash Flows for the Twelve Months Ended December 31,
1995 and the Ten Months Ended December 31, 1994
Notes to Financial Statements
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
OF RAIN FOREST-MOOSE, LTD.
Unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1995
Unaudited Pro Forma Consolidated State of Income for the Year
Ended December 31, 1995
Unaudited Pro Forma Consolidated State of Cash Flows for the Year
Ended December 31, 1995
Notes to Unaudited Pro Forma Consolidated Financial Statements
RENDEZVOUS TRAILS OF AMERICA, INC.
(Predecessor of Rain Forest - Moose, Ltd., a Nevada corporation)
Independent Auditors Report
Balance Sheet as of December 31, 1995
Notes to Balance Sheet
15
<PAGE>
SIGNATURES
In accordance with the Exchange Act, the Registrant caused this amended
report to be signed on its behalf by the undersigned, thereunto duly authorized.
RAIN FOREST - MOOSE, LTD.
(Registrant)
By: /S/DAN PILKINGTON
Dan Pilkington, President
Date: May 15,1996
16
<PAGE>
INDEX TO EXHIBITS
2.1 Agreement and Plan of Merger between Rendezvous Trails of America,
Inc. and Rain Forest - Moose, Ltd., dated February 23, 1996.*
2.2 Certificate and Articles of Merger of Rendezvous Trails of America,
Inc. with and into Rain Forest - Moose, Ltd.*
2.3 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996.**
2.4 Certificate of Merger of RFM Acquisition Corporation of Oklahoma, Inc.
with and into Rain Forest - Moose, Ltd.**
4.1 Agreement and Plan of Merger between Rendezvous Trails of America,
Inc. and Rain Forest - Moose, Ltd., dated February 23, 1996.*
4.2 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996**.
4.2 Certificate of the Powers Designation, Rights and Preferences for the
Series I Convertible Preferred Stock of Rain Forest - Moose, Ltd.,
dated March 5, 1996.**
4.3 Registration Rights Agreement between Rain Forest - Moose, Ltd. and
Dan Pilkington, dated March 5, 1996.**
10.1 Plan of Reorganization and Agreement of Merger between Rain Forest -
Moose, Ltd., a Nevada corporation, RFM Acquisition Corporation of
Oklahoma, Inc., an Oklahoma corporation, Rain Forest - Moose, Ltd., an
Arkansas corporation, Dan Pilkington, Jeff Martin, Stan Sisemore, Jim
Anderson and Bill Hooten, dated March 5, 1996.**
10.2 Registration Rights Agreement between Rain Forest - Moose, Ltd. and
Dan Pilkington, dated March 5, 1996.**
27 Financial Data Schedule
------------
* Incorporated by reference to Form 8-K, dated March 5, 1996, filed with the
Commission on March 20, 1996. ** Incorporated by reference to Form 8-K, dated
March 7, 1996, filed with the Commission on March 22, 1996.
17
<PAGE>
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