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, 1997.
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
------------ -----------
Commission file number: 0-6292
AAROW ENVIRONMENTAL GROUP, INC.
( Formerly RAIN FOREST - MOOSE, LTD.)
(Name of small business issuer in its charter)
Nevada 73-1491593
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5703 South Hewitt
Johnson, Arkansas 72741
(Address of principal executive offices) (Zip Code)
(501) 444-8688
(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 June 1, 1997, was 9,312,622.
1
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
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, 1997, and December 31, 1996................ 3
Consolidated Statements of Income
For the Three Months Ended March 31, 1997 and 1996......... 5
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996......... 6
Notes to Consolidated Financial Statements..................... 7
Item 2. Management's Discussion and Analysis or Plan of Operation...... 12
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 14
Item 2. Changes in Securities.......................................... 14
Item 3. Defaults Upon Senior Securities................................ 14
Item 4. Submission of Matters to a Vote of Security Holders............ 14
Item 5. Other Information.............................................. 14
Item 6. Exhibits and Reports on Form 8-K............................... 15
Signatures................................................................. 16
Financial Data Schedule.................................................... 17
2
<PAGE>
Part I - Financial Statements
Item 1. Financial Statements
RAIN FOREST-MOOSE, LTD
BALANCE SHEET
As of March 31, 1997 and March 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
March March
Assets 31, 1997 31, 1996
-------- --------
Current Assets:
Cash and Cash Equivalents ................................................. $ 35 $ 33,487
Accounts Receivable ....................................................... 0 90,081
Employee Receivables ...................................................... 0 1,972
Prepaid Expenses .......................................................... 0 164
Inventory ................................................................. 31,538 136,136
Insurance Claim ........................................................... 119,182 0
-------- --------
TOTAL CURRENT ASSETS ........ $150,755 $261,840
PROPERTY, PLANT AND EQUIPMENT (net of accumulated
depreciation of $ 20,902 and $ 14,550 respectively) ........ 31,174 55,185
Other Assets
Organization Costs (net of accumulated
amortization of $ 1,800 and $ 900 respectively) ....................... 2,700 3,600
-------- --------
TOTAL ASSETS ........ $184,629 $320,625
======== ========
Liabilities and Stockholders Equity
Current Liabilities:
Accounts Payable .......................................................... $ 20,309 $ 5,148
Payroll Taxes Payable ..................................................... 68,555 38,954
Accrued Interest Payable .................................................. 2,270 312
Accrued Income Taxes ...................................................... 0 23,836
Current Portion of Long Term Notes ........................................ 61,173 54,067
-------- --------
TOTAL CURRENT LIABILITIES ............................................. $152,307 $122,317
LONG TERM LIABILITIES ..................................................... 0 10,915
-------- --------
TOTAL LIABILITIES ..................................................... $152,307 $133,232
Stockholders Equity
Common Stock, $ 0.001 par value, 30,000,000 shares authorized,
9,312,622 shares issued and outstanding .................................. 7,619 $ 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 shares common ........................... 3,000 3,000
Paid in Capital ........................................................... 99,881 99,881
Retained Earnings ......................................................... ( 78,178) 76,893
-------- --------
TOTAL STOCKHOLDERS EQUITY ................................................. $ 32,322 $187,393
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY ............................. $184,629 $320,625
======== ========
</TABLE>
SEE ACCOUNTANTS REPORT AND NOTES
3
<PAGE>
RAIN FOREST-MOOSE, LTD
STATEMENTS OF INCOME
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
March March
31, 1997 31, 1996
-------- --------
Sales Income ................................................................................. $ 7,094 $ 202,507
Cost of Sales
Materials .................................................................................... $ 1,788 $ 28,694
Warehouse Labor .............................................................................. 0 20,759
Freight ...................................................................................... 0 961
------------ ------------
Total Cost of Sales .......................................................................... $ 1,788 $ 50,414
------------ ------------
GROSS PROFIT .............................................................................. $ 5,306 $ 152,093
Operating Expenses ........................................................................... 9,890 85,069
------------ ------------
INCOME/(LOSS) FROM OPERATIONS ............................................................ ($ 4,584) $ 67,024
Other Income and (Expenses)
Interest Expense .......................................................................... ($ 1,538) ($ 1,768)
Penalties ................................................................................. ( 1,549) 0
------------ ------------
Total Other Income and (Expenses) ............................................................ ($ 3,087) ($ 1,768)
------------ ------------
INCOME BEFORE EXTRAORDINARY ITEMS
AND INCOME TAXES .......................................................................... ($ 7,671 $ 65,256
Extraordinary Item-Loss on Repossession ................................................... ( 3,298) 0
Income Taxes .............................................................................. 0 ( 23,836)
------------ ------------
NET INCOME ............................................................................ ($ 10,969) $ 41,420
============ ============
WEIGHTED AVERAGE number of common stock
and common stock equivalents outstanding ..................................................... 16,618,702 16,618,702
============ ============
NET INCOME per common stock and
common stock equivalents ..................................................................... $ .001 $ .002
============ ============
</TABLE>
SEE ACCOUNTANTS REPORT AND NOTES
4
<PAGE>
RAIN FOREST-MOOSE, LTD
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
March March
31, 1997 31, 1996
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ............................................... ($10,969) $ 41,420
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation ............................................. 2,160 3,392
Amortization ............................................. 225 225
Extraordinary Item-Loss on Repossession .................. 3,298 0
(Increase) decrease in:
Accounts Receivable ...................................... 0 ( 39,854)
Prepaid Expenses ......................................... 0 658
Inventory ................................................ 87 18,762
Increase (decrease) in:
Bank Overdraft ........................................... 0 ( 2,151)
Accounts Payable ......................................... 0 ( 10,455)
Payroll Taxes Payable .................................... 1,550 6,629
Sales Taxes Payable ...................................... 0 ( 31)
Accrued Interest Payable ................................. 1,537 ( 1,001)
Accrued Income Taxes ..................................... 0 23,836
-------- --------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES .............................. ($ 2,112) $ 41,430
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment ................................ ($ 0) ($ 1,052)
CASH FLOWS FROM FINANCING ACTIVITIES
New borrowings
Long-Term ............................................ $ 0 $ 2,500
Short-Term ........................................... 0 7,500
Debt Reduction
Long-Term ............................................ ( 19,899) 0
Short-Term ........................................... 0 ( 0)
-------- --------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES .............................. $ 0 ($ 9,899)
-------- --------
NET INCREASE/(DECREASE) IN CASH ...................... ($ 2,112) $ 30,479
CASH AT BEGINNING OF YEAR ................................ 2,147 3,008
-------- --------
CASH AT END OF YEAR .................................. $ 35 $ 33,487
======== ========
SUPPLEMENTAL DISCLOSURES
Interest Paid ............................................ $ 1,538 $ 1,768
</TABLE>
SEE ACCOUNTANTS REPORT AND NOTES
5
<PAGE>
RAIN FOREST-MOOSE, LTD
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
STATEMENT OF SIGNIFICANT ACCOUNTING ASSUMPTIONS
BASIS OF ACCOUNTING
The financial statements of Rain Forest Moose, Ltd at March 31, 1997, have been
prepared on the accrual basis of accounting. Using this method, revenue and
expenses are recognized when incurred.
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.
INCOME TAXES
For income tax reporting and financial statement reporting at March 31, 1997,
and 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
SEE ACCOUNTANTS REPORT
6
<PAGE>
RAIN FOREST-MOOSE, LTD
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
NOTE-1: INSURANCE CLAIM
On August 8, 1996 a fire destroyed $ 119,282 worth of finished inventory. This
inventory was insured by Loyds of London for cost less a $ 100 deductible. The
company has submitted a claim for payment and expects payment from the insurer
for the full insured amount.
NOTE-2: 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,
AR.
NOTE-3: THE COMPANY'S LONG-TERM DEBT CONSISTS OF THE FOLLOWING:
<TABLE>
<CAPTION>
<S> <C> <C>
March March
31, 1997 31, 1996
---------- -----------
Anchor Financial, 21 % interest, $ 354.39 per month ......................... $ 1,173 $ 4,681
Maturity Date: 6-30-1997
Secured by computer printers and a copier
Springdale Bank & Trust, 10.25%, $ 534.58 per month ......................... 0 14,954
Maturity Date: 5-10-98
Secured by 90 GMC truck
Springdale Bank & Trust, 10.25%, Monthly Int. Only Payments ................. 60,000 30,000
Maturity Date 6-21-97
Secured by Inventory and A/R
U. S. Equipment, Inc., 7.5%, Payable on Demand .............................. 0 11,063
Maturity Date Payable on Demand
Unsecured
Note Payable Dan Pilkington, 7.5%, Payable on Demand ........................ 0 4,284
Maturity Date Payable on Demand
Unsecured
Current Portion of long-term debt ........................................... 0 ( 54,067)
------------- -------------
Long-term debt, less current portion ........................................ $ 61,173 $ 10,915
============= =============
</TABLE>
SEE ACCOUNTANTS REPORT
7
<PAGE>
RAIN FOREST-MOOSE, LTD
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
NOTE-3 CONTINUED:
The following is a summary of principal maturities of long term debt:
1997 $ 61,173
NOTE-4: GOING CONCERN
As shown in the accompanying financial statements, the Company has incurred a
loss for the period ended March 31, 1997 and has a deficit in working capital.
Due to inadequate management there has been a reduction in the number of
distributors for the Company's product resulting in a corresponding drop in
overall sales. As discussed in Note-5 the existing president at March 31, 1997
was removed and new officers were elected. The new management has begun a plan
to recapitalize the Company and to reestablish the relationship with the
distributors. There can be no assurance that the Company will be successful in
its efforts to implement this plan. If the Company is unsuccessful in its
efforts, it may be necessary to undertake such other actions as may be
appropriate to preserve asset value. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE-5: SUBSEQUENT EVENTS
Subsequent to the balance sheet date the president at March 31, 1997 was
replaced and a new president, officers, and board of directors were elected on
May 12, 1997.
On February 24, 1997 Springdale Bank and Trust, a note holder, called a note in
the amount of
$ 9,372 that was in default. Springdale Bank and Trust obtained possession of
the collateral which was a 90 GMC truck.
NOTE-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.
SEE ACCOUNTANTS REPORT
8
<PAGE>
SUPPLEMENTAL INFORMATION
9
<PAGE>
RAIN FOREST-MOOSE, LTD
NOTES TO FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1997 and the
Three Months Ended March 31, 1996
March March
31, 1997 31,1996
----------- ------------
Operating Expenses
Accounting $ 1,200 $2,150
Amortization 225 225
Auto & Truck 1,642 3,031
Bank Charges 116 50
Credit Card Fees 69 35
Depreciation 2,160 3,392
Insurance 222 2,601
Management Expense 0 92
Miscellaneous 544 108
Office Expense 0 4,596
Office Salaries 0 20,046
Payroll Tax Expense 0 3,066
Postage 0 1,664
Rent 1,062 6,621
Repairs 0 150
Sales Commission 0 3,210
Supplies 0 649
Taxes & Licenses 0 85
Telephone 0 9,983
Travel 2,650 22,556
Utilities 0 759
------------- -------------
$ 9,890 $ 85,069
============= =============
10
<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 Aarow Environmental (formerly
Rain Forest - Moose, Ltd.), was incorporated in April 1970. The name of the
Company was changed from Rain Forest - Moose, Ltd., to Aarow Environmental
Group, Inc., on June 13, 1997. 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 Aarom Environmental as the surviving
corporation. The merger of RTA with and into Aarow Environmental effectively
changed the state of domicile of RTA to Nevada as a result of Aarow
Environmental 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 fiscal years ended December 31, 1995, and December 31, 1996, which are
derived from the audited financial statements of the Company, and (ii) the three
month periods ended March 31, 1996 and 1997, which are derived from the
unaudited financial statements of the Company.
<TABLE>
<CAPTION>
For the Fiscal For the Fiscal
Year Ended Year Ended
December 31, 1995 December 31, 1996 March 31, 1996 March 31, 1997
----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amount Percent Amount Percent Amount Percent Amount Percent
Sales income................... $630,1945 100.0 % $404,056 100.0% $202,507 100.0% $7,094 100.0%
---------- ------- --------- -------- -------- ------- ------ ------
Cost of sales:
Materials.................... 137,232 21.8% 113,269 28% 28,694 14.2% 1,788 25.2%
Warehouse labor.............. 105,645 16.8% 49,202 12.2% 20,759 10.2% %
Freight...................... 2,091 .3% 1,183 .3% 961 .5% %
---------- ------- --------- -------- -------- ------- ------ ------
Total Cost of Sales........ 244,968 38.9% 163,654 40.5% 50,414 24.9% 1,788 25.2%
---------- ------- --------- -------- -------- ------- ------ ------
Gross profit................... 385,226 61.1% 240,402 59.5% 152,093 75.1% 5,306 74.8%
---------- ------- --------- -------- -------- ------- ------ ------
Operating expenses............. 318,069 50.5% 290,044 71.8% 85,069 42.0% 9,890 139.4%
---------- ------- --------- -------- -------- ------- ------ ------
Income or (loss) from
operations..................... 67,157 10.6% (49,642) 12.3% 67,024 33.1% (4,584) 64.6%
---------- ------- --------- -------- -------- ------- ------ ------
Other income and (expense):
Interest income.............. 120 % 934 .2% % %
Interest expense............. (9,365) 1.5% (4,463) 1.5% (1,768) .9% (1,538) 21.7%
Penalties.................... (2,087) .3% (16,017) (1,549) 21.9%
Loss on Note Receivable (33,493)
Loss on Repossession......... % % % (3,298) 46.5%
---------- ------- --------- -------- -------- ------- ------ ------
Total other income
and (expense)........... (11,332) 1.8 % (53,0392) 1.8% (1,768) .9% (6,385) 90%
---------- ------- --------- -------- -------- ------- ------ ------
<PAGE>
Income (Loss) before income 55,825 8.8% (102,681) 25.4% 65,25 32.2% (10,969) 154.6%
taxes..........................
Income tax expense............. % % (23,836) 11.8% 11.8%
---------- ------- --------- -------- -------- ------- ------ ------
Net Income or (loss)........... $55,825 8.8% $(102,681) 25.4% $13,492 14.6%$ 10,969) 154.6%
======= === =========== ==== ========= ====== ======= ======
</TABLE>
11
<PAGE>
Comparison of the three months ended March 31, 1996 and 1997
Sales income decreased to $7,094 in the three months ended March 31,
1996 (the "1997 Interim Period") from $202,507 for the three months ended March
31, 1996 (the "1996 Interim Period"). The decrease in revenues was due decreased
sales of Peat Moose Absorbent products during the 1997 Interim Period as
compared to the 1996 Interim Period. The decrease in sales volume was
attributable to continuing operational problems resulting from the loss of
$119,282 worth of finished inventory to fire on August 8, 1996, and inadequate
management in attempting to deal with the difficulties resulting from the
causality loss. Because of the very low level of activity during the 1997
Interim Period cost of sales decreased to $1,788, with no costs being incurred
for warehouse labor or freight. Gross profit declined to $5,306 in the 1997
Interim Period to compared to $152,093 in the 1996 Interim Period, and as a
percent of sales income decreased to from 75.1% in the 1996 Interim Period to
74.8 percent in the 1997 Interim Period.
Operating expenses decreased to $9,890 in the 1997 Interim Period from
$85,069 in the 1996 Interim Period, but increased as a percent of sales income
from 42 percent in the 1996 Interim Period to 139.4 percent in the 1997 Interim
Period. The actual decrease in operating expenses and increase as a percentage
of sales was the result of cost cutting measures taken to preserve asset value
during the period of only nominal sales activity following the August 8, 1996,
casualty loss.
The Company experienced a $4,584 loss from operations in the 1997
Interim Period, compared to income from operations of 67,024 in the 1996 Interim
Period. The loss from operations in the 1997 Interim Period was 139.4 percent of
sales income and 186.4 percent of gross profits on sales. The Company also
experienced a loss on the repossession of a 1990 GMC truck as a result of the
Company's default on a note to Springdale Bank and Trust.
Net income before income taxes was $65,256 in the 1996 Interim Period
(which represented 32.2 percent of income from sales). For the 1997 Interim
Period a loss of $10,969 was incurred which represented 154.6 percent of sales.
Net income after income taxes was $41,420 in the 1996 Interim Period (which
represented 20.4 percent of income from sales
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.
12
<PAGE>
Income Taxes
For income tax reporting and financial statement reporting at March 31,
1997, and 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 expense giving rise to accrual of deferred
income tax.
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
totaled $2,112 in the 1997 Interim Period. As of March 31, 1996, the Company had
working capital of $139,523, compared to a deficit in working capital of $1,552,
at March 31, 1997. During the 1997 Interim Period the Company continued to
experience operating difficulties as a result of lack of working capital
following the August 8, 1996, casualty loss and the resulting operational
decline. The Company also continued to experience inadequate management until
the election of new management for the Company on May 12, 1997. The new
Management for the Company has begun a plan to recapitalize the Company. There
is no assurance that the Company will be successful in its efforts to implement
its plan for recapitalization and the resumption of full operations.
As of December 31, 1996, RFM Arkansas had two long-term loans from
Springdale Bank & Trust Company (the "Bank"), which were secured by certain a
vehicle and inventory and accounts receivable, bear interest at 10.5 percent per
annum, and required monthly principal and interest installment payments of $535
through May 1998 and monthly interest payments. At December 31, 1996, the
outstanding principal balance of these loans were $9,372 and $30,000,
respectively. On February 24, 1997, Springdale Bank and Trust called the note in
the amount of $9,372 which was in default and obtained possession of the
collateral which was a 1990 GMC truck. The Company also has an equipment loan
with Anchor Financial Corp. secured by office equipment, bears interest at 21
percent per annum, and requiring monthly principal and interest installment
payments of $354. The outstanding principal amount of this loan at March, 31,
1997, was $1,173.
Currently cash flows from operations are not sufficient to service its
obligations under the various financing arrangements and maintain operations of
the Company. Management of the Company has developed a plan to recapitalize in
order to resume full manufacturing and marketing operations. However, there is
no assurance that the Company will be successful in its efforts to implement its
plan for recapitalization and the resumption of full operations.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the period
covered by this report.
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
No reports on Form 8-K were filed during the quarter for which this
report is filed.
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.
AAROW ENVIRONMENTAL GROUP, INC.,
(Formerly RAIN FOREST - MOOSE, LTD.)
(Registrant)
By: /S/STANLEY L. SISEMORE
------------------------------
Stanley L. Sisemore, President
Date: June 30,1997
15
<PAGE>
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0
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