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, 1999.
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
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)
1317 South Turner
Springdale, Arkansas 72764
(Address of principal executive offices) (Zip Code)
(501) 927-1884
(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 13, 1999 was 10,380,942.
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
Index to Quarterly Report on Form 10-QSB
Part I - FINANCIAL INFORMATION Page
----
<S> <C> <C>
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets
as of March 31, 1999 and December 31, 1998 3
Unaudited Consolidated Statements of Income for the Three Months
Ended March 31, 1999 and 1998 4
Unaudited Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 5
Notes to Unaudited Consolidated Financial Statements 6
Supplemental Information 9
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
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 13
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Part I - Financial Statements
Item 1. Financial Statements
AAROW ENVIRONMENTAL GROUP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
March December
Assets 31, 1999 31, 1998
------------- --------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 0 $ 0
Inventory 32,400 32,400
------------- --------------
Total Current Assets $ 32,400 $ 32,400
PROPERTY, PLANT AND EQUIPMENT (net of accumulated
depreciation of $ 14,921 and $ 13,937 respectively) 7,175 8,159
Other Assets
Organization Costs (net of accumulated
amortization of $ 3,038 and $ 2,925 respectively) $ 1,462 $ 1,575
Noncompete Covenant (net of accumulated
amortization of $ 3,000 and $ 2,550 respectively) 15,000 15,450
------------- --------------
TOTAL OTHER ASSETS $ 16,462 $ 17,025
------------- --------------
TOTAL ASSETS $ 56,037 $ 57,584
============= ==============
Liabilities and Stockholders Equity
Current Liabilities:
Bank Overdraft $ 3,500 $ 0
Accounts Payable 50,436 41,142
Payroll Taxes Payable 115,609 103,496
Accrued Interest Payable 30,320 24,229
Judgment Payable 18,370 18,370
Short Term Notes 209,008 204,686
Accrued Salaries Payable 19,276 0
Current Portion of Long Term Notes 60,000 60,000
------------- --------------
TOTAL CURRENT LIABILITIES $ 506,519 $ 451,923
LONG TERM LIABILITIES 0 0
------------- --------------
TOTAL LIABILITIES $ 506,519 $ 451,923
Stockholders Equity
Common Stock, $ 0.001 par value, 30,000,000 shares authorized, $ 10,381 $ 10,381
10,380,942 shares issued and outstanding
Convertible Preferred Stock, $0.001 par value, 5,000,000 shares 3,000 3,000
authorized, 3,000,000 shares issued and outstanding,
one share convertible for three shares common
Paid in Capital 220,557 220,557
Retained Earnings ( 684,420) ( 628,277)
-------------- ---------------
TOTAL STOCKHOLDERS EQUITY ($ 450,482) ($ 394,339)
-------------- --------------=
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 56,037 $ 57,584
============= ==============
See notes to unaudited financial statements.
3
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
March March
31, 1999 31, 1998
------------- --------------
Sales Income $ 0 $ 8,163
Cost of Sales
Materials 0 5,566
------------- --------------
GROSS PROFIT $ 0 $ 2,597
Operating Expenses 47,359 30,744
------------- --------------
INCOME/(LOSS) FROM OPERATIONS ($ 47,359) ($ 28,147)
Other Income and (Expenses)
Interest Expense ($ 6,090) ($ 5,785)
Penalties ( 2,694) ( 2,283)
-------------- ---------------
Total Other Income and (Expenses) ($ 8,784) ($ 8,068)
-------------- ---------------
INCOME/(LOSS) BEFORE EXTRAORDINARY ITEMS
AND INCOME TAXES ($ 56,143) ($ 36,215)
-------------- ---------------
NET INCOME/(LOSS) ($ 56,143) ($ 36,215)
============== ===============
WEIGHTED AVERAGE number of common stock
and common stock equivalents outstanding 19,380,942 18,243,987
============= ==============
NET INCOME per common stock and
common stock equivalents ($ .003) ($ .002)
============== ==============
</TABLE>
See notes to unaudited financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
March March
31, 1999 31, 1998
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ($ 56,143) ($ 36,215)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation 984 984
Amortization 562 562
(Increase) decrease in:
Accounts Receivable 0 1,043
Inventory 0 3,625
Increase (decrease) in:
Bank Overdraft 3,500 ( 2,186)
Accounts Payable 9,294 5,716
Payroll Taxes Payable 12,113 6,256
Accrued Salaries Payable 19,276 0
Accrued Interest Payable 6,091 5,785
------------- -------------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES ($ 4,323) ($ 14,430)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment ($ 0) ($ 0)
CASH FLOWS FROM FINANCING ACTIVITIES
New borrowings
Short-Term $ 4,323 $ 2,230
Debt Reduction
Sale of Stock 0 12,200
------------- -------------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES $ 4,323 $ 14,430
------------- -------------
NET INCREASE/(DECREASE) IN CASH $ 0 $ 0
CASH AT BEGINNING OF PERIOD 0 0
------------- -------------
CASH AT END PERIOD $ 0 $ 0
============= =============
SUPPLEMENTAL DISCLOSURES
Interest Paid $ 6,090 $ 5,785
</TABLE>
See notes to unaudited financial statements.
5
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
STATEMENT OF SIGNIFICANT ACCOUNTING ASSUMPTIONS
BASIS OF ACCOUNTING
The financial statements of Aarow Environmental Group, Inc. (the "Company") at
March 31, 1999, 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. An independent accountant has not audited
these financial statements.
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 for the year ended December 31, 1998. 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, 1999,
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
Note 1: Property, Plant and Equipment
All assets are recorded at original cost. Depreciation is calculated using
accelerated methods, lives are five years for office equipment, seven years for
manufacturing equipment and furniture, and 10 years for Leasehold Improvements.
6
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
Note 2: Noncompete Covenant
On July 29, 1998 the Company entered into an agreement with Evergreen
BioServices, Inc. whereby Evergreen grants Aarow the right to use Evergreen's
name and reputation to exclusively market remediation throughout the U.S. and
Mexican markets. Additionally, Evergreen agrees to work exclusively through
Aarow and Evergreen agrees not to compete with Aarow. Evergreen will supply the
engineering and technical support and will be responsible to accept or reject
all proposals concerning remediation through Aarow. This agreement begins on
July 29, 1998 and remains in effect for ten years at which time Aarow can renew
one time for an additional ten years
<TABLE>
March 31, Dec. 31,
1999 1998
---------------- ----------------
<S> <C> <C>
Noncompete Covenant $ 18,000 $ 18,000
Accumulated Amortization ( 3,000) ( 2,550)
----------------- -----------------
Net Noncompete Covenant $ 15,000 $ 15,450
================ ================
Note 3: Judgment Payable
On October 2, 1998 a judgment was entered in the Washington County Court,
Fayetteville, AR, against the Company. This judgment is in the amount of $
18,370 and accrues interest at the rate of 10 %.
Note 4: Short-Term Notes
On September 15, 1998 the Company issued a series of short term notes in the
amount of $ 5,000 each for a total of $ 55,000. Each note accrues interest at
the rate of 8 % and is a single pay note originally due September 15, 1998.
These notes were increased and extended to September 15, 1999. In addition
20,000 shares of common stock and 100,000 common stock warrants were issued to
each note holder. In case of default the note agreements call for the issuance
of an additional 40,000 shares of common stock to each note holder.
One of the shareholders who is also a Director and Officer loaned the Company $
2,230. This is an unsecured non-interest demand note.
Note 5: The company's Long-Term debt consists of the following:
March. 31, Dec. 31,
1999 1998
---------------- ----------------
Springdale Bank & Trust, 10.0%, Monthly Int. Only $ 60,000 $ 60,000
Maturity Date Feb. 16, 2000
Secured by Inventory and A/R
Current Portion of Long Term debt ( 60,000) ( 60,000)
----------------- -----------------
Long Term debt, less current portion $ 0 $ 0
================ ================
</TABLE>
7
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
Note 6: Stockholders' Equity
Common Stock: At March 31, 1999 there were 30,000,000 shares authorized,
10,380,942 issued and outstanding at $ 0.001 per share par value. At December
31, 1998 there were 30,000,000 shares authorized, 10,380,942 issued and
outstanding at $ 0.001 per share par value. The Company trades it's stock on the
over the counter bulletin board using the stock symbol of AARO.
Stock Warrants: There are 1,100,000 common stock warrants issued. Each common
stock warrant permits the holder to purchase at any time from September 15, 1998
until September 15, 2002 one share of the Company's common stock at the initial
exercise price of $ 0.50 per share. The common stock warrants are redeemable by
the Company upon thirty days written notice to the holder, at $ 0.001 per
warrant, conditioned upon the price of the common stock of the Company closing
for fourteen consecutive business days above $ 2.00 per share.
Convertible Preferred Stock: At March 31, 1999 and December 31, 1998 there were
5,000,000 shares authorized, 3,000,000 shares issued and outstanding. Each share
has a $ 0.001 par value and is convertible for three shares of common stock.
Note 7: Going Concern
As shown in the accompanying financial statements, the Company has incurred a
loss for the period ended March 31, 1999 and has a deficit in working capital.
Management has begun a plan to recapitalize the Company and to market new
products. 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 8: Earnings Per Share of Common Stock
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.
8
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
SUPPLEMENTAL INFORMATION TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
SUPPLEMENTAL INFORMATION
March March
31, 1999 31, 1998
------------- --------------
Operating Expenses
Accounting $ 1,500 $ 4,514
Advertising 615 0
Amortization 562 562
Auto & Truck 0 500
Bank Charges 0 20
Depreciation 984 984
Equipment Rental 0 92
Legal Fees 0 1,494
Office Expense 975 800
Office Salaries 26,000 10,618
Payroll Tax Expense 2,695 1,248
Postage 0 414
Rent 2,750 3,000
Supplies 0 230
Telephone 8,286 3,668
Travel 2,992 2,600
------------- --------------
$ 47,359 $ 30,744
============= ==============
9
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with the
unaudited consolidated 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 1980. The name of the
Company was changed from Rain Forest - Moose, Ltd., to Aarow Environmental
Group, Inc., on June 13, 1998. 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 Aarow 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").
Results of Operations
The following table sets forth selected results of operations for the
three months ended March 31, 1999 and 1998, and the twelve months ended December
31, 1998 and 1997 which are derived from the unaudited consolidated financial
statements of the Company. The results of operations for the periods presented
are not necessarily indicative of the Company's future operations.
<TABLE>
Three Months Ended March 31, For the Year Ended
----------------------------------------- ------------------------------------------
1999 1998 1998 1997
------------------- -------------------- -------------------- -------------------
Amount Percent Amount Percent Amount Percent Amount Percent
--------- ------- ---------- -------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Income $ 0 100.00% $ 8,163 100.0% $ 26,242 262.42% $ 38,279 100.0%
--------- ------- ---------- -------- --------- ------- --------- ------
Materials $ 0 0.00% $ 5,566 68.2% $ 14,418 54.90% $ 20,815 54.4%
Freight 0 0.00 0 0.0 0 0.0 198 0.5
--------- ------- ---------- -------- --------- ------- --------- ------
Total Cost of Sales $ 0 0.00% $ 5,566 68.2% $ 14,418 54.90% $ 21,013 54.9%
--------- ------- ---------- -------- --------- ------- --------- ------
Gross Profit $ 0 0.00% $ 2,597 31.8% $ 11,824 45.10% $ 17,266 45.1%
Operating Expenses 47,359 473.59% 30,744 376.6% 197,119 751.16% 206,652 539.9%
--------- ------- ---------- -------- ---------- ------- --------- ------
Income or (Loss) from Operations $(47,359) 473.59% $( 28,147) 344.8% $(185,295) 706.10% $(189,386) 494.8%
--------- ------- ---------- -------- ---------- ------- ---------- ------
Other Income and (Expenses)
Interest Expense $( 6,090) 60.9% $( 5,785) 70.90% $( 22,179) 84.50% $( 7,036) 18.4%
Penalties ( 2,694) 26.94 ( 2,283) 28.00 (7,722) 29.40 ( 6,517) 17.0
--------- ------- ---------- --------- ---------- ------- ---------- ------
Total Other Income and (Expense)$( 8,784) 87.84% $( 8,068) 98.90% $( 29,901) 113.90% $( 13,553) 35.4%
--------- ------- ---------- --------- ----------- ------- ---------- ------
Income (Loss) before extraordinary
Items $(56,143) 561.43% $( 36,215) 443.7% $ (215,196) 820.00% $( 202,939) 530.2%
Extraordinary Items
Loss on Note Receivable $ 0 0.00% $ 0 0.0% $ 0 0.00% $( 20,455) 53.4%
Loss on Repossession 0 0.00 ( 0) 0.0 0 0.00 ( 3,298) 8.6
Casualty Loss 0 0.00 ( 0) 0.0 0 0.00 ( 119,181) 11.4
--------- ------- ---------- --------- ---------- -------- ---------- ------
Total Extraordinary Item $ 0 0.00% $( 0) 0.0% $ 0 0.00% $( 142,934) 373.4%
--------- ------- ---------- --------- ---------- -------- ---------- ------
Net Income or (Loss) $(56,143) 561.43% $( 36,215) 443.7% $(215,196) 820.00% $( 345,873) 903.6%
========= ======= ========== ========= ========== ======== ========== ======
</TABLE>
10
<PAGE>
Comparison of the Three Months Ended March 31, 1999 and 1998
Due to the required sales and promotion time for the Animal Waste
Machine there were no sales during the three months ended March 31, 1999.
Therefore, sales income decreased to $ 0 in the three months ended March 31,
1999 (the "1999 Three-Month Period") from $ 8,163 for the three months ended
March 31, 1998 (the "1998 Three- Month Period"). The decrease in sales income
was due the fact that the purchase of an Animal Waste Machine requires a high
initial investment. Also, this is new technology slowly growing acceptance.
These factors are causing a large lag time between machine development and
machine sales. The Company expects to have machine sales by the third quarter.
The cost of sales decreased to $ 0 for the 1999 Three-Month Period from $ 5,566
for the 1998 Three-Month Period.
Gross profit declined to $ 0 in the 1999 Three-Month Period, from $
2,598 during the 1998 Three-Month Period. As a percent of sales income, gross
profit decreased to 0 percent during the 1999 Three Month Period from 31.8
percent during the 1998 Three Month Period, which again is attributable to the
long promotional time required for the Animal Waste Machine. The cost of
materials as a percent of sales income decreased from 68.2 percent during the
1998 Three-Month Period to 0 percent during the 1999 Three-Month Period.
Operating expenses increased to $ 47,359 (473.59 percent of sales
income) in the 1999 Three Month Period from $ 30,744 (376.6 percent of sales
income) in the 1998 Three Month Period, which was principally due to the
increase in salaries from $ 10,618 during the 1998 Three Month Period to $
26,000 during the 1999 Three Month Period, an increase of $ 15,382. Also,
telephone expenses increased to $ 8,286 in the 1999 Three-Month Period from $
3,668 in the 1998 Three-Month Period, an increase of 125.9 percent. This
increase was attributable to the sales promotion of the Animal Waste Machine in
the 1999 Three-Month Period, while during the 1998 Three-Month Period the
Company's business activities were curtailed due to ongoing work to develop the
Animal Waste Machine.
The Company experienced a loss from operations of $ 47,359 during the
1999 Three-Month Period compared to a loss from operations of $ 28,147 in the
1998 Three-Month Period. The loss from operations in the 1999 Three-Month Period
was 473.59 percent of sales income and 344.8 percent of sales income in the 1998
Three-Month Period.
A net loss was sustained during the 1999 Three-Month Period of $ 56,143
compared to a loss of $ 36,215 during the 1998 Three-Month Period.
Quarterly Results of Operations
The Company's operations have been severely affected by time devoted to
the Animal Waste Machine. The Company expects to show significantly larger sales
beginning in the third quarter with the placement of the first Animal Waste
Machine. Because the general and administrative expenses associated with
maintaining and adding to the Company's manufacturing and product distribution
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 that 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.
11
<PAGE>
Income Taxes
For income tax reporting and financial statement reporting at March 31,
1999 and 1998, 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.
Because of continuing losses the Company has not incurred any income
tax expense.
Liquidity and Capital Resources
The Company incurred a loss for the three months ended March 31, 1999
and had a deficit in working capital of $ 474,119. There can be no assurance
that future cash flows from operations and availability of credit from vendors
will be sufficient to implement management's business plan or that the Company
will be successful in its efforts to implement such 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.
Due to the Company's lack of substantial equity, its working capital
deficit and volume of sales, traditional bank lending facilities are not
currently available. Historically, the Company financed its growth from
borrowings and shareholder contributions and depended in part upon credit terms
from its various vendors as a source of financing. Arrangements with such
vendors have generally been informal, without specific agreements as to terms
and payments. The availability of credit from vendors, or the terms of any such
credit, cannot be assured. Because future cash flows and the availability of
vendor credit or other financing are subject to a number of variables, there can
be no assurance that the Company's cash flows and capital resources will be
sufficient to enable the Company to service its outstanding debt and liabilities
or to maintain currently planned levels of sales and product distribution.
Net cash used by operating activities totaled $ 4,323 in the 1999
Three-Month Period, while net cash used by operating activities totaled $ 14,430
in the 1998 Three-Month Period. During the 1999 Three-Month Period, net cash
flows provided by financing activities totaled $ 4,323, in comparison net cash
flows used by financing activities totaled $ 14,430 during the 1998 Three-Month
Period. During the 1999 and 1998 Three-Month Periods, the Company had no
investing activities.
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 augment its
capitalization in order to resume full marketing operations. However, there is
no assurance that the Company will be successful in its efforts to implement its
plan for additional capitalization and the resumption of full business
operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Report constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should" or "anticipates" or other
variations thereon, or by discussions of strategies that involve risks and
uncertainties. The actual results of the Company or industry results may be
materially different from any future results expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include general economic and business conditions; the ability of the
Company to implement its business plan and strategy; industry changes; changes
in customer preferences; product competition; availability of key personnel;
increasing operating costs; unsuccessful advertising and promotional efforts;
changes in brand awareness and preferences; acceptance of new product offerings;
and changes in, or the failure to comply with, government regulations
(especially environmental protection laws and regulations); the ability of the
Company to obtain vendor credit or other financing; and other factors.
12
<PAGE>
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.
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.**
13
<PAGE>
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.
(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 report
to be signed on its behalf by the undersigned, thereunto duly authorized.
AAROW ENVIRONMENTAL GROUP, INC.,
(Registrant)
By: /s/ Lloyd W. Phillips
------------------------------------
Lloyd W. Phillips, President
Date: May 14, 1999
14
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