SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 22,2000 (August 4,2000)
RAINWIRE PARTNERS, INC.
Delaware 0-23892 57-0941152
(State or other (Commission File (IRS Employer
jurisdiction of No.) ID No.)
incorporation)
695 Pylant Street, Atlanta, GA 30306
(Address of principal executive offices)
404-892-1111
(Registrant's telephone number, including area code)
4940 Peachtree Industrial Blvd., Suite 350, Norcross, GA, 30071
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
This Form 8-K/A is filed as an amendment to the Form 8-K which was filed on
August 4, 2000 announcing the July 26, 2000 closing of the Plan and Agreement to
Exchange Stock by and among Envirometrics, Inc., The Catapult Group, Inc. and
the shareholders of Catapult. The name was subsequently changed to Rainwire
Partners, Inc.
Description of the Company
Rainwire Partners, Inc. is an advanced technology consulting firm
specializing in the design, management and auditing of Internet technology
initiatives. Rainwire is a "next generation" web development company. The
company provides strategy, design, process management and quality assurance
services that act as an insurance policy for organizations undertaking broad and
expensive advanced technology initiatives. Structured as a consultancy, Rainwire
offers a cohesive set of services targeted exclusively at the "delivery" of
technology solutions. These service offerings include:
1. Solutions Design and Management. The solutions design and management
services of Rainwire provide the customer with the strategy, planning, solution
design and documentation services necessary to successfully begin any technology
implementation initiative. The end result of these services is the Rainwire
Blueprint. This extensive set of documentation acts as a road-map to the
successful completion of any technology project and is used to create and manage
customer expectation throughout the development process.
2. Managed Development Services. The managed development services of
Rainwire supply the customer with a streamlined and effective means of
developing a technology initiative. This group assists the customer in selecting
and managing an inventory of capable and value-driven development organizations
to fulfill development for Rainwire customers. This group also provides project
management and project auditing services to insure that the customer is
consistently receiving the value committed to them by their selected developer.
3. Quality Management & Auditing Services. The quality management and
auditing services of Rainwire provide the customer with the peace of mind that
their money and efforts dedicated to technology will pay the dividend originally
committed in the Rainwire Blueprint. By providing solution testing, quality
management and completed project auditing services, this group provides the
customer with a set of "checks and balances" to document that their expenditures
and efforts have resulted in a functional, tested and value-driven solution.
The Company's Mission
The goal of Rainwire Partners is to ensure that every customer expenditure
made toward the implementation of Internet solutions and other advanced
technologies yields a positive financial return while exceeding the expectations
of the customer and their stakeholders. Initially operating in the Atlanta area
in Georgia, Rainwire is rapidly expanding to sell its services into multiple
markets in the Southeast.
Our emphasis will be on providing a complete specialized service based on
having years of experience in the processes and procedure of developing
difficult technology for business use. Market research indicates that the major
criticism Rainwire's type of client has of existing web development firms is
that they rarely meet the expectation of their customer. These customers feel
that they are already spending too much money for the service that they are
being provided.
By capitalizing on our experience in the customer delivery and management
aspects of complex technology initiatives, we will be able to establish a
reputation for excellence, value and reliability in a market that is currently
starved for such an enterprise.
This Form 8-K/A contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that
certain statements in this Form 8-K/A are "forward looking statement" within the
meaning of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risks, uncertainties and other factors. Such uncertainties and
risks include, among others, certain risks associated with government
regulation, and general economic and business conditions. Actual events,
circumstances, effects and results may be materially different from the results,
performance or achievements expressed or implied by the forward-looking
statements. Consequently, the forward-looking statements contained herein should
not be regarded as representations by Rainwire Partners, Inc. or any other
person that the projected outcomes can or will be achieved.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired
See Exhibit 7.1 for complete audited financial information on The Catapult
Group, Inc.
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
CURRENT ASSETS
Cash $ 2,294
Accounts receivable 233,897
Due from stockholder 20,000
------------
TOTAL CURRENT ASSETS 256,191
PROPERTY & EQUIPMENT, net of accumulated depreciation of $12,769 29,720
OTHER ASSETS
Goodwill, net of accumulated amortization of $16,762 486,103
Deposits 4,942
------------
491,045
------------
TOTAL ASSETS $ 776,956
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 500,000
Accounts payable 26,786
Accrued Expenses 54,268
------------
TOTAL CURRENT LIABILITIES 581,054
------------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 10,000,000 shares,
6,000,000 issued and outstanding 60,000
Additional paid-in capital 554,930
Accumulated deficit (419,028)
------------
TOTAL STOCKHOLDERS' EQUITY 195,902
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 776,956
============
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
REVENUES
Consulting income $ 578,229
OPERATING EXPENSES
Communication and internet services 227,615
General and administrative 366,889
Founders' services 390,000
------------
TOTAL OPERATING EXPENSES 984,504
------------
OPERATING LOSS (406,275)
------------
OTHER INCOME (EXPENSE)
Interest expense (13,356)
Interest income 603
------------
(12,753)
------------
NET LOSS $ (419,028)
============
WEIGHTED AVERAGE COMMON SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER SHARE 6,000,000
------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (.07)
============
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
UN-AUDITED
----------
CURRENT ASSETS
Cash $ -
Accounts receivable 201,348
------------
TOTAL CURRENT ASSETS 201,348
PROPERTY & EQUIPMENT, net of accumulated depreciation of $22,369 48,305
OTHER ASSETS
Goodwill, net of accumulated amortization of $33,524 469,341
Deposits 4,942
------------
474,283
------------
TOTAL ASSETS $ 723,936
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Checks issued in excess of bank balance $ 10,353
Notes payable 500,000
Accounts payable 171,119
Accrued Expenses 80,773
------------
TOTAL CURRENT LIABILITIES 762,244
------------
STOCKHOLDERS' EQUITY
Common stock, par value $.01;
authorized 10,000,000 shares;
issued - 6,000,000 shares 60,000
Additional paid-in capital 554,930
Accumulated deficit (653,238)
------------
TOTAL STOCKHOLDERS' EQUITY (38,308)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 723,936
============
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
UN-AUDITED
----------
REVENUES $ 937,305
COST OF REVENUE 353,045
OPERATING EXPENSES
Sales and Marketing 84,863
General and administrative 693,174
Depreciation and Amortization 26,362
------------
TOTAL OPERATING EXPENSES 804,399
------------
OPERATING LOSS (220,139)
------------
OTHER INCOME (EXPENSE)
Interest expense (16,250)
Interest income 1,130
Other income (expense) 1,050
------------
(14,070)
------------
NET LOSS $ (234,209)
============
WEIGHTED AVERAGE COMMON SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER SHARE 6,000,000
------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (.04)
============
<PAGE>
(b) Pro Forma Financial Information
RAINWIRE PARTNERS, INC.
PROFORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
Actual Adjustments Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents $ 439,649 $ 30,936 (1)$ 470,585
Accounts receivable 201,347 17,010 (1) 218,357
Other net monetary assets - 127,184 127,184
Prepaid expenses - 5,572 (1) 5,572
--------------- --------------- ---------------
Total Current Assets 640,996 180,702 821,698
--------------- --------------- ---------------
Property and Equipment
Furniture and equipment 70,674 202,615 (1) 273,289
Less accumulated depreciation (22,369) (183,129) (205,498)
--------------- --------------- ---------------
48,305 19,486 67,791
--------------- --------------- ---------------
Other Assets
Deposits 4,942 11,852 (1) 16,794
Goodwill, net of accumulated
amortization of 469,340 - 469,340
--------------- --------------- ---------------
474,282 11,852 486,134
--------------- --------------- ---------------
TOTAL $ 1,163,583 $ 212,040 $ 1,375,623
=============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Actual Adjustments Pro Forma
--------------- --------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 250,000 $ $ 250,000
Current maturities of long-term debt - 18,171 (1) 18,171
Accounts payable 171,119 231,370 (1) 402,489
Accrued expenses and other 80,773 60,916 (1) 141,689
-------------- --------------- ---------------
Total Current Liabilities 501,892 310,457 812,349
-------------- --------------- ---------------
Long-term Debt, less current portion
Banks and others - 72,805 (1) 72,805
Affiliates 700,000 (700,000)(2) -
Deferred gain on asset sale - 12,083 (1) 12,083
-------------- --------------- ---------------
Total Current Liabilities 700,000 (615,112) 84,888
-------------- --------------- ---------------
Redeemable Preferred Stock,
Par value $.001; authorized 2,500,000
shares; issued 2000 - 24,959 - 49,918 (1) 49,918
-------------- --------------- ---------------
- 49,918 49,918
-------------- --------------- ---------------
Common Stock and Accumulated Deficit
Common stock, par value $.001;
authorized 20,000,000 shares;
issued - 7,005,387 shares 60,000 (60,000)(2) 7,005
5,555 (2)
3,852 (1)
148 (2)
22 (2)
1,503 (2)
(4,975)(3
900 (2)
Additional paid-in capital 554,930 54,445 (2) 1,074,702
(22)(2)
(239,624)(1)
4,975 (3)
699,100 (2)
Accumulated deficit (653,239) - (653,239)
-------------- --------------- ---------------
(38,309) 466,777 428,468
-------------- --------------- ---------------
$ 1,163,583 $ 212,040 $ 1,375,623
============== =============== ===============
</TABLE>
<PAGE>
RAINWIRE PARTNERS, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
JUNE 30,2000 AND DECEMBER 31, 1999
Six Months Ended July 31, 1999 thru
June 30, 2000 December 31, 1999
-------------- ---------------
Service Revenue $ 937,305 $ 578,229
---------------
Direct Service Costs 353,045 227,615
-------------------- -------------- ---------------
Gross Profit 584,260 350,614
-------------- ---------------
Operating Expenses
------------------
Sales and marketing 84,863 346,805
General and administrative 693,174 390,000
Depreciation and amortization 26,362 20,084
-------------- ---------------
804,399 756,889
-------------- ---------------
Operating Loss (220,139) (406,275)
-------------- ---------------
Other Income (Expense)
----------------------
Interest income 1,130 603
Interest expense (16,250) (13,356)
Other income (expense) 1,050 -
-------------- ---------------
Net Income (Loss) $ (234,209) $ (419,028)
----------------- ============== ===============
Net (Loss) Per Common Share $ (0.034) $ (0.07)
--------------------------- ============== ===============
Weighted average number of common shares
outstanding 6,894,875 5,927,401
============== ===============
See Notes to Consolidated Proforma Financial Statements
<PAGE>
RAINWIRE PARTNERS, INC.
NOTES TO UNAUDITED PROFORMA CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma condensed financial statements have been prepared
combining the net monetary assets purchased of Envirometrics, Inc. and The
Catapult Group, Inc. and adjusting such combined balances to conform to the
accounting policies of the two companies.
The following describes adjustments and other items relevant to the pro forma
financial statements.
(1) Net deficiency in monetary assets acquired from Envirometrics, Inc. amounted
to $239,624 at June 30, 2000. This is due to the use of cash approximating and
significant decrease in trade accounts receivable from December 31, 1999.
(2) Re-capitalization. The weighted average number of shares outstanding was
calculated assuming Envirometrics shares were exchanged for all of the
outstanding shares of The Catapult Group at January 1, 2000 and 5,555,064 new
shares of Envirometrics, Inc. common stock was issued. Additionally, the
weighted average number of shares includes the 900,000 shares of common stock
that were issued for the $700,000 equity infusion at July 26, 2000.
(3) Loss per Common Share. Loss per common share is based upon the weighted
average number of common shares outstanding. The calculation also assumes that
holders of Envirometrics, Inc. common shares participated in a reverse split
transaction and were issued one share of Envirometrics, Inc. common stock for
every ten shares held.
(4) Impairment of long-lived assets. The Company reviews long-lived assets for
impairment whenever events or changes in business circumstances indicate the
carrying value of the assets may not be fully recoverable. The Company performs
undiscounted cash flow analyses to determine if impairment exists. Based on a
review performed for the quarter ended June 30, 2000, no impairment existed that
would require adjustment to or disclosure in the pro forma financial statements.
Note 1. Proforma Financial Condition and Plan of Operation at June 30, 2000
The pro forma consolidated balance sheet presents positive working capital in
the amount of approximately $18,000. As a result of the $700,000 equity infusion
that occured at closing on July 26, 2000, a note payable amounting to $250,000
was retired as if it occured at June 30, 2000.
Prior to the closing of and in accordance with the Exchange Agreement, The
Catapult Group was to have obtained a financing commitment for Two Million
Dollars ($2,000,000) in net proceeds or such lesser amount as may be agreed to
by Envirometrics and The Catapult Group, from a third party investor(s) upon
terms and conditions satisfactory to Envirometrics and The Catapult Group. At
closing on July 26, 2000, the Company received an equity infusion of Seven
Hundred Thousand dollars ($700,000). This initial equity infusion was used to
retire the aforementioned notes outstanding.
Note 2. Results of Operations and Management's Plans
Envirometric's completion of the plan to exchange stock with The Catapult Group,
Inc. represents the conclusion of the Company's turn-around efforts and a
considerable shift in strategy from environmental consulting services to
Internet and electronic commerce strategy and consulting services.
Traditionally, The Catapult Group has provided end-to-end Internet technology
solutions to its clientele. Moving forward, the Company will continue to provide
these services while orienting its brand and its operations toward a pure
consulting model. Under this model, the Company will supply its customers with
technology design and strategy, project management, quality assurance, and
auditing services. As a component of this honing of focus and market
differentiation, the organization has changed its operating name to Rainwire
Partners, Inc.("Rainwire"). Rainwire will aggressively expand both its Atlanta
and Charleston operations late in the third quarter and early in the fourth
quarter of this year.
The Company has continued to enlist new business throughout the second and third
quarters of 2000. However, the pace of new revenues has slowed as the Company
makes changes to its billing structure and begins to phase in its consulting
model and enhanced business plan. Additionally, late in the second quarter, one
of the Company's larger accounts was unable to pay amounts owed to the Company.
This default generated the write-off of nearly $100,000 in receivables and the
elimination of unbilled revenue accruals. The total write-off to this customer
was approximately $250,000. The Company anticipates a return to profitability in
the first quarter of 2001. The Company intends to pursue other acquisition
opportunities and expand its effort in the Southeastern United States. The
timing and success of these efforts is unpredictable. Accordingly, the Company
is unable to accurately estimate its expected capital requirement. Funding for
these efforts will likely come from the issuance of additional equity.
In the last 30 days, Rainwire has secured additional projects centering on the
deployment of Internet technology initiatives from; a company focusing on
creating and managing transformational technologies, products and business
models from ideas through market entry, a company that is a leader in packaged
concrete products, and a company providing technology infrastructure. These
initial contracts total $125,000 in projected revenue.
(c) Exhibits
The following exhibit is filed as a part of this Form 8-K/A
7.1 The Catapult Group, Inc. Audited Financial Statements for the year ended
December 31, 1999.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
RAINWIRE PARTNERS, INC.
(Registrant)
Dated: September 22, 2000 By: s/s Walter H. Elliott, III
--------------------------
Walter H. Elliott, III
Vice President
<PAGE>
Exhibit 7.1
-----------
TAUBER & BALSER, P.C.
Certified Public Accountants
3340 Peachtree Road, N.E.
Suite 250
Atlanta, GA 30326
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference of our report dated March 29, 2000
included in the September 22, 2000 Form 8-K/A for Rainwire Partners, Inc.
(formerly known as The Catapult Group, Inc.)
/s/ Tauber & Balser, P.C.
Tauber & Balser, P.C.
Atlanta, Georgia
September 22, 2000
THE CATAPULT GROUP, INC. 1999 AUDITED FINANCIAL STATEMENTS
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
THE CATAPULT GROUP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
PAGES
INDEPENDENT AUDITORS' REPORT..........................................148
CONSOLIDATED BALANCE SHEET............................................149
CONSOLIDATED STATEMENT OF OPERATIONS..................................150
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY........................151
CONSOLIDATED STATEMENT OF CASH FLOWS..............................152-153
NOTES TO FINANCIAL STATEMENTS.....................................154-160
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS.....................161
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The Catapult Group, Inc. and Subsidiary
Norcross, Georgia
We have audited the accompanying consolidated balance sheet of The Catapult
Group, Inc. and Subsidiary as of December 31, 1999 and the related consolidated
statements of operations, stockholders' equity and cash flows for the period
from July 21, 1999 (inception) to December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Catapult Group,
Inc. and Subsidiary as of December 31, 1999, and the results of their operations
and their cash flows for the period from July 21, 1999 (inception) to December
31, 1999. in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the
consolidated financial statements taken as a whole. The consolidating
information is presented for purposes of additional analysis of the consolidated
statement of operations rather than to present the results of operations of the
individual companies. The consolidating information has been subjected to the
auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole.
/S/ TAUBER & BALSER, P.C.
-------------------------
Atlanta, Georgia
March 29, 2000
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 2,294
Accounts receivable 233,897
Due from stockholder 20,000
------------
TOTAL CURRENT ASSETS 256,191
PROPERTY & EQUIPMENT, net of accumulated depreciation of $12,769 29,720
OTHER ASSETS
Goodwill, net of accumulated amortization of $16,762 486,103
Deposits 4,942
------------
491,045
------------
TOTAL ASSETS $ 776,956
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 500,000
Accounts payable 26,786
Accrued Expenses 54,268
------------
TOTAL CURRENT LIABILITIES 581,054
------------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 10,000,000 shares,
6,000,000 issued and outstanding 60,000
Additional paid-in capital 554,930
Accumulated deficit (419,028)
------------
TOTAL STOCKHOLDERS' EQUITY 195,902
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 776,956
============
The accompanying notes are an integral part of these financial statements
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
REVENUES
Consulting income $ 578,229
OPERATING EXPENSES
Communication and internet services 227,615
General and administrative 366,889
Founders' services 390,000
------------
TOTAL OPERATING EXPENSES 984,504
------------
OPERATING LOSS (406,275)
------------
OTHER INCOME (EXPENSE)
Interest expense (13,356)
Interest income 603
------------
(12,753)
------------
NET LOSS $ (419,028)
============
WEIGHTED AVERAGE COMMON SHARES USED IN
COMPUTING BASIC AND DILUTED LOSS PER SHARE 6,000,000
------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (.07)
============
The accompanying notes are an integral part of these financial statements
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Stock Issued Additional
------------------- Paid-In Accumulated Stockholders'
Shares Par Value Capital Deficit Equity
------ --------- ------- ------- ------
Balance, July 21, 1999 - $ - $ - $ - $ -
Issuance of stock 1,500,000 15,000 135,000 - 150,000
Issuance of stock for services 3,900,000 39,000 351,000 - 390,000
Issuance of stock for acquisition 600,000 6,000 68,930 - 74,930
Net loss - - - (419,028) (419,028)
--------- --------- -------- ---------- --------
BALANCE, DECEMBER 31, 1999 6,000,000 $ 60,000 $554,930 $ (419,028) $195,902
========= ========= ======== ========== ========
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (419,028)
------------
Adjustments:
Stock issued for services 390,000
Depreciation and amortization 20,084
Changes in assets and liabilities,
net of effects of i2o, Inc. purchase:
Accounts receivable (175,480)
Accounts payable and accrued expenses 34,556
------------
Total Adjustments 269,160
NET CASH USED IN OPERATING ACTIVITIES (149,868)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (6,358)
Payment for acquisition of subsidiary, net (221,480)
------------
NET CASH USED BY INVESTING ACTIVITIES (227,838)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable 250,000
Proceeds from issuance of common stock 130,000
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 380,000
------------
NET INCREASE IN CASH AND CASH END OF YEAR $ 2,294
============
(Continued)
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
(CONTINUED)
SUPPLEMENTAL DISCLOSURES OF CASH INFORMATION:
Cash paid for interest $ -
============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Details of acquisition
Fair value of assets acquired $ 636,428
Cash paid for the common stock (265,000)
Issuance of common stock (74,930)
Note payable (250,000)
-----------
Liabilities assumed $ 46,498
===========
Due from stockholder for purchase of common stock $ 20,000
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND OPERATING HISTORY
The Catapult Group, Inc. (the "Company") is an Internet services company,
providing internet consulting, systems development and integration as well as
marketing and communications solutions to Global 2000 and middle-market
companies. The Company's operations focus on three primary areas. The consulting
portion focuses on building the framework for systems development and deployment
by matching customer requirements with available technologies. The systems
development portion uses this "blueprint" to construct and deploy solutions
using the most efficient combination of customized programming and third-party
software. Once complete, the Marketing and Communications portion assists
customers with branding and marketing the product.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of The Catapult
Group, Inc. and its wholly owned subsidiary. All significant intercompany
accounts and transactions have been eliminated.
FAIR VALUE OF FINANCIAL INSTRUMENTS
All financial instruments reported are carried at cost, which approximates fair
value because of the short maturity of those instruments.
CREDIT RISK
The Company's accounts receivable potentially subject the Company to credit
risks as collateral is generally not required. The Company requires signed
contracts prior to starting any project.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost, and depreciated using an
accelerated method over the estimated useful lives of the assets, commencing
when the assets are installed or placed in service.
GOODWILL
Goodwill is the excess of cost over fair value of net assets acquired in a
business combination accounted for as a purchase. Goodwill is amortized on a
straight-line basis over 10 years. Amortization expense for the period ended
December 31, 1999 was $16,762.
REVENUE RECOGNITION
Revenues are recorded as services are performed and costs are recorded as
incurred. The Company at each reporting date reviews the status of major
contracts and immediately records losses in total, if any. Advance billings and
collections relating to future services, if any, are recorded as deferred
revenue and recognized when revenue is earned.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
ADVERTISING EXPENSE
Advertising expense includes the cost of sales brochures, print advertising in
trade publications, and trade shows. The cost of advertising is expensed as
incurred. Advertising expense for the period ended December 31, 1999 was $8,602.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.
NET LOSS PER SHARE
Loss per share is computed based on the weighted average of the number of
common shares outstanding of 6,000,000 for each period. For additional
disclosure regarding warrants see Note 7.
2. DUE FROM STOCKHOLDER
Due from stockholder consisted of an interest free advance which was collected
in March 2000.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1999 consist of the following:
Furniture and fixtures $ 5,134
Computer and office equipment 37,355
--------
42,489
Less accumulated deppreciation 12,769
--------
$ 29,720
========
Depreciation expense for the period ended December 31, 1999 was $3,322.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
4. NOTES PAYABLE
Notes payable at December 31, 1999 consist of the following:
Note payable related to purchase of i2o, Inc. at 5%, due
August 4, 2000, collateralized by the common stock of the
Company, interest and principal payable at maturity. $250,000
Note payable related to purchase of i2o, Inc. at 8%,
due February 4, 2000, interest and principal payable at maturity.
The note was still outstanding at March 29,2000 $250,000
--------
$500,000
========
Both notes are due within twelve months and are therefore current.
5. INCOME TAXES
Deferred income taxes and the related valuation allowances result from the
potential tax benefits of tax carryforwards and temporary differences between
financial and income tax reporting. . The Company has recorded a valuation
allowance to reflect the uncertainty of the ultimate utilization of the deferred
tax asset as follows:
Deferred tax asset:
Net operating loss carryforward $ 12,000
Stock issued for services 156,000
--------
Deferred tax asset 168,000
Valuation allowance (168,000)
--------
Net deferred tax asset $ -
========
The reconciliation of the effective income tax rate to the Federal statutory
rate is as follows:
Federal income tax rate (34.0)%
Effect of valuation allowance on deferred tax asset 34.0
State income tax, net of Federal benefit 0.0
-------
Effective income tax rate 0.0%
=======
Net operating loss carryforwards of approximately $30,000 arising in 1999
expires in 2019.
6. LEASE COMMITMENTS
The Company leases office space and equipment under operating leases expiring at
various times. Rental expense was $15,035 for the period ended December 31,
1999. The minimum rentals are as follows:
<PAGE>
2000 $ 60,564
2001 56,097
2002 47,135
2003 46,521
---------
$ 210,317
=========
7. STOCK PURCHASE WARRANTS AND OPTIONS
The Company applies the fair value method for stock warrants issued to
consultants. Compensation expense is recognized only when warrants are granted
with a discounted exercise price. For 1999, the exercise price for all stock
warrants issued was below the market value of the underlying stock on the grant
date. Compensation expense related to stock warrants issued in 1999 was nominal.
The following table summarizes warrant activity during 1999:
Weighted-Average
Shares Exercise Price
------- ------------------
Outstanding at beginning of the period - $ -
Granted 60,000 0.01
------- -------
Outstanding at end of the period 60,000 $ 0.01
======= =======
The following table summarizes information about the warrants outstanding at
December 31, 1999:
Exercise price $0.01
Weighted-average remaining contract life 10 years
Weighted-average exercise price $0.01
All warrants outstanding at December 31, 1999 are exercisable.
On September 28, 1999, the Company adopted the 1999 Stock Incentive Plan (the
"Plan"), which provided for the issuance of Incentive Stock Options ("ISO's")
and non-qualified stock options to officers, directors, key employees and
consultants in connection with the Company's incentive compensation program. The
number of shares reserved for the Plan was 882, 350.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
The Plan authorizes the grant of ISO's or non-qualified options with such
vesting provisions as determined at the time of grant. The exercise price of
each option granted under the Plan shall be set forth in the Stock Option
Agreement. The exercise price of any ISO granted shall not be less than the fair
market value of the Company's common stock on at the date of grant. These
options must be exercised within ten years of the date of grant.
Incentive stock options issued to persons who directly or indirectly own more
than 10% of the outstanding stock of the Company shall have an exercise price of
no less than 110 percent of the fair market value or the Company's common stock
on the date of grant and are exercisable up to five years from the date of
grant.
At December 31, 1999, no options were issued or outstanding under this Plan.
8. FOUNDERS' SERVICES
In July 1999, the Company issued 3,900,000 shares to certain founders in
exchange for services rendered. Charges to expense related to the transaction
were $390,000, which was calculated based on the fair market value of the stock
at the date of issuance
<PAGE>
THE CATAPULT GROUP, INC. AND SUBIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
9. ACQUISITIONS
In July 1999, the Company acquired 12.7% of i2o, Inc. a Georgia corporation, for
the issuance of 600,000 shares of common stock. On August 4, 1999, the Company
acquired the remaining 87.3% for $515,000. A portion of this purchase was
financed by issuance of a note payable of $250,000. The acquisition was
accounted for as a purchase and was included in operations from that date
through December 31, 1999. The details of the purchase are as follows:
Assets purchased $ 133,563
Liabilities assumed $ (46,498)
Goodwill $ 502,865
10. MAJOR CUSTOMERS
For the period July 21, 1999 (Inception) to December 31, 1999, the Company
earned approximately 85% of its revenue from four customers. At December 31,
1999, accounts receivable included approximately $208,000 from these customers.
11. SUBSEQUENT EVENT
The Company has entered into an agreement to be acquired by Envirometrics, Inc.
("Envirometrics"), a corporation, in exchange for all outstanding stock. The
acquisition will result in shareholders of the Company owning 90% of the
acquiring entity. The acquisition will be accounted for as a purchase of net
monetary assets of Envirometrics by The Catapult Group, Inc. in accordance with
generally accepted accounting principles. The acquisition is a reverse purchase
of the assets and liabilities of Envirometrics by The Catapult Group, Inc. The
accounting treatment applied in the reverse acquisition differs from the legal
form of the transaction and the continuing legal entity is Envirometrics, which
will change its name to The Catapult Group, Inc. The transaction is contingent
on the acquiring entity's stock being relisted on the OTC Bulletin Board, which
was accomplished on March 21, 2000 and other requirements. Upon consummation,
The Catapult Group, Inc. will become a reporting company with the Securities and
Exchange Commission. As of March 29, 2000, the acquisition has not been
consummated.
<PAGE>
THE CATAPULT GROUP, INC. AND SUBSIDIARY
SUPPLEMENTAL CONSOLIDATING SCHEDULE OF OPERATIONS
FOR THE PERIOD FROM JULY 21, 1999 (INCEPTION) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The
Catapult
Group I2O, INC. ELIMINATIONS CONSOLIDATED
REVENUES
Consulting income $ - $ 578,229 $ - $ 578,229
OPERATING EXPENSES
Communication and internet services - 227,615 - 227,615
General and administrative 46,761 320,128 - 366,889
Founders' services 390,000 - - 390,000
---------- ----------- -------- -----------
TOTAL OPERATING EXPENSES 436,761 547,743 - 984,504
---------- ----------- -------- -----------
OPERATING (LOSS) INCOME (436,761) 30,486 - (406,275)
----------- ---------- -------- -----------
OTHER INCOME (EXPENSE)
Interest expense (13,356) - - (13,356)
Interest income - 603 - 603
----------- ---------- -------- ----------
(13,356) 603 - (12,753)
----------- ---------- -------- ----------
NET INCOME (LOSS) $ (450,117) $ 31,089 $ - $ (419,028)
=========== ========== ======== ==========
</TABLE>
