UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended June 30, 2000
Commission file Number 0-23892
RAINWIRE PARTNERS, INC.
(Exact name of registrant as specified in its charter.)
DELAWARE 57-0941152
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
4940 Peachtree Industrial Boulevard, Ste 350
Norcross, GA 30071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(843) 553-9456
Indicate by check mark whether the registrant(1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X ] NO [ ]
As of June 30, 2000 the Registrant had outstanding 5,503,222 shares of
common Stock. Transitional small business disclosure format (check one):
YES [ ] NO [X]
<PAGE>
INDEX
-----
PART I. FINANCIAL INFORMATION Page #
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at
June 30, 2000 and December 31, 1999 2
Condensed Statement of Operations for the
Second Quarter ended June 30, 2000 and 1999 3
Condensed Statement of Cash Flows for the
Second Quarter ended June 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Conditions 6-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 3. Defaults upon Senior Securities 9
Item 5. Other Information 9-14
Item 6. Exhibits and Reports 14
Signature 15
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and December 31, 1999
Envirometrics Envirometrics
2000 1999
(Unaudited) (Audited)
------------- -------------
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 30,936 $ 104,607
Notes receivable, current portion 127,871 -
Trade receivables less allowance
for doubtful accounts $5,000
in 2000 and 1999 17,010 131,654
Inventories 4,000 4,000
Prepaid expenses 1,572 27,634
----------- -----------
TOTAL CURRENT ASSETS 181,389 267,895
----------- -----------
OTHER ASSETS AND INTANGIBLES
Deposits 2,500 2,500
Other 9,352 -
----------- -----------
11,852 2,500
----------- -----------
PROPERTY AND EQUIPMENT
Furniture and equipment 202,615 921,358
Vehicles 9,490 9,490
----------- -----------
212,105 930,848
Less accumulated depreciation 192,619 870,816
----------- -----------
19,486 60,032
----------- -----------
$ 212,727 $ 330,427
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 73,492 $ 12,848
Current maturities of
long-term debt 18,171 13,708
Accounts payable 231,370 221,228
Accrued expenses 61,789 170,677
----------- -----------
TOTAL CURRENT LIABILITIES 384,822 418,461
----------- -----------
LONG-TERM DEBT,
less current maturities - 71,681
Deferred Gain on Asset Sale 12,084 24,167
----------- -----------
12,084 95,848
----------- -----------
Redeemable Preferred Sotck 49,918 717,985
----------- -----------
STOCKHOLDERS' EQUITY
Common stock par value $.001;
authorized 10,000,000 shares;
issued 2000 - 5,503,222 and 1999 -
3,640,880 shares 5,503 3,640
Additional paid-in capital 5,811,856 5,069,388
Retained earnings(deficit) (6,051,456) (5,974,895)
----------- -----------
(234,097) (901,867)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 212,727 $ 330,427
=========== ===========
See Notes to Condensed Consolidated Financial Statements
1
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
DISCONTINUED OPERATIONS
Loss from discontinued operations (149,107) (17,700) (282,210) (11,758)
Gain (loss) on disposition
of operations 211,703 5,028 205,661 26,224
Interest (net) 65 1,507 (12) 827
NET INCOME (LOSS)FROM ----------- ---------- ----------- ----------
DISCONTINUED OPERATIONS 62,661 (11,165) (76,561) 15,293
=========== ========== =========== ==========
Weighted average number of
common shares outstanding 5,155,312 3,012,686 4,398,096 3,012,686
=========== ========== =========== ==========
Net income (loss)
per common share $ 0.012 $ (0.004) $ (0.017) $ 0.005
=========== ========== =========== ==========
Net (loss) per common share,
after preferred dividends $ 0.010 $ (0.007) $ (0.020) $ 0.002
=========== ========== =========== ==========
Dividends per common share $ - $ - $ - $ -
=========== ========== =========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
2
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SECOND QUARTER ENDED JUNE 30, 2000 AND 1999
June 30, June 30,
2000 1999
-------- --------
Cash Flows From Discontinued Operation's:
Net income $ (76,561) $ 15,293
Adjustments To Reconcile net income
(loss) to net cash used in
discontinued operation's.
Depreciation 10,875 20,567
(Gain) on disposal of subsidiary operations (125,329) -
(Gain)loss on disposal of real property (12,083) -
Net gain on vendor balances mediated (68,248) (26,199)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable 114,644 67,722
(Increase) decrease in prepaid
expenses 26,062 4,461
Increase (decrease) in accounts
payable and accrued expenses (98,746) (27,984)
------------ -----------
Net cash provided by (used in)
discontinued operation's (229,386) 53,860
------------ -----------
Cash Flows From Investing Activities:
Issuance of notes receivable for disposal
of subsidiary operations 130,000 -
Collection of notes receivable 2,129 218,294
Book value of assets disposed 40,699 -
Purchase of furniture and equipment - (2,835)
(Increase) decrease in deposits - (128)
(Increase) decrease in other assets (9,352) 252
------------ -----------
Net cash provided by investing
activities 163,476 215,583
------------ -----------
Cash Flows From Financing Activities:
Principal payments on long-term
borrowing (7,761) (36,673)
------------ -----------
Net cash used in financing activities (7,761) (36,673)
------------ -----------
Net increase (decrease) in cash and
cash equivalents (73,671) 232,770
Cash and cash equivalents, beginning 104,607 40,934
------------ -----------
Cash and cash equivalents, ending $ 30,936 $ 273,704
=========== ===========
Supplemental Disclosure of Cash Flows
Information
Cash payments for interest $ 787 $ 2,768
=========== ===========
Supplemental Disclosure of Cash Flows
Information
Issuance of common stock for warrants,
loan costs and other $ - $ 3,554
=========== ===========
Issuance of common stock for
debt conversion $ $ 76,877
=========== ===========
Issuance of preferred stock for
debt conversion $ $ 422,379
=========== ===========
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
ENVIROMETRICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(1) The unaudited condensed financial statements and related notes have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying condensed consolidated financial statements of the Company, and
notes thereto, should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1999, filed under the Company's former
name Envirometrics, Inc.
The results of activity for the interim periods shown in this report are not
necessarily indicative of results to be expected for the fiscal year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to present fairly the consolidated financial position, discontinued
operations and changes in cash flow for the interim periods. All such
adjustments are of a normal recurring nature.
(2) Net loss per common share is computed using the weighted average number of
common shares outstanding, after giving effect for the 1 for 2 reverse split
effective with the initial public offering in 1994.
(3) The Company's common stock and warrants were deleted from The Nasdaq
SmallCap Market(tm) on December 3, 1996 for failure to meet the capital and
surplus requirement for continued listing. The Company was subsequently listed
on the OTC-Bulletin Board. The Company's listing on the OTC-Bulletin board was
deleted November 18, 1999 and re-listed on March 21, 2000 after filing the
required forms 10-KSB for the years 1996, 1997, 1998 and 1999.
(4) At June 30, 2000 the Company had accrued $873 in dividends on Series C
preferred shares discussed above. In March 2000, the holders of all preferred
shares agreed to convert to Common Stock all accrued dividends of $69,304.
(5) The Company disposed of all remaining operations in May, 2000 in two
unrelated transactions. Therefore, all activity for 2000 and 1999 has been
reflected as discontinued operations. Two notes receivable have been recorded in
connection with these transactions
(6) The Company entered into a binding agreement with The Catapult Group, Inc.
and acquired all of the outstanding stock of that corporation on July 26, 2000.
The Company subsequently changed its name to Rainwire Partners, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three Months Ended June 30, 2000 Compared To Three Months Ended June 30, 1999
On April 26 and May 8, 2000 respectively, the Company sold its remaining
consultative and laboratory operations. Because of these two transactions, the
Company has reported all activity as discontinued operations for the quarter
ended June 30, 2000, and has restated the corresponding amounts for the quarter
ended June 30, 1999.
Because these operations were sold and the Company focused its attention on
closing the transaction with The Catapult Group, Inc., no comparative discussion
of operations with prior periods has been included.
Financial Condition
The independent auditor's report, filed in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1999, stated that the Company has
suffered from recurring losses from operations and decreases in working capital
and stockholders' equity. This raised substantial doubt about the Company's
ability to continue as a going concern. The Company's financial condition
deteriorated during the second quarter ended June 30, 2000 over 1999 due to the
sale of assets from its operating subsidiary. The Company is experiencing cash
flow constraints.
Working capital deficiency at June 30, 2000 amounted to $129,900 which was
approximately a $20,600 improvement over December 31, 1999. Cash decreased by
approximately $73,700 and trade accounts receivable decreased by approximately
$114,600 over December 31, 1999. Two notes receivable in connection with the
disposition of subsidiary operations are expected to be collected within one
year and are recorded as current assets. Included in current maturities of long
term debt is $73,400 in connection with the Small Business Administration debt
discussed below.
The Company did not have adequate assets to meet its obligations at June 30,
2000. Approximately $80,000 (representing 100%) of debt in connection with the
Small Business Administration is expected to be paid from collections of a note
receivable recorded in connection with the sale of the consultative operations.
As part of that agreement, the Company also is expected to receive additional
proceeds based on revenues from certain existing customer contracts transferred.
In addition, the Company received $700,000 through the issuance of new shares of
common stock subsequent to the completion of the acquisition of The Catapult
Group, Inc., $500,000 was used to repay notes payable of The Catapult Group,
Inc. of which $250,000 was in default. The remaining amount will be used for
working capital.
In addition, $69,304 of accrued dividends on preferred shares were converted
into common shares during April 2000.
The Company eliminated approximately $53,000 in trade payables related to vendor
amounts greater than three years old during the first six months of 2000.
The Company has significant professional fees included in accounts payable at
June 30, 2000. The Company expects that payment in excess of $100,000 for
professional fees recorded at June 30, 2000 will be from the capital raise
completed at the merger with The Catapult Group, Inc., and additional financing
anticipated through the sale of new shares of common stock.
Recent Development
On May 18, 2000 the Company filed a definitive Information Statement soliciting
consents from its shareholders to consummate the transaction with The Catapult
Group, Inc. and take other actions as outlined in the Information Statement
necessary to comply with the Plan and Agreement to Exchange Stock dated as of
February 16, 2000 (the "Exchange Agreement"). On June 8, 2000 the Company's
transfer agent, Continental Stock Transfer & Trust Company suspended the consent
count because a majority (approximately 60%) of the consents had been returned.
The transfer agent then issued the Company a confirmation letter tabulating the
consent count, 3,264,363 votes were received with greater than 99% giving
consent to the transactions outlined in the Information Statement.
Prior to the closing of the Exchange Agreement, on July 26, 2000, Registrant
effected a 10:1 reverse split of its outstanding common stock, issued 5,555,064
shares of its common stock to purchase all of the outstanding common stock of
Catapult, changed its name to The Catapult Group, Inc. and increased its
authorized shares from Ten Million (10,000,000) to Twenty Million (20,000,000).
An amendment to Registrant's Certificate of Incorporation reflecting such
changes was filed with the Secretary of State of Delaware on July 26, 2000. Upon
completion of the Exchange Agreement, The Catapult Group, Inc. became a wholly
owned subsidiary of the Company and the shareholders of The Catapult Group, Inc.
became owners of approximately 90% of the current outstanding shares of Common
Stock of the Company. The Company subsequently changed its name to Rainwire
Partners, Inc. Mr. Walter H. Elliott, III resigned as President and CEO and Mr.
Bryan M. Johns became President and CEO.
On July 26, 2000 four individuals, Jake Cantrell, Ronald Potts, Nancy Edwards
and Shiela A. Tallent (the "Purchasers") acquired a total of Nine Hundred
Thousand (900,000) shares of newly issued Common Stock of the Company for Seven
Hundred Thousand dollars ($700,000) or approximately $0.78 per share. Although
the Exchange Agreement required an investment of $2 million, both Envirometrics,
Inc. and The Catapult Group, Inc. agreed to waive this requirement and accept
the $700,000 capital investment. In consideration of their purchase of Common
Stock the Purchasers were granted certain Registration Rights.
The Purchasers' registration rights include the right to make one demand that
the Company register common stock constituting all or part of the
above-mentioned 900,000 shares on Forms S-1, S-2 or S-3 at any time after
September 1, 2000. If the Company is unable to financially bear the cost of the
filing of the registration statement under the demand registration, the
Purchasers may elect to pay the registration expenses. Subject to certain
restrictions, the Purchasers' registration rights also require the Company, upon
request, to use its best efforts to include in any registration of equity
securities of the Company, whether for sale for the account of the Company or
for the account of any holder of securities of the Company, common stock
constituting all or part of the above-mentioned 900,000 shares that the Company
has been so requested to register. For a more detailed description of the terms
of the registration rights agreement please see Exhibit 10.5.
General Overview
During the course of the "Turnaround" phase (see Envirometrics, Inc. 1999
10-KSB, Item 1: Description of Business), the Company explored alternative plans
for growth to include the identification of companies in other markets which had
greater growth potential than the Environmental, Health and Safety market. This
process began with a view of keeping all options open for the future of the
Company. In September 1999, the Company was introduced to The Catapult Group,
Inc. ("The Catapult Group"), a Georgia corporation. The Catapult Group operated
as an Internet integration firm offering intelligent end-to-end e-business
solutions to large and middle-market organizations. These solutions range from
strategic e-business planning and application development to marketing and
communications services for Internet enterprises. The Catapult Group was looking
to enter the public market without incurring the cost of an expensive Initial
Public Offering and was exploring the avenue of a reverse merger with a company
whose securities were already publicly traded. In February 2000, the Company and
The Catapult Group entered into a non-binding agreement whereby the Company
would acquire The Catapult Group. On July 26, 2000 this transaction was
consummated.
On July 26, 2000, Registrant entered into Employment Agreements with Mr. Bryan
M. Johns, President and Chief Executive Officer, and Mr. Walter H. Elliott, III,
Vice President, Business Operations and Mergers and Acquisitions. The Employment
Agreements have an initial term of three (3) years and are renewable for one
year successive terms after the expiration of three (3) years. The Employment
Agreements provide for an annual minimum base salary of $102,000 for Mr. Johns,
and $100,000 for Mr. Elliott. The Employment Agreements entitle Mr. Johns and
Mr. Elliott to annual bonuses to be determined by the Compensation Committee of
the Board of Directors and participation in Registrant's Incentive Stock Option
Plan.
On July 26, 2000, the majority of the shareholders of Registrant elected to
change the name of Registrant from The Catapult Group, Inc. to Rainwire
Partners, Inc. An amendment to Registrant's Certificate of Incorporation
reflecting the name change was filed with the Secretary of State of Delaware on
July 27, 2000.
On August 1, 2000, Rainwire Partners, Inc. received a new symbol from NASDAQ. As
of that date, Rainwire Partners, Inc. is traded on the OTC Bulletin Board under
the symbol RNWR.
This 10-QSB contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Investors are cautioned that certain
statements in this 10-QSB 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, government regulation, and general economic and business
conditions. Actual events, circumstances, effects and results may be materially
different from the results, performance or achievements expressed or implied by
the forward-looking statements. Consequently, the forward-looking statements
contained herein should not be regarded as representations by the Company or any
other person that the projected outcomes can or will be achieved.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 3. Defaults upon Senior Securities
Dividends on Preferred Shares
As of June 30, 2000, 24,959 shares of Series C preferred stock remain
outstanding. Dividends on these shares total $873 and are still unpaid.
Item 5. Other Information
ProForma Financial Information
ENVIROMETRICS, INC. AND THE CATAPULT GROUP, INC. (NOW RAINWIRE PARTNERS, INC.)
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma condensed financial information has been
prepared based upon the net deficiency in monetary assets of Envirometrics, Inc.
acquired and the historical consolidated financial statements of The Catapult
Group, Inc., giving effect to the combination.
In the financial statements of the Company, the acquisition is accounted for as
a reverse purchase of the assets and liabilities of Envirometrics, Inc. 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 now Rainwire Partners, Inc (formerly Envirometrics, Inc.).
The pro forma condensed financial information does not purport to present the
financial condition and results of operations of Envirometrics, Inc. and The
Catapult Group, Inc. had the Merger actually been completed as of the dates
indicated. In addition, the pro forma condensed financial information is not
necessarily indicative of the future results of operations and should be read in
connection with the historical consolidated financial statements and the notes
thereto of Envirometrics, Inc. and The Catapult Group, Inc., respectively.
The Company filed a Form 8-K on August 4, 2000 announcing the completion of the
transaction and will file updated pro forma condensed financial statements as of
the effective date, July 26, 2000, as an amendment to this Form 8-K filing.
<PAGE>
THE CATAPULT GROUP, INC. (formerly ENVIROMETRICS, INC. AND SUBSIDIARIES)
PROFORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
Actual Adjustments Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents $ (10,351) $ 30,936 (1)$ 20,585
Accounts receivable 186,596 17,010 (1) 206,606
Other net monetary assets - 127,184 127,184
Prepaid expenses - 5,572 (1) 5,572
--------------- --------------- ---------------
Total Current Assets 176,245 180,702 356,947
--------------- --------------- ---------------
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 469,341 - 469,341
--------------- --------------- ---------------
474,283 11,852 486,135
--------------- --------------- ---------------
TOTAL $ 698,833 $ 212,040 $ 910,873
=============== =============== ===============
<FN>
See Notes to Consolidated Proforma Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Actual Adjustments Pro Forma
--------------- --------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 500,000 $ $ 500,000
Current maturities of long-term debt - 18,171 (1) 18,171
Accounts payable 127,982 231,370 (1) 359,352
Accrued expenses and other 80,773 60,916 (1) 141,689
-------------- --------------- ---------------
Total Current Liabilities 708,755 310,457 1,019,212
-------------- --------------- ---------------
Long-term Debt, less current portion
Banks and others - 72,805 (1) 72,805
Deferred gain on asset sale - 12,083 (1) 12,083
-------------- --------------- ---------------
Total Current Liabilities - 84,888 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 10,000,000 shares;
issued 2000 - 6,107,887 shares 60,000 (60,000)(2) 6,108
5,555 (2)
3,852 (1)
148 (2)
25 (2)
1,503 (2)
(4,975)(3
Additional paid-in capital 554,930 54,445 (2) 375,600
(25)(2)
(238,726)(1)
4,975 (3)
Accumulated deficit (624,852) - (624,852)
-------------- --------------- ---------------
(9,922) (233,223) (243,145)
-------------- --------------- ---------------
$ 698,833 $ 212,040 $ 910,873
============== =============== ===============
<FN>
See Notes to Consolidated Proforma Financial Statements
</FN>
</TABLE>
<PAGE>
THE CATAPULT GROUP, INC.(formerly ENVIROMETRICS, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTER ENDED JUNE 30,2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ACTUAL ADJUSTMENTS CONSOLIDATED
-------------- --------------- ---------------
Service Revenue $ 922,555 $ $ 922,555
---------------
Direct Service Costs 353,045 353,045
-------------------- -------------- --------------- ---------------
Gross Profit 569,510 569,510
-------------- --------------- ---------------
Operating Expenses
------------------
Sales and marketing 141,641 141,641
General and administrative 593,261 593,261
Depreciation and amortization 26,362 26,362
-------------- --------------- ---------------
761,264 761,264
-------------- --------------- ---------------
Operating Loss (191,754) (191,754)
-------------- --------------- ---------------
Other Income (Expense)
----------------------
Interest income 1,130 1,130
Interest expense (16,250) (16,250)
Other income (expense) 1,050 1,050
-------------- --------------- ---------------
Net Income (Loss) $ (205,824) $ $ (205,824)
----------------- ============== =============== ===============
Net (Loss) Per Common Share $ (0.034) $ n/a $ (0.034)
--------------------------- ============== =============== ===============
Weighted average number of common shares
outstanding 6,000,000 (4,109) 5,995,891
============== =============== ===============
<FN>
See Notes to Consolidated Proforma Financial Statements
</FN>
</TABLE>
<PAGE>
RAINWIRE PARTNERS, INC. (formerly ENVIROMETRICS, INC. AND SUBSIDIARIES)
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 amounted to $203,433 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.
(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
The pro forma consolidated balance sheet presents negative working capital in
the amount of $305,200. Included in this deficiency is $500,000 in notes
payable, of which $250,000 was in default as of 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) as described above (Part I, Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Recent Developments). 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.
Item 6. Exhibits and Reports
(a) The following exhibits are filed along with this Report on Form 10-QSB:
Number Description of Exhibit
10.1 Subscription Agreement by and between Registrant and Ronald Potts,
dated July 26, 2000
10.2 Subscription Agreement by and between Registrant and Jake Cantrell,
dated July 26, 2000
10.3 Subscription Agreement by and between Registrant and Shiela Tallent,
dated July 26, 2000
10.4 Subscription Agreement by and between Registrant and Nancy Edwards,
dated July 26, 2000
10.5 Registration Rights Agreement by and between Registrant and Ronald
Potts, Jake Cantrell, Shiela Tallent, and Nancy Edwards, dated July 26,
2000
(b) Reports on Form 8-K: The Company filed a Form 8-K on August 4, 2000.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
RAINWIRE PARTNERS, INC.
Date: August 21, 2000 /s/ Walter H. Elliott, III
__________________________
Walter H. Elliott, III
Vice President
