<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______________ to
________________
Commission file number 000-30522
CEREUS TECHNOLOGY PARTNERS, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 13-3773537
(State of Incorporation) (I.R.S. Employer Identification No.)
1000 ABERNATHY ROAD, SUITE 1000, ATLANTA, GEORGIA 30328
(Address of principal executive offices) (Zip Code)
(770) 668-0900
(Registrant's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
-----------
Check whether the issuer: (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 May 10, 2000, there were 8,944,159 shares of Common Stock, $0.01
par value, outstanding.
Transitional Small Business Disclosure Format (check one): Yes[ ] No [X]
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CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2000
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1 FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet of Cereus Technology
Partners, Inc. and Subsidiaries at March 31, 2000 and December 31, 1999..................... 3
Condensed Consolidated Statements of Operations of Cereus
Technology Partners, Inc. and Subsidiaries for the Three Months
Ended March 31, 2000 and March 31, 1999..................................................... 4
Condensed Consolidated Statements of Stockholder's Equity as of
March 31, 2000.............................................................................. 5
Condensed Consolidated Statements of Cash Flows of Cereus
Technology Partners, Inc. and Subsidiaries for the Three Months
Ended March 31, 2000 and March 31, 1999..................................................... 6
Notes to Condensed Consolidated Financial Statements........................................ 8
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.......................................................... 11
</TABLE>
PART II - OTHER INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1 LEGAL PROCEEDINGS.............................................................. 13
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS...................................... 13
ITEM 3 DEFAULTS UPON SENIOR SECURITIES................................................ 14
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................ 14
ITEM 5 OTHER INFORMATION.............................................................. 14
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K............................................... 14
SIGNATURES....................................................................................... 15
</TABLE>
2
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CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31,2000 December 31,1999
----------------- ----------------
<S> <C> <C>
Current assets:
Cash $ 16,972,112 $ --
Accounts receivable, net 955,108 814,892
Prepaid expenses and other current assets 435,273 145,120
Assets of discontinued operations held for sale 640,000 640,000
----------------- ----------------
Total current assets 19,002,493 1,600,012
----------------- ----------------
Property and equipment, net 532,176 304,166
Goodwill, net 5,404,322 11,348,425
Other assets 305,976 305,976
----------------- ----------------
Total assets $ 25,244,967 $ 13,558,579
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ -- $ 107,702
Notes payable and short-term debt 1,274,987 3,351,163
Accounts payable 659,184 1,976,411
Accrued expenses and other current liabilities 1,690,750 1,776,783
Accrued stock compensation -- 638,300
----------------- ----------------
Total current liabilities 3,624,921 7,850,359
Long-term debt 11,816 36,463
----------------
Total liabilities 3,636,737 7,886,822
----------------- ----------------
Stockholders' equity:
Preferred stock -- --
Common stock 89,415 40,627
Additional paid-in capital 48,246,105 15,481,923
Accumulated deficit (25,613,681) (8,835,482)
----------------- ----------------
Total 22,721,839 6,687,068
Less notes receivable from stockholders (1,113,609) (1,015,311)
----------------- ----------------
Total stockholders' equity 21,608,230 5,671,757
Commitments and contingencies
----------------- ----------------
Total liabilities and stockholder's equity $ 25,244,967 $ 13,558,579
================= =================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Net revenues $ 1,591,325 $ --
Less:
Cost of revenues 1,433,180 --
Loss on contractual services 250,000 --
Sales and marketing expenses 315,465 --
General and administrative expenses 738,949 --
Stock compensation expense 2,273,050 --
Impairment charge 5,637,401 --
Depreciation and amortization 43,537 --
Goodwill amortization 306,702 --
------------- -------------
Operating loss (9,406,959) --
Interest income, net 52,260 --
Loss from continuing operations before
------------- -------------
income taxes and extraordinary item (9,354,699) --
Income taxes from continuing operations -- --
------------- -------------
Loss from continuing operations before
extraordinary item (9,354,699) --
Discontinued operations
Loss from discontinued operations -- (309,456)
Loss on disposal of discontinued operations (236,000) --
------------- -------------
(236,000) (309,456)
Loss before extraordinary item (9,590,699) (309,456)
Extraordinary Item:
Loss from debt conversion (7,187,500) --
------------- -------------
Net loss $ (16,778,199) $ (309,456)
============= =============
Loss per share-basic and diluted:
Loss before discontinued operations and
extraordinary items $ (1.38) $ --
Discontinued operations (0.03) (0.22)
------------- -------------
Loss before extraordinary items (1.41) (0.22)
Loss from debt conversion (1.06) --
------------- -------------
Net loss $ (2.47) $ (0.22)
============= =============
Weighted Average Shares Outstanding 6,792,081 1,396,684
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON ADDITIONAL
-------------------------- PAID-IN
SHARES AMOUNT CAPITAL
<S> <C> <C> <C>
Balances at December 31, 1999 4,062,604 $ 40,627 $ 15,481,923
Issuance of common stock in private placement,
including placement agency shares 4,084,955 40,850 19,575,950
Conversion of debt and expenses for common stock 751,381 7,514 9,951,987
Issuance of common stock for options exercised 39,837 398 74,271
Stock compensation -- -- 2,913,156
Adjustment of issuance of common stock and note receivable to
acquire common stock in connection with acquisition (50,000) (500) 500
Common stock issued for services 52,632 526 248,318
Net loss -- -- --
------------ ------------ ------------
Balances at March 31, 2000 8,941,409 $ 89,415 $ 48,246,105
============ ============ ============
</TABLE>
<TABLE>
NOTES
ACCUMULATED RECEIVABLE FROM TOTAL
DEFICIT STOCKHOLDERS
<S> <C> <C> <C>
Balances at December 31, 1999 $ (8,835,482) $ (1,015,311) $ 5,671,757
Issuance of common stock in private placement,
including placement agency shares -- -- 19,616,800
Conversion of debt and expenses for common stock -- -- 9,959,501
Issuance of common stock for options exercised -- -- 74,669
Stock compensation -- -- 2,913,156
Adjustment of issuance of common stock and note receivable to
acquire common stock in connection with acquisition -- (98,298) (98,298)
Common stock issued for services -- -- 248,844
Net loss (16,778,199) -- (16,778,199)
------------ ------------ ------------
Balances at March 31, 2000 $(25,613,681) $ (1,113,609) $ 21,608,230
============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Operating activities:
Continuing operations:
Loss from continuing operations $ (16,542,199) $ --
Adjustments to reconcile net loss to net cash
provided by continuing operating activities:
Depreciation and amortization 350,239 --
Impairment charge 5,637,401 --
Noncash stock compensation 2,273,050 --
Accounts receivable allowances (27,495) --
Amortization of debt discount 73,341 --
Loss from Debt Conversion 7,187,501 --
Changes in operating assets and liabilities:
Accounts receivable (112,721) --
Prepaid expenses and other current assets 8,691 --
Accounts payable (1,317,227) --
Accrued expenses and other liabilities 737,549 --
------------- -------------
Net cash used in continuing operating activities (1,731,870) --
------------- -------------
Discontinued operations:
Loss from discontinued operations -- (385,452)
Loss on disposal of discontinued operations (236,000) --
------------- -------------
Net cash used in discontinued operating activities (236,000) (385,452)
------------- -------------
Net cash used in operating activities (1,967,870) (385,452)
------------- -------------
Investing activities:
Continuing operations:
Net cash used in investing activities for continuing operations -
Additions to property and equipment (321,547) --
------------- -------------
Discontinued operations:
Net cash used in investing activities for discontinued operations -
Additions to property and equipment -- (2,331)
------------- -------------
Net cash used in investing activities (321,547) (2,331)
------------- -------------
Financing activities:
Decrease in bank overdraft (107,702) --
Proceeds from borrowings from note payable 511,836 --
Repayments of long-term debt (311,000) --
Increase in note receivable shareholder (98,298) --
Issuance of common stock 19,266,694 --
------------- -------------
</TABLE>
6
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<TABLE>
<S> <C> <C>
Net cash provided from financing activities
for continuing operations 19,261,530 --
Discontinued operations:
Increase in bank overdraft 292,958
Proceeds from debt financing -- 100,000
Payment of long-term debt -- (5,175)
------------- -------------
Net cash provided by financing activities
for discontinued operations -- 387,783
------------- -------------
Net cash provided by financing activities 19,261,530 387,783
------------- -------------
Net increase in cash and cash equivalents 16,972,113 --
Cash and cash equivalents at beginning of period -- --
------------- -------------
Cash and cash equivalents at end of period $ 16,972,113 $ --
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
CEREUS TECHNOLOGY PARTNERS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2000
(Unaudited)
(1) BUSINESS AND BASIS OF PRESENTATION
Cereus Technology Partners, Inc. and subsidiaries (the "Company"
or "Cereus"), was formerly named AIM Group, Inc. prior to December
1, 1999. Prior to July 31, 1999, the Company operated a surface
modification facility in Arkansas for industrial minerals used as
fillers and endeavored to develop a cement additive application
for a silica/kaolinite rock mined on property leased by the
Company in Arizona. On March 31, 2000, the Company entered into an
agreement to sell its mineral businesses for aggregate
consideration of approximately $1.0 million to the Company's
former Chairman of the Board (the "Mineral Transaction").
Accordingly, the surface modification and mining operations have
been reflected as discontinued operations in the accompanying
consolidated financial statements. The Mineral Transaction was
closed in April 2000.
In 1999, the Company acquired three companies that provided
information technology services and began providing business
software implementation and consulting and Internet services. On
July 30, 1999, the Company acquired The Reddy Group, Inc. and its
wholly-owned subsidiary, Cereus Bandwidth LLC (collectively,
"Cereus Bandwidth"), an Atlanta-based Internet service provider
("ISP") which developed and currently markets a variety of
Internet, intranet and e-commerce services. On July 30, 1999, the
Company acquired Enterprise Solutions Group, Inc. ("ESG"), a West
Palm Beach based business software applications consulting firm.
On November 15, 1999, the Company acquired Client Server
Solutions, Inc. and an affiliate company (collectively, "CSS"), an
Atlanta-based business software sales and service company. ESG and
CSS are focused on enterprise resource planning ("ERP")
applications consisting of integrated financial, administrative,
payroll and human resource, manufacturing, distribution,
point-of-sale and inventory management software. The applications
are supported by software that includes management information
systems and database management of sales and marketing
information.
(2) DISCONTINUED OPERATIONS
Until July 31, 1999 the Company was primarily a mining and mined
products company. During 1999, the Company decided to change its
business model to become a technology services company. To
accomplish this objective, the Company acquired three technology
consulting companies, changed its name and decided to discontinue
its mining operations business.
In March 2000, the Company executed a sale agreement with the
former Chairman of the Board of the Company to sell the mining
business; the transaction closed in April 2000. This agreement
specified a purchase price of approximately $640,000 for the
stock of all mining subsidiaries plus approximately $340,000 of
working capital contributions to be provided by the Company. The
consideration was in the form of an interest-bearing note, due in
180 days, unless called earlier by the Company based upon certain
rights. This note is secured by the pledge of 84,000 shares of
the Company's stock held by the former Chairman and the stock of
certain of the subsidiaries to be sold.
8
<PAGE> 9
The Company will retain no subsequent interests in any mining
operations or assets, no liabilities, expressed or contingent
with respect to the mining operations, and the ultimate payment
of the note is not tied in any form to the results of the mining
operations.
The sales price approximates the fair market value of the assets,
as determined by an independent appraiser. Therefore, the Company
wrote down the book value of its mining operations to this fair
market value and accrued for transaction costs and severance
obligations associated with the disposition in the fourth quarter
of 1999. An additional loss on disposal of discontinued operations
of approximately $236,000 was recorded for the quarter ended March
31, 2000 reflecting an adjustment to the write-down of the book
value of the mining companies that was recorded in 1999. In
accordance with generally accepted accounting principles the
Company's prior period financial statements have been reclassified
to reflect the results of the discontinued operations.
(3) GOODWILL AND IMPAIRMENT CHARGE
During the quarter ended March 31, 2000 the Company hired new
management, appointed a new board of directors and changed its
strategic direction from an ERP implementation and consulting
business to a web integration and application service provider
business. As a result, management evaluated its net investments
in the recently acquired companies and based upon its projections
of expected future cash flows over a five year period, discounted
using a 12% interest rate, determined that the investments in the
companies previously engaged in ERP software sales and
implementation services were impaired. Accordingly, the Company
recognized an impairment charge of approximately $5.6 million
during the quarter ended March 31, 2000.
(4) STOCK-BASED COMPENSATION
During the quarter ended March 31, 2000 stock issued to certain
employees pursuant to contingent payments under amended terms of
the CSS acquisition as well as purchases of stock and warrants by
members of management as part of the private equity placement
and warrants issued to consultants resulted in stock compensation
expense of approximately $2.3 million.
(5) LOSS ON COMMITMENTS AND CONTINGENCIES
Loss on contractual services of approximately $250,000 related to
commitments entered into prior to the new management team and its
repositioning of the business to focus on business to business
e-commerce was recognized in the first quarter 2000. The loss is
recognized based on management's evaluation that any future
economic benefits from these commitments are not probable given
the repositioning of the business and the amount of the loss can
be reasonably estimated.
(6) DEBT
During the quarter ended March 31, 2000, the Company retired
approximately $2 million of its notes payable outstanding as of
December 31, 1999 through a conversion of the notes into a
combination of stock and warrants. In addition another $440,000
of notes issued in January, 2000 were converted into stock and
warrants, and the Company settled certain other amounts payable
through the issuance of common stock and warrants. Approximately
$1
9
<PAGE> 10
million of the notes were converted pursuant to their original
terms and accordingly no gain or loss on the extinguishment of
debt was recognized. The remaining notes payable and other
payables were extinguished based upon terms not pursuant to the
original obligations. Accordingly, the Company recognized a loss
on extinguishment of approximately $7.2 million based upon the
difference between the fair value of the stock and warrants
issued and the carrying value of the debt extinguished as
measured at the dates of the extinguishment.
(7) STOCK, OPTIONS AND WARRANTS
On February 8, 2000, the Company consummated the private
placement (the "Private Placement") of 4,000,000 shares of the
Company's common stock (the "Common Stock" and warrants to
purchase 4,000,000 shares of Common Stock. The placement was for
1,600 units (the "Units"), with each Unit having a purchase price
of $12,500 and consisting of 2,500 shares of Common Stock and a
warrant (the "Warrant") to purchase 2,500 shares of Common Stock
at an exercise price of $10.00 per share. The Warrant expires
three (3) years after its issuance and may be redeemed by the
Company if the closing bid price for the Common Stock is equal to
or greater than 100% of the exercise price of the Warrant for
twenty (20) consecutive trading days, provided that a
registration statement covering the shares of Common Stock to be
issued upon exercise of the Warrants is then effective.
The Company received gross proceeds of $20 million from the
Private Placement. The Company intends to use such proceeds to
make strategic acquisitions, to meet working capital requirements
and for general corporate purposes.
In connection with the Private Placement, the Company incurred
placement agency fees of approximately $760,000 in cash in the
aggregate, issued an aggregate of 84,955 shares of Common Stock,
warrants to purchase an aggregate of 84,955 shares of Common
Stock at an exercise price of $10.00 per share, and warrants to
purchase an aggregate of 336,750 shares of Common Stock at an
exercise price of $5.50 per share.
The Units offered and sold in the Private Placement were not
registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption therefrom
provided by Section 4(2) of the Securities Act.
In addition to the 4,000,000 shares of Common Stock and 4,000,000
warrants (exercisable at $10.00) issued in connection with the
Private Placement and the 84,955 shares of Common Stock and
421,705 warrants issued to placement agents, other significant
activity during the first quarter included: the issuance of
751,381 shares of Common Stock and 929,918 warrants (exercisable
between $3.75 and $10.00) for conversion of debt and
settlement of expenses, as well as the issuance of 52,632 shares
of Common Stock for contractual services; the issuance of
2,630,000 warrants to members of the new executive management and
new board of director members (at exercise prices ranging from
$3.75 to $17.75).
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements contained in this Quarterly Report on Form 10-QSB are
"forward-looking statements," within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective in nature. Such
forward-looking statements reflect management's beliefs and assumptions and are
based on information currently available to management. The forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of Cereus Technology
Partners, Inc. to differ materially from those expressed or implied in such
statements. There can be no assurance that such factors or other factors will
not affect the accuracy of such forward-looking statements.
Results of Operations
Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999
Cereus Technology Partners, Inc. (the "Company" or "Cereus"), known as AIM
Group, Inc. prior to December 1, 1999, adopted a new business strategy in July
1999 to provide business application software and services through traditional
delivery methods and Web based delivery methods. To facilitate its new business
strategy during 1999 Cereus acquired Client Server Solutions, Inc. and an
affiliated company (collectively, "CSS"), Enterprise Solutions Group ("ESG") and
Reddy Group, Inc. and subsidiary, Cereus Bandwidth, LLC (collectively, "Cereus
Bandwidth" and together with CSS and ESG the "Acquired Businesses"). On July 30,
1999, the Company acquired Cereus Bandwidth and ESG, and on November 15, 1999,
the Company acquired CSS. CSS and ESG provide business application software and
services to the middle market through traditional delivery methods. Cereus
Bandwidth is a provider of Internet-based technology services to small and
middle market companies. The results from continuing operations for the quarter
ended March 31, 2000 were derived from the operations of the Acquired
Businesses.
Net revenues of approximately $1,591,000 for the quarter ended March 31, 2000
were derived principally from sales of software, consulting and development
fees and Internet service fees.
Cost of revenues of approximately $1,433,000 for the quarter ended March 31,
2000 primarily reflect the cost of software products and consulting,
development and other direct labor costs associated with the first quarter 2000
revenue.
Loss on contractual services of approximately $250,000 related to software
purchase commitments entered into which the Company does not expect to use due
to its repositioning of the business to focus on business to business
e-commerce was recognized in the first quarter 2000. The loss is recognized
based on management's evaluation that any future economic benefits from these
commitments are not probable given the repositioning of the business and the
amount of the loss can be reasonably estimated.
Sales and marketing costs of approximately $315,000 for the quarter ended March
31, 2000 relate primarily to cost of sales, marketing and business development
personnel, including commissions as well as travel and marketing campaign
expenses.
General and administrative expenses of approximately $739,000 for the quarter
ended March 31, 2000 primarily relate to personnel expenses, professional
services, travel expenses and other overhead costs.
11
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Stock compensation of approximately $2,273,000 for the quarter ended March 31,
2000 represents non-cash charges related to the issuance of common stock and
warrants to employees and consultants during the quarter ended March 31, 2000.
Impairment charges of approximately $5,637,000 relates to the write-down of
goodwill associated with two of the Company's acquisitions in 1999, CSS and ESG,
which were principally ERP software sales and implementation businesses. As a
result of the new management team repositioning and restructuring the Company's
business model, management's analysis indicated impairment in the goodwill
valuation associated with these acquisitions of approximately $5,637,000.
Amortization of goodwill of approximately $307,000 reflects the amortization
expense for the quarter ended March 31, 2000 related to the goodwill associated
with the Acquired Businesses (as adjusted in the first quarter 2000 for the
impairment valuation discussed above).
Interest income, net of approximately $52,000 for the quarter ended March 31,
2000 reflects interest income earned on the proceeds of approximately
$19,242,000 from the Company's February 2000 private equity placement, net of
interest expense on debt outstanding and net of approximately $73,000 of debt
discount amortization expense. The discount related to the subordinated notes
issued in 1999, which were converted to equity in the first quarter 2000.
Loss from discontinued operations of approximately $309,000 for the quarter
ended March 31, 1999 represent the losses for the mineral operations for that
period. Income from operations for the mining operations was approximately
break-even during the first quarter of 2000.
Loss on disposal of discontinued operations of approximately $236,000 for the
quarter ended March 31, 2000 reflects an adjustment to the write-down of the
book value of the mining companies that was recorded in the fourth quarter of
1999. The write-down reflects the reduction in carrying value of net assets to
fair market value plus an additional accrual for severance and transaction
costs associated with its disposition of these companies.
The loss from debt conversion in the quarter ended March 31, 2000 of
approximately $7,188,000 relates to the conversion of approximately $2,075,000
in debt to equity (a combination of common stock and warrants) which conversion
occurred in the first quarter, 2000.
LIQUIDITY AND SOURCES OF CAPITAL
Cereus has been funded using both equity and debt financing, and most recently,
from the proceeds of a private equity placement of common stock and warrants
completed on February 8, 2000. The net proceeds to the Company from this
private equity placement were approximately $19,242,000, and upon the exercise
in full of the warrants issued as part of such private equity placement, the
Company will receive additional proceeds of approximately $40,000,000. As of
March 31, 2000, the Company had working capital of approximately $15,377,000.
Cash used in continuing operating activities was approximately $1,732,000 for
the first quarter of 2000. Cash used in operations, including discontinued
operations, was approximately $1,968,000 in the first quarter of 2000 compared
with cash used in operations of $385,000 in the first quarter of 1999. The net
use of cash in first quarter 2000 was primarily a result of the cash operating
losses for the quarter and the planned reduction in accounts payable, utilizing
the proceeds from the private equity placement.
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Cash used in investing activities was approximately $322,000 in the first
quarter of 2000 compared to approximately $2,000 for the first quarter of 1999.
The increase is attributable to purchases of property, plant and equipment in
the first quarter 2000 for the Acquired Businesses.
Net cash provided by financing activities was approximately $19,262,000 for the
first quarter of 2000 compared with approximately $95,000 for the first quarter
1999. The financing proceeds primarily related to the net proceeds of
$19,242,000 from the private equity placement completed in the first quarter of
2000. In the first quarter of 1999, the proceeds related to debt financing.
As of March 31, 2000, the Company had approximately $16,972,000 in cash. The
Company anticipates that operating and capital expenditures will be significant
as the Company continues to expand its application service provider business
and web integration strategy but the Company believes that its liquidity and
capital resources will be sufficient to satisfy its cash requirements for the
next 12 to 18 months, excluding any acquisitions or significant hiring
activities. In the event additional capital resources are required, the Company
will attempt to raise additional equity and debt capital. There can be no
assurance that the Company will be able to raise additional such funds.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending, or to the Company's
knowledge, threatened against the Company or any of its subsidiaries.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February 8, 2000, the Company consummated the private placement (the
"Private Placement") of 4,000,000 shares of the Company's common stock (the
"Common Stock") and warrants to purchase 4,000,000 shares of Common Stock. The
placement was for 1,600 units (the "Units"), with each Unit having a Purchase
Price of $12,500 and consisting of 2,500 shares of Common Stock and a warrant
(the "Warrant") to purchase 2,500 shares of Common Stock at an exercise price
of $10.00 per share. The Warrant expires three (3) years after its issuance and
may be redeemed by the Company if the closing bid price for the Common Stock is
equal to or greater than 100% of the exercise price of the Warrant for twenty
(20) consecutive trading days, provided that a registration statement covering
the shares of Common Stock to be issued upon exercise of the Warrants is then
effective.
The Company received gross proceeds of $20 million from the Private Placement.
The Company intends to use such proceeds to make strategic acquisitions, to
meet working capital requirements and for general corporate purposes.
In connection with the Private Placement, the Company incurred placement agency
fees of approximately $760,000 in cash in the aggregate, issued an aggregate of
84,955 shares of Common Stock, warrants to purchase an aggregate of 84,955
shares of Common Stock at an exercise price of $10.00 per share, and warrants
to purchase an aggregate of 336,750 shares of Common Stock at an exercise price
of $5.50 per share.
The Units offered and sold in the Private Placement, and shares of Common Stock
and warrants issued to placement agents in connection therewith, were not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon the exemption therefrom provided by Section 4(2) of
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the Securities Act.
In addition, during the quarter ended March 31, 2000, the Company converted
approximately $2.8 million in aggregate principal amount of its outstanding
convertible promissory notes and other indebtedness into an aggregate of 751,381
shares of Common Stock and warrants to purchase an aggregate of 1,014,873 shares
of Common Stock. These warrants have terms identical to the Warrants issued as
part of the Private Placement except that warrants to purchase 250,000 shares of
Common Stock have an exercise price $3.75 per share, and warrants to purchase
332,418 shares of Common Stock have an exercise price $4.00 per share. The
shares of Common Stock and Warrants issued upon the conversion of the
convertible promissory notes and other indebtedness were not registered under
the Securities Act in reliance upon an exemption therefrom provided by Section
4(2) of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No information is required to be reported under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No information is required to be reported under this item.
ITEM 5. OTHER INFORMATION
No information is required to be reported under this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule (for SEC use only)
</TABLE>
(b) Reports on Form 8-K:
On January 19, 2000, the Company filed a Current Report on Form 8-K to
provide under Item 5 an updated description of the business of the Company that
resulted from acquisitions effected by it in July and November of 1999.
14
<PAGE> 15
On January 31, 2000, the Company filed an amendment on Form 8-K/A to a
Current Report on Form 8-K to disclose under Item 7 historical financial and
pro forma financial information relating to CSS.
On February 17, 2000, the Company filed a Current Report on Form 8-K
to report under Item 4 the engagement of a new auditor and under Item 5 the
filing of a Registration Statement on Form 8-A and the consummation of a
private equity placement.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CEREUS TECHNOLOGY PARTNERS, INC.
By: /s/Juliet M. Reising
------------------------------------------------
Juliet M. Reising
Executive Vice President and Chief Financial Officer
Dated: May 15, 2000
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
27 Financial Data Schedule (for SEC use only)
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CEREUS TECHNOLOGY PARTNERS, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,972,112
<SECURITIES> 0
<RECEIVABLES> 955,108
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,002,493
<PP&E> 532,176
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,244,967
<CURRENT-LIABILITIES> 3,624,921
<BONDS> 0
0
0
<COMMON> 89,415
<OTHER-SE> 21,518,815
<TOTAL-LIABILITY-AND-EQUITY> 25,244,967
<SALES> 1,591,325
<TOTAL-REVENUES> 1,591,325
<CGS> 1,433,180
<TOTAL-COSTS> 1,433,180
<OTHER-EXPENSES> 9,565,104
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 79,620
<INCOME-PRETAX> 9,354,699
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,354,699
<DISCONTINUED> 236,000
<EXTRAORDINARY> 7,187,500
<CHANGES> 0
<NET-INCOME> (16,778,199)
<EPS-BASIC> (2.47)
<EPS-DILUTED> 0
</TABLE>
