SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 2002
Commission File Number: 0-23892
Rainwire Partners, Inc.
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(Exact Name of Registrant as specified in its charter
Delaware 57-0941152
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization
3480 Preston Ridge Road, Suite 500
Alpharetta, GA 30005
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Address of Principal executive offices of Incorporation Zip Code
or organization
770-343-8196
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Registrants telephone number, including area code
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Suite 925, 8215 Roswell Road
Atlanta, GA, 30050
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(Former name, former address and former fiscal year, if
changed since last report)
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 and 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 last 90 days.
YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practical date.
CLASS No. of shares Outstanding on October 18, 2002
--------------- ---------------------------------------------
Common Stock 9,609,884
Par Value $.001
Per share
RAINWIRE PARTNERS, INC.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets at
September 30, 2002 (unaudited) and December 31, 2001.......................................... 1
Unaudited Condensed Consolidated Statements of Operations
for the nine months ended September 30, 2002 and 2001......................................... 2
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 2002 and 2001......................................... 3
Statement of Changes in Stockholders' equity for the period
December 31, 2000 to September 30, 2002 (unaudited)........................................... 4
Notes to Condensed Consolidated Financial Statements ......................................... 5
Item 2. Management's Discussion and Plan of Operation................................................. 5
PART II OTHER INFORMATION Page
Item 1. Legal Proceedings............................................................................. 7
Item 2. Changes in Securities and Use of Proceeds..................................................... 7
Item 3. Defaults Upon Senior Securities............................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders........................................... 7
Item 5. Other Information............................................................................. 8
Item 6. Exhibits and Reports on Form 8-K.............................................................. 8
RAINWIRE PARTNERS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS OF DISCONTINUED BUSINESS 2002 2001
------------- ------------
(unaudited)
CURRENT ASSETS
Cash $ -- $ 788
----------- -----------
TOTAL CURRENT ASSETS $ -- $ 788
=========== ===========
LIABILITIES OF DISCONTINUED BUSINESS
CURRENT LIABILITIES
Related Party loans $ 126,955 $ 114,925
Accounts payable 813,166 813,167
Accrued business disposal costs and expenses 46,987 46,987
Other accrued liabilities 10,326 23,143
----------- -----------
TOTAL CURRENT LIABILITIES 997,434 998,222
----------- -----------
REDEEMABLE PREFERRED STOCK
Par value $.001;authorized 2,500,000 shares
Series C, 24,959 shares outstanding 55,908 55,908
Serues D, 500,000 shares outstanding 50,000 50,000
----------- -----------
105,908 105,908
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value; authorized,100,000,000 shares
issued,19,609,885 and 19,909,886 shares 19,610 19,910
Paid-in capital 1,418,975 1,418,675
Accumulated (deficit) (2,491,927) (2,491,927)
Treasury Stock, 10,000,000 shares (50,000) (50,000)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,103,342) (1,103,342)
----------- -----------
$ -- $ 788
=========== ===========
The accompanying notes are an integral part of these financial statements
1
RAINWIRE PARTNERS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
INCEPTION
OF DEVELOPMENT
STAGE
(JANUARY 1,2001)
THREE MONTHS ENDED NINE MONTHS ENDED TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
----------- ----------- ----------- ----------- ----------------
2002 2001 2002 2001 2002
----------- ----------- ----------- ----------- -----------
Revenues $ -- $ -- $ -- $ -- $ --
Expenses
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations -- -- -- -- --
Discontinued Operations:
Income from discontinued operations -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 19,809,886 13,659,886 19,876,553 10,029,886
=========== =========== =========== ===========
Basic And Diluted Net Income Per Common Share $ -- $ -- $ -- $ --
Income From Discontinued Operations -- -- -- --
----------- ----------- ----------- -----------
Basic And Diluted Net Income Per Common Share $ -- $ -- $ -- $ --
=========== =========== =========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
RAINWIRE PARTNERS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Inception
of Development
Stage
Nine Months Ended (January 1,2001)
September 30, to
----------------------- September 30,
2002 2001 2002
------- ------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing Operations $ -- $ -- $ --
Discontinued Operations:
Stock issued for services 2,500
Capital contributed for services 40,000
Adjustments to reconcile net loss to net cash flows
used by discontinued activities
Income (loss) from operations of discontinued business -- --
Changes in current assets and liabilities:
Accounts receivable 34,662 21,962
Other current assets 12,700
Deposits 6,257
Accrued liabilities (12,818) (46,366) (12,817)
Provision for loss on disposal of the business (553,247)
Accounts payable 4,302 343,649
--------- --------- ---------
Net cash flows used by discontinued activities (12,818) (1,145) (145,253)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other assets -- -- 6,255
--------- --------- ---------
Net cash flows from (to) investing activities -- -- 6,255
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 10,000
Related Party Loans 12,030 126,955
--------- --------- ---------
Net cash flows from financing activities 12,030 136,955
--------- --------- ---------
NET CHANGE IN CASH FLOWS FOR THE PERIOD (788) (1,145) (2,043)
CASH, AT BEGINNING OF PERIOD, 788 2,043 2,043
--------- --------- ---------
CASH, AT END OF PERIOD $ -- $ 898 $ --
========= ========= =========
SUPPLEMENTARY NON-CASH INFORMATION
Correction of share issuances, prior year $ (300) $ (300)
========= =========
Increase in paid-in capital $ 300 $ 300
========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
RAINWIRE PARTNERS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IS SHAREHOLDERS' EQUITY
COMMON STOCK
-------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL (DEFICIT)
---------- -------- ---------- -----------
(AUDITED)
Balance December 31, 2000 7,609,886 $ 7,610 $1,321,472 $(2,491,927)
Shares issued for legal services at $.025 per
share on August 29, 2001 100,000 100 2,400
Shares sold at $.05 per share
on September 30, 2001 200,000 200 9,800
Shares issued to retire debt on August 29, 2001
at $.005 per share 12,000,000 12,000 48,000
Accretion on redeemable preferred stock (2,997)
Management services contributed to capital 40,000
Purchase of 25,000 shares as treasury stock
for issuance of 25,000 shares of Series D
convertible debentures, October 15, 2001
Net income (loss) for the year --
---------- -------- ---------- -----------
Balance December 31, 2001 19,909,886 19,910 1,418,675 (2,491,927)
(UNAUDITED)
Correction of share issuances, prior year (300,001) (300) 300
Net (loss) for the nine months --
---------- -------- ---------- -----------
BALANCE, September 30, 2002 (unaudited) 19,609,885 $ 19,610 $1,418,975 $(2,491,927)
========== ======== ========== ===========
TREASURY
STOCK TOTAL
-------- -----------
(AUDITED)
Balance December 31, 2000 $ -- $(1,162,845)
Shares issued for legal services at $.025 per
share on August 29, 2001 2,500
Shares sold at $.05 per share
on September 30, 2001 10,000
Shares issued to retire debt on August 29, 2001
at $.005 per share 60,000
Accretion on redeemable preferred stock (2,997)
Management services contributed to capital 40,000
Purchase of 25,000 shares as treasury stock
for issuance of 25,000 shares of Series D
convertible debentures, October 15, 2001 (50,000) (50,000)
Net income (loss) for the year --
-------- -----------
Balance December 31, 2001 (50,000) (1,103,342)
(UNAUDITED)
Correction of share issuances, prior year --
Net (loss) for the nine months --
-------- -----------
BALANCE, September 30, 2002 (unaudited) $(50,000) $(1,103,342)
======== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
RAINWIRE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the Company's financial position
as of September 30, 2002 and the consolidated results of its operations and cash
flows for the nine months ended September 30, 2002 and 2001. Operating results
for the nine months ended September 30, 2002 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2002.
These condensed financial statements should be read in conjunction with
the financial statements and notes thereto contained in the Company's Form
10-KSB for the year ended December 31, 2001.
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations.
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 statements" 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 the Company or any other person that the projected outcomes can or
will be achieved.
The following discussion and analysis should be read in
conjunction with the Consolidated Financial Statements and Notes
thereto, appearing elsewhere in this Form 10-QSB.
A. Results of Operations.
Third quarter of 2002 compared to third quarter of 2001.
5
There were no earned revenues in either quarter as the Company
had discontinued all operations since January 1, 2000. The minor amount
of expenses incurred in the current quarter were charged to the accrued
estimated losses already provided as of December 31, 2000 for such
anticipated amounts. These expense items were paid from advances
received from Oasis Group, Inc. ("Oasis"). The Company had previously
entered into a Share Exchange Agreement with Oasis, which was
terminated on September 25, 2002. There was no cash activity for the
comparable quarter in 2001.
Nine months of 2002 compared to the same period a year ago.
There were no earned revenues in either period for the reason
stated above. The minor amount of expenses incurred in both periods
were charged to the accrued estimated losses already provided as of
December, 31, 2000 for such anticipated amounts. All remaining assets
of the Company were liquidated during the first quarter of 2001 with
proceeds used to reduce outstanding indebtedness recorded as of
December 31, 2000.
B. Financial Condition.
The Company is solely dependent on advances from related
parties to continue in existence as the Company is in a negative
financial position, has discontinued its operations as of December 31,
2000 and has substantial past due obligations and commitments. Its
audited financial statements disclose a "going concern" paragraph in
its most recent audited financial statements and nothing has changed
that circumstance to date. The Company has no employees or facilities.
C. Plan of Operations.
For the near term, the Company is financially dependent on its
shareholders, related parties and /or management, who have financed its
existence to date. As a result of the termination of the Share Exchange
Agreement with Oasis, the Company is currently seeking a suitable
acquisition or merger candidate but has had no discussions with any
potential candidate since the termination of the Share Exchange
Agreement.
Item 3. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Within 90 days before filing this report, the Company evaluated the
effectiveness of the design and operation of its disclosure controls
and procedures. The Company's disclosure controls and procedures are
the controls and other procedures that the Company has designed to
ensure that it records, processes, summarizes and reports in a timely
manner the information the Company must disclose in its reports filed
under the Securities Exchange Act. Lyne Marchessault, President and
Peggy A. Evans, Chief Financial Officer, reviewed and participated in
this evaluation. Base on this evaluation, Ms. Marchessault and Ms.
Evans concluded that, as of the date of their evaluation, the Company's
disclosure controls and procedures were effective.
6
(b) Internal controls. Since the date of the evaluation
described above, there have not been any significant changes in the
Company's internal controls or in other factors that could
significantly affect those controls, including any corrective actions
with regard to significant deficiencies an material weakness.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
No material change.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Under the terms of our Series D Preferred Stock, if the
Company shall fail to pay a dividend to the holders of the Series D for
two consecutive quarters, the Series D shall be convertible into fifty
million (50,000,000) shares of the common stock of the Company so long
as such dividends remain unpaid. As of the date of the filing of this
Quarterly Report, the Company has failed to pay a dividend for two
consecutive quarters and the conversion feature has been triggered,
although the holder has not converted the preferred stock. As of the
date of the filing of this Quarterly Report, the Company does not have
a sufficient number of authorized but unissued shares available to
effect such a conversion; however, after the Company files its
Amendment to its Certificate of Incorporation (as discussed in Item 4),
the Company will have a sufficient number of shares to effect the
conversion if the holder so elects.
Item 4. Submission of Matters to a Vote of Security Holders
On October 10, 2002, Rainwire's Board of Directors unanimously approved
an Amendment to Rainwire's Certificate of Incorporation that increases the
number of authorized shares from 20,000,000 to 300,000,000 shares of common
stock, par value $.001, and increases the number of authorized shares from
2,500,000 to 30,000,000 shares of preferred stock, par value $.001. The
amendment was approved by a majority of Rainwire's stockholders by written
consent on October 18, 2002.
On October 11, 2002, Rainwire filed a Preliminary Information Statement
on Schedule 14C in connection with the proposed amendment to its Certificate of
Incorporation. Rainwire filed the Definitive Information Statement on Schedule
14C on November 12, 2002. The amendment will become effective upon the
expiration of certain waiting periods mandated by Regulation 14A and 14C of the
Securities Exchange Act of 1934, as amended, and upon the filing of the
Certificate of Amendment with the Secretary of State of the State of Delaware,
which is expected to occur on or about December 5, 2002.
7
Item 5. Other Information
On September 25, 2002, the Company terminated the Amended and Restated
Plan and Agreement to Exchange Stock with Oasis Group, Inc. ("Oasis") dated as
of December 19, 2001 (the "Share Exchange Agreement"), whereby Oasis would have
become a wholly owned subsidiary. In addition, on September 25, 2002, the
Company withdrew its Registration Statement on Form S-4 in connection with the
Share Exchange (the "Registration Statement").
Item 6. Exhibits and Reports on Form 8-K.
Form 8-K
On September 30, 2002, the Company filed a Current Report on From 8-K
reporting the termination of the Share Exchange Agreement and the withdrawal of
the Registration Statement.
Exhibits
99.1 Certification by Lyne Marchessault, President of the Company,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification by Peggy A. Evans, Chief Financial Officer of
the Company, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on November 14, 2002.
Rainwire Partners, Inc.,
a Delaware corporation
By: /s/ Lyne Marchessault
----------------------------------
Name: Lyne Marchessault
Title: President
By: /s/ Peggy Evans
----------------------------------
Name: Peggy Evans
Title: Chief Financial and Accounting
Officer
9
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-QSB of Rainwire
Partners, Inc. for the period ending September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof, I, Lyne Marchessault,
President of registrant, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002, that:
(1) I have reviewed this quarterly report on Form 10-QSB of
Rainwire Partners, Inc.;
(2) Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in al
material respects the financial condition, results of operations and cash flows
of registrant as of, and for, the periods presented in this quarterly report;
and
(4) The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
(6) The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 14, 2002 By: /s/ Lyne Marchessault
---------------------
Lyne Marchessault
President
This certification accompanies this Quarterly Report on Form 10-QSB pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 and shall not, except to the
extent required by such Act, be deemed filed by registrant for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-QSB of Rainwire
Partners, Inc., for the period ending September 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof, I, Peggy A. Evans, Chief
Financial Officer of registrant, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 302 of the Sarbanes-Oxley Act of 2002, that:
(1) I have reviewed this quarterly report on Form 10-QSB of
Rainwire Partners, Inc.;
(2) Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report; and
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in al
material respects the financial condition, results of operations and cash flows
of registrant as of, and for, the periods presented in this quarterly report;
and
(4) The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
(6) The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
Dated: November 14, 2002 By: /s/ Peggy A. Evans
-----------------------
Peggy A. Evans
Chief Financial Officer
This certification accompanies this Quarterly Report on Form 10-QSB
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and shall not, except
to the extent required by such Act, be deemed filed by registrant for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.