U. S. 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
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Securities Exchange Act of 1934
For the Quarterly Period Ended February 28, 2001 or
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Transition Report pursuant to Section 13 or 15(d) of the
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Securities Exchange Act of 1934
For the Transition Period From to
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COMMISSION FILE NUMBER 0-18091
RSI HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
NORTH CAROLINA 56-1200363
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
28 East Court Street, P. O. Box 6847
Greenville, South Carolina 29606
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(Address of principal executive offices)
(864) 271-7171
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(Issuer's telephone number, including area code)
Not Applicable
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(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 Exchange Act during the past 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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common Stock, $.01 Par Value - 16,798,154 shares outstanding as of April 05,
2001
Transitional Small Business Disclosure Format (check one):
Yes No X
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INDEX
RSI HOLDINGS, INC.
(A Development Stage Company)
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated balance sheet - February 28, 2001 1
Condensed consolidated statement of operations - Two Months
ended February 28, 2001 and Two and Five Months ended
January 31, 2000 2
Condensed consolidated statement of cash flows - Two Months
ended February 28, 2001 and Five Months ended January 31, 2000 3
Condensed consolidated statement of changes in net assets in
liquidation - One and Four Months ended December 31, 2000
and One Month ended February 28, 2000 4
Notes to condensed consolidated financial statements --
February 28, 2001 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION 8
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults upon senior securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Balance Sheet
(Unaudited)
February 28, 2001
Assets
Current Assets:
Cash $ 152,000
Accounts receivable 7,000
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Total current assets 159,000
Property and equipment:
Cost 26,000
Less accumulated depreciation 17,000
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9,000
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$ 168,000
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 3,000
Accrued expenses 41,000
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44,000
Long-term debt - convertible note 500,000
Shareholders' equity:
Common Stock, $.01 par value-authorized
25,000,000 shares, issued and outstanding
16,798,154 shares at February 28, 2001 168,000
Excess of paid-in capital over par value 4,356,000
Deficit related to liquidated operations (4,869,000)
Deficit accumulated during development stage
(beginning January 1, 2001) (31,000)
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(376,000)
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$ 168,000
===========
See accompanying notes.
1
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Operations (Unaudited)
Two Months ended February 28, 2001
Two and Five Months ended January 31, 2000
Two Two Five
Months Months Months
2001 2000 2000
--------- --------- ---------
Revenues:
Origination fees $ - $ 246,000 $ 648,000
Gain on sale of loans - 25,000 105,000
--------- --------- ---------
Total revenues - 271,000 753,000
Expenses:
Selling, general and
administrative 25,000 428,000 1,187,000
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Loss from operations (25,000) (157,000) (434,000)
Other income (expense):
Interest income - 39,000 91,000
Interest expense (6,000) (18,000) (51,000)
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Total other income (expense) (6,000) 21,000 40,000
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Net loss $(31,000) $(136,000) $(394,000)
========= ========= =========
Net loss per share - basic
and diluted $ (.00) $ (.02) $ (.05)
======== ========= =========
Weighted average number
of shares outstanding 16,625,740 7,907,488 7,905,914
========== ========= =========
Effective January 1, 2001, the Company changed its accounting presentation to
those standards that apply to development state enterprises from the liquidation
basis of accounting. Fiscal year 2001 amounts above include operations from
January 1, 2001 through February 28, 2001.
The Company changed its accounting presentation to the liquidation basis of
accounting from the going concern basis of accounting effective January 31,
2000. Fiscal Year 2000 amounts above include operations through January 31,
2000, the date of change to liquidation basis of accounting from going concern
basis.
See accompanying notes.
2
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Cash Flows (Unaudited)
Two Months ended February 28, 2001 and Five Months ended January 31, 2000
2001 2000
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Cash provided by (used in) operating activities $ (59,000) $ 1,045,000
Investing activities
Reduction of certificate of deposit - 250,000
Purchase of equipment - (40,000)
Proceeds from sale of equipment 1,000 -
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Net cash provided by investing activities 1,000 210,000
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Financing activities
Advances under bank lines of credit - 6,308,000
Payments on bank line of credit - (7,319,000)
Payment of deferred compensation - (25,000)
Other - 1,000
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Net cash (used in) provided by financing activities - (1,035,000)
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Increase (decrease) in cash and cash equivalents (58,000) 220,000
Cash and cash equivalents at beginning of period 210,000 23,000
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Cash and cash equivalents at end of period $ 152,000 $ 243,000
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See accompanying notes.
3
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Changes in Net Assets in Liquidation
(Unaudited)
One Month and Four Months ended December 31, 2000 and
One Month ended February 28, 2000
One Month Four Months One Month
2001 2001 2000
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Deficiency in net assets in liquidation at
beginning of period $(595,000) $(595,000) $ (448,000)
Activity that provided net assets:
Conversion of debt to common stock 250,000 250,000 0
Accruals and costs during period of liquidation:
Adjustment of property and equipment to
estimated net realizable value 0 0 172,000
Compensation and related expenses 0 0 146,000
Interest expense 0 0 68,000
Professional fees 0 0 42,000
Rent 0 0 214,000
Other 0 0 80,000
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Total accruals and costs during
period of liquidation 0 0 (722,000)
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Deficiency in net assets in liquidation at
end of period $(345,000) $ (345,000 $(1,170,000)
========= ========== ==========
See accompanying notes.
4
RSI Holdings, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note A - Basis of Presentation
Liquidated operations.
As of January 31, 2000, RSI Holdings, Inc. (the "Company") adopted the
liquidation basis of accounting.
As a result of the decision to cease all of HomeAdd's business operation, the
Company changed its basis of accounting for its financial statements as of
January 31, 2000 from the going concern basis of accounting to the liquidation
basis of accounting in accordance with generally accepted accounting principles.
The Company's wholly-owned subsidiary, HomeAdd Financial Corporation ("HomeAdd")
had experienced significant recurring losses and had working capital
deficiencies. Because of the increased difficulties of HomeAdd in selling its
loans, the Company decided to cease all of HomeAdd's business operations
effective January 31, 2000. Consequently, assets were valued at estimated net
realizable value and liabilities were presented at their estimated settlement
amounts, including costs associated with carrying out the liquidation. The
Company accrued the costs that it estimated would be incurred during the
liquidation period of February 1, 2000 through December 31, 2000.
Development stage.
At January 1, 2001 all of HomeAdd's assets had been sold and substantially all
of HomeAdd's known liabilities had been settled. The Company was looking for
other business opportunities. As a result of the completion of the liquidation
of HomeAdd, the Company's only business, and the search for other business
opportunities, the Company began reporting under those accounting principles
that apply to development stage enterprises. Generally accepted accounting
principles that apply to established operating enterprises govern the
recognition of revenue by a development stage enterprise and determine whether a
cost incurred by a development stage enterprise is to be charged to expense when
incurred or is to be capitalized or deferred.
The Company presently has no material net assets. Although the Company is
looking for other business opportunities, it cannot determine at this time what,
if any, future business activities it may engage in.
The accompanying unaudited condensed consolidated financial statements at
February 28, 2001 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments including normal recurring accruals considered
necessary for a fair presentation have been included. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended August 31, 2000.
Note B - Convertible Note Payable
On December 20, 2000, the Company issued a convertible note payable in the
amount of $500,000 bearing interest at 8.0% per year and due on December 20,
2005 to the mother of the President and Chief Executive Officer of the Company.
This note is convertible into the Company's common stock at the rate of $.075
per share.
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
Special Cautionary Notice Regarding Forward-Looking Statements.
This Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act and 21E of the Exchange Act.
Forward-looking statements are indicated by such terms as "expects", "plans",
"anticipates", and words to similar effect. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of the Company to be
materially different from future results, performance or achievements expressed
or implied by such forward-looking statements. Important factors ("Cautionary
Statements") that could cause the actual results, performance or achievements of
the Company to differ materially from the Company's expectations are disclosed
in this Report on Form 10-QSB. All written or oral forward-looking statements
attributable to the Company are expressly qualified in their entirety by the
Cautionary Statements.
Results of Operations
As described in Note A to its unaudited Condensed Consolidated
Financial Statements included above, the Company changed its basis of accounting
for its financial statements at January 31, 2000 from the going concern basis of
accounting to the liquidation basis of accounting in accordance with generally
accepted accounting principles. As of December 31, 2000 the Company had
completed the liquidation of HomeAdd Financial Corporation, its only business.
On January 1, 2001, the Company changed its basis of accounting for its
financial statements from the liquidation basis of accounting to the going
concern basis of accounting in accordance with generally accepted accounting
principles. The Company's financial statements as of and for the two months
ended February 28, 2001 have been prepared in accordance with disclosure
requirements applicable to a development stage entity because no business
opportunities have been identified and no operations have commenced.
The Company presently has no material net assets. Although the Company
is looking for other business opportunities, it cannot determine at this time
what, if any, future business activities it may engage in.
Liquidity and Capital Resources
Anticipated Liquidity Requirements
On December 20, 2000, the widow of the former Chairman of the Board and
the mother of the President and Chief Executive Officer of the Company loaned
the Company $500,000 under the terms of a convertible note payable. Proceeds
from this loan was used to pay the outstanding balance of the line of credit
with a bank and the amount remaining after payment of the line of credit was
available for use as working capital capital during the period in which the
Company seeks to identify an appropriate business opportunity.
At February 28, 2001, the Company's liabilities exceeded the net
realizable value of its assets by $376,000. The Company can give no assurance
that its available cash will be sufficient to pay its expenses while it seeks to
identify an appropriate business opportunity. It also can give no assurance that
sufficient working capital will be available to finance a future business
activity.
6
Cash and Cash Equivalents
The Company had cash and cash equivalents in the amount of $152,000 as
of February 28, 2001.
Debt Arrangements
On December 20, 2000, the Company issued a note in the amount of
$500,000 bearing interest at 8.0% and is payable to the mother of the President
and Chief Executive Officer of the Company on December 20, 2005. This note is
convertible into Common Stock of the Company at $.075 per share.
7
PART II. Other information
ITEM 1. LEGAL PROCEEDINGS*
ITEM 2. CHANGES IN SECURITIES*
ITEM 3. DEFAULTS UPON SENIOR SECURITIES*
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following summarizes the votes at the Annual Meeting of the Company's
shareholders held on January 18, 2001.
Broker
Matter For Against Withheld Abstentions Nonvotes
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Election of
Directors
Buck A. Mickel 12,925,090 N/A 6,992 N/A 0
C. C. Guy 12,925,090 N/A 6,992 N/A 0
Charles M. Bolt 12,925,090 N/A 6,992 N/A 0
Ratification of
Appointment of
Elliott, Davis &
Company L.L.P.
for fiscal 2001 12,927,095 1,101 N/A 3,886 0
ITEM 5. OTHER INFORMATION*
*Items 1, 2, 3, and 5 are not presented as they are not applicable or the
information required thereunder is substantially the same as information
previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
10.1 Convertible note dated December 20, 2000 issued by the Company
payable to Minor H. Mickel: Incorporated by reference to the Form
10-QSB of the Registrant filed with the Securities and Exchange
Commission for the fiscal quarter ended November 30, 2000, File
No. 0-18091).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fiscal
quarter ended February 28, 2001.
8
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RSI HOLDINGS, INC.
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April 6, 2001 /s/ Joe F. Ogburn
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(Date) Joe F. Ogburn,
Treasurer and Chief Financial Officer
(Principal Accounting Officer)
9
INDEX OF EXHIBITS
10.1 Convertible note dated December 20, 2000 issued by the Company payable to
Minor H. Mickel: Incorporated by reference to the Form 10-QSB of the
Registrant filed with the Securities and Exchange Commission for the fiscal
quarter ended November 30, 2000, File No. 0-18091).
10