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 May 31, 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 July 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 - May 31, 2001 1
Condensed consolidated statement of operations - Three and Five Months
ended May 31, 2001 and Five Months ended January 31, 2000 2
Condensed consolidated statement of cash flows - Five Months ended May 31, 2001
and Five Months ended January 31, 2000 3
Condensed consolidated statement of changes in net assets in liquidation -
Four Months ended December 31, 2000 and Three and Four Months ended May 31, 2000 4
Notes to condensed consolidated financial statements -- May 31, 2001 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
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)
May 31, 2001
Assets
Current Assets:
Cash $ 117,000
Accounts receivable 3,000
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Total current assets 120,000
Property and equipment:
Cost 26,000
Less accumulated depreciation 18,000
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8,000
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$ 128,000
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 3,000
Accrued expenses 56,000
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59,000
Long-term debt - convertible note 500,000
Shareholders' equity:
Common Stock, $.01 par value-authorized
25,000,000 shares, issued and outstanding
16,798,154 shares at May 31, 2001 168,000
Excess of paid-in capital over par value 4,356,000
Deficit related to liquidated operations (4,869,000)
Deficit accumulated during development stage
(beginning January 1, 2001) (86,000)
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(431,000)
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$ 128,000
===========
See accompanying notes.
1
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Operations (Unaudited)
Three and Five Months ended May 31, 2001
and Five Months ended January 31, 2000
Three Five Five
Months Months Months
2001 2001 2000
--------- --------- ---------
Revenues:
Origination fees $ - $ - $ 648,000
Gain on sale of loans - - 105,000
--------- --------- ---------
Total revenues - - 753,000
Expenses:
Selling, general and
administrative 47,000 72,000 1,187,000
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Loss from operations (47,000) (72,000) (434,000)
Other income (expense):
Interest income 3,000 3,000 91,000
Interest expense (11,000) (17,000) (51,000)
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Total other income (expense) (8,000) (14,000) 40,000
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Net loss $(55,000) $(86,000) $(394,000)
========= ========= =========
Net loss per share - basic
and diluted $ (.00) $ (.01) $ (.05)
========= ========= =========
Weighted average number
of shares outstanding 16,798,154 16,709,854 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 May 31, 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)
Five Months ended May 31, 2001 and
Five Months ended January 31, 2000
2001 2000
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Cash (used in) provided by operating activities $ (94,000) $ 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) financing activities - (1,035,000)
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Increase (decrease) in cash and cash equivalents (93,000) 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 $ 117,000 $ 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)
Four Months ended December 31, 2000 and
Three and Four Months ended May 31, 2000
Four Three Four
Months Months Months
2001 2000 2000
--------- -------- ---------
Deficiency in net assets in
liquidation at beginning of period $(595,000) $(1,170,000) (448,000)
Activity that provided net assets:
Conversion of debt to common stock 250,000 0 0
Accruals and costs during period of liquidation:
Adjustment of property and equipment
to estimated net realizable value 0 22,000 (150,000)
Compensation and related expenses 0 (7,000) (153,000)
Interest expense 0 (2,000) (70,000)
Professional fees 0 2,000 (40,000)
Rent 0 (5,000) (219,000)
Other 0 7,000 (73,000)
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Total accruals and costs during
period of liquidation 0 17,000 (705,000)
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Deficiency in net assets in
liquidation at end of period $ (345,000) $(1,153,000) $(1,153,000)
========== ========== ===========
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 that the Company was
conducting 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 May
31, 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.
Note C - Loss per share
The Company calculates earnings per share in accordance with SFAS No. 128,
"Earnings Per Share." SFAS No. 128 specifies the computation, presentation and
disclosure requirements for earnings per share (EPS) for entities with publicly
held common stock or potential common stock such as options, warrants,
convertible securities or contingent stock agreements.
5
This standard specifies computation and presentation requirements for both basic
EPS and, for entities with complex capital structures, diluted EPS. Basic
earnings per share are computed by dividing net income by the weighted average
common shares outstanding. Diluted earnings per share is similar to the
computation of basic earnings per share except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued.
For the period ended May 31, 2001, the Company incurred a net loss from
operations. The effect of including stock options and long term convertible debt
would be antidilutive and therefore, diluted earnings per share has not been
presented.
6
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 three and five
months ended May 31, 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. Although
the Company is looking for 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
At May 31, 2001, the Company's liabilities exceeded its assets by
$431,000. 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.
Cash and Cash Equivalents
The Company had cash and cash equivalents in the amount of $117,000 as
of May 31, 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*
ITEM 5. OTHER INFORMATION*
*Items 1, 2, 3, 4 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 May 31, 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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July 13, 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).