United States
Securities and Exchange Commission
Washington, D. C. 20549
FORM 10 - QSB
(MARK ONE)
[X] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended November 30, 2001
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[ ] Transition Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to
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COMMISSION FILE NUMBER 0-18091
RSI HOLDINGS, INC.
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(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)
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 [ ]
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 January 07,
2002
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
INDEX
RSI HOLDINGS, INC.
(A Development Stage Company)
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated balance sheet - November 30, 2001 1
Condensed consolidated statement of operations - Three Months ended November 30, 2001 2
Condensed consolidated statement of cash flows - Three Months ended November 30, 2001 3
Condensed consolidated statement of changes in net assets in liquidation -
Three Months ended November 30, 2000 4
Notes to condensed consolidated financial statements -- November 30, 2001 5
Item 2. Plan of operation 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)
November 30, 2001
Assets
Current Assets:
Cash $ 252,000
Accounts receivable 3,000
-----------
Total current assets 255,000
Property and equipment:
Cost 26,000
Less accumulated depreciation 19,000
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7,000
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$ 262,000
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Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 6,000
Accrued expenses 71,000
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77,000
Long-term debt - Note B 750,000
Shareholders' equity:
Common Stock, $.01 par value-authorized
25,000,000 shares, issued and outstanding
16,798,154 shares at November 30, 2001 168,000
Additional paid-in capital 4,356,000
Deficit related to liquidated operations (4,869,000)
Deficit accumulated during development stage
(beginning January 1, 2001) (220,000)
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(565,000)
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$ 262,000
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The accompanying notes are an integral part of this consolidated financial
statement.
1
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Operations (Unaudited)
Three Months ended November 30, 2001
Expenses:
Selling, general and
administrative 57,000
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Loss from operations (57,000)
Other income (expense):
Interest income 2,000
Interest expense (14,000)
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Total other income (expense) (12,000)
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Net loss $ (69,000)
=========
Net loss per share - basic
and diluted $ (.00)
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Weighted average number
of shares outstanding 16,798,154
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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.
During the three months ended November 30, 2000, the Company reported its
results under the liquidation basis of accounting as found on page 4 of this
report.
The Company changed its accounting presentation to the liquidation basis of
accounting from the going concern basis of accounting effective January 31, 2000
and presented its financial information under the liquidation basis of
accounting from February 1, 2000 through December 31, 2000.
The accompanying notes are an integral part of this consolidated financial
statement.
2
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Cash Flows (Unaudited)
Three Months ended November 30, 2001
Cash (used in) operating activities $ (63,000)
Investing activities
None -
Financing activities
None -
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(Decrease) in cash and cash equivalents (63,000)
Cash and cash equivalents at September 1, 2001 315,000
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Cash and cash equivalents at November 30, 2001 $ 252,000
===========
The accompanying notes are an integral part of these consolidated financial
statements.
3
RSI Holdings, Inc.
(A Development Stage Company)
Condensed Consolidated Statement of Changes in Net Assets in Liquidation
(Unaudited)
Three Months ended November 30, 2000
Deficiency in net assets in
liquidation at September 1, 2000 $(595,000)
Accruals and costs during period:
None -
---------
Deficiency in net assets in
liquidation at November 30, 2000 $(595,000)
===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
RSI Holdings, Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note A - Summary of significant accounting policies and activities
Nature of business
RSI Holdings, Inc. (the "Company") has no operations. Prior to January
31, 2000, its principal operating subsidiary, HomeAdd Financial Corporation
("HomeAdd"), was primarily engaged in the business of originating and selling
second mortgage residential loans.
The Company and HomeAdd experienced significant recurring losses during
the period of HomeAdd's operations and had a working capital deficiency on
January 31, 2000. Because of the increased difficulties of HomeAdd in
originating and selling its loans, the Company decided to cease all of HomeAdd's
business operations on January 31, 2000.
Effective with the decision to cease all of HomeAdd's operations, the
Company began the orderly liquidation of the assets of HomeAdd and the
settlement of its liabilities. The Company completed the liquidation of HomeAdd
during the eleven months from February 1, 2000 through December 31, 2000.
Since January 1, 2001, the Company has been looking for and
investigating other business opportunities. Although the Company has considered
certain businesses in which it might engage, it has been unable to make an
appropriate acquisition or identify a business that would be a viable
opportunity for it to pursue. The Company has a deficiency in net assets and any
future business endeavors would require additional funds from either loans or
capital infusions.
Basis of Presentation
Development stage.
As of January 1, 2001, the Company adopted the accounting principles
generally accepted in the United States of America that apply to established
operating enterprises.
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. Accounting principles generally accepted in the United States of
America 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 accompanying unaudited condensed consolidated financial statements
at November 30, 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, 2001.
5
Liquidated operations.
As of January 31, 2000, the Company adopted the liquidation basis of
accounting.
As a result of the decision to cease all of HomeAdd's business
operations, 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 accounting principles
generally accepted in the United States of America. 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 liquidated HomeAdd during the period beginning February
1, 2000 through December 31, 2000.
Note B - Long-term debt
Unsecured note payable to the mother of the President and Chief Executive Officer of the Company
with interest payable quarterly at 8.0 percent per year. The unpaid principal balance is due
on August 14, 2006. $ 250,000
Unsecured convertible note payable to the mother of the President and Chief Executive Officer of
the Company with interest payable annually at 8.0 percent per year. The unpaid principal
balance is due on December 20, 2005. This note is convertible by either party into the
Company's common stock at the rate of $.075 per share. 500,000
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$ 750,000
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Note C - Loss per share
Basic net loss per common share is computed on the basis of the
weighted average number of common shares outstanding in accordance with
Statement of Financial Standards (SFAS) No. 128, "Earnings per Share". The
treasury stock method is used to compute the effect of stock options on the
weighted average number of common shares outstanding for the diluted method.
Since the Company incurred a loss, the treasury stock method is anti-dilutive.
6
Item 2. Plan of Operation.
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.
Changes in basis of accounting
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 accounting
principles generally accepted in the United States of America. The Company's
activities during the eleven months beginning February 1, 2000 consisted
primarily of selling the assets and paying the liabilities of HomeAdd Financial
Corporation, ("HomeAdd"). The Company completed the liquidation of HomeAdd, its
only business by December 31, 2000.
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 accounting principles with
generally accepted in the United States of America. The Company's activities
since January 1, 2001 consisted of looking for and investigating business
opportunities. Although the Company has considered certain businesses in which
it might engage, it has been unable to make an appropriate acquisition or
identify a business that would be a viable opportunity for it to pursue. The
Company's financial statements as of and for the three months ended November 30,
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.
Development stage operations
As stated above, at January 1, 2001, the Company had completed the
liquidation of HomeAdd and began searching for other business opportunities.
During the three months ended November 30, 2001, the Company had no revenues.
General and administrative expenses were $57,000 during the three
months ended November 30, 2001. These expenses include salaries and related
costs of $40,000; legal, accounting, and shareholder related expenses of $6,000;
rent of $6,000 and other administrative expenses of $5,000. The Company does not
anticipate any changes in the number of employees during this period while it
attempts to identify a business opportunity.
Interest expense incurred during the three months ended November
30,2001 was $14,000. Interest income in the amount of $2,000 was earned on cash
investments during the three months ended November 30, 2001.
Liquidation stage operations
The Company's activities during the eleven months beginning February 1,
2000 through December 31, 2000 consisted primarily of selling the assets and
paying the liabilities of HomeAdd. The accruals and costs incurred during this
liquidation period were recorded during the period ended August 31, 2000.
7
Liquidity and Capital Resources
Anticipated Liquidity Requirements
Certain of the Company's shareholders have advanced funds and
guaranteed debt under the debt arrangements as discussed under "Debt
Arrangements". At November 30, 2001, the Company's liabilities exceeded its
assets by $565,000.
The Company anticipates that its cash balances will be sufficient to
pay its obligations as they become due through August 31, 2002, but that
additional sources of cash will be necessary to fund its search for a business
opportunity after that date. The Company cannot give any assurance that
additional funds can be secured to meet its future obligations.
Cash and Cash Equivalents
The Company had cash and cash equivalents in the amount of $252,000 as
of November 30, 2001.
Debt Arrangements
On December 20, 2000, Minor H. Mickel, the mother Buck A. Mickel,
President and Chief Executive Officer of the Company the Company loaned the
Company $500,000 under terms of an 8% convertible note payable on December 20,
2005. Under the terms of this note all principal and interest is convertible at
the conversion rate of $.075 per share at the option of either the Company or
holder of the convertible note.
On August 31, 2001, Minor H. Mickel loaned the Company $250,000 under
the terms of an unsecured note payable bearing interest at 8% per year with the
principal balance due on August 14, 2006.
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
None
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fiscal
quarter ended November 30, 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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January 14, 2002 /s/ Joe F. Ogburn
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(Date) Joe F. Ogburn,
Treasurer and Chief Financial Officer
(Principal Accounting Officer)
9