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: September 30, 1999
-----------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-23825
Optimum Source International, Ltd.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0674322
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4525 West Hacienda Avenue, Suite 12H, Las Vegas, Nevada 89118
(Address of principal executive offices)
(800) 868-7233
Issuer's telephone number
3539 Ocean View Blvd., Glendale, California 91208
(Former name, former address and former fiscal year, if changed since last
report.)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: 1,654,051 as of September 30, 1999
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
OPTIMUM SOURCE INTERNATIONAL, LTD.
BALANCE SHEETS
(Unaudited)
September 30, December 31,
ASSETS 1999 1998
- ------
--------- ---------
Current Assets
- --------------------
Inventory .......................................... $ 20,000 $ 50,000
Marketable Securities .............................. 75,000 --
--------- ---------
Total Current Assets ............................ 95,000 50,000
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable - Trade Dollars ................... 95,000 65,000
Accounts Payable ................................... 25,252 18,689
Accrued Liabilities ................................ 10,571 2,133
Loans from Shareholder ............................. 95,156 83,306
--------- ---------
Total Liabilities ............................... 225,979 169,128
--------- ---------
Stockholders' Equity
Preferred Stock, authorized 5,000,000 shares of
$.01 par value, issued and outstanding 0 ..... -- --
Common Stock, authorized 50,000,000 shares of
$.001 par value, issued and outstanding 1,654,051 1,654 1,654
Additional Paid in Capital ......................... 92,765 92,765
Retained Deficit ................................... (225,398) (213,547)
--------- ---------
Total Stockholders' Equity (Deficit) ............ (130,979) (119,128)
--------- ---------
Total Liabilities and Stockholders' Equity ...... $ 95,000 $ 50,000
========= =========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
OPTIMUM SOURCE INTERNATIONAL, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenue:
<S> <C> <C> <C> <C>
Sales .................... $ -- $ -- $ 75,000 $ 45,905
Cost of Sales ............ -- -- 60,000 14,013
----------- ----------- ----------- -----------
Gross Margin ............... -- -- 15,000 31,892
Expenses
General and Administrative 715 30,500 17,165 80,055
----------- ----------- ----------- -----------
Operating Loss ............. (715) (30,500) (2,165) (48,163)
-----------
----------- ----------- ----------- -----------
Other Expenses
Other Expense - Interest . 3,980 591 9,686 11,507
----------- ----------- ----------- -----------
Income (Loss) Before Taxes . (4,695) (31,091) (11,851) (59,670)
Income Tax ................. -- -- -- --
Net Income (Loss) .......... $ (4,695) $ (31,091) $ (11,851) $ (59,670)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding .............. 1,654,051 1,654,051 1,654,051 1,654,051
=========== =========== =========== ===========
Loss Per Share ............. $ -- $ (0.02) $ (0.01) $ (0.04)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
OPTIMUM SOURCE INTERNATIONAL, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
----------------------
1999 1998
-------- --------
Cash Flows from Operating Activities:
Cash paid to suppliers .......................... $(11,850) (28,726)
-------- --------
Net cash used in operating activities .............. (11,850) (28,726)
-------- --------
Cash Flows from Investing Activities:
Net cash used by investing activities .............. -- --
Cash Flows From Financing Activities:
Loans from shareholder .......................... 11,850 28,726
-------- --------
Net Cash Provided by Financing Activities ......... 11,850 28,726
-------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents ................................. -- --
Cash and Cash Equivalents at
Beginning of the Year ............................ -- --
-------- --------
Cash and Cash Equivalents at
End of the Year .................................. $ -- $ --
======== ========
Reconciliation of Net Loss to Cash Used
by Operating Activities
Net income (loss) .................................. $(11,851) $(59,670)
Changes in Assets and Liabilities
Increase in accounts receivable .................... -- --
Decrease in inventory .............................. 30,000 (35,987)
Increase in Marketable Securities .................. (75,000) --
Decrease in prepaid expense ........................ -- 10,000
Increase in accounts payable ....................... 6,563 15,386
Increase in trade dollars payable .................. 30,000 50,000
Increase in accrued expenses ....................... 8,438 (8,455)
-------- --------
Net Cash Used by Operating Activities .............. $(11,850) $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Interest ........................................... $ -- $ --
Income Taxes ....................................... $ -- $ --
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
OPTIMUM SOURCE INTERNATIONAL, LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Unaudited)
1. Interim Reporting
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles and with Form 10-QSB requirements.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the nine month period
ended September 30, 1999, are not necessarily indicative of the results that may
be expected for the year ended December 31, 1999.
2. Subsequent Events
The Company's Board of Directors, on November 2, 1999, authorized and organized
the acquisition of a wholly owned subsidiary "The Word, LTD" and its products
and marketing rights (i.e. Traders Tool software, Art of Starter Barter Book,
and world wide marketing rights to both products), in exchange for 10 million
shares of the Company's common stock valued at $.10 per share (total exchange
value $1,000,000).
The following pro forma balance sheets and statements of operations give effect
to the above events as if they had occurred January 1, 1999.
5
<PAGE>
PRO FORMA BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
As Reported
in the
Accompanying
Financial
Statements
Optimum
Source
International, The Word, Pro Forma Pro Forma
Ltd. LTD Adjustments Balance
----------- ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C>
Current Assets ................................ $ 95,000 $ -- $ -- $ 95,000
Other Assets - Intangibles ................... -- 1,000,000 -- 1,000,000
----------- ----------- ----------- -----------
Total Assets ............................. 95,000 1,000,000 -- 1,095,000
----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities ................................... 225,979 -- -- 225,979
Stockholders' Equity
Common Stock ................................ 1,654 1,000,000 (990,000)A 11,654
Additional Paid in Capital .................. 92,765 -- 990,000 A 1,082,765
Retained Deficit ............................ (225,398) -- -- (225,398)
----------- ----------- ----------- -----------
Total Stockholders' Equity (Deficit) ..... (130,979) 1,000,000 -- 869,021
----------- ----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 95,000 $ 1,000,000 $ -- $ 1,095,000
=========== =========== =========== ===========
</TABLE>
PRO FORMA STATEMENTS OF OPERATIONS (Unaudited)
The pro forma statements of operations have been omitted as there are
no transactions for The Word, LTD. and no pro forma adjustments relating to the
statement of operations.
PRO FORMA ADJUSTMENTS (Unaudited)
The adjustments to the accompanying unaudited condensed pro forma
balance sheet are described below:
A. Net change in Common Stock and Additional Paid in Capital
resulting from 10,000,000 shares issued pursuant to the
exchange agreement.
6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
General - This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 1998.
Results of Operations - From 1984 to 1986, the Company attempted to manufacture,
distribute and sell chemical products for the purification of water. This
business activity was abandoned. From 1986 to 1990, the Company attempted to
acquire interests in various business opportunities, all attempts were
abandoned. The Company was inactive from 1990 to 1992. The Company was in the
development stage from December 31, 1992 through December 31, 1997.
Total Revenues - For the Nine months ended September 30, 1999 and 1998, the
Company had total sales of approximately $75,000 and $46,000 respectively.
Costs and Expenses - For the Nine months ended September 30, 1999 and 1998, the
Company had a net loss of approximately $12,000 and $60,000, respectively.
Liquidity and Capital Resources
The Company requires working capital principally to fund its current operations.
There are no formal commitments from banks or other lending sources for lines of
credit or similar short-term borrowing, but the Company has been able to borrow
any additional working capital that has been required. From time to time in the
past, required short-term borrowing have been obtained from a principal
shareholder or other related entities.
The Company may be required to supplement its available cash and other liquid
assets with proceeds from borrowing, the sale of additional securities, or other
sources. There can be no assurance that any such required additional funding
will be available or, if available, that it can be obtained on terms favorable
to the Company.
Year 2000 Compliance - The Company utilizes software and related technologies
which have been programmed to recognize and properly process data fields
containing a two digit year and commonly referred to as the Year 2000 Compliance
issue. Management has concluded that a material effect on the Company's
financial condition is not reasonably likely to occur as a result of Year 2000
issues. While the Company communicates with the systems of its vendors and
suppliers, it cannot measure the impact that the Year 2000 issue will have on
such parties with which it conducts business.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The Company did not file a report on Form 8-K during the quarter
months ended September 30, 1999.
8
<PAGE>
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.
OPTIMUM SOURCE INTERNATIONAL, LTD.
(Registrant)
DATE: November 19, 1999 By: /S/
-------------------- ------------------------------------------
James O'Brien, C.E.O., President
(Principal financial and Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF OPTIMUM SOURCE INTERNATIONAL, LTD. AS OF SEPTEMBER 30, 1998 AND
THE RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE NINE MONTHS THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 75
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20
<CURRENT-ASSETS> 95
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 95
<CURRENT-LIABILITIES> 226
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> (133)
<TOTAL-LIABILITY-AND-EQUITY> 95
<SALES> 75
<TOTAL-REVENUES> 75
<CGS> 60
<TOTAL-COSTS> 60
<OTHER-EXPENSES> 17
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (12)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
