<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2000
000-28331
(Commission File Number)
PLUS SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Charter)
TEXAS 88-0412455
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
14677 MIDWAY ROAD, SUITE 206, ADDISON, TEXAS, U.S.A.
(Address of principal executive offices)
75001
(Zip Code)
972-687-0090
(Registrant's telephone number, including area code)
SOUND DESIGNS, INC., 14677 MIDWAY ROAD, SUITE 206, ADDISON, TEXAS, USA 75001
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by 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 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 past 90
days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check whether the issuer has filed all reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
<TABLE>
<S> <C>
Common Stock 39,000,000
</TABLE>
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 36,426 $ 121,629
Prepaid expenses 100 1,208
Total current assets 36,526 122,837
PROPERTY AND EQUIPMENT- Net 84,465 51,297
PRODUCT DEVELOPMENT COSTS 148,891 97,440
TOTAL $ 269,882 $ 271,574
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 177,938 $ 166,442
Notes payable 93,317 68,317
Total current liabilities 271,255 234,759
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible voting preferred stock, 8,000,000
shares authorized; no shares issued and outstanding 0 0
Common stock, $.001 par value; 100,000,000 shares authorized;
38,940,000 and 23,340,000 shares issued and outstanding 38,940 23,340
Additional paid-in capital 8,488,194 8,081,377
Deficit accumulated during the development stage (8,528,507) (8,067,902)
Total stockholders' equity (deficit) (1,373) 36,815
TOTAL $ 269,882 $ 271,574
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
2
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PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended Cumulative
June 30, June 30, June 30, June 30, From
2000 1999 2000 1999 Inception
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ -- $ --
OPERATING EXPENSES:
Salaries and benefits 185,007 73,061 332,876 168,246 1,557,288
General and administrative 75,236 11,998 113,138 17,740 6,923,332
Depreciation expense 8,279 4,844 14,591 9,688 40,013
Total operating expenses 268,522 89,903 460,605 195,674 8,520,633
OPERATING LOSS (268,522) (89,903) (460,605) (195,674) (8,520,633)
OTHER EXPENSE - Net 0 0 0 0 (7,874)
NET LOSS $ (268,522) $ (89,903) $ (460,605) $ (195,674) $ (8,528,507)
Earnings per share:
Basic $ (0.01) $ (0.00) $ (0.01) $ (0.01)
Diluted $ (0.01) $ (0.00) $ (0.01) $ (0.01)
Weighted average common and common
equivalent shares outstanding:
Basic 38,940,000 18,321,013 38,940,000 18,299,347
Diluted 38,940,000 18,321,013 38,940,000 18,299,347
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
3
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PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended Cumulative
June 30, June 30, From
2000 1999 Inception
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (460,605) $ (195,674) $(8,528,507)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of property and equipment 5,501
Depreciation of property and equipment 14,591 9,688 40,013
Issuance of common and preferred stock for services 6,659,486
Stock compensation expense 40,000 800,000
Net changes in operating assets and liabilities:
Prepaid expenses 1,108 (100)
Accounts payable and accrued expenses (11,496) 58,464 177,938
Net cash used in operating activities (393,410) (127,522) (845,669)
INVESTING ACTIVITIES:
Additions to property and equipment (47,759) (53,562)
Capitalized product development costs (51,451) (1,000) (148,891)
Cash acquired in reverse merger 107,431 107,431
Net cash provided by (used in) investing activities 8,221 (1,000) (95,022)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 84,000 290,250
Proceeds from issuance of debt 25,000 25,000
Payments on notes payable (8,100)
Collection of due from stockholder 20,000 20,000
Capital contributions 274,986 649,967
Net cash provided by financing activities 299,986 104,000 977,117
NET INCREASE (DECREASE) IN CASH (85,203) (24,522) 36,426
CASH, BEGINNING OF PERIOD 121,629 46,198
CASH, END OF PERIOD $ 36,426 $ 21,676 $ 36,426
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.
4
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PLUS SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
UNAUDITED
1. GOING CONCERN
The condensed financial statements have been prepared assuming that
Plus Solutions, Inc. (the "Company") will continue as a going concern. The
Company has experienced cumulative operating losses, has an accumulated deficit,
and its operations are subject to certain risks and uncertainties, including,
among others, risks associated with technology and regulatory trends, growth
competition by entities with greater financial and other resources, and the need
for additional capital. There can be no assurances that the Company will be
successful in becoming profitable or generating positive cash flow in the
future. The Company is considered to be a development stage company. The Company
is currently exploring various short-term and long-term financing alternatives,
but does not know if these alternatives will be successful. The success of these
financing alternatives will have a significant impact on the Company's ability
to continue as a going concern. The condensed financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
2. FINANCIAL STATEMENT POLICIES
BASIS OF PRESENTATION. The condensed financial statements include the
accounts of the Company. The condensed financial statements reflect all
adjustments that are, in the opinion of management, necessary to present a fair
statement of the Company's financial position as of June 30, 2000, and the
results of operations for the three and six month periods ended June 30, 2000
and June 30, 1999. All adjustments are of a normal, recurring nature.
These interim financial statements should be read in conjunction with
the audited financial statements and the notes thereto prepared by the Company.
Operating results for the six month period ended June 30, 2000, are not
necessarily indicative of the results to be achieved for the full year.
As discussed in Note 2, on March 10, 2000, the Company merged with
Sound Designs, Inc. ("Sound Designs"), and the stockholders of the Company
received approximately 1.69 shares of Sound Designs common stock for each share
of the Company's common stock they owned. At the time of the merger, the Company
had 13,876,193 common shares issued and outstanding, and in the merger,
23,340,000 shares of Sound Designs common stock were received. Retroactive
effect has been given to the merger in stockholders' equity accounts beginning
as of the year ended December 31, 1999, and in all share and per share data in
the accompanying condensed financial statements.
BUSINESS. The Company, organized in October 1998, is to be a provider
of Internet-based, business-to-business, e-commerce solutions and services that
enable buyers and suppliers to automate business transactions on the Internet.
The Company is headquartered in Addison, Texas.
3. ACQUISITION
On March 10, 2000, the Company closed the Agreement and Plan of Merger
entered into with Sound Designs, a Nevada corporation. As consideration for the
merger, the stockholders of the Company, the accounting acquirer, received
approximately 1.69 shares of Sound Designs, the legal acquirer, common stock for
each share of the Company's common stock they owned. In addition, the Company
received cash of $107,431 from Sound Designs. As a result, the former
stockholders of the Company currently own 60% of the outstanding shares of
common stock of Sound Designs. In addition, the merger agreement required all
existing directors and officers of Sound Designs to resign and name the
directors of the Company as the directors of the surviving company which has
taken the name of Plus Solutions, Inc.
4. STOCKHOLDERS' EQUITY
During the First Quarter of 2000, the Company received additional
capital contributions of $274,986.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following is a discussion of the financial condition and results of
operations of the Company for the three and six month periods ended June 30,
2000 (the "Second Quarter 2000" and "YTD 2000", respectively), as compared to
the three and six month periods ended June 30, 1999 (the "Second Quarter 1999"
and "YTD 1999", respectively). This discussion should be read in conjunction
with the Condensed Financial Statements and the related Notes attached hereto.
GENERAL
The Company is to be a provider of Internet-based,
business-to-business, e-commerce solutions and services that enable buyers and
suppliers to automate business transactions on the Internet. The Company is
headquartered in Addison, Texas.
The Company has experienced cumulative operating losses, and its
operations are subject to certain risks and uncertainties, including, among
others, risks associated with technology and regulatory trends, growth
competition by entities with greater financial and other resources, and the need
for additional capital. There can be no assurances that the Company will be
successful in becoming profitable or generating positive cash flow in the
future. The Company is considered to be a development stage company.
On March 10, 2000, the Company closed the Agreement and Plan of Merger
entered into with Sound Designs, Inc. ("Sound Designs"), a Nevada corporation.
As consideration for the merger, the stockholders of the Company, the accounting
acquirer, received approximately 1.69 shares of Sound Designs, the legal
acquirer, common stock for each share of the Company's common stock they owned.
In addition, the Company received cash of $107,431 from Sound Designs. As a
result, the former stockholders of the Company currently own 60% of the
outstanding shares of common stock of Sound Designs. In addition, the merger
agreement required all existing directors and officers of Sound Designs to
resign and name the directors of the Company as the directors of the surviving
company which has taken the name of Plus Solutions, Inc.
OPERATIONS. There was no revenue in the Second Quarter 1999 nor in the
Second Quarter 2000. Total operating expenses, including general and
administrative costs were $89,903 for the Second Quarter 1999 versus $268,522
for the Second Quarter 2000. Contributing significantly to this increase were
insurance costs of an additional $22,409, primarily for directors and officers
liability insurance, increased salary, payroll tax and benefit cost of $61,945
due to additional staff and salary adjustments, increased marketing and web site
development costs of $7,945 related to product marketing and the marketing of
the Company in the public markets, increase in lease payments for office space
of $4,492 due to lease adjustments and expense of $40,000 to record stock
options in Second Quarter 2000 versus 0 in Second Quarter 1999. Net operating
losses for the Second Quarter 1999 totaled $89,903 versus Second Quarter 2000 of
$268,522.
For the six month periods ended June 30, there was no revenue in 1999
or 2000. Total operating expenses, including general and administrative, were
$195,674 for YTD 1999 and $460,605 for YTD 2000. Contributing significantly to
this increase were additional insurance costs of $37,827, primarily for
directors and officers liability insurance, increased salary, payroll tax and
benefit cost of $114,628 due to decreased compensation in 1999 plus additional
staff and salary adjustments in 2000, additional legal and accounting fees of
$15,177 in the first six months of 2000, marketing and web site development
costs of $7,945, travel costs of an additional $18,357 due to merger and
investor related activities, increased lease payments of $8,256 due to lease
adjustments, increased postage and printing costs of $2,125 due to investor
related activities and expense to record stock options $40,000 in Second Quarter
2000 versus 0 in Second Quarter 1999. Net Operating Losses for YTD 1999 totaled
$195,674 versus YTD 2000 of $460,605.
6
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LIQUIDITY AND CAPITAL RESOURCES. Currently, we have sufficient
resources to continue to operate for approximately 75 to 90 days. Subsequent to
June 30, 2000, we have made arrangements that management believes will provide
sufficient additional funds to continue our operations for an approximately 150
to 180 days. These arrangements have not been closed and the additional funds
have not been made available to us as of the date of this filing. While
management believes that these arrangements will close and additional funds will
be made available to the Company, we cannot provide any assurance that the
closing will take place and such additional funds will be made available. If
such additional funds are not made available, we may have to cease operations if
additional short-term funding is not available.
Even if the current financing arrangements are closed, we will need to
secure substantial additional financing in the near future to continue
implementation of our business plan. We are currently actively exploring
various long-term financing alternatives, but we currently have no commitments
from any person to provide us with long-term financing in any substantive
amount. If we fail to acquire such additional financing, we will be forced to
delay the implementation of our business plan, if we are able to continue our
business at all. We cannot assure you that we will be able to secure the
additional long-term financing we require or, if we do acquire such financing,
that it will be on terms that are commercially reasonable. You should be aware
that our failure to secure substantial additional long-term financing on terms
that are acceptable and commercially reasonable will have a very negative impact
on our current financial situation and our prospects for continued success.
FORWARD-LOOKING STATEMENTS
Management's discussion of the Company's 2000 quarterly period in
comparison to 1999, contains forward-looking statements regarding current
expectations, risks and uncertainties for future periods. The actual results
could differ materially from those discussed here. As well as those factors
discussed in this report, other factors that could cause or contribute to such
differences include, among other items, cancellation of product development,
lack of substantial additional financing, or an inability of management to
successfully reduce operating expenses. Therefore, the condensed financial data
for the periods presented may not be indicative of the Company's future
financial condition or results of operations.
7
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 17, 2000, the Company held its annual meeting of stockholders
(the "Annual Meeting"). At the Annual Meeting, each nominee for director
discussed in the Company's Proxy Statement dated May 1, 2000 regarding the
Annual Meeting, was elected a director of the Company. The votes received by
each nominee for director are set forth below:
<TABLE>
<CAPTION>
NOMINEE VOTES RECEIVED
<S> <C>
Max Golden .................................................................... 22,055,140
Mack Lawrence ................................................................. 22,055,140
John Reynolds ................................................................. 22,055,140
</TABLE>
In addition, three proposals were submitted for a vote of the Company's
stockholders. A brief description of each of these proposals, as well as the
votes cast for, against and abstained with respect to each proposal, is set
forth below:
<TABLE>
<CAPTION>
VOTES VOTES VOTES
PROPOSAL FOR AGAINST ABSTAINED
<S> <C> <C> <C>
Proposal #1, which amended the Company's articles of
incorporation to change the name of the Company from
"Sound Designs, Inc." to "Plus Solutions, Inc." ................................... 22,055,140 0 0
Proposal #2, which amended the Company's articles of incorporation to
allow the Company to issue shares of preferred stock and to allow the
board of directors to designate the rights of the preferred stock.................. 22,055,140 0 0
Proposal #3, which adopted a new stock plan to allow the Company to
issue shares of the Company's common stock to the Company's directors,
officers, employers and consultants ............................................... 22,055,140 0 0
</TABLE>
8
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None
9
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SIGNATURES
Pursuant to the requirements 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.
Date: August 14, 2000 PLUS SOLUTIONS, INC.
By: /s/ MAX L. GOLDEN
--------------------------------------
Max L. Golden
Chairman of the Board of Directors and
Chief Executive Officer
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<S> <C>
27 Financial Data Schedule.
</TABLE>
