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 June 30, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ------------ to -------------- .
Commission file number: 0-30061
-------
STARUNI CORPORATION
-------------------------------
(Exact name of small business issuer as specified in its charter)
California 95-2210753
------------ -----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1642 Westwood Blvd., Los Angeles, California 90024
--------------------------------------------------
(Address of principal executive office) (Zip Code)
(310) 470-9358
---------------------
(Issuer's telephone number)
Check whether the issuer: (1) 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 XX No
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of June 30, 2000 was 14,396,839
1
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................4
PART II
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES................................6
ITEM 5. OTHER INFORMATION.....................................................7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................7
SIGNATURES.....................................................................8
INDEX TO EXHIBITS..............................................................9
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Staruni Corporation, a
California corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended June, 2000 and
statements of operations, and statements of cash flows for the interim period up
to the date of such balance sheet and the comparable period of the preceding
year are attached hereto as Pages F-1 through F- 5 and are incorporated herein
by this reference.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
3
<PAGE>
STARUNI CORPORATION
UNAUDITED CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2000
ASSETS
Current assets
Cash $ 97,746
Receivables 12,940
Advance to stockholder 109,000
Prepaid expenses 5,000
------------
Total Current Assets 224,686
----------
Property and equipment, net of accumulated depreciation 2,174
Total Assets $ 226,860
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts and Accrued Payables $ 6,988
-----------
Total Current Liabilities 6,988
-----------
Long-term liabilities
Loans from Officers 850
------------
Total long-term liabilities 850
------------
TOTAL LIABILITIES 7,838
Shareholders' Equity
Class B Preferred Stock, no par value authorized
5,000,000 shares, issued and outstanding 0 shares
Common stock, no par value, 250,000,000 shares
authorized, 14,396,839 shares issued and outstanding
with 68,748 shares held in treasury at June 30, 2000 1,241,213
Common stock subscription (receivable) (401,837)
Accumulated (deficit) (620,354)
--------------
Net Stockholders' Equity 219,022
--------------
Total Liabilities and Stockholders' Equity $ 226,860
==============
See Accompanying Notes to Unaudited Financial Statements
F-1
<PAGE>
<TABLE>
STARUNI CORPORATION
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDING JUNE 30, 2000 AND 1999
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
2000 1999 2000 1999
------------ ----------- ---------- --------
<S> <C> <C> <C> <C>
Income $ 41,813 $ 39,154 $169,902 $148,194
------- ------- -------- --------
Computer and Internet related expenses 38,479 41,389 129,785 104,823
General and administration expenses 120,433 103,062 205,386 227,813
----------- ---------- ----------- -----------
Total operating expenses 158,912 144,451 336,171 332,636
----------- ---------- ----------- -----------
Income (loss) from operations before (117,099) (105,297) (165,269) (184,442)
provision for income taxes
Provision for income taxes - - - -
------------------------- ------------------------
Net (loss) $ (117,099) $ (105,297) $ (165,269) $ (184,442)
============ =========== =========== ===========
Income (loss) per weighted-average share
of common stock outstanding (0.01) (0.03) (0.01) (0.05)
========================== =========================
Weighted-average number of common
stock outstanding 14,396,839 3,595,576 14,396,839 3,595,576
----------- ------------ ------------ ----------
</TABLE>
See Accompanying Notes to Unaudited Financial Statements
F-2
<PAGE>
<TABLE>
STARUNI CORPORATION
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDING MARCH 31, 2000
<CAPTION>
Common
Class B Stock Accumulated Net
Preferred Stock Common Stock Subscription (Deficit) Equity
(Receivables)
Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C>
Balance September 30, 1997 - $ - 3,245,576 $ 132,240 $ - $ (24,788) $ 107,452
Issuance of Shares - - 350,000 40,142 - - 40,142
Net (loss) - - - - - (125,541) (125,541)
------- ------ ------------- --------------- ----------- ---------- ----------
Balance September 30, 1998 - - 3,595,576 172,382 - (150,329) 22,053
Issuance of Shares - - 10,286,251 991,581 (513,281) - 478,300
Net (loss) - - - - - (304,756) (304,756)
------- -------- -------------- --------------- ---------- ---------- ------------
Balance September 30, 1999 - - 13,881,827 1,163,963 (513,281) (455,085) 195,597
Payments on previous stock issued 29,444 - 29,444
Net (loss) - three months - - - - (27,132) (27,132)
------- -------- --------------- --------------- ----------- --------- --------------
Balance December 31, 1999 - - 13,881,827 1,163,963 (483,837) (482,217) 197,909
Payments on previous stock issued 82,000 - 82,000
Net (loss) - three months - - - - - (21,038) (21,038)
Balance as of March 31, 2000 - - 13,881,827 $ 1,163,963 $ (401,837) (503,255) $ 258,871
------- ------- ------------- -------------- ----------- ---------- -------------
Issuance of Shares 515,012 77,250 77,250
Net (loss) - three months (117,099) (117,099)
Balance as of June 30, 2000 - $ - 14,396,839 $ 1,241,213 $ (401,837) $ (620,354) $ 219,022
======= ======== ========== =============== =========== =========== ==============
</TABLE>
See Accompanying Notes to Unaudited Financial Statements
F-3
<PAGE>
<TABLE>
STARUNI CORPORATION
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDING MARCH 31, 2000 AND 1999
<CAPTION>
Six Months Ended
June 30
Unaudited
2000 1999
------------------ ----------------
<S> <C> <C>
Cash Flows From Operating Activities Net (loss) $ (165,268) $ (184,442)
------------------ -------------
Adjustments To Reconcile Net Loss To Net Cash
Used In Operating Activities
Depreciation - -
Issuance of stock for services 77,250 -
Decrease (increase) in prepaid expense (5,000) -
(Increase) in receivables (45) (2,167)
Increase (decrease) in accounts and accrued payables (3,526) 4,333
---------------- ---------------
Net Adjustment (68,679) 2,166
---------------- ---------------
Net Cash (Used) In Operating Activities (96,590) (180,276)
---------------- ----------------
Cash Flows From Investing Activities
Increase in property, plant, & equipment - -
---------------- ---------------
Net Cash (Used) By Investing Activities - -
---------------- ---------------
Cash Flows From Financing Activities
(Increase) in loans to stockholder (net) (78,850) -
Proceeds from issuance of capital stock (Net) 111,444 202,341
Increase in long-term liabilities 850 -
---------------- ---------------
Net Cash Provided By Financing Activities 33,444 202,341
---------------- ---------------
Net (decrease) in cash (63,146) 20,065
Cash-beginning 160,892 22,230
---------------- ----------------
Cash-end $ 97,746 $ (42,295)
---------------- ================
Non-cash items
Stock issued for services $ 77,250 $ -
================ ===============
</TABLE>
F-4
<PAGE>
STARUNI CORPORATION
NOTES TO UNAUDITED INTERIM CONDENSED
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 2000
NOTE 1 - BASIS OF PRESENTATION
The interim financial statements at June 30, 2000, and for the three and
nine month periods ended June 30, 2000 and 1999 are unaudited, but include
all adjustments which the Company consider necessary for a fair
presentation.
The accompanying unaudited financial statements are for the interim
periods and do not include all disclosures normally provided in annual
financial statements, and should be read in conjunction with the Company's
Form 10-KSB for the year ended September 30, 1999. The accompanying
unaudited interim financial statements for the three and nine month
periods ended June 30, 2000, are not necessarily indicative of the results
which can be expected for the entire year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2 - INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"), which requires an asset and liability approach
to accounting for income taxes. Under SFAS 109, deferred tax assets or
liabilities are computed on the difference between the financial statement
and income tax bases of assets and liabilities ("temporary differences")
using the enacted marginal tax rate. Deferred income tax expenses or
benefits are based on the changes in the deferred tax asset or income
liability from period to period.
F-5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company
Staruni Corporation, a California corporation (the "Company"), is an Internet
service provider ("ISP") with its main offices located in Los Angeles,
California. The Company provides a wide array of Internet services tailored to
meet the needs of individual and business customers, including customers with
little or no online experience. The Company does business mainly in California.
The Company presently has more than two thousand customers. The Company's growth
is attributable, in part, to the use of media advertising. The Company operates
its ISP business through its Cyberhotline Division, and advertises itself as
Cyberhotline.
Internet access and related value-added services ("Internet services") represent
growing segments of the telecommunications services marketplace. Declining
prices in the PC market, continuing improvements in Internet connectivity,
advancements in Internet navigation technology, and the proliferation of
services, applications, information and other content on the Internet continue
to attract a rapidly growing number of Internet users. The Company is seeking to
attract a portion of the growing number of Internet users as customers.
The Company provides a number of value-added services, such as dedicated
high-speed access, news access, Web hosting and server co-location. The Company
plans to evaluate and develop potential new value-added services, and will seek
to leverage its current sales, marketing and network capabilities in an attempt
to create additional revenue opportunities. The Company believes that a user
dense, regionally focused customer base will provide an excellent platform for
the introduction of new value- added services that can take advantage of brand
awareness and economies of scope and scale, potentially including Internet
telephony and video and audio programming distribution.
General.
The Company's major focus has been the creation and development of its ISP
business. As a by- product the Company has also been involved in the development
of its Web Hosting and Web Design business.
Results of Operations
Three months ended June 30, 2000 & 1999. Nine months ended June 30, 2000 & 1999.
Sales
Sales for the three months ended June 30, 2000 increased to $41,813 from $39,154
for the comparable period in 1999, an increase of 7%. The increase in revenues
was primarily attributable to an increase in the number of Internet customers
resulting from the Company's marketing efforts.
Sales for the nine months ended June 30, 2000 increased to $169,902 from
$148,194 for the nine months ended June 30, 1999, an increase of 14.6%. The
increase in revenues is primarily attributable to a marketing campaign for the
Company's ISP business and the increase of customers attributable thereto.
4
<PAGE>
Losses
Net losses for the three months ended June 30, 2000, were $117,099 up from a net
loss of $105,297 for the comparable period in 1999, an increase of $11,802. Net
Losses for the nine months ended June 30, 2000 decreased to $165,269 from
$184,442 for the nine months ended June 30, 1999. The decrease in losses were
primarily attributable to a decrease in general and administrative expenses and
an increase in sales income.
The Company expects that it may continue to incur losses at least through fiscal
2000 and there can be no assurance that the Company will achieve or maintain
profitability or that revenues will be generated or that growth can be sustained
in the future.
Expenses
Total Operating Expenses for the three months ended June 30, 2000, increased to
$158,912 from $144,451 in the comparable period in 1999.
Total Operating Expenses for the nine months ended June 30, 1999 increased to
$335,171 from $332,636 for the nine months ended June 30, 1998, an increase of
$2,535.
Computer and Internet related expenses decreased sightly to $38,479 for the
three months ended June 30, 2000 from $41,389 in the three months ended June 30,
1999.
Computer and Internet related expenses increased to $129,785 for the nine months
ended June 30, 2000 from $104,823 for the nine months ended June 30, 1999. The
increase in Computer and Internet expenses is primarily attributable to the
increase in the Company's ISP business.
General and Administrative expenses, for the three month period ended June 30,
2000, increased $17,371 from $103,062 at June 30, 1999 to $120,433 at June 30,
2000.
General and Administrative expenses, for the nine month period ended June 30,
2000, decreased $22,427 from $227,813 at June 30, 1999 to $205,386 at June 30,
2000. The decrease in General and Administrative Expenses over the first three
quarter resulted from steps undertaken to operate the Company more efficiently.
B. Liquidity and Capital Resources
As of June 30, 2000, the Company has current assets of $224,686 and total assets
of $226,860, as compared to $203,937 and $206,111, respectively at September 30,
1999. The Company had net working capital of $217,698 at June 30, 2000 compared
to net working capital of $193,423 at September 30, 1999.
Net stockholder's equity in the Company was $219,022 at June 30, 2000, compared
to $206,111 as of September 30, 1999.
5
<PAGE>
Cash flows used in operations were $96,590 for the nine months ended June 30,
2000 as compared to cash flows used in operations of $182,276 for the comparable
period in 1999. Negative cash flows are primarily attributable to marketing
costs.
Cash flows generated from financing activities were $33,444 for the nine months
ending June 30, 2000, as compared to $202,341 for the comparable period in 1999.
The Company's financing activities have primarily consisted of private
placements of its common stock.
Capital Expenditures
The Company made no significant capital expenditures on property or equipment
during either 1999 or to date in 2000. The Company has no present plans for any
significant capital expenditures during the remainder of this fiscal year.
PART II
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
On May 8, 2000, the Company issued a total of 300,000 shares of its common stock
at $0.01 per share pursuant to the Staruni Corporation employee benefit plan to
the following individuals for Services to the Company pursuant to Rule 701 under
Regulation D of the Securities Act of 1933:
Name Number of Shares
Richard D. Surber 270,000
Edward T. Wells 20,000
Julieanne Piirala 5,000
Allan Merrill 5,000
The Company relied on the following facts in determining that Rule 701 was
available: (a) the shares were issued pursuant to a written compensatory benefit
plan issued by the Company, (b) the individuals listed rendered bonafide
services not in connection with the offer or sale of securities in a capital
raising transaction, (c) the shares were issued pursuant to a written contract
relating to the issuance of shares paid as compensation for services rendered,
and (d) the amount of shares offered and sold in reliance on Rule 701 did not
exceed $500,000 and all securities sold in the last 12 months have not exceeded
$5,000,000. These shares were subsequently registered pursuant to an S-8
registration filed by the Company on June 12, 2000.
On June 23, 2000 the Company issued a total of 215,000 shares of stock to
officers and employees of the Company pursuant to the Company's 2000 Benefit
Plan as set out below. The shares were issued pursuant to an S-8 Registration
filed with the Securities and Exchange Commission on June 12, 2000.
6
<PAGE>
NAME NUMBER OF SHARES
Bruce Stuart 140,000
Robert Riecks 25,000
Laurie Weinstock 25,000
Michael Petrusis 25,000
ITEM 5. OTHER INFORMATION
In early June, 2000, the Company opened an Internet storefront called
"ibargain.com." The site offers discounted prices on brand name merchandise such
as watches, electronics and cameras. The Company is working to expand the
variety of merchandise which is available on the site. Customers of ibargain.com
will also be offered free Internet access through the Company's Internet Service
Provider ("ISP"), Cyberhotline.
During the first half of June, 2000 the Company also increased its service area
for its Cyberhotline ISP by expanding from the southern California area to
include 33 additional states and the District of Columbia as well as offering
service in Japan and Canada
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B are
listed in the Index to Exhibits on page 10 of this Form 10-QSB, and are
incorporated herein by this reference.
(b) Reports on Form 8-K. No reports were filed on Form 8-K during the quarter.
-------------------
[THIS SPACE INTENTIONALLY LEFT BLANK]
7
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, this 4th day of August, 2000.
Staruni Corporation
/s/ Bruce D. Stuart
----------------------
Bruce D. Stuart, Chief Executive Officer,
Chief Financial Officer
8
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS
INDEX TO EXHIBITS
Exhibit
No. Page No. Description
2(i) * Articles of Incorporation of Altius Corp. dated February 1,
1962 and filed February 5, 1962.
2(ii) * Certificate of Amendment of Articles of Incorporation of
Altius Corp. dated January 29, 1971 and filed April 9, 1971.
2(iii) * Certificate of Amendment of Articles of Incorporation of
Altius Corp. dated December 30,1996 and filed March 24, 1997
wherein the name of the corporation was changed from Altius
Corp. to Staruni Corporation.
2(iv) * Certificate of Amendment of Articles of
Incorporation of Staruni Corporation dated June 15,
1999 and filed August 20, 1999.
2(v) * By-Laws of Altius Corp. (Staruni Corporation) dated February
8, 1962
10 ** Staruni Employee Benefit Plan dated March 15, 1999
23 * Consent Letter of Auditor
27 __ Financial Data Schedule "CE"
* Incorporated by reference from Form 10-SB filed March 22, 2000.
** Incorporated by reference from Form 10-SB/A filed May 12, 2000.
9
