<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 0-8164
MSI HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
UTAH 87-0280886
STATE OR OTHER JURISDICTION OF (IRS EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION
501 WALLER ST., AUSTIN, TEXAS 78702
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (512) 476-6925
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
NONE N/A
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK, NONE
PAR VALUE $.10
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 REPORT(S), AND
(2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
(1) YES (X) NO ( ) (2) YES (X) NO ( )
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT DECEMBER 31, 1997:
10,764,733
<PAGE> 2
Part I: Financial Information Item 1:
Consolidated Financial Statements
Index to Consolidated Financial Statements Page
Consolidated Balance Sheets 3
Consolidated Statements of Operation 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
2
<PAGE> 3
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
Consolidated Balance Sheets - (restated)
<TABLE>
<CAPTION>
December 31
1997
(unaudited)
--------------
<S> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 19,696
Accounts Receivable - Trade 576,852
Inventory 346,521
Other Receivables - Advances 174,945
Total Current Assets ------------
1,118,014
-----------
Property, Plant, and Equipment (at cost) net 691,881
-----------
Long Term Notes Receivable 434,756
-----------
TOTAL ASSETS $ 2,244,651
===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable - Trade $ 653,766
Bank Line of Credit 204,765
Other Accrued Expenses 24,000
Current Maturities of Long-term Debt 174,026
Current Portion of Obligations Under Capital Leases 41,097
-----------
Total Current Liabilities 1,097,654
-----------
Long Term Notes Payable 389,874
Obligations under Capital Leases For Equipment 81,902
Senior Convertible Notes 371,000
Other Long Term Liabilities 685,450
-----------
Total Long Term Notes 1,528,226
-----------
Stockholders Equity
Preferred stock, Series B, $5.30 2,226,000
stated value; 420,000 authorized, issued and outstanding
Common stock at $.10 par value; 1,076,473
Authorized 50,000,000 shares; 10,764,733 shares issued and outstanding
Additional paid-in capital (209,889)
Accumulated Deficit (3,473,813)
-----------
Total Stockholders Equity (381,229)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 2,244,651
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
Consolidated Statements of Operation - (restated)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 31 Ended December 31
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Revenues:
Hardware, Software & Peripherals $ 212,013 $ 107,264 $ 1,350,810 $ 320,035
Service, Support & Integration 188,298 79,936 702,915 266,794
Network Installation 319,950 641,604 685,771 2,394,663
------------ ------------ ------------ ------------
720,261 828,804 2,739,496 2,981,492
------------ ------------ ------------ ------------
Cost of Goods Sold
Hardware, Software & Peripherals 204,926 75,085 885,989 254,249
Service, Support & Integration 122,394 51,958 456,896 173,415
Network Installation 255,301 417,043 509,405 1,556,532
------------ ------------ ------------ ------------
582,621 544,086 1,852,290 1,984,196
------------ ------------ ------------ ------------
Gross Margin 137,640 284,718 887,206 997,296
Selling, General & Administrative 1,234,852 341,811 2,620,639 1,200,271
------------ ------------ ------------ ------------
Operating Income (Loss) (1,097,212) (57,093) (1,733,433) (202,975)
Interest expense, net -- -- -- --
Other Income (Expense) (256,811) 66,508 (362,212) (33,385)
------------ ------------ ------------ ------------
Net Income (Loss) (1,354,023) 9,415 (2,095,645) (236,360)
------------ ------------ ------------ ------------
Preferred stock dividends (1,244,169) -- (1,244,169) --
------------ ------------ ------------ ------------
Net loss available to Common stockholders (2,598,192) 9,415 (3,339,814) (236,360)
============ ============ ============ ============
Basic and diluted net loss per share (0.241) $ (0.000) (0.310) $ (0.024)
============ ============ ============ ============
Basic and diluted weighted
Average shares outstanding 10,764,733 9,784,733 10,764,733 9,784,733
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION Consolidated Statements of Cash
Flow (restated) For the Nine Months Ended December 31
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (Loss) $(2,095,645) $(236,360)
Adjustments to reconcile net income to net cash, provided by operating
activities:
Depreciation expense 148,587 86,096
Change in accounts receivable 359,566 (224,423)
Change in inventory (165,461) 270,519
Change in accounts payable (221,968) 120,429
Change in accrued expenses (89,185) 24,795
----------- ---------
Net Cash Provided by Operating Activities (2,064,106) 41,056
----------- ---------
Cash Flows from Investment Activities:
Investment in property & equipment (56,429) (367,270)
Investment in other assets (15,022) (428,082)
----------- ---------
Net Cash provided by (Used by) Investing Activities (71,451) (795,352)
----------- ---------
Cash Flows from Financing Activities:
Proceeds from Line of Credit (520,235) 275,000
Change in long term debt (116,932) 493,037
Proceeds from other notes receivable 685,450
Change in capital lease obligations (100,142)
Proceeds from Private Placement 1,818,000
Proceeds from Senior Convertible Debt 371,000
----------- ---------
Net Cash Provided by (Used by)Financing Activities 2,137,141 768,037
----------- ---------
Net Increase in Cash 1,584 13,741
Cash at Beginning of Period 18,112 9,104
----------- ---------
Cash at End of Period $ 19,696 $ 22,845
=========== =========
Supplemental disclosures:
Cash paid for interest $ 81,891 $ 70,200
=========== =========
Supplemental schedule of non-cash investing and financing activities:
Preferred stock issued for:
Placement Agent Fees $ 106,000 --
Stock Options: --
Placement Agent Fees 367,350 --
Discount on preferred stock issued for dividends 1,890,769 --
=========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
MICRO-MEDIA SOLUTIONS, INC.
5
<PAGE> 6
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
December 31, 1997
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation:
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principals and the rules of the
Securities and Exchange Commission (the SEC), and should be read in conjunction
with the audited financial statements and notes thereto contained in the
Company's latest Annual Report filed with the SEC on Form 10-KSB/A. In the
opinion of management, all adjustments consisting of normal recurring
adjustments, necessary for the fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operation are not necessarily indicative of the results
to be expected for the full year. Notes to the financial statements which would
substantially duplicate the disclosure contained in the audited financial
statements for the year ended March 31, 1997, as reported in the Form 10-KSB/A
have been omitted.
Nature of Business and Organization
Micro-Media Solutions, Inc. (formerly Mountain States Resources Corporation,
("MSRC")), was organized under the laws of the State of Utah on April 15, 1969.
MSRC began operations on April 15, 1969, as a mining, mineral extraction and oil
and gas exploration company. MSRC discontinued its operations in 1993 and became
a development stage company as described in the Statement of Financial
Accounting Standards No.7, "Accounting and Reporting by Development Stage
Enterprises". On June 23, 1997, the then shareholders of Micro-Media Solutions,
Inc., (MSI-Texas), entered into an agreement and plan of reorganization with
MSRC whereby MSRC acquired all of the issued and outstanding stock of MSI-Texas
in exchange for 9,310,000 shares of Common Stock of MSRC. The transaction was
accounted for as a recapitalization. As part of the reorganization, MSRC changed
its name to Micro-Media Solutions, Inc., (a Utah Corporation), ("MSI") (the
"Company").
MSI-Texas is an Austin, Texas, based technology corporation formed to provide
computer hardware, software programming, system installation and support,
maintenance, media duplication, and kitting to the public and private sectors.
In addition, MSI-Texas is certified by the State of Texas as a Historically
Underutilized Business (HUB).
Principles of Consolidation
The consolidated financial statements for the years ended December 31, 1997 and
1996 include the accounts and transactions of MSI and MSI-Texas. All significant
inter-company accounts and transactions have been eliminated in the accompanying
consolidated financial statements. MSI, however, did not have any material asset
or liability accounts or account balances. With the exception of MSI's equity
accounts, the significant account balances belong to MSI-Texas.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Earnings (Loss) Per Share
The earnings (loss) per share is computed on the basis of the weighted average
number of shares outstanding during the period. All historical per share data
has been restated to reflect stock splits and the effect of the merger
transaction of MSI.
Use of Estimates and Certain Concentrations
Management of the Company has made a number of estimates and assumptions
relating to the valuation and reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these consolidated
financial statements in conformity with generally accepted accounting
principles. Although actual results could differ from those estimates,
Management believes its estimates are reasonable. Certain components,
subassemblies and software included in the Company's computer systems are
obtained from sole suppliers or limited number of suppliers. The company relies,
to a certain extent, upon its suppliers' abilities to enhance existing products
in a timely and cost-effective manner, to develop new products to meet changing
customer needs and to respond to emerging standards and other technological
developments in the computer industry. The Company's reliance on a limited
number of suppliers involves several risks, including the possibility of
shortages and/or increases in costs of components and subassemblies, and the
risk of reduced control over delivery schedules.
6
<PAGE> 7
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
December 31, 1997
(Continued)
The Company has a large number of customers on which it performs ongoing credit
evaluations and generally does not require collateral from its customers.
Historically, the Company has not experienced significant losses related to
receivables from individual customers or groups of customers in any particular
industry of geographic area.
Restated Financial Statements
The accompanying financial statements have been restated from the statements
originally issued. These statements have been restated to report the transaction
between MSRC and MSI-Texas as a recapitalization. The original financial
statements reported the transaction as a purchase. Changes in the financial
statements are as follows:
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1997
-------------------------- --------------------------
As Reported As Restated As Reported As Restated
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance Sheet:
Goodwill $ 707,521 $ -0- $ 751,329 $ -0-
Additional paid-in capital 6,986,652 (209,889) 5,600 (1,046,058)
Preferred Stock Series B 840,000 2,226,000 -0- -0-
Accumulated deficit (8,576,833) (3,473,813) (5,746,125) (133,999)
</TABLE>
<TABLE>
<CAPTION>
For the Nine For the Three
Months Ended Months Ended
--------------------------- ---------------------------
December 31, 1997 March 31, 1997
--------------------------- ---------------------------
As Reported As Restated As Reported As Restated
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Statement of Operation
Selling, General & Administrative $ 2,573,293 $ 2,620,639 $ 686,953 $ 1,234,852
Net Loss (2,830,708) (2,095,645) (1,064,584) (3,175,673)
Earnings (Loss) Per Share (.220) (.310) (.083) (.126)
Weighted average number of shares outstanding
used in earnings (loss) per share calculation
12,895,845 10,764,733 12,895,845 10,764,733
</TABLE>
Certain amounts previously reported have been reclassified for presentation
purposes in the restated financial statements. These amount are not material to
the financial statements. Restated financial statements and Form 10KSB/A for
March 31, 1997 have previously been filed with the SEC.
NOTE 2. SHORT-TERM BORROWINGS
The Company has two outstanding promissory notes in the total amount of $200,000
payable to a third party. These notes bear interest at a rate of 20% per anum.
The Company has refused to make payment on theses notes due to a number of
disputes among the Company, the third party, and a former consultant to the
Company. The third party filed suit against the Company to enforce the notes.
The Company filed an answer and denies liability. The Company also filed a
separate lawsuit against both the third party and the former consultant in
connection with the global dispute among the parties. The Company intends to
defend vigorously the third party's claim under the notes and to pursue
vigorously its own claims against the third party and the former consultant.
7
<PAGE> 8
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
December 31, 1997
(Continued)
The Company had a secured credit agreement with Bank One providing for
borrowings of up to $725,000, based on the amount of the Company's eligible
receivables. As of December 31, 1997 the Company owed $205,000 on the line of
credit. Under the agreement, the Company is subject to certain financial and
other covenants including certain financial ratios.
The credit agreement matured on August 18, 1997 and Bank One notified the
Company that they would not renew the credit line. The Company has working
agreements with two other banking institutions.
NOTE 3. CAPITAL TRANSACTIONS
On November 18, 1997, the Company received gross proceeds of $2,120,000 from the
Private Placement (Phase I) of 400,000 shares of Series B, 5% Cumulative
Convertible Non-Voting Preferred Stock, Stated value $5.30 per share. The
Company issued 20,000 shares of the Series B Preferred Stock as agreed for
payment of commission fees of the Private Placement (Phase I). Each share of
Preferred B stock is initially convertible into ten shares of the Company's
Common Stock. Each Preferred B share was issued six Class A Warrants exercisable
for a two year period beginning January 31 1998. The exercise price for each
warrant is $1.50 per share and will entitle the holder to one share of the
Company's Common Stock. Total expenses of the Private Placement including broker
fees, commissions, and legal and accounting expenses totaled $408,000.
The Company received $371,000 in October 1997 from two individuals under Senior
Convertible Debt (the "Senior Convertible Debt") secured by common stock.
NOTE 4. SUBSEQUENT EVENTS
On February 4, 1998, the Company received $1,000,000 completing the Private
Placement (Phase II) of 94,340 shares of Series C, 6% Cumulative Convertible
Non-Voting Preferred Stock for a purchase price of 10.60 per share. The Company
issued 4,717 shares of Series C, 6% Cumulative Convertible Non-Voting Preferred
Stock as agreed for payment of commission fees of the Private Placement (Phase
II). Each share of Preferred C Stock is initially convertible into ten shares of
the Company's Common Stock. Total expense of the Private Placement including
broker fees, commissions, and legal and accounting fees totaled $180,000.
The holders of the Senior Convertible Debt have requested conversion of the debt
into 420,000 Class A Warrants and 70,000 shares of Series B, 5% Cumulative
Convertible Non-Voting Preferred Stock, Stated value $5.30 per share. The Class
A Warrants will be exercisable at a price of $0.795 per share. Accrued interest
on the Senior Convertible Debt will be paid through the issuance of 10,286
shares of Common Stock.
On February 5, 1998, the Company arranged for a line of credit in the amount of
$750,000 from Compass Bank. This credit facility is secured by deposits at
Compass Bank. An additional line of credit in the amount of $500,000 is being
requested and will be secured by receivables.
NOTE 5. CONTINGENCIES AND LEGAL MATTERS
MSI is engaged in various litigation and has a number of unresolved claims
pending. While the amounts claimed are not material and the ultimate liability
in respect to such litigation and claims cannot be determined at this time, MSI
is of the opinion that such liability is not of material importance in relation
to its accounts.
8
<PAGE> 9
MICRO-MEDIA SOLUTIONS, INC.
FORMERLY MOUNTAIN STATES RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)
December 31, 1997
(Continued)
NOTE 6. GOING CONCERN
As shown in the accompanying consolidated financial statements, the Company has
incurred a net loss in the current quarter of $1,354,023 and as of that date,
the Company's current assets exceeded its current liabilities by $20,360. At
December 31, 1997, the Company owes accounts payable with dates due in excess of
ninety (90) days. These factors create an uncertainty about the Company's
ability to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company's attaining additional financing
to fund the expenses related to operations and capital improvements. The Company
received a net $2,189,000 from capital transactions during the quarter ending
December 31, 1997. An additional net $870,000 has been received in the first
quarter of 1998. The Company has signed a letter of intent for up to an
additional $ 5,000,000 under a debt instrument to be received no later than
April 30, 1998. In addition, the Company plans a secondary offering during the
calendar year 1998. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
9
<PAGE> 10
Part I: Financial Information Item 2: Management's Discussion and analysis of
financial condition and results of operations.
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. This discussion should be read in
conjunction with the Consolidated Financial Statements appearing in Item 1.
GENERAL
Micro-Media Solutions, Inc. (formerly Mountain States Resources Corporation,
("MSRC")), was organized under the laws of the State of Utah on April 15, 1969.
MSRC began operations on April 15, 1969, as a mining, mineral extraction and oil
and gas exploration company. MSRC discontinued its operations in 1993 and became
a development stage company as described in the Statement of Financial
Accounting Standards No.7, "Accounting and Reporting by Development Stage
Enterprises". On June 23, 1997, the then shareholders of Micro-Media Solutions,
Inc., (MSI-Texas), entered into an agreement and plan of reorganization with
MSRC whereby MSRC acquired all of the issued and outstanding stock of MSI-Texas
in exchange for 9,310,000 shares of Common Stock of MSRC. The transaction was
accounted for as a recapitalization. As part of the reorganization, MSRC changed
its name to Micro-Media Solutions, Inc., (a Utah Corporation), ("MSI") (the
"Company").
MSI-Texas is an Austin, Texas, based technology corporation formed to provide
computer hardware, software programming, system installation and support,
maintenance, media duplication, and kitting to the public and private sectors.
In addition, MSI-Texas is certified by the State of Texas as a Historically
Underutilized Business (HUB).
The principal costs to market and sell the Company's products are advertising
and promotion cost, salaries and commissions, general and administrative
expenses. The Company's operation results may be subject to fluctuations on a
quarterly and an annual basis as a result of various factors, including, but not
limited to, fluctuating market pricing for computer and semiconductor memory
products, industry competition, seasonal government purchasing cycles, and
working capital restrictions on manufacturing and production. Therefore, the
operating results for any particular period are not necessarily indicative of
the results that may occur in any future period.
The Company's revenues consist of hardware sales, software sales and the
delivery of technical services, including installing and maintaining network
systems. The technical service sales of the Company typically yield a higher
gross margin than the hardware and software sales of the Company. This is due,
in part, to the intense competition in the hardware and software sales sector
from Original Equipment Manufactures and distributors. As a result, the Company
is attempting to strategically reposition itself from emphasizing hardware sales
to intensifying sales of technical services.
RESULTS OF OPERATIONS
Three Months Ended December 31, 1997 Compared to Three Months Ended December 31,
1996
Net sales for the 1997 fiscal Third Quarter were $720,261 versus $828,804 for
the 1996 fiscal Third Quarter. A decrease of 13%. The decrease is primarily due
as a result of the completion of a large network installation project without
any new projects cued to follow.
Cost of sales was $582,621 resulting in a gross margin of 24% in the 1997 third
quarter versus sales of $828,804 resulting in a gross margin of 34% in the 1996
third quarter, a decrease of 10%. The decrease was the result of lower net sales
and increase in service related sales, which typically have a higher margin.
Selling general and administrative expenses increased to $1,224,852 in the 1997
third quarter from $341,811 in the 1996 third quarter, an increase of 361%. This
increase is primarily due to additional management personnel.
Nine Months Ended December 31, 1997 Compared to Nine Months Ended December 31,
1996.
Net sales for the 1997 Nine months ended December 31, 1997 were $2,739,496
versus $2,981,492 for the Nine months ended December 31, 1996. A decrease of 8%.
The decrease is primarily due as a result of the completion of a large network
installation project without any new projects cued to follow.
Cost of sales was $1,852,290 in the Nine months ended December 31, 1997 versus
$1,984,196 in the Nine months ended December 31, 1996, a decrease of 7%. The
decrease reflects the decrease in net sales in 1997.
10
<PAGE> 11
The Company's gross margin in the Nine months ended December 31, 1997 was 32%
versus 33% in the Nine months ended December 31, 1996, a decrease of 1%.
Selling general and administrative expenses increased to $2,620,639 in the Nine
months ended December 31, 1997 from $1,200,271 in the Nine months ended December
31, 1996, an increase of 118% This increase is primarily due to additional
management personnel and an increase in interest expense and late fees.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had a working capital of $20,360 compared to
working capital deficit of $363,599 at December 31, 1996. This increase in the
Company's working capital was primarily due to the decrease in borrowings and
payables.
The Company received $3,282,450 in proceeds from outsiders in the form of a
private placement, bridge financing and issuing senior convertible debt during
the three months ended December 31, 1997. Additional funding of $870,000 was
received through February 4, 1998.
The company has financed its operations primarily through borrowings. As of
December 31, 1997, the Company's sources of internal financing were limited. It
is not expected that internal sources of liquidity will improve until net cash
is provided by operating activities which is expected in early 1998, and until
such time, the company will rely upon external sources for liquidity.
The Company has signed a letter of intent with an investment banking firm for a
debt offering of $3 to $5 million beginning on or before April 30, 1998.
11
<PAGE> 12
PART II: Other Information
Item 2: Changes in Securities
On November 17, 1997, the Company completed the private placement (Phase I) (The
"Private Placement") of 420,000 shares of Series B Preferred Stock, Stated Value
$5.30 per share (the "Series B Preferred Stock"), all to "accredited Investors"
as that term is defined in rule 501(a) of Regulation D Promulgated under the
Securities Act of 1933, as amended.
On February 4, 1998, the Company completed the private placement of 99,057
Shares of Series C, 6% Cumulative Convertible Non-Voting Preferred Stock, all to
"Accredited Investors" as that term is defined in rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended.
The Company plans to use the proceeds from the sale of the Shares for working
capital, repayment of indebtedness and hiring of new personnel for recently
received new contracts. Based upon those contracts in place at December 31, 1997
and the successful completion of the private placement-funding, revenues for
fiscal year 1999 should exceed $15,000,000.
The company is obligated to issue up to 1,500,000 shares of common stock to
employees and consultants.
Item 4: Submission of matters to a vote of the security holders
On September 26,1997, a special meeting of the security holders of the Company
was held to change the name of the company to Micro- Media Solutions, Inc.
Item 5: Other Matters
The Company has retained the firm of Novokov, Davidson & Flynn, of Dallas, Texas
as corporate legal counsel to represent the Company in all matters except for
items relating to the private placement. The firm of Vial, Hamilton, Koch & Knox
represents the Company in the private placement.
The Company is now listed on Standard & Poor's Market Access Service as of
December 1997 which prominently displays the investment merit of over the
counter (OTC) bulletin board companies in some of the most widely distributed
information vehicles in the financial and investment communities.
PR Newswire has been selected as the firm for dissemination of news releases. PR
Newswire is the world's leader in the electronic distribution of full Text
corporate, association, and institutional news releases to the media and
financial community
The Board of Directors at its February meeting will be adding two new members to
the board as required by the private placement agreement.
Ernesto M Chavarria, President of ITBR, Inc. has 25 years experience in
international business development.
Blandida Cardenas, Associate Professor at The LBJ Institute, The University of
Texas, Former Commissioner of United States Commission of Civil Rights and
Former Director Of Office of Minorities in Higher Education.
The Company has entered into Employment Agreements with its senior executive
officers for a period ending on March 31, 2001 subject to two (2) one year
extensions. These agreements grant the executives stock options to purchase an
aggregate of 150,000 shares at a price ranging from $1.50 to $2.25 per share.
These agreements also included specific bonus plans based on performance,
revenues and common stock value.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MSI HOLDINGS, INC.
Date: October 4, 1999 By: /s/ Robert Gibbs
Robert Gibbs, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of this
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Steve Metzger Director October 4, 1999
- -----------------------------
Steve Metzger
/s/ Davinder Sethi Director October 4, 1999
- -----------------------------
Davinder Sethi
/s/ Ernesto Chavarria Director October 4, 1999
- -----------------------------
Ernesto Chavarria
/s/ Blandina Cardenas Director October 4, 1999
- -----------------------------
Blandina Cardenas
/s/ Daniel Dornier Director October 4, 1999
- -----------------------------
Daniel Dornier
/s/ Humbert Powell Director October 4, 1999
- -----------------------------
Humbert Powell
/s/ Robert Gibbs President and
- ----------------------------- Chief Executive Officer October 4, 1999
Robert Gibbs
/s/ Doug Banister Chief Financial Officer October 4, 1999
- -----------------------------
Doug Banister
/s/ Stephen Hoelscher Secretary, Controller
- ----------------------------- Chief Accounting Officer October 4, 1999
Stephen Hoelscher
</TABLE>
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
EX 27.1 FINANCIAL DATA SCHEDULE
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 19,696
<SECURITIES> 0
<RECEIVABLES> 751,797
<ALLOWANCES> 0
<INVENTORY> 346,521
<CURRENT-ASSETS> 1,118,014
<PP&E> 1,008,271
<DEPRECIATION> 316,390
<TOTAL-ASSETS> 2,244,651
<CURRENT-LIABILITIES> 1,097,654
<BONDS> 1,528,226
0
2,226,000
<COMMON> 1,076,473
<OTHER-SE> (3,683,702)
<TOTAL-LIABILITY-AND-EQUITY> 2,244,651
<SALES> 720,261
<TOTAL-REVENUES> 720,261
<CGS> 582,621
<TOTAL-COSTS> 582,621
<OTHER-EXPENSES> 1,491,663
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,354,023)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,354,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,354,023)
<EPS-BASIC> (0.241)
<EPS-DILUTED> (0.241)
</TABLE>
