U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10 - QSB
(MARK ONE)
X Quarterly Report pursuant to Section 13 or 15(d) of the
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Securities Exchange Act of 1934
For the Quarterly Period Ended November 30, 2000 or
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Transition Report pursuant to Section 13 or 15(d) of the
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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, including area code)
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
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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 05,
2000
Transitional Small Business Disclosure Format (check one):
Yes No X
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INDEX
RSI HOLDINGS, INC.
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed consolidated statement of deficiency in net assets
in liquidation -- November 30, 2000 1
Condensed consolidated statement of changes in net assets in
liquidation - Three Months ended November 30, 2000 2
Condensed consolidated statement of operations - Three
Months ended November 30, 1999 3
Condensed consolidated statement of cash flows - Three
Months ended November 30, 1999 4
Notes to condensed consolidated financial statements --
November 30, 2000 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
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
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RSI Holdings, Inc.
Condensed Consolidated Statement of Deficiency in Net Assets
in Liquidation (Unaudited)
November 30, 2000
Assets
Cash $ 7,000
Accounts receivable 3,000
Property and equipment 11,000
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$ 21,000
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Liabilities
Accounts payable $ 16,000
Accrued expenses 25,000
Note payable - bank 280,000
Convertible note payable 250,000
Estimated costs during the remaining period of liquidation 45,000
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616,000
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Deficiency in net assets $(595,000)
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See accompanying notes.
1
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RSI Holdings, Inc.
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 0
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Deficiency in net assets in liquidation at November 30, 2000 $(595,000)
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See accompanying notes.
2
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RSI Holdings, Inc.
Condensed Consolidated Statement of Operations (Unaudited)
Three Months ended November 30, 1999
Revenues:
Origination fees $ 402,000
Gain on sale of loans 80,000
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Total revenues $ 482,000
Expenses
Selling, general and administrative 759,000
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Loss from operations (277,000)
Other income (expense)
Interest income 52,000
Interest expense (33,000)
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Total other income (expense) 19,000
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Net loss $ (258,000)
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Net loss per share - basic and diluted $ (.03)
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Weighted average number of shares outstanding 7,904,979
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The Company changed its accounting presentation to the liquidation basis of
accounting from the going concern basis of accounting effective January 31,
2000. Consequently, there were no operations to report during the three months
ended November 30, 2000.
See accompanying notes.
3
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RSI Holdings, Inc.
Condensed Consolidated Statement of Cash Flows (Unaudited)
Three Months ended November 30, 1999
Cash (used in) operating activities $ (902,000)
Investing activities
Purchase of equipment (28,000)
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Net cash (used in) investing activities (28,000)
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Financing activities
Advances under bank lines of credit 4,301,000
Payments on bank line of credit (3,363,000)
Payment of deferred compensation (15,000)
Other 1,000
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Net cash provided by financing activities 924,000
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(Decrease) in cash and cash equivalents (6,000)
Cash and cash equivalents at beginning of year 23,000
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Cash and cash equivalents at end of quarter $ 17,000
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See accompanying notes.
4
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RSI Holdings, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note A - Basis of Presentation
As of January 31, 2000, RSI Holdings, Inc. (the "Company") adopted the
liquidation basis of accounting. The Company's wholly-owned subsidiary, HomeAdd
Financial Corporation ("HomeAdd") had experienced significant recurring losses
and had working capital deficiencies. Because of the increased difficulties of
HomeAdd in selling its loans, the Company decided to cease all of HomeAdd's
business operations effective January 31, 2000. The Company presently has no
material net assets. Although the Company intends to look for other business
opportunities, it cannot determine at this time what, if any, future business
activities it may engage in.
As a result of the decision to cease all of HomeAdd's business operation, 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 generally accepted accounting principles.
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 accrued the
costs that it estimates will be incurred during the liquidation period of
February 1, 2000 through December 31, 2000. All of HomeAdd's assets have now
been sold and substantially all of HomeAdd's known liabilities have been
settled. The Company is presently looking for other business opportunities.
The accompanying unaudited condensed consolidated financial statements at
November 30, 2000 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, 2000.
Note B - Convertible Note Payable
On October 10, 2000 the Company issued a convertible note payable in the amount
of $250,000 bearing interest at 8.5% per year and due on October 10, 2005. This
convertible note was issued in exchange for an unsecured note payable to the
widow of the former chairman of the Board of Directors of the Company. All
principal and unpaid interest are convertible into the Company's common stock at
the conversion rate of $.075 per share at the option of the Company or the
holder of the convertible note. On January 4, 2001, this note was converted into
3,333,333 shares of the Company's Common Stock.
On December 20, 2000, the Company issued a convertible note payable in the
amount of $500,000 to the widow of the former Chairman of the Board of the
Company. Proceeds from this $500,000 was used to pay the outstanding balance of
a note payable to a bank in the amount of $295,000 and the remaining $205,000 is
available to be used for working capital.
5
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
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.
Results of Operations
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 generally
accepted accounting principles. Consequently, assets have been valued at
estimated net realizable value and liabilities are presented at their estimated
settlement amounts, including costs associated with carrying out the
liquidation. The Company presently has no material net assets. Although the
Company intends to look for other business opportunities, it cannot determine at
this time what, if any, future business activities it may engage in.
The Company completed its liquidation period on December 31, 2000. At
November 30, 2000, the statement of deficiency in net assets in liquidation
included accrued expenses in the amount of $25,000 to record all known expenses
incurred through November 30, 2000, but not yet paid. As of November 30, 2000
the Company's estimated costs to be incurred during the remaining period of
liquidation in the amount of $45,000 were accrued. These costs to be incurred
during the liquidation period include salaries and related costs of $11,000;
legal, accounting and other annual reporting costs of $17,000, rent expense of
$4,000 interest expense of $4,000 and other costs of $9,000. The actual
realization of assets and settlement of liabilities could be higher or lower
than amounts indicated and are based upon management's estimates as of November
30, 2000.
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 below under "Debt Arrangements".
At November 30, 2000, the Company's liabilities, including estimated costs
during the remaining period of liquidation, exceeded the net realizable value of
its assets by $595,000.
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On October 10, 2000, the Company issued a convertible note payable in
the amount of $250,000 in exchange for an unsecured note payable to the widow of
the former Chairman of the Board of Directors of the Company. On January 4,
2001, the holder of the convertible note exerised her conversion option, and the
Company issued 3,333,333 shares of its Common Stock to her.
On December 20, 2000, the widow of the former Chairman of the Board and
the mother of the President and Chief Executive Officer of the Company loaned
the Company $500,000 under the terms of a convertible note payable. Proceeds
from this loan was used to pay the outstanding balance of the line of credit
with a bank and the amount remaining after payment of the line of credit is
available for use as working capital.
Cash and Cash Equivalents
The Company had cash and cash equivalents in the amount of $7,000 as of
November 30, 2000.
Debt Arrangements
The Company has the following debt arrangements. None of the Company's
assets have been pledged under these debt arrangements.
At November 30, 2000, the outstanding balance was $280,000 on the
Company's $500,000 loan facility with a bank. This credit facility was payable
on demand or in any event on January 1, 2001. A corporation that is owned by the
President and Chief Executive Officer, his mother and his two adult siblings has
guaranteed payment of the loan and has pledged certain securities as collateral
to the loan. On December 20, 2000, this credit facility was paid from proceeds
of a $500,000 loan from Minor H. Mickel, the mother of the President and Chief
Executive officer of the Company. The Company issued a note that is convertible
into Common Stock of the Company at $.075 per share in exchange for this debt.
On October 10, 2000, the Company issued a note in the amount of
$250,000 bearing interest at 8.5% that was convertible into Common Stock of the
Company at $.075 per share. This convertible note was issued in exchange for a
note that was originally payable to the Estate of Buck Mickel, the former Chief
Executive Officer of the Company. On January 4, 2001, this note was converted
into 3,333,333 shares of the Company's Common Stock as described above under
"Anticipated Liquidity Requirements".
7
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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
3.1 Articles of Incorporation of RSI Holdings, Inc., as amended:
Incorporated by reference to Exhibit 3.2 and 3.2.2 to the Registration
Statement on Form S-4 of RSI Corporation and Porter Brothers, Inc.,
File No. 33-30247 (the "Form S-4").
3.1.1 Articles of Amendment and Certificate of Reduction of Capital of
Porter Brothers, Inc.: Incorporated by reference to Exhibit 4.1 to the
Form 8-K of the Registrant filed with the Securities and Exchange
Commission on November 28, 1989, File No. 0-7067.
3.2.1 By-laws of RSI Holdings, Inc., as amended: Incorporated by reference
to Exhibit 3.1.1 to the Form S-4.
3.2.2 Amendments to By-laws: Incorporated by reference to Exhibit 3.2.2 to
the Form 10-KSB of the Registrant filed with the Securities and
Exchange Commission for the fiscal year ended August 31, 1996, File
No. 0-18091.
4.1 See Exhibits 3.1, 3.1.1, 3.2.1 and 3.2.2.
4.1.1 Specimen of Certificate for RSI Holdings, Inc., common stock:
Incorporated by reference to Exhibit 4.1.2 to the Form S-4.
10.1 Convertible note dated December 20, 2000 issued by the Company payable
to Minor H. Mickel.
27 Financial Data Schedule (electronic filing only)
(b) The Company filed a Current Report on Form 8-K, dated September
20, 2000, with respect to the conversion of a $400,000
convertible note and accrued interest of $16,800 into 5,557,333
of the Company's common stock.
8
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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 12, 2001 /s/ Joe F. Ogburn
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Joe F. Ogburn,
Vice President and Treasurer
(Principal Accounting Officer)
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INDEX OF EXHIBITS
3.1 Articles of Incorporation of RSI Holdings, Inc., as amended:
Incorporated by reference to Exhibit 3.2 and 3.2.2 to the Registration
Statement on Form S-4 of RSI Corporation and Porter Brothers, Inc.,
File No. 33-30247 (the "Form S-4").
3.1.1 Articles of Amendment and Certificate of Reduction of Capital of
Porter Brothers, Inc.: Incorporated by reference to Exhibit 4.1 to the
Form 8-K of the Registrant filed with the Securities and Exchange
Commission on November 28, 1989, File No. 0-7067.
3.2.1 By-laws of RSI Holdings, Inc., as amended: Incorporated by reference
to Exhibit 3.1.1 to the Form S-4.
3.2.2 Amendments to By-laws: Incorporated by reference to Exhibit 3.2.2 to
the Form 10-KSB of the Registrant filed with the Securities and
Exchange Commission for the fiscal year ended August 31, 1996, File
No. 0-18091.
4.1 See Exhibits 3.1, 3.1.1, 3.2.1 and 3.2.2.
4.1.1 Specimen of Certificate for RSI Holdings, Inc., common stock:
Incorporated by reference to Exhibit 4.1.2 to the Form S-4.
10.1 Convertible note dated December 20, 2000 issued by the Company payable
to Minor H. Mickel.
27 Financial Data Schedule (electronic filng only)
10
