-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NKCzIiog+SBBOJNHfADQmXoifoFc8OocpLuAKael4dOQcUZl2eAwvUCQUe3OFQNV yLcqNZs1J3hHmPvVmf3SKg== /in/edgar/work/0001038838-00-000700/0001038838-00-000700.txt : 20001115 0001038838-00-000700.hdr.sgml : 20001115 ACCESSION NUMBER: 0001038838-00-000700 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LSI COMMUNICATIONS INC CENTRAL INDEX KEY: 0001084475 STANDARD INDUSTRIAL CLASSIFICATION: [6770 ] IRS NUMBER: 870627349 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-30786 FILM NUMBER: 762932 BUSINESS ADDRESS: STREET 1: 112 WEST BUSINESS PARK DR CITY: DRAPER STATE: UT ZIP: 84020 BUSINESS PHONE: 8015722555 MAIL ADDRESS: STREET 1: 112 WEST BUSINESS PARK DR CITY: DRAPER STATE: UT ZIP: 84020 10QSB 1 0001.txt FORM 10-QSB ENDED SEPTEMBER 30, 2000 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 -OR- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to__________________ Commission File No. 0-30786 LSI COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Nevada 87-0627349 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 112 West Business Park Drive Draper, Utah 84020 (801) 572-2555 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ] At September 30, 2000, there were 11,415,632 shares of common stock, par value $.001 per share, of the registrant outstanding. Transitional small business disclosure format: Yes [ ] No [X] LSI COMMUNICATIONS, INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets: September 30, 2000 and December 31, 1999 - 3 Consolidated Statements of Operations: Nine-Months Periods Ended September 30, 2000 and September 30, 1999 - 5 Consolidated Statements of Operations: Three-Month Periods Ended September 30, 2000 and September 30, 1999 - 6 Consolidated Statements of Cash Flows Nine-Months Periods Ended September 30, 2000 and September 30, 1999 - 7 Note to Consolidated Financial Statements - 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - 10 PART II. OTHER INFORMATION ITEM 1 - Legal Proceedings - - - - 13 ITEM 2 - Changes in Securities - - - - 13 ITEM 3 - Defaults upon Senior Securities - - 13 ITEM 4 - Submission of Matter to Vote of Security Holders- 13 ITEM 5 - Other Information - - - - 13 ITEM 6 - Exhibits and Reports on Form 8-K Page - - 13 SIGNATURES - - - - - - 14 2
LSI COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEET FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED) ASSETS September 30, December 31, 2000 1999 ------------- ------------- CURRENT ASSETS Cash & Cash Equivalents $113,805 $18,393 Inventory 11,521 4,546 Accounts Receivable (Net of allowance of $7,000 and 13,000, respectively) 69,239 157,829 Notes & Employee Receivable 330 226,800 ------------- ------------- Total Current Assets 194,895 407,568 ------------- ------------- PROPERTY & EQUIPMENT (Net of Accumulated Depreciation) 63,434 26,135 ------------- ------------- OTHER ASSETS Deposits & Prepaids 6,076 6,076 ------------- ------------- Total Other Assets 6,076 6,076 ------------- ------------- TOTAL ASSETS $264,405 $439,779 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2000 1999 ------------- ------------- CURRENT LIABILITIES Accounts payable $32,802 $22,858 Accrued expenses 24,292 34,410 Customer Deposits 100 - Current portion of long-term liabilities 103,879 195,081 Deferred Revenue 490 1,962 Deferred Compensation 91,000 91,000 ------------- ------------- Total Current Liabilities 252,563 345,311 ------------- ------------- LONG TERM LIABILITIES Notes payable 24,692 37,368 Notes payable-related party 107,704 166,587 Less current portion (103,879) (195,081) ------------- ------------- Total long term Liabilities 8,517 8,874 ------------- ------------- TOTAL LIABILITIES 281,080 354,185 ------------- ------------- Minority Interest - - ------------- ------------- STOCKHOLDERS' EQUITY Common stock, authorized 50,000,000 shares of $.001 par value, issued and outstanding 11,415,632 and 8,915,632 shares, respectively 11,416 8,916 Additional Paid-in capital 731,598 731,598 Retained Earnings (759,689) (654,920) ------------- ------------- Total Stockholders' Equity (16,675) 85,594 ------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS EQUITY $264,405 $439,779 ============= =============
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LSI COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED) For the Period Ended September 30, September 30, 2000 1999 ----------- ------------ REVENUES Software Sales $22,785 $99,792 Training Sales 1,112,614 104,034 ----------- ------------ TOTAL REVENUES 1,135,399 203,826 ----------- ------------ COST OF SALES Software 257 1,931 Training 341,464 10,158 ----------- ------------ TOTAL COST OF GOODS SOLD 341,721 12,089 ----------- ------------ GROSS PROFIT 793,678 191,737 ----------- ------------ SELLING EXPENSES 259,638 116,069 PAYROLL 227,755 53,145 RESEARCH & DEVELOPMENT 3,792 18,300 CONSULTING FEE - 135,000 PRODUCTION FEE - 70,000 GENERAL & ADMINISTRATIVE EXPENSES 407,342 183,507 ----------- ------------ TOTAL OPERATING EXPENSES 898,527 576,021 ----------- ------------ OPERATING INCOME (LOSS) (104,849) (384,284) ----------- ------------ OTHER INCOME AND (EXPENSES) Forgiveness of Debt 13,368 - Miscellaneous income (expense) (5,446) (3,483) Interest expense (7,843) (3,723) ----------- ------------ Total Other Income and (Expenses) 79 (7,206) ----------- ------------ NET INCOME (LOSS) BEFORE INCOME TAXES (104,770) (391,490) ----------- ------------ PROVISION FOR INCOME TAXES - - ----------- ------------ NET INCOME (LOSS) (104,770) (391,490) =========== ============ NET INCOME (LOSS) PER SHARE (0.01) (0.06) =========== ============ WEIGHTED AVERAGE OUTSTANDING SHARES 11,132,785 6,950,178 =========== ============
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LSI COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED) For the Quarter Ended September 30, September 30, 2000 1999 ----------- ------------ REVENUES Software Sales $2,589 $24,728 Training Sales 515,942 104,034 ----------- ------------ TOTAL REVENUES 518,531 128,762 ----------- ------------ COST OF SALES Software 58 1,359 Training 187,395 10,158 ----------- ------------ TOTAL COST OF GOODS SOLD 187,453 11,517 ----------- ------------ GROSS PROFIT 331,078 117,245 ----------- ------------ SELLING EXPENSES 156,187 105,001 PAYROLL 79,850 17,140 RESEARCH & DEVELOPMENT 887 9,373 CONSULTING FEE - 135,000 PRODUCTION FEE - 70,000 GENERAL & ADMINISTRATIVE EXPENSES 117,605 110,343 ----------- ------------ TOTAL OPERATING EXPENSES 354,529 446,857 ----------- ------------ OPERATING INCOME (LOSS) (23,451) (329,612) ----------- ------------ OTHER INCOME AND (EXPENSES) Forgiveness of Debt - - Miscellaneous income (expense) (170) (2,580) Interest expense (2,577) (3,076) ----------- ------------ Total Other Income and (Expenses) (2,747) (5,656) ----------- ------------ NET INCOME (LOSS) BEFORE INCOME TAXES (26,198) (335,268) ----------- ------------ PROVISION FOR INCOME TAXES - ----------- ------------ NET INCOME (LOSS) (26,198) (335,268) =========== ============ NET INCOME (LOSS) PER SHARE (0.00) (0.04) =========== ============ WEIGHTED AVERAGE OUTSTANDING SHARES 11,415,632 8,779,214 =========== ============
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LSI COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED) For the Period Ended September 30, September 30, 2000 1999 ------------- ------------ Cash Flows From Operating Activities Net income (loss) ($104,770) ($391,490) Non-cash items: Depreciation 12,351 6,959 Bad Debt 7,000 11,800 Issuance of stock for remaining 15% Warever shares 2,500 - Consulting Expense paid with stock issuance - 135,000 Recognition of Deferred Revenue (491) - (Increase)/decrease in currents assets: Accounts receivable 94,390 42,948 Inventory (6,955) (1,189) Increase/(decrease) in currents liabilities: Accounts payable 9,944 29,281 Accrued expense (10,148) 18,537 ------------- ------------ Net Cash Provided (Used) by Operating Activities 3,821 (148,154) ------------- ------------ Cash Flows From Investing Activities Cash received in sale of contract 226,800 - Cash in Coaching Institute at Acquisition - 35,855 Cash paid for property, equipment and software technology (49,650) (17,272) ------------- ------------ Net Cash Provided (Used) by Investing Activities 177,150 18,583 ------------- ------------ Cash Flows From Financing Activities Factoring Fees (13,000) - Increase in long-term debt 25,692 165,000 Principal payments on long-term debt (98,251) (47,527) ------------- ------------ Net Cash Provided (Used) by Financing Activities (85,559) 117,473 ------------- ------------ Increase/(decrease) in Cash 95,412 (12,098) Cash and Cash Equivalents at Beginning of Period 18,393 24,418 Cash and Cash Equivalents at End of Period $113,805 12,320 Supplemental Cash Flow Information: Cash paid for interest $7,843 $3,723 Cash paid for income taxes - -
6 LSI COMMUNICATIONS, INC. NOTE TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED) 1. Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Item 310 of Regulation S-B. 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 (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The unaudited financial statements should be read in conjunction with the financial statements for the year ended December 31, 1999 and footnotes thereto included in the Company's registration statement on Form 10SB12G. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND RESULTS OF OPERATIONS This discussion contains forward-looking statements made by the Company pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current views with respect to such future events. Actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Factors that could cause actual results to differ adversely include, without limitation, inability to maintain sources of coaching customers, and lack of consumer demand for new products. We do not undertake to update any forward-looking statement that may be made from time to time by or on our behalf. (a) Introduction We are a technology development, sales and training company based in Draper, Utah. We operate two distinct, but complementary subsidiaries, Warever Corporation and Coaching Institute, Inc. Coaching Institute, Inc. offers fully integrated "coaching" programs designed specifically for sales trainers, seminar leaders, motivational speakers and network marketers who are interested in extending their programs to seminar attendees through one-on-one training. By implementing an after-market program such as one-on-one coaching, companies are able to assist clients' personal development, create additional profits, and increase client loyalty. Warever Corporation develops, programs, sells, and markets computer software packages. Sales of its primary product, Action Plus, a management assistance software are being phased out. On August 31, 2000, Warever Corporation released Powerhouse, a sales force automation and personal productivity software program designed for the real estate industry. We expect sales of Powerhouse to constitute nearly all of Warever's software sales in the next few quarters. (b) Results of Operations (i) Nine Months Ended September 30, 2000 and September 30, 1999 Sales Revenues Sale revenues for the nine months ended September 30, 2000 were $1,135,399, an increase of $931,573, or 573% from $203,826 for the nine months ended September 30, 1999. The increase in revenues is due to the acquisition of Coaching Institute and relative increases in training sales. Warever's software sales, which prior to Coaching Institute's acquisition at the end of the second quarter of 1999, was our only source of revenues, decreased 129.6% to $22,785 from $99,792 in the first three quarters of 1999. Warever's software sales have been declining as demand for Action Plus, our primary software 8 product reached the end of its product lifecycle and the technology became less current. Despite the release of Powerhouse on August 31, 2000, we did not have any significant software sales during September 2000. We intend to market Powerhouse at real estate seminars in the United States and expect sales of Powerhouse to result during the fourth quarter of 2000. However, we have performed no market tests and have insufficient information to adequately assess the potential demand for Powerhouse. The overall increase in our sales was due to $1,112,614 in revenues from Coaching Institute during the nine months ended September 30, 2000. Coaching Institute's revenues increased $1,008,580 or 969% from $104,034 during the nine month period ended September 30, 1999. The $104,034 in revenue in the period ended September 30, 1999 only reflect coaching sales for approximately three months since the time Coaching Institute was acquired in June 1999. Coaching Institute's estimated combined revenues both as an independent entity and a subsidiary of LSI Communications was $281,899 through September 30, 1999, reflecting more than a 290% increase in coaching revenues compared to the prior year nine-month period. Further discussion and financial statements related to Coaching Institute's financials and their impact on our financial statements can be found in our registration statement on Form 10SB12G as filed with the SEC on June 23, 2000. Our management believes that Coaching Institute's revenue increase trend should continue in the coming quarter. However, despite our increased coaching related revenues and the increased consumer interest in coaching services perceived by our management, we cannot ensure that we will be able to maintain or increase revenues from coaching services. Cost of Sales Cost of Sales increased by $329,632, or 2,727%, to $341,721 in the 2000 nine month period from $12,089 in the comparable 1999 nine month period. The increase was attributable to the acquisition of Coaching Institute and its relatively expensive product costs. Many of Coaching Institute's clients or trainees are referred by entities, such as SDI Le Grand, that produce seminars. We pay commissions to these entities in exchange for their trainee referrals. The commission costs are included in our consolidated Cost of Sales. Salaries paid to the coaches who perform the coaching, which is very labor intensive, are also included in Costs of Sales. The commission and salaries are the primary cause of the exponential cost of sales increase. Our management is exploring possible ways to decrease training related cost of sales by increasing the proportion of our trainees that we acquire from our direct marketing efforts. However, until we plan and implement an effective method to expand our direct sales, we must heavily rely on commission based referrals. We expect training related cost of sales related to continue to mirror training revenues in the foreseeable future. Cost of sales related to software should increase relative to sales of our new software product Powerhouse. Software costs of sales in relation to software related revenues should remain under 10%. 9 Selling, General and Administrative Expenses General and Administrative expenses increased by $223,835, or 122%, to $407,342 in the 2000 nine-month period from $183,507 in the 1999 nine-month period. A primary reason for the 2000 nine-month period increase is the acquisition of Coaching Institute in the third quarter of 1999. We now have General and Administrative expenses for two subsidiaries where we only had one for the majority of the comparable nine month period ended September 30, 1999. Causes of increased General and Administrative related expenses included a large increase in telephone expenses, accounting and legal fees. Selling expenses increased by $143,569, or 123.7%, to $259,638 in the nine-month period ended September 30, 2000 from $116,069 in the comparable 1999 nine-month period. This increase is the result of Coaching Institute's salaries, commissions, advertising and general sales expenses that were not present on our books prior to Coaching Institute's acquisition in June 1999. Selling expenses related to software sales actually decreased due to retraction of our software selling efforts during the development phase of Powerhouse. We expect our selling expenses to increase as we expand coaching services and commence marketing of the Powerhouse software. Payroll related expenses increased by $174,610, or 328.5%, to $227,755 in the nine-month period ended September 30, 2000 from $53,145 in the comparable 1999 nine-month period. The Payroll line item of our Statement of Operations includes all salaries, primarily administrative, not related to selling, marketing or actual coaching. This increase is generally attributable to the expansion of our administration to accommodate Coaching Institute and its growth. Interest Expense Interest expense increased by $4,120, or 110.6%, to $7,843 in the 2000 nine-month period from $3,723 in the 1999 nine-month period. The increase was primarily due to interest paid on loans from 1999. The loans were required to continue our operations. Net Loss Our net loss for the 2000 nine-month period decreased by $286,720, or 73.2%, to a net loss of ($104,770) from a net loss of ($391,490) in the comparable 1999 period. This decreased net loss is due primarily to the absence of consulting fees during the 2000 period in contrast to the 1999 nine month period. (ii) Three Month Periods Ended September 30, 2000 and September 30, 1999 Revenue grew to $518,531 during the three-month period ended September 30, 2000 compared to $128,762 of revenue recorded during the same period of the prior year. This represented an increase of 302.7% compared to the prior year quarter. Increases in costs of sales and operating expenses, and the absence of consulting fees, consistent with 10 the description in the year-to-date comparison above, created a net loss of $26,198 in the current quarter compared to $335,268 in the prior year period. (c) Liquidity and Capital Resources Our liquidity and capital resources as of September 30, 2000 were $113,805, and as of December 31, 1999 were $18,393, an increase of $95,412 or 518.7%. The cause of this increase was due to the cash received from the sale of the Karl Malone video and collections of accounts receivable. At September 30, 2000, our current liabilities exceeded our current assets by approximately $57,668, with a ratio of current liabilities to current assets of approximately 1.3 to 1. Inventory levels increased by $6,975 or 153.4% to $11,521 on September 30, 2000 compared to $4,546 on December 31, 1999. The primary reason for this increase was the production and accumulation of units of Powerhouse, our new software product that was completed and released during the third quarter. Accounts receivable were lower due to collection from one of our large clients, SDI LeGrand. We expect to satisfy our cash requirements during the next 12 months from cash on hand and revenues. However, we are considering raising money through a stock offering to expand and fund our operations. We have no commitments for significant capital expenditures over the next 12 months. II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS not applicable ITEM 2. CHANGES IN SECURITIES not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES not applicable ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS not applicable ITEM 5. OTHER INFORMATION not applicable 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit No. Description 27.1 Financial Data Schedule. (b) Reports on Form 8-K: None. 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. LSI COMMUNICATIONS, INC. By: /s/ Craig Hendricks ------------------------------ Craig Hendricks Chief Executive Officer, President Date 11/10/00 12 EX-27.1 2 0002.txt FDS --
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 113,805 0 69,239 0 11,521 194,895 63,434 0 264,405 252,563 0 0 0 11,416 0 264,405 1,135,399 1,135,399 341,721 1,240,248 0 0 7,843 (104,849) 0 (104,849) 0 0 0 (104,849) (0.01) (0.01)
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