SRUN: Quarterly Report (SEC form 10QSB)
August 14, 2001
STARUNI CORP (SRUN.OB)
Quarterly Report (SEC form 10QSB)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The Company's major focus is 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
During the third quarter of 2001, the Company improved its financial condition. The Company increased its revenues over the comparable quarter and nine month periods in 2000. As a direct result of increased revenues for the first through third quarters of 2001, the Company's overall financial health is improving.
On November 16, 2000, the Company acquired from Enova Holdings, Inc. all of the outstanding shares of Pego Systems, Inc. in exchange for Fifteen Million (15,000,000) restricted shares of the common stock of Staruni. Enova Holdings, Inc. is a Nevada corporation, with its principal offices located in Los Angeles, California.
Pego Systems, Inc. was a privately held corporation in the business of distribution and development of environmental-control and filtration systems. It had been in business for 27 years with such customers as Coca- Cola, Mobil Oil and other Fortune 500 Companies. The addition of Pego, with its significant revenues, was expected to add significant shareholder value to Staruni. Pego owned a manufacturing site, consisting of a 22,000 square foot facility located in Long Beach, California.
The Company operated Pego Systems, Inc. as a wholly owned subsidiary from November 16, 2000, until March 1, 2001. On March 1, 2001, the Company discontinued operations of Pego Systems, Inc. and sold 100% of its interest in Pego Systems, Inc. to Embro Investments of Hong Kong, Peoples Republic of China for the sum of one million five hundred thousand dollars ($1,500,000). The $1,500,000 is represented by a promissory note which accrues interest at 8% per annum and is due and payable on January 14, 2004. Management has determined it prudent to report the note from Embro and the related sale of Pego to Embro at $500,000 due to issues surrounding the collectibility of the full amount of the note, rather than $1,500,000. Consequently the financial statements reflect the sale at $500,000 not $1,500,000.
Three Months ended June 30, 2001, and Nine Months ended June 30, 2001
Gross revenues for the three months ended June 30, 2001, were $110,210 compared to $41,813 for the same period in 2000, an increase of $68,397. The gross revenues for the three months ended June 30, 2001, were higher than the comparable three months in 2000 due to the Company operating Pego Systems.
Gross revenues for the nine months ended June 30, 2001, were $216,614 compared to $169,902 for the same period in 2000, an increase of $46,712 The gross revenues for the nine months ended June 30, 2001, were higher than the comparable six months in 2000 due to the operation of Pego Systems.
Net loss was $18,238 for the three months ended on June 30, 2001, compared to a net loss of $117,099 for the comparable three months in 2000. Net loss as a percentage of revenues for the three month periods were 16.5% and 280%, respectively. The decrease in net loss resulted from an increase in revenues coupled with a decrease in general and administrative expenses.
Net income was $346,543 for the nine months ended on June 30, 2001, compared to a net loss of $165,268 for the comparable nine months in 2000. Net income as a percentage of revenues for the nine months ended June 30, 2001, was 160% compared to a net loss as a percentage of revenues of 97% for the nine months period ended June 30, 2000. The reason for the large swing is due to a net decrease in expenses of approximately $45,000, an increase in revenues of approximately $46,700, and extraordinary gain on the sale of discontinued operations of a net of $420,149 after deducting a $348,654 loss from discontinued operations.
General, and administrative expenses were $73,366 for the three months ended on June 30, 2001, and $120,433 for the comparable period in 2000, a decrease of $47,067, or approximately39%. The decrease in general and administrative expenses resulted from the decrease in administrative costs following the sale of Pego Systems.
General, and administrative expenses were $179,988 for the nine months ended on June 30, 2001, and $205,385 for the comparable period in 2000, a decrease of $26,397. The primary reason for the decrease was the decrease in advertising.
Operating loss was $18,238 during the three months ended on June 30, 2001, compared to an operating loss of $117,099 for the comparable three months in 2000. The Company's operating loss decreased $98,861 over the comparable period in 2000, due primarily to a decrease in advertising costs.
Operating loss was $73,606 during the nine months ended on June 30, 2001, compared to an operating loss of $165,268 for the comparable nine months in 2000. The Company's operating loss decreased $91,652 over the comparable period in 2000.
Capital Resources and Liquidity
The Company had a net working capital of $144,285 for the period ended June 30, 2001, as compared to $121,631 as of September 30, 2000 (year-end).
Net stockholders' equity in the Company was $644,285 as of June 30, 2001, compared to stockholder's equity of $121,8420 as of September 30, 2000. The increase in net stockholder's equity is primarily due to the sale of Pego Systems and correspondent increase in receivables and stock issued.
Cash flows used in operations were $64,414 for the nine months ended June 30, 2001, as compared to cash flows used in operations of $175,440 for the comparable period in 2000.
Cash flows provided by investing activities were $70,149 for the nine months ended June 30, 2001, and $0.00 for the nine months ended June 30, 2000.
Cash flows generated by financing activities were $0.00 for the nine months ending June 30, 2001, as compared to $112,294 generated by financing activities for the comparable period in 2000. The Company's financing activities have primarily consisted of private placements of its common stock.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years. The Company believes that it can offset inflationary increases in the cost of materials and labor through increased sales and improved operating efficiency.
Capital Expenditures
The Company made no significant capital expenditures on property or equipment during either 2000 or to date in 2001. The Company has no present plans for any significant capital expenditures during the remainder of this fiscal year
