UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
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REGEN ENVIRONMENTAL INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-4025857
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1700 Montgomery Street - Suite 111
San Francisco, California 94111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number 415-835-9488
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Check here whether the issuer (1) has filed all reports required
to be filed by Sections 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_______
As of June 30, 1999, the following shares of the Registrant's
common stock were issued and outstanding:
10,676,000 shares of voting common stock
Traditional Small Business Disclosure (check one): Yes X No
<PAGE>
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .4
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .5
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .6
Note 1. NATURE OF BUSINESS AND SIGNIFICANT
ACCOUNTING POLICIES. . . . . . . . . . . . .7
Note 2. LIQUIDITY. . . . . . . . . . . . . . . . . .7
Note 3. EARNINGS PER SHARE . . . . . . . . . . . . .8
Note 4. PURCHASE AGREEMENT. . . . . . . . . . . . . 8
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . .11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 17
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 17
Item 5. Other information. . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
To the Board of Directors of Regen Environmental Inc.
We have reviewed the accompanying balance sheet of Regen
Environmental Inc., (a development stage company) as of
June 30, 1999 and the related statements of loss and accumulated
deficit, and cash flows for the three months then ended, in
accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public
Accountants. All information included in these financial
statements is the representation of the management of Leisure
Concepts International Inc.
A review consists principally of inquiries of Company personnel
and analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements in order for them to be in conformity with generally
accepted accounting principles.
Dated: New York, New York
August 18, 1999
REGEN ENVIRONMENTAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
As Of As Of
June 30, 1999 Dec. 31, 1998
(Unaudited) (Audited)
--------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $0 $0
Other Current Assets 0 0
_________ ________
Total Current Assets 0 0
Other Assets
Deferred Charges 4,270 0
_________ ________
TOTAL ASSETS $4,270 $0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $7,025 $0
Accrued Expenses 54,748 5,150
_________ ________
Total Liabilities $61,773 $5,150
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000.000 Shares;
Issued and Outstanding
14,946,000 Shares 14,946 4,325
Additional Paid in Capital 72,099 23,300
Deficit Accumulated During the
Development Stage (144,548) (32,775)
_________ ________
Total Stockholders' Equity $(57,503) $(5,150)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,270 $0
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<PAGE>
<PAGE>
REGEN ENVIRONMENTAL INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
<TABLE>
For the 3 Mos Ended For the 3 Mos Ended
June 30 March 31
1999 1998 1999 1998
------------------------------------------
<S> <C> <C> <C> <C>
TOTAL REVENUES: $ 0 N/A 0 N/A
OPERATING EXPENSES:
Accounting 4,500 N/A 0 N/A
Legal 2,500 0
Rent Expense 0 0
Filing Fee 12 13
Contributed Svcs 0 50,000
________ _______ ________ ________
NET LOSS ( 7,012) N/A (50,013) N/A
NET LOSS PER SHARE (.00) (.00)
Weighted Average
Number of Shares
Outstanding 1,496,000 12,870,333
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<PAGE>
<PAGE>
REGEN ENVIRONMENTAL INC.
STATEMENT OF CASH FLOWS (unaudited)
<TABLE>
For the 3 mos For the 3 mos
Ended Ended
to to
June 30, 1999 June 30, 1998
________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $( 7,012) N/A
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Activities:
Changes in Assets and Liabilities
Increase in Accounts Payable and
Accrued Expenses (7,012)
________ ________
Total Adjustments (7,012) N/A
Net Cash Used in
Operating Activities 0
Net Change in Cash 0 N/A
Cash at Beginning of Period 0
Cash at End of Period $ 0
Supplemental Disclosure of
Cash Flow Information
Cash Paid During the Period for
Interest Expense 0
Corporate Taxes $ 0
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<PAGE>
<PAGE>
REGEN ENVIRONMENTAL INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
A. Description of Company
REGEN ENVIRONMENTAL INC., ("the Company") is a for-profit
corporation, incorporated under the laws of the State of
Delaware on December 19, 1996. On February 17, 1997 the
Company's name was changed to Total Golf Inc. On April 16, 1998
its name was changed to Tallman Supply Inc. On November 11,
1998, its name was changed to Regen Environmental Inc. The
Company's principal objective is to identify, develop and market
emergent bioenvironmental technologies.
B. Basis of Presentation
Financial statements are prepared on the accrual basis of
accounting. Accordingly, revenue is recognized when earned and
expenses when incurred.
C. Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company
considers all short-term investments with maturity of three
months or less to be cash equivalents.
D. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from these estimates. Significant estimates in the
financial statements include the assumption that the Company will
continue as a going concern. See Notes 2 and 4.
NOTE 3 - LIQUIDITY
The Company requires additional capital principally to meet its
costs for the implementation of its business plan, for general
and administrative expenses and to fund costs associated with the
start up of its telecommunications operations. It is not
anticipated that the Company will be able to meet its financial
obligations through internal net revenue in the foreseeable
future. The Company does not have a working capital line of
credit with any financial institution. Therefore, future sources
of liquidity will be limited to the Company's ability to obtain
additional debt or equity funding.
NOTE 3 - EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED
JUNE 30, 1999
Net Loss Per Share $ (0.00)
NOTE 4 - PURCHASE AGREEMENT
On October 20, 1998, the Company entered into an agreement
whereby it agreed to purchase 100 percent of the issued and
outstanding stock of Atrium Group of Companies Ltd., a company
incorporated under the laws of England on December 16, 1997.
Atrium Group is a developmental stage company with no assets and
approximately $52,000 of liabilities as of November 30, 1998.
Atrium Group has four subsidiaries, each incorporated under the
laws of England in November 1997. The subsidiaries are: Atrium
Metals Ltd., Atrium Agriculture Ltd., Atrium Healthcare Ltd., and
Atri Ltd. After the purchase, the subsidiaries' names will
change to Regen Metals Ltd., Regen Agriculture Ltd., Regen Carbon
Tech Ltd., and Regen Solutions Ltd.
The agreement between Regen and Atrium Group calls for a one-for
7.5 reverse split of Regen's currently outstanding shares
resulting in 576,000 shares outstanding. Regen will then issue
10,000,000 post-reverse split shares with a par value of $10,000
to the shareholders of Atrium Group in exchange for 100 percent
of the issued and outstanding stock of Atrium Group.
The Company will account for the purchase agreement transaction
as a capital transaction rather than a business combination.
Additional paid in capital will be reduced for the $10,000 par
value of the stock Regen will issue in exchange for the
outstanding stock of Atrium. Regen will record Atrium Group's
accrued expenses of $54,748 as its own liabilities with a
corresponding increase in Regen's Deficit. No goodwill or other
intangible asset will be recorded. Upon consummation of the
transaction, Regen's prior historic financial statements will
reflect Atrium Group's historic financial statements.
An additional 100,000 shares of post-reverse split shares will be
issued to Eagle Ventures for consulting services rendered in
connection with the purchase agreement. From December 1, 1998 to
January 13, 1999 Eagle Ventures is providing advice regarding
Atrium's technologies and future possibilities of those
technologies. The fair market value of the services rendered is
$50,000 which will be recognized as an expense upon issuance of
the stock. The issuance of stock to Eagle Ventures Ltd., is
contingent upon closing of the purchase agreement. These shares
are treated as contingent shares in the calculation of earnings
per share.
The purchase agreement is subject to an assessment of some of the
metals remediation technologies under development. Confirmation
of satisfactory results in early 1999 allowed completion of the
purchase agreement on January 13, 1999.
Also on October 20, 1998, the Company signed two notes payable.
One note for $850,000 is due to European Technology Investments,
Ltd. ("ETI"). In return, Regen will receive $850,000 in loans
from ETI over a one-year period as Regen achieves performance
milestones listed below. The other note for $800,000 is due to
Biotechnology & Healthcare Ventures, Ltd. In return, Regen will
receive $800,000 in loans BHV over a one-year period as Regen
achieves performance milestones.
The following terms apply to both notes: 1) no interest shall
accrue during the first 36 months of the loan period; 2) For the
24 months after the first 36-month period, interest only shall be
paid quarterly in arrears computed quarterly on the unpaid
balance at the U.S. Federal Reserve prime rate; 3) At the end of
60 months, the principle amount of each note shall be payable, at
the discretion of the REI board, either in a lump sum of cash, or
the equivalent value in shares of Regen, with the price per share
being computed as the average share price over the last 5 trading
days prior to the note being paid.
The Company intends to account for the interest payments by the
use of the interest method based on the five year life of the
notes. Interest expense will be recorded in each period the loan
is outstanding at an interest rate such that the present value of
the interest expense over the life of the loan equals the present
value of the interest payments required under the terms of the
notes.
The principal amount of the note to ETI is $850,000; the
principal amount of the note, to BHV is $800,000. Each note is
dependent on the closing of the acquisition agreement between
Regen and Atrium which took place as described above January 13,
1999. No cash was received from either ETI or BHV as of December
31, 1999. Therefore no asset or liability has been recorded on
the financial statements. The principal amounts are due more
than five years after the date of the financial statements.
ETI and BHV will each be issued 2,135,000 shares of Regen
stock under the agreement to purchase Atrium Group. These
4,270,000 shares will be valued at their par value of $4,270 upon
issuance with a corresponding asset on the balance sheet called
deferred charges representing the cost of issuing the notes.
These deferred charges will be amortized over the five year life
of the notes.
These 4,270,000 shares will be held in escrow accounts as
security for payment of the loans to Regen. The fair value of
the shares at the time they are released from escrow will be
recognized as a charge to income in that period. These shares
are treated as contingent shares in the calculation of earnings
per share.
After the purchase agreement closes, Regen will have 14,946,000
shares of stock outstanding.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
RESULTS OF OPERATIONS
The Company is a development stage company. The Company has no
assets and no recent operating history. The Company's goal is to
develop biotechnology and related solutions to environmental
problems in three key technological areas. Those areas are the
remediation of precious and strategic metals from mining and
other wastes; the development of matrices to improve
stabilization of remediated land surfaces and commercial
agricultural processes in harsh climates; and the development of
carbon related technologies which increase the use and life of
carbon filtration materials.
The Company has no recent operating history and no representation
is made, nor is any intended, that the Company will be able to
carry on future business activities successfully. Further, there
can be no assurance that the Company will have the ability to
sustain its business operations or achieve material profits. In
the opinion of management, inflation has not and will not have a
material affect on the operations of the Company over the next
six months as the Company currently does not have any significant
assets, debt or income.
Management intends to hold expenses to a minimum and to obtain
services on a contingency basis when possible. Further, the
Company's directors will forego any compensation until such time
as the Company begins to generate sufficient investment in the
Company to cover such expenses.
There is no certainty that the Company's business operations will
be successful or profitable. There is also no certainty that the
Company will be able to operate a successful business. Potential
investors are alerted that the investment in the Company is
highly speculative and involves a high degree of risk.
The Company has an undertaking from two entities to receive
funding of $1.65 million dollars to allocate towards its business
operations over the next four years. The Company will receive
such funding once it has become fully registered with the
Securities and Exchange Commission and the NASD. The funds were
acquired by the Company through two promissory notes. The first
note, for $800,000, has been provided by the Company to
Biotechnology & Healthcare Ventures, Ltd. The second, for
$850,000, has been provided by the Company to European Technology
Investments Ltd.
The investment will provide working capital during the further
development phases of each of the technology platforms planned in
year one. The funds will support the development programs during
the first year as commercial relationships are established and
license fees and royalties are established. The availability of
the additional working capital will also protect the market
leadership achievable in certain technologies, through protection
of the Intellectual Property involved and speeding the time to
market.
The Company's operations to date have consisted of marketing
activity and research carried out with the objective of seeking
out specific client opportunities which will be developed through
the application of the technologies sourced. These activities
have resulted in the acquisition of such rights, commercial
partnerships and licenses as the company currently holds or is
negotiating and a number of prospective projects, both short and
long term. The transition of three of these projects from
prospect to live client, two in metals remediation and one in
carbon reactivation continues. All three are expected to become
operationally live revenue contributors in the next half year.
Two are UK based prospects and the third is in Southern Africa.
The time taken to realize the commercial potential for these
potential operations will be greatly reduced by the investment
income the company is expecting under the agreements attached to
this filing, enabling earlier commitment to investing in plant
and associated equipment.
The Company intends to extend the development of the three
technology platforms through licensing specific applications of
the technologies and thereby acquiring additional financing from
licensing arrangements. This will create the opportunity for the
Company to provide operational services for these applications
and to earn ongoing revenues from the applications under license.
The Company also plans to raise further funds to enable the
investment in an operational plant for the Metals and Carbon
technologies and to fund further acquisition of related
technologies at the earliest possible stage from sources
including University departments and technology incubator
organizations. The Company intends to achieve this by becoming
listed in an equity market which would enable it to raise funds
from professional investors and institutions in the initial
stages prior to a full IPO. At the present, the Company is not
listed on any equity market and there are no applications pending
for such listing.
TECHNOLOGY INVESTMENT
The Company will seek to purchase technology to provide the basis
of the products for Regen Agriculture's initial commercial
implementation. Additional investments and acquisitions will be
made in the future, when and where appropriate, to develop the
Company's technologies. The Company has adopted a policy to
acquire technologies only where the market for those technologies
is already defined and readily available.
There are three technology platforms under development by the
Company. They are as follows:
Remediation of Metals: Three projects have been initiated in a
program with Oxford University and under the auspices of the
UK's, Natural Research Council (which will be added to in due
course) providing the foundation for the development program.
Those areas are remediation of gold, PGMs (platinum group metals)
and zinc. In each area the research has focused upon both a
biological route and a chemically engineered route to the
extraction of residual value in mining waste in such a way as to
improve and sustain the local environment and create no harmful
consequences for it. Proof of principle in each case will result
in the involvement of a commercial interest from prospective
licensees of the technology in the relevant industry for the
metal being remediated. In each case the intellectual protection
of the process will be further secured by protection of elements
in the production process at the point of scaling up to pilot
plant. Additional target metals, including copper, nickel and
cadmium, and related projects will be built upon these three
founding areas in due course following the proof of principle
phase being completed for each. The level of research required
and potential development programs for these metals cannot be
defined at this stage. In addition commercial opportunities
arising from available sources of material to remediate will
influence the focus of further projects.
Agricultural & Land Remediation Systems: The core of this
business will be based upon the acquisition of a range of
products which the company hopes to acquire. The development of
such products includes a laminated growing matrix which provides
a number of beneficial controls to the user including greatly
reduced use of water, improved germination rates, precise and
accurate methods of application for pesticides and herbicides as
well as targeted application of fertilizers, and in commercial
agriculture the reduction of crop management labor and
opportunity to increase yields as well as the number of crops per
season in some cases. In addition the process of planting is
both simple and rapid requiring minimal labor. While commercial
activity will establish the products, further research to develop
a more sophisticated matrix with greater biodegradability will be
undertaken in the first year. In addition, the Company has the
support of the agricultural departments of Hawksbury College
(Western Sydney University, Australia) and Pretoria University in
South Africa. These Universities provide the Company with
technical and trial facilities in their local markets on an
ongoing commercial arrangement under non-disclosure agreements,
enabling climatic, soil and seed variety trials to be conducted
in a controlled environment on behalf of clients.
Carbon Reactivation Technology:
Activated Carbon (GAC - Granular Activated Carbon) is a high-
performance filtration system normally produced as granules or
powder. GAC is used within the food and drinks industry, water
treatment systems, gas filtration systems and other applications
to remove impurities from a process flow. The filtration
properties of activated carbon are well known World War II gas
masks were charged with GAC to filter out chemical warfare. It
is a relatively expensive commodity which can only be used once.
The Company, in association with its South African joint venture
partners, are developing applications for a patented GAC re-
activation system which allows the carbon to be re-used many
times following low-cost re-processing. The applications
currently being developed are based on a vertically integrated
production and re-activation business which includes the
growing of coconuts (from which GAC is made) to a range of
agricultural products, specialist filtration devices and contract
filtration services. The joint venture has been set up with
Carbon Cor (Pty) Ltd of South Africa, the joint venture is a
South African company with each shareholder party owning 50%.
The company is ASA Biotechnologies (Pty) Ltd, of 406 Die Anker,
1279 Mike Crawford Avenue, Centurion, Pretoria, RSA and the
registered number is 97/11804/07, Previously known as Carbon
Dynamics. The share capital is RSA Rand 1000, of which 100 are
issued, paid for by the respective partners. At this point in
time the company has not traded and remains dormant until there
is a live project to do so. As such there are no trading
accounts for this joint venture and the Company's participation
is unreported due to no activity. The principle of the joint
venture is that the partners each contribute key elements which,
the other does not have, to enable the business to offer clients
effective, competitive solutions. The Carbon Cor existing
business links in the mining industry, through chrome mining
activities, and the metals trading markets round the world
provide a powerful support to the Regen remediation technologies.
In doing so they give the Company both prospective customers and
the exit route for recovered ores at market price or on long term
contracts.
Market opportunities for these applications are currently being
developed in the UK, South Africa, Australia and Polynesia.
Major players in the brewing, foods and water treatment industry
are in discussion with a view to employing the technology to
optimizing their current usage of GAC.
INTENDED PLAN OF OPERATION
The Company intends to expand its operation by working with
companies in the mining, agriculture and carbon market who are
known and trusted. The Company intends to distribute and market
its technology for each specific area through either a license
arrangement or the establishment of a joint venture depending on
the commercial benefits and constraints of the situation.
The development of the business will consist of a number of
phases dependant upon the raising of funds. The anticipates
phases are as follows:
Phase 1: The Company's current position which is to develop the
core structure of the Company along with research and a marketing
plan.
Phase 2: The investment of $1,650,000 by two companies will
provide the development capital to establish a number of live
research projects over the first twelve months of funded
operation. There will be a mix of medium term (12 to 36 months
to fruition) research projects and short term technology
development directly related to client projects (6 to 12 months
to application). In addition the funding will support the
development of an operational infrastructure to run the business.
This includes accelerating the marketing activity in the
international partnership territories, seeking out further
relevant technologies for future acquisition and the protection
of IPR being developed currently.
Phase 3: Running concurrently with Phase 2 the Company will be
developing certain projects specific to clients where the funding
will be substantially supported by the client as development
funding, licensing fee, and capital funding for projects on their
sites. Through these partnerships the client gains security and
more control of the license on the technology developed for them
and we gain assistance in the development costs enabling us to
attack the market opportunities from a broader base than if we
totally fund all aspects of development. Should we fail to
achieve Phase 2 funding our current prospective client
relationships would enable us to continue to develop a business
with them although the pace of the company's overall development
would slow down. That is, until alternative sources of funds
were achieved to replace those.
Phase 4: Phases 1 to 3 will enable the Company to operate without
further funding over the initial twelve to eighteen months of
operation. Management believes that during year two of its
operations it should prepare for and seek funding through an
initial offering on the NASDAQ market. These funds are to
provide further research capital and to enable faster growth
through investment in client operations in each of our technology
platforms as well as seeking acquisition opportunities for which
we will be searching the market on an ongoing basis.
The Company's target for the first year of operation is to
consolidate the contacts it has established in Africa, Australia,
the UK & Europe, and North America and to target and select a
suitable partner to engage in a joint venture.
The Company's sales efforts will be based in the UK but in due
course the Company foresees the establishment of commercial
managers for each territory, who would spend most of their time
on the ground with the local partner organizations. Since the
Company's business is primarily selling the application of its
technology, it prefers to use local skills and talent wherever it
is possible, encouraging the development of local, licensed and
royalty paying businesses.
As a result of implementing this marketing plan, the Company does
not foresee a major growth in personnel. The Company's
operational and research base will remain in the Cambridge area
in the UK and the additional staff employed in the first twelve
months of trading, should not exceed 8 persons. Additional
support, if needed, may be obtained by joint venture partners in
each of the territories who already have infrastructures in place
at a local level.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are currently no pending legal proceedings against the
company.
Item 2. Changes in Securities
There has been no change in the Company's securities since the
filing of its Form 10SB-12G.
Item 3. Defaults upon Senior Securities
There has been no default in the payment of principal, interest,
sinking or purchase fund installment.
Item 4. Submission of Matters to a Vote of Security Holders
No matter has been submitted to a vote of security holders during
the period covered by this report.
Item 5. Other information
There is no other information to report which is material to the
company's financial condition not previously reported.
Item 6. Exhibits and Reports on Form 8-K
There are no Exhibits or reports on Form 8-K attached hereto.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
REGEN ENVIRONMENTAL INC.
- -----------------------------------
(Registrant)
Date: August 18, 1999
By: /s/ Chris Every
---------------
President
