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 September 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 September 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
September 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.
Graf Repetti & Co., LLP
Dated: New York, New York
November 11, 1999
<PAGE>
REGEN ENVIRONMENTAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
As Of As Of
Sept. 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 - Note 5 4,270 0
Investment in ASA
Biotechnologies - Note 6 9 -
_________ ________
TOTAL ASSETS $4,279 $0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 0 $0
Accrued Expenses - Note 4 75,286 5,150
_________ ________
Total Liabilities $75,286 $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 106,455 23,300
Deficit Accumulated During the
Development Stage (192,408) (32,775)
_________ ________
Total Stockholders' Equity $(71,007) $(5,150)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,279 $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
September 30 June 30
1999 1998 1999 1998
------------------------------------------
<S> <C> <C> <C> <C>
TOTAL REVENUES: 0 0 0 0
OPERATING EXPENSES:
Accounting 11,000 0 4,500 0
Legal 2,500 0 2,500 0
Filing Fee 13 13 12 12
Contributed Svcs 27,720 0 0 0
- Note 7
Telephone and
Utilities 892 0 0 0
Travel 4,436 0 0 0
Business Entertain. 435 0 0 0
Equipment Rental 285 0 0 0
Office Expense 588 0 0 0
________ _______ ________ ________
NET LOSS (47,869) ( 13) ( 7,012) ( 12)
DEFICIT - BEGINNING
OF PERIOD (144,539)
DEFICIT -
END OF PERIOD (192,408)
NET LOSS PER SHARE (.00) (.00) (.00) (.00)
Weighted Average
Number of Shares
Outstanding 14,496,000 4,325,000 14,946,000 4,325,000
</TABLE>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<PAGE>
<PAGE>
REGEN ENVIRONEMTNAL INC.
STATEMENT OF CASH FLOWS (unaudited)
<TABLE>
For the 3 mos For the 3 mos
Ended Ended
to to
September 30, 1999 September 30, 1998
________________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $(47,869) N/A
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Activities:
Additional Paid in Capital
Contributed by Shareholders for:
Contributed Services 27,720
Expenses Paid Out of Pocket
By Officers 6,636
Changes in Assets and Liabilities:
Increase in Accrued Expenses 13,513
________ ________
Total Adjustments 47,869 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
SEPTEMBER 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. 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, 4 and 5.
NOTE 2 - LIQUIDITY
The Company viability as a going concern is dependent upon
raising additional capital, and ultimately, having net
income. The Company's limited operating history,
including its losses and no revenues, primarily reflect the
operations of its early stage. As a result, the Company had
from time of inception to September 30, 1999 no revenue
and a net loss from operations of $192,408. As of September 30,
1999, the Company had a net capital deficiency of $71,007.
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 bioenvironmental technologies. It is not
anticipated that the Company will be able to meet its financial
obligations through internal net revenue in the foreseeable
future. Regen Environmental, Inc., 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.
See Note 4.
NOTE 3 - EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED FROM INCEPTION
SEPTEMBER 30, 1999 TO
SEPTEMBER 30, 1999
Net Loss Per Share $ (0.00) $ (0.03)
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., respectively.
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 servies 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.
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.
NOTE 5 - NOTES PAYABLE AND SUBSEQUENT EVENTS
Also on October 20, 1998, the Company signed two notes payable.
One note for $850,000 is due to Europoean 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.
NOTE 6 - INVESTMENT IN ASA BIOTECHNOLOGIES
In November of 1998, Atrium Group invested $9 in a joint venture
in South Africa named ASA Biotechnologies (PTY) Ltd. Formerly
known as Carbon Dynamics, the joint venture is authorized to
issue 1,000 shares of RSA 1 Rand par value. Atrium Group and
Carbon Cor (Pty) Ltd., of South Africa each own 50 of the 100
outstanding shares of ASA Biotechnologies. The joint venture has
had no activity through September 30, 1999 therefore there is no
pro-forma financial information to be included in Regen's
financial statements.
NOTE 7 - CONTRIBUTED SERVICES
Two of the Company's officers render services on behalf of the
Company at no cost. The average fair market value is $4,620 per
officer per month. In addition, the officers contributed a total
of $6,636 for payment of out of pocket expenses on behalf of the
Company. These expenses are telephone and utilities, travel,
business entertainment, equipment rental, and office expense.
Each amount is reflected as an expense with a corresponding
credit to additional paid in capital.
<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.
The company intends to have its common stock traded on the OTC-
Bulletin Board and expects to file a Form 211 with the NASD to
secure a trading symbol within the next three months. In the
event the Company is successful in its application and commences
trading on the OTC Bulletin Board, the Company has received 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 undertaking has been secured by way of two
conditional 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 officer and directors of the Company shall continue
to receive no income up until such time as the Company receives
these funds.
The Company at this time has not incurred any significant costs
and has attempted to defer as many of its expenses as possible
pending its receipt of funding. It is continuing to perform
projects on behalf of clients in the metals remediation and
carbon areas. The Company is also discussing the possibility of
clients participating in the financing of the Company's
operations for the purpose of raising additional capital.
Management believes that its clients may be a good source of
funding as the current clients are familiar with the Company's
operations and potential and would be in a more ready position to
assist the Company with its growth. This would also accelerate
the Company's growth and research potential. At this time
however no client has contributed any funding for the Company and
there is no guarantee that any client will in fact contribute
funds in the future.
The Company's operations to date have consisted of marketing
activity and research carried out with the objective of
indentifying specific client opportunities which will be
developed through the application of its technologies.
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 remains active in the following business areas:
Metals Remediation:
The Company is in the process of formalizing an arrangement with
a recognized University for additional technology in the metals
remediation area which will enhance the Company's ability to
offer solutions to the market place. The formal arrangements for
a working relationship have been discussed and the preparation
of a draft agreement between the Company and the University is
being conducted. The Company expects that such an arrangement
will enable it to receive the rights to existing technologies
with the University and to continue modification and further
development of these technologies with the University. The
Company further expects to be able to proceed with detailed and
specific client project works in the remediation of zinc,
vanadium, and platinum metals. Two of these clients for such
tasks are based in Southern Africa the third in the United
Kingdom. It is expected that a project for the remediation
of zinc for the steel industry shall generate income for the
company in the upcoming two quarters. The cost of tailoring
development of the technology for this application will be shared
with the client.
Activated Carbon Services:
Through the Company's joint venture with Carbon Tech Pty. of the
Republic of South Africa, the Company has completed and signed a
working agreement with the technical services division of one of
the world's largest sweetener and dextrose producers, Tate &
Lyle. The working document provides the Company with the ability to
work together to define and consolidate a development of this
relationship. The basis of the agreement is that the joint
venture will provide Tate & Lyle carbon reactivation services and
resources and the ability to develop and install these on site at
their own plants and those of the worldwide sweetener/dextrose industry
where they operate as technical services suppliers. Present
discussions are examining the potential for reactivation plants in United
Kingdom, in Southern Africa and in the United States. It is
expected that these will be formalised during the next three
months when it will become clear where the first site is to be and just
what the timetable for installation will be. This joint venture
will enable the Company to meet its milestone goals during the
next year in this area.
The Company also continues to gather and develop the material for
a detailed feasibility study for the establishment of a plant in
the Pacific Rim with local help on the ground in the territory
concerned. It is also preparing to visit the region in the next
three to four months to finalize plans for the operation.
Consulting Services:
The Company has received early stage opportunities for its
consulting services. It is seeking to develop further contact
for the purpose of cultivating commercial projects through consulting
work. While the Company continues to entertain work in this
area, it is not actively pursuing growth of this sector until it
receives capital fuding. The delay in raising capital funding has also
delayed the progress of the consultancy opportunities for the
moment. In the interim, the Company will focus its attention on
other areas of its business which have a greater potential to
create immediate revenues.
Land Remediation:
Work continues at a market research level with Oxford University
and other relevant technology entities to seek and link suitable
technologies in this sector. It has been decided that the
relationship with Terraseed can be established on a licensed
basis. Terraseed delivers the matrix or a delivery mechanism in the
Company's technologies however is not crucial to the success of
the remediation plants which the Company is intending to develop into
its phytoremediation technology. Early stage discussions are
being conducted regarding potential development projects with
companies in the mining area who need to remediate waste material to a
suitable standard for natural environments, leisure use,
agriculture or human habitation. In particular the Company is
linking its activities and potential clients to research being
carried out at Oxford University over the next few years.
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.
<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.
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(Registrant)
Date: November 10, 1999
By: /s/ Chris Every
---------------
President
