SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarterly Period ended JUNE 30, 2000 or
[X] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from _____________ to
____________
Commission File Number
----------------------------
REMEDENT USA, INC
--------------------------------------------------------------------------------
(exact name of small business issuer as specified in its charter)
Nevada 86-0837251
----------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization.) Identification No.)
1220 Birch Way, Escondido, California 92027
------------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
(760) 781-3333
---------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) 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___ .
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of 6-30-00 : 12,578,637 shares
Transitional Small Business Disclosure Format (check one): Yes ____ No _X_.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 2
Remedent USA, Inc.
Balance Sheet (Unaudited)
For the period For the period
ending ending
June 30, 2000 June 30, 1999
--------------- --------------
ASSETS
Current Assets
Cash $ 14,869 $ 14,438
Accounts receivable, net 54,422 117,535
Due from related parties 35,170 5,280
Inventory 109,643 150,900
Prepaid insurance 338 4,436
----------------------------------------------------------------------
Total current assets 214,442 292,589
Property and Equipment, net 29,037 24,111
Other Assets
Deposits 7,782 8,790
Patents, net of accumulated amortization 27,704 29,984
----------------------------------------------------------------------
Total other assets 35,486 38,774
----------------------------------------------------------------------
Total Assets $ 278,965 $ 355,474
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
For the period For the period
ending ending
June 30, 2000 June 30, 1999
-----------------------------
Current Liabilities
Notes payable-related parties $ 99,345 $ 883
Accounts payable 467,647 111,416
Accrued liabilities 259,306 42,485
Royalty payable 43,117 30,224
Current portion capital lease 1,108 1,777
Note payable-Union Bank 48,809 50,000
------------------------------------------------------- -------------
Total current liabilities 919,332 236,785
Long Term Liabilities and Capital Leases 2,763
Stockholders' Equity
Common stock 12,579 12,446
Additional paid in capital 1,446,124 1,199,802
Accumulated deficit (2,099,070) (1,096,322)
------------------------------------------------------- ------------
Total stockholders' equity (deficit) (640,367) 115,926
---------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $ 278,965 $ 355,474
=====================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 3
Remedent USA, Inc.
Statement of Operations
(Unaudited)
For the period For the period
ending ending
June 30, 2000 June 30, 1999
---------------------------------
Revenues
Sales $ 200,053 $ 188,860
--------------------------------------------------------------------
Total Revenue 200,053 188,860
Cost of Goods Sold 69,865 77,384
--------------------------------------------------------------------
Gross profit 130,188 111,476
Operating Expenses
Research and development 15,085 10,131
Sales and marketing 198,165 44,221
General and administrative 75,134 117,305
Depreciation and amortization 3,329 2,736
--------------------------------------------------------------------
Total operating expenses 291,713 174,393
--------------------------------------------------------------------
Net loss from operation (161,525) (62,917)
Other (Income) Expenses
Interest income (68) (143)
Interest expense 2,677 1,309
--------------------------------------------------------------------
Total other (income) expenses 2,609 1,166
--------------------------------------------------------------------
Net loss before tax (164,134) (64,083)
State Income Taxes 0 0
--------------------------------------------------------------------
Net loss $ (164,134) $ (64,083)
====================================================================
Loss per share (0.01) (0.01)
Weighted average shares outstanding 12,578,637 12,437,730
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 4
Remedent USA, Inc.
Statement of Cash Flows
(Unaudited)
For the period For the period
ending ending
June 30, 2000 June 30, 1999
-----------------------------
Cash Flows From Operating Activities
Net loss $ (164,134) $ (64,083)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,328 2,737
Stock for services 12,983 12,482
Changes in:
Accounts receivable (13,525) (82,161)
Inventory 44,069 20,236
Prepaid expenses 198 (3,798)
Accounts payable 71,439 53,912
Accrued liabilities 19,629 6,299
Customer deposits (8,892) 0
Royalties payable 2,363 6,432
Deposits (3,000) (7,610)
--------------------------------------------------------------------------------
Net Cash Used in Operating Activities (35,542) (55,554)
Cash Flows from Investing Activities
Notes to related parties (18,251) 664
--------------------------------------------------------------------------------
Net Cash (Used) Provided by Investing Activities (18,251) 664
Cash Flows from Financing Activities
Lease payments (521) 0
Proceeds of notes and debenture 62,249 2,149
Officer loans (repayments) 0 (22,202)
Sale of common stock 0 0
Note payments (1,191) 0
--------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 60,537 (20,053)
Net Increase in Cash 6,744 (74,943)
Cash, beginning of the year 8,125 89,382
--------------------------------------------------------------------------------
Cash, March 31 14,869 $ 14,439
================================================================================
Supplemental Non Cash Investing and Financing Activities:
The Company acquired services as CFO for 12, 482 shares of stock.
Supplemental Information:
Interest paid $ 473 $ -
Taxes paid $ - $ -
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 5
Remedent USA, Inc.
Statement of Changes in Stockholders Equity (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Stock Paid Accounts Accumulated
Date Description Shares Dollars in Capital Receivable Deficit Total
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance March 31, 1999 12,433,780 $ 12,434 $1,187,332 $ - $ (1,032,239) $ 167,527
------------------------------------------------------------------------------------------------------------------------
April 1999 through Shares for
June 1999 Services 12,482 $ 12 $ 12,470 $ 12,482
June 30, 1999 Net loss $ (64,083) $ (64,083)
------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1999 12,446,262 12,446 1,199,802 0 $(1,096,322) $ 115,926
------------------------------------------------------------------------------------------------------------------------
July 1 1999 through Shares for
March 2000 Services 132,375 $ 133 $ 236,322 $ (12,983) $ 223,472
July 13, 1999 Debenture conversion
feature $ 10,000 $ 10,000
March 31, 2000 Net loss $ (775,840) $ (775,840)
------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2000 12,578,637 $ 12,579 $1,446,124 $ (12,983) $ (1,872,162) $ (426,442)
------------------------------------------------------------------------------------------------------------------------
June 30, 2000 Net loss $ (151,151) $ (151,151)
------------------------------------------------------------------------------------------------------------------------
Balance June 30, 2000 12,578,637 $ 12,579 $1,446,124 $ (12,983) $ (2,023,313) $ (577,593)
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 6
-----------------------------------------------------------------------------
NOTE 1 CONDENSED FINANCIAL STATEMENTS
A. Disclosure
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the Form 10-SB/A Filed 9/15/00.
B. Management's Representation
The consolidated balance sheet as of June 30, 2000 and the consolidated
statement of operations for the three month and six month periods ended June 30,
2000 and June 30, 1999 and the statement of cash flows for the six month periods
ended June 30, 2000 and 1999 have been prepared by the Registrant, without
audit. In the opinion of management, all adjustments necessary to present fairly
the financial position, results of operations, and cash flows at June 30, 2000
and for all periods presented, have been made.
REMEDENT USA, INC.
NOTES TO FINANCIAL STATEMENTS
1. Basis of Preparation
The unaudited financial statements of Remedent USA, Inc. (the "Company""),
presented herein have been prepared in accordance with the instructions to
Form 10-QSB and do not include all of the information and note disclosures
required by generally accepted accounting principles. These statements
should be read in conjunction with the financial statements and notes
thereto included in our last audited financial statements. These audited
statements are contained in our FORM 10-KSB for the year ended March 31,
2000 and have been filed with the Securities and Exchange Commission.
In management's opinion the accompanying financial statements include all
adjustments (consisting only of normal, recurring adjustments) necessary to
summarize fairly the financial position and results of operations for the
three months ended June 30, 2000 may not be indicative of the results that
may be expected for the full fiscal year.
2. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
3. Accounts Receivable
The Company sells premium toothbrushes to various companies, primarily to
retail chains located throughout the United States. The terms of sales are
2% 10 days, net 30 days. Accounts receivable is reported at net realizable
value and net of allowance for doubtful accounts. As of June 30, 2000 and
1999 the allowance for doubtful accounts was $3,000.
The Company uses the allowance method to account for uncollectible accounts
receivable. The Company's estimate is based on historical collection
experience and a review of the current status of trade accounts receivable.
It is reasonably possible that the company's estimate of the allowance for
doubtful accounts will change.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 7
4. Inventories
Inventories are stated at lower of cost (weighted average) or market.
Inventory costs include material, labor and manufacturing overhead.
Individual components of inventory are listed below:
2000 1999
---- ----
Inventory-Supplies $ 32,629 $ 4,745
Displays and Raw Materials $ 52,962 $ 42,587
Finished Goods $ 24,052 $103,568
--------- --------
Total $109,643 $150,900
5. Patents
Patent costs are amortized using straight-line method over 15 years. Patent
values and accumulated amortization at June 30, 2000 and 1999 are as
follows:
2000 1999
---- ----
Patent $ 34,199 $ 34,199
Accumulated amortization $ 6,495 $ 4,215
--------- --------
Patents, net $ 27,704 $ 29,984
6. Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period.
7. Impact of Recently Issued Accounting Standards
SFAS No.131 establishes standards for reporting information about operating
segments in financial statements issued to stockholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. The
company's financial reporting as well as the chief operating
decision-maker, does not currently provide or review information by
segments. All financial information is currently analyzed in the aggregate.
The company is currently evaluating various methods of segment reporting
for the method which they believe will be most useful to management.
In June 1998, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 133 (Accounting for Derivative Instruments and Hedging
Activities), which establishes accounting and reporting standards for
derivative instruments. This Statement requires that an entity recognize
all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. In June
1999, the FASB issued SFAS No. 137 (Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.
133) which postponed the adoption date of SFAS No.133. as such, the Company
is not required to adopt the new statement until the year 2001. The Company
is currently evaluating the effect that implementation of the new standard
will have on its operations and financial position.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 8
8. Going Concern
The Company has sustained substantial net losses since its inception in
September 1996. In addition, as of June 30, 2000 the Company had a working
capital deficit totaling $704,890 and a shareholders deficit of $640,367.
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The Company is currently working with various
groups in an effort to raise significant working capital and completion of
the Company's marketing plan.
9. Related Party Transactions
The Company's headquarters in California occupy approximately 1000 square
feet of Rebecca M. Inzunza's, an officer shareholder, primary residence
that total's 4,000 square feet. Rent paid directly to Ms. Inzunza each
monthly is currently $650.
The Company has borrowed various amounts totaling $99,345 from several
stockholders to meet the current financial obligations of the Company. The
notes are unsecured, due on demand and include interest at 10% per annum.
The Company may continue to borrow from shareholders and officers to meet
current financial needs.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 9
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
For the quarter ending June 30, 2000, the Company's sales increased by
$11,193 or 6% over the comparable three-month period in 1999. Sales
increased from $188,860 in 1999 to 200,053 in 2000. This low amount of
increase was due to our temporarily not shipping to our largest
domestic customer, CVS, while they are clearing their shelves of our
old blister-packed brushes before replacing it with our new tube style
packaging. A good part of the CVS cut back was replaced with brisk
international sales for the quarter ending June 30, 2000, totaling
$145,169 which represents 73% of total sales for that period.
Cost of goods decreased by $7,519 or 6% for the quarter ending June 30,
2000 as compared to the same three-month period for 1999. Cost of goods
decreased from 77,384 in 1999 to 69,865 in 2000. This decrease was due
to the reduced costs related to assembly of product displays at our
Scottsdale, Arizona fulfillment facility.
Operating expenses increased $117,320 or 59% from 174,393 in June 1999
to 291,713 in June 2000. These increases were due to sales and
marketing commissions and consulting fees, advertising, and investor
relations consulting fees.
Net losses increased by 156% from $64,083 in June 1999 to $164,134 in
June 2000 due to the factors mentioned above which include decreased
sales, increased costs with sales and marketing consulting fees, and
investors relations fees, and advertising.
The total current assets decreased by $78,147 or 27% from $292,589 in
June 1999 to $214,442 in June 2000. Accounts receivable decreased by
54% from $117,535 to $54,422 primarily due to successful collection
activities, and the fact that international sales are conducted on a
cash basis only. Included in this decrease is the accrual of officers
salaries and a loan to one of the officers. Inventory decreased $41,257
or 27% from $150,900 in June 30, 1999 to $105,643 in June 30, 2000, due
to the desire to decrease existing inventory to make room for our new
tube-style packaged brushes. Liabilities increased $682,547 or 288%
when comparing June 30, 2000 to June 30, 1999. Liabilities totaled
$919,332 for the period ended June 30, 2000 as compared to $236,785 for
the period ended June 30, 1999. Notes payable to related parties
increased by $98,462 and includes loans from investors, the purchase of
computer equipment, and a loan from an officer. By June 30, 2000,
accounts payable increased by $356,231 due to advertising, sales and
marketing expenditures, investor relation fees, and general and
administrative cost. Accrued liabilities increased by $216,821 due to
accrued officer's salaries.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 10
LIQUIDITY AND CAPITAL RESOURCES
THREE MONTHS ENDED JUNE 30, 2000
The Company's primary goal in raising capital is to fund the increase
in sales, which includes advertising support and consumer awareness.
The first phase of the marketing plan implementation is still in
progress and moving forward. We are currently advertising on a top
rated radio show and professional packets have been sent to all dental
hygienists in the Pacific Northwest. This mailing has substantially
increased sales to dental professionals.
As of June 30, 2000, the negative working capital totals $705,000 vs. a
positive working capital of $55,804 with the increase of $151,000 from
fiscal year-end. Net cash comparison from each period stayed the same
at $14,500. This flat amount was due to the decrease in sales and
increase in liabilities. Net cash used mainly in reducing liabilities
where necessary while advertising in the Pacific Northwest to increase
sales for the first phase of the marketing plan.
Because of the Company's emphasis on new packaging, a decrease in old
inventory is expected, while increasing the new package inventory.
International sales in the first quarter of our fiscal year 2000 have
been successful with 73% of all sales realized within that quarter.
QUARTERLY TRENDS
We do not anticipate significant "seasonal" changes in our
operation. Our product is a toothbrush that people use on a daily basis
for oral hygiene and as such, we predict that although sales may
increase over the year, sales will not be affected by quarterly trends.
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this Form 10-QSB:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K filed during the period covered by this Form 10-QSB:
None
<PAGE>
Form 10-QSB
Remedent USA, Inc.
June 30, 2000
Page 12
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.
Remedent USA, Inc.
-----------------------------------------------------
(Registrant)
/s/ Rebecca Inzunza
-------------------------------------------------
Rebecca Inzunza
CEO, President,
and Director
Date: September , 2000
