SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB-A
[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
[ ] 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
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REMEDENT USA, INC
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(exact name of small business issuer as specified in its charter)
Nevada 86-0837251
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization.) Identification No.)
1220 Birch Way, Escondido, California 92027
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(Address of principal executive offices (Zip Code)
(760) 781-3333
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(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 .
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(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 : 12,985,303 shares
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Transitional Small Business Disclosure Format (check one): Yes No X .
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<TABLE>
<CAPTION>
Remedent USA, Inc.
Balance Sheet
June 30, Fiscal Year End
2000 March 31, 2000
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 14,869 $ 8,125
Accounts receivable, net 54,422 40,897
Due from related parties 35,170 16,919
Inventory 109,643 153,712
Prepaid expenses 338 536
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Total current assets 214,442 220,189
Property and Equipment, net 29,037 31,795
Other Assets
Patents, net of accumulated amortization 27,704 28,274
Other Assets 7,782 4,782
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Total other assets 35,486 33,056
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Total Assets $ 278,965 $ 285,040
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
At June 30, Fiscal Year End
2000 March 31, 2000
(Unaudited) (Audited)
------------------------------------------
<S> <C> <C>
Current Liabilities
Accounts payable $ 394,429 $ 396,208
Notes payable-related parties 99,663 37,096
Accrued Officers Salaries 105,667 85,567
Accrued liabilities 154,422 154,110
Customer deposits 0 8,892
Royalty payable 43,117 40,754
Current portion capital lease 1,108 1,629
Note payable-Union Bank 48,665 50,000
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Total current liabilities 847,071 774,256
Long Term Liabilities and Capital Leases
Stockholders' Equity
Common stock 12,985 12,685
Additional paid in capital 1,578,223 1,446,018
Prepaid services for stock (12,983)
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Accumulated deficit (2,159,314) (1,934,936)
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Total stockholders' equity (deficit) (568,106) (489,216)
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Total Liabilities and Stockholders' Equity $ 278,965 $ 285,040
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</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
<PAGE>
<TABLE>
<CAPTION>
Remedent USA, Inc.
Statement of Operations
(Unaudited)
For the three month period ending June 30,
2000 1999
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<S> <C> <C>
Revenues
Sales $ 200,053 $ 188,860
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Total Revenue 200,053 188,860
Cost of Goods Sold 69,865 77,384
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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 75,837 117,305
Depreciation and amortization 3,329 2,736
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Total operating expenses 292,416 174,393
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Net loss from operation (162,228) (62,917)
Other (Income) Expenses
Interest income (68) (143)
Interest expense 62,218 1,309
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Total other (income) expenses 62,150 1,166
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Net loss before tax (224,378) (64,083)
State Income Taxes 0 0
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Net loss $ (224,378) $ (64,083)
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Loss per share (0.02) (0.01)
Weighted average shares outstanding 12,738,050 12,437,730
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
<PAGE>
<TABLE>
<CAPTION>
Remedent USA, Inc.
Statement of Cash Flows
(Unaudited)
For the three month For the three month
period ending June period ending June
30, 2000 30, 1999
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<S> <C> <C>
Cash Flows From Operating Activities
Net loss $ (224,378) $ (64,083)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,328 2,737
Beneficial conversion feature 53,200
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 77,526 53,912
Accrued liabilities 19,629 6,299
Customer deposits (8,892) 0
Royalties payable 2,363 6,432
Deposits (3,000) (7,610)
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Net Cash Used in Operating Activities (36,499) (55,554)
Cash Flows from Investing Activities
Notes to related parties (17,150) 664
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Net Cash (Used) Provided by Investing Activities (17,150) 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 (1,335) 0
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Net Cash Provided by Financing Activities 60,393 (20,053)
Net Increase in Cash 6,744 (74,943)
Cash, beginning of the year 8,125 89,382
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Cash, June 30 $ 14,869 $ 14,439
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Supplemental Non Cash Investing and Financing Activities:
The Company issued 300,000 shares of stock in exchange for an account
payable of $79,305.
Supplemental Information:
Interest paid $ 473 $ -
Taxes paid $ - $ -
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
<PAGE>
<TABLE>
<CAPTION>
Remedent USA, Inc.
Statement of Changes in Stockholders Equity (Deficit)
(Unaudited)
Common Stock Additional Accounts Accumulated
Paid
Date Description Shares Dollars in Capital Receivable Deficit Total
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<S> <C> <C> <C> <C> <C> <C> <C>
Balance March 31, 2000 12,685,303 $ 12,685 $ 1,446,018 $ (12,983) $(1,934,936) $ (489,216)
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April 1, 2000 Debenture $ 10,000 $ 10,000
April 15, 2000 Debenture $ 27,200 $ 27,200
June 15, 2000 Shares for A/P 300,000 $ 300 $ 79,005 $ 79,305
June 15, 2000 Shares for Services $ 12,983 $ 12,983
June 29, 2000 Debenture $ 16,000 $ 16,000
June 30, 2000 Net Loss $ (224,378) $ (224,378)
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Balance June 30, 2000 12,985,303 $ 12,985 $ 1,578,223 $ (0) $(2,159,314) $ (568,106)
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The accompanying notes are an integral part of the consolidated financial
statements
</TABLE>
<PAGE>
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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 January 17, 2001.
B. Management's Representation
The consolidated balance sheet as of June 30, 2000 and fiscal year ending March
31, 2000, the consolidated statement of operations for the three month period
ended June 30, 2000 and June 30, 1999 and the statement of cash flows for the
three month period 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 1999, 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-SB 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 and 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.
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
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Inventory-Supplies $ 32,629 $ 4,745
Displays and Raw Materials $ 52,962 $ 42,587
Finished Goods $ 24,052 $ 103,568
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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
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Patent $ 34,199 $ 34,199
Accumulated amortization $ 6,495 $ 4,215
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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.
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 $632,629 and a shareholders deficit of $568,106. 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.
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
$655.
The Company has borrowed various amounts totaling $53,200 from a stockholder 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>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
The total current assets decreased by $5,747 or 3% from $220,189 at fiscal year
end March 31, 2000 to $214,442 for the three months ended June 30, 2000.
Accounts receivable increased by 33% from $40,897 at fiscal year end March 31,
2000 to $54,422 for the three months ended June 30, 2000. This was primarily due
to international sales. Amounts due from related parties increased $18,251 or
108% from $16,919 from fiscal year end March 31, 2000 to $35,170 for the three
month period ending June 30, 2000. Loans in the amount of $17,728 were disbursed
to three separate officers.
Inventory decreased $44,069 or 29% from $153,712 from fiscal year end March 31,
2000 to $109,643 for the three months ended June 30, 2000. This decrease is due
to the desire to deplete the old package inventory to make room for our new
tube-style packaged brushes.
Liabilities increased $72,815 or 9% from $774,256 for fiscal year end March 31,
2000 to $847,071 for the three months ended June 30, 2000. The main components
of these increases relate to advertising, accrual of officer's salaries, and
notes payable to related parties. Notes payable to related parties for the three
months ended June 30, 2000 increased $62,567 due to a $53,200 convertible
debenture from a shareholder, and the purchase of computer equipment. Accrued
officer's salaries for June 30, 2000 was $105,667 compared to $85,567 for fiscal
year end March 31, 2000. As of June 30, 2000, accounts payable had decreased
$1,779 from the fiscal year ending March 31, 2000 total of $396,208.
In an effort to provide additional exposure of the Company's unique product, the
Company does provide, to certain first time buyers, all dental professional
customers, and all international customers, an opportunity to acquire the
product with certain special marketing discounts. The Company views these
discounts not as sales discounts but as a method of marketing its products to
customers that may not otherwise purchase the product. Promotional discounts for
the three month period ended June 30, 2000 totaled $99,847, which is included
within sales and marketing expenses. This amount should be deducted from sales
to evaluate the exact sales number. Beginning April 1, 2001, the accounting
procedure for posting sales will reflect the actual sales price and not the
Company's standard blanket cost to all buyers.
For the quarter ending June 30, 2000, the Company's sales increased by $11,193
or 6% over the comparable three-month period ending June 30, 1999. Sales for the
three months ended June 30, 2000 totaled $200,053. This low 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. Promotional
discounts of $83,677 were applied towards international sales.
Cost of goods for the quarter ending June 30, 2000 totaled $69,865; a decrease
of $7,519 or 10% when compared to the same three-month period ended June 30,
1999. This decrease was due to the reduced costs related to assembly of product
displays at our Phoenix, Arizona fulfillment facility. The gross profit margin
for the three month period ending June 30, 2000 was 65% compared to 59% for the
same period in 1999.
Operating expenses increased $118,023 or 68% from $174,393 on June 30 1999 to
$292,416 on June 30, 2000. These increases were due to sales and marketing
commissions of $7,865 or 114%; advertising increased $25,160 or 142%; promotion
discounts increased $78,816 or 375%; new advertising literature $3,746 or 375%;
supplies $1,199 or 278%; freight $2,101 or $59%; and new marketing mailers
increased $18,940 or 737%. These increases (except for promotional discounts)
are due to the expansion plan. Decreases in operating expenses included: travel,
$3,700; sales and marketing consulting fees of $5,000; officers salaries,
$8,500; employee salaries, $13,300; officers life insurance $2,500; dues and
subscriptions, $2,000; outside services, $1,100; royalties $4,100; and rent,
$3,100.
Net loss from operations increased by $99,311 or 158% from ($62,917) on June 30,
1999 to ($162,228) on June 30, 2000 due to the factors mentioned above which
include decreased sales, increased costs, investors relations fees, and
advertising.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
THREE MONTHS ENDED JUNE 30, 2000
On June 30, 2000, our current liabilities exceeded our current assets by
$632,629.
The Company borrowed $53,200 from a shareholder in the form of convertible
debentures. The debentures are unsecured and bear interest at 10% per annum. The
debentures are due on demand and if no demand is made before the maturity dates,
the debentures can be converted to stock at 37.5% of the average trading price
30 days before maturity. The Company has recorded interest expense of $53,200 as
part of the conversion feature of the debenture.
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Date of Debenture Amount of Maturity Date
Debenture
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April 1, 2000 $ 10,000 April 1, 2001
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April 15, 2000 $ 27,200 April 15, 2001
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June 29, 2000 $ 16,000 June 29, 2001
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TOTAL $ 53,200
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The Company's primary goal in raising capital is to fund sales growth, which
includes advertising support and consumer awareness. The first phase of the
marketing plan implementation is still in progress and moving forward. As of
June 30, 2000 we were advertising on a top rated radio show and professional
packets were sent to 7,024 dental hygienists in the Pacific Northwest. This
mailing has substantially increased sales to dental professionals.
As of June 30, 2000, working capital totaled ($632,629) vs. ($554,067) for March
31, 2000, an increase of $78,562 from fiscal year-end. Net cash comparison from
each period stayed the same at approximately $14,500. This flat amount was due
to the decrease in sales and increase in liabilities. Net cash was 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 were 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>
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
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.
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(Registrant)
/s/ Rebecca Inzunza
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Rebecca Inzunza
CEO, President,
and Director
Date: January 16, 2001
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<PAGE>
