<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
-------------
( ) 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 1-7301
------
COLORMAX TECHNOLOGIES, INC.
---------------------------
(Exact name of registrant as specified in charter)
Delaware 75-1329265
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14251 Chambers Road Tustin, CA 92780
------------------------------- -----
(Address of principal executive offices) (Zip Code)
(714) 730-7900
--------------
Registrant's telephone number, including area code
Renu-U International, Inc.
--------------------------
(Former name, former address, and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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), Yes [x] No [ ] and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Class Outstanding as of May 15, 2000
----- ------------------------------
Common Stock, $0.001 22,902,582
1
<PAGE>
INDEX
Page
Number
------
PART I.
ITEM 1. Financial Statements ....................................3
Condensed Consolidated Balance Sheets
December 31, 1999 and June 30, 2000 (unaudited)........4
Condensed Consolidated Statements of Operations
For the six months ended June 30, 2000 (unaudited)
and for the three months ended June 30, 2000
(unaudited)................................. ..........5
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2000 (unaudited).....6
Notes to Condensed Consolidated Financial Statements.....7
ITEM 2. Management's Discussion and Analysis.....................9
PART 2
ITEM 1. Changes in Securities ..................................11
2
<PAGE>
PART I - FINANCIAL INFORMATION
--------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The accompanying condensed consolidated balance sheets of ColorMax Technologies,
Inc. and subsidiary at June 30, 2000 (unaudited), and December 31, 1999, the
condensed consolidated statements of operations for the six months ended June
30, 2000 (unaudited) and the three months ended June 30, 2000 (unaudited), and
the condensed consolidated statement cash flows for the six months ended June
30, 2000 (unaudited), have been prepared by the Company's management and they do
not include all information and notes to the financial statements necessary for
a complete presentation of the financial position, results of operations, cash
flows, and stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the six months ended June 30, 2000, are not necessarily
indicative of the results that can be expected for the year ending December 31,
2000.
3
<PAGE>
<TABLE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND JUNE 30, 2000 (UNAUDITED)
---------------------------------------------------------------------------------------------------------------
<CAPTION>
ASSETS
June 30, December 31,
2000 1999
-------------- --------------
(unaudited)
<S> <C> <C>
Current Assets
Cash $ 1,857,145 $ 12,299
Accounts Receivable 634,299 2,000
Inventory 21,744 6,601
Prepaid Expense 64,983 20,102
-------------- --------------
Total Current Assets 2,578,171 41,003
Property and Equipment, net 475,791 113,612
Other Assets
Patents and Marketing Rights, net 1,425,788 1,372,733
Deposits 23,626 13,519
-------------- --------------
Total Assets $ 4,503,377 $ 1,540,866
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes Payable Current Portion - Related Parties $ 124,576 $ 179,300
Accounts Payable and Accrued Liabilities 115,387 246,503
-------------- --------------
Total Current Liabilities 239,963 425,803
-------------- --------------
Notes Payable - Related Parties 69,180 -
-------------- --------------
Total Liabilities 309,143 425,803
-------------- --------------
Stockholders' Equity
Series A preferred stock, $0.10 par value
1,000,000 shares authorized - -
0 (unaudited) shares issued and outstanding
Series B preferred stock, $0.001 par value
50,000,000 shares authorized 33 -
33,000 (unaudited) shares issued and outstanding
Series C preferred stock, $0.001 par value
50,000,000 shares authorized - -
0 (unaudited) shares issued and outstanding
Common Stock, $0.001 par value 22,983 22,752
100,000,000 shared authorized
22,982,415 (unaudited) shares issued and outstanding
Additional paid-in capital 8,158,391 3,079,082
Accumulated deficit during development stage (3,987,173) (1,986,772)
-------------- --------------
Total Stockholders' Equity 4,194,234 1,115,063
-------------- --------------
Total Liabilities and Stockholders' Equity $ 4,503,377 $ 1,540,866
============== ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
COLORMAX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Three
Months Ended Months Ended
June 30, 2000 June 30, 2000
-------------- --------------
(unaudited) (unaudited)
<S> <C> <C>
SALES $ 662,209 $ 557,259
COST OF SALES 68,024 65,883
-------------- --------------
Gross Profit 594,185 491,376
-------------- --------------
EXPENSES
General and Administrative 1,380,080 490,233
Amortization 71,945 33,139
Depreciation 10,770 6,085
-------------- --------------
Total Expenses 1,462,795 529,457
-------------- --------------
Net Loss before Other Income (868,610) (38,081)
Other Income, net 40,812 40,812
-------------- --------------
Net Income (Loss) (827,798) 2,731
Preferred Dividends 1,172,603 917,689
-------------- --------------
Net Loss Available to Common Shareholders $ (2,000,401) $ (914,958)
============== ==============
Basic and Diluted Loss Per Common Share $ (0.09) $ (0.04)
============== ==============
Weighted-Average Shares Outstanding 22,867,165 22,940,115
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
For the Six
Months Ended
June 30, 2000
--------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (827,798)
Adjustments to reconcile net loss
to net cash used in operating activities
Amortization 71,945
Depreciation 10,770
Issuance of Common Stock for Expenses 252,000
Changes in Inventory (15,143)
Changes in Accounts Receivable (632,299)
Changes in Prepaid Expenses & Deposits (54,988)
Changes in Accounts Payable (131,116)
--------------
Net Cash used in Operating Activities (1,326,629)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment $ (372,951)
Purchase of Patents (125,000)
--------------
Net Cash used in Investing Activities (497,951)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable $ 382,000
Payments on Notes Payable (367,544)
Proceeds from Issuance of Preferred Stock 3,654,970
--------------
Net Cash Provided By Financing Activities $ 3,669,426
--------------
Net Increase in Cash 1,844,846
Cash at Beginning of Period 12,299
--------------
Cash at End of Period $ 1,857,145
==============
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On June 8, 1999 Colormax Technologies, Inc. and subsidiary, ( collectively, the
"Company") acquired all of the outstanding stock of RGB Technology Group Inc.
through a stock for stock exchange in which the stockholder (Kimrose Holdings)
of RGB Technology Group Inc. received 6,000,000 (after stock split) common
shares of the Company in exchange for all of the stock of RGB Technology Group
Inc. RGB Technology Group, Inc. was organized in the state of Delaware on April
28, 1999 for the purpose of marketing ColorMax Lenses and ColorMax Color Test
software. After the completion of the transaction the outstanding stock of the
Company was 6,664,082 common shares of which 6,000,000 was owned by Kimrose
Holdings.
The only asset held by RGB Technology Group, Inc. on June 8, 1999 consisted of
the exclusive marketing rights for the above technology, for use in the United
States, Australia, and New Zealand, which was recorded on the books of RGB with
no value.
For reporting purposes, the acquisition was treated as an acquisition of the
Company by RGB Technology Group, Inc., the acquirer, (a reverse acquisition) and
a recapitalization of RGB Technology Group, Inc. The historical financial
statements prior to June 8, 1999 are those of RGB Technology Group, Inc. No
goodwill was recognized from the consolidation. All material intercompany
accounts and transactions have been eliminated.
The Company has not had any operations in the prior comparable periods,
therefore, no such comparable periods are presented.
Principles of Consolidation
---------------------------
The accompanying financial statements include the accounts of Colormax
Technologies, Inc. and its wholly owned subsidiary. All significant intercompany
accounts and transactions have been eliminated.
Basic and Diluted Net Loss Per Share
------------------------------------
The Company utilizes SFAS No. 128, "Earnings per Share." SFAS No. 128 replaced
the previously reported primary and fully diluted loss per share with basic and
diluted loss per share. Unlike primary loss per share, basic loss per share
excludes any dilutive effects of options, warrants, and convertible securities.
Diluted loss per share is very similar to the previously reported fully diluted
loss per share. Basic loss per share is computed using the weighted-average
number of common shares outstanding during the period. Common equivalent shares
are excluded from the computation if their effect is anti-dilutive. As such,
basic and diluted loss per share are the same.
2. MARKETING RIGHTS
The Company acquired marketing rights, from outside parties, for use in the
countries of the United Kingdom, Canada, and Japan by the issuance of common
stock in previous periods. These rights were recorded on the books of the
Company at their fair market value. The rights will continue for ten years with
rights of renewal. As such, the Company is amortizing these rights over the
remaining life of the agreements. Unamortized amounts related to the marketing
rights totaled $1,302,933 as of June 30, 2000. The Company recognized $69,800 in
amortization expense related to these agreements in the six months ended June
30, 2000.
7
<PAGE>
COLORMAX TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
3. PATENTS
During March 2000 the Company purchased two patents and trademarks relating to
soft contact lenses in the United States and in Canada for $125,000. The patents
are being amortized over eight years which is the remaining life left before the
patents expire.
4. NOTES PAYABLE - RELATED PARTIES
The Company has received loans from related parties amounting to $193,756 with
various due dates after one year with interest at 8%.
5. PREFERRED STOCK
On March 6, 2000 the Company completed a private placement and sale of 40,000
shares of 7% convertible preferred capital stock for cash of $3,654,970 net of
offering costs of $345,030 and included 76,471 warrants convertible to common
stock, 20,000 of the warrants issued was additional offering costs
The terms of the preferred stock includes semi-annual dividend payments in cash
and conversion rights of one share of preferred for one share of common, not to
exceed 50% of holding by each shareholder during any 30 day period upon an
effective registration date with the SEC, with a conversion rate of the lower of
$12.75, or 85% of the low three-day average closing bid price of the Company's
common stock for the 20 consecutive trading days prior to the trading day on
which conversion notice is sent, however, the Company cannot issue more than 20%
of common shares outstanding without shareholder approval. If shareholder
approval cannot be obtained then the Company will be obligated to purchase the
preferred shares at 120% of the original purchase price plus accrued dividends.
In accordance with generally accepted accounting principles, the Company is
required to recognize the benefit received by preferred shareholders on the
preferred stock conversion feature as a return to those shareholders over the
vesting period of the conversion feature. The return to preferred shareholders
is calculated as the difference between the most beneficial conversion rate
available and the trading price of the company's common stock at the time of
issuance, multiplied by the number of shares the preferred would be convertible
into. Related to the preferred stock's conversion feature, the company
recognized dividends in the amount of $254,914 in the first quarter And $917,689
and $50,983 in the subsequent two quarters, respectively. These preferred
dividends are reflected as an increase in the net loss available to common
shareholders on the accompanying statement of operations.
6. CONTINGENCIES
The Company is currently disputing the issuance of 66,668 shares of common stock
to a former officer for services. As such, these shares have not been reflected
in the accompanying balance sheet.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following contains some "forward looking statements" which are based upon
our plans, goals, and objectives. Such statements are subject to various risks
and uncertainties. Numerous factors exist within the business world which may
prevent the successful attainment of such plans, goals and objectives.
Consequently, the reader should consider that such risks, uncertainties, and
unknown factors may cause actual results to vary materially from those stated
goals outlined below. Among the factors that may cause our actual results to
differ materially are the factors detailed below and the risks discussed in the
"Risk Factors" section included in our Form SB-2 registration statement filed on
April 20, 2000. You should also consult the risk factors listed from time to
time on our reports and amendments.
OVERVIEW
We distribute and develop products to help improve color vision discrimination
for people who suffer from genetic colorblindness. Our principal product,
ColorMax Color Vision Enhancement Lenses, is designed as a corrective aid for
red and green colorblindness. The Food and Drug Administration ("FDA") has
approved ColorMax Color Vision Enhancement Lenses as a safe and effective
optical aid for the treatment of colorblindness.
PLAN OF OPERATION
We are the first to receive FDA clearance for an optical aid for genetic
colorblindness. As the "first mover" in this emerging market, our plan for the
following 12 months includes aggressive expansion of our marketing operations
and the increase in our manufacturing capabilities.
Our marketing plan includes key objectives regarding two of our most important
targets: (1) licensed eye care professionals, including optometrists and
ophthalmologists, and (2) colorblind patients.
Eye care professionals act as distributors for our products and are the primary
point of contact with the end user. Our goal is to establish an extensive
distributorship base of authorized ColorMax Providers in all major U.S. markets,
as well as key international markets. We intend on employing aggressive
marketing strategies which will connect with and educate doctors on this new
product. Our marketing program includes interfacing with doctors at optometric
trade shows, the development of continuing education programs, direct sales and
demonstrations, and advertising and promotion in the optometric trade journals.
We have developed practice support materials and programs to assist doctors in
maximizing ColorMax sales at their practice. We will continue our efforts to
build our marketing and practice support divisions over the course of the year.
Our objective is to raise consumer awareness and establish brand name
recognition to the approximately 12 million people in the United States alone
and 250 million people worldwide who suffer from colorblindness. Colorblindness
is a genetic condition which affects 8% or men and 0.5% of women, or 1 in every
twelve men and 1 in every 250 women. Our authorized ColorMax Providers will
market directly to their patients the ColorMax line of products. We also market
to the consumer through a variety of methods including the internet, direct mail
and consumer advertising. We plan on initiating a major consumer advertising
campaign after the establishment of the basic distributorship network.
Our research and development is directed toward new procedures and products
which may prove useful in the diagnosis and treatment of colorblindness.
Currently, we are developing ColorMax Soft Contact Lenses and intends on seeking
regulatory approval. We intend to distribute ColorMax Soft Contact Lenses
through our authorized ColorMax Providers.
9
<PAGE>
The Company's plan for growth requires the acquisition of additional machinery
and equipment to increase manufacturing output to supply ColorMax products
throughout the world. It will be also be necessary for the Company to recruit
and hire beyond its current personnel levels to implements its plans for the
year. We anticipate that our current cash and our anticipated cash flow from
operations will be sufficient to meet our working capital and capital equipment
needs at least through the next twelve months.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion includes our operations.
Revenue totaled $662,209 for the six month period ended June 30, 2000. There is
no comparative financial information since we had not started active sales or
operations in the optical area until we received FDA approval at the end of 1999
and then began sales and marketing beginning in January 2000. The increase in
sales during the three months ended June 30, 2000 in comparison to revenue
during the three months ended March 31, 2000 came about as we established a base
of practitioners who prescribe ColorMax lenses. Sales were centered in ColorMax
Doctor Test Kits and ColorMax Color Test Software. As stated in the Plan of
Operations, our chief sales objective is the installation of our distributor
base of authorized ColorMax Providers. All authorized ColorMax Providers must
acquire a ColorMax Doctor Test Kit and Color Test Software in order to test and
fit patients for ColorMax Lenses. Sales of ColorMax Lenses to patients will
build once the larger installed doctor base is established. At the end of the
period, there were approximately 205 authorized ColorMax Providers in the United
States, Canada and Australia. Accounts Receivable totaled $634,299 for the
period.
General and administrative expenses and research and development costs totaled
$1,380,080 for the six months ended June 30, 2000. During the first quarter, we
acquired several patents relating to soft contact lenses for colorblindness
including the U.S. and Canadian Patents and Trademarks to X-Chrom Soft Contact
Lenses for approximately $125,000. The X-Chrom name and trademark is well known
in the optical business.
After incurring a loss of $830,529 during the first quarter of 2000, we recorded
an operating income of $2,731 during the second quarter. The year to date
operational loss is due to expenditures necessary to begin operations, establish
a base of practitioners who will serve to distribute ColorMax corrective lenses
and other products as they are introduced. We also expended funds to increase
and monitor our laboratory facility and to disseminate information about our
services and product line.
Increasing production quality and capacity was emphasized during the second
quarter. We believe that the increase in production capacity completed at the
end of the period will help the Company to deliver all of its orders and keep up
with demand in future periods.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased by $3,050,621 in the first three months of 2000 largely due to
the sale of preferred stock and warrants in March. We filed a registration
statement in connection with the offering and the Securities and Exchange
Commission declared the registration statement effective on May 1, 2000. We
anticipate that our current cash and our anticipated cash flow from operations
will be sufficient to meet our working capital and capital equipment needs at
least through the next twelve months.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - CHANGES IN SECURITIES
ITEM 1A - STOCK SPLIT
On January 7, 2000, we split our outstanding common stock on a two for one
basis, increasing common shares outstanding from 11,375,957 to 22,751,914.
ITEM 1B - PRIVATE PLACEMENT OF PREFERRED STOCK
On March 6, 2000 we completed a private placement and sale of 40,000 shares of
7% convertible preferred capital stock for cash of $3,654,970 net of offering
costs of $345,030 and included 76,471 warrants convertible to common stock,
20,000 of the warrants issued was additional offering costs
The terms of the preferred stock includes semi-annual dividend payments in cash
and conversion rights of one share of preferred for one share of common, not to
exceed 50% of holding by each shareholder during any 30 day period upon an
effective registration date with the SEC, with a conversion rate of the lower of
$12.75, or 85% of the low three-day average closing bid price of our common
stock for the 20 consecutive trading days prior to the trading day on which
conversion notice is sent, however, we cannot issue more than 20% of common
shares outstanding without shareholder approval. If shareholder approval cannot
be obtained then we will be obligated to purchase the preferred shares at 120%
of the original purchase price plus accrued dividends.
SUBSEQUENT EVENTS
On July 14, 2000, we issued 32,674 shares of common stock in accordance with the
terms of our private placement agreement.
On August 2, 2000, the Board approved the repurchase of up to 200,000 shares of
its common stock.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned who are duly authorized.
COLORMAX TECHNOLOGIES, INC.
[Registrant]
Dated:
August 5, 2000
By /s/ Richard R. Milewski
-------------------------------
Richard R. Milewski
Chief Financial Officer
11
