SECURITIES AND EXCHANGE COMMISSSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission File No. 0-14696
RMED International, Inc.
(Exact Name of Registrant and Specified in its Charter)
Colorado 84-0898302
(State of Incorporation) (I.R.S. Employer Identification Number)
675 Industrial Boulevard, Delta, CO 81416
(Address of Principal Office)
(970)874-7536
(Registrant's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock $.01
Par value(Title of
Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 3 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days.
_X_ YES __NO
There were 6,395,958 shares of the Registrant stock $.01 par value common stock
outstanding as of September 30, 1998.
<PAGE>
RMED International, Inc.
Condensed Financial Statements
TABLE OF CONTENTS
PAGE
PART I. Item 1.
Condensed Balance Sheet as of September 30, 1998 and
December 31, 1997 F-1
Condensed Statements of Operations for the three and nine
months ended September 30, 1998 and 1997 F-2
Condensed Statements of Cash Flows for the nine months
ended September 30, 1998 and 1997 F-3
Condensed Statement of Changes in Stockholders' Equity
for the nine months ended September 30, 1998 F-4
Notes to Condensed Financial Statements F-5
Item 2.
Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
PART II. Other Information 8
Signatures 9
<PAGE>
RMED International, Inc.
Balance Sheet
September 30, December 31,
1998 1997
---------- ------------
(Unaudited)
CURRENT ASSETS
Cash $ 79,554 $ 178,754
Accounts receivable, less allowance for
doubtful accounts of $3,000 and $6,000,
respectively 196,147 100,082
Notes receivable, current maturities 33,459 39,928
Inventory, at cost 238,302 76,604
Prepaids and other 4,627 60,108
----------- -----------
552,089 455,476
----------- -----------
NOTES RECEIVABLE, less current maturities 49,212 68,782
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land and building 245,000 245,000
Furniture and office equipment 51,333 50,255
Machinery and equipment 15,737 15,737
Vehicles 5,796 5,796
317,866 316,788
Less accumulated depreciation (90,527) (80,213)
----------- -----------
227,339 236,575
----------- -----------
OTHER ASSETS 28,930 16,299
----------- -----------
$ 857,570 $ 777,132
=========== ===========
CURRENT LIABILITIES
Note payable, current maturities $ 3,477 $ 3,244
Note payable to President 70,861 186,790
Accounts payable and accrued liabilities 314,979 219,745
----------- -----------
389,317 409,779
----------- -----------
NOTE PAYABLE, less current maturities 139,138 141,532
----------- -----------
528,455 551,311
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000
shares authorized; 6,395,958 and 6,370,958
issued and outstanding, respectively 63,960 63,710
Contributed capital 5,160,412 5,146,013
Accumulated deficit (4,895,257) (4,983,902)
----------- -----------
329,115 225,821
----------- -----------
$ 857,570 $ 777,132
=========== ===========
See accompanying notes.
F-1
<PAGE>
RMED International, Inc.
Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- --------------------------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997
---------------- -------------- ---------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES OF DIAPERS $ 702,721 $ 503,301 $ 1,887,271 $ 1,316,385
COST OF GOODS SOLD 453,344 352,448 1,023,970 866,966
--------- --------- --------- ---------
GROSS PROFIT 249,377 150,853 863,301 449,419
--------- --------- --------- ---------
OPERATING EXPENSES
General and administrative 171,012 101,037 515,892 363,681
Sales and marketing 113,116 96,072 311,784 247,611
--------- --------- --------- ---------
284,128 197,109 827,676 611,292
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (34,751) (46,256) 35,625 (161,873)
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest income 7,890 9,318 23,894 33,868
Interest expense (4,926) (6,967) (15,285) (20,546)
Gain on sale of medical products line
and diaper machine 8,890 7,038 21,411 17,876
Other 15,613 2,309 23,000 6,385
--------- --------- --------- ---------
27,467 11,698 53,020 37,583
--------- --------- --------- ---------
NET INCOME (LOSS) $ (7,284) $ (34,558) $ 88,645 $(124,290)
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE:
BASIC * $ (0.01) $ 0.01 $ (0.02)
========= ========= ========= =========
DILUTED * $ (0.01) $ 0.01 $ (0.02)
========= ========= ========= =========
WEIGHTED SHARES - BASIC 6,395,958 6,370,958 6,384,328 6,370,958
========= ========= ========= =========
WEIGHTED SHARES - DILUTED 6,395,958 6,370,958 7,401,992 6,370,958
========= ========= ========= =========
</TABLE>
* Amount is less than $.01 per share
See accompanying notes.
F-2
<PAGE>
RMED International, Inc.
Statement of Cash Flows
Nine Months Ended
--------------------------
Sept. 30, Sept. 30,
1998 1997
----------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 88,645 $(124,290)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Stock issued for services 14,649 --
Depreciation and amortization 10,512 10,543
Changes in assets and liabilities:
Accounts receivable (96,065) (80,165)
Inventory (161,698) 54,291
Prepaids and other current assets 55,481 (1,199)
Accounts payable and accruals 95,234 78,027
--------- ---------
NET CASH FROM (USED FOR) OPERATIONS 6,758 (62,793)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments received on medical products line and
diaper machine notes receivable 26,039 40,646
Increase in note receivable from Chairman -- (8,693)
Purchases of equipment (1,078) (3,127)
Increase in other assets (12,829) (490)
--------- ---------
NET CASH FROM INVESTING ACTIVITIES 12,132 28,336
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in (payments on) note payable to
President (115,929) 50,242
Payments on mortgage payable (2,161) (2,427)
--------- ---------
NET CASH FROM (USED FOR) FINANCING ACTIVITIES (118,090) 47,815
--------- ---------
NET INCREASE (DECREASE) IN CASH (99,200) 13,358
CASH - BEGINNING OF PERIOD 178,754 7,006
--------- ---------
CASH - END OF PERIOD $ 79,554 $ 20,364
========= =========
See accompanying notes.
F-3
<PAGE>
RMED International, Inc.
Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock
--------------------------- Contributed Accumulated
Shares Amount Capital Deficit
--------- -------- ----------- ------------
<S> <C> <C> <C> <C>
December 31, 1997 6,370,958 $ 63,710 $ 5,146,013 $ (4,983,902)
Issued for services 25,000 250 14,399 --
Net income (unaudited) -- -- -- 88,645
--------- -------- ----------- ------------
September 30, 1998 (Unaudited) 6,395,958 $ 63,960 $ 5,160,412 $ (4,895,257)
========= ======== =========== ============
See accompanying notes.
</TABLE>
F-4
<PAGE>
RMED International, Inc.
Notes to Condensed Financial Statements
For the Nine Months Ended September 30, 1998
(Unaudited)
Note A - General
The accompanying unaudited condensed financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. The financial statements include all the accounts
of RMED International, Inc. (the "Company") and its wholly owned subsidiaries,
all of which are inactive. All intercompany transactions and balances have been
eliminated. In the opinion of management, all material adjustments, consisting
of only normal recurring adjustments considered necessary for a fair
presentation, have been included. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-KSB for the year ended December 31, 1997.
Note B - Earnings (Loss) Per Share
Basic earnings (loss) per share of common stock are computed using the weighted
average number of common stock outstanding during each period. Diluted earnings
per share is calculated by increasing the weighted average shares by
contingently issuable shares to the Company's President for a patent interest
and for stock options computed using the treasury stock method.
Note C - Contingency
In August 1994, the Company commenced an action in the United States District
Court for the Southern District of New York against Sloan's Supermarkets, Inc.
and John A. Catsimatidis to recover damages based on the defendants' failure to
disclose, in its public filings and otherwise, the existence of an investigation
by the Federal Trade Commission ("FTC") regarding the concentration of
supermarkets by entities owned or controlled by the defendants. The Company
purchased approximately 226,000 shares of Sloan's common stock in November and
December 1993, in open market transactions on the American Stock Exchange,
without knowledge of the FTC investigation, and sold a portion of these shares
at a loss after June 2, 1994, when the Company learned of the FTC investigation.
The legal action has been certified as a "class action" with the Company the
class action representative. Litigation is subject to many uncertainties and the
Company is unable to predict the outcome of this matter.
Note D - Proposed Merger
September 23, 1998, the Company announced an agreement in principal to merge
with Jettar, Ltd., a privately held company located in Eau Claire, Wisconsin.
Jettar manufactures and markets their own branded diapers and manufactures
private label diapers for other companies. The merger is expected to be
finalized in the fourth quarter of 1998.
F-5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATONS
RMED International, Inc. ( the "Company", "RMED") was incorporated under
the laws of the State of Colorado on December 28, 1982, and is in the
business of marketing and selling Tushies(R) and TenderCare(R) Baby
Products.
Tushies and TenderCare products are manufactured by outside private label
manufacturers pursuant to Company specifications.
TenderCare Baby Diapers are competitive in price to the leading brand
diapers. This has been a major factor in sales growth. Every domestic
major health food store is now carrying one or both of our brands.
Products sold by the Company to retail stores and through the 800 home
delivery service include TushiesWipes, Tushies Organic T-shirts, Bibbies
Disposable Baby Bibs, TushiesMates for the cloth-diaper services.
The Merger
On September 23, 1998 RMED announced an agreement in principal to merge
with Jettar Ltd., Eau Claire, WI, a privately held company. Jettar
manufactures private label and their own Bumpies(R) and Rock-A-Bye(R)
branded baby diapers. The merger is expected to be finalized in the 4th
quarter of 1998.
MATERIAL CHANGES IN FINANCIAL POSITION
Total assets of the Company increased $80,438 from $777,132 at December
31, 1997 to $857,570 at September 30, 1998.
During the nine month period ended September 30, 1998, net working Capital
increased $117,075 primarily due to repayments on the note payable to the
President and an increase in accounts receivable and inventory.
Total liabilities at September 30, 1998 were $528,455 compared to $551,311
at December 31, 1997. The decrease $22,856 in total liabilities was
primarily due to the decrease in the note to the President, offset by an
increase in accounts payable and accrued liabilities.
Total stockholders' equity increased $103,294 during the nine month period
ended September 30, 1998. The increase was primarily a result of an
improvement in gross profit and an overall increase in sales.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION cont'd
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the quarter ended September 30, 1998 were $702,721 compared
to $503,301 for the quarter ended September 30, 1997, an increase of 40%.
Net sales for the nine months ended September 30, 1998 were $1,887,271
compared to $1,316,385 for the nine months ended September 30, 1997, an
increase of 43%.
Gross profit increased to $249,377 in the quarter ended September 30, 1998
compared to $150,853 for period ended September 30, 1997 and increased to
$863,301 for the nine month period ended September 30, 1998 compared to
$449,419 for the nine month period ended September 30, 1997. Improvement
in gross margin is directly related to reduced costs from outside
suppliers.
Operating expenses for the quarter and nine month periods ended September
30, 1998 were $284,128 and $827,676, respectively, compared to $197,109
and $611,292 in the quarter and nine months period ended September 30,
1997, an increase of $87,019 and $216,384, due primarily to increases in
general and administrative expenses of $69,975 and $152,211 and increases
in marketing expenses of $17,044 and $64,173.
The net loss for the quarter ended September 30, 1998 was ($7,284) and net
income for the nine month period was $88,645 as compared to a net loss of
($34,558) for the quarter and a net loss of ($124,290) for the nine month
period ended September 30, 1997. The net loss in the quarter ended
September 30, 1998 is primarily due to an increase in advertising,
commissions, salaries and wages, offset by increased sales.
Liquidity and Capital Resources
At September 30, 1998 the Company had a net working capital $162,772
consisting of $552,089 in current assets and $389,317 in current
liabilities.
As of September 30, 1998 the Company's long term debt is $139,138
consisting of a mortgage payable on the Delta, Colorado facility.
7
<PAGE>
Year 2000 Issues
The Company has not presently addressed the extent of the Year 2000 effect
on its computerized system or the estimated costs required to remidiate.
At present it is uncertain as to the effect the Year 2000 scenario will
have on operations, liquidity and financial condition. There presently is
not a contingency plan in effect to address this issue.
PART II. Other Information
Items 1-6. Not applicable.
8
<PAGE>
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 thereunto duly authorized.
RMED International, Inc.
Date: November 12, 1998
/s/ Brenda Schenk
------------------------------
Brenda Schenk
President & Principal
Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 79,554
<SECURITIES> 0
<RECEIVABLES> 196,147
<ALLOWANCES> 3,000
<INVENTORY> 238,302
<CURRENT-ASSETS> 552,089
<PP&E> 317,866
<DEPRECIATION> 90,527
<TOTAL-ASSETS> 857,570
<CURRENT-LIABILITIES> 389,317
<BONDS> 139,138
0
0
<COMMON> 63,960
<OTHER-SE> 265,155
<TOTAL-LIABILITY-AND-EQUITY> 857,570
<SALES> 702,721
<TOTAL-REVENUES> 702,721
<CGS> 453,344
<TOTAL-COSTS> 284,128
<OTHER-EXPENSES> (32,393)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,926
<INCOME-PRETAX> (7,284)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,284)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,284)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
