SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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)
3925 North Hastings Way
Eau Claire, WI 54703
--------------------
(Address of Principal Office)
(715) 831-0280
--------------
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 9,220,958 shares of the Registrant stock $.01 par value common stock
outstanding as of June 30,1999.
<PAGE>
RMED International, Inc.
Condensed Financial Statements
Table of Contents
PAGE
PART I. Item 1.
Condensed Balance Sheet as of June 30, 1999 and F-1
December 31, 1998
Condensed Statements of Operations for the three and six F-2
Month periods ended June 30, 1999 and 1998
Condensed Statements of Cash Flows for the three and six F-3
Month periods ended June 30, 1999 and 1998
Exhibit 11-Computation of Per Share Earnings F-4
For the three months ended June 30, 1999 and 1998
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 9
Signatures 10
<PAGE>
<TABLE>
<CAPTION>
RMED International, Inc.
Condensed Balance Sheets
(Unaudited)
June 30, December 31,
1999 1998
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 10,794 $ 120,504
Accounts receivable, less allowance for doubtful 751,469 832,898
accounts of $20,000 and $29,000
Notes receivable, current maturities 5,375 25,180
Inventory 1,388,935 979,770
Prepaid and other 104,429 192,340
----------- -----------
Total current assets 2,261,002 2,150,692
NOTES RECEIVABLE, less current maturities 45,258 47,034
PROPERTY AND EQUIPMENT
Land and building 245,000 245,000
Furniture and office equipment 118,707 105,116
Machinery and equipment 2,712,186 2,712,186
----------- -----------
3,075,893 3,062,302
Less accumulated depreciation 784,750 642,779
----------- -----------
2,291,143 2,419,523
OTHER ASSETS 43,511 43,853
----------- -----------
$ 4,640,914 $ 4,661,102
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Long-term debt, current maturities $ 12,398 $ 12,230
Bank line of credit 2,235,000 3,052,000
Note payable to directors 511,926 71,860
Accounts payable 1,386,366 1,212,689
Accrued liabilities 128,314 303,594
----------- -----------
Total current liabilities 4,274,004 4,652,373
LONG-TERM DEBT, less current maturities 152,450 156,218
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value; 50,000,000 shares
authorized; 9,220,958 and 9,195,958 shares
issued and outstanding 92,210 91,960
Contributed capital 7,546,962 7,534,712
Accumulated deficit (7,424,712) (7,774,161)
----------- -----------
214,460 (147,489)
----------- -----------
$ 4,640,914 $ 4,661,102
=========== ===========
</TABLE>
See accompanying notes.
F-1
<PAGE>
<TABLE>
<CAPTION>
RMED International, Inc.
Condensed Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES $ 3,939,670 $ 5,135,295 $ 7,841,376 $ 9,279,866
COST OF GOODS SOLD 2,151,863 3,355,965 4,346,227 5,804,175
------------ ------------ ------------ ------------
GROSS PROFIT 1,787,807 1,779,330 3,495,149 3,475,691
OPERATING EXPENSES
General and Administrative 314,011 366,317 599,686 674,378
Sales and Marketing 1,341,763 1,334,236 2,467,486 3,238,654
------------ ------------ ------------ ------------
1,655,774 1,700,553 3,067,172 3,913,032
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) 132,033 78,777 427,977 (437,341)
OTHER INCOME (EXPENSE)
Interest income 3,850 7,640 10,317 16,004
Interest expense (61,821) (76,323) (121,010) (152,497)
Other 12,930 10,389 32,165 19,908
------------ ------------ ------------ ------------
(45,041) (58,294) (78,528) (116,585)
------------ ------------ ------------ ------------
NET INCOME BEFORE INCOME TAXES 86,992 20,483 349,449 (553,926)
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 86,992 $ 20,483 $ 349,449 $ (553,926)
============ ============ ============ ============
BASIC EARNINGS (LOSS) PER SHARE $ 0.01 $ 0.00 $ 0.04 (0.06)
============ ============ ============ ============
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.00 $ 0.03 (0.06)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES - BASIC 9,220,958 9,203,054 9,213,458 9,203,054
============ ============ ============ ============
WEIGHTED AVERAGE SHARES - DILUTED 10,374,905 10,263,547 10,416,623 9,203,054
============ ============ ============ ============
</TABLE>
See accompanying notes.
F-2
<PAGE>
<TABLE>
<CAPTION>
RMED International, Inc.
Condensed Statement of Cash Flows
(Unaudited)
Three Months Ended Six Months Ended
----------------------- ---------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
----------------------- ---------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 86,992 $ 20,483 $ 349,449 $(553,926)
Adjustments to reconcile net income (loss) to cash
flows from operating activities
Depreciation and amortization 72,121 72,152 141,994 143,595
Other -- 3,950 -- 3,950
Changes in assets and liabilities
Accounts receivable 144,766 (216,925) 81,429 (33,513)
Inventory (255,297) 374,967 (409,165) 273,628
Prepaid and other 80,799 125,151 87,911 119,774
Accounts payable and accrued liabilities (242,263) (615,529) (1,603) (76,809)
--------- --------- --------- ---------
Cash flows provided by (used in)
operating activities (112,882) (235,751) 250,015 (123,301)
Cash flows from investing activities
Payments received on notes receivable 11,875 6,581 21,581 13,024
Decrease in other assets 69 29,151 319 58,302
Purchase of equipment (2,961) (6,345) (13,591) (7,715)
--------- --------- --------- ---------
Cash flows from investing activities 8,983 29,387 8,309 63,611
Cash flows from financiang activities
Loans from directors -- -- 500,000 102,000
Increase (decrease) in bank overdraft (207,029) 336,353 -- 50,117
Proceeds from exercise of stock options -- -- 12,500 --
Borrowings (payments) on bank line-of-credit, net 172,000 (278,000) (817,000) (29,000)
Payments on loans from officer (5,000) (3,887) (59,934) (121,877)
Increases to (payments on) capital leases 267 (1,381) (1,668) (3,320)
Payments on mortgage note (853) (482) (1,932) (1,399)
--------- --------- --------- ---------
Cash flows provided by (used in) financing activities (40,615) 52,603 (368,034) (3,479)
--------- --------- --------- ---------
Net increase (decrease) in cash (144,514) (153,761) (109,710) (63,169)
Cash, Beginning of period 155,308 270,139 120,504 179,547
--------- --------- --------- ---------
Cash, End of period $ 10,794 $ 116,378 $ 10,794 $ 116,378
========= ========= ========= =========
Supplemental disclosure of cash flow information
Cash paid for interest $ (61,821) $ (76,323) $(121,010) $(152,497)
</TABLE>
See accompanying notes.
F-3
<PAGE>
RMED International, Inc.
Exhibit 11
The following represents the computation of per share earnings reflecting the
assumption that the granted shares under the option plan will be exercised.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- -------------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------------------------- -------------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 86,992 $ 20,483 $ 349,449 $ (553,926)
----------- ----------- ----------- -----------
Weighted average common shares outstanding 9,220,958 9,203,054 9,213,458 9,203,054
Common share equivalents relating to stock options 1,153,947 1,060,493 1,203,165 --
----------- ----------- ----------- -----------
Adjusted common and common equivalent shares
for computation 10,374,905 10,263,547 10,416,623 9,203,054
=========== =========== =========== ===========
Net earnings per share:
Basic $ 0.01 $ 0.00 $ 0.04 $ (0.06)
=========== =========== =========== ===========
Diluted $ 0.01 $ 0.00 $ 0.03 $ (0.06)
=========== =========== =========== ===========
</TABLE>
F-4
<PAGE>
RMED International, Inc.
Notes to Condensed Financial Statements
Three Months Ended June 30, 1999
(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. 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, 1998.
November 23, 1998, the Company merged with Jettar, Ltd. The merger has been
accounted for as a "pooling of interests." Under this method of accounting, the
previously issued financial statements of RMED have been restated to include the
assets, liabilities, stockholders' equity and results of operations of Jettar
for all periods presented. All share and per share amounts are also restated for
all periods presented.
Note B - Earnings (Loss) Per Share
Basic earnings (loss) per share are computed using the weighted average number
of shares outstanding during each period. Diluted earnings per share is computed
by increasing the weighted average shares by contingently issuable shares and
for stock options when diluted.
Note C - Loans from Directors
March 31, 1999, two members of the board of directors loaned the Company
$250,000 (a total of $500,000). The loans bear interest at the rate of 7-1/2%,
payable monthly in arrears beginning May 1, 1999. Payment on the two notes,
consisting of unpaid principal and accrued interest is due December 15, 1999 and
December 15, 2000. The loans are unsecured and subordinate to the bank
line-of-credit.
Note D - Reclassifications
Certain amounts have been reclassified to conform to the June 30, 1999 financial
statement presentation.
F-5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 manufacturing, marketing and selling baby disposable diapers
and related products under its own branded labels and private branded
labels.
On November 23, 1998, the Company acquired Jettar, Ltd. ("Jettar"), a
privately held diaper manufacturing and distributing company located in
Eau Claire, WI. As a result of the acquisition RMED has the capability
of manufacturing its own baby diaper products in addition to
manufacturing private label diapers. Various RMED products are
manufactured by outside private label manufacturers pursuant to Company
specifications.
The acquired facility is over 80,000 square feet and is used as a
central distribution point for all RMED products. RMED now has its own
full machine shop and a testing lab in which we can pursue our goal of
improving absorbency with natural materials. The acquired diaper machine
produces up to 400 disposable diapers per minute and has a value of over
two million dollars.
The Company is marketing its products internationally through health
product stores, mainstream supermarkets, the Internet, mail order,
catalogues and in a direct marketing partnership with Earth's Best Baby
Food, a division of H.J. Heinz Company.
As of July 1999, consumers are purchasing Tushies(R) Baby Products
through our new and exciting website WWW.TUSHIES.COM.
Product Description
Tushies(R) - The Alternative GEL-FREE Disposable Diaper featuring its
patented natural blend cotton absorbency and cloth-like backsheet is
available in four sizes and sold primarily in health product stores,
mail order, catalogues and the Internet on the Whole Foods, ECOMALL and
Earth's Best websites. Earth's Best is the largest certified organic
baby food in the United States.
TushiesWipes(TM) - Under the TushiesWipes brand, the Company offers
natural formula wipes in Tubs, Refills and Travelpacks. The wipes
contain Aloe Vera, are Hypo-Allergenic and Alcohol-FREE.
TushiesBear T-Shirts - Made with 100% organic cotton.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION cont'd
Bibbies(R) - Patented and invented by a pediatrician, the non-toxic,
absorbent and waterproof disposable bibs are sold through our usual
channels.
TenderCare(R) Disposable Diapers - Manufactured by RMED allowing us to
be price and design competitive with the leading national brands.
TenderCare is made without artificial chemical absorbents and is sold in
major supermarkets and health product stores.
Bumpies(R) Disposable Diapers - A mainstream diaper that is sold through
major supermarkets in the Midwest and Mid-Atlantic regions at a
competitive price and is available in regular, jumbo and mega-size
packaging.
Rock-A-Bye(R) Disposable Diapers - Sold internationally to distributors
and retailers under branded and private labels.
The Company currently holds patents, registrations, various trademarks
and Internet domain names for its products.
MATERIAL CHANGES IN FINANCIAL POSITION
Total assets of the Company decreased $20,188 from $4,661,102 at
December 31, 1998 to $4,640,914 at June 30, 1999.
During the six month period ended June 30, 1999, net working capital
increased by $488,679 primarily due to an increase in inventory and
decreases in the bank line of credit, and accrued liabilities.
Total liabilities at June 30, 1999 were $152,450 compared to $156,218 at
December 31, 1998.
Total stockholders' equity increased $361,949 during the six-month
period ended June 30, 1999. The increase was primarily a result of
increased earnings.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION cont'd
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the quarter ended June 30, 1999 were $3,939,670 compared
to $5,135,295 for the quarter ended June 30, 1998, a decrease of
$1,195,625 due to the Company's commitment to pursue more profitable
sales.
Gross profit increased to $1,787,807 in the quarter ended June 30, 1999
compared to $1,779,330 in the quarter ended June 30, 1998, due to
decreased material costs and the Company's increased commitment to
profitability.
Operating expenses for the quarter period ended June 30, 1999 were
$1,655,774 compared to $1,700,553 for the quarter ended June 30, 1998, a
decrease of $44,779.
Net income for the quarter ended June 30, 1999 was $86,992 compared to
$20,483 for the quarter ended June 30, 1998, an increase of $66,509, due
to the above mentioned factors.
Liquidity and Capital Resources
At June 30, 1999 the Company had working capital ($1,884,688) consisting
of $2,261,002 in current assets and $4,145,690 in current liabilities.
As of June 30, 1999 the Company's long term debt is $152,450 consisting
of a mortgage payable on the Delta, Colorado facility ($135,851), and
capital leases ($16,599).
Year 2000 Issues
The Eau Claire, WI facility is fully Y2K compliant. The Delta, CO
facility will be compliant within the next 120 days.
Except for historical matters contained herein, the matters discussed
are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are
cautioned that these forward-looking statements may reflect numerous
assumptions, especially sales and product mix, and involve risks and
uncertainties which may affect RMED International, Inc.'s business and
prospects and cause actual results to differ materially from these
forward-looking statements.
8
<PAGE>
Part II. Other Information
Items 1-5. Not applicable.
Item 6. Exhibits and reports on Form 8-K.
In the three months ended June 30, 1999 a report on Form 8-K dated June 10,
1999, was filed by the Company with the Securities and Exchange Commission. In
the period ended July 31, 1999 three reports on Form 8-K dated July 6, 1999,
July 8, 1999 and July 26, 1999 were filed by the Company with the Securities and
Exchange Commission. The Form 8-K's were to report a change in certifying
accountant.
9
<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: August 13, 1999
/s/Brenda Schenk
----------------
Brenda Schenk
President & Principal
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<CASH> 10,794
<SECURITIES> 0
<RECEIVABLES> 771,469
<ALLOWANCES> 20,000
<INVENTORY> 1,388,935
<CURRENT-ASSETS> 2,261,002
<PP&E> 3,075,893
<DEPRECIATION> 784,750
<TOTAL-ASSETS> 4,640,914
<CURRENT-LIABILITIES> 4,274,004
<BONDS> 0
0
0
<COMMON> 92,210
<OTHER-SE> 122,250
<TOTAL-LIABILITY-AND-EQUITY> 4,640,914
<SALES> 7,841,376
<TOTAL-REVENUES> 7,841,376
<CGS> 4,346,227
<TOTAL-COSTS> 4,346,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,010
<INCOME-PRETAX> 349,449
<INCOME-TAX> 0
<INCOME-CONTINUING> 349,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 349,449
<EPS-BASIC> .04
<EPS-DILUTED> .03
</TABLE>
