SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
ANNUAL REPORT PERSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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 9,977,142 shares of the Registrant stock $.01 par value common stock
outstanding as of March 23, 2000.
<PAGE>
RMED International, Inc.
Table of Contents
PAGE
PART I Item 1.Business 3
Item 2.Properties 4
Item 3.Legal Proceedings 4
Item 4.Submission of Matters to a Vote of Security Holders 5
PART II
Item 5.Market for the Registrant's Common Equity 5
And Related Stockholder Matters
Item 6.Management's Discussion and Analysis of 5
Financial Condition and Results of Operations
Item 7.Financial Statements 8
Item 8.Changes in and Disagreements With Accountants 9
on Accountingand Financial Disclosure
Part III
Item 9.Directors and Executive Officers of the Registrant 9
Item 10.Executive Compensation 11
Item 11.Security Ownership of Certain Beneficial Owners 11
and Management
Item 12.Certain Relationships and Related Party Transactions 12
Part IV
Item 13.Exhibits and Reports on Form 8-K 13
Signatures 14
2
<PAGE>
Item 1 BUSINESS
General
RMED International, Inc. (the "Company" or "RMED"), was incorporated under
the laws of the State of Colorado on December 28, 1982, and is in the
business of manufacturing, marketing, distributing and selling disposable
baby diapers and related products under its own branded labels and private
branded labels.
Business Strategy
On November 23, 1998, the Company acquired Jettar, Ltd. ("Jettar"), a
privately held diaper manufacturing and distributing company located in
Eau Claire, Wisconsin. As a result of the acquisition, RMED now
manufactures 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 contains approximately 80,000 square feet and is
used as a central distribution point for all RMED products. RMED has its
own testing lab in which they can pursue their goal of improving
absorbency with natural materials. The Company's diaper machine produces
up to 400 disposable diapers per minute and cost approximately $2.0
million.
An automatic packaging machine will be in place April, 2000. The Company
will invest more than $2.5 million for a second production line to be used
to manufacture disposable baby diapers. The line will be in service in
July 2000.
The Company is marketing its products internationally through health
product stores, mainstream supermarkets, mail order, catalogues, the
Internet at tushies.com, ecomall.com, mothernature.com, drugstore.com,
diapers4less.com and our representative in the UK greenbabyco.com and in
an ongoing direct marketing partnership with Earth's Best Baby Food, a
division of Hain Food Group. Earth's Best Baby Food is the largest
certified organic baby food manufacturer in the United States.
Product Description
The Company currently distributes the following products:
Tushies(R)-This alternative disposable diaper features patented natural
blend cotton absorbency, cloth-like backsheet and is available in four
sizes.
TushiesWipes-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.
3
<PAGE>
Item 1. BUSINESS cont'd.
TushiesBear T-Shirt-This T-Shirt is made with 100% organic cotton.
Bibbies(R)-Invented and patented by a pediatrician, these bibs are
non-toxic, absorbent, waterproof and disposable.
The Company currently manufactures and sells the following products:
TenderCare(R) Disposable Diapers-These diapers are manufactured by RMED
allowing the Company 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-Theses mainstream diapers are sold through
major supermarkets in the Midwest and Mid-Atlantic regions at a
competitive price in regular, jumbo, and mega-size packaging.
Rock-A-Bye(R) Disposable Diapers-These diapers are sold internationally to
distributors and retailers under branded and private labels.
Patents, Trademarks and Registrations
The Company currently holds patents in cotton blend and flushable
disposable diapers, holds various trademarks and owns over 100 Internet
domain names for its products and related baby businesses.
Employees
As of December 31, 1999, the Company had 52 full and part-time
employees.
Item 2. PROPERTIES
The principal office of the Company is leased and located at 3925 North
Hastings Way, Eau Claire, Wisconsin, 574703.
The 10,000 square foot Delta, Colorado facility is owned by the Company,
and is on two and one-half acres in an industrial park. At this location
the Company maintains its mail order and phone operations and warehouses
its products for west coast distribution.
Item 3. LEGAL PROCEEDINGS
The Company is subject to various legal proceedings in the normal course
of business. Management believes the outcome of these proceedings will
not have a material adverse effect on the Company's financial position
or results of operation.
4
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Part II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER'S MATTERS
The Company's common stock is traded on the "Electronic Bulletin Board
System" (OTC-BB) with the symbol TUSH.
The following table shows the high and low sales prices for each quarter
within the last two fiscal years.
<TABLE>
<CAPTION>
Qtr 1 Qtr 2 Qtr 3 Qtr 4
1999 1998 1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $2.000 $1.125 $1.312 $2.500 $1.563 $2.688 $1.000 $2.063
Low $1.313 $0.480 $0.980 $0.625 $0.770 $0.938 $0.500 $1.188
</TABLE>
As of December 31, 1999, there were 966 holders of record of the Company's
common stock.
The Company has not paid and does not anticipate the payment of cash
dividends in the foreseeable future. Any future earnings and declaration
of dividends will remain within the discretion of the Company's Board of
Directors. The Board of Directors will review its dividend policy from
time to time, which will depend upon, among other factors, the Company's
earnings and financial requirements, as well as general business
conditions.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Material Changes in Financial Position
Total assets of the Company increased $2,344,342 from $5,003,029 at
December 31, 1998 to $7,347,371 at December 31, 1999, an increase of 46%,
primarily due to increases in accounts receivable, inventory and prepaid
expenses.
5
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS cont'd.
During the year ended December 31,1999, net working capital increased by
$1,511,615 or 60% primarily due to increases in accounts receivable,
inventory and prepaid expenses and decreases in the bank line of credit.
Inventory and receivables increased and the line of credit decreased due
to additional funding received from the sale lease-back of the Company's
diaper machine. Prepaid expenses increased due to a deposit for the new
diaper line.
Total liabilities at December 31, 1999 were $7,387,105 compared to
$5,150,518 at December 31, 1998, an increase of 43%. The increase was
primarily due to the capital lease from the sale lease-back of the diaper
machine.
Total stockholders' equity increased $107,755 or 73% during the year ended
December 31, 1999. The increase was primarily a result of the exercise of
stock options offset by the effect of the net loss.
Material Changes in Results of Operations
Net sales for the year ended December 31, 1999 were $15,620,052 compared
to $17,599,885 for the year ended December 31, 1998, a decrease of
$1,979,833 or 11%. Although there was a decrease in sales dollars, the
company's unit volume remained constant as a result of the sales mix
moving from branded label sales with a higher selling price to private
label sales with a lower selling price due to fewer related selling
expenses.
Gross margin decreased $690,253 or 10% from $6,923,225 in 1998 to
$6,232,972 in 1999. The decrease was primarily the result of the sales mix
moving from high margin branded label sales to private label sales with a
smaller gross margin, but fewer selling expenses.
Operating expenses for the fiscal period ended December 31, 1999 were
$6,180,810 compared to $7,340,473 for the year ended December 31, 1998, a
decrease of $1,159,663 or 16%. The decrease was primarily due to a
reduction in promotional activities.
Net loss for the year ended December 31, 1999 was ($145,567) as compared
to a net loss of ($614,405) for the year ended December 31, 1998, a
decrease in loss of 76% primarily due to the Company's increased
commitment to profitability and change in focus from branded label to
private label business.
Liquidity and Capital Resources
At December 31, 1999 the Company had working capital ($988,442) consisting
of $4,710,479 in current assets and $5,698,921 in current liabilities.
6
<PAGE>
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS cont'd.
As of December 31, 1999 the Company's long-term obligation is $2,542,084
consisting of a mortgage payable on the Delta, Colorado facility
($137,758), capital leases ($1,904,326) and notes payable to
shareholders/directors ($500,000). The Company has the ability through its
line of credit and other available resources to fund its current
operations.
The Company has a line of credit agreement expiring in 2001 with available
funds of the lesser of $5,000,000 or a defined borrowing base consisting
of eligible receivables and inventory with interest at the bank's prime
rate plus 3.0% on the first $500,000, the bank's prime rate plus 1.5% for
borrowings above $500,000 and prime plus 5.0% on any special accommodation
of up to $200,000. The terms of this agreement require the Company to meet
certain financial covenants, including a minimum book net worth and
minimum net earnings. The Company was in compliance or obtained waivers
for its non-compliance with the covenants as of December 31, 1999. As part
of these waivers, the interest rates charged are the bank's prime rate
plus 4.5% on all borrowings up to $500,000, the prime rate plus 3.0% on
all borrowings over $500,000 and prime plus 6.5% on any special
accommodation. The Company must meet certain covenants by June 30, 2000 or
the Company will be subject to its full default rates retroactive to
January 1, 2000. The default rate is prime plus 6.0% on borrowings up to
$500,000, prime plus 4.5% on all borrowings greater than $500,000 and
prime plus 8.0% on any special accommodation.
In July 2000 the Company plans to purchase a new diaper machine for
approximately $2,500,000 through a capital lease. During 1999, the Company
paid $550,000 as a deposit for this machine.
Impact of Inflation
The impact of inflation on the Company's results of operations is not
readily determinable. However, the Company does not believe the impact
varies materially from that experienced by the national economy as a
whole. As sales increase, it is possible the Company may be able to reduce
costs and thereby minimize the impact of inflation.
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.
7
<PAGE>
Item 7. FINANCIAL STATEMENTS
Financial statements are included on the following pages numbered F-1
through F-25.
8
<PAGE>
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
RMED INTERNATIONAL, INC.
December 31, 1999 and 1998
<PAGE>
CONTENTS
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS -
GRANT THORNTON LLP.................................................... F-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS -
OATLEY BYSTROM & HANSEN............................................... F-3
FINANCIAL STATEMENTS
BALANCE SHEETS........................................................ F-4
STATEMENTS OF OPERATIONS.............................................. F-6
STATEMENTS OF CASH FLOWS.............................................. F-7
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)............... F-9
NOTES TO FINANCIAL STATEMENTS........................................ F-10
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
RMED International, Inc.
We have audited the accompanying balance sheet of RMED
International, Inc. as of December 31, 1999, and the related statements of
operations, cash flows, and changes in stockholders' equity (deficit) for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RMED International,
Inc. as of December 31, 1999, and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.
/s/ GRANT THORNTON LLP
Minneapolis, Minnesota
February 22, 2000
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
RMED International, Inc.
We have audited the accompanying balance sheet of RMED
International, Inc. (a Colorado corporation) as of December 31, 1998, and the
related statements of operations, cash flows and changes in stockholders' equity
(deficit) for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RMED International,
Inc. as of December 31, 1998 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ OATLEY BYSTROM & HANSEN
Oatley Bystrom & Hansen
Greenwood Village, Colorado
March 17, 1999
F-3
<PAGE>
The accompanying notes are an integral part of these statements.
F-6 RMED
International, Inc.
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
ASSETS 1999 1998
------ ------
<S> <C> <C>
CURRENT ASSETS
Cash $ 442,394 $ 120,504
Marketable securities 32,715 -
Accounts receivable, less allowance for doubtful
accounts and discounts of $25,000 and $29,000
in 1999 and 1998 1,574,715 1,174,825
Inventory 1,814,339 979,770
Deposits on equipment 550,000 -
Prepaids and other 296,316 217,520
-------- --------
Total current assets 4,710,479 2,492,619
PROPERTY AND EQUIPMENT
Land and building 245,000 245,000
Furniture and office equipment 126,535 105,116
Machinery and equipment 2,166,083 2,712,186
--------- ---------
2,537,618 3,062,302
Less accumulated depreciation 352,161 642,779
-------- --------
2,185,457 2,419,523
OTHER ASSETS
Patents, net of accumulated amortization 318,373 3,603
Other 133,062 87,284
-------- -------
451,435 90,887
-------- -------
$7,347,371 $5,003,029
========= =========
</TABLE>
F-4
<PAGE>
LIABILITIES AND STOCK-
<TABLE>
<CAPTION>
HOLDERS' EQUITY (DEFICIT) 1999 1998
------ ------
<S> <C> <C>
CURRENT LIABILITIES
Note payable to bank $ 1,847,904 $ 3,052,000
Current maturities of long-term obligations 853,900 82,466
Accounts payable 1,971,338 1,212,689
Customer deposits 500,000 -
Accrued liabilities 525,779 645,521
-------- --------
Total current liabilities 5,698,921 4,992,676
LONG-TERM OBLIGATIONS, less current maturities 1,688,184 157,842
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.10 par value; 2,500,000 shares
authorized; none issued - -
Common stock, $.01 par value; 50,000,000 shares
authorized; 10,022,942 and 9,195,958 shares
issued and 9,609,442 and 9,195,958 shares
outstanding at December 31, 1999 and 1998 96,094 91,960
Additional paid-in capital 7,702,900 7,534,712
Common stock to be issued, 450,000 shares 315,000 -
Accumulated deficit (7,919,728) (7,774,161)
---------- ----------
194,266 (147,489)
Less notes receivable from stockholders 234,000 -
-------- ---
(39,734) (147,489)
-------- ---------
$ 7,347,371 $ 5,003,029
========== ==========
</TABLE>
F-5
<PAGE>
RMED International, Inc.
STATEMENTS OF OPERATIONS
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Sales $15,620,052 $17,599,885
Cost of goods sold 9,387,080 10,676,660
---------- ----------
Gross profit 6,232,972 6,923,225
Operating expenses
Sales and marketing 4,829,704 5,985,933
General and administrative 1,351,106 1,354,540
---------- ----------
6,180,810 7,340,473
---------- ----------
Operating income (loss) 52,162 (417,248)
------- ---------
Other income (expense)
Interest expense (303,918) (284,251)
Interest income 24,522 30,493
Other 81,667 56,602
------- -------
(197,729) (197,156)
--------- ---------
NET LOSS $ (145,567) $ (614,404)
========= =========
Net loss per share - basic and diluted $ (0.02) $ (0.07)
====== ======
Weighted average common shares outstanding -
basic and diluted 9,217,241 9,194,465
========== ==========
</TABLE>
F-6
<PAGE>
RMED International, Inc.
STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (145,567) $(614,404)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation and amortization 370,085 290,016
Amortization of deferred compensation - 96,684
Stock issued for services - 14,649
Gain on sale of assets (25,216) -
Changes in current assets and liabilities:
Accounts receivable (399,890) (254,623)
Inventory (834,569) 32,355
Prepaid and other (647,427) 85,518
Accounts payable 758,649 119,490
Accrued liabilities 324,008 473,335
-------- --------
Net cash provided by (used in)
operating activities (599,927) 243,020
Cash flows from investing activities:
Purchases of equipment (110,803) (42,445)
Payments received on notes receivable 23,228 36,496
Purchase of trading securities (32,715) -
Increase in other assets 6,105 22,408
------ -------
Net cash provided by (used in)
investing activities (114,185) 16,459
</TABLE>
F-7
<PAGE>
RMED
International, Inc.
STATEMENTS OF CASH FLOWS - CONTINUED
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Cash flows from financing activities:
Borrowings (payments) on note payable to bank, net $(1,204,096) $ 104,000
Decrease in bank overdraft - (286,236)
Proceeds from notes payable issued to directors 500,000 42,500
Payments on note payable to President (71,860) (157,430)
Proceeds from long-term obligations 2,015,339 -
Payments on long-term obligations (141,703) (10,656)
Proceeds from exercise of stock options 43,095 -
Acquisition of stock - (10,700)
Purchase of stock (137,488) -
Sale of stock 32,715 -
------- ---
Net cash provided by (used in)
financing activities 1,036,002 (318,522)
---------- --------
NET INCREASE (DECREASE)
IN CASH 321,890 (59,043)
Cash at beginning of year 120,504 179,547
-------- --------
Cash at end of year $ 442,394 $ 120,504
======== ========
Supplemental cash flow information and noncash investing
and financing activities:
Interest paid $ 298,000 $ 284,000
Common stock to be issued for patent 315,000 -
Notes received for common stock issued on
exercise of options 234,000 -
Stock issued for legal services - 14,649
Payable to Chairman and Vice President of Operations
due in stock to be issued as compensation for
personal guarantee of debt 56,250 -
Receipt of stock as settlement related to merger 300,000 -
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE>
RMED International, Inc.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Years ended December 31,
<TABLE>
<CAPTION>
Common stock Contributed Common stock to be issued
--------------------------- -------------------------
Shares Amount capital Shares Amount
--------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
January 1, 1998 9,200,185 $92,002 $7,530,721 - $ -
Stock issued for services 25,000 250 14,399 - -
Acquisition of stock for cash (29,227) (292) (10,408) - -
Net loss - - - - -
--------- ---------- ------------ --------- ------------
December 31, 1998 9,195,958 91,960 7,534,712 - -
Exercise of stock options 826,984 8,269 268,826 - -
Purchase of stock (157,500) (1,575) (135,913) - -
Sale of stock 44,000 440 32,275 - -
Receipt of shares from merger
settlement (300,000) (3,000) 3,000 - -
Stock to be issued for patent - - - 450,000 315,000
Net loss - - - - -
--------- ---------- ------------ --------- -------------
December 31, 1999 9,609,442 $96,094 $7,702,900 450,000 $315,000
========= ====== ========= ======= =======
<CAPTION>
Notes
receivable
Accumulated from
deficit stockholders Total
------------- ------------ --------
<S> <C> <C> <C>
January 1, 1998 $(7,159,757) $ - $ 462,966
Stock issued for services - - 14,649
Acquisition of stock for cash - - (10,700)
Net loss (614,404) - (614,404)
----------- --------- --------
December 31, 1998 (7,774,161) - (147,489)
Exercise of stock options - 234,000 43,095
Purchase of stock - - (137,488)
Sale of stock - - 32,715
Receipt of shares from merger
settlement - - -
Stock to be issued for patent - - 315,000
Net loss (145,567) - (145,567)
----------- --------- --------
December 31, 1999 $(7,919,728) $(234,000) $ (39,734)
========== ======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-9
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Nature of Business
RMED International, Inc. (the "Company" or "RMED"), manufactures disposable baby
diapers for private label distributors and its Bumpies(R) and Rock-A-Bye (R)
brands as well as markets and distributes its Tushies(R) brand disposable
diapers and related products. The Company's private brand diapers are marketed
through independent commissioned brokers and sold to retail grocery chains in
the Midwest and Mid-Atlantic regions of the United States. The Company also
sells a small portion (less than 5%) of its diapers internationally.
Merger with Jettar, Inc.
Effective November 23, 1998, the Company merged with Jettar, Inc. ("Jettar"), a
privately held diaper manufacturing and distributing company located in Eau
Claire, Wisconsin, by issuing 2.8 million shares of its common stock in exchange
for all the outstanding common stock of Jettar based on a conversion ratio of
approximately 292.275574 shares of RMED common stock for each share of Jettar
common stock. In addition, Jettar stockholders received options to purchase a
total of 801,924 shares of RMED common stock for two years at $1 per share. As a
result of the merger, the separate existence of Jettar ceased. The merger
qualifies as a tax-free reorganization and 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 related to the merger are also
reflected for all periods presented. The Company incurred professional fees of
approximately $106,900 directly related to the merger.
Activity previously reported by the separate companies for 1998 and the combined
amounts presented in the 1998 financial statements are summarized below.
F-10
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - Continued
1998
Sales ----
Jettar $15,789,601
RMED 2,322,939
Eliminating entries (512,655)
---------
$17,599,885
Net loss
Jettar $ (455,207)
RMED (156,319)
Eliminating entries (2,878)
-------
$ (614,404)
Summary of Significant Account Policies
Revenue Recognition and Concentrations of Credit Risk
Sales are recognized when products are shipped. Sales included in the statement
of operations are presented net of allowances for sales returns, and promotional
and trade discounts. Sales of wholesale product are generally unsecured and
subject to credit limits that typically provide a two percent trade discount.
Home delivery sales require payment prior to shipment.
Marketable Securities
The Company's investments consist of equity securities and are classified as
trading which requires the securities to be reported at fair value, with
unrealized gains and losses reported as income. At December 31, 1999, cost
approximated market value for these securities.
F-11
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - Continued
Inventory
Inventory is valued at the lower of cost (first-in, first-out) or market value.
Inventories consist of the following at December 31:
1999 1998
------ ------
Raw materials $1,087,933 $387,200
Finished goods 726,406 592,570
-------- -------
$1,814,339 $979,770
========= =======
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets, ranging from
five years for furniture and office equipment, 10 years for machinery and
equipment to 39 years for buildings. Property under capital leases is
depreciated using the straight-line method over the term of the lease.
Maintenance and repair costs are charged to expense as incurred, and renewals
and improvements that extend the useful life of the assets are capitalized.
Patents
Patents are recorded at cost and amortized over the life of the patent of 17
years.
Advertising and Slotting Costs
Production costs of advertising (including the cost of coupons) are expensed
when the initial advertising takes place. All other advertising and promotional
costs are expensed when incurred. Advertising and coupon costs, which are
included in sales and marketing expenses were $3,467,361 and $4,273,439 for 1999
and 1998. Slotting fees paid to retailers for shelf space are expensed upon the
initial shipment to the retailer. Slotting fees were $244,494 and $445,669 in
1999 and 1998.
F-12
<PAGE>
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - Continued
Stock Based Compensation
The Company utilizes the intrinsic value method for stock-based compensation.
Under this method, compensation expense is recognized for the amount by which
the market price of the common stock on the date of grant exceeds the exercise
price of an option.
Net Loss Per Common Share
The Company's basic net loss per share amounts have been computed by dividing
net loss by the weighted average number of outstanding common shares. The
Company's diluted net loss per share is computed by dividing net loss by the
weighted average number of outstanding common shares and common share
equivalents relating to stock options, when dilutive. For each of the years
ended December 31, 1998 and 1999, the Company incurred net losses and therefore
basic and diluted per share amounts are the same. Common stock equivalent shares
consist of stock options (using the treasury stock method). Common stock
equivalents as of December 31, 1999 and 1998 included 920,067 and 812,616 shares
related to stock options which were excluded from the computation of diluted
loss per share because they were antidilutive.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair Value of Financial Investments
Due to their short-term nature, the carrying value of our current financial
assets and liabilities approximates their fair values. The fair value of our
borrowings, if recalculated based on current interest rates, would not
significantly differ from the recorded amounts.
F-13
<PAGE>
NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - Continued
Reclassifications
Certain reclassifications have been made to the 1998 financial statements to
conform with the 1999 financial statement presentation.
NOTE B - NOTE PAYABLE TO BANK
The Company entered into a new line of credit agreement expiring in December
2001. The agreement automatically renews for successive one year periods unless
the Company provides 30 days notice to cancel or demand is made by the lender.
Total funds available under the line of credit is the lesser of $5,000,000 or a
defined borrowing base consisting of eligible receivables and inventory. The
agreement requires monthly interest payments at the bank's prime rate plus 3.0%
(effective rate of 11.5% at December 31, 1999) for the first $500,000 and the
bank's prime rate plus 1.5% for borrowings above $500,000 (effective rate of 10%
at December 31, 1999). The lender may also make a special accommodation of up to
$200,000 requiring monthly principal payments of $16,667 plus interest at the
bank's prime rate plus 5.0% (effective rate of 13.5% at December 31, 1999) with
a final payment of unpaid principal due on December 1, 2000. The line is
collateralized by substantially all the business assets, is personally
guaranteed by the Vice President of Operations of the Company, and has priority
over notes payable to shareholders/directors (note C). The Company's outstanding
line of credit balance at December 31, 1999 was $1,847,904. The terms of this
agreement require the Company to meet certain financial covenants, including a
minimum book net worth and minimum net earnings. The Company was in compliance
with or obtained waivers for its non-compliance with the covenants as of
December 31, 1999. As part of these waivers, the interest rates charged are the
bank's prime rate plus 4.5% on all borrowings up to $500,000, the prime rate
plus 3% on all borrowings over $500,000, and prime plus 6.5% on any special
accommodation. The Company must meet certain covenants by June 30, 2000 or the
Company will be subject to its full default rates retroactive to January 1,
2000. The default rate is prime plus 6% on borrowings up to $500,000, prime plus
4.5% on all borrowings greater than $500,000, and prime plus 8% on any special
accommodation.
The Company's previous line of credit agreement required monthly interest
payments of 1/2% to 3/4% above the bank's prime rate (effective rate of 8-1/2%
as of December 31, 1998). The Company's outstanding balance as of December 31,
1998 was $3,052,000.
F-14
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE C - LONG-TERM OBLIGATIONS
Long-term debt and notes payable consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
------ ------
<S> <C> <C>
Mortgage note payable, due January 17, 2001, payable in monthly
installments of $1,409 including interest at the bank's base rate
(effective rate of 8.5% and 8.75% at December 31, 1999 and 1998),
secured by land and building, guaranteed
by President $ 137,758 $141,510
Notes payable to shareholders/directors, interest at 7.5%,
unsecured, subordinate to line-of-credit 500,000 -
Note payable to President, due on demand, accrues
interest at 7%, paid in 1999 - 71,860
Capital lease obligations (see note G) 1,904,326 26,938
--------- -------
2,542,084 240,308
Less current maturities 853,900 82,466
-------- -------
$1,688,184 $157,842
========= =======
</TABLE>
Future maturities of long-term obligations including capital leases are as
follows:
Year ended December 31:
2000 $ 853,900
2001 519,463
2002 419,158
2003 459,569
2004 289,994
--------
$2,542,084
F-15
<PAGE>
NOTE D - INCOME TAXES
The Company has not recorded an income tax provision for 1999 or 1998 due to the
Company's inability to carryback losses.
The tax effects of temporary differences giving rise to deferred income taxes
consisted of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998
------ ------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment $ (40,300) $ (197,500)
Deferred tax assets:
Allowance for accounts receivable 10,000 11,800
Accrued vacation 16,000 10,000
Net operating loss carryforwards 1,399,100 1,514,500
---------- ----------
1,384,800 1,338,800
Valuation allowance (1,384,800) (1,338,800)
---------- ----------
$ - $ -
========== ==========
</TABLE>
The Company's provision for income taxes differs from the expected tax benefit
amount computed by applying the statutory federal income tax rate of 34.0% to
income before taxes as a result of the following:
December 31,
--------------------------
1999 1998
------ ------
Federal statutory rate (34.0)% (34.0)%
Change in valuation allowance 31.5 38.1
Other 2.5 (4.1)
---- -----
-% -%
==== =====
F-16
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE D - INCOME TAXES - Continued
Deferred tax liabilities and deferred tax assets reflect the net effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The
valuation allowance has been established due to the uncertainty of future
taxable income, which is necessary to realize the benefits of the deferred tax
assets. The Company had net operating loss (NOL) carryforwards of approximately
$3,500,000 at December 31, 1999, which begin to expire in 2005. These NOL's are
subject to annual utilization limitations due to prior ownership charges.
NOTE E - RELATED PARTY TRANSACTIONS
A 50% patent interest in the Company's Tushies disposable diaper owned by the
President was converted into 450,000 shares of common stock of the Company on
December 30, 1999. The stock has been recorded as stock to be issued on the
balance sheet as the stock certificates were not issued by the transfer agent as
of December 31, 1999.
During 1999, the Company had sales of $38,079 to a company which is owned by a
relative of an officer. Accounts receivable to this company were $25,078 at
December 31, 1999.
The Company also had sales in 1999 of $36,437 to a company which is owned by a
director of the Company.
In 1998, the Company paid a related company $26,894 for operating supplies,
administrative and accounting services. A director of the Company is a major
stockholder of the related company. Another officer was paid $30,007 in 1998 for
legal services.
NOTE F - COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is subject to various legal proceedings in the normal course of
business. Management believes the outcome of these proceedings will not have a
material adverse effect on the Company's financial position or results of
operations.
F-17
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE F - COMMITMENTS AND CONTINGENCIES - Continued
Royalty Agreements
The Company has an agreement with a national diaper manufacturer which requires
payment of royalties to the manufacturer of three percent of net sales of
certain disposable diapers effective August 13, 1998 for the term of the
patents. Royalty expense related to this agreement was $207,499 and $54,688 for
the years ended December 31, 1999 and 1998.
The Company has an agreement which grants the Company a non-exclusive license to
manufacture and sell patented diapers for a royalty through July 3, 2007. The
royalty rate is .11% of applicable sales in 1998 and .10% thereafter. The
Company may terminate the agreement upon six months written notice. In 1999 and
1998, royalty expense pursuant to this agreement was $22,385 and $12,523.
Capital Leases
The Company leases equipment under capital leases. During 1999, the Company sold
its diaper machine to a financing company and entered into a sale-leaseback
transaction which was accounted for as a capital lease. This lease is personally
guaranteed by the Chairman and Vice President of Operations. Property and
equipment includes the following amounts under capital leases at December 31:
1999 1998
------ ------
Machinery and equipment $2,057,946 $42,607
Less accumulated amortization 227,089 17,043
-------- ------
$1,830,857 $25,564
========= ======
F-18
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE F - COMMITMENTS AND CONTINGENCIES - Continued
Future minimum lease payments for these leases are as follows:
Year ending December 31,
2000 $ 524,227
2001 523,428
2002 517,036
2003 513,840
2004 299,740
--------
Total payments 2,378,271
Less amount representing interest (10%) 473,945
--------
Present value of future minimum lease payments $1,904,326
=========
Operating Leases
The Company leases its manufacturing, warehouse, and office facility in Eau
Claire, Wisconsin pursuant to a non-cancelable operating lease agreement. The
annual base rent of $187,920 is subject to increases in inflation and the
Company is responsible for principally all operating expenses. The agreement
provides the Company options to renew the lease for two successive five-year
terms. Rent for this lease was $187,920 for both 1999 and 1998.
Minimum remaining rental commitments are as follows:
Year ending December 31,
2000 $187,920
2001 187,920
-------
$375,840
F-19
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE F - COMMITMENTS AND CONTINGENCIES - Continued
Manufacturing Contract
In October 1999, the Company entered into a contract to manufacture diapers for
another company. As part of this agreement the Company will manufacture and
deliver a minimum of seven million diapers and a maximum of ten million diapers
per month and shall maintain a minimum inventory of two million diapers. This
agreement will remain in force for one year and renew automatically for
successive terms of six months unless either party gives notice of termination
at least 90 days prior to the expiration of the initial term or any extension
term.
Other Commitments
During 1999, the Company paid $550,000 as a deposit on a second diaper machine.
A payment of $1,635,948 will be due prior to shipment of the machine and
$181,772 due within 90 days of shipment or start-up, whichever comes first.
NOTE G - STOCKHOLDERS' EQUITY
Pursuant to the terms of a settlement agreement to settle all disputes and
differences related to the Company's merger with Jettar on November 23, 1998,
the Company received 300,000 shares of its stock which were returned in
September 1999.
During 1998, the Company issued 25,000 shares of common stock to an attorney for
legal services with an estimated value of $14,649.
During 1997, Jettar hired a chief executive officer that acquired 29,227 shares
for $25,000 with funds paid to him pursuant to an employment agreement. The
officer was terminated during 1998, and the 29,227 shares previously issued were
repurchased and canceled by the Company for $10,700.
In 1996, Jettar issued 222,129 shares to two officers for future services, which
were to vest annually over a three-year period beginning December 31, 1997. The
estimated cost of the deferred compensation, $190,000, was recorded in 1996 and
amortized to expense over the vesting period. As a result of the November 23,
1998 merger of RMED and Jettar, the shares became fully vested and the remaining
deferred compensation was recognized. Compensation expense recorded for the
shares was $96,684 in 1998.
F-20
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE G - STOCKHOLDERS' EQUITY - Continued
Incentive Stock Options
The Company has an incentive stock option plan (the "Plan") for key employees of
the Company, reserving 250,000 shares of common stock. The options are to be
granted to employees as determined by a committee administering the Plan. The
exercise price of options granted under the Plan cannot be less than the fair
market value of the common stock on the date of grant. As of December 31, 1999,
no options have been granted.
Stock Appreciation Rights
The Plan also authorizes Stock Appreciation Rights to be granted, in connection
with incentive stock options, which would permit an employee to receive an
amount equal to the difference between the exercise price of the option and the
fair market value of the Company's common stock upon the exercise date in
paid-up stock of the Company or in cash, depending upon the Company's
determination. It is not presently intended that Stock Appreciation Rights will
be granted with options under the Plan. As of December 31, 1999, no rights have
been granted.
Non-Qualified Options
A summary of the Company's stock option activity, and related information
through December 31, 1999 is as follows:
Weighted average
Shares exercise price
-------- ----------------
Outstanding as of December 31, 1997 836,984 $ .34
Granted 801,924 1.00
--------
Outstanding as of December 31, 1998 1,638,908 .66
Exercised (826,984) .34
---------
Outstanding as of December 31, 1999 811,924 $ .99
======== ====
F-21
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE G - STOCKHOLDERS' EQUITY - Continued
<TABLE>
<CAPTION>
December 31,
------------------------------
1999 1998
------- ---------
<S> <C> <C>
Options exercisable at end of year 811,924 1,638,908
======= =========
Weighted-average fair value of options granted
during the year $ - $ 1.09
====== ========
The following table summarizes information concerning options outstanding and
exercisable as of December 31, 1999:
Outstanding Exercisable
options options
--------- ---------
Number of options 811,924 811,924
Weighted average remaining contractual
life, in years .89 .89
Weighted average exercise price ($.38 - $1.00) $.99 $.99
</TABLE>
The market value of the Company's common stock approximated the options'
exercise price on the date of grant.
Pro forma information regarding the fair value of stock options is determined at
the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions for the year ended December 31, 1998:
risk free interest rates of 4.5%; no dividend yield, volatility factor of the
expected market price of the Company's common stock of 113%; and a
weighted-average expected life of the options of 24 months. As there were no
option grants in 1999 no assumptions have been provided for 1999.
F-22
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE G - STOCKHOLDERS' EQUITY - Continued
The Company's pro forma net loss and net loss per common share were as follows:
1998
--------
Net loss - as reported $614,404
Net loss - pro forma 692,121
Loss per common share basic and diluted - as reported $0.07
Loss per common share basic and diluted - pro forma $0.08
For the year ended December 31, 1999 there was no significant effect of applying
the fair value method on net loss or loss per share as no options were granted
or vested in the current year.
The pro forma amounts may not be representative of future disclosures since the
estimated fair value of stock options is amortized to expense over the vesting
period and additional options may be granted in future years.
NOTE H - NOTES RECEVABLE FROM STOCKHOLDERS
In November 1999, the Company's Chairman and President exercised their options
to purchase 300,000 and 400,000 shares of common stock in exchange for notes
receivable of $114,000 and $120,000. Both notes bear interest at 7% and are due
in November 2002.
NOTE I - EMPLOYEE BENEFIT PLAN
The Company maintains a 401(k) savings plan for employees who are not covered by
any collective bargaining agreement, have attained age 21 and have completed one
year of service. Employee and Company matching contributions are discretionary.
The Company did not make matching contributions in 1999 or 1998.
F-23
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE J - CONCENTRATIONS
Customers
The following customers each accounted for more than 10% of net sales for the
years ending December 31:
1999 1998
------ ------
Customer A $2,795,173 $3,655,603
Customer B 1,685,710 1,811,930
Accounts receivable from these customers were $468,820 and $463,921 at December
31, 1999 and 1998.
Suppliers
The following suppliers each accounted for more than 10% of purchases for the
years ending December 31:
1999 1998
------ ------
Supplier A $1,386,257 $1,557,002
Supplier B 1,191,820 1,324,943
Supplier C 1,047,707 -
Accounts payable to these suppliers were $712,265 and $297,535 at December 31,
1999 and 1998.
F-24
<PAGE>
RMED International, Inc.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999 and 1998
NOTE K - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standard Board Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities" is effective for fiscal years beginning
after June 15, 2000 as amended by SFAS 137. SFAS 133 requires entities to
recognize all derivatives in their financial statements as either assets or
liabilities measured at fair value. The Statement also specifies new methods of
accounting for derivatives used in risk management strategies (hedging
activities), prescribes the items and transactions that may be hedged, and
specifies detailed criteria required to qualify for hedge accounting. The
adoption of this standard is not expected to have a material effect on the
financial statements of the Company.
NOTE L - FOURTH QUARTER ADJUSTMENT
In the fourth quarter of 1999 the Company included an adjustment of
approximately $150,000 for advertising billbacks which should have been included
in the first quarter of 1999.
F-25
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
We dismissed our independent auditors, Oatley Bystrom & Hansen effective
as of June 10, 1999, and retained the accounting firm of Grant Thornton
LLP to audit our financial statements for the year ended December 31,
1999. This change in accountants was approved by the board of directors.
There were no disagreements with the former accountants on accounting or
financial disclosure issues, and the former accountants' audit option for
the past two years did not contain an adverse opinion or disclaimer of
opinion and were not modified as to uncertainty, audit scope or accounting
principles.
Part III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the directors and officers of the Registrant and
their positions and offices presently held are as follows:
Name Age Position and Period of Service
Edward Reiss 61 Director, Chairman of the Board
and Co-CEO
Brenda Schenk 56 Director, President and Co-CEO
Todd L. Nelson 41 Vice President Operations
Thomas A. Biebel 59 Director
John O. Harry 53 Director
George Reinbacher 72 Director
No family relationships exist between any Executive Officer or Director.
Background of Listed Directors and Executive Officers
-----------------------------------------------------
EDWARD REISS has been a Director, Chairman of the Board and Officer of the
Company since April 1988 and Vice President and Secretary since 1990. Mr.
Reiss directs the Company's marketing activities and has served as Co-CEO
since January 1999. Mr. Reiss is the owner and President of an injection
molding plastics company.
9
<PAGE>
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT cont'd.
BRENDA SCHENK has been a Director of the Company since October 1990 and
served as President and CEO since September 1990 and Co-CEO since January
1999. Ms. Schenk is the President and owner of Brandy Enterprises, Ltd.,
an equipment leasing company. Ms. Schenk is co-owner and Vice President of
Mr. Reiss's injection molding plastics company.
TODD L. NELSON, Vice President Operations of the Company since January
1999, was Manufacturing Supervisor at Pope & Talbot from 1977-1992,
General Manager at Universal Converter from 1992-1995 and Vice President &
General Manager of Jettar, Ltd. from 1996-1998.
THOMAS A. BIEBEL, a Director of the Company since January 1999, has been
the majority owner, President and CEO of Belson Company, a distributor of
paper packaging and industrial products, since 1987. Mr. Biebel was
Chairman and President of the Wisconsin Film and Bag Company from 1988 to
1993 and served as Chairman of the Board of Jettar, Ltd. from 1997 until
1998.
JOHN O. HARRY, a Director of the Company since January 1999, has been
majority owner, Chairman of the Board, President and CEO of Corrosion
Technologies, Inc. since 1988.
GEORGE REINBACHER, a Director of the Company since January 1999, was Vice
President and General Manager of the Absorbent Products Division of Pope &
Talbot, until his retirement in 1991. Mr. Reinbacher serves on the board
of Spectrum Industries, manufacturers of office furniture.
10
<PAGE>
Item 10. EXECUTIVE COMPENSATION
The following table sets forth information concerning the cash
compensation during the last two years of the Company to each of the
Company's executive officers.
Name and Annual Other
Principal Position Year Salary Compensation
------------------ ---- ------- ------------
Edward Reiss 1999 $85,981 $37,000
Director, Chairman
of the Board 1998 $68,000 $31,700
& Co-CEO 1997 $60,000 $27,600
Brenda Schenk 1999 $94,073 $25,000
Director, President 1998 $87,500 -
& Co-CEO 1997 $75,000 -
Todd L. Nelson 1999 $89,163 $25,000
Vice President Operations 1998 $92,140 -
1997 $83,062 -
All Executive Officers 1999 $356,217
As a Group 1998 $279,340
1997 $245,662
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth information with respect to those persons
who owned beneficially, more than 5% of the $.01 par value common stock of
the Company as of December 31, 1999, as reflected in the stock transfer
records of the Company, copies of filings on schedule 13-D or 13-G, and
otherwise to the Company's knowledge.
Name and Address (1) of Amount of Percent of
Beneficial Owner Beneficial Ownership (2) Common (7)
----------------------- ------------------------ ----------
Edward Reiss 837,109 (3) 8%
Brenda Schenk 2,650,221 (4) 27%
Thomas A. Biebel 1,289,340 (5) 13%
John O. Harry 964,764 (6) 10%
11
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(1) The addresses of all individuals are c/o RMED International, Inc.
3925 N. Hastings Way
Eau Claire, WI 54703
(2) Unless otherwise indicated, (i) all shares listed are outstanding
and (ii) beneficial owners listed have sole voting and investment
power with respect to such shares.
(3) Includes 3,792 shares held in trust for Mr. Reiss's daughter, Ilana.
(4) Includes 337,500 shares owned by Brandy Enterprises, Ltd., a
corporation wholly owned by Ms. Schenk.
(5) Includes 305,535 shares reserved for issuance upon exercise of
options to purchase common stock of the Company held by Mr. Biebel,
which are presently exercisable.
(6) Includes 192,529 shares reserved for issuance upon exercise of
options to purchase common stock of the Company held by Mr. Harry,
which are presently exercisable.
(7) Percentage is computed as if all shares listed in column (2) for the
beneficial owners were outstanding.
Item 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In November 1999, the Company's Chairman and President exercised their
options to purchase 300,000 and 400,000 shares of common stock in exchange
for notes receivable of $114,000 and $120,000.
A 50% patent interest owned by the President in the Company's Tushies
disposable diaper was sold to the Company for 450,000 shares of common
stock of the Company on December 30,1999.
12
<PAGE>
Part IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
In the year ended December 31, 1999 three Form 8-K's dated June 10, 1999,
July 6, 1999 and July 8, 1999, reporting a change in certifying accountant
were filed by the Company with the Securities Exchange Commission.
Form 8-K dated July 26, 1999, reporting the Company's $2,000,000 sale
leaseback transaction was filed with the Securities Exchange Commission.
Form 8-K dated October 8, 1999, reporting a stock transaction generated by
post-merger adjustments, was filed with the Securities Exchange Commission
and is attached herewith.
13
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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: March 29, 2000
By /s/ Brenda Schenk
-------------------
President and Co-CEO
(Principal Financial and
Accounting Officer)
In accordance with the Securities Exchange Act of 1934, this report has been
signed below on March 29, 2000 by the following persons on behalf of the
Registrant and in the capacity indicated.
/s/ Edward Reiss 03/29/00
- ------------------------------ --------------------------
Edward Reiss, Chairman Date
of the Board and Co-CEO
(Principal Executive Officer)
/s/Brenda Schenk 03/29/00
- ------------------------------ --------------------------
Brenda Schenk Date
President and Co-CEO (Principal
Financial and Accounting Officer)
/s/George Reinbacher 03/29/00
- ------------------------------ --------------------------
George Reinbacher
Director Date
14
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
October 8, 1999
---------------
Date of Report
RMED International, Inc.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 0-14696 84-0898302
-------- ------- ----------
(State of Incorporation) (Commission file Number) (I.R.S. Employer
Identification)
3925 N. Hastings Way
Eau Claire, WI 54703
(715) 831-0280
(Registrant's Telephone Number)
<PAGE>
Item 5. Other Events.
RMED International, Inc. merged with Jettar. Inc. ("Jettar") on November
21, 1998 in a transaction in which RMED exchanged 2,800,000 shares of RMED
common stock for all of the stock of Jettar. As a result of post-merger
adjustments to the purchase price, the former shareholders of Jettar returned
300,000 shares to RMED on September 22, 1999. These returned shares will be held
as treasury shares. There are 8,895,958 shares of the Registrant stock
outstanding as of October 8, 1999.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMED International, Inc.
Date: October 8, 1999
By: /s/ Brenda Schenk
-------------------------------
Brenda Schenk, President &
Principal Financial Officer
3
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Dec-31-1999
<CASH> 442,394
<SECURITIES> 32,715
<RECEIVABLES> 1,599,715
<ALLOWANCES> 25,000
<INVENTORY> 1,814,339
<CURRENT-ASSETS> 4,710,479
<PP&E> 2,537,618
<DEPRECIATION> 352,161
<TOTAL-ASSETS> 7,347,371
<CURRENT-LIABILITIES> 5,698,921
<BONDS> 0
0
0
<COMMON> 96,094
<OTHER-SE> (135,828)
<TOTAL-LIABILITY-AND-EQUITY> 7,347,371
<SALES> 15,620,052
<TOTAL-REVENUES> 15,620,052
<CGS> 9,387,080
<TOTAL-COSTS> 15,567,890
<OTHER-EXPENSES> 81,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,918
<INCOME-PRETAX> (145,567)
<INCOME-TAX> 0
<INCOME-CONTINUING> (145,567)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145,567)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
