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 September 30, 2000
Commission File No. 0-14696
RMED International, Inc.
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(Exact Name of Registrant and Specified in its Charter)
Colorado 84-0898302
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(State of Incorporation) (I.R.S. Employer Identification Number)
3925 North Hastings Way
Eau Claire, WI 54703
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(Address of Principal Office)
(715) 831-0280
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(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 9,963,642 shares of the Registrant stock $.01 par value common stock
outstanding as of October 31, 2000.
<PAGE>
RMED International, Inc.
Condensed Financial Statements
Table of Contents
PAGE
PART I. Item 1.
Condensed Balance Sheets as of September 30, 2000 and F-1
December 31, 1999
Condensed Statements of Earnings for the three and F-2
nine month periods ended September 30, 2000 and 1999
Condensed Statements of Cash Flows for the three and F-3
nine month periods ended September 30, 2000 and 1999
Notes to Condensed Financial Statements F-4
Item 2.
Management's Discussion and Analysis of Financial Condition 5
and Results of Operations
PART II. Other Information 7
Items 1-5.
Not applicable.
Item 6.
Exhibits and reports on Form 8-K.
(a) Exhibits
Exhibit 11 - Statement regarding computation of per share
earnings.
Exhibit 27 - Financial Data Schedule
(b) Reports on form 8-K
In the three months ended September 30, 2000 no reports on
Form 8-K were filed by the Company with the Securities and
Exchange Commission.
Signatures 8
<PAGE>
RMED International, Inc.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ -- $ 442,394
Marketable securities -- 32,715
Accounts receivable, less allowance for doubtful 818,420 1,574,715
accounts of $30,000 and $25,000
Inventory 1,294,463 1,814,339
Deposits on equipment -- 550,000
Prepaids and other 429,896 296,316
---------- ----------
Total current assets 2,542,779 4,710,479
PROPERTY AND EQUIPMENT
Land and building 252,269 245,000
Furniture and office equipment 148,840 126,535
Machinery and equipment 5,430,400 2,166,083
---------- ----------
5,831,509 2,537,618
Less accumulated depreciation 686,582 352,161
---------- ----------
5,144,927 2,185,457
OTHER ASSETS 404,911 451,435
---------- ----------
$8,092,617 $7,347,371
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Note payable to bank $ 665,731 $1,847,904
Current maturities of long-term obligations 982,508 853,900
Accounts payable 1,944,081 1,971,338
Customer deposits -- 500,000
Accrued liabilities 439,147 525,779
---------- ----------
Total current liabilities 4,031,467 5,698,921
LONG-TERM OBLIGATIONS, less current maturities 3,907,788 1,688,184
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.01 par value; 50,000,000 shares
authorized; 10,492,922 and 10,042,922 shares
issued and 9,963,642 and 9,609,422 outstanding 99,636 96,094
Common stock to be issued, 450,000 shares -- 315,000
Additional paid-in capital 7,959,143 7,702,900
Accumulated deficit 7,671,417) 7,919,728)
---------- ----------
387,362 194,266
Less notes receivable from stockholders 234,000 234,000
---------- ----------
153,362 (39,734)
---------- ----------
$8,092,617 $7,347,371
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
F-1
<PAGE>
RMED International, Inc.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
SALES $2,449,779 $3,692,032 $9,578,943 $11,533,408
COST OF GOODS SOLD 1,855,107 2,309,387 7,096,047 6,655,614
---------- ---------- ---------- -----------
GROSS PROFIT 594,672 1,382,645 2,482,896 4,877,794
OPERATING EXPENSES
Sales and Marketing 465,331 1,096,477 1,633,926 3,563,963
General and Administrative 315,797 346,948 1,081,464 946,634
---------- ---------- ---------- -----------
781,128 1,443,425 2,715,390 4,510,597
OPERATING INCOME (LOSS) (186,456) (60,780) (232,494) 367,197
OTHER INCOME (EXPENSE)
Interest income 5,364 6,468 14,402 16,785
Interest expense (126,626) (79,449) (363,775) (200,459)
Other 380,722 14,411 830,178 46,576
---------- ---------- ---------- -----------
259,460 (58,570) 480,805 (137,098)
---------- ---------- ---------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES 73,004 (119,350) 248,311 230,099
PROVISION FOR INCOME TAXES -- -- -- --
---------- ---------- ---------- -----------
NET INCOME (LOSS) $ 73,004 $ (119,350) $ 248,311 $ 230,099
========== ========== ========== ===========
BASIC NET EARNINGS PER SHARE $ 0.01 $ (0.01) $ 0.02 $ 0.02
========== ========== ========== ===========
DILUTED NET EARNINGS PER SHARE $ 0.01 $ (0.01) $ 0.02 $ 0.02
========== ========== ========== ===========
WEIGHTED AVERAGE SHARES - BASIC 9,963,859 9,293,877 9,973,776 9,240,172
========== ========== ========== ===========
WEIGHTED AVERAGE SHARES - DILUTED 9,963,859 9,293,877 9,975,098 10,370,090
========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
F-2
<PAGE>
RMED International, Inc.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
-------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 248,311 $ 230,099
Adjustments to reconcile net income to cash
flows from operating activities
Depreciation and amortization 361,207 220,891
Other -- (9,876)
Changes in operating assets and liabilities
Accounts receivable 756,295 (555,406)
Inventory 519,876 (503,033)
Prepaid and other 416,420 92,310
Accounts payable and accrued liabilities (613,889) 369,313
----------- -----------
Cash flows provided by (used in)
operating activities 1,688,220 (155,702)
Cash flows from investing activities
Purchase of equipment (553,097) (13,591)
Net proceeds from sale of investments 32,715 --
Payments received on notes receivable 19,738 22,788
----------- -----------
Cash flows provided by (used in) investing activities (500,644) 9,197
Cash flows from financing activities
Proceeds from notes payable issued to directors -- 500,000
Proceeds from exercise of stock options -- 43,095
Repurchase of stock (66,984) --
Sale of stock 11,769 --
Net payments on line of credit (1,182,173) (1,897,000)
Proceeds from sale and leaseback of equipment -- 2,000,000
Payments on loans from officer -- (59,934)
Payments on capital leases (392,582) (560,160)
----------- -----------
Cash flows provided by (used in) financing activities (1,629,970) 26,001
----------- -----------
Net decrease in cash (442,394) (120,504)
Cash, Beginning of period 442,394 120,504
----------- -----------
Cash, End of period $ -- $ --
=========== ===========
Supplemental disclosure of cash flow information and noncash
investing and financing activities:
Cash paid for interest $ 428,223 $ 200,459
</TABLE>
During June 2000, the company acquired equipment under a capital lease and
a note payable in the amounts of $2,420,794 and $320,000.
During September 1999, the company received 300,000 shares of its common
stock for post merger adjustments. These shares are held as treasury
shares.
During July 1999, the company entered into a capital lease for the sale
leaseback of equipment totaling $2,015,339.
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
RMED International, Inc.
Notes to Condensed Financial Statements
September 30, 2000
(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 accounting principles generally accepted in
the United States of America for interim 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, 1999. Operating results for the three months and nine months ended September
30, 2000 are not necessarily indicative of the operating results for the year
ending December 31, 2000.
Certain amounts have been reclassified to conform to the September 30, 2000
financial statement presentation.
Note B - Inventory
Inventory is valued at the lower of cost (first-in, first-out) or market value.
Inventories consist of the following:
September 30, December 31,
2000 1999
---- ----
Raw materials $ 501,499 $1,087,933
Finished goods 792,964 726,406
---------- ----------
$1,294,463 $1,814,339
========== ==========
Note C - Concentrations
For the nine months ended September 30, 2000, revenues of approximately
$2,620,000 were from one customer. Of this amount, $822,000 was charged to the
customer for not meeting certain purchase requirements during the period and is
recorded as other income. At September 30, 2000, approximately $26,000 is due
the Company from this customer. During the quarter, this customer filed for
bankruptcy, and the Company reserved for the entire amount of this customer's
balance.
Note D - Income Taxes
The provision for income taxes for the three and nine months ended September 30,
2000 and 1999 have been offset principally by a reduction in the valuation
allowance for deferred taxes.
F-4
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RMED International, Inc. (the "Company", "RMED") manufactures, markets and
sells disposable baby diapers and related products under its own branded
labels and private branded labels. The Company operates two secure
websites where customers can place orders for home delivery. The addresses
are www.tushies.com and www.diapers4less.com.
MATERIAL CHANGES IN FINANCIAL POSITION
Total assets of the Company increased $745,246 from $7,347,371 at December
31, 1999 to $8,092,617 at September 30, 2000, an increase of 10% due to
the acquisition of new machinery and equipment.
During the nine month period ended September 30, 2000, net working capital
decreased by $500,246 or 51% primarily due to decreases in accounts
receivable and inventory.
Total liabilities at September 30, 2000 were $7,939,255 compared to
$7,387,105 at December 31, 1999. The increase was primarily due to the
addition of a capital lease obligation for a diaper machine.
Total stockholders' equity increased $193,096 during the nine month period
ended September 30, 2000 primarily due to net income and issuance of
common stock, offset by the repurchase of stock.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the quarter ended September 30, 2000 were $2,449,779
compared to $3,692,032 for the quarter ended September 30, 1999, a
decrease of $1,242,253. The decrease in sales dollars of 34% was primarily
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. This
change was done to reduce related selling expenses.
Gross profit as a percentage of sales decreased from 37% for the quarter
ended September 30, 1999 to 24% in the quarter ended September 30, 2000
due to higher emphasis on sales to private label customers versus retail
customers.
Sales and marketing expenses for the quarter ended September 30, 2000 were
$465,331 compared to $1,096,477 for the quarter ended September 30, 1999,
a decrease of 58% due to reductions in promotional activities with retail
customers.
Net income for the quarter ended September 30, 2000 was $73,004 as
compared to a net loss of ($119,350) for the quarter ended September 30,
1999.
5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION cont'd
Liquidity and Capital Resources
At September 30, 2000, current liabilities exceeded current assets by
$1,488,688 compared with $988,442 at September 30, 1999. The decrease in
working capital is primarily due to a decrease in accounts receivable and
inventory.
As of September 30, 2000 the Company's long term debt is $3,907,788
consisting of capital leases of ($3,272,953), notes payable ($134,835),
and notes payable to directors ($500,000). The Company believes it has the
ability through its line of credit and other available resources to fund
its current operations through September 30, 2001.
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.
6
<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 14, 2000
/s/Brenda Schenk
Brenda Schenk
President & Principal
Financial Officer
