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 March 31, 2000
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 13 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) has been subject to such filing
requirements for the past 90 days.
|X| Yes |_| No
There were 9,975,642 shares of the Registrant stock $.01 par value common stock
outstanding as of March 31, 2000.
<PAGE>
RMED International, Inc.
Condensed Financial Statements
Table of Contents
PAGE
PART I. Item 1.
Condensed Balance Sheets as of March 31, 2000 and F-1
December 31, 1999
Condensed Statements of Earnings for the three months F-2
ended March 31, 2000 and 1999
Condensed Statements of Cash Flows for the three months F-3
ended March 31, 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
Signatures 8
<PAGE>
RMED International, Inc.
Condensed Balance Sheets
(Unaudited)
March 31, December 31,
2000 1999
----------- ------------
ASSETS
CURRENT ASSETS
Cash $ -- $ 442,394
Marketable securities -- 32,715
Accounts receivable, less allowance
for doubtful accounts of $14,500
and $25,000 2,666,057 1,574,715
Inventory 1,647,330 1,814,339
Deposits on equipment 550,000 550,000
Prepaids and other 365,054 296,316
----------- -----------
Total current assets 5,228,441 4,710,479
PROPERTY AND EQUIPMENT
Land and building 245,000 245,000
Furniture and office equipment 127,505 126,535
Machinery and equipment 2,217,723 2,166,083
----------- -----------
2,590,228 2,537,618
Less accumulated depreciation 465,405 352,161
----------- -----------
2,124,823 2,185,457
OTHER ASSETS 430,172 451,435
----------- -----------
$ 7,783,436 $ 7,347,371
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Note payable to bank $ 1,738,169 $ 1,847,904
Current maturities of long-term
obligations 494,886 853,900
Accounts payable 2,663,876 1,971,338
Customer deposits 500,000 500,000
Accrued liabilities 407,557 525,779
----------- -----------
Total current liabilities 5,804,488 5,698,921
LONG-TERM OBLIGATIONS, less current
maturities 1,962,113 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 9,975,642 and
9,609,422 outstanding 99,756 96,094
Common stock to be issued,
450,000 shares -- 315,000
Additional paid-in capital 7,963,061 7,702,900
Accumulated deficit (7,811,982) (7,919,728)
----------- -----------
250,835 194,266
Less notes receivable from
stockholders 234,000 234,000
----------- -----------
16,835 (39,734)
----------- -----------
$ 7,783,436 $ 7,347,371
=========== ===========
The accompanying notes are an integral part of these statements
F-1
<PAGE>
RMED International, Inc.
Condensed Statements of Earnings
(Unaudited)
Three Months Ended
---------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
SALES $ 4,486,369 $ 3,901,706
COST OF GOODS SOLD 3,287,106 2,194,364
------------ ------------
GROSS PROFIT 1,199,263 1,707,342
OPERATING EXPENSES
Sales and Marketing 539,459 1,125,723
General and Administrative 428,366 285,675
------------ ------------
967,825 1,411,398
OPERATING INCOME 231,438 295,944
OTHER INCOME (EXPENSE)
Interest income 3,621 6,467
Interest expense (129,752) (59,189)
Gain on sale of assets -- 19,235
Other 2,439 --
------------ ------------
(123,692) (33,487)
------------ ------------
NET EARNINGS BEFORE INCOME TAXES 107,746 262,457
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET EARNINGS $ 107,746 $ 262,457
============ ============
BASIC EARNINGS PER SHARE $ 0.01 $ 0.03
============ ============
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.02
============ ============
WEIGHTED AVERAGE SHARES - BASIC 9,983,584 9,205,680
============ ============
WEIGHTED AVERAGE SHARES - DILUTED 9,987,552 10,511,882
============ ============
The accompanying notes are an integral part of these statements
F-2
<PAGE>
RMED International, Inc.
Condensed Statement of Cash Flows
(Unaudited)
Three Months Ended
----------------------------
March 31, March 31,
2000 1999
----------- -----------
Cash flows from operating activities
Net income $ 107,746 $ 262,457
Adjustments to reconcile net
income to cash flows from
operating activities
Depreciation and amortization 113,244 69,873
Changes in assets and liabilities
Accounts receivable (1,091,342) (63,337)
Inventory 167,009 (153,868)
Prepaid and other (68,738) 7,112
Accounts payable and
accrued liabilities 574,316 447,689
----------- -----------
Cash flows provided by
(used in) operating
activities (197,765) 569,926
Cash flows from investing activities
Net proceeds from sale of
Investments 32,715 --
Payments received on notes
receivable 4,093 9,706
Decrease in other assets 17,170 250
Purchase of equipment (52,610) (10,630)
----------- -----------
Cash flows provided by (used in)
investing activities 1,368 (674)
Cash flows from financiang activities
Loans from directors -- 500,000
Proceeds from exercise of stock
options -- 12,500
Purchase of stock (62,946) --
Sale of stock 11,769 --
Payments on bank line-of-credit, net (109,735) (989,000)
Payments on loans from officer -- (54,934)
Payments on capital leases (84,157) (1,935)
Payments on mortgage note (928) (1,079)
----------- -----------
Cash flows used in financing
activities (245,997) (534,448)
----------- -----------
Net increase (decrease) in cash (442,394) 34,804
Cash, Beginning of period 442,394 120,504
----------- -----------
Cash, End of period $ -- $ 155,308
=========== ===========
Supplemental disclosure of cash flow
information
Cash paid for interest $ 122,738 $ 59,189
The accompanying notes are an integral part of these statements
F-3
<PAGE>
RMED International, Inc.
Notes to Condensed Financial Statements
Three Months Ended March 31, 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 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 ended March 31, 2000 are not
necessarily indicative of the operating results for the year ending December 31,
2000.
Note B - Inventory
Inventory is valued at the lower of cost (first-in, first-out) or market value.
Inventories consist of the following:
March 31, December 31,
2000 1999
---- ----
Raw materials $ 943,571 $1,087,933
Finished goods 703,759 726,406
---------- ----------
$1,647,330 $1,814,339
========== ==========
Note C - Note Payable to Bank
During the quarter ended March 31, 2000, the Company amended its credit
agreement with Wells Fargo. The amendment resulted in an increase in the
Company's interest rates and changes to the financial covenants. During the
quarter, the Company was in default with certain covenants. The Company expects
to receive a waiver for their non- compliance.
Note D - Stockholders' Equity
During the quarter ended March 31, 2000 the Company purchased and sold shares of
the Company's stock. The Company accounted for these transactions using the cost
method.
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 and
private branded labels.
MATERIAL CHANGES IN FINANCIAL POSITION
Total assets of the Company increased $436,065 from $7,347,371 at December
31, 1999 to $7,783,436 at March 31, 2000.
Accounts receivable increased $1,091,342 from $1,574,715 at December 31,
1999 to $2,666,057 at March 31, 2000. The increase was primarily due to
amounts due from one major customer.
Current maturities of long term debt decreased $359,014 from $853,900 at
December 31, 1999 to $494,886 at March 31, 2000. The decrease was
primarily due to the reclassification of notes payable to directors from
current to long term debt.
Accounts payable increased $692,538 from $1,971,338 at December 31, 1999
to $2,663,876 at March 31, 2000. The increase was primarily due to the
reduced cashflow caused by the significant increase in accounts
receivable.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the quarter ended March 31, 2000 were $4,486,369 compared to
$3,901,706 for the quarter ended March 31, 1999, an increase of $584,663
due to the Company's increased private label sales.
Gross profit as a percentage of sales decreased from 43.8% for the quarter
ended March 31, 1999 to 26.7% in the quarter ended March 31, 2000, due to
higher emphasis on sales to private label customers versus retail
customers.
Sales and Marketing expenses for the quarter ended March 31, 2000 were
$539,459 compared to $1,125,723 for the quarter ended March 31, 1999, a
decrease of $586,264. The decrease was due primarily to the reduction in
promotional expenses associated with retail customers such as coupons,
advertising billbacks and slotting fees.
5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION, cont.
Net income for the quarter ended March 31, 2000 was $107,746 compared to
$262,457 for the quarter ended March 31, 1999. An adjustment of
approximately $150,000 for advertising billbacks in the fourth quarter of
1999 should have been included in the first quarter of 1999. If this
adjustment had been made in the first quarter of 1999, net income would
have been $112,457 or more comparable to the first quarter of 2000.
Liquidity and Capital Resources
At March 31, 2000 the Company had working capital of ($576,047) consisting
of $5,228,441 in current assets and $5,804,488 in current liabilities.
As of March 31, 2000 the Company's long term debt is $1,962,113 consisting
of capital leases ($1,462,113) and notes payable to directors ($500,000).
The Company has the ability through its line of credit and other available
resources to fund its current operations through December 31, 2000.
The Company is planning for the installation of a second diaper machine in
the Eau Claire, Wisconsin facility during the second quarter of 2000. The
total cost of this equipment is approximately $2,500,000. The Company is
negotiating capital lease financing for this equipment acquisition. It is
anticipated that the deposit on equipment of $550,000 will then be
returned to the Company.
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>
Part II. Other Information
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 March 31, 2000 no reports on
Form 8-K were filed by the Company with the Securities
and Exchange Commission.
7
<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: May 12, 2000
/s/ Brenda Schenk
------------------------------
Brenda Schenk
President & Principal
Financial Officer
8
Exhibit 11
RMED International, Inc.
Exhibit 11
The following represents the computation of earnings per share reflecting the
assumption that the granted shares under the option plan which would be dilutive
will be exercised.
Three Months Ended
----------------------------
March 31, March 31,
2000 1999
----------------------------
Net income $ 107,746 $ 262,457
=========== ===========
Weighted average common
shares outstanding 9,983,584 9,205,680
Common share equivalents relating
to stock options 3,968 1,306,202
----------- -----------
Adjusted common and common equivalent
shares for computation 9,987,552 10,511,882
=========== ===========
Net earnings per share:
Basic $ 0.01 $ 0.03
=========== ===========
Diluted $ 0.01 $ 0.02
=========== ===========
The accompanying notes are an integral part of these statements.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,680,557
<ALLOWANCES> 14,500
<INVENTORY> 1,647,330
<CURRENT-ASSETS> 5,228,441
<PP&E> 2,590,228
<DEPRECIATION> 465,405
<TOTAL-ASSETS> 7,783,436
<CURRENT-LIABILITIES> 5,804,488
<BONDS> 0
0
0
<COMMON> 99,756
<OTHER-SE> (82,921)
<TOTAL-LIABILITY-AND-EQUITY> 7,783,436
<SALES> 4,486,369
<TOTAL-REVENUES> 4,486,369
<CGS> 3,287,106
<TOTAL-COSTS> 3,287,106
<OTHER-EXPENSES> 967,825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,752
<INCOME-PRETAX> 107,746
<INCOME-TAX> 0
<INCOME-CONTINUING> 107,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,746
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