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, 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 9,973,642 shares of the Registrant stock $.01 par value common stock
outstanding as of June 30, 2000.
<PAGE>
RMED International, Inc.
Condensed Financial Statements
Table of Contents
PART I. Financial Information PAGE
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 2000 and 1
December 31, 1999
Condensed Statements of Earnings for the three and 2
six month periods ended June 30, 2000 and 1999
Condensed Statements of Cash Flows for the 3
six month periods ended June 30, 2000 and 1999
Notes to Condensed Financial Statements 4
Item 2.
Management's Discussion and Analysis or Plan of 6
Operation
PART II. Other Information 8
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 June 30, 2000 no
reports on Form 8-K were filed by the
Company with the Securities and Exchange
Commission.
Signatures 9
<PAGE>
RMED International, Inc.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ -- $ 442,394
Marketable securities -- 32,715
Accounts receivable, less allowance for doubtful 1,501,635 1,574,715
accounts of $10,000 and $25,000
Inventory 1,338,998 1,814,339
Deposits on equipment -- 550,000
Prepaids and other 436,029 296,316
----------- -----------
Total current assets 3,276,662 4,710,479
PROPERTY AND EQUIPMENT
Land and building 252,269 245,000
Furniture and office equipment 147,689 126,535
Machinery and equipment 5,119,500 2,166,083
----------- -----------
5,519,458 2,537,618
Less accumulated depreciation 578,770 352,161
----------- -----------
4,940,688 2,185,457
OTHER ASSETS 414,426 451,435
----------- -----------
$ 8,631,776 $ 7,347,371
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Note payable to bank $ 735,012 $ 1,847,904
Current maturities of long-term obligations 968,696 853,900
Accounts payable 1,728,143 1,971,338
Customer deposits 550,000 500,000
Accrued liabilities 447,864 525,779
----------- -----------
Total current liabilities 4,429,715 5,698,921
LONG-TERM OBLIGATIONS, less current maturities 4,118,833 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 9,973,642 and 9,609,422 outstanding 99,736 96,094
Common stock to be issued, 450,000 shares -- 315,000
Additional paid-in capital 7,961,913 7,702,900
Accumulated deficit (7,744,421) (7,919,728)
----------- -----------
317,228 194,266
Less notes receivable from stockholders 234,000 234,000
----------- -----------
83,228 (39,734)
----------- -----------
$ 8,631,776 $ 7,347,371
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
1
<PAGE>
RMED International, Inc.
Condensed Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $ 2,642,795 $ 3,939,670 $ 7,129,164 $ 7,841,376
COST OF GOODS SOLD 1,953,834 2,151,863 5,240,940 4,346,227
------------ ------------ ------------ ------------
GROSS PROFIT 688,961 1,787,807 1,888,224 3,495,149
OPERATING EXPENSES
Sales and Marketing 629,136 1,341,763 1,168,595 2,467,486
General and Administrative 337,301 314,011 765,667 599,686
------------ ------------ ------------ ------------
966,437 1,655,774 1,934,262 3,067,172
OPERATING INCOME (277,476) 132,033 (46,038) 427,977
OTHER INCOME (EXPENSE)
Interest income 5,417 3,850 9,038 10,317
Interest expense (107,397) (61,821) (237,149) (121,010)
Other 447,017 12,930 449,456 32,165
------------ ------------ ------------ ------------
345,037 (45,041) 221,345 (78,528)
------------ ------------ ------------ ------------
NET INCOME BEFORE INCOME TAXES 67,561 86,992 175,307 349,449
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET INCOME $ 67,561 $ 86,992 $ 175,307 $ 349,449
============ ============ ============ ============
BASIC EARNINGS PER SHARE $ 0.01 $ 0.01 $ 0.02 $ 0.04
============ ============ ============ ============
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.01 $ 0.02 $ 0.03
============ ============ ============ ============
WEIGHTED AVERAGE SHARES - BASIC 9,973,884 9,220,958 9,978,734 9,213,458
============ ============ ============ ============
WEIGHTED AVERAGE SHARES - DILUTED 9,973,884 10,374,905 9,980,718 10,416,623
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements
2
<PAGE>
RMED International, Inc.
Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 175,307 $ 349,449
Adjustments to reconcile net income to cash
flows from operating activities
Depreciation and amortization 226,609 141,994
Changes in assets and liabilities
Accounts receivable 73,080 81,429
Inventory 475,341 (409,165)
Prepaid and other 410,287 87,911
Accounts payable and accrued liabilities (271,110) (1,603)
----------- -----------
Cash flows provided by
operating activities 1,089,514 250,015
Cash flows from investing activities
Net proceeds from sale of Investments 32,715 --
Payments received on notes receivable 6,177 21,581
Decrease in other assets 30,832 319
Purchase of equipment (241,046) (13,591)
----------- -----------
Cash flows provided by (used in) investing activities (171,322) 8,309
Cash flows from financiang activities
Loans from directors -- 500,000
Proceeds from exercise of stock options -- 12,500
Purchase of stock (64,114) --
Sale of stock 11,769 --
Proceeds from (payments on) line-of-credit, net (1,112,892) (817,000)
Payments on loans from officer -- (59,934)
Payments on capital leases (170,442) (1,668)
Payments on notes payable (24,907) (1,932)
----------- -----------
Cash flows used in financing activities (1,360,586) (368,034)
----------- -----------
Net decrease in cash (442,394) (109,710)
Cash, Beginning of period 442,394 120,504
----------- -----------
Cash, End of period $ -- $ 10,794
=========== ===========
Supplemental disclosure of cash flow information and noncash
investing and financing activities:
Cash paid for interest $ 246,826 $ 121,010
</TABLE>
During the quarter ended June 30, 2000, the company acquired equipment under a
capital lease and a note payable in the amounts of $2,420,794 and $320,000.
The accompanying notes are an integral part of these statements
3
<PAGE>
RMED International, Inc.
Notes to Condensed Financial Statements
Three Months Ended June 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 ended June 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 June 30, 2000 financial
statement presentation.
Note B - Earnings per share
Basic earnings 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 dilutive.
Note C - Inventory
Inventory is valued at the lower of cost (first-in, first-out) or market value.
Inventories consist of the following:
June 30, December 31,
2000 1999
---- ----
Raw materials $ 551,870 $1,087,933
Finished goods 787,128 726,406
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$1,338,998 $1,814,339
========== ==========
Note D - Concentrations
For the six months ended June 30, 2000, revenues of approximately $2,242,000
were from one customer. Of this amount, $447,000 was charged to the customer for
not meeting certain purchase requirements during the period and is recorded as
other income. At June 30, 2000, approximately $400,000 is due the Company from
this customer.
4
<PAGE>
Note E - Stock Options
On June 30, 2000 two officers of the company were each issued 200,000 stock
options for personal guarantees made for the capital lease commitment on the new
equipment. The exercise price of the options approximates the fair value of the
Company's stock on the date of grant.
5
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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.
MATERIAL CHANGES IN FINANCIAL POSITION
Total assets of the Company increased $1,284,405 from $7,347,371 at
December 31, 1999 to $8,631,776 at June 30, 2000, an increase of 17%
primarily due to the acquisition of new machinery and equipment.
During the six month period ended June 30, 2000, net working capital
decreased by $164,611 or 17% primarily due to decreases in accounts
receivable, inventory, and deposits on equipment.
Total liabilities at June 30, 2000 were $8,548,548 compared to
$7,387,105 at December 31, 1999. The increase was primarily due to the
capital lease on the new diaper machine.
Total stockholders' equity increased $122,962 or 309% during the six
month period ended June 30, 2000.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net sales for the quarter ended June 30, 2000 were $2,642,795 compared
to $3,939,670 for the quarter ended June 30, 1999, a decrease of
$1,296,875. Although there was a decrease in sales dollars of 33%, the
company's unit volume decreased only 10% 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 and fewer related selling
expenses.
Gross profit as a percentage of sales decreased from 45% for the
quarter ended June 30, 1999 to 26% in the quarter ended June 30, 2000
due to higher emphasis on sales to private label customers versus
retail customers.
Sales and marketing expenses for the quarter period ended June 30, 2000
were $629,136 compared to $1,168,595 for the quarter ended June 30,
1999, a decrease of 46% due to reductions in promotional activities
with retail customers.
Net income for the quarter ended June 30, 2000 was $67,561 as compared
to a net income of $86,992 for the quarter ended June 30, 1999.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION cont'd
Liquidity and Capital Resources
At June 30, 2000 the Company had working capital ($1,153,053)
consisting of $3,276,662 in current assets and $4,429,715 in current
liabilities.
As of June 30, 2000 the Company's long term debt is $4,118,833
consisting of capital leases of $3,321,833, notes payable of $297,000,
and notes payable to directors of $500,000. Management believes that
its current liquidity will be sufficient to fund operations for an
estimated 12 months. There can be no assurance, however, that the
company will not require funds sooner than expected if operating costs
are higher or revenues are lower than expected. RMED may raise
additional capital in the future; however, no assurance can be given
that RMED will be able to obtain additional financing if needed from
any source at all or on terms favorable or acceptable to RMED.
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>
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,
2000 1999 2000 1999
------------------------- -------------------------
<S> <C> <C> <C> <C>
Net income $ 67,561 $ 86,992 $ 175,307 $ 349,449
=========== =========== =========== ===========
Weighted average common shares outstanding 9,973,884 9,220,958 9,978,734 9,213,458
Common share equivalents relating to stock options -- 1,153,947 1,984 1,203,165
----------- ----------- ----------- -----------
Adjusted common and common equivalent shares
for computation 9,973,884 10,374,905 9,980,718 10,416,623
=========== =========== =========== ===========
Net earnings per share:
Basic $ 0.01 $ 0.01 $ 0.02 $ 0.04
=========== =========== =========== ===========
Diluted $ 0.01 $ 0.01 $ 0.02 $ 0.03
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
8
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RMED International, Inc.
Date: August 14, 2000
/s/Brenda Schenk
Brenda Schenk
President & Principal
Financial Officer
9
