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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998 Commission File No. 1-12350
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Regenesis Holdings, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0827283
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
19 Hillsyde Court
Cockeysville, Maryland 21030
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (410) 628-0050
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the issuer's common stock, par value
$.01 per share as of July 24, 1998 was 681,377.
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
Index to Financial Statements
(Unaudited)
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I: Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1998 and
December 31, 1997 2
Condensed Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6-7
Part II: Other Information 7
Signatures 8
</TABLE>
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
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(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash $ -0- $ 500
Current portion of notes receivable from Lator International, Inc. 100,000 100,000
Notes and accounts receivable from the sale of QPQ Medical, net of
allowance for doubtful accounts of $202,167 -0- 2,983
Prepaid expenses -0- 18,000
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Total Current Assets 100,000 121,483
Furniture, equipment and leasehold improvements, net -0- 14,013
Noncurrent notes receivable from Lator International, Inc. -0- 250,000
Assets held for sale -0- 3,000
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$ 100,000 $ 388,496
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ -0- $ 76,925
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Shareholders' Equity
Preferred stock, $.01 par value,
1,000,000 shares authorized
Common stock, $.01 par value,
1,666,667 shares authorized;
693,643 and 663,643 shares issued
and outstanding, respectively 6,936 6,636
Additional paid-in capital 12,448,981 12,344,281
Accumulated deficit (12,355,917) (12,039,346)
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Total Shareholders' Equity 100,000 311,571
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$ 100,000 $ 388,496
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</TABLE>
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Expenses
General and administrative $ 86,445 $ 372,152 $ 246,545 $ 1,012,947
----------- ----------- ----------- -----------
Other Income (Expenses)
Interest expense -0- (11,665) -0- (26,872)
Interest income 22 17,516 91 21,676
Other income 2,226 -0- 17,157 -0-
Underwriter warrant settlement -0- -0- -0- (201,000)
Discount on note receivable (70,261) -0- (70,261) -0-
Loss on disposal of assets (17,013) (228,088) (17,013) (228,088)
----------- ----------- ----------- -----------
Net Other Expense (85,026) (222,237) (70,026) (434,284)
----------- ----------- ----------- -----------
Loss from Continuing Operations (171,471) (594,389) (316,571) (1,447,231)
Discontinued Operations
Loss from operations -0- (713,290) -0- (1,149,017)
----------- ----------- ----------- -----------
Net Income (Loss) $ (171,471) $(1,307,679) $ (316,571) $(2,596,248)
=========== =========== =========== ===========
Net Loss per Share
Continuing operations (0.25) (1.28) (0.46) (3.42)
----------- ----------- ----------- -----------
Discontinued operations 0.00 1.54 0.00 (2.71)
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Weighted Average Shares Outstanding $ 693,643 $ 463,566 $ 693,643 $ 423,352
=========== =========== =========== ===========
</TABLE>
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<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
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<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ (316,571) $(2,596,248)
Adjustment to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization -0- 141,142
Loss on sale of discontinued operations -0- 301,711
Loss on disposition of assets 17,013 310,088
Expenses paid by issuance of common stock 90,000 382,866
Changes in operating assets and liabilities:
Receivables 252,983 (99,955)
Accrued interest receivable -0- (8,165)
Prepaid expenses 18,000 168,363
Other assets -0- (61,306)
Accounts payable and accrued expenses (76,925) 71,005
Discontinued operations - noncash charges and working capital changes -0- 36,509
Other noncash charges -0- 101,829
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Net Cash Used in Operating Activities (15,500) (1,252,161)
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Cash Flows from Investing Activities
Proceeds from sale of discontinued operations -0- 500,000
Proceeds from sale of equipment -0- 49,282
Discontinued operations -0- 315,135
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Net Cash Provided by (Used in) Investing Activities -0- 864,417
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Cash Flows from Financing Activities
Net proceeds from issuance of common stock 15,000 -0-
Net proceeds from issuance of 8% convertible debentures -0- 1,066,667
Proceeds from exercise of stock options -0- 30,000
Discontinued operations -0- (321,718)
Payments from/to affiliates, net -0- (94,601)
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Net Cash Provided by Financing Activities 15,000 680,348
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Foreign Currency Translation Adjustment -0- (68,537)
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Increase (Decrease) in Cash and Cash Equivalents (500) 224,067
Beginning Cash and Cash Equivalents 500 138,731
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Ending Cash and Cash Equivalents $ -0- $ 362,798
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Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest:
Continuing operations $ -0- $ 3,022
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Discontinued operations $ -0- $ 17,475
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</TABLE>
Six Months Ended June 30, 1997:
192,000 shares of Common Stock were issued in satisfaction of $1,280,000
principal amount of 8% Convertible Debentures and $22,638 of accrued
interest.
65,000 shares of Common Stock were issued in satisfaction of liabilities and
payment of legal and professional expenses.
15,642 shares of Common Stock were issued in payment of officer
compensation.
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Basis of Presentation
The accompanying condensed consolidated financial statements at June 30,
1998 include the accounts of the Company. The results of operations and cash
flows for PK Polska and QPQ Medical for all periods presented are included in
Discontinued Operations.
Note 2: Interim Financial Statements
The financial statements for the six months ended June 30, 1998 and 1997
are unaudited, but in the opinion of management, such financial statements have
been presented on the same basis as the audited financial statements and include
all adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the financial position and results of operations, and cash
flows for these periods.
As permitted under the applicable rules and regulations of the
Securities and Exchange Commission, these financial statements do not include
all disclosures normally included with audited consolidated financial statements
and, accordingly, should be read in conjunction with the financial statements
and notes thereto as of December 31, 1997 and 1996 and for the years then ended.
The results of operations presented in the accompanying financial statements are
not necessarily representative of operations for an entire year.
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
GENERAL
At June 30, 1998, Regenesis did not have any operating subsidiaries.
During the year ended December 31, 1997, management of the Company
determined that it would be in the best interest of the Company to
dispose of all of its medical center operation in order to eliminate the
continuing losses associated with such operation and the potential
contingent liabilities related to the weight loss business.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30,
1997
RESULTS OF OPERATIONS
During the six months ended June 30, 1997 the Company generated revenues
from QPQ Medical and PK Polska of $1,127,162 and incurred losses from
such operations in the amount of $(1,149,017). At June 30, 1998,
Regenesis did not have any operating subsidiaries.
General and Administrative Expenses for the six months ended June 30,
1998 and June 30, 1997, totaled $246,545 and $1,012,947, respectively.
For the six months ended June 30, 1998, General and Administrative
Expenses were comprised of executive and office staff salaries and
benefits of $69,330 and legal and professional fees, office rent,
travel, telephone and other corporate expenses of $177,215. The shares
issued for a portion of the compensation and consulting fees were valued
at the market value of the Company's stock on the date of authorization.
However, the Board took into account the lack of liquidity of the shares
when issued in determining the value of the compensation. For the six
months ended June 30, 1997, General and Administrative Expenses were
comprised of executive and office staff salaries of $165,848, legal and
professional fees, office rent, travel, telephone and other general
corporate expenses of $762,539 and depreciation and amortization of
$84,560.
Interest and other income for the six months ended June 30, 1998 and
1997 was $17,248 and $21,676, respectively. The $17,248 is primarily
attributable to miscellaneous income relating to the recovery of certain
assets.
Interest expense for the six months ended June 30, 1997 was $26,872 and
relates primarily to interest incurred on the 8% Convertible Debentures
prior to their conversion into Common Stock in June 1997.
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
Liquidity and Capital Resources
As of June 1998, the Company had working capital of $100,000 and cash
and cash equivalents of $-0-.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, Regenesis has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REGENESIS HOLDINGS, INC.
By:
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Zirk Engelbrecht, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
Date:
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