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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 September 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 November 14, 1998 was 693,643.
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 September 30, 1998 and
December 31, 1997 2
Condensed Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 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>
September 30, December 31,
1998 1997
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(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash $ 44,011 $ 500
Current portion of notes receivable from Lator International, Inc. -0- 100,000
Notes and accounts receivable from the sale of QPQ Medical, net of
allowance for doubtful accounts of $202,167 -0- 2,983
Due from related party 7,770 -0-
Prepaid expenses -0- 18,000
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Total Current Assets 51,781 121,483
Furniture, equipment and leasehold improvements, net -0- 14,013
Noncurrent notes receivable from Lator International, Inc. -0- 250,000
Assets held for sale -0- 3,000
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$ 51,781 $ 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, $.01 par value,
1,666,667 shares authorized;
693,643 and 663,643 shares issued
and outstanding, respectively 6,936 6,636
Additional paid-in capital 12,448,981 12,344,281
Accumulated deficit (12,404,136) (12,039,346)
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Total Shareholders' Equity 51,781 311,571
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$ 51,781 $ 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 Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Expenses
General and administrative $ 48,219 $ 164,526 $ 294,764 $ 968,322
--------- ----------- ----------- -----------
Other Income (Expenses)
Interest expense -0- (4,503) -0- (31,375)
Interest income -0- 503 91 21,698
Other income -0- -0- 17,157 -0-
Underwriter warrant settlement -0- -0- -0- (201,000)
Discount on note receivable -0- -0- (70,261) -0-
Loss on disposal of assets -0- -0- (17,013) -0-
--------- ----------- ----------- -----------
Net Other Expense -0- (4,000) (70,026) (210,677)
--------- ----------- ----------- -----------
Loss from Continuing Operations (48,219) (168,526) (364,790) (1,178,999)
Discontinued Operations
Loss from operations -0- (87,119) -0- (1,371,183)
Loss on disposal of discontinued operations -0- (295,630) -0- (597,341)
--------- ----------- ----------- -----------
Net Loss $ (48,219) $ (551,275) $ (364,790) $(3,147,523)
========= =========== =========== ===========
Net Loss per Share
Continuing operations $ (0.07) $ (0.70) $ (0.53) $ (6.76)
Discontinued operations 0.00 (1.60) 0.00 (11.29)
--------- ----------- ----------- -----------
Net loss $ (0.07) $ (2.30) $ (0.53) $ (18.05)
========= =========== =========== ===========
Weighted Average Shares Outstanding 693,643 239,908 693,643 174,415
========= =========== =========== ===========
</TABLE>
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<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
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<S> <C> <C>
Cash Flows from Operating Activities
Net loss $ (364,790) $(3,147,523)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization -0- 54,905
Loss on sale of discontinued operations -0- 851,883
Loss on disposition of assets 17,013 -0-
Expenses paid by issuance of common stock 90,000 404,136
Changes in operating assets and liabilities:
Receivables 352,983 -0-
Accrued interest receivable -0- 26,473
Prepaid expenses 18,000 (27,000)
Other assets (7,770) -0-
Accounts payable and accrued expenses (76,925) (49,354)
Discontinued operations - noncash charges and working capital changes -0- 448,112
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Net Cash Provided by (Used in) Operating Activities 28,511 (1,438,368)
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Cash Flows from Investing Activities
Purchase of property and equipment -0- (13,000)
Proceeds from sale of discontinued operations -0- 585,000
Proceeds from sale of equipment -0- 73,350
Note receivable -0- (300,000)
Discontinued operations -0- 300,000
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Net Cash Provided by Investing Activities -0- 645,350
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Cash Flows from Financing Activities
Net proceeds from issuance of common stock 15,000 50,000
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 15,000 730,348
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Foreign Currency Translation Adjustment -0- (68,537)
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Increase (Decrease) in Cash and Cash Equivalents 43,511 (131,207)
Beginning Cash and Cash Equivalents 500 138,731
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Ending Cash and Cash Equivalents $ 44,011 $ 7,524
========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest:
Continuing operations $ -0- $ 31,375
========== ===========
Discontinued operations $ -0- $ 17,475
========== ===========
Nine Months Ended September 30, 1997:
64,000 shares of Common Stock were issued in satisfaction of $1,280,000 principal amount of 8% Convertible Debentures and $22,638
of accrued interest.
31,667 shares of Common Stock were issued in satisfaction of liabilities and payment of legal and professional expenses.
6,086 shares of Common Stock were issued in payment of officer compensation.
</TABLE>
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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
September 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 Nine Months ended September 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 September 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.
Nine Months Ended September 30, 1998 Compared to Nine Months
Ended September 30, 1997
RESULTS OF OPERATIONS
During the Nine Months ended September 30, 1997 the Company
generated revenues from QPQ Medical and PK Polska of
$1,260,707 and incurred losses from such operations in the
amount of $1,371,183. At September 30, 1998, Regenesis did not
have any operating subsidiaries.
General and Administrative Expenses for the Nine Months ended
September 30, 1998 and September 30, 1997, totaled $294,764
and $968,322, respectively. For the Nine Months ended
September 30, 1998, General and Administrative Expenses were
comprised of executive and office staff salaries and benefits
of $69,330, management fees of $15,500 paid to an entity owned
by the Company's president, and legal and professional fees,
office rent, travel, telephone and other corporate expenses of
$209,934. For the Nine Months ended September 30, 1997,
General and Administrative Expenses were comprised of
executive and office staff salaries of $199,118, legal and
professional fees, office rent, travel, telephone and other
general corporate expenses of $687,645 and depreciation and
amortization of $81,559. 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.
.
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REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
Interest and other income for the Nine Months ended September
30, 1998 and 1997 was $17,248 and $21,698, respectively. The
$17,248 is primarily attributable to miscellaneous income
relating to the recovery of certain assets.
Interest expense for the Nine Months ended June 30, 1997 was
$31,375 and relates primarily to interest incurred on the 8%
Convertible Debentures prior to their conversion into Common
Stock in June 1997.
Liquidity and Capital Resources
As of September 30, 1998, the Company had working capital of
$51,781 and cash and cash equivalents of $44,011.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In August, 1998, the Company received a letter from an
attorney for a stockholder of the Company asserting that the
stockholder was damaged by affirmative misrepresentations and
material omissions allegedly made by the Company and its
affiliates in connection with the sale in 1996 of securities
of the Company to the stockholder. The letter asserts that the
stockholder was damaged in the amount of at least $1,200,000,
excluding interest and attorney's fees. The attorney states in
the letter that his firm intends to file suit on behalf of the
stockholder, and possibly others, against the Company and
certain of its controlling persons for securities fraud.
To the Company's knowledge, no litigation has been initiated
against the Company in connection with this matter.
Based on the information currently available to the present
management of the Company, which information is limited, the
Company believes (but can offer no assurance) that there would
not be an unfavorable outcome to the Company as a result of
litigation initiated by the stockholder in connection with
this matter; however, if the outcome was unfavorable, the
Company believes that such litigation would have a material
adverse effect on the Company's financial position and that
the dollar amount of a judgment in favor of the stockholder
could exceed the value of the present assets of the Company.
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 Holdings, Inc. has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
REGENESIS HOLDINGS, INC.
By:___________________________________________
Zirk Engelbrecht, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
Date:_________________________________________
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