<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998
[ ] Transition Report Under Section 13 or 15(d) of
the Exchange Act
For the transition period from ____________ to ____________.
Commission file number 1-12350
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.)
7777 Glades Road, Suite 211
Boca Raton, Florida 33434
---------------------------------------------
(Address of Principal Executive Office)
(561) 470-6005
--------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
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 May 31, 1998 was 762,379.
Transitional Small Business Disclosure Format:
Yes [ ] No [x]
<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
(Unaudited)
PART I. FINANCIAL INFORMATION Page
- ------------------------------ ----
ITEM. 1 Financial Statements
Condensed Consolidated Balance Sheets
as of March 31, 1998 and December
31, 1997 2
Condensed Consolidated Statements of
Operations for the Three
Months Ended March 31, 1998 and 1997 3
Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1998 and 1997 4
Notes to Condensed Consolidated
Financial Statements 5
ITEM. 2 Management's Discussion and Analysis
or Plan of Operation 6
PART II. OTHER INFORMATION
- -----------------------------
SIGNATURES
1
<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(Unaudited) *
ASSETS
<S> <C> <C>
Current assets
Cash $ 1,297 $ 500
Current portion of notes receivable
from Lator International, Inc. 61,161 100,000
Notes and accounts receivable
from the sale of QPQ Medical,
net of allowance for doubtful
accounts of $193,667 and $202,167,
respectively -- 2,983
Prepaid expenses 18,000 18,000
------------ ------------
Total current assets 80,458 121,483
Furniture, equipment & leasehold
improvements, net 14,013 14,013
Noncurrent notes receivable from
Lator International, Inc. 250,000 250,000
Assets held for sale 3,000 3,000
------------ ------------
$ 347,471 $ 388,496
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 76,000 $ 76,925
Note payable - related party
------------ ------------
Total current liabilities 76,000 76,925
Commitments and contingencies
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 (12,184,446) (12,039,346)
------------ ------------
271,471 311,571
------------ ------------
$ 347,471 $ 388,496
============ ============
</TABLE>
*condensed from audited financial statements
See Accompanying Notes
2
<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
-----------------------------
1998 1997
----------- -----------
Operating expenses
General and administrative 160,100 640,795
----------- -----------
Other expenses
Interest expense -- (15,207)
Interest income 69 4,160
Other income 14,931 --
Underwriter warrant settlement -- (201,000)
----------- -----------
15,000 (212,047)
----------- -----------
Discontinued operations:
Loss from operations -- (435,727)
----------- -----------
Net income (loss) $ (145,100) $(1,288,569)
=========== ===========
Basic and diluted net
loss per share
Continuing operations $ (0.21) $ (6.69)
=========== ===========
Discontinued operations $ -- $ (3.42)
=========== ===========
Weighted average shares 693,643 127,558
outstanding =========== ===========
See Accompanying Notes
3
<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (145,100) $(1,288,569)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation -- 102,135
Provision for underwriter warrant settlement -- 201,000
Net realizable value adjustments -- 131,375
Gain on disposition of equipment 90,000 --
Changes in operating assets and liabilities:
Decrease in accounts receivable 41,822 18,834
Decrease in inventory 2,314
Increase in accrued interest receivable (3,699)
Decrease in prepaid expenses 185,719
Decrease in other assets 55,761
Decrease in accounts payable (925) (20,526)
----------- -----------
Net cash used in operating activities (14,203) (615,656)
----------- -----------
Cash flows from investing activities
Payment for other assets -- (65,374)
Purchase of equipment -- (10,231)
----------- -----------
Net cash used in investing activities 0 (75,605)
----------- -----------
Cash flows from financing activities
Due to / from affiliates -- 25,697
Proceeds from bank credit facility, net -- 6,637
Issuance of common stock 15,000 --
Proceeds from 8% convertible debentures -- 1,066,667
----------- -----------
Net cash provided by financing activities 15,000 1,099,000
----------- -----------
Forign currency translation adjustment -- 38,234
Net increase (decrease) in cash 797 445,973
Cash, beginning of year 500 138,731
----------- -----------
Cash, end of year $ 1,297 $ 584,704
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ -- $ 12,601
=========== ===========
</TABLE>
See Accompanying Notes
4
<PAGE>
REGENESIS HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation - The accompanying condensed consolidated
financial statements at March 31, 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
The accompanying unaudited condensed consolidated financial statements,
which are for interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained in the
Annual Report on Form 10-KSB for the year ended December 31, 1997 as filed
with the Securities and Exchange Commission. The December 31, 1997
consolidated balance sheet was derived from audited consolidated financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (which are of a
normal recurring nature) necessary for a fair presentation of the financial
statements. The results of operations for the three months ended March 31,
1998 are not necessarily indicative of the results to be expected for the full
year.
Going Concern - The report of the Company's independent accountants on
their audit of the Company's December 31, 1997 consolidated financial
statements contained uncertainties relating to the Company's ability to
continue as a going concern. The Company has incurred a loss in the three
months ended March 31, 1998 and uncertainties exist with regard to the
Company's ability to generate sufficient cash flows from operations or other
sources to meet existing obligations, which gives rise to doubts about the
Company's ability to continue as a going concern. These financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Reclassification - Certain amounts in the 1997 financial statements have
been reclassified to conform to the 1998 presentation.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
GENERAL
Management's Discussion and Analysis or Plan of Operation contains various
"forward looking statements" within the meaning of the Securities Act of 1993
and the Securities And Exchange Act of 1934, which represents the Company's
expectations or beliefs concerning future events including without limitation
the following; ability of the Company to obtain financing on terms and
conditions that are favorable: ability of the Company to achieve profitability
and sufficiency of cash provided by operations, investing and financing
activities.
The Company cautions that these statements are further qualified by
important factors that would cause actual results to differ materially from
those contained in the forward looking statements, including without
limitations, the demand for the Company's future products and services,
changes in the level of operating expense and the present and future level of
competition. Results actually achieved may differ materially from expected
results included in these statements.
At March 31, 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.
THREE MONTHS ENDED MARCH 31, 1998 VS THREE MONTHS ENDED MARCH 31, 1997:
RESULTS OF OPERATIONS
During the three months ended March 31, 1997 the Company generated
revenues from QPQ Medical and PK Polska of $536,830 and incurred losses from
such operations in the amount of $(435,727). At March 31, 1998, Regenesis did
not have any operating subsidiaries.
General and Administrative Expenses for the three months ended March 31,
1998 and March 31, 1997, totaled $146,094 and $640,795, respectively. For the
three months ended March 31, 1998, General and Administrative Expenses were
comprised of executive and office staff salaries and benefits of $40,302 and
legal and professional fees, office rent, travel, telephone and other
corporate expenses of $119,798. 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 three months ended March 31, 1997, General
and Administrative Expenses were comprised of executive and office staff
salaries of $108,769, legal and professional fees, office rent, travel,
<PAGE>
telephone and other general corporate expenses of $467,314 and depreciation
and amortization of $64,712.
Interest and other income for the three months ended March 31, 1998 and
1997 was $15,000 and $4,160, respectively. The $15,000 is primarily
attributable to interest earned on invested funds during the 1998 period ,as
well as, miscellaneous income relating to the recovery of certain assets.
Interest expense for the three months ended March 31, 1997 was $(15,207)
and relates primarily to interest incurred on the 8% Convertible Debentures
prior to their conversion into Common Stock in June 1997.
Following is a condensed summary of the results of operations of QPQ
Medical and PK Polska for all periods presented in the accompanying condensed
consolidated financial statements:
Three Months Ended
March 31,
------------------------
1998 1997
----------- ----------
Revenues $ - $ 536,830
Net Loss $ - $(435,727)
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had working capital of $3,533 and cash
and cash equivalents of $1,297.
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.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, Regensis has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REGENESIS HOLDING, INC.
DATE: June 25, 1998 By: /s/ C. Lawrence Rutstein
-------------------------------------------
C. Lawrence Rutstein, Chairman of the Board,
Chief Executive Officer and President
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REGENESIS HOLDINGS, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,297
<SECURITIES> 0
<RECEIVABLES> 61,161
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 80,458
<PP&E> 14,013
<DEPRECIATION> 2,448
<TOTAL-ASSETS> 347,471
<CURRENT-LIABILITIES> 76,000
<BONDS> 0
0
0
<COMMON> 6,969
<OTHER-SE> 264,535
<TOTAL-LIABILITY-AND-EQUITY> 347,471
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 160,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (145,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (145,100)
<DISCONTINUED> (145,100)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145,100)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
