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 June 30, 1999
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.
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(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.)
930 Washington Avenue - 4th Floor
Miami Beach, Florida 33139
-----------------------------------
(Address of Principal Executive Office)
(305) 695-4400
-----------------------------------
(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 August 16, 1999 was 4,401,512.
Transitional Small Business Disclosure Format:
Yes [x] No [ ]
<PAGE>
REGENESIS HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION ----
- ------------------------------
<S> <C> <C>
ITEM. 1 Financial Statements
Condensed Balance Sheet as of June
30, 1999 and December 31, 1998 2
Condensed Statements of Operations
for the Three and Six Months Ended
June 30, 1999 and 1998 3
Condensed Statements of Shareholders'
Deficiency for the Six Months Ended
June 30, 1999 4
Condensed Statements of Cash Flows
for the Six Months Ended June 30,
1999 and 1998 5
Notes to Condensed Financial
Statements 6 - 10
ITEM. 2 Management's Discussion and Analysis
or Plan of Operation 11 - 12
</TABLE>
PART II. OTHER INFORMATION
- ---------------------------
SIGNATURES
1
<PAGE>
REGENESIS HOLDINGS, INC.
CONDENSED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
ASSETS
------
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,042 $ 20,748
Due from officers 11,579 -
------------ -----------
Total Current Assets 19,621 20,748
------------ -----------
Furniture, equipment & leasehold
improvements, net 13,790 -
Deposits 12,860 -
Other assets 630 -
------------ -----------
Total Assets $ 46,901 $ 20,748
============ ===========
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES:
Accounts payable, trade $ 120,986 $ 14,403
Accrued payroll and related taxes 108,377 -
Loans payable others 26,025 2,800
------------ ------------
Total Current Liabilities 255,388 17,203
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value,
10,000,000 shares authorized;
no shares issued -- --
Common Stock, $.01 par value,
100,000,000 shares authorized;
4,259,845 and 762,345 shares
issued and outstanding, 42,598 7,623
Additional paid-in capital 12,873,416 12,471,481
Accumulated deficit (13,124,501) (12,475,559)
------------ ------------
Total Shareholders' Deficiency ( 208,487) 3,545
------------ ------------
Total Liabilities and
Shareholders' Deficiency $ 46,901 $ 20,748
============ ============
</TABLE>
See Accompanying Notes
2
<PAGE>
REGENESIS HOLDINGS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- --------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
COST OF CD ROM DISCS PRODUCED $ 10,368 $ - $ 107,368 $ -
GENERAL & ADMINISTRATIVE
EXPENSES 370,628 86,445 547,574 246,545
------------ ------------ ----------- -----------
Total costs and expenses 380,996 86,445 654,942 246,545
------------ ------------ ----------- -----------
OTHER INCOME (EXPENSES):
Interest income - 22 - 91
Other Income 6,000 2,226 6,000 17,157
Discount on note receivable - ( 70,261) - ( 70,261)
Loss on disposal of assets - ( 17,013) - ( 17,013)
------------ ------------ ----------- -----------
Total other income
(expense), net 6,000 ( 85,026) 6,000 ( 70,026)
------------ ------------ ----------- -----------
NET LOSS $( 374,996) $( 171,471) $( 648,942) $( 316,571)
============ ============ =========== ===========
BASIC AND DILUTED
NET LOSS PER COMMON
SHARE: $( .09) $( .25) $( .21) $( .46)
============ ============ =========== ===========
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 4,210,425 693,643 3,123,706 693,643
============ ============ =========== ===========
</TABLE>
See Accompanying Notes
3
<PAGE>
REGENESIS HOLDINGS, INC.
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Deficiency)
For the Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balances,
December 31,
1998 - - 762,345 $ 7,623
Issuance of Series C
Preferred Shares 480 $ 480 - -
Conversion of Series C
Preferred Shares into
Common Stock (480) (480) 900,000 9,000
Issuance of shares in private
placement Transactions - - 1,587,500 15,875
Issuance of Shares to officers
pursuant to their employment
agreements - - 1,000,000 10,000
Issuance of shares to acquire
Net Disc, Inc. assets - - 10,000 100
Net loss for
the period - - - -
Balances,
June 30, 1999 - $ - 4,259,845 $ 42,598
======== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid In Accumulated
Capital Deficit Total
---------- ----------- --------
<S> <C> <C> <C>
Balances,
December 31,
1998 $12,471,481 $(12,475,559) $ 3,545
Issuance of Series C
Preferred Shares - - 480
Conversion of Series C
Preferred Shares into
Common Stock 48,180 - 56,700
Issuance of shares in private
placement Transactions 300,225 - 316,100
Issuance of Shares to officers
pursuant to their employment
agreements 53,000 - 63,000
Issuance of shares to acquire
Net Disc, Inc. assets 530 - 630
Net loss for
the period - (648,942) (648,942)
Balances,
June 30, 1999 $12,873,416 $(13,124,501) $(208,487)
=========== ============ =========
</TABLE>
See Accompanying Notes
4
<PAGE>
REGENESIS HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $( 648,942) $( 316,571)
Adjustment to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 1,532 17,013
Expenses paid by issuance of
common stock 170,050 90,000
Changes in operating assets and
liabilities:
Receivables - 252,983
Prepaid expenses - 18,000
Deposits and other assets ( 24,439) -
Accounts payable and
accrued expenses 214,960 ( 76,925)
------------ ------------
Net cash used in operating
activities ( 286,839) ( 15,500)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for furniture, equipment
and leasehold improvements ( 15,322) -
------------ ------------
Net cash provided by(used in)
investing activities ( 15,322) -
------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net proceeds from issuance of
Common stock 266,230 15,000
Proceeds from loans payable, net 23,225 -
------------ ------------
Net cash provided by financing
activities 289,455 15,000
------------ ------------
INCREASE(DECREASE) IN CASH AND
CASH EQUIVALENTS ( 12,706) ( 500)
BEGINNING CASH AND CASH EQUIVALENTS 20,748 500
------------ ------------
ENDING CASH AND CASH EQUIVALENTS $ 8,042 $ -
============ ============
</TABLE>
See Accompanying Notes
5
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation - The accompanying condensed financial statements
at June 30, 1999 include the accounts of the Company
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 financial statements, which are
for interim periods, do not include all disclosures provided in the annual
financial statements. These unaudited condensed financial statements should be
read in conjunction with the financial statements and the footnotes thereto
contained in the Annual Report on Form 10-KSB for the year ended December 31,
1998 of Regenesis Holdings, Inc. (the "Company"), as filed with the Securities
and Exchange Commission. The December 31, 1998 condensed balance sheet was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles.
In the opinion of the Company, the accompanying unaudited condensed
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 six months ended June 30, 1999 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, 1998 financial statements contained
uncertainties relating to the Company's ability to continue as a going concern.
The Company has incurred a substantial loss in the six months ended June 30,
1999 and uncertainties exist with regard to the Company's ability to generate
sufficient cash flows from operations or other sources to meet existing
obligations and fund its commitment with regard to the expansion of its existing
operations 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.
Net Loss Per Common Share - The basic and diluted net loss per common
share in the accompanying statements of operations is based upon the net loss
divided by the weighted average number of shares outstanding during the period.
Diluted per share is the same as basic per share data since the inclusion of all
potentially dilutive common shares that would be issuable upon the exercise of
options and warrants and the assumed conversion of preferred stock would be
anti-dilutive.
6
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Liquidity and Plan of Operations - As of June 30, 1999, the Company had
cash of $8,042 and a deficiency in working capital of $(235,767), respectively.
The Company's ability to meet future obligations in relation to the orderly
payment of its recurring general and administrative expenses on a current basis
is totally dependent upon its ability to secure and develop new business
opportunities through acquisitions or other venture opportunities. Since the
Company does not have any source of liquidity, the Company is unable to project
how long it may be able to survive without significant infusion of capital from
outside sources and it further is unable to predict whether such capital
infusion, if available, would be at terms and conditions that are acceptable to
the Company.
In order to generate future operating activities, the Company intends to search
for, investigate and attempt to secure and develop, business opportunities
through acquisitions, reverse mergers or venture activities, However, there can
be no assurance that the Company will be successful in its search for new
business opportunities or that any such businesses or ventures acquired will be
successful.
2. ACQUISITION OF NETDISC. INC:
On March 18, 1999, the Company acquired substantially all of the
operating assets and business operations of NetDisc, Inc. for 10,000 shares of
the Company's common stock. The Company assumed none of NetDisc's liabilities.
The 10,000 shares of common stock were valued at a price of $.063 per share
which represents the last publicly traded price of the Company's common stock on
December 15, 1998, as quoted on the OTC Bulletin Board. The Company believes
that the December 15, 1998, per share price reasonably reflects the estimated
fair market value per share of the Company's common stock on the date of
acquisition.
As of the date of acquisition, NetDisc had no operations and minimal
assets. Accordingly, the $630 value of the 10,000 shares of common stock issued
to acquire NetDisc, Inc. has been included in other assets in the accompanying
balance sheet.
NetDisc is engaged in Internet advertising, and has developed CD
ROM/Internet technology, which directs users to the web sites of advertisers.
3. SHAREHOLDERS' EQUITY:
On February 1, 1999 the Company sold 35,000 shares of its Series C
preferred Stock for a purchase price of $350.00 or $.01 per share, to Mr Adler,
the Chairman of the Board of the company. Inasmuch as Mr. Adler, as an executive
officer and director of the Company, is an accredited investor, issuance of such
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2) of such Act and the rules
and regulations thereunder.
7
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(Unaudited)
On February 3, 1999, the Company sold 10,000 and 3,000 shares of its
Series C Preferred Stock for a purchase price of $130.00 or $.01 per share, to
Mr. Adler and Mr Sandler, Chairman of the Board of Directors and President of
the Company, respectively. Inasmuch as each of Messrs. Adler and Sandler is an
executive officer and director of the company, and therefor an accredited
investor, issuance of such securities was exempt from the registration
requirements of the Securities Act pursuant to the exemption set forth in
Section 4(2) of such Act and the rules and regulations thereunder.
On February 5, 1999, the company granted options under its 1997 Stock
Option plan to purchase an aggregate of 500,000 shares of its common stock to
Mr. Adler. such options have an exercise price of $.25 per share, are
immediately exercisable and expire February 4, 2003. Inasmuch as Mr. Adler, as
an executive officer and director of the Company, is an accredited investor,
issuance of such securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2) of such Act
and the rules and regulations thereunder.
On February 15, 1999, the Company consummated the sale of 950,000 of
shares of common stock for an aggregate purchase price of $9,500.00 or $.01 per
share, to 29 investors. Inasmuch as each of such investors is either and
accredited or otherwise qualified investor, or had a pre-existing relationship
with the Company, and had access to relevant information concerning the company,
the issuance of such securities was exempt from the registration requirements of
the Securities Act pursuant to the exemption set forth in Section 4(2) of such
Act and the rules and regulations thereunder. Results of operations for the six
months ended in June 30, 1999, includes a charge for compensation of $50,350
relating to the issuance of the 950,000 shares of common stock.
On February 15, 1999, Mr Adler transferred 29,000 of his shares of
Series C Preferred Stock in the following manner to the following transferee,
each of which is an officer of the Company: 5,000 shares to Mr. Sandler;
13,333.33 shares to Mr. Gallo; and 10,666.66 shares to Mr. Brownstein. Messrs.
Adler, Sandler, Gallo and Brownstein then converted all of the shares of Series
C Preferred Stock into an aggregate of 900,000 shares of common stock of the
Company as follows: Mr. Adler: 300,000 shares; Mr. Sandler: 150,000 shares; Mr.
Gallo: 250,000 shares; and Mr. Brownstein: 200,000 shares. Results of operations
for the six months ended June 30, 1999, includes a charge for compensation of
$56,700 relating to the issuance of the 900,000 shares of common stock.
On February 23, 1999, the Company consummated the sale of 500,000 of
its shares of common stock for and aggregate purchase price of $100,000., or
$.20 per share, to four institutional investors. Inasmuch as each of such
institutional investor is an accredited investor, and had access to relevant
information concerning the company, the issuance of such securities was exempt
from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2) of such Act and the rules and regulations
thereunder.
On March 30, 1999, the Company consummated the sale of 100,000 shares
of its common stock for a purchase price of $100,000, or $1.00 per share, to an
institutional investor. In as much
8
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(Unaudited)
as the institutional investor is an accredited investor, and had access to
relevant information concerning the company, including financial information,
the issuance of such securities was exempt from the registration requirements of
the Securities Act pursuant to the exemption set forth in Section 4(2) of such
Act and the rules and regulations thereunder.
During the six months ended June 30, 1999, the Company entered into
employment agreements with its five officers. The agreements provide for
aggregate annual compensation of approximately $685,000. Pursuant to the
agreements the officers were granted an aggregate of 1,000,000 shares of common
stock and options to purchase 950,000 shares of common stock at an exercise
price of $.25 per share. Results of operations for the six months ended June 30,
1999, includes a charge for compensation of $63,000 relating to the grant of the
1,000,000 shares of common stock.
In April 1999, May 1999, and June 1999, the Company consummated the
sale of an aggregate of 37,500 shares of common stock for an aggregate purchase
price of $56,250 or $1.50 per share, to 4 investors. Inasmuch as each of such
investors is an accredited investor, and had access to relevant information
concerning the Company, the issuance of such securities was exempt from the
registration requirements of the Securities Act pursuant to the exemption set
forth in Section 4(2) of such Act and the rules and regulations thereunder.
From July 1, 1999, through August 16, 1999, the Company consummated the
sale of 133,667 shares of common stock for an aggregate purchase price of
$200,500 or $1.50 per share to 4 investors and the sale of 8,000 shares of
common stock for an aggregate purchase price of $24,000 or $3.00 per share to 2
investors. Inasmuch as each of such investors is an accredited investor, and had
access to relevant information concerning the Company, the issuance of such
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2) of such Act and the rules
and regulations thereunder.
In connection with the sale of 950,000 shares of common stock to 29
investors, the issuance of 900,000 shares of common stock in exchange for 480
shares of Preferred Stock and the grant of 1,000,000 shares of common stock to
officers pursuant to their employment agreements, the Company valued the
2,850,000 shares of common stock at a price of $.063 per share which represents
the last publicly traded price of the Company's common stock on December 15,
1998, as quoted on the OTC Bulletin Board. The Company believes that the
December 15, 1998, per share price reasonably reflects the estimated fair market
value per share of the Company's common stock on the date of the transactions
described above.
No underwriters were involved in any of the transactions described
above, and no commissions were paid in connection therewith.
9
<PAGE>
REGENESIS HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(Unaudited)
4. COMMITMENTS AND CONTINGENCIES:
Regenesis received a letter in August 1998 on behalf of one of its
shareholders whereby the stockholder alleged that he was damages by affirmative
misrepresentations and material commissions allegedly made by Regenesis and its
affiliates in connection with the 1996 sales of its securities to the
stockholder. The amount of damages alleged to have been suffered buy the
stockholder is $1,200,000, excluding interest and attorney's fees. In December
1998, in an effort to resolve such pending allegations, Regenesis joined a suit
in which this stockholder was charges with libel and slander. Regenesis believes
that this matter will be resolved in a manner favorable to it, but there can be
no assurances of this. If this matter is resolved in a manner unfavorable to
Regenesis, the Company's financial position could be materially adversely
affected.
On May 12, 1999, the Company entered into an office service agreement
for a New York office. The agreement, which expires on May 31, 2000, requires
monthly payments of $4,626 and may be terminated by either party upon thirty
days written notice. Upon expiration of the initial term of the agreement, there
is an automatic extension for the same period of time as the initial term with
an increase in the base rent of 8%. The terms of the agreement will remain the
same as the initial term if extended.
The Company has relocated it's corporate headquarters from Weston,
Florida to Miami Beach, Florida where it currently leases approximately 4,000
square feet of office space from an unaffiliated party. It's monthly lease
payment is $4,100. The term of the lease is thirty five months from August 1,
1999 through May 31, 2002.
10
<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
1933 and the Securities And Exchange Act of 1034, which represents the Company's
expectations or beliefs concerning future events including without limitation to
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.
Six Months Ended June 30, 1999 vs Six Months Ended June 30, 1998:
Results of Operations
At June 30, 1999 and 1998, Regenesis did not have any operating
subsidiaries.
General and Administrative Expenses for the six months ended June 30,
1999 and June 30, 1998, totalled $547,574 and $246,545, respectively. For the
six months ended June 30, 1999, General and Administrative Expenses were
comprised of executive and office salaries of $146,346, promotion expenses
related to product development and marketing, legal and professional fees,
office rent, travel, telephone and other corporate expenses of $231,178 and
compensation charges relating to the issuance of common stock of $170,050. For
the six months ended June 30, 1998, General and Administrative Expenses were
comprised of executive and office staff salaries of $69,390, legal and
professional fees, office rent, travel, telephone and other general corporate
expenses of $177,215.
Interest and other income for the six months ended June 1999 and 1998
was $6,000 and $(70,026). The $6,000 of other income is attributable to the
collection of accounts receivable that were previously considered uncollectible.
The $(70,026) is primarily attributable to interest earned on invested funds
during the 1998 period as well as miscellaneous losses relating to the disposal
of assets.
Liquidity and Capital Resources
As of June 30, 1999, the company had cash of $8,042 and a deficiency in
working capital of $(235,767). The Company's ability to meet it's future
obligations in relation to the orderly payment of its recurring general and
administrative expenses on a current basis is totally dependent upon its ability
to secure and develop new business opportunities through acquisitions
11
<PAGE>
or other venture opportunities. Since the Company does not have any current
source of liquidity, the Company is unable to predict how long it may be able to
survive without significant infusion of capital from outside sources and it
further is unable to predict whether such capital infusion, if available, would
be at terms and conditions that are acceptable to the Company.
In order to generate future operating activities, the Company intends to search
for, investigate and attempt to secure and develop, business opportunities
through acquisitions, reverse mergers or business combinations and strategic
alliances. There can be no assurance that the Company will be successful in its
search for new business opportunities or that any such businesses, assets or new
ventures will be successful. Although the Company engages in these discussions
from time to time, it is not a party to any agreement or contract. The report of
Rachlin, Cohn & Holtz, LLP, the company's auditors ("Auditor") in connection
with their annual audit of the company's financial statements for the year ended
December 31, 1998, contained an explanatory paragraph which expressed
substantial doubt as to the ability of the Company to continue as a going
concern, which assumes the realization of assets and liquidation of liabilities
in the ordinary course of business. Uncertainty from operational or other
sources to meet and fund its commitments with regard to existing liabilities and
recurring expenses, which give rise to substantial doubt as to the Company's
ability as a going concern.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Regenesis received a letter in August 1998 on behalf of one of
its shareholders whereby the stockholder alleged that he was damages by
affirmative misrepresentations and material commissions allegedly made by
Regenesis and its affiliates in connection with the 1996 sales of its securities
to the stockholder. The amount of damages alleged to have been suffered buy the
stockholder is $1,200,000, excluding interest and attorney's fees. In December
1998, in an effort to resolve such pending allegations, Regenesis joined a suit
in which this stockholder was charges with libel and slander. Regenesis believes
that this matter will be resolved in a manner favorable to it, but there can be
no assurances of this. If this matter is resolved in a manner unfavorable to
Regenesis, the Company's financial position could be materially adversely
affected.
ITEM 2. CHANGES IN SECURITIES
On February 1, 1999 the Company sold 35,000 shares of its
Series C preferred Stock for a purchase price of $350.00 or $.01 per share, to
Mr Adler, the Chairman of the Board of the company. Inasmuch as Mr. Adler, as an
executive officer and director of the Company, is an accredited investor,
issuance of such securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2) of such Act
and the rules and regulations thereunder.
On February 3, 1999, the Company sold 10,000 and 3,000 shares of its
Series C Preferred Stock for a purchase price of $130.00 or $.01 per share, to
Mr. Adler and Mr Sandler, Chairman of the Board of Directors and President of
the Company, respectively. Inasmuch as each of Messrs. Adler and Sandler is an
executive officer and director of the company, and therefor an accredited
investor, issuance of such securities was exempt from the registration
requirements of the Securities Act pursuant to the exemption set forth in
Section 4(2) of such Act and the rules and regulations thereunder.
On February 5, 1999, the company granted option under its 1997 Stock
Option plan to purchase an aggregate of 500,000 shares of its common stock to
Mr. Adler. such options have an exercise price of $.25 per share, are
immediately exercisable and expire February 4, 2003. Inasmuch as Mr. Adler, as
an executive officer and director of the Company, is an accredited investor,
issuance of such securities was exempt from the registration requirements of the
Securities Act pursuant to the exemption set forth in Section 4(2) of such Act
and the rules and regulations thereunder.
On February 15, 1999, the Company consummated the sale of 950,000 of
shares of common stock for an aggregate purchase price of $9,500.00 or $.01 per
share, to 29 investors. Inasmuch as each of such investors is either and
accredited or otherwise qualified investor, or had a pre-existing relationship
with the Company, and had access to relevant information concerning the company,
the issuance of such securities was exempt from the registration requirements of
the Securities Act pursuant to the exemption set forth in Section 4(2) of such
Act and the rules and regulations thereunder.
13
<PAGE>
On February 15, 1999, Mr Adler transferred 29,000 of his shares of
Series C Preferred Stock in the following manner to the following transferee,
each of which is an officer of the Company: 5,000 shares to Mr. Sandler;
13,333.33 shares to Mr. Gallo; and 10,666.66 shares to Mr. Brownstein. Messrs.
Adler, Sandler, Gallo and Brownstein then converted all of the shares of Series
C Preferred Stock into an aggregate of 900,000 shares of common stock of the
Company as follows: Mr. Adler: 300,000 shares; Mr. Sandler: 150,000 shares; Mr.
Gallo: 250,000 shares; and Mr. Brownstein: 200,000 shares.
On February 23, 1999, the Company consummated the sale of 500,000 of
its shares of common stock for and aggregate purchase price of $100,000, or $.20
per share, to four institutional investors. Inasmuch as each of such
institutional investor is an accredited investor, and had access to relevant
information concerning the company, the issuance of such securities was exempt
from the registration requirements of the Securities Act pursuant to the
exemption set forth in Section 4(2) of such Act and the rules and regulations
thereunder.
On March 30, 1999, the Company consummated the sale of 100,000 shares
of its common stock for a purchase price of $100,000, or $1.00 per share, to an
institutional investor. Inasmuch as the institutional investor is an accredited
investor, and had access to relevant information concerning the company,
including financial information, the issuance of such securities was exempt from
the registration requirements of the Securities Act pursuant to the exemption
set forth in Section 4(2) of such Act and the rules and regulations thereunder.
During the six months ended June 30, 1999, the company entered into
employment agreements with it's five officers. The agreements provide for
aggregate annual compensation of approximately $685.000. Pursuant to the
agreements the officers were granted an aggregate of 1,000,000 shares of common
stock and options to purchase 950,000 shares of common stock at an option
exercise price of $.25 per share.
In April 1999, May 1999, and June 1999, the Company consummated the
sale of an aggregate of 37,500 shares of common stock for an aggregate purchase
price of $56,250 or $1.50 per share, to 4 investors. Inasmuch as each of such
investors is an accredited investor, and had access to relevant information
concerning the Company, the issuance of such securities was exempt from the
registration requirements of the Securities Act pursuant to the exemption set
forth in Section 4(2) of such Act and the rules and regulations thereunder.
From July 1, 1999, through August 16, 1999, the Company consummated the
sale of 133,667 shares of common stock for an aggregate purchase price of
$200,500 or $1.50 per share to 4 investors and the sale of 8,000 shares of
common stock for an aggregate purchase price of $24,000 or $3.00 per share to 2
investors. Inasmuch as each of such investors is an accredited investor, and had
access to relevant information concerning the Company, the issuance of such
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2) of such Act and the rules
and regulations thereunder.
In connection with the sale of 950,000 shares of common stock to 29
investors, the issuance of 900,000 shares of common stock in exchange for 480
shares of Preferred Stock and the grant of 1,000,000 shares of common stock to
officers pursuant to their employment agreements, the Company valued the
2,850,000 shares of common stock at a price of $.063 per share which represents
the last publicly traded price of the Company's common stock on December 15,
1998, as quoted on the OTC Bulletin Board. The Company believes that the
14
<PAGE>
December 15, 1998, per share price reasonably reflects the estimated fair market
value per share of the Company's common stock on the date of the transaction
described above.
No underwriters were involved in any of the transactions described
above, and no commissions were paid in connection therewith.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 1, 1999, the board of directors of the Company designated
300,000 shares of authorized Preferred Stock as Series B Preferred Stock with a
par value of $.01 per share. The Series B Preferred Stock has equal voting
rights with the Company's Common Stock and upon conversion to common stock
convertible , at the option of the holder, into twenty shares of Common stock
for each share of Series B Preferred Stock; is redeemable at any time at the
sole option of the Company at a redemption price to be negotiated by the
parties; entitled to dividends from time to time as determined in the sole
discretion of the Company out of funds legally available for the payment of
dividends; and is entitled to a liquidation preference of $.01 per share upon
voluntary or involuntary dissolution or winding up of the company.
On February 1, 1999, the Board of Directors of the Company designated
300,000 shares of authorized Preferred Stock as Series C Preferred Stock with a
par value of $.01 per share. The Series C Preferred Stock has equal voting
rights with the Company's Common Stock, is convertible, at the option of the
holder, into fifty shares of Common Stock for each share of Series C Preferred
Stock; is redeemable at any time at the sold option of the Company at a
redemption price to be negotiated by the parties; entitled to dividends from
time to time as determined in the sole discretion of the Company out of funds
legally available for the payment of dividends; and is entitled to a liquidation
preference of $.01 per share upon voluntary or involuntary dissolution or
winding up of the company.
On February 1, 1999, the Board of Directors of the Company and a
majority of the shareholders filed an amendment to the articles which provide
for an increase of common and preferred shares as follows: the maximum number of
shares of all classes of stock which the Corporation is authorized to have
outstanding at any one time is 110,000,000 shares, of which 10,000,000 shares
shall be preferred stock , par value $.01 per share, issuable in one or more
classes or series ( the" Preferred Stock") and 100,000,000 shares shall be
Common Stock, par value $.01 per share ( the "Common Stock"). All or any part of
the Common Stock and Preferred Stock may be issued by the Corporation from time
to time and for such consideration as the Board of Directors may determine. All
of such shares, if and when issued, and upon receipt of such consideration by
the Corporation, shall be fully paid and non-assessable.
ITEM 5. OTHER INFORMATION
The Company has relocated it's corporate headquarters from Weston,
Florida to Miami Beach, Florida where it currently leases approximately 4000
square feet of office space from an
15
<PAGE>
unaffiliated party. It's monthly lease payment is $4,100. The term of the lease
is 35 months, commencing on August 1, 1999 and ending May 31, 2002.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
16
<PAGE>
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.
DATE: August 18, 1999 By: /s/ Lawrence Gallo
-------------------------------
Lawrence Gallo
Chief Executive Officer and President
(Principal Executive Officer)
17
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