U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 0-51109
RMD TECHNOLOGIES, INC.
(Exact Name of Company as Specified in Its Charter)
California 72-1530833
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
308 West 5th Street, Holtville, California 92250
(Address of Principal Executive Offices)
(760) 356-2039
(Company's Telephone Number)
______________________________________________________________
(Former Name, Former Address, and Former Fiscal Year, if Changed Since
Last Report)
Indicate by check mark whether the Company (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) been subject to such filing requirements for the past 90 days.
Yes X No .
Indicate by check mark whether the Company is a shell company (as
defined in Rule 12b-2 of the Exchange Act): Yes No X
As of February 28, 2006, the Company had 15,002,300 shares of
common stock issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes No X .
The Company, by this Form 10-QSB/A, amends the following: (a) Part I,
Item 1, Financial Statements, to make certain revisions to Note 2; and
(b) Part II, Item 6, Exhibits, to revise the Exhibit Index so that the
numbers correspond to the filed exhibits, and to include new
certifications to the financial statements. Besides these changes, no
other changes have been made to the Form 10-QSB for the quarter ended
February 28, 2006. In addition, the remaining information in this
amended Form 10-QSB has not been changed or updated to reflect any
changes in information that may have occurred subsequent to the date
of the reporting period that this Form 10-QSB relates.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCAL STATEMENTS.
RMD TECHNOLOGIES, INC.
BALANCE SHEET
FEBRUARY 28, 2006
(Unaudited)
ASSETS
Current Assets
Cash $ 68,888
Escrow deposit 2,000
Accounts receivable 3,842
Inventory 1,071
Total Current Assets 75,801
Furniture and equipment - net of accumulated
depreciation of $25,314 46,919
Other Assets
Security deposits 911
Total Assets $ 123,631
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 131,392
Current portion - capital leases 8,918
Derivative liability related to convertible debenture 100,000
Advance from La Jolla Cove Investors, Inc. 150,000
Note payable 5,294
Payable to related individuals 121,160
Total Current Liabilities 516,764
Long Term Liabilities
Convertible debenture 8,220
Capital leases payable 8,493
Total Liabilities 533,477
Stockholders' Deficit
Common stock, no par value
100,000,000 shares authorized,
15,002,300 shares issued and outstanding 17,300
Additional paid-in capital 25,000
Accumulated deficit (452,146)
Total Stockholders' Deficit (409,846)
Total Liabilities and Stockholders' Deficit $ 123,631
See Accompanying Notes to Financial Statements
RMD TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
February 28, February 28,
2006 2005 2006 2005
Revenues
Sales $ 23,371 $ 24,638 $ 90,275 $ 78,132
Recycling 21,669 36,851 79,578 136,774
Total Revenues 45,040 61,489 169,853 214,906
Cost of Revenues
Cost of sales 15,957 15,859 47,965 46,166
Cost of recycling revenues 59,969 26,049 130,102 97,309
Total Cost of Revenues 75,926 41,908 178,067 143,475
Gross Profit (30,886) 19,581 (8,214) 71,431
Selling, General, and Administrative expenses
Depreciation 1,630 2,510 4,892 6,387
Other selling, general, and
administrative expenses 60,102 37,162 192,848 128,454
Total Selling, General,
and Administrative Expenses 61,732 39,672 197,740 134,841
Total Loss From Operations (92,618) (20,091) (205,954) (63,410)
Other Expenses
Interest expense (11,241) (10,725) (26,206) (12,082)
Other expense -- -- -- --
Total Loss $(103,859) $ (30,816) $(232,160) $ (75,492)
Basic and Diluted Net Loss per
Weighted Average Share $ (0.01) $ (0.00) $ (0.02) $ (0.01)
Weighted Average Number of Common
Shares Used to Compute Net Loss
per Weighted Average Share 15,002,300 15,002,300 15,002,300 13,612,091
See Accompanying Notes to Financial Statements
RMD TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
February 28,
2006 2005
Operating Activities
Net loss $ (232,160) $ (75,492)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation 4,892 6,387
Accretion of principal related
to convertible debenture 8,220 --
Changes in operating assets and liabilities:
Change in accounts receivable 10,719 33,117
Change in inventory (871) 186
Change in deposits -- (911)
Change in accounts payable and accrued liabilities 20,853 14,726
Change in accrued interest within notes payable 6,990 --
Net Cash Used in Operating Activities (181,357) (21,987)
Investing Activities
Purchase of equipment -- (881)
Net Cash Used in Investing Activities -- (881)
Financing Activities
Decrease in bank overdraft (2,130) --
Proceeds from stock issuance -- 15,000
Proceeds from notes payable 13,228 30,187
Proceeds from advance from La Jolla
Cove Investors, Inc. 150,000 --
Proceeds from convertible debenture 100,000 --
Payments made on capital leases (10,853) (13,527)
Net Cash Provided by Financing Activities 250,245 31,660
Increase in Cash 68,888 8,792
Cash at Beginning of the Period -- 4,398
Cash at End of the Period $ 68,888 $ 13,190
Interest paid $ 2,249 $ --
Taxes paid $ -- $ --
See Accompanying Notes to Financial Statements
RMD TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements of RMD Technologies,
Inc., a California corporation ("Company") have been prepared in
accordance with Securities and Exchange Commission ("SEC")
requirements for interim financial statements. Therefore, they do not
include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete
financial statements. The financial statements should be read in
conjunction with the annual financial statements of the Company for
the years ended May 31, 2005 and 2004 contained in its Form 10-KSB, as
amended.
The interim financial statements present the balance sheet, statements
of operations, stockholders' equity and cash flows of the Company. The
financial statements have been prepared in accordance with accounting
principles generally accepted in the United States.
The interim financial information is unaudited. In the opinion of
management, all adjustments necessary to present fairly the financial
position as of February 28, 2006 and the results of operations and
cash flows presented herein have been included in the financial
statements. All such adjustments are the recurring and normal nature.
Interim results are not necessarily indicative of results of
operations for the full year.
Estimates
The preparation of financial statements in accordance 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. Because of the use of
estimates inherent in the financial reporting process, actual results
could differ significantly from those estimates.
NOTE 2 CONVERTIBLE DEBENTURE
On January 27, 2006, the Company entered into a Securities Purchase
Agreement ("Agreement") with La Jolla Cove Investors, Inc. Under the
Agreement, La Jolla Cove Investors, Inc. agreed to purchase from the
Company a convertible debenture in the aggregate principal amount of
$100,000. The debenture matures January 27, 2009, bears interest at
7.75% per annum, and principal and interest are due at maturity. The
number of shares into which this Debenture may be converted is equal
to the dollar amount of the debenture being converted multiplied by
110, minus the product of the Conversion Price multiplied by 100 times
the dollar amount of the Debenture being converted, and the entire
foregoing result divided by the Conversion Price (based on an Addendum
to Convertible Debenture and Warrant to Purchase Common Stock Addendum
to Debenture and Warrant, dated January 27, 2006). Under the
Agreement, the Conversion Price is defined as the lesser of (i) 80% of
the average of the 3 lowest volume weighted average prices during the
20 trading days prior to holder's election to convert, or (ii) 80% of
the volume weighted average price on the trading day prior to holder's
election to convert.
In connection with the Agreement, the Company issued a warrant for
10,000,000 shares of common stock at an exercise price of $1.00 per
share. La Jolla Cove Investors, Inc. is required to exercise a
percentage of the warrant that is equal to the percentage of the
debenture being converted. Under the Addendum, the exercise price of
the warrant was changed to $1.09 per share; in addition, the warrant
is to be exercised in an amount equal to 100 times the amount of the
debenture. The warrant is exercisable for a period of three years
from issuance.
The Company has determined the convertible debenture represents an
embedded derivative due to the indeterminate number of shares that may
be issued as part of the conversion feature of the host debt that
would be required to be bifurcated from the underlying debt as
derivative liability in accordance Statement of Financial Accounting
Standards ("SFAS") No. 133. Additionally, the warrant related to the
convertible debenture are considered tainted due to the indeterminate
number of shares associated with the conversion feature of the host
debt that would be accounted for as a derivative instrument ("warrant
liability"). As a result, the entire principal balance of the
convertible debenture has been allocated as a derivative liability
with no amount allocated to warrant liability when initially recording
this transaction. Both embedded derivative and warrant liability will
be adjusted to the fair value of the underlying securities at the end
of each period. The recorded fair values of both the derivative and
warrant liability can fluctuate significantly based upon the
fluctuations in the market value of the underlying securities, as well
as the volatility of the stock price during the term used for
observation and the term remaining for the warrant. The adjustment to
fair value for both the derivative and warrant liability will result
in either an unrealized gain or loss and recorded in the income
statement as a component of Other Income (Expense). The estimated
fair value of the warrant liability has been determined using Black-
Scholes option pricing model using the following assumptions: exercise
price of $1.09, stock price volatility of 1%, risk free interest rate
of 3.5%; dividend yield of 0% and 3 year term. The estimated fair
value of the derivative liability was determined by taking the total
amount advanced from the host debt and determining the potential
number of shares to be converted based upon the terms of the debt
Agreement and arriving at fair value based upon the closing price of
the underlying securities which was then allocated on a pro rata basis
along with the estimated fair value of the warrant liability. The
Company will accrete principal over the term of the convertible
debenture since the entire principal balance of the convertible
debenture has been allocated between the derivative and warrant
liability. As of February 28, 2006, the Company has accreted
principal of $8,220 with unaccreted principal of $91,780 and
derivative liability of $100,000.
In accordance with SFAS No. 133, the Company will revalue the related
derivative and warrant liability based upon the fair value at the end
of each reporting period. As of February 28, 2006, the Company has
accreted principal of $8,220 with unaccreted principal of $91,780 and
derivative liability of $100,000.
NOTE 3 ADVANCE FROM LA JOLLA COVE INVESTORS, INC.
On January 31, 2006, La Jolla Cove Investors, Inc. advanced the
Company $150,000 against future exercises of the warrant, as discussed
in Note 2. The advance is unsecured, due on demand and bears no
interest.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS.
Exhibits included or incorporated by reference herein are set
forth in the attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RMD Technologies, Inc.
Dated: June 14, 2006 By: /s/ Patrick A. Galliher
Patrick A. Galliher, President
Dated: June 14, 2006 By: /s/ Arthur De Joya
Arthur De Joya,
Chief Financial Officer
EXHIBIT INDEX
Number Description
3.1 Articles of Incorporation, dated May 17, 2001 (incorporated
by reference to Exhibit 3.1 of the Form 10-SB filed on
January 7, 2005).
3.2 Certificate of Amendment of Articles of Incorporation, dated
June 21, 2004 (incorporated by reference to Exhibit 3.2 of
the Form 10-SB filed on January 7, 2005).
3.2 Bylaws, dated June 20, 2001 (incorporated by reference to
Exhibit 3.3 of the Form 10-SB filed on January 7, 2005).
4.1 Securities Purchase Agreement between the Company and La
Jolla Cove Investors, Inc., dated January 27, 2006
(incorporated by reference to Exhibit 4.1 of the Form 8-K
filed on February 6, 2006).
4.2 7 3/4% Convertible Debenture issued to La Jolla Cove Investors,
Inc., dated January 27, 2006 (incorporated by reference to
Exhibit 4.2 of the Form 8-K filed on February 6, 2006).
4.3 Warrant to Purchase Common Stock issued to La Jolla Cove
Investors, Inc., dated January 27, 2006 (incorporated by
reference to Exhibit 4.3 of the Form 8-K filed on February
6, 2006).
4.4 Registration Rights Agreement between the Company and La
Jolla Cove Investors, Inc., dated January 27, 2006
(incorporated by reference to Exhibit 4.4 of the Form 8-K
filed on February 6, 2006).
4.5 Addendum to Convertible Debenture and Warrant To Purchase
Common Stock, dated January 27, 2006 (incorporated by
reference to Exhibit 4.5 of the Form 8-K filed on February
6, 2006).
4.6 Continuing Personal Guaranty issued by Patrick A. Galliher
and Suzanne E. Galliher in favor of La Jolla Cove Investors,
Inc., dated January 27, 2006 (incorporated by reference to
Exhibit 4.6 of the Form 8-K filed on February 6, 2006).
10.1 Promissory Note issued by the Company in favor of Steven J.
Galliher, dated July 12, 2002 (incorporated by reference to
Exhibit 10.1 of the Form 10-SB filed on January 7, 2005).
10.2 Promissory Note issued by the Company in favor of Patrick A.
Galliher or Suzanne E, Galliher, dated November 17, 2002
(incorporated by reference to Exhibit 10.2 of the Form 10-SB
filed on January 7, 2005).
10.3 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated November 17, 2003 (incorporated by reference
to Exhibit 10.3 of the Form 10-SB filed on January 7, 2005).
10.4 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated December 29, 2003 (incorporated by reference
to Exhibit 10.4 of the Form 10-SB filed on January 7, 2005).
10.5 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated January 9, 2004 (incorporated by reference
to Exhibit 10.5 of the Form 10-SB filed on January 7, 2005).
10.6 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated February 6, 2004 (incorporated by reference
to Exhibit 10.6 of the Form 10-SB filed on January 7, 2005).
10.7 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated February 13, 2004 (incorporated by reference
to Exhibit 10.7 of the Form 10-SB filed on January 7, 2005).
10.8 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated March 22, 2003 (incorporated by reference to
Exhibit 10.8 of the Form 10-SB filed on January 7, 2005).
10.9 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated April 26, 2004 (incorporated by reference to
Exhibit 10.9 of the Form 10-SB filed on January 7, 2005).
10.10 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated May 7, 2004 (incorporated by reference to
Exhibit 10.10 of the Form 10-SB filed on January 7, 2005).
10.11 Promissory Note issued by the Company in favor of Patrick A.
Galliher, dated June 17, 2004 (incorporated by reference to
Exhibit 10.11 of the Form 10-SB filed on January 7, 2005).
10.12 Promissory Note issued by the Company in favor of Ann
Morrison, dated August 24, 2005 (incorporated by reference
to Exhibit 10.12 of the Form 10-SB/A filed on May 16, 2006).
10.13 Consulting Services Agreement between the Company, on the
one hand, and De Joya & Company, Inc. and Arthur De Joya, on
the other hand, dated September 1, 2005 (incorporated by
reference to Exhibit 10 of the Form 8-K filed on September 21, 2005).
10.14 Amended and Restated Consulting Services Agreement between
the Company, on the one hand, and De Joya & Company, Inc.
and Arthur De Joya, on the other hand, dated February 28,
2006 (incorporated by reference to Exhibit 10 of the Form 8-
K/A filed on May 11, 2006).
16 Letter on Change in Certifying Accountant (incorporated by
reference to Exhibit 16 of the Form 8-K filed on January 5, 2006).
31.1 Rule 13a-14(a)/15d-14(a) Certification of Patrick A.
Galliher (filed herewith).
31.2 Rule 13a-14(a)/15d-14(a) Certification of Arthur de Joya
(filed herewith).
32 Section 1350 Certification of Patrick A. Galliher and Arthur
de Joya (filed herewith).