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RPM DENTAL, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion and analysis summarizes the significant factors affecting our condensed consolidated results of operations, financial condition and liquidity position for the six months ended June 30, 2011. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2010 and notes thereto contained in the information filed as part of the Company's Registration Statement on Form S-1, which was declared effective on May 9, 2011. The following discussion and analysis contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Forward-Looking Statements Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth and competition; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission ("SEC"). In some cases, you can identify forward-looking statements by terminology such as ''may,'' ''will,'' ''should,'' ''could,'' ''expects,'' ''plans,'' ''intends,'' ''anticipates,'' ''believes,'' ''estimates,'' ''predicts,'' ''potential,'' or ''continue'' or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this Report. Corporate History and Structure RPM Dental, Inc. is a Delaware Corporation founded on February 25, 2010. Our business is operated through our wholly-owned subsidiary, RPM Dental Systems, LLC, a limited liability company formed in Kentucky on September 15, 2009. On March 23, 2010, Mr. Josh Morita was appointed as our Chief Executive Officer and Chairman of the Board of Directors. On April 1, 2010, we issued four million (4,000,000) shares of common stock par value $.000001 to Josh Morita, Director and Chief Executive Officer. The shares issued to Mr. Morita are subject to Rule 144 of the Securities Act of 1933 and as such, are defined as restricted securities. Business Model Our business model is to target all dentists across America through our websites www.rpmdental.com and www.outrankmydentalcompetition.com. We generate revenue by offering traditional marketing plans targeted to our client's locale and online marketing plans in which our client's services can be optimized online through Search Engine Marketing ("SEM"). We plan to attract dentists through our website and online advertising, in addition to word of mouth referrals at dental conferences and conventions. As our good will grows, we will research and consider joint venture and affiliate opportunities with dental consultants, dental newsletter writers, and dental business brokers. 1 -------------------------------------------------------------------------------- Business Development The core of our business is to offer marketing services to dentists through our websites. Although still under construction at this time, customers buy our services and learn about our business by viewing both of our web sites located at www.rpmdental.com. and www.outrankmydentalcompetition.com. We implement our Responsive Patient Marketing campaign ("RPM") by initiating a consultation between our clients and a Dental Marketing Consultant. After the initial consultation we create a unique marketing plan for our client's practice. We work with our clients to identify key demographics about their existing patient base, and whether or not they are best utilizing marketing materials that are currently in use by their business. We also localize our client's practice by making sure that all their marketing materials are targeted to their local area. Since each locale is different, our research will include ways to attract customers by incorporating what we learn about their local area. In order to obtain the most favorable results for our clients, we develop a step-by-step marketing plan for their business, which highlights the roles of our team and our clients in marketing their practice. This service was announced to the public in December 2009 and has been in operation for over 9 months. During April of 2011, the Company started a new dental distribution service for implants and other dental products. To complement the existing services offered to dental clients, the Company is embarking on a dental distribution business. The first test market of Lexington, Kentucky was chosen based on existing relationships with dental professionals in the market as well as growth potential in the area. We will strive to be a reliable local choice for implants and other dental products that dentists often need on short notice. We believe there will be tremendous growth opportunities with our new line of business. Plan of Operation Marketing Plan Our marketing strategy is to aggressively enhance, promote and support the dentist in their efforts to educate patients about their practice. This will be accomplished by implementing a traditional marketing plan which focuses on our clients' locale, and utilizing very high quality professionally produced video and print media. We will market to dentists online with our websites and search engine advertising such as Google, Facebook, Bing, and Yahoo. We intend to joint venture with publishers of online dental newsletters who have thousands of dentists in their online distribution database such as www.TheWealthyDentist.com or www.DentalInsiders.com. We plan to advertise online and in hardcopy with e-zines, websites and magazines like www.DentalTown.com. Our Director is a member or on the board of numerous national dental organizations, including American Academy of Cosmetic Dentistry (www.aacd.com), American Association of Women Dentists (www.aawd.org), Academy of General Dentistry (www.agd.org), and American Academy of Implant Dentistry (www.aaid-implant.org). We plan to use our director's contacts in the industry to help market our business operations. Sales Strategy RPM Dental's sales strategy is to utilize online marketing and websites to generate repeat, referral and new business. We will offer free consultations to dentists, evaluating their current marketing plan. This will allow us to collect contact information and to continue marketing to our contacts. We will reach out to established dental consultants and online newsletter writers such as www.TheWealthyDentist.com and www.DentalInsiders.com, and offer affiliate and joint venture opportunities to rapidly grow sales. In this section we outline our plan of operation for the remainder of the fiscal year and the first six (6) months of the next fiscal year. 2 -------------------------------------------------------------------------------- Timeline Business Start-up: Remainder of the fiscal year: · Legal procedures including but not limited to filing papers of incorporation and SEC compliance. · Obtaining all necessary licenses and permits · Website development: finalize branding · Establishing key people and points of contact First six months of the next fiscal year: · Purchase of materials: office hardware, software · Start date for marketing activities · Opening date for business Task 1: Legal procedures: to fully establish RPM Dental as a web based business · Open bank accounts and credit/debit Merchant, PayPal, and dental payment systems. Task 2: Licenses and Permits · Further business permits or licenses may not be required, but due diligence must be done. Task 3: Website Development · Establish workflow turnaround time for placing and receiving inquiries and orders from users; ensuring all linkages are fluid. · Test and finalize methods of user interaction. · Test and finalize implementation of branding with website. Task 4: Work on Marketing Plan · Decide initial marketing channels and strategy. We believe our cash assets and the proceeds from the implementation of our sales strategy will satisfy our cash requirements for the remainder of the year and the first quarter of our next fiscal year. If we do not generate sufficient revenue after the first quarter of our next fiscal year it may be necessary to raise additional funds to meet the expenditures required to operate our business. Specifically, we may need additional funds to market our website, maintain our domain name, update our web design and pay costs associated with being a public company. If it is necessary to raise additional funds we plan to conduct an additional private offering. We do not anticipate initiating any material product research and development, material acquisition of plants and equipment, or material changes in the number of employees during the period covered in our plan of operations. 3 -------------------------------------------------------------------------------- Results of Operations The following tables set forth key components of our results of operations for the periods indicated, in dollars, and key components of our revenue for the period indicated, in dollars. For the three months ended June 30, 2011 2010 Revenue $ 51,578 2,000 Cost of Revenue 48,578 1,018 Operating Expenses General and Administrative 160 795 Professional Fees 10,075 900 Total Operating Expenses 10,235 1,695 Net Income (Loss) $ (7,235) (713) Net Loss Per Share - Basic and Diluted $ (0.00 ) (0.00 ) Weighted average number of shares outstanding during the year Basic and Diluted 5,525,000 4,000,000 For the three months ended June 30, 2011 and for the three months ended June 30, 2010 Revenue. Our revenue was $51,578 for the three months ended June 30, 2011 and $2,000 for the three months ended June 30, 2010, representing an increase of $49,578 or approximately 2,479%, as a result of the Company embarking on a dental distribution business with a related party. The Company entered into a contract with the related party as of July 19, 2011 which will result in monthly revenue to the Company pursuant to the terms of the contract. Cost of Revenue. Our cost of revenue was $48,578 for the three months ended June 30, 2011 and $1,018 for the three months ended June 30, 2010, representing an increase of $47,560 or approximately 4,672%, as a result of the cost of implants and other dental products in the dental distribution business. General and Administrative. Our general and administrative expenses were $160 for the three months ended June 30, 2011 and $795 for the three months ended June 30, 2010, representing a decrease of $635 or approximately 79.87%, as a result of the decrease of bank service charges, post office box rental and telephone expenses. Professional Fees. Our professional fees were $10,075 for the three months ended June 30, 2011 and $900 for the three months ended June 30, 2010, representing an increase of $9,175 or approximately 1,019%. The increase is due to incurring accounting and legal fees relating to the process of bringing the company public. Liquidity and Capital Resources As reflected in the accompanying financial statements, the Company is in the development stage with minimal operations. Revenue was $51,578 and $2,000 for the three months ended June 30, 2011 and 2010, respectively. We have an accumulated deficit of $71,253 for the period from September 15, 2009 (inception) to June 30, 2011, and have negative cash flow from operations of $71,253 from inception. Our financial statements have been presented on the basis that it is a going concern, which contemplates the realization of revenues from our subscriber base and the satisfaction of liabilities in the normal course of business. We have incurred losses from inception. These factors raise substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that would be necessary if the Company is unable to continue as a going concern. Management believes the actions presently being taken to obtain additional funding and implement its strategic plans provide for the Company to continue as a going concern. We believe revenue from operations and our cash on hand will be sufficient to sustain operations on an ongoing basis over the next 9 months. In the event we are unable to sustain our operations through our revenues generated, we may request a capital contribution from our officers and directors. Our officers and directors are not obligated to make any capital contributions. 4 -------------------------------------------------------------------------------- Recent Accounting Pronouncements In March 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-11 (ASU 2010-11), "Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives." The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity's first fiscal quarter beginning after issuance of this Update. The Company does not expect the provisions of ASU 2010-11 to have a material effect on the financial position, results of operations or cash flows of the Company. In February 2010, the FASB Accounting Standards Update 2010-10 (ASU 2010-10), "Consolidation (Topic 810): Amendments for Certain Investment Funds." The amendments in this Update are effective as of the beginning of a reporting entity's first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company's adoption of provisions of ASU 2010-10 did not have a material effect on the financial position, results of operations or cash flows. In February 2010, the FASB issued ASU No. 2010-09 "Subsequent Events (ASC Topic 855) "Amendments to Certain Recognition and Disclosure Requirements" ("ASU No. 2010-09"). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The adoption did not have an impact on the Company's financial position and results of operations. In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06, "Improving Disclosures about Fair Value Measurements." ASU No. 2010-06 amends FASB Accounting Standards Codification ("ASC") 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers' disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on the Company's financial statements. In January 2010, the FASB issued an amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company's financial statements. In January 2010, the FASB issued an amendment to ASC 820, Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of this standard is not expected to have a significant impact on the Company's financial statements. In October 2009, FASB issued an amendment to the accounting standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011. 5 -------------------------------------------------------------------------------- In October 2009, the FASB issued an amendment to the accounting standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting guidance such that tangible products that contain both software and non-software components that function together to deliver the product's essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards. Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This standard, for which the Company is currently assessing the impact, will become effective on January 1, 2011. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. Critical Accounting Policies and Estimates None. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs). |