UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of The Securities Exchange Act of 1934
CIRO INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 13-3963499
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
445 Fifth Avenue, Suite 11 A
New York, New York 10016
(Address of Principal Executive Offices) (Zip Code)
(212) 481-1322
(Issuer's Telephone Number)
Securities to be registered pursuant to Section 12 (b) of the Act.
None
Securities to be registered pursuant to Section 12 (g) of the Act.
COMMON STOCK, $0.001 PAR VALUE
(Title of Class)
<PAGE>
Ciro International, Inc.
CROSS REFERENCE SHEET
Item Number and Caption in Form 10-SB Caption in Form 10-SB
1. Item 101. Description of Business............... Description of
Business
2. Item 303. Management's Discussion
and Analysis or Plan of Operation.................. Management's
Discussion and Analysis
3. Item 102. Description of Property............... Description of
Properties
4. Item 403. Security Ownership
of Certain Beneficial Owners and Management......... Security Ownership of
Certain Beneficial
Owners and Management
5. Item 401. Directors, Executives Officers,
Promoters and Control Persons ...................... Directors, Executives
Officers, Promoters and
Control Persons
6. Item 402. Executive Compensation.................... Executive Compensation
7. Item 404. Certain Relationships and Related
Transactions........................................ Certain Relationships
and Related
Transactions
8. Item 103. Legal Proceedings......................... Legal Proceedings
9. Item 201. Market for Common Equity and
Related Stockholder Matters ........................ Market for Common
Equity and Related
Stockholder Matters
10. Item 701. Recent Sales of Unregistered
Securities ......................................... Recent Sales of
Unregistered Securities
11. Item 202. Description of Securities................. Description of
Securities
12. Item 702. Indemnification of Directors and
Officers ........................................... Indemnification
of Directors and
Officers
13. Item 310. Financial Statements...................... Financial Statements
14. Item 304. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure ......................................... Changes in and
Disagreements with
Accountants and
Financial Disclosure
15. Item 601. Index to Exhibits......................... Index to Exhibits
<PAGE>
Ciro International, Inc.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS...............................................1
PART I ..................................................................1
ITEM 1. DESCRIPTION OF BUSINESS................................1
BUSINESS DEVELOPMENT..........................1
BUSINESS OF ISSUER............................2
PRODUCTS; TRADEMARKS; LICENSES................3
COMPETITION...................................5
REPORTS TO SECURITY HOLDERS...................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
AND RESULTS OF OPERATION......................6
RESULTS OF OPERATIONS.........................6
LIQUIDITY AND CAPITAL RESOURCES ..............7
SEASONALITY...................................9
YEAR 2000 COMPLIANCE..........................9
ITEM 3. DESCRIPTION OF PROPERTY.......................9
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.............10
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS..........................11
ITEM 6. EXECUTIVE COMPENSATION................................11
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.........................12
ITEM 8. DESCRIPTION OF SECURITIES.............................12
DIVIDENDS....................................13
VOTING RIGHTS................................13
PREEMPTIVE RIGHTS............................13
ANTI-TAKEOVER PROVISIONS.....................13
TRANSFER AGENT...............................13
PART II ................................................................13
ITEM 1. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS..................13
ITEM 2. LEGAL PROCEEDINGS.....................................14
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.......14
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES. .............14
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.............15
PART F/S ...............................................................17
FINANCIAL STATEMENT...................................17
PART III ...............................................................18
ITEM 1. INDEX TO EXHIBITS.....................................18
INDEX TO FINANCIAL STATEMENTS ..........................................20
SIGNATURES .............................................................21
<PAGE>
FORWARD-LOOKING STATEMENTS
The Company cautions readers regarding certain "forward-looking statements
in the following discussion and elsewhere in this registration statement or any
other statement made by, or on the behalf of the Company, whether or not in
future filings with the Securities and Exchange Commission. The safe harbor
provisions of the Litigation Reform act of 1995 are not applicable to this
filing. Forward-looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward-looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, with respect to future business
decisions, are subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ materially from
those expressed in any forward-looking statements make by, or on behalf of, the
Company. The Company disclaims any obligation to update forward-looking
statements.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Ciro International, Inc. was originally incorporated in the State of
Florida on June 14, 1990 as Mid-Way Medical Diagnostic Center, Inc. ("Mid-Way
(Florida)"). In September of 1996, Mid-Way (Florida) amended its articles of
incorporation to increase the authorized number of common shares from 100 to
50,000,000 and to reduce the par value to $.001. Also in September of 1996,
Mid-Way (Florida) forward split its outstanding shares of Common Stock
10,000-for-one, increasing the number of outstanding shares from 100 to
1,000,000.
Mid-Way (Florida) was initially engaged in the business of attempting to
establish and operate medical and diagnostic centers. During 1991, Mid-Way
(Florida) abandoned its efforts to engage in such business.
In September of 1997, Mid-Way (Florida) entered into a Stock Purchase
Agreement with Mr. David Cohen in which Mid-Way (Florida) agreed to issue
10,000,000 shares of its Common Stock to Mr. Cohen for $100,000. Mr. Cohen was
subsequently appointed the sole officer and director of Mid-Way (Florida). The
$100,000 paid to Mid-Way (Florida) were used by Mid-Way (Florida) to pay legal
expenses and finder's fees in connection with the aforementioned transaction.
1
<PAGE>
In November 1997, Mid-Way (Florida) entered into a reorganization agreement
with Ciro Jewelry, Inc. ("Ciro Jewelry (Delaware)"), a Delaware corporation, in
which Ciro Jewelry (Delaware) agreed to merge with and into Mid-Way Acquisition
Corp. ("Merger Sub"), a wholly owned Nevada corporation created by Mid-Way
(Florida) solely for the purpose of merging with Ciro Jewelry (Delaware). By
virtue of the merger, all of the assets, liabilities, and business of Ciro
Jewelry (Delaware) became the assets, liabilities, and business of the Merger
Sub.
The closing of the reorganization occurred on December 2, 1997, and Mid-Way
(Florida) issued 2,500,000 post-forward split shares to Mr. Murray A. Wilson,
the sole shareholder of Ciro Jewelry (Delaware), in return for all of the
outstanding stock of Ciro Jewelry (Delaware). As a result of the merger, the
Merger Sub changed its name to Ciro Jewelry, Inc. ("Ciro Jewelry"); Mr. Cohen
resigned as the sole officer and director of the Company and of Ciro Jewelry and
simultaneously appointed Mr. Wilson as the sole director of each entity.
In connection with the aforementioned reorganization, Mr. Cohen canceled
9,400,000 of the 10,000,000 pre-forward split shares held by him. He also sold
260,000 of his pre-forward split shares to Mr. Wilson for $26,000 and 140,000 of
his pre-forward split shares to Mr. Laszlo Schwartz, a former officer of the
Company, for $14,000.
In December 1997, Mid-Way (Florida) changed its name to Ciro International,
Inc. ("Ciro" or, "the Company") at the same time the Company merged with Mid-Way
Medical and Diagnostic Center, Inc., a Nevada corporation, which was established
solely for the purpose of changing the domicile of the Company from the State of
Florida to the State of Nevada.
BUSINESS OF ISSUER
The Company exists primarily as a holding company, and accordingly, the
operations described in this document, unless otherwise specified, are those of
its operating subsidiary, Ciro Jewelry. The Company's main source of income is
as a result of the licensing of the CIRO name.
Ciro Jewelry currently has three licensees in the United States, Korea, and
Mexico, and Russia, which operate approximately 5 retail fashion jewelry stores
using the CIRO name. In addition, Ciro Jewelry holds a number of trademarks and
trade names relating to the CIRO name throughout the world. The license
agreements, trademarks and trade names were acquired by Ciro Jewelry from
Merchants T&F, Inc. ("MT&F"), a corporation controlled by Mr. Wilson, an
officer, director, and a controlling shareholder of the Company. See "Related
Transactions". In 1994 Ciro, Inc., Ciro of Bond Street, Inc., and Ciro
Creations, Inc. (hereinafter collectively referred to as, "Former Ciro") filed
for protection under Chapter 11 of the U.S. Bankruptcy Code. On February 5,
1995, for $1,475,000, MT&F purchased certain assets from Mr. Alan Cohen, as
Trustee in the bankruptcy of Former Ciro. These assets included real property
leases for various store locations previously operated by Former Ciro together
with the security deposits thereunder, the personal property in the stores
merchandise inventory, computer equipment and software used in connection with
the operation of Former Ciro, and the agreements between Former Ciro and all of
its franchisees. MT&F, using the services of Ciro Jewelry, subsequently sold off
substantially all of the assets purchased from the bankruptcy court, but
retained the trademarks, trade names and licensing agreements. MT&F transferred
these license agreements, trademarks and trade names to Ciro Jewelry in 1995 as
a capital contribution for 1,500 shares of Ciro Jewelry. Neither MT&F, Ciro
Jewelry, nor the officers, directors, or affiliates of such entities, had any
affiliation with Former Ciro.
2
<PAGE>
The Company currently does not own or hold leases to any stores. All
individual licensees are responsible for owning their own stores as well as
securing their own merchandise. The Company does not manufacture or distribute
the products sold under the CIRO name, nor does it secure the source or
availability of materials used to manufacture the Ciro products. These
responsibilities are left up to the individual licensees. As such, the Company
bears no research and development costs.
PRODUCTS; TRADEMARKS; LICENSES
Before filing for protection under federal bankruptcy laws, Former Ciro was
a significant retailer of high quality imitation jewelry and cultured and
imitation pearls under the name CIRO, Ken Lane, Kenneth Jay Lane, and Daniel
Swarovski trade names. The items sold under these names included all types of
jewelry set with imitation, man-produced diamonds, imitation pearls, cultured
pearls and wide range of necklaces, rings, brooches, earrings, bracelets, and
watches. In December of 1993, Former Ciro owned a total of 146 retail stores, of
which 47 were located in the United States, 75 in the United Kingdom, 13 in
Germany, 5 in Austria, and 6 in France. At such time Former Ciro employed a
total of 623 people at these locations. In addition, it had 14 licensing
arrangements. Ciro Jewelry has serviced the remaining licensees and collected
royalty payments therefrom since 1995.
The Company intends to expand its licensing arrangements and expand into
14K gold and semi-precious stones. Ciro Jewelry presently has licensing
arrangements with entities throughout the world, entitling them to use the CIRO
trade name in connection with their retail stores, subject to certain quality
control requirements enforced by Ciro Jewelry. The licensees are entitled to
open as many stores as they wish within the territory for which their licenses
are granted. Each license agreement is for an initial term of five years,
renewable at the option of Ciro Jewelry.
The following table sets forth: (1) the location for which a licensee has
rights to open stores; (2) whether the licensees' development rights are
exclusive or non-exclusive to the licensee; (3) the total number of stores
opened as of December 31, 1999; and, (4) the year in which the present license
agreement shall expire:
Exclusive/ Total Stores License
Location Non-Exclusive Open at 12/31/99 Expiration Date
- -------- ------------- ---------------- ----------------
Mexico Exclusive 2 December 2002
Korea Exclusive 1 December 2002
USA Non-exclusive 2 December 2002
3
<PAGE>
The Company currently has no leases. On December 23, 1998, Hamilton
Jewelry, Inc., Oldco Bijoux, Inc. and KJL Vegas, Inc. (collectively "U.S.
Licensees") and Company (collectively the "Parties") agreed to close the United
States stores in a Rescission Agreement (the "Rescission Agreement"). Ciro had
entered into a contract with Hamilton Jewelry, Inc., its licensee, to purchase
its inventory. After Examination of the inventory, it was determined that it was
not worth the amount that it had been represented. Ciro thereupon exercised its
right to rescind the contract. Under the terms of the Rescission Agreement, the
Company and its U.S. Licensees agreed that all documents executed by the May 1,
1998 agreement are canceled and are null and void.
In furtherance of the Rescission Agreement, the U.S. Licensees and the
Company agreed to that the U.S. Licensees shall repay, as per separate agreement
to be negotiated by the Parties, the advance of $310,000.00 forwarded to the
U.S. Licensees by the Company for the purposes of the Jewelry Business. Under
this Rescission Agreement, the U.S. Licensees and the Company agreed to each
release and discharge their respective party from all causes of actions relating
to the agreement for the repayment of the $310,000.00, royalty arrangements
concerning use of the Ciro trademark and lease purchase agreement with respect
to the lease for the Ciro shop at Caesar's Palace Hotel.
Ciro Jewelry's registered trademark is "Ciro 7." MT&F originally purchased
several trade names and trademarks in the bankruptcy of the Former Ciro. In
1995, MT&F assigned all of its rights, title, and interests in the trade names
and trademarks to Ciro Jewelry, subject to existing license agreements. Set
forth below is a list of the trademarks and trade names currently owned by Ciro
Jewelry.
Country Mark Application Number Registration Number
- ------- ---- ------------------ -------------------
Bolivia CIRO 1361
Chile CIRO 421866
Hungary CIRO 137946
Israel CIRO 80209
CIRO 80210
CIRO in Hebrew 80058
CIRO in Hebrew 80059
Japan CIRO 63006/1993
Macao CIRO 11006-M
CIRO 11515-M
Mexico CIRO 416046
CIRO 421337
Monaco CIRO 9314680
Panama CIRO (stylized) 54820
CIROLITE 54821
Philippines CIRO 85612-PN
Portugal CIRO 276161
CIRO 280206
Russia CIRO 95703549
South Korea CIRO 262281
CIRO 262282
CIRO 265017
CIRO 265158
U.S.A. CIRO 327696
CIRO 826855
CIRO 1794011
CIRO 1668523
CIRO (stylized) 601862
CIRO and crown 74/350726
CIROLITE 949790
Crown device 74/350876
4
<PAGE>
COMPETITION
The Jewelry business is highly competitive, with competition from other
independent jewelry stores, department stores, and others operating in leased
concession department stores. Many of the Company's competitors have greater
technical expertise, financial resources and marketing capabilities than the
Company. Many have been in existence longer and have a much more established
market presence and substantially greater financial, marketing and other
resources. The Company competes with a variety of other retail jewelry
businesses in the industry, and income is dependent upon the various license
arrangements with others to use the Ciro name. There is no assurance that the
rights to such name are adequately protected, although the Company has attempted
to contact various federal and foreign agencies to protect the exclusive use of
the "Ciro" name.
Our products seek to offer the look and feel of expensive jewlery without
its cost. Indirect competition comes from fashion jewelry at the low end of the
market. We believe our low end jewelry is superior in design and quality to that
offered by fashion jewelry retailers. Our product competes directly with jewelry
offered by department stores, including home shopping channels and indirectly
with specialy retailers of accessiories and related items. To compete profitably
we must increase our number of store locations develop strong vendor relations
and re-establish name recognition.
REPORTS TO SECURITY HOLDERS
Prior to filing this Form 10-SB, the Company had not been required to
deliver annual reports. The press releases or letters to shareholders have been
issued. However, once the Company becomes a reporting company, the Company shall
deliver annual reports to securities holders as required by the Securities
Exchange Act of 1934 (the "Exchange Act"). Additionally, the Company shall
deliver annual reports to securities holders as required by the rules or
regulations of any exchange upon which Ciro's shares may be traded. If the
Company is not required to deliver annual reports, it is not likely that the
Company will go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports, such reports will contain audited
financial statements as required.
Prior to the filing of this Form 10-SB, the Company had not filed reports
with the Securities and Exchange Commission (hereinafter the "Commission").
However, once the Company becomes a reporting company, management anticipates
that Forms 3, 4, 5, 10-K-SB, 10Q-SB, 8-K and Schedules 13D along with
appropriate proxy materials will have to be filed as they come due. If the
Company issues additional shares, then it may file additional registration
statements for those shares. The public may read and copy any materials Ciro
files with the Commission at the Commission's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the Commission. The Internet address of the
Commission's Web site is (HTTP://WWW.SEC.GOV).
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS - COMPARISON OF YEARS DECEMBER 31, 1999 AND DECEMBER 31,
1998.
Revenue for the year ended December 31, 1999 was $58,337, a 73% decrease
from $213,244 during the year ended December 31, 1998. The decrease in revenue
of $154,907 is due to reduced level of business activity in 1999 caused by the
loss our prime licensee. The decline in revenues is not expected to continue as
efforts are being made to enter into an agreement with another licensee to
replace Hamilton Jewelry. The Company's majority shareholder has agreed to cover
the Company's cash flow shortages through December 2000.
Operating costs for the year ended December 31, 1999 were $327,941 compared to
$358,314 from the year ended December 31, 1998. There have been a
disproportionate amount of increases and decreases in some items. Bad debt
expense decreased from $207,625 in 1998 to $33,941 in 1999, due to the reduction
in business activity and loss of prime licensee. Management fees decreased from
$40,000 in 1998 to $0 in 1999 due to non-renewal of the consulting agreement
with Merchants T & F, Inc. in 1999. Office expenses decreased from $26,285 in
1998 to $3,556 in 1999 due to the reduction in business activity and loss of
prime licensee. In 1999 trademarks with a value of $246,323 were written off due
to the loss of the prime licensee.
Loss from operations for the year ended December 31, 1999 were $269,604 compared
to $145,070 from the year ended December 31, 1998. The increase of $124,534 in
losses is explained above.
Other income for the year ended December 31, 1999 was $4,595 compared to
other expenses of $309,600 for the year ended December 31, 1998. The majority of
the other expenses in 1998 related to an acquisition advance reserve. The
reserve was necessary because advances given to a potential acquisition partner
of $310,000 have doubt as to their recoverability due to a recission agreement
of the proposed merger. The recission agreement states that the $310,000 is to
be repaid in full.
Net loss for the year ended December 31, 1999 was $265,732 compared to $455,415
for the year ended December 31, 1998. The net decrease in loss of $189,363
reflects lower bad debt and acquisition expenses (including a merger fee of $3
10,000 in 1998) and these reductions were offset by the $246,323 write-off of
trademarks in 1999 and a reduced level of business activity in 1999, which
resulted in a decrease in operating costs.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1999 increased to $1,630 from working
capital of $494 at December 31, 1998. The increase in working capital was
primarily due to a reduced level of business activity in 1999.
6
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's physical facilities presently consists of only its main
location at 445 Fifth Avenue, Suite 11A, New York, New York 10016. This facility
is leased by MT&F who is in the eighth year of a 10 year lease with Mr. Murray
A. Wilson. See "Related Transactions". The facility used by the Company is
approximately 1000 square feet. Currently, this facility is used as the
Company's corporate headquarters, billing sites and company offices.
Currently, Ciro Jewelry does not own any property. All stores where Ciro
Jewelry is sold are owned by individual licensees.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the beneficial ownership of shares of voting
stock of Ciro, as of December 31, 1999, of (i) each person known by Ciro to
beneficially own 5% or more of the shares of outstanding common stock; (ii) each
of Ciro's executive officers and directors; and (iii) all of Ciro's executive
officers and directors as a group. Except as otherwise indicated, all shares are
beneficially owned, and investment and voting power is held by the persons named
as owners.
<TABLE>
<CAPTION>
==================================================================================================================
Title of Class Name and Address of Beneficial Owner Amount and Nature of Percentage of
Beneficial Owner Class
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Murray A. Wilson (1) (2) 3,500,000 48.88%
- ------------------------------------------------------------------------------------------------------------------
Common Max Bloch (3) (4) -0- -0-
- ------------------------------------------------------------------------------------------------------------------
Common CEDE & CO (5) 814,000 11.37%
- ------------------------------------------------------------------------------------------------------------------
Common All officers and directors as a 3,500,000 48.88%
group (2 persons)
==================================================================================================================
</TABLE>
- ----------
(1) The address for Murray A. Wilson is 445 Fifth Avenue, New York, NY 10016.
(2) Murray A. Wilson serves as the Company's President, Chief Executive
Officer, Director and Secretary.
(3) The address for Max Bloch is Buchstrasse 2, Endingen, Switzerland 5304.
(4) Max Bloch serves as Ciro's Vice President.
(5) The address for CEDE & CO is PO Box 222 Bowling Green Station, New York, NY
10274.
7
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS.
Set forth below are the names and ages of and the positions and offices
held by each of the Directors and Executive Officers of the Company.
Positions and Offices
Name Age With The Company
---- --- ---------------------
Murray A. Wilson 60 Director; Chief Executive Officer;
President & Secretary
Max Bloch 48 Vice President
Murray A. Wilson has served as Ciro's President, Chief Executive Officer,
Director and Secretary since December 1, 1997. In addition, Mr. Wilson has
served as President and the Chief Operating Officer of MT&F, Inc. since 1990.
From 1994 to present, Mr. Wilson has served as President of Grossingers
Trademark.
Max Bloch has been a partner in Berlowitz Bloch & Partner, located in
Zurich, Switzerland, a portfolio management firm, since 1996. From 1994 to 1996,
he was the Deputy Manager and a director of Giro-Credit Bank, located in Zurich,
Switzerland, and from 1993 to 1994, he was the Deputy Manager and a director of
Uto Bank AG, located in Zurich, Switzerland.
8
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
The following information sets forth the cash and other compensation paid
or accrued by Ciro during the last fiscal year, with respect to services
performed by Murray A. Wilson and Max Bloch for services as officers and
director of the Company.
Neither Mr. Wilson nor Mr. Bloch has received any compensation for their
respective services rendered unto the Company, nor have they received such
compensation in the past. They have agreed to act without compensation until
authorization by the Board of Directors, which is not expected to occur until
the Company has generated revenues.
The following table sets forth information concerning all remuneration paid
by the Company as of December 15, 1999 to the Company's Directors and all
Executive Officers as a group:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
=====================================================================
AWARDS PAYOUTS
=====================================================================================================================
Name and Principal Year Salary Bonus ($) Other Restricted Securities LTIP All Other
Position ($) Annual Stock Underlying Payouts Compensation
Compensation Award(s) Options/ ($) ($)
($) ($) SARs (#)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Murray A. Wilson 1998 0 0 0 0 0 0 0
(Director; C.E.O.; 1999 0 0 0 0 0 0 0
President; Secretary)
- ---------------------------------------------------------------------------------------------------------------------
Max Bloch 1998 0 0 0 0 0 0 0
(Vice President) 1999 0 0 0 0 0 0 0
=====================================================================================================================
</TABLE>
9
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Murray A. Wilson, Director, Chief Executive Officer, President and
Secretary of the Company is also the sole shareholder of Merchants T&F, Inc.
("MT&F"), the former parent of Ciro Jewelry (Delaware). Effective August 1,
1997, MT&F entered into a one-year consulting agreement ("Consulting Agreement")
with Ciro Jewelry (Delaware). As compensation under such agreement, Ciro Jewelry
(Delaware) agreed to pay MT&F the greater of $5,000 per month or 20% of the
gross royalty income. In return, MT&F provided management and organizational
services on a part-time basis. Murray Wilson is the sole shareholder of
Merchants T & F, Inc. Mr. Wilson also owns 48% of the outstanding common stock
of Ciro. This agreement was not entered into in an arms' length transaction and
although management believes the terms are fair, no independent determination of
fairness has ever been obtained. The Consulting Agreement between MT&F and Ciro
Jewelry (Delaware) expired on July 31, 1998 and was not renewed.
ITEM 8. DESCRIPTION OF SECURITIES.
The following description is qualified in all respects by reference to the
Company's Certificate of Incorporation and all amendments thereto and the
Company's Bylaws, copies of which are attached hereto as exhibits.
The Company's Articles of Incorporation, as amended, currently authorizes
50,000,000 shares of Common Stock, $0.001 par value. As of December 15, 1999,
7,160,000 shares of the Company's Common Stock were issued and outstanding to
twenty-seven shareholders.
Dividends. The Company has not declared any dividends since its inception.
Because the Company intends to retain future earnings to fund the development
and growth of its business, it does not anticipate paying cash dividends on the
Common Stock in its foreseeable future. Any payments of dividends in the future
is in the sole discretion of the Board of Directors of the Company. The
Company's decision will be dependent upon the Company's financial condition,
results of operations and other factors the Board deems relevant.
Voting Rights. Holders of shares of Common Stock will vote as a single
class together on all matters submitted to a vote of stockholders, with each
share of Common Stock entitled to one vote, except as otherwise provided by law.
Preemptive Rights. The holders of Common Stock are not entitled to
preemptive or subscription rights.
Anti-Takeover Provisions. Although management is not presently aware of any
takeover attempts, our Certificate of Incorporation defers to provisions in the
Nevada General Corporation Laws which may be deemed to be "anti-takeover" in
nature in that such provisions may deter, discourage or make more difficult the
assumption of control of the Company by another entity or person.
Transfer Agent. The transfer agent for the shares of Common Stock of the
Company is Interwest Transfer Company, Inc., with an address of 1981 East 4800
South, Suite 100, Salt Lake City, Utah 84117, and telephone number (801)
272-9294.
10
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
On October 21, 1999, the Company's Common Stock was no longer eligible to
be quoted on the OTC-Bulletin Board for failure to comply with NASD Eligibility
Rule 6530 (the "Rule"). Under the Rule, in part, a company is required to be
current in the filing of reports with the Securities and Exchange Commission.
The Company failed to meet its reporting obligations. After being de-listed from
the OTC-Bulletin Board, the Company's Common Stock is now quoted in the "Pink
Sheets" under the symbol "CIRR". The Pink Sheets are a static paper quotation
medium operated by the National Quotation Bureau. While it is anticipated that
the Company will apply to be re-listed on the OTC-Bulletin Board after this
registration statement is declared effective by the Commission, the Common Stock
may not be or remain eligible to trade under the Rule, which could result in an
illiquid market in the Common Stock.
The following table sets forth, for the fiscal quarters indicated, the high
and low bid prices for the Company's Common Stock as reported on the
OTC-Bulletin Board. The quotations reflect inter-dealer prices without retail
mark-up, markdown or commission, and may not represent actual transactions.
FISCAL YEAR ENDED December 31, 2000:
First Quarter No Trades
- ----------------------------------------------------------------------------
FISCAL YEAR ENDED December 31, 1999:
Quarter High Low
- ----------------------------------------------------------------------------
First Quarter $ 7/8 $ 5/8
- ----------------------------------------------------------------------------
Second Quarter $ 5/8 $ 1/4
- ----------------------------------------------------------------------------
Third Quarter $ 1/4 $ 1/4
- ----------------------------------------------------------------------------
Fourth Quarter $ 1/4 $ 1/4
- ----------------------------------------------------------------------------
FISCAL YEAR ENDED December 31, 1998:
Quarter High Low
- ----------------------------------------------------------------------------
First Quarter $ 11/2 $ 7/8
- ----------------------------------------------------------------------------
Second Quarter $ 2 3/8 $ 1 3/8
- ----------------------------------------------------------------------------
Third Quarter $ 2 $ 1 1/8
- ----------------------------------------------------------------------------
Fourth Quarter $ 11/4 $ 3/4
- ----------------------------------------------------------------------------
As of December 15, 1999, the Company had approximately 27 shareholders of
record. The Company has never declared or paid any dividends on its Common
Stock. The Company currently intends to retain any earnings for use in its
business and therefore does not anticipate paying any dividends in the near
future.
ITEM 2. LEGAL PROCEEDINGS.
Neither Ciro nor any of its properties, is a party to any material pending
legal proceedings or government actions, including any material bankruptcy,
receivership, or similar proceedings. Management of Ciro does not believe that
there are any material proceedings to which any director, officer, or affiliate
of the Company, any owner of record of the beneficially or more than five
percent of the common stock of Ciro, or any associate of any such director,
officer, affiliate of the Company, or security holder is a party adverse to Ciro
or has a material interest adverse to Ciro.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with independent accountants over any item
involving the Company's financial statements.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Private Placement. In 1998, Ciro sold 660,000 shares of common stock, $.001
par value, at $.66 per share pursuant to Rule 504 of Regulation D Promulgated
under the Securities Act of 1933, as amended, to twelve (12) investors for a
total consideration of $435,600 net of commission
II-1
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: May 23, 2000
CIRO INTERNATIONAL, INC.
By: /s/ Murray A. Wilson
-------------------------------------------
Murray A. Wilson, President, Chief Executive
Officer, Director and Secretary
II-2
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
- CONTENTS -
Page(s)
-------
Independent Auditors' Report 1.
Financial Statements:
Consolidated Balance Sheets 2.
Consolidated Statements of Operations 3.
Consolidated Statements of Changes in Shareholders' Equity 4.
Consolidated Statements of Cash Flows 5.
Notes to Consolidated Financial Statements 6. - 9.
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To The Shareholders of
Ciro International, Inc. and Subsidiary
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of Ciro
International, Inc. and Subsidiary as of December 31, 1999 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements, referred to above,
present fairly, the financial position of Ciro International, Inc. and
Subsidiary as of December 31, 1999 and 1998 and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the financial statements, certain conditions indicate
that the Company may be unable to continue as a going concern. The accompanying
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
/S/LAZAR LEVINE & FELIX LLP
-----------------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
February 5, 2000
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999
- ASSETS -
CURRENT ASSETS:
Cash $ 930
Interest receivable 700
---------
TOTAL CURRENT ASSETS 1,630
---------
OTHER ASSETS:
Loans receivable - shareholders (Note 5) 57,977
Loans receivable - other 5,000
---------
62,977
---------
TOTAL ASSETS $ 64,607
=========
- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) -
CURRENT LIABILITIES:
Accounts payable $ -
--------
TOTAL CURRENT LIABILITIES -
--------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)
SHAREHOLDERS' EQUITY (Note 4):
Common stock - $.001 par value, 50,000,000 shares authorized,
7,160,000 shares issued and outstanding 7,160
Additional paid-in capital 900,289
Accumulated deficit (842,842)
---------
64,607
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,607
=========
The accompanying notes are an integral part of these financial statements.
Page 2.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
--------- ---------
REVENUES:
Royalty income $ 58,337 $ 213,244
--------- ---------
TOTAL REVENUES 58,337 213,244
OPERATING COSTS:
Selling, general and administrative expenses 81,618 358,314
Writeoff of trademarks (Note 3e) 246,323 --
--------- ---------
TOTAL OPERATING COSTS 327,941 358,314
--------- ---------
(LOSS) FROM OPERATIONS (269,604) (145,070)
--------- ---------
OTHER INCOME (EXPENSE):
Acquisition advance reserve (Note 6) -- (310,000)
Interest income 4,595 400
--------- ---------
4,595 (309,600)
--------- ---------
(LOSS) BEFORE PROVISION FOR INCOME TAXES (265,009) (454,670)
Provision for taxes (Note 3d) 723 745
--------- ---------
NET (LOSS) $(265,732) $(455,415)
========= =========
EARNINGS (LOSS) PER SHARE (NOTE 3i)
Basic $ (.04) $ (.06)
========= =========
Diluted $ (.04) $ (.06)
========= =========
The accompanying notes are an integral part of these financial statements.
Page 3.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------ Paid-in Accumulated Shareholders
Shares Amount Capital Deficit Equity
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 6,500,000 $ 6,500 $ 465,349 $(121,695) $ 350,154
Net proceeds from issuance of additional
shares of common stock (Note 4) 660,000 660 434,940 -- 435,600
Net (loss), December 31, 1998 -- -- -- (455,415) (455,415)
--------- --------- --------- --------- ---------
Balance, December 31, 1998 7,160,000 7,160 900,289 (577,110) 330,339
Net (loss), December 31, 1999 -- -- -- (265,732) (265,732)
--------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1999 7,160,000 $ 7,160 $ 900,289 $(842,842) $ 64,607
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(265,732) $(455,415)
Adjustments to reconcile net (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 24,838 24,838
Bad debt provision 33,490 205,625
Writeoff of trademarks 246,323 --
Changes in assets and liabilities:
(Increase) in accounts receivable (33,490) (192,135)
(Increase) in interest receivable (300) (400)
(Decrease) increase in accounts payable -- (3,005)
--------- ---------
Net cash provided by (used in) operating activities 5,129 (420,492)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to shareholders (4,295) (15,211)
--------- ---------
Net cash (used) by investing activities (4,295) (15,211)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- 435,600
--------- ---------
Net cash provided by financing activities -- 435,600
--------- ---------
NET INCREASE (DECREASE) IN CASH 834 (103)
Cash, at beginning of year 96 199
--------- ---------
CASH, AT END OF YEAR $ 930 $ 96
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 723 $ 3,745
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - NATURE OF BUSINESS:
On November 12, 1997, Mid-Way Medical and Diagnostic Center, Inc. ("Mid-Way
Medical") a Florida corporation, changed its domicile state to Nevada and
changed is name to Ciro International, Inc. ("the Company"). On December 2,
1997, Mid-Way Acquisition Corp. ("Mid-Way"), a wholly-owned subsidiary of
Mid-Way Medical, merged with Ciro Jewelry, Inc.
At the closing, Jewelry's sole shareholder was issued 2,500,000 shares of
the Company's stock in exchange for all the outstanding shares of the
subsidiary. As a result of the merger all the assets, liabilities and the
business of the subsidiary became the assets, liabilities and business of
Mid-Way. At the same time, the former majority shareholder of Mid-Way
Medical canceled and/or sold a vast majority of his shares in the Company.
After the merger Mid-Way changed it's name to Ciro Jewelry, Inc. This
transaction is considered to be a recapitalization with Ciro Jewelry as the
accounting acquirer and has been reflected using reverse acquisition
accounting.
Ciro Jewelry Inc. (subsidiary) owns a trademark for the "Ciro" jewelry name
in the following countries: Bolivia, Chile, Hungary, Israel, Japan, Macao,
Mexico, Monaco, Panama, Philippines, Portugal, South Korea, Russia and the
United States. The Company licenses its trademark and receives royalties
from the licensees.
NOTE 2 - GOING CONCERN UNCERTAINTY:
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates the realization of assets and
liquidation of liabilities in the ordinary course of business. For the year
ended December 31, 1999, the Company incurred a loss of $265,732, which
increased the accumulated deficit to $842,842. In addition the Company's
main source of royalty income did not pay royalties due for the year ended
December 31, 1999 and has only paid a nominal amount as of December 31,
1999, and the ongoing relationship is in question (See Note 6). It is the
Company's intention to seek a replacement licensee for its main source of
royalty income, however to date a replacement has not been found, and
accordingly, the Company has written down the value of its trademark to
zero at December 31, 1999.
The current operating expenses of the Company are minimal. The majority of
the 1999 loss was a result of amortization and the subsequent write off of
the trademark as well as bad debt expense. The majority shareholder has
indicated his willingness to provide the funds for all operating expenses
at least through December 31, 2000, which primarily consist of rent expense
paid to an affiliate and other nominal costs.
In view of these matters, realization of the assets of the Company is
dependent upon the Company's ability to generate royalty income from its
trademark, and the success of its future operations. The financial
statements do not include adjustments relating to the recoverability and
classification of recorded asset amounts and classification of liabilities
that might be necessary should the Company be unable to continue in
existence. The Company will attempt to market the trademark to other
sources, although management cannot provide assurance that they will be
successful in doing so.
Page 6.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Principles of Consolidation:
The accompanying consolidated financial statements include the
accounts of "Ciro International, Inc." and its wholly owned subsidiary
"Ciro Jewelry, Inc". All material intercompany balances and
transactions have been eliminated in consolidation. For purposes of
these financial statements Ciro Jewelry is considered the accounting
acquirer.
(b) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management
does not expect such variances, if any, to have a material effect on
the financial statements.
(c) Concentration at Credit Risk/Fair Value:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The
Company, from time to time, may maintain cash balances which exceed
the federal depository insurance coverage limit. The Company performs
periodic reviews of the relative credit rating of its bank to lower
its risk. The carrying amounts of cash and accounts receivable
approximate fair value due to the short-term nature of these items.
(d) Income Taxes:
The Company utilizes Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes" ("SFAS 109"), which requires
the use of the asset and liability approach of providing for income
taxes. SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Under SFAS 109, the
effect on deferred tax assets and liabilities of changes in tax rates
is recognized in income in the period that includes the enactment
date.
The Company has a net operating loss carryforward as of its year end,
December 31, 1999, of approximately $825,000 which may be applied
against future taxable income, and which expires in the years
beginning in 2018. Since there is no assurance that the Company will
generate future taxable income to utilize the deferred tax asset
resulting from the net operating loss carryforward, the Company has
not recognized this asset.
Page 7.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(e) Trademarks:
Trademarks were being amortized over a 15 year period. During 1999,
trademarks with a value of $246,323 were written off because they were
considered to have no continuing value.
(f) Cash Equivalents:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
(g) Accounts Receivable:
For the years ended December 31, 1999 and 1998 the Company has
reserved the entire balance of accounts receivable in the amount of
$239,566 and $205,625, respectively. The receivable represents amounts
due from a customer with which the Company had a merger agreement that
was later rescinded (see Note 6).
(h) Comprehensive Income:
In 1998, the Company adopted Financial Accounting Standards Boards
Statement No. 130, "Reporting Comprehensive Income", which prescribes
standards for reporting other comprehensive income and its components.
The Company had no items of other comprehensive income in any period
presented and accordingly is not required to report a statement of
comprehensive income.
(i) Earnings Per Share:
The Company has adopted Financial Accounting Standards Board Statement
No. 128 "Earnings Per Share" ("SFAS 128"), which has changed the
method for calculating earnings per share. SFAS 128 requires the
presentation of basic and diluted earnings per share on the face of
the statement of operations. Earnings per common share is computed by
dividing net income by the weighted average number of common shares
and for diluted earnings per share also common equivalent shares
outstanding.
The following average shares were used for the computation of basic
and diluted earnings per share:
Years Ended December 31, 1999 1998
------------------------ ------------ ----------
Basic 7,160,000 6,926,339
Diluted 7,160,000 6,926,339
Page 8.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 4 - STOCKHOLDERS' EQUITY:
Private Placement Offering:
During 1998, the Company commenced selling common stock through a private
placement memorandum. The offering was for the sale of a maximum of
1,500,000 shares of common stock at a price of $.66 per share. As of
December 31, 1998, 660,000 shares were sold and the Company received net
proceeds of $435,600.
NOTE 5 - RELATED PARTY TRANSACTIONS:
Effective January 1, 1999, loans receivable - shareholder are interest
bearing at 8% per annum and have no formal repayment terms.
As of August 1, 1997, a consulting agreement was entered into between the
subsidiary and its then parent company, Merchants T & F, Inc. The agreement
was for one year whereby the Company would pay the greater of $5,000 per
month or 20% of the gross royalty income it earns to its parent, who would
provide management consulting services. The agreement was not renewed due
to the merger with Ciro International, Inc. Management fees of $0 and
$40,000 were paid in 1999 and 1998, respectively.
The Company pays rent for business property to Merchants T & F, Inc. Total
rent for the years ended December 31, 1999 and 1998 was $19,000 and
$24,000, respectively.
NOTE 6 - CONTINGENCIES:
In May 1998, the Company entered into an agreement to purchase the assets
of Hamilton Jewelry, Inc., Oldco Bijoux, Inc. and KJL Vegas, companies with
which it had licensee agreements with and which provided the majority of
the Company's royalty revenues. In accordance with the signing of the
agreement the Company advanced $310,000 in anticipation of the consummation
of the acquisition. Subsequently, there was a mutual recision of this
agreement. Although the Company plans to vigorously pursue its recoupment
of the $310,000 advance, there is no certainty that it will be able to do
so and accordingly, the Company has reserved against the full amount of the
advance.
