UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter ended September 30, 2000
Commission File No. 0-30646
CIRO INTERNATIONAL, INC.
A Nevada Corporation 13-3963499
(State of incorporation) (Employer Identification no.)
445 Fifth Avenue, Ste. 11A
New York, New York
10016
Issuer's telephone number: (212) 481-1322
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 as of
September 30, 2000 was 7,160,000
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
FORM 10-QSB - INDEX
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Page
Part No. Item No. Description No.
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I FINANCIAL INFORMATION:
1. Financial Statements
Consolidated Balance Sheets at September 30, 2000 (Unaudited) and December
31, 1999 2
Consolidated Statements of Operations for the Quarters and Nine Months
Ended September 30, 2000 and 1999 (Unaudited) 3
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2000 and September 30, 1999 (Unaudited) 4
Notes to Consolidated Financial Statements (Unaudited) 5
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
II OTHER INFORMATION:
6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- ASSETS -
September 30, December 31,
2000 1999
--------- ---------
(Unaudited)
CURRENT ASSETS:
Cash $ 812 $ 930
Interest receivable 700 700
Accounts receivable -- --
--------- ---------
TOTAL CURRENT ASSETS 1,512 1,630
--------- ---------
OTHER ASSETS:
Loans receivable - shareholders 57,977 57,977
Loans receivable - other 5,000 5,000
--------- ---------
62,977 62,977
--------- ---------
TOTAL ASSETS $ 64,489 $ 64,607
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ -- $ --
Accrued expenses 16,600 --
--------- ---------
TOTAL CURRENT LIABILITIES 16,600 --
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock - $.001 par value, 50,000,000
shares authorized, 7,160,000 shares
issued and outstanding 7,160 7,160
Additional paid-in capital 900,289 900,289
Accumulated deficit (859,560) (842,842)
--------- ---------
47,889 64,607
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,489 $ 64,607
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Quarter Ended For Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
(Unaudited) (Unaudited)
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REVENUES:
Royalty income $ 360 $ -- $ 5,482 $ 50,849
-------- -------- -------- --------
TOTAL REVENUES 360 -- 5,482 50,849
OPERATING COSTS:
Selling, general and administrative expenses 2,564 7,061 30,213 68,349
-------- -------- -------- --------
(LOSS) FROM OPERATIONS (2,204) (7,061) (24,731) (17,500)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Bad debt recovery -- -- 8,313 --
Interest income -- 100 -- 300
-------- -------- -------- --------
-- 100 8,313 300
-------- -------- -------- --------
(LOSS) BEFORE PROVISION FOR INCOME
TAXES (2,204) (6,691) (16,418) (17,200)
Provision for taxes 300 -- 300 680
-------- -------- -------- --------
NET (LOSS) $ (2,504) $ (6,691) $(16,718) $(17,880)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE
Basic $ -- $ -- $ -- $ --
======== ======== ======== ========
Diluted $ -- $ -- $ -- $ --
======== ======== ======== ========
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The accompanying notes are an integral part of these consolidated financial
statements.
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
September 30,
-------------------------
2000 1999
-------- --------
(Unaudited)
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $(16,718) $(17,880)
Adjustments to reconcile net (loss) to net cash
(used) provided by operating activities:
Depreciation and amortization -- 18,629
Bad debt provision -- 33,490
Changes in assets and liabilities:
(Increase) in accounts receivable -- (33,490)
(Increase) in interest receivable -- (300)
Increase in accrued expenses 16,600 --
-------- --------
Net cash (used in) provided by
operating activities (118) 449
-------- --------
NET (DECREASE) INCREASE IN CASH (118) 449
Cash, at beginning of year 930 96
-------- --------
CASH, AT END OF PERIOD $ 812 $ 545
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Income taxes $ 300 $ 680
The accompanying notes are an integral part of these consolidated financial
statements.
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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. The loss
for the nine months ended September 30, 2000 increased this deficit to
$859,560. In addition the Company has lost its main source of
royalties. 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.
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 a trademark as well as bad debt expenses. The majority
shareholder has indicated his willingness to provide the funds for all
operating expenses at least through September 30, 2001, which primarily
consist of professional fees associated with SEC filings and other
nominal costs. The shareholder has indicated this willingness to
provide the necessary working capital until sufficient royalty income
is generated from its trademark or other financing is obtained to make
the Company self sufficient.
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.
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CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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.
Basis of Presentation:
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments necessary to present
fairly the financial position at September 30, 2000 and the results of
operations and cash flows for all periods presented. The results of
operations for the interim periods are not necessarily indicative of
the results to be obtained for the entire year
For a summary of significant accounting policies (which have not
changed from December 31, 1999) and additional financial information
see the Company's Form 10-SB which was filed on March 29, 2000 and
became effective May 29, 2000.
Earnings (Loss) Per Share:
The following weighted average shares were used for the computation of
basic and diluted earnings per share:
Quarters Nine Months
-------- -----------
Periods ended September 30 2000 1999 2000 1999
---- ---- ---- ----
Basic 7,160,000 7,160,000 7,160,000 7,160,000
Diluted 7,160,000 7,160,000 7,160,000 7,160,000
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
Ciro International, Inc. ("Company") exists primarily as a holding company. The
Company's wholly owned subsidiary, Ciro Jewelry, Inc. ("Ciro Jewelry") generates
income as a result of the licensing of the CIRO name in connection with the sale
of fashion (costume) Jewelry. Ciro Jewelry currently has 3 licensees in the
United States, Korea, Mexico, and Russia who operate approximately 5 fashion
jewelry stores using the CIRO name. The Company is seeking additional licensees.
The Company does not manufacture or distribute the products sold under the CIRO
name, nor does it secure the source of availability of materials used to
manufacture Ciro products. These responsibilities are left up to the individual
licensees.
Results of Operations
The Company had royalty revenues for the quarter and nine months ended September
30, 2000 of $360 and $5,482, representing a 100% increase and a 89% decrease
from royalty revenues of $0 and $50,849 for the same periods of 1999. The
decrease in royalty income was caused by the fact that the Company lost its
primary licensee. The Company is currently attempting to market its trademark to
other sources, although management cannot provide assurance that they will be
successful in doing this.
Selling, general and administrative expenses ("SG&A") were $2,564 for the third
quarter of 2000 compared to $7,061 for the third quarter of 1999. SG&A for the
first nine months of 2000 was $30,213 compared to $68,349 for the first nine
months of 1999. The differences are caused by bad debt expense and amortization
expenses for trademarks which were written off at December 31, 1999. The Company
had no amortization expense for the quarter and nine months ended September 30,
2000 and amortization expense of $6,210 and $18,629 for the same periods of
1999. The Company had no bad debt expense for the quarter and nine months ended
September 30, 2000 and bad debt expense of $0 and $33,490 for the same periods
of 1999.
The Company had net losses of $2,504 and $16,718 for the third quarter and first
nine months of 2000 down 63% and 7% from losses of $6,691 and $17,880 for the
same periods of 1999. The ongoing losses are caused primarily by the fact that
the Company lost its primary licensee.
Liquidity and Capital Resources
The Company had a working capital deficiency at September 30, 2000 of $15,088
compared to working capital of $1,630 as of December 31, 1999. The difference
was caused by accrued expenses incurred as of September 30, 2000 for accounting
and printing fees. The majority shareholder has indicated his willingness to
provide the funds for all expenses not covered by cash flow at least through
September 30, 2001. The Company is actively attempting to add additional
licensees in an attempt to generate sufficient cash flow as to not have to rely
on working capital loans from the majority shareholder.
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Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
11.1 Computation of Per Share Earnings
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SIGNATURES
In accordance with requirements of the Exchange Act, the Issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 13, 2000
CIRO INTERNATIONAL, INC.
By: /s/ Murray A. Wilson
--------------------
Murray A. Wilson
President, Chief Executive Officer
