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 June 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 June
30, 2000 was 7,160,000
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANAYLYSIS 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 six months ended June 30,
2000 of $0 and $5,122, representing a 100% and 90% decrease from royalty
revenues of $30,849 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 the 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 $21,868 for the
second quarter of 2000 compared to $36,099 for the second quarter of 1999. SG&A
for the first half of 2000 was $27,651 compared to $61,288 for the first six
months of 1999. The differences are caused by bad debt expense and amortization
expense for trademarks which were written off at December 31, 1999. Accordingly,
the Company had no amortization expense for the quarter and six months ended
June 30, 2000 and amortization expense of $6,209 and $12,419 for the same
periods of 1999. The Company had no bad debt expense for the quarter and six
months ended June 30, 2000 and bad debt expense of $19,550 and $33,490 for the
same periods of 1999.
The Company had net losses of $21,868 and $14,216 for the second quarter and
first six months of 2000 up 325% and 30% from losses of $5,150 and $10,919 for
the same periods of 1999. The additional losses were caused primarily by the
fact that the Company lost its primary licensee.
Liquidity and Capital Resources
The Company had a working capital deficiency at June 30, 2000 of $12,586
compared to working capital of $1,630 as of December 31, 1999. The difference
was caused by accrued expenses incurred as of June 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 June 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 of the majority shareholder.
<PAGE>
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: August 17, 2000
CIRO INTERNATIONAL, INC.
By: /s/ Murray A. Wilson
----------------------------------
Murray A.Wilson
President, Chief Executive Officer
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
FORM 10-QSB - INDEX
<TABLE>
<CAPTION>
Part Item Description Page
No. No. No.
<S> <C> <C> <C>
I FINANCIAL INFORMATION:
1. Financial Statements
Consolidated Balance Sheets at June 30, 2000
(Unaudited) and December 31, 1999.............................................. 2
Consolidated Statements of Operations for the Quarters and Six Months Ended
June 30, 2000 and 1999 (Unaudited)............................................. 3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2000 and June 30, 1999 (Unaudited).................................... 4
Notes to Consolidated Financial Statements (Unaudited)........................... 5
2. Management's Discussion and Analysis of Financial Condition
and results of Operations.....................................................
II OTHER INFORMATION:
6. Exhibits and Reports on Form 8-K.................................................
SIGNATURES.......................................................................
</TABLE>
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<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- ASSETS -
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------- ---------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 814 $ 930
Interest receivable 700 700
Accounts receivable -- --
--------- ---------
TOTAL CURRENT ASSETS 1,514 1,630
--------- ---------
OTHER ASSETS:
Loans receivable - shareholders 57,977 57,977
Loans receivable - other 5,000 5,000
--------- ---------
62,977 62,977
--------- ---------
TOTAL ASSETS $ 64,491 $ 64,607
========= =========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ -- $ --
Accrued expenses 14,100 --
--------- ---------
TOTAL CURRENT LIABILITIES 14,100 --
--------- ---------
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 (857,058) (842,842)
--------- ---------
50,391 64,607
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 64,491 $ 64,607
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 2
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, June 30,
------------------------- -------------------------
2000 1999 2000 1999
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Royalty income $ -- $ 30,849 $ 5,122 $ 50,849
-------- -------- -------- --------
TOTAL REVENUES -- 30,849 5,122 50,849
OPERATING COSTS:
Selling, general and administrative expenses 21,868 36,099 27,651 61,288
-------- -------- -------- --------
(LOSS) FROM OPERATIONS (21,868) (5,250) (22,529) (10,439)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Bad debt recovery -- -- 8,313 --
Interest income -- 100 -- 200
-------- -------- -------- --------
-- 100 8,313 200
-------- -------- -------- --------
(LOSS) BEFORE PROVISION FOR INCOME
TAXES (21,868) (5,150) (14,216) (10,239)
Provision for taxes -- -- -- 680
-------- -------- -------- --------
NET (LOSS) $(21,868) $ (5,150) $(14,216) $(10,919)
======== ======== ======== ========
EARNINGS (LOSS) PER SHARE
Basic $ -- $ -- $ -- $ --
======== ======== ======== ========
Diluted $ -- $ -- $ -- $ --
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
-------------------------
2000 1999
-------- --------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (loss) $(14,216) $(10,919)
Adjustments to reconcile net (loss) to net cash (used)
provided by operating activities:
Depreciation and amortization -- 12,419
Bad debt provision -- 33,490
Changes in assets and liabilities:
(Increase) in accounts receivable -- (33,490)
(Increase) in interest receivable -- (200)
Increase in accrued expenses 14,100 --
-------- --------
Net cash (used in) provided by operating activities (116) 1,300
-------- --------
NET INCREASE (DECREASE) IN CASH (116) 1,300
Cash, at beginning of year 930 96
-------- --------
CASH, AT END OF PERIOD $ 814 $ 1,396
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Income taxes -- $ 680
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
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 six months ended June 30, 2000 increased this deficit to
$857,058. In addition the Company's source of royalties has only paid
a nominal amount as of June 30, 2000. 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 expenses.
The majority shareholder has indicated his willingness to provide the
funds for all operating expenses at least through June 30, 2001, which
primarily consist of rent expense paid to an affiliate 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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<PAGE>
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 June 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 Six Months
--------------------- ---------------------
Periods ended June 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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