UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998 Commission File Number 0-109659
CITA BIOMEDICAL, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
COLORADO 93-0962072
_______________________________ _________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
9025 Wilshire Blvd., Suite 301, Los Angeles, California 90211
_______________________________________________________ __________
(Address of principal executive offices) (Zip code)
(310) 550-4965
____________________________________________________
(Registrant's telephone number, including area code)
Southwestern Environmental Corp.1801 Century Park East,
25th Floor,Los Angeles, CA 90067
_____________________________________________________
(Former name, former address and
former fiscal year, if changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _____ No __X___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.01 par value 11,499,929
_____________________________ ______________________________
Class Number of shares outstanding
at December 14, 1998
This document is comprised of 9 pages.
<PAGE>
FORM 10-QSB
2ND QUARTER
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet as of
June 30, 1998 (Unaudited) 3
Condensed statements of operations - three and nine
months ended June 30, 1998 and 1997 (Unaudited) 4
Condensed statements of cash flows - nine months ended
June 30, 1998 and 1997 (Unaudited) 5
Notes to condensed financial statements (Unaudited) 6
Item 2. Plan of operation 8
PART II - OTHER INFORMATION 8
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to A Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 9
* The accompanying financial statements are not covered by an independent
Certified Public Accountant's report.
-2-
<PAGE>
Part I. Item 1. Financial information
CITA BIOMEDICAL, INC.
Condensed Balance Sheet
June 30, 1998
ASSETS
TOTAL ASSETS $ -
=============
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
Accounts payable and accrued liabilities $ 61,163
Accrued interest payable 46,255
Accrued officer compensation 26,000
Indebtedness to related party 8,000
Note payable 150,000
-------------
TOTAL LIABILITIES 291,418
-------------
SHAREHOLDERS' DEFICIT
Common stock 40,000
Additional paid-in capital 3,468,704
Retained deficit (3,800,122)
-------------
TOTAL SHAREHOLDERS' DEFICIT (291,418)
-------------
$ -
=============
See accompanying notes to condensed financial statements
-3-
<PAGE>
CITA BIOMEDICAL, INC.
<TABLE>
<CAPTION>
Condensed Statements of Operations
Three months ended Nine months ended
June 30, June 30,
---------------------------------------------------------------
1998 1997 1998 1997
---------------------------- ------------------------------
Expenses
<S> <C> <C> <C> <C>
Officers' compensation $ 12,000 $ - $ 26,000 $ -
Legal and accounting 1,539 - 3,539 -
Interest 1,373 3,172 8,061 6,344
Net Income (Loss) $ (14,912) $ (3,172) $ (37,600) $ (6,344)
========== ========== ========== ===========
Basic loss per share * * * *
Basic shares outstanding 3,999,929 3,999,929 3,999,929 3,999,929
========== ========== ========== ===========
* Less than $.01 per share
</TABLE>
See accompanying notes to condensed financial statements
-4-
<PAGE>
CITA BIOMEDICAL, INC.
Condensed Statements of Cash Flows
Nine Months Ended
June 30,
--------------------------
1998 1997
--------- ----------
NET CASH (USED IN)
OPERATING ACTIVITIES $ (8,000) $ -
Cash flows from financing activities:
Proceeds from related party advance 8,000 -
-------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 8,000 -
-------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS - -
Cash and cash equivalents,
beginning of period - -
-------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD - -
======== ==========
See accompanying notes to condensed financial statements
-5-
<PAGE>
CITA BIOMEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1998
Note A: Basis of presentation
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its annual 10-KSB report dated
September 30, 1997 and should be read in conjunction with the notes thereto. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) which are necessary to provide a fair presentation of operating
results for the interim period presented have been made. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the year. Interim financial data presented herein are
unaudited.
Note B: Related party transactions
A business associate paid certain obligations totaling $8,000 for the Company
during the nine months ended June 30, 1998. The accompanying financial
statements reflect an expense and corresponding credit to contributed capital
for the payment of the obligations.
The Board of Directors previously voted to compensate the President and
Secretary $2,000 per month each, commencing December 15, 1997. $26,000 has been
accrued and is unpaid at June 30, 1998.
Note C: Income taxes
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". Any deferred income
tax asset due to net operating losses is fully allowed for, as there is no
assurance that the Company will have future net income to utilize the operating
losses.
Note D: Notes payable
The Company is indebted to another company the amount of $150,000 pursuant to
the terms of a note payable. Interest has been accrued at 7% and totaled $46,255
at June 30, 1998. The note is convertible to common stock at 60% of the
applicable market price at the option of the holder.
Note E: Reverse stock split
On December 15, 1997, the Board of Directors approved a reverse split of the
outstanding shares of common stock, one existing share for up to twenty new
shares of the Company. The date and amount of the reverse split will be at the
discretion of the Board. At the time of the reverse split, there will be no
change in either the par value or the number of authorized common shares of the
Company.
-6-
<PAGE>
CITA BIOMEDICAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1998
Note F: Subsequent events
On August 4, 1998, 1998, the Company issued 4.2 million shares of common stock
to Tanaka Capital Limited in exchange for a note payable in the amount of
$150,000 and accrued interest totaling $46,255 at June 30, 1998.
On September 20, 1998, the Company issued 200,000 shares of common stock to a
consultant who consulted with the Company on reorganization and restructuring.
On September 20, 1998, the Company issued 500,000 shares of common stock to a
consultant who consulted with the Company on reorganization, restructuring, and
acquisition strategies and provided investment-banking services
On September 20, 1998, the Company issued 200,000 shares of common stock to the
President of the Company in satisfaction of deferred compensation totaling
$13,000 at June 30, 1998.
On September 20, 1998, the Company issued 200,000 shares of common stock to the
Secretary of the Company in satisfaction of deferred compensation totaling
$13,000 at June 30, 1998.
On August 12, 1998, the Company purchased all of the outstanding shares of
common stock of CITAmerica, Inc. from Aviation Industries, Inc. pursuant to a
Stock Purchase Agreement entered into in July 1998. The purchase was paid
through the issuance of non-voting convertible preferred stock of the
Registrant. The Company plans to file Form 8-K disclosing the acquisition. The
president of the Company received 2.1 million shares of CITAmerica, Inc. common
stock in connection with the acquisition. CITAmerica, Inc. is a Nevada
corporation engaged in investigation and treatment of addiction. In conjunction
with the purchase, the Company changed its name.
-7-
<PAGE>
Part I. Item 2. Plan of operation
CITA BIOMEDICAL, INC.
PLAN OF OPERATION
The plan of the Company's management, for the next twelve months, is to operate
its newly acquired subsidiary corporation, CITAmerica, Inc., profitably. In
addition, management plans to seek additional merger candidates. There is no
assurance that the Company will be successful in consummating additional
mergers. Also, there is no assurance that the merger with CITAmerica, Inc. will
result in profitable operations.
RESULTS OF OPERATIONS
No operations were conducted during the most recent quarter. Since December
1994, the Company has been an inactive shell company. Expenses incurred since
then have been related to legal, accounting and stock transfer agent fees in
order to provide stock transfer services to current shareholders and to comply
with reporting as required by the Securities Exchange Act of 1934.
On August 12, 1998, The Company acquired all of the outstanding stock of an
operating company. The transaction will be accounted for as a "Purchase". Under
the Purchase method, the operations of the Company and its newly acquired
subsidiary will be consolidated beginning on the date of purchase.
FINANCIAL CONDITION
Due to liquidity problems, the Company has been unable to make timely payments
to certain creditors. As of June 30, 1998, the Company had past due trade
payables totaling $41,163. Deferred payments have been negotiated with certain
creditors. However, certain other creditors have suspended work on Company
matters. Consequently, the Company is dependent upon the continued forbearance
of its creditors. The Company is currently seeking sources of working capital
financing sufficient to fund delinquent balances and meet ongoing trade
obligations. However, during the period from July 1 through November 30, 1998,
the Company liquidated certain liabilities with the issuance of common stock.
The Company extinguished a note payable for $150,000 and related accrued
interest totaling $46,255 at June 30, 1998 with 4.2 million shares of common
stock. In addition, the Company issued 400,000 shares of common stock to its
officers in satisfaction of deferred compensation obligations totaling $26,000
at June 30, 1998.
PART II - OTHER INFORMATION
Items 1 through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits
27* Financial Data Schedule.
(b) The Company filed no reports on Form 8-K during the three months
ended June 30, 1998.
-8-
<PAGE>
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the nine months ended June 30, 1998 have been
included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CITA BIOMEDICAL, INC.
(Registrant)
DATE: January 28,1999 BY: /s/ Joseph Dunn
________________ _______________________________
Joseph Dunn
President, Chief Executive Officer and
Chief Financial Officer
DATE: December 28, 1998 BY: /s/ Michael C. Hinton
________________ _______________________________
Michael C. Hinton
Secretary and Director
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CITA BIOMEDICAL, INC. UNAUDITED BALANCE SHEET AS OF June 30, 1998 AND THE
RELATED STATEMENT OF INCOME FOR THE nine MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000700890
<NAME> CITA BIOMEDICAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 291,418
<BONDS> 0
0
0
<COMMON> 40,000
<OTHER-SE> (331,418)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 29,539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,061
<INCOME-PRETAX> (37,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,600)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
