UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB/A
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 2000
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission File Number 0-109659
CITA BIOMEDICAL, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 93-0962072
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9025 Wilshire Blvd. Suite 301, Beverly Hills, CA 90211
------------------------------------------------------
(Address of principal executive offices)
(310) 550-4965
----------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common stock, $.01 par value 15,433,823
----------------------------- ----------------------------
Class Number of shares outstanding
at November 16, 2000
This document is comprised of 10 pages.
<PAGE>
CITA BIOMEDICAL, INC.
Index to Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements*
<S> <C>
Condensed consolidated balance sheet, September 30, 2000 (unaudited)..................3
Condensed consolidated statements of operations for the three and nine months
ended September 30, 2000 and 1999 (unaudited)...................................4
Condensed consolidated statements of cash flows for the three and nine months
ended September 30, 2000 and 1999 (unaudited)...................................5
Notes to condensed consolidated financial statements (unaudited)......................6
Item 2. Management's discussion and analysis..........................................8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................................9
Item 2. Changes in Securities.........................................................9
Item 3. Defaults Upon Senior Securities...............................................9
Item 4. Submission of Matters to a Vote of Security Holders...........................9
Item 5. Other Information.............................................................9
Item 6. Exhibits and Reports on Form 8-K..............................................9
Signatures...........................................................................10
</TABLE>
* The accompanying condensed financial statements are not covered by an
Independent Certified Public Accountant's report
2
<PAGE>
PART I. Item 1. FINANCIAL INFORMATION
CITA BIOMEDICAL, INC.
Condensed Consolidated Balance sheet
(Unaudited)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash.....................................................................................................$ 547,130
----------
Total current assets 547,130
Property and equipment, net.............................................................................. 13,236
Intangible assets, net................................................................................... 1,088,524
Deferred compensation.................................................................................... 40,000
Deposits................................................................................................. 13,577
----------
$ 1,702,467
==========
Liabilities and Shareholder's Deficit
Current liabilities:
Accounts payable and accrued liabilities...........................................................$ 524,089
Short-term loans................................................................................... 426,804
Due to related party (Note B)...................................................................... 413,061
----------
Total current liabilities 1,363,954
----------
Shareholder's deficit (Note E):
Preferred stock.................................................................................... 896,444
Common stock....................................................................................... 154,339
Additional paid-in capital......................................................................... 4,759,410
Accumulated deficit, including deficit accumulated during -
the development stage totaling $1,670,608....................................................... (5,471,680)
----------
Total shareholder's deficit 338,513
----------
$ 1,702,467
==========
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CITA BIOMEDICAL, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
2000 1999 2000 1999
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Sales and revenues, net..........................................$ 25,250 $ 124,322 $ 238,141 $ 420,434
Cost of sales and revenues....................................... (18,017) (67,691) (160,492) (228,997)
--------- ---------- --------- ---------
Gross profit 7,233 56,631 77,649 191,437
Operating expenses:
General and administrative................................. 284,962 203,582 675,478 630,491
Depreciation............................................... 31,711 35,112 92,337 89,826
--------- ---------- --------- ---------
Total operating expenses 316,673 238,694 767,815 720,317
--------- ---------- --------- ---------
Loss from operations (309,440) (182,063) (690,166) (528,880)
--------- ---------- --------- ---------
Interest expense................................................. - - - -
Interest income.................................................. 170 133 396 538
--------- ---------- --------- ---------
Loss before income taxes (309,270) (181,930) (689,770) (528,342)
Provision for income taxes (Note C).............................. - - - -
--------- ---------- --------- ---------
Net loss $ (309,270) $ (181,930) $ (689,770) $ (528,342)
========= ========== ========= =========
Basic and diluted loss per common share.........................$ (0.03) $ (0.02) $ (0.08) $ (0.07)
========= ========== ========= =========
Basic and diluted weighted average
common shares outstanding.................................10,322,382 7,766,662 8,618,569 7,766,662
========= ========== ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
CITA BIOMEDICAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net cash used in operating activities...........................................$ (690,665) $ (387,449)
---------- ----------
Cash flows from investing activities:
Cash paid for deposits.................................................... - -
Purchase of Cita Americas, Inc., cash..................................... - -
Payments for web site development......................................... (232,962) -
Equipment purchases....................................................... (5,911) -
---------- ----------
Net cash used in investing activities........................................... (238,873) -
---------- ----------
Cash flows from financing activities:
Proceeds from sale of common stock........................................ 1,063,607 -
Proceeds from working capital advances.................................... 413,061 376,475
---------- ----------
Net cash provided by financing activities....................................... 1,476,668 376,475
---------- ----------
Net change in cash 547,130 (10,974)
Cash, beginning of period....................................................... - 10,974
---------- ----------
Cash, end of period $ 547,130 $ -
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest..................................................................$ - $ -
========== ==========
Income taxes..............................................................$ - $ -
========== ==========
Non-cash investing and financing transactions:
Acquisition of CITA Americas, Inc. in exchange
for 1,000 shares of preferred stock....................................$ - $ -
========== ==========
Stock issued in satisfaction of note payable..............................$ - $ -
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE>
CITA BIOMEDICAL, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note A: Basis of presentation
The condensed consolidated financial statements presented herein have been
prepared by the Company in accordance with the accounting policies in its annual
10-KSB report dated December 31, 1999 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.
During the nine months ended September 30, 2000, the Company emerged from the
development stage.
Note B: Related party transactions
The $413,061 due to related parties at September 30, 2000 consists of $68,000
due to a former owner of the Company and $345,061 due to an officer and director
of the Company. During the three and nine months ended September 30, 2000 the
officer and director of the Company advanced the Company approximately $18,678
and $215,771, respectively for working capital purposes. At December 31, 1999
the amounts due to the former owner and the officer and director were $68,000
and $129,290, respectively.
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: CubeCentral.com, Inc.
On March 29, 2000, the Company incorporated a wholly owned subsidiary,
CubeCentral.com, Inc. (CubeCentral.com), to set up and manage the Company's
Internet operations. CubeCentral.com plans to provide an interactive forum and
on-line after-care to persons affected by all types of addiction.
CubeCentral.com's web site proposes to include information and counseling
services as well as referrals for the detoxification services provided by the
Company.
6
<PAGE>
CITA BIOMEDICAL, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note E: Shareholders' equity
During the three months September 30, 2000, the Company sold 7,667,161 shares of
its $.01 par value common stock for $1,063,607 ($.14 per share). Following is a
schedule of changes in shareholders' equity for the nine months ended September
30, 2000:
<TABLE>
<CAPTION>
Schedule of Changes in Shareholders' Equity
Preferred Stock Common Stock Additional
------------------- ----------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
-------- --------- ---------- -------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000........... 1,000 $ 896,444 7,766,662 $ 77,667 $ 3,772,475 $ (4,781,910) $ (35,324)
Sale of common stock
($.14/share).................... - - 7,667,161 76,672 986,935 - 1,063,607
Net loss for the nine months
ended September 30, 2000........ - - - (689,770) (689,770)
----- --------- ---------- -------- ----------- ------------ ---------
Balance, September 30, 2000 1,000 $ 896,444 15,433,823 $154,339 $ 4,759,410 $ (5,471,680) $ 338,513
===== ========= ========== ======== =========== ============ =========
</TABLE>
Note F: Computer software development costs
During the three months September 30, 2000, the Company capitalized $232,962 of
external costs incurred to develop internal-use computer software for an
Internet web site. The capitalized web site costs are amortized over an
estimated life of three years commencing on the date the software is ready for
its intended use. The Company commenced amortizing its web site development
costs on September 1, 2000. Amortization expense totaled $6,471 for both the
three and nine months ended September 30, 2000.
Note G: Subsequent event
During November of 2000, the Company received a United States patent for
Urod(SM) (ultrarapid opiate detoxification).
7
<PAGE>
Part I. Item 2. Management's Discussion and Analysis
CITA BIOMEDICAL, INC.
Liquidity and Capital Resources
As of September 30, 2000, the Company had increased its cash balance to $547,130
with proceeds from the sale of its common stock. For the nine months ended
September 30, 2000, the Company also received approximately $124,000 from an
unrelated third party as working capital loans and repaid $19,125 on the loans.
The Company anticipates converting the loans to convertible preferred stock.
Further, the President of the Company advanced the Company $215,771 as
short-term working capital advances.
The Company anticipates financing its operations from net cash flow from
operations and third party financing transactions.
Results of Operations
Revenue
The Company's revenues for the nine months ended September 30, 2000 were
$238,141 compared to $420,434 for the nine months ended September 30, 1999.
Essentially all of this revenue was derived from procedures performed by CITA
Americas, Inc. The decrease in revenues was primarily due to a decrease in the
number of hospital facilities that provided the Company's services during the
nine months ended September 30, 2000.
Cost of Revenue
The Company's cost of revenues for the nine months ended September 30, 2000 was
$160,492 compared to $228,997 for the nine months ended September 30, 1999. This
resulted in a gross profit of $77,649 for the nine months ended September 30,
2000, or a gross profit margin of approximately 33 percent. The gross profit for
the three months ended September 30, 2000 was $7,233, or a gross profit margin
of approximately 29 percent. The reduction in the gross profit percentage was
related to the decrease in services provided during 2000.
Other Operating Expenses
General and administrative expenses for the nine months ended September 30, 2000
were $675,478 compared to $630,491 for the nine months ended September 30, 1999.
The increase of $44,987 was primarily due to the increase in staffing for
CubeCentral.com.
8
<PAGE>
Part I. Item 2. Management's Discussion and Analysis, continued
CITA BIOMEDICAL, INC.
Financial Condition
The Company has experienced losses since 1997 as a result of efforts to find a
suitable merger or acquisition candidate. Since its acquisition of CITA
Americas, Inc., and the commencing of operations, the Company has continued to
incur operating losses and negligible cash flow from operations. Due to
liquidity problems, the Company has been unable to make timely payments to
certain creditors. As of September 30, 2000, the Company had past due trade
payables and accruals totaling $155,688.
During the three months ended September 30, 2000, the Company sold 7,667,161
shares of its $.01 par value common stock for $1,063,607. The Company plans to
use the proceeds to repay liabilities, commence a marketing and advertising
campaign, fund the operations of CubeCentral.com and for working capital.
Deferred payments have been negotiated with certain creditors and the Company is
actively pursuing new operating centers which management believes will provide
positive working capital. There is no assurance that new centers will be
obtained, or if acquired, that they will provide sufficient working capital.
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 nine months ended
September 30, 2000.
9
<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 three and nine months ended September 30,
2000 and 1999 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: November 21, 2000 BY: /s/ Joseph Dunn
--------------------------------------
Joseph Dunn
President, Chief Executive Officer and
Chief Financial Officer
DATE: November 21, 2000 BY: /s/ Michael C. Hinton
--------------------------------------
Michael C. Hinton
Secretary and Director
10
