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, 2000 Commission File Number 0-109659
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CITA BIOMEDICAL, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 93-0962072
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9025 Wilshire Blvd. Suite 301, Beverly Hills, CA 90211
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(Address of principal executive offices) (Zip code)
(310) 550-4965
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(Registrant's telephone number, including area code)
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(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 X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.01 par value 7,766,662
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Class Number of shares outstanding at August 21, 2000
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This document is comprised of 10 pages.
<PAGE>
FORM 10-QSB
2ND QUARTER
CITA BIOMEDICAL, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements*
Page
-----
Condensed consolidated balance sheet - June 30, 2000 (Unaudited)........3
Condensed consolidated statements of operations - three and six
months ended June 30, 2000 and 1999 and for the period August
12, 1998 through June 30, 2000 (Unaudited) ...........................4
Condensed consolidated statements of cash flows - six months ended
June 30, 2000 and 199 and for the period August 12, 1998
through June 30, 2000 (Unaudited) ....................................5
Notes to condensed consolidated financial statements (Unaudited) .......6
Item 2. Management's discussion and analysis ...........................7
PART II - OTHER INFORMATION.................................................8
Item 1. Legal Preceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To A Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures..............................................................9
* The accompanying condensed consolidated financial statements are not covered
by an Independent Certified Public Accountant's report.
2
<PAGE>
Part I. Item 1. Financial information
CITA BIOMEDICAL, INC.
(A Development Stage Company)
Condensed Consolidated Balance Sheet
June 30, 2000
Assets
<TABLE>
<CAPTION>
<S> <C>
Cash.............................................................................$ 10,386
Other current assets............................................................. -
----------
Total Current Assets 10,386
Property and Equipment, net...................................................... 17,874
Intangible Assets, net........................................................... 885,220
Deposits......................................................................... 13,577
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$ 927,057
==========
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses............................................ 495,981
Short term loans................................................................. 445,929
Due to related party............................................................. 394,383
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Total Current Liabilities 1,336,293
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Preferred stock.................................................................. 896,444
Common stock..................................................................... 77,667
Additional paid in capital....................................................... 3,772,475
Accumulated deficit..............................................................(3,801,072)
Deficit accumulated during development stage.....................................(1,354,750)
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Total Shareholders' Equity (409,236)
----------
$ 927,057
==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE>
CITA BIOMEDICAL, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30, August 12, 1998
-------------------------- -------------------------- Through
2000 1999 2000 1999 June 30, 2000
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Revenues..................... $144,384 $111,013 $212,891 $296,112 $ 890,980
Operating Expenses
Cost of revenues............ 102,643 71,866 142,475 161,306 502,911
General and administration.. 223,359 191,425 390,516 426,909 1,495,540
Depreciation and amortization 30,212 24,772 60,626 54,714 225,403
--------- --------- --------- --------- -----------
Total operating expenses...... 356,214 288,063 593,617 642,929 2,223,854
Operating Loss.............. (211,830) (177,050) (380,726) (346,817) (1,332,874)
Nonoperating Income (Expense)
Interest expense............ - - - - (23,077)
Interest income............. 116 180 226 405 1,200
--------- --------- --------- --------- -----------
Net loss before income taxes.. (211,714) (176,870) (380,500) (346,412) (1,354,751)
Income taxes.................. - - - - -
--------- --------- --------- --------- -----------
Net Loss..............$(211,714) $(176,870) $(380,500) $(346,412) $(1,354,751)
========= ========= ========= ========= ===========
Net loss per common share:
Basic and diluted...........$ (0.03) $ (0.02) $ (0.05) $ (0.04)
========= ========= ========= =========
Shares used for computing
net loss per share:
Basic and diluted...........7,766,662 7,766,662 7,766,662 7,766,662
========= ========= ========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE>
CITA BIOMEDICAL, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the six months ended
June 30, August 12, 1998
---------------------------- Through
2000 1999 June 30, 2000
---------- ---------- ----------
<S> <C> <C> <C>
NET CASH (USED IN)
OPERATING ACTIVITIES $ (304,796) $ (296,503) $ (802,500)
INVESTING ACTIVITIES
Cash paid for deposits............................. - - (581)
Purchase of CITA Americas, Inc., cash received..... - - 47,066
Purchase of equipment.............................. (5,911) - (5,911)
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NET CASH (USED IN)
INVESTING ACTIVITIES (5,911) - 40,574
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FINANCING ACTIVITIES
Proceeds from working capital advances............. 321,093 327,475 772,312
---------- ---------- ----------
NET CASH (USED IN)
FINANCING ACTIVITIES 321,093 327,475 772,312
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Net increase in cash............................... 10,386 30,972 10,386
Cash, beginning of period.......................... - 10,974 -
---------- ---------- ----------
Cash, end of period................................ $ 10,386 $ 41,946 $ 10,386
========== ========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest............................. $ - $ - $ -
========== ========== ==========
Cash paid for income taxes......................... $ - $ - $ -
========== ========== ==========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of CITA Americas, Inc. in exchange for
1,000 shares of preferred stock................... $ - $ - $ 896,444
========== ========== ==========
Stock issued in satisfaction of note payable........ $ - $ - $ 150,000
========== ========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE>
CITA BIOMEDICAL, INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
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.
Note B: Related party transactions
The $394,383 due to related parties at June 30, 2000 consists of $68,000 due to
a former owner of the Company and $326,383 due to an officer and director of the
Company. During the three and six months ended June 30, 2000 the officer and
director of the Company advanced the Company approximately $131,030 and
$197,093, 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.
6
<PAGE>
Part I. Item 2. Management's Discussion and Analysis
CITA BIOMEDICAL, INC.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had cash of $10,386. For the six months ended June
30, 2000 the Company received approximately $124,000 from an unrelated third
party as working capital loans. The Company anticipates converting the loans to
convertible preferred stock. Further, the President of the Company advanced the
Company $197,093 as short-term working capital advances. The Company anticipates
financing its operations from net cash flow from operations and third party
financing transactions. The Company intends to explore all options available to
it with respect to such potential financing.
RESULTS OF OPERATIONS
Revenue
The Company's revenues for the six months ended June 30, 2000 were $212,891
compared to $296,112 for the six months ended June 30, 1999. Essentially all of
this revenue was derived from procedures performed by Cita Americas, Inc. The
decrease in revenues was primarily due to fewer patients being treated during
the six months ended June 30, 2000.
Cost of Revenue
The Company's cost of revenues for the six months ended June 30, 2000 was
$142,475 compared to $161,306 for the six months ended June 30, 1999. This
resulted in a gross profit of $70,416 for the six months ended June 30, 2000, or
a gross profit margin of approximately 33 percent. The gross profit for the
three months ended June 30, 2000 was $28,675, or a gross profit margin of
approximately 42 percent.
Other Operating Expenses
General and administrative expenses for the six months ended June 30, 2000 were
$390,516 compared to $426,909 for the six months ended June 30, 1999. The
decrease of $36,393 was primarily due to the decrease in the number of patients
treated during the six months ended June30, 2000.
The Company incurred depreciation and amortization expenses of $60,626 for the
six months ended June 30, 2000 as compared to $54,714 for the six months ended
June 30, 1999.
The sum of the above resulted in a net loss of $380,500 for the six months ended
June 30, 2000 as compared to a net loss of $346,412 for the six months ended
June 30, 1999.
7
<PAGE>
Part I. Item 2. Management's Discussion and Analysis, continued
CITA BIOMEDICAL, INC.
FINANCIAL CONDITION
The Company has experienced losses since 1994 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 June 30, 2000, the Company had past due trade payables
totaling approximately $350,000. In the aggregate, these indicators raise
substantial doubt about the Company's ability to continue as a going concern.
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 six months ended
June 30, 1999.
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 three and six months ended June 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: August 21, 2000 BY:
--------------------------------------
Joseph Dunn
President, Chief Executive Officer and
Chief Financial Officer
DATE: August 21, 2000 BY:
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Michael C. Hinton
Secretary and Director
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