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 March 31, 2000 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 (I.R.S. Employer Identification No.)
incorporation or organization)
9025 Wilshire Blvd. Suite 301, Beverly Hills, CA 90211
(Address of principal executive offices) (Zip code)
(310) 550-4965
(Registrant's telephone number, including area code)
(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 7,766,662
Class Number of shares outstanding at May 19, 2000
This document is comprised of 9 pages.
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FORM 10-QSB
1ST QUARTER
CITA BIOMEDICAL, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements*
Page
-
<S> <C> <C>
Condensed consolidated balance sheet - March 31, 2000 (Unaudited) 3
Condensed consolidated statements of operations - three months
ended March 31, 2000 and 1999 and for the period August 12, 1998
through March 31, 2000 (Unaudited) ............................. 4
Condensed consolidated statements of cash flows - three months
ended March 31, 2000 and 1999 and for the period August 12, 1998
through March 31, 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.
</TABLE>
<PAGE>
2
Part I. Item 1. Financial information
<TABLE>
<CAPTION>
CITA BIOMEDICAL, INC.
(A Development Stage Company)
Condensed Consolidated Balance Sheet
March 31, 2000
Assets
<S> <C>
Cash .................................................................... $ 5,710
Other current assets .................................................... --
-----------
Total Current Assets 5,710
Property and Equipment, net ............................................. 19,730
Intangible Assets, net .................................................. 910,993
Deposits ................................................................ 13,577
-----------
$ 950,010
===========
Liabilities and Shareholders' Equity
Accounts payable and accrued expenses ................................... 469,778
Short-term loans ........................................................ 445,929
Due to related party .................................................... 263,228
-----------
Total Current Liabilities 1,178,935
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 ............................ (1,174,439)
-----------
Total Shareholders' Equity (228,925)
-----------
$ 950,010
===========
</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 August 12, 1998
March 31, Through
2000 1999 March 31, 2000
----------- --------- -----------
<S> <C> <C> <C>
Revenues .................................... $ 96,099 $185,099. $ 774,188
Operating Expenses
Cost of revenues .......................... 46,297 89,440 406,733
General and administrative ................ 219,845 235,484 1,324,869
Depreciation and amortization ............. 30,212 29,942 194,989
----------- --------- -----------
Total operating expenses . 296,354 354,866 1,926,591
Operating Loss . (200,255) (169,767) (1,152,403)
Non-operating Income (Expense)
Interest expense .......................... -- -- (23,077)
Interest income ........................... 67 225 1,041
----------- --------- -----------
Net loss before income taxes . (200,188) (169,542) (1,174,439)
Income taxes ................................ -- --
Net Loss . $ (200,188) $ (169,542) $(1,174,439)
=========== =========== ===========
Net loss per common share:
Basic and diluted ......................... $ (0.03) $ (0.02)
=========== ===========
Shares used for computing net loss per share:
Basic and diluted ......................... 7,766,662 7,766,662
=========== ===========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CITA BIOMEDICAL, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
For the three months August 12, 1998
ended March 31, Through
2000 1999 March 31, 2000
--------- --------- ---------
<S> <C> <C> <C>
NET CASH (USED IN)
OPERATING ACTIVITIES $(181,102) $(129,726) $(678,806)
INVESTING ACTIVITIES
Cash paid for deposits ........................................... -- -- (581)
Purchase of equipment ............................................ (3,126) -- (3,126)
Purchase of CITA Americas, Inc., cash received ................... -- -- 47,066
--------- --------- ---------
NET CASH (USED IN)
INVESTING ACTIVITIES (3,126) -- 43,359
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from working capital advances ........................... 189,938 147,444 641,157
NET CASH (USED IN)
FINANCING ACTIVITIES 189,938 147,444 641,157
Net increase in cash ............................................. 5,710 17,718 5,710
Cash, beginning of period ........................................ -- 10,974 --
--------- --------- ---------
Cash, end of period .............................................. $ 5,710 $ 28,692 $ 5,710
========= ========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest ........................................... $ -- $ -- $ --
========= ========= =========
Cash paid for income taxes ....................................... $ -- $ -- $ --
========= ========= =========
NON-CASH 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)
March 31, 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 $263,328 due to related parties at March 31, 2000 consists of $68,000 due to
a former owner of the Company and $195,228 due to an officer and director of the
Company. During the three months ended March 31, 2000 the officer and director
of the Company advanced the Company approximately $65,938 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 March 31, 2000 the Company had cash of $5,710. For the three months ended
March 31, 2000 the Company received approximately $124,000 from unrelated third
parties as working capital loans. The Company anticipates converting the loans
to convertible preferred stock. Further, the President of the Company advanced
the Company approximately $65,938 as short-term working capital advances. The
Company anticipates financing its operations from net cash flow from operations
and third party financing. The Company intends to explore all options available
to it with respect to such potential financing.
The Company's newly formed subsidiary does intend to raise capital in
2000 but will do so directly through the subsidiary and not through the parent
CITA Biomedical, Inc.
RESULTS OF OPERATIONS
Revenue
The Company's revenues for the three months ended March 31, 2000 were $96,099
compared to $185,099 for the three months ended March 31, 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 while
renegotiating hospital contracts during the three months ended March 31, 2000.
Cost of Revenue
The Company's cost of revenues for the three months ended March 31, 2000 was
$46,297 compared to $89,440 for the three months ended March 31, 1999. This
resulted in a gross profit of $49,802 for the three months ended March 30, 2000,
or a gross profit margin of approximately 52 percent. The gross profit for the
three months ended March 31, 1999 was $95,659, or a gross profit margin of
approximately 51%.
Other Operating Expenses
General and administrative expenses for the three months ended March 31, 2000
were $219,845 compared to $235,484 for the three months ended March 31, 1999.
The decrease of $16,539 was primarily due to the decrease in the number of
patients treated during the three months ended March 31, 2000.
The Company incurred depreciation and amortization expenses of $30,212 for the
three months ended March 31, 2000 as compared to $29,942 for the three months
ended March 31, 1999.
The sum of the above resulted in a net loss of $200,188 for the three months
ended March 31, 2000 as compared to a net loss of $169,542 for the three months
ended March 31, 1999.
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 commending 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 march 31, 2000, the Company had past due trade payables
totaling approximately $300,000. 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 the new centers
will be obtained, or if acquired, that they will provide sufficient working
capital.
7
<PAGE>
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 March
31, 2000.
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 months ended March 31, 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: May 19, 2000 BY:/s/Joseph Dunn
---------------------------------------------
Joseph Dunn
President, Chief Executive Officer and
Chief Financial Officer
DATE: May 19, 2000 BY:/s/Michael C. Hinton
---------------------------------------------
Michael C. Hinton
Secretary and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CITA BIOMEDICAL, INC. UNAUDITED BALANCE SHEET
AS OF MARCH 31, 2000 AND THE RELATED
STATEMENT OF INCOME FOR THE THREE 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> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 5,710
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 55,526
<DEPRECIATION> 35,796
<TOTAL-ASSETS> 959,010
<CURRENT-LIABILITIES> 1,178,935
<BONDS> 0
0
896,444
<COMMON> 77,667
<OTHER-SE> (1,203,036)
<TOTAL-LIABILITY-AND-EQUITY> 950,010
<SALES> 96,099
<TOTAL-REVENUES> 96,099
<CGS> 46,297
<TOTAL-COSTS> 296,354
<OTHER-EXPENSES> (67)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (200,188)
<INCOME-TAX> 0
<INCOME-CONTINUING> (200,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (200,188)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
