<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE EXT. OF 1934
For the quarterly period ended September 30, 1996.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from July 1, 1996 to September 30, 1996.
Commission file number 0-16423.
Citadel Environmental Group Inc.
--------------------------------
(exact name of Registrant as specified in its charter)
COLORADO 84-0907969
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
750 N. DIAMOND BAR BOULEVARD, SUITE 202, DIAMOND BAR, CALIFORNIA
----------------------------------------------------------------
(Address of principal executive offices)
91765
-----
(Zip Code)
909-396-5153
------------
(Registrant's telephone number, including area code)
CITADEL ASSET MANAGEMENT, LTD.
------------------------------
2055 ANGLO DRIVE, SUITE 105, COLORADO SPRINGS, COLORADO, 80918
--------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed from last report)
Indicate by check mark 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 than 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
--- ------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
CLASS OF STOCK NO. OF SHARES OUTSTANDING DATE
-------------- ------------------------- ----
Common 1,969,510 November 14, 1996
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
Form 10-Q
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . 3,4
Statements of Operations . . . . . . . . . . . . . . 5
Statements of Cash Flow . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . . 8
Signatures . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
BALANCE SHEETS
_____________________________________________________________________________
September 30, December 31,
1996 1995
Unaudited Audited
--------- -------
ASSETS
------
CURRENT ASSETS:
Cash and equivalents . . . . . . . . . . . . $ 15,000 $ 1,565
Accounts Receivables (Net).. . . . . . . . . 324,431
Other current assets . . . . . . . . . . . . 501,179
----------
Total current assets . . . . . . . . . . . . 840,610
FURNITURE AND EQUIPMENT:
Furniture and equipment. . . . . . . . . . . $ 844,291 21,352
Less accumulated depreciation. . . . . . . . (181,684) (21,352)
Furniture and equipment - net. . . . . . . . 662,607
OTHER ASSETS . . . . . . . . . . . . . . . . 50,716 1,250
--------- -------
TOTAL. . . . . . . . . . . . . . . . . . . .$ 1,562,941 $14,065
--------- -------
See notes to the financial statements.
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
BALANCE SHEETS, (Continued)
- --------------------------------------------------------------------------------
September 30, December 31,
1996 1995
Unaudited Audited
--------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable . . . . . . . . . . . . . . . . 248,580 $ 586
Accrue Expense . . . . . . . . . . . . . . . . . 312,823 7,730
Note Payable . . . . . . . . . . . . . . . . . . 1,508,657 0
--------- ---
Total current liabilities. . . . . . . . . . . . 2,070,060 8,316
MINORITY STOCKHOLDERS' EQUITY: . . . . . . . . . 5,415 0
Preferred stock, Series A, no par
value; 2,000,000 shares authorized,
1,500,000 issued and outstanding at
September 30, 1995, 0 shares
issued outstanding at
December 31, 1995
Preferred stock, Series B, no par
value; 200,000 shares authorized,
1,500,000 issued and outstanding
at September 30, 1995 and 0 issued
and outstanding at December 31, 1996 . . . . .
Preferred stock, Series C, no par
value; 300,000 shares authorized,
2,000,000 issued and outstanding
at September 30, 1995, 0 issued and
outstanding at December 31, 1995.
Common stock, no par value,
25,000,000 shares authorized,
1,792,744 issued and outstanding
at September 30, 1996. . . . . . . . . . . . . 489,994 479,994
Contributed capital. . . . . . . . . . . . . . . 40,000 40,000
Treasury stock, at cost,
22,300 shares. . . . . . . . . . . . . . . . . (3,357) (3,357)
Current year loss. . . . . . . . . . . . . . . . (543,515) (6,585)
Accumulated deficit. . . . . . . . . . . . . . . (495,661) (495,661)
--------- -------
Total stockholders' equity . . . . . . . . . . . (512,539) 14,391
TOTAL. . . . . . . . . . . . . . . . . . . . . .$ 1,562,941 $ 22,707
---------
See notes to the financial statements.
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
NINE MONTHS ENDED
September 30
1996 1995
---- ----
-UNAUDITED-
------------
Revenue 1,080,156 0
--------- ---------
COSTS AND EXPENSES
Costs of Goods and Services 75,135 0
Selling, General Administration 979,611 6,585
--------- ---------
OPERATION LOSS (589,878) (6,585)
LOSS BEFORE INCOME TAXES (589,878) (6,585)
MINORITY SHAREHOLDERS INTEREST
IN LOSS 46,363 0
PROVISIONS FOR INCOME TAX
NET INCOME 0 0
--------- ---------
DIVIDENDS ON PREFERRED STOCK 0 0
--------- ---------
NET LOSS APPLICABLE
TO COMMON STOCK (543,515) (6,585)
------- -----
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
THREE MONTHS ENDED
SEPTEMBER 30,
1995
----
--(UNAUDITED)--
---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . $ (381)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization. . . . . . . . . . . 350
(Increase) decrease in current assets. . . . . . .
Increase (decrease) in accounts payable
and other current liabilities. . . . . . . . . . 0
-
Net cash provided (used) by operating
activities . . . . . . . . . . . . . . . . . . . (31)
----
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in and advance to affiliates
Other. . . . . . . . . . . . . . . . . . . . . . . 0
----------
Net cash provided (used) by
investing activities . . . . . . . . . . . . . . 0
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of Treasury Stock . . . . . . . . . . . . 0
----------
Net cash provided by financing activities. . . . . 0
----------
NET INCREASE / DECREASE IN CASH AND
EQUIVALENTS. . . . . . . . . . . . . . . . . . . (31)
CASH AND EQUIVALENTS -
BEGINNING OF PERIOD. . . . . . . . . . . . . . . 1,389
-----
CASH AND EQUIVALENTS - END OF PERIOD . . . . . . . $1,389
------
See notes to the financial statements.
<PAGE>
CITADEL ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
_____________________________________________________________________________
1. In the opinion of management, all adjustments necessary to a fair statement
of the results for such periods have been included, all adjustments being of
normal, recurring nature.
2. The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
3. Earnings per share information is omitted because it is not material to an
understanding of the financial statements.
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On August 12, 1996, the Company completed an acquisition of Tonopah
Resources International, Inc ("TRI") which has been accounted for as a reverse
merger. All the shareholders of TRI exchanged 100% of the issued and outstanding
shares of TRI for 1,050,000 common shares, 1,500,000 shares of Preferred Series
A, 1,500,000 Preferred Series B and 2,000,000 shares of Preferred Series C
issued by the Company. This acquisition was approved by the shareholders at a
special meeting held on August 12, 1996. At this same meeting the shareholders
approved a name change and change in terms of the Preferred shares.
In addition, the Company commenced a private placement offering on August
5, 1996, which sold 186,666 Units at the price of 1.50. Each Unit consisted of
one share of common stock and one warrant to purchase a share of common stock at
3.00. Of the Units sold, the Company received approximately 80,000 in cash and
a note receivable for 210,000. The private placement was terminated on
September 30, 1996.
Management believes that additional funds will be needed to sustain
operations. A new private placement is planned.
(2) RESULTS OF OPERATION
Revenues are not comparable to prior periods as TRI was not in operation in
the third quarter of 1995. Revenue has increased in the third quarter over the
second quarter at TRI.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: NOVEMBER 27, 1996 CITADEL ENVIRONMENTAL GROUP, INC.
By: /s/Richard Landi
-----------------------------------
Richard Landi
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, THE CONSOLIDATED STATEMENTS OF INCOME AND THE
CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,008
<SECURITIES> 0
<RECEIVABLES> 324,431
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 501,179
<PP&E> 844,291
<DEPRECIATION> 181,684
<TOTAL-ASSETS> 1,562,941
<CURRENT-LIABILITIES> 2,075,475
<BONDS> 0
0
0
<COMMON> 489,994
<OTHER-SE> (3,357)
<TOTAL-LIABILITY-AND-EQUITY> 1,562,941
<SALES> 1,080,156
<TOTAL-REVENUES> 0
<CGS> 751,557
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 933,248
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (543,515)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (543,515)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> 0
</TABLE>
