U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-26059
CIRTRAN CORPORATION
(Exact name of small business issuer as specified in its
charter)
Nevada 68-0121636
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4125 South 6000 West, West Valley City, Utah 84128
(Address of principal executive offices)
(801) 963-5112
(Issuer's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the
preceding 12 months (or for such shorter period that the issuer
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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the Exchange
Act subsequent to 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 July 31, 2000 10,143,567 shares
of common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
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FORM 10-QSB
CIRTRAN CORPORATION
INDEX
Page
PART I. Financial Information 3
Accountants' Review Report 3
Unaudited Condensed Balance Sheets
June 30, 2000 and December 31, 1999 4
Unaudited Condensed Statements of
Operations, for the three and six months
ended June 30, 2000 and 1999 and from the
re-entering of development stage on
January 1, 1996 through June 30, 2000 5
Unaudited Condensed Statements of Cash
Flows, for the six months ended June
30, 2000 and 1999 and from the re-entering
of development stage on January 1, 1996
through June 30, 2000 6
Notes to Unaudited Condensed Financial
Statements 7
Management's Discussion and Analysis of
Financial Condition 11
PART II. Other Information 13
Exhibits and Reports on Form 8-K 13
Signatures 13
2
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PART I.
Financial Information
ACCOUNTANTS' REVIEW REPORT
Board of Directors
CIRTRAN CORPORATION
(Formerly Vermillion Ventures, Inc.)
Salt Lake City, Utah
We have reviewed the accompanying condensed balance sheet of
Cirtran Corporation [a development stage company] (formerly known
as Vermillion Ventures, Inc.) as of June 30, 2000, and the
related condensed statements of operations and for the three and
six months ended June 30, 2000 and for the period from the re-
entering of development stage on January 1, 1996 through June 30,
2000 and the statements of cash flows for the six months ended
June 30, 2000 and 1999, and for the period from the re-entering
of development stage on January 1, 1996 through June 30, 2000.
All information included in these financial statements is the
representation of the management of Cirtran Corporation
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is
substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed financial
statements reviewed by us, in order for them to be in conformity
with generally accepted accounting principles.
The accompanying condensed financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Note 7 to the financial statements, the company
has no on-going operations, has incurred substantial losses since
its inception, has liabilities in excess of assets and has no
working capital. These factors raise substantial doubt about its
ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 7. The
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
PRITCHETT, SILER & HARDY, P.C.
August 16, 2000
Salt Lake City, Utah
3
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
June 30, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash in bank $ - $ -
___________ ___________
Total Current Assets - -
___________ ___________
$ - $ -
________________________
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 2,713 2,309
___________ ___________
Total Current Liabilities 2,713 2,309
___________ ___________
COMMITMENTS AND CONTINGENCIES - -
___________ ___________
STOCKHOLDERS' (DEFICIT):
Common stock, $.001 par value,
500,000,000 shares authorized,
143,567 and 116,044 shares issued
and outstanding, respectively 143 116
Capital in Excess of Par 29,073 22,424
Retained deficit (since Quasi-
Reorganization in which a deficit of
$703,761, as of January 1, 1996
was eliminated) - -
Deficit accumulated during the
development stage (31,929) (24,849)
___________ ___________
Total Stockholders' (Deficit) (2,713) (2,309)
___________ ___________
$ - $ -
________________________
Note: The balance sheet at December 31, 1999 was taken from the
audited financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
Cumulative From
the Re-entering of
For the Three For the Six Development Stage
Months Ended Months Ended on January 1,
June 30, June 30, 1996 through
___________________________________ June 30,
2000 1999 2000 1999 2000
__________________________________________________
REVENUE:
Sales $ - $ - $ - $ - $ -
__________________________________________________
Total Revenue - - - - -
__________________________________________________
EXPENSES:
General and
administrative 7,080 - 7,080 - 31,929
__________________________________________________
Total Expenses 7,080 - 7,080 - 31,929
__________________________________________________
(LOSS) FROM
OPERATIONS (7,080) - (7,080) - (31,929)
CURRENT INCOME TAXES - - - - -
DEFERRED INCOME TAX - - - - -
__________________________________________________
NET (LOSS) $ (7,080) $ - $ (7,080) $ - $ (31,929)
_______________________________________________________
(LOSS) PER SHARE $ (.06) $ - $ (.06) $ - $ (.33)
_______________________________________________________
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
Cumulative from
the Re-entering of
Development Stage
For the Six months on January 1,
Ended June 30, 1996 through
_______________________ June 30,
2000 1999 2000
________________________________
Cash Flows From Operating Activities:
Net loss $(7,080) $ - $ (31,929)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock Issued for services 200 - 20,200
Contributed Capital 1,196 - 3,736
Stock issued for expenses paid on
behalf of Company by shareholder 5,280 - 5,280
Changes in assets and liabilities:
Increase in accounts payable 404 - 2,713
________________________________
Net Cash (Used) by Operating Activities - - -
________________________________
Cash Flows From Investing Activities:
- - -
________________________________
Net Cash (Used) by Investing Activities - - -
________________________________
Cash Flows From Financing Activities:
- - -
________________________________
Net Cash Provided by Financing Activities - - -
________________________________
Net Increase in Cash - - -
Cash at Beginning of the Year - - -
________________________________
Cash at End of the Year $ - $ - $ -
___________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the three months ended June 30, 2000:
The Company issued 25,333 shares of common stock to a related
party for expenses of $5,280 paid on behalf of the Company by the
related party and also issued 2,000 shares for services rendered,
valued at $200.
For the three months ended June 30, 1999: None
The accompanying notes are an integral part of these unaudited
condensed financial statements.
6
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Cirtran Corporation (formerly known as Vermillion
Ventures, Inc.) (the Company) was organized under the laws of the
State of Nevada on March 23, 1987. The Company was formed to
acquire other operating corporate entities. On March 15, 1988
The Company acquired all of the outstanding stock of BMC
Incorporated (BMC) by issuing 129,000,000 shares of common stock.
BMC was unsuccessful in its satellite bingo operations and was
dissolved. During 1996, Management determined it was in the best
interest of the Company to discontinue its previous operations.
The Company is considered to have re-entered into a new
development stage on January 1, 1996. Because the Company
discontinued its previous operations and is seeking new potential
business opportunities, the Company adopted quasi-reorganization
accounting procedures to provide the Company a "fresh-start" for
accounting purposes.
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June
30, 2000 and 1999 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's December 31, 1999 audited financial
statements. The results of operations for the periods ended June
30, 2000 are not necessarily indicative of the operating results
for the full year.
Development Stage - The Company is considered a development stage
company as defined in SFAS no. 7.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 9].
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles required
management to make estimates and assumptions that effect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimated by management.
7
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
SFAS No. 134, "Accounting for Mortgage-Backed Securities.", SFAS
No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", SFAS No. 136, "Transfers of Assets to a not for
profit organization or charitable trust that raises or holds
contributions for others", and SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB statement No. 133 ( an amendment of FASB
Statement No. 133.)," were recently issued. SFAS No. 132, 133,
134, 135, 136 and 137 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
NOTE 2 - QUASI-REORGANIZATION
In May 2000 the shareholders of the Company adopted quasi-
reorganization accounting procedures. Quasi-reorganization
accounting allowed the Company to eliminate its previous retained
(deficit) of $701,761 against additional paid-in capital.
Therefore, the adoption of quasi-reorganization accounting
procedures gave the Company a "fresh start" for accounting
purposes. The Company is also considered as re-entering a new
development stage on January 1, 1996, as it discontinued all of
its previous bingo operations. These financial statements have
been restated to reflect the change.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" which requires the liability approach for the
effect of income taxes.
The Company has available at June 30, 2000, unused operating loss
carryforwards of approximately $31,900, which may be applied
against future taxable income and which expire in various years
through 2019. If certain substantial changes in the Company's
ownership should occur, there could be an annual limitation on
the amount of net operating loss carryforwards which can be
utilized. The amount of and ultimate realization of the benefits
from the operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards (approximately $11,800) at June 30, 2000
and, therefore, no deferred tax asset has been recognized for the
loss carryforwards. The change in the valuation allowance is
equal to the tax effect of the current period's net loss
(approximately $3,400 for the six months ended June 30, 2000).
8
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 4 - COMMON STOCK
On April 29, 1997 the company issued 666,667 shares of its
previously authorized but unissued common stock for services
rendered valued at $20,000 (or $.30 per share). The stock
issuance resulted in a change of control of the Company.
In May 2000, the Company issued 190 fractional shares related
to the 1 for 3,000 reverse stock split.
In June 2000, the Company issued 2,000 shares of its
previously authorized, but unissued common stock for services
rendered valued at $200 (or $.10 per share).
In June 2000, the Company issued 25,333 shares of its
previously authorized, but unissued common stock for expenses
paid by shareholder on behalf of Company totaling $5,280 (or
$.21 per share).
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods presented, the
Company did not pay any compensation to its officers and
directors.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his office as a mailing address, as needed, at no
expense to the Company.
Capital Contributions - A shareholder paid expenses on behalf of
the Company, of $1,196 in 2000, $2,440 in 1999, and $100 in 1996.
These have been accounted for as contributions to capital.
NOTE 6 - COMMENTS AND CONTINGENCIES
Management believes that the Company is not liable for any
existing liabilities related to its former discontinued
operations. The Company is not currently named nor is it aware
of any such claims or suits against the Company. No amounts have
been reflected or accrued in these financial statements for any
contingent liability.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has no on-going operations and has incurred
losses since its inception. Further, the Company has current
liabilities in excess of assets and has no working capital to pay
its expenses. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional
funds not provided by operations through loans or through sales
of its common stock or through a possible business combination
with another company. There is no assurance that the Company
will be successful in raising this additional capital or
achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of
these uncertainties.
9
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CIRTRAN CORPORATION
(Formerly Known As Vermillion Ventures, Inc.)
[A Development Stage Company]
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 8 - SUBSEQUENT EVENTS
During July 2000, pursuant to the close of an asset purchase
agreement with Circuit Technology Inc., the Company issued
10,000,000 shares of common stock.
In July 2000 the Company changed its name from Vermillion
Ventures, Inc. to Cirtran Corporation. This name change has
been reflected in these financial statements.
NOTE 9 - EARNINGS (LOSS) PER SHARE
The following data show the amounts used in computing income
(loss) per share and the effect on income and the weighted
average number of shares of dilutive potential common stock for
the three months ended June 30, 2000 and 1999 and for the period
from the re-entering of development stage on January 1, 1996
through June 30, 2000:
Cumulative From
the Re-entering of
For the Three For the Six Development Stage
Months Ended Months Ended on January 1,
June 30, June 30, 1996 through
___________________________________ June 30,
2000 1999 2000 1999 2000
__________________________________________________
Loss from continuing
operations available to
common stockholders
(numerator) $(7,080) $ - $(7,080) $ - $ (31,929)
__________________________________________________
Weighted average number of
common shares outstanding
used in earnings per share
during the period
(denominator) 122,542 116,044 119,388 116,044 96,877
__________________________________________________
Dilutive earnings per share was not presented, as the Company had
no common equivalent shares for all periods presented that would
effect the computation of diluted earnings (loss) per share.
10
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
Forward-Looking Statement Notice
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities
Act of 1933 and Section 21e of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors.
Recent Acquisition
On July 1, 2000, the Company acquired substantially all of
the assets of Circuit Technology, Inc., a Utah corporation
("CTI"), through the Company's wholly owned subsidiary, CTI
Systems, Inc. ("CTSI"), which is now the operating subsidiary of
the Company. As a result, the Company is now engaged in the
business of assembling complex printed circuit boards and other
electronic assemblies and providing related component part
production services to OEM manufacturers of electronic equipment
for a wide variety of business applications. The purchase price
for CTI paid at closing consists of the assumption of certain CTI
liabilities and 10,000,000 shares of common stock of the Company.
The final dollar amount of the purchase price will be determined
on the basis of the CTI balance sheet as of June 30, 2000, which
is in the process of being prepared. The purchase price was
determined through arms-length negotiations between the Company
and CTI on the basis of the tangible assets of CTI and the
goodwill associated with the business. The principal owners of
CTI, Iehab J. Hawatmeh, Raed Hawatmeh, Roger Kokozyon, and the
Saliba Private Trust, were not affiliated or associated with the
Company or its affiliates prior to the acquisition.
Prior to the acquisition, the Company was not engaged in any
active business operations. Consequently, the financial
information presented in this report for the six-month periods
ended June 30, 2000 and 1999, do not reflect the effect of the
acquisition and are not indicative of the operations or financial
condition of the Company going forward.
Results of Operations
Six Months periods Ended June 30, 2000 and 1999
The Company had no revenue from continuing operations for
the periods ended June 30, 2000 and 1999.
General and administrative expenses for the six month
periods ended June 30, 2000 and 1999, consisted of general
corporate administration, legal and professional expenses, and
accounting and auditing costs. These expenses were $7,080 and $0
for the six-month periods ended June 30, 2000 and 1999,
respectively.
As a result of the foregoing factors, the Company realized a
net loss of $7,080 for the six months ended June 30, 2000, and no
gain or loss for the same period in 1999.
11
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Liquidity and Capital Resources
At June 30, 2000, the Company had a working capital deficit
of $2,713, as compared to a deficit of $2,309 at December 31,
1999. The working capital needs of the Company changed
substantially as a result of the acquisition of CTI in July 2000.
PART II. OTHER INFORMATION
Exhibits and Reports on Form 8-K.
Reports on Form 8-K: No reports on Form 8-K were filed by
the Company during the quarter ended June 30, 2000.
Exhibits: Included only with the electronic filing of this
report is the Financial Data Schedule for the six-month period
ended June 30, 2000 (Exhibit ref. No. 27).
SIGNATURES
In accordance with the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CIRTRAN CORPORATION
Date: August 21, 2000 By: /s/ Iehab J. Hawatmeh, President
12
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