UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [Fee Required]
For the quarterly period ended - June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from ________ to ________
Commission file number 33-33042-NY
Coronado Industries, Inc.
----------------------------------------------
(Name of small business issuer in its charter)
Nevada 22-3161629
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16929 E. Enterprise Drive, Suite 202, Fountain Hills, AZ 85268
- --------------------------------------------------------------- ---------
(Address of Principal executive offices) (as of date of filing) (Zip Code)
Issuer's telephone number (602) 837-6810
---------------
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject 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 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 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: 18,599,253
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CORONADO INDUSTRIES, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Page
----
PART I
Item 1 Financial Statements 3
Item 2. Management's Discussion and Analysis
or Plan of Operation 8
PART II
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
<PAGE>
CORONADO INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
June 30, December 31,
1997 1996
-------- -----------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash $ 2,643 $ 7,183
Inventory 27,764 10,567
-------- -------
Total current assets 30,407 17,750
-------- -------
PROPERTY AND EQUIPMENT, net 15,550 8,799
-------- -------
OTHER ASSETS:
Patents 26,396 1
Professional retainers 5,000 --
Goodwill, net 7,410 8,265
-------- -------
Total other assets 38,806 8,266
-------- -------
TOTAL ASSETS $ 84,763 $34,815
======== =======
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 40,188 $ 8,272
Accrued salaries 85,556 30,556
Accrued payroll taxes 8,025 --
Notes payable and accrued interest 209,480 --
-------- -------
Total current liabilities 343,249 38,828
LONG-TERM DEBT -- 10,000
-------- -------
Total liabilities 343,249 48,828
-------- -------
SHAREHOLDERS' DEFICIT:
Common stock - $.001 par value;
20,000,000 shares authorized,
18,344,253 issued and outstanding 18,344 18,344
Additional paid in capital 37,149 37,149
Deficit accumulated during development stage (313,979) (69,506)
-------- -------
Total shareholders' deficit (258,486) (14,013)
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 84,763 $34,815
======== =======
See selected notes to financial statements.
3
<PAGE>
CORONADO INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
SIX AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended Development Stage
--------------------- --------------------- -----------------
June 30, June 30, June 30, June 30, November 5, 1996 -
1997 1996 1997 1996 June 30, 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ -- $ --
--------- --------- --------- --------- ---------
OPERATING EXPENSES:
Salaries:
Officers 100,000 -- 50,000 -- 130,556
Office 4,950 -- 3,750 -- 4,950
Payroll taxes 8,577 -- 4,243 -- 8,577
Advertising 297 -- 108 -- 582
Amortization 1,302 -- 732 -- 1,587
Bad debt -- -- -- -- 900
Bank charges 31 -- -- -- 117
Business promotion 8,000 -- 8,000 -- 8,187
Depreciation 1,962 -- 977 -- 3,729
Directors Fees -- -- -- -- 1,200
Donations 60 -- -- -- 60
Filing fees 865 -- -- -- 865
Insurance:
General liability 625 -- 352 -- 625
Product liability 5,463 -- 1,368 -- 5,463
Meals and entertainment 120 -- 120 -- 179
Office 688 256 515 256 2,434
Outside services 3,086 -- 2,914 -- 3,193
Postage and delivery 481 -- 350 -- 855
Professional fee 74,577 7,150 57,476 7,150 99,317
Rent 4,485 -- 2,292 -- 4,485
Research and development 5,000 -- -- -- 5,000
Shareholder services 6,840 -- 1,130 -- 6,840
Supplies 3,534 -- 1,306 -- 3,661
Taxes and licenses 150 -- (337) -- 3887
Telephone 2,717 2,241 784 2,042 3,489
Temporary labor 764 -- -- -- 764
Travel 2,866 -- 50 -- 4,356
Workers' compensation 53 -- 53 -- 53
--------- --------- --------- --------- ---------
Total operating expenses 237,493 9,647 136,183 9,448 305,910
--------- --------- --------- --------- ---------
LOSS FROM OPERATIONS (237,493) (9,647) (136,183) (9,448) (305,910)
--------- --------- --------- --------- ---------
OTHER INCOME AND (EXPENSES):
Other income 500 -- -- -- 500
Interest expense (7,480) (425) (6,314) (425) (8,569)
--------- --------- --------- --------- ---------
Total other income and (expenses) (6,980) (425) (6,314) (425) (8,069)
--------- --------- --------- --------- ---------
NET LOSS (244,473) (10,072) (142,497) (9,873) $(313,979)
=========
ACCUMULATED DEFICIT, beginning of period (69,506) (42,362) (171,482) (42,561)
--------- --------- --------- ---------
ACCUMULATED DEFICIT, end of period $(313,979) $ (52,434) $(313,979) $ (52,434)
========= ========= ========= =========
NET LOSS PER COMMON SHARE $ (.01) $ (.01) $ (.01) $ (.01)
========= ========= ========= =========
</TABLE>
See selected notes to financial statements.
4
<PAGE>
CORONADO INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
June 30, June 30,
1997 1996
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $(187,826) $ (12,097)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (8,714) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 192,000 11,000
--------- ---------
NET DECREASE IN CASH (4,540) (1,097)
CASH, beginning of period 7,183 1,403
--------- ---------
CASH, end of period $ 2,643 $ 306
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(244,473) $ (10,072)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 1,302 --
Depreciation 1,962 --
Increase in:
Other notes and accounts receivable -- (900)
Inventory (17,197) --
Patents (26,841) --
Professional retainers (5,000) --
Increase (decrease) in:
Accounts payable 31,916 (550)
Accrued salaries 55,000 --
Accrued expenses 7,480 (575)
Accrued payroll taxes 8,025 --
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $(187,826) $ (12,097)
========= =========
See selected notes to financial statements.
5
<PAGE>
CORONADO INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
SELECTED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
DECEMBER 31, 1996
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Coronado Industries, Inc. (the Company) was originally incorporated under the
laws of the State of New York in December 1989 as Logical Computer services of
New York, Ltd. In September 1996 the Company changed its name to Coronado
Industries, Inc. The Company had limited activity for several years until on
November 5, 1996 when the Company acquired 100% of the assets of Ophthalmic
International, L.L.C. and American Glaucoma Institute in a reverse merger.
The Company has been in the development stage since its acquisition of
Ophthalmic International, L.L.C. and American Glaucoma Institute in November
1996. Ophthalmic International owns a patented treatment for Open Angle
Glaucoma. Ophthalmic International, L.L.C. has also received a patent on the
method for treating Open Angle Glaucoma as well as the devices used in the
treatment, including the Vacuum Fixation Device. The Company manufactures and
markets the Vacuum Fixation Device and the patented suction rings to major
medical supply companies and health care providers throughout the world.
(However, the Company has yet to generate any revenues).
BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-QSB. Accordingly, they do not include all the
information and footnotes required by Generally Accepted Accounting Principles
("GAAP") for complete financial statements. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation of the results for the interim periods presented have been
made. The results for the six month and three month periods ended June 30, 1997
may not be indicative of the results for the entire year. These financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996.
LOSS PER COMMON SHARE
Loss per common share is computed by dividing net loss by the weighted average
number of common share and common share equivalents outstanding during the
period, which is assumed to be 18,344,253 shares for each period. Primary and
fully diluted earnings per share are considered to be the same in all periods.
DEBT
During the period from January 1, 1997 through June 30, 1997, the Company
received additional funding from Hayden Investments. The Company received
$192,000 in exchange for several notes payable, each payable within one year
(360 days) with applicable interest stated at 15%. During this same period, the
Company accrued interest of $7,480 on these notes and others from Hayden
Investments.
6
<PAGE>
CORONADO INDUSTRIES, INC.
(A DEVELOPMENT STAGE COMPANY)
SELECTED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
DECEMBER 31, 1996
SUBSEQUENT EVENTS
After June 30, 1997, the Company entered into certain material transactions
which are summarized below:
ACQUISITION OF ASSETS
On July 9, 1997, the Company entered into an acquisition agreement to purchase
the assets of an eye institute in the metropolitan Phoenix area which it intends
to convert into the Company's first Arizona Glaucoma Institute. The Company has
hired the selling doctor to become the Chief Medical Director.
FINANCING
During July 1997, the Company entered into an agreement with Fox & Company
Investments, Inc. to sell up to ten units of 30,000 shares of the Company's
common stock for $37,500 per unit. As a result of this offering, 252,000 shares
of common stock were sold for $315,000. Under the terms of the agreement,
$47,250 of this amount was paid to Fox and Company Investments, Inc. as a fee.
Fox & Company Investments, Inc. entered into an agreement to use its best
efforts to raise an additional $5 million for the Company.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION.
Registrant was a development stage company at June 30, 1997, with no
revenues having been generated during that six-month period. Also, prior to
November 5, 1996 Registrant had been a dormant shell company with no operations
since 1994. Therefore, there is no prior year's operations of Registrant to
which to compare the June 1997 quarterly or six-month operating results.
OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997
For the quarter ended June 30, 1997 Registrant experienced a net loss
from operations of $136,183. Approximately, 79% of this loss resulted from the
total of the accrued of management salaries of $50,000, and $57,476 of
professional fees. Until Registrant's clinic revenues or product sales commence,
Registrant anticipates management will receive partial salary payments. Any
accrued salaries will be paid out of future increased revenues.
Professional fees increased by approximately $30,000 from the prior
quarter because Registrant filed its annual report for the 1996 year and the
quarterly report for the first quarter of 1997 in June. Also, legal fees for the
litigation which was researched and filed in June (see Item 3 below) added to
the professional fee expenses of the quarter. If the litigation is not resolved
in the near future, the legal expenses could be substantial in the aggregate and
continue for a year or longer. Also, legal expenses will be incurred in the
third and fourth quarters of this year, as Registrant completes its initial
private placement and commences its larger private placement, both through Fox &
Company Investments, Inc. (see "Liquidity and Capital Resources" below).
On July 8, 1997 Registrant entered into an agreement (which was closed
on July 28, 1997) with Dr. Leo D. Bores for the acquisition of furniture and
equipment and the lease of a building in Scottsdale, Arizona for Registrant's
first glaucoma treatment clinic. Registrant paid Dr. Bores $50,000 cash and
issued a promissory note in the amount of $75,000 (due in 18 months and bearing
10% interest) for the furniture and equipment and received an 18-month option to
purchase the clinic building.
8
<PAGE>
Dr. Bores, an internationally known ophthalmologist who was a pioneer
in the field of radialkeratotomy ("RK"), became the Medical Director of the
Scottsdale clinic on August 1, 1997. Dr. Bores will be the Medical Director over
all of Registrant's future medical clinics. Registrant has made an application
to the Arizona Department of Health Services to commence operation of its clinic
on September 1, 1997. The Department of Health Services has not yet completed
its review of Registrant's application and its inspection of Registrant's
facility; therefore, at this time there can be no assurances that Registrant's
clinic will open on September 1, 1997. However, Registrant presently anticipates
any delays to its clinic opening will be minimal in duration. Registrant will
commence advertising the opening of its Scottsdale clinic in August 1997.
Registrant's patented glaucoma treatment using Registrant's patented
equipment will only be available to glaucoma patients at Registrant's treatment
clinics in the near future. On an annual basis, Registrant's glaucoma clinic
could be profitable from serving as few as 800 patients. Registrant believes,
without assurances, that its Scottsdale glaucoma center is likely to be serving
between 1,000 and 3,000 patients on an annual basis by August 31, 1998.
Registrant intends to open 40 to 50 glaucoma treatment clinics throughout the
United States over the next three years.
With respect to future operations Registrant hopes to secure initial
international orders for its patented Vacuum Fixation Device and patented
suction rings in the second half of 1997. The profitability of these operations
will be dependent upon the total number of units sold. Registrant believes,
without assurances, that its gross profit margins are such that Registrant could
be profitable if as few as 200 Vacuum Fixation Devices were sold during 1997.
However, there can be no assurances at this time that any units will be sold in
1997.
SIX MONTHS ENDED JUNE 30, 1997
For the six months ended June 30, 1997 Registrant experienced a net
loss from operations of $237,493. Approximately, 74% of this loss resulted from
the total of the accrued of management salaries of $100,000, and $74,577 of
professional fees. Until Registrant's product sales commence, Registrant
anticipates management will receive minimal salary payments. Any accrued
salaries will be paid out of future increased revenues. (See "Quarter Ended June
30, 1977" above for a discussion of Registrant's professional fees.)
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997 Registrant's "Quick Ratio" (current assets to current
liabilities) was approximately 1 to 11.3, due primarily to Registrant's $209,480
of accrued short-term debt and $85,556 of accrued salaries. At June 30, 1997
Registrant had borrowed a total of $202,000 and accrued $7,480 of interest
expense on this debt. These loans mature in one year from the date of issuance,
commencing in January 1998, and bear 15% annual interest which is due at
maturity. Registrant presently believes, without assurance, the revenues and
profits from its Scottsdale glaucoma clinic will be sufficient to repay these
loans as they mature in 1998.
On a short-term and long-term basis Registrant requires only minimal
capital to sustain its anticipated manufacturing and marketing of its patented
Vacuum Fixation Device and its patented suction rings.
After entering into the agreement with Dr. Bores, Registrant
anticipates requiring only approximately $500,000 of working capital to commence
profitable operations at the Scottsdale clinic in the second half of 1997. On
July 31, 1997 Registrant closed on a private placement for $315,000 of gross
offering proceeds which will supply approximately one-half of the clinic's
annual operating budget. This offering was underwritten by Fox & Company
Investments, Inc., the largest investment banking firm in Arizona ("Fox & Co.).
Fox and Co. has also executed an agreement with Registrant to raise an
additional $5,000,000 in the second half of 1997. These funds would be used by
Registrant to fully fund the Scottsdale clinic, as well as to open as many as
six additional glaucoma clinics in other parts of the United States. At this
time there can be no assurances that this second offering in 1997 by Registrant
will be successful.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: THE STATEMENTS CONTAINED IN THIS REPORT WHICH ARE NOT HISTORICAL
ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE
FORWARD- LOOKING STATEMENTS, INCLUDING, BUT NOT LIMITED TO, CERTAIN DELAYS
BEYOND REGISTRANT'S CONTROL WITH RESPECT TO MARKET ACCEPTANCE OF NEW
TECHNOLOGIES AND PRODUCTS, DELAYS IN STATE LICENSING, AND OTHER RISKS DETAILED
FROM TIME TO TIME IN REGISTRANT'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During the quarter ended June 30, 1997 Registrant filed a lawsuit in
Federal district court for the District of Arizona against one of Registrant's
former officers and Directors, seeking the return of approximately 139,000
shares of common stock on the basis that these shares were not earned by the
shareholder. Subsequently, this lawsuit was amended to include approximately
115,000 shares presently held by two other shareholders on similar grounds.
Registrant was named as defendant in two separate lawsuits by the former officer
and one of the other shareholders in actions filed in Ohio and South Carolina,
on grounds that Registrant had validly issued the shares to these shareholders
and Registrant has no valid reason to prevent the shareholders from selling
their shares at this time. These lawsuits against Registrant seek the release of
the shares by Registrant, as well as actual and punitive damages. As of August
1, 1997 Registrant had entered into discussions with all defendants in the
lawsuits, except the former officer, with whom Registrant expects to commence
settlement discussions in the very near future.
Registrant has had settlement discussions with the two additional
shareholders described above and at this time it anticipates settling the Ohio
lawsuit on favorable terms. If Registrant is not able to enter into a favorable
settlement with its former officer, the Federal lawsuit and/or the South
Carolina lawsuit may take a substantial amount of time and expense to resolve,
with no assurance of a favorable outcome from continued litigation in this
matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reoprts on Form 8-K filed during
the quarter ended June 30, 1997.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto authorized.
CORONADO INDUSTRIES, INC.
Date: August 13, 1997 By: /s/ Gary R. Smith
----------------- ---------------------------------------
Gary R. Smith, President (Chief
Executive Officer) and Treasurer
(Chief Accounting Officer)
12
EXHIBIT 11
CORONADO INDUSTRIES, INC.
Earnings (Loss) Per Share
June 30, 1997
Net Loss $ (244,473)
Net Loss Per Share $ (.01)
Weighted Average Shares Outstanding 18,344,253
The loss per share is based upon the weighted average number of shares
outstanding from the time of the reverse merger, and giving retroactive effect
to the one-for-five reverse stock split.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,643
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 27,764
<CURRENT-ASSETS> 30,407
<PP&E> 19,078
<DEPRECIATION> (3,528)
<TOTAL-ASSETS> 84,763
<CURRENT-LIABILITIES> 343,249
<BONDS> 0
0
0
<COMMON> 18,344
<OTHER-SE> (276,830)
<TOTAL-LIABILITY-AND-EQUITY> 84,763
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 237,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,480
<INCOME-PRETAX> (244,473)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (244,473)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
