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 - September 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: 18,746,653
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CORONADO INDUSTRIES, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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.
BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
September 30, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 9,699 $ 7,183
Accounts Receivable 16,908 --
Inventory 43,031 10,567
-------- -------
Total current assets 69,638 17,750
-------- -------
PROPERTY AND EQUIPMENT, net 155,054 8,799
-------- -------
OTHER ASSETS:
Patents 26,844 1
Goodwill, net 6,026 8,265
-------- -------
Total other assets 32,870 8,266
-------- -------
TOTAL ASSETS $257,562 $34,815
======== =======
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 48,117 $ 8,272
Accrued expenses 11,387 --
Accrued salaries 135,556 30,556
Notes payable and accrued interest 292,056 --
-------- -------
Total current liabilities 487,116 48,828
LONG-TERM DEBT -- 10,000
-------- -------
Total liabilities 487,116 48,828
-------- -------
SHAREHOLDERS' DEFICIT:
Common stock - $.001 par value;
20,000,000 shares authorized,
18,626,253 issued and outstanding 18,626 18,344
Additional paid in capital 325,325 37,149
Accumulated deficit during development stage (573,505) (69,506)
-------- -------
Total shareholders' deficit (229,554) (14,013)
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $257,562 $34,815
======== =======
See selected notes to financial statements.
3
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
SIX AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
------------------------ -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE $ 26,398 $ -- $ 26,398 $ --
OPERATING EXPENSES:
Salaries:
Officers 150,000 -- 50,000 --
Office 42,350 -- 37,400 --
Payroll taxes 15,563 -- 6,986 --
Advertising 74,115 -- 73,818 --
Amortization 2,239 -- 937 --
Bad debt -- -- -- --
Bank charges 86 -- 55 --
Business promotion 8,000 -- -- --
Depreciation 13,607 -- 11,645 --
Directors Fees -- -- -- --
Donations 60 -- -- --
Dues and Subscriptions 182 -- 182 --
Filing fees 865 -- -- --
Insurance 8,966 -- 2,878 --
Maintenance and repairs 408 -- 408 --
Meals and entertainment 261 -- 141 --
Office 3,347 -- 2,659 --
Outside services 5,111 -- 2,025 --
Postage and delivery 793 -- 312 --
Professional fees 124,752 -- 50,175 --
Rent 13,173 -- 8,688 --
Research and development 5,000 -- -- --
Shareholder services 11,740 -- 4,900 --
Supplies 4,609 -- 1,075 --
Taxes and licenses 3,569 -- 3,419 --
Telephone 4,934 -- 2,217 --
Temporary labor 2,325 -- 1,561 --
Travel 18,766 -- 15,900 --
Utilities 967 -- 967 --
Workers' compensation 53 -- -- --
---------- ---------- ---------- ----------
Total operating expenses 515,841 22,901 278,348 12,829
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (489,443) (22,901) (251,950) (12,829)
---------- ---------- ---------- ----------
OTHER INCOME AND (EXPENSES):
Other income 500 -- -- --
Interest expense (15,056) -- (7,576) --
---------- ---------- ---------- ----------
Total other income and (expenses) (14,556) -- (7,576) --
---------- ---------- ---------- ----------
NET LOSS (503,999) (22,901) (259,526) (12,829)
ACCUMULATED DEFICIT, beginning of period (69,506) (42,362) (313,979) (52,434)
---------- ---------- ---------- ----------
ACCUMULATED DEFICIT, end of period $ (573,505) $ (65,263) $ (573,505) $ (65,263)
========== ========== ========== ==========
NET LOSS PER COMMON SHARE $ (0.03) $ (0.00) $ (0.01) $ (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 18,402,869 18,344,253 18,518,188 18,344,253
</TABLE>
See selected notes to financial statements.
4
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Sept. 30, Sept. 30,
1997 1996
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $(403,081) $ (19,776)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (159,860) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing 267,000 21,000
Proceeds from sale of stock 298,457 --
--------- ---------
Net increase in cash 2,516 1,224
CASH, beginning of period 7,183 1,403
--------- ---------
CASH, end of period $ 9,699 $ 2,627
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(508,999) $ (22,901)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 2,239 --
Depreciation 13,607 --
Increase in:
Accounts receivable (16,908) (900)
Inventory (32,464) --
Patents (26,843) --
Professional retainers (5,000) --
Increase (decrease) in:
Accounts payable 39,845 2,532
Accrued expenses 26,442 (325)
Accrued salaries 105,000 --
Directors' fees -- 1,818
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $(403,081) $ (19,776)
========= =========
See selected notes to financial statements.
5
<PAGE>
CORONADO INDUSTRIES, INC.
SELECTED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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
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 until September of 1997 when it opened its first clinic. 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.
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 nine month and three month periods ended September 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. Primary and fully diluted earnings per share are considered to be the
same in all periods.
6
<PAGE>
CORONADO INDUSTRIES, INC.
SELECTED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 AND 1996
DECEMBER 31, 1996
DEBT
During the period from January 1, 1997 through September 30, 1997, the Company
received funding from Hayden Investments in the amount of $202,000 in exchange
for several notes payable, each payable within one year (360 days) with
applicable interest stated at 15%. On July 18, 1997, the Company issued a note
in the amount of $75,000 and bearing 10% annual interest to Dr. Leo Bores, a
Company employee. One-half of the principal is due on July 31, 1998 and one-half
on December 31, 1998. During this same period, the Company accrued interest of
$15,056 on these notes.
EQUITY
During the quarter ended September 30, 1997, the Company sold 282,000 shares of
common stock at $1.25 per share, less commissions at 15% and approximately
$11,000 of expenses and fees through a private placement.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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 September 1997 quarterly or nine-month
operating results.
OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997
For the quarter ended September 30, 1997 Registrant experienced a net
loss from operations of $256,950, which is an increase of $120,767 from the
prior quarter. This increase resulted primarily from advertising expenses of
$73,818 and $37,400 of glaucoma treatment center personnel expenses. The
Registrant commenced the operation of the first glaucoma treatment center in
September 1997 and the advertising and personnel expenses were incurred by the
Registrant for the first time in the third quarter. The Registrant's glaucoma
treatment center generated approximately $20,000 of revenue in its first month
of operation, with approximately $6,600 of revenue generated from the sale of
one unit of the vacuum fixation device to Europe
Professional fees at $50,175 remained high in the third quarter because
Registrant's litigation continued throughout the quarter and the legal expenses
incurred in connection with the Registrant's private placement offering which
started in the second quarter and continued in the third quarter. The Registrant
completely settled its litigation by October 11, 1997 and legal expenses
therefor will cease in the fourth quarter. However, legal expenses will be
incurred in the fourth quarter of 1997 and the first quarter of 1998, 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)
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. Registrant intends to open 40 to 50 glaucoma
treatment centers throughout the United States over the next three years,
subject to obtaining the required financing. Registrant's treatment centers will
be managed by the physicians which the Registrant will employ as medical
directors and the Registrant will not have control over the advertising employed
by the center or the actual medical procedures conducted by the physicians at
its centers.
8
<PAGE>
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. However, at this time it
appears unlikely that any units will be sold in 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1997
For the nine months ended September 30, 1997 Registrant experienced a
net loss from operations of $489,443. Approximately, 71.6% of this loss resulted
from the total of the accrued of management salaries of $150,000 (30.6%),
advertising expenses of $74,115 (15.1%) and $129,752 of professional fees
(25.9%). Until Registrant generates sufficient revenues or the Registrant
obtains adequate financing, Registrant anticipates management will receive only
partial salary payments. Any accrued salaries will be paid out of future
increased revenues or proceeds from securities offerings. Management believes
its professional expenses will decrease in the future as its securities offering
are completed and it is able to hire internal accounting personnel. Advertising
for the Registrant's glaucoma treatment centers will continue to be a large
portion of the Registrant's quarterly expense, since this expense must be
incurred in order to build the centers' patient base. (See "Quarter Ended
September 30, 1997" above.)
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997 Registrant's "Quick Ratio" (current assets to
current liabilities) fell to approximately 1 to 7.0 as compared to 1 to 11.3 for
the prior quarter, due primarily to an increase in the Registrant's treatment
center inventories and the $16,908 of accounts receivable. Current liabilities
increased by $143,867, as a result of accrued salaries increasing by $50,000 and
notes payable increasing by $75,000 as a result of the acquisition of the office
equipment and inventories of Dr Bores in July 1997.
At September 30, 1997 Registrant had borrowed a total of $277,000 and
accrued $15,056 of interest expense on this debt. $202,000 of 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 treatment
center will be sufficient to repay these loans as they mature in 1998. The
Registrant issued a $75,000 note to Dr. Bores for the purchase of his office
equipment and inventory. This note bears annual interest at 10% and one-half
matures on July 31, 1998 and one-half matures on December 31, 1998.
9
<PAGE>
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.
On October 30, 1997 Registrant closed on a private placement for
$503,000 of gross offering proceeds which will supply approximately one-half of
the Scottsdale treatment center's annual operating budget. This offering was
underwritten by Fox & Company Investments, Inc., the largest investment banking
firm in Arizona ("Fox & Co."). Fox & Co. has obtained written commitments from
subscribers for an additional $807,500 of private placement proceeds, subject to
collection of payment for these subscriptions on or before December 3, 1997. In
addition, Fox & Co. will commence the Registrant's $5,600,000 debenture offering
in November 1997. These funds would be used by Registrant to fully fund the
first year budget for the Scottsdale treatment center, 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 or that payment on the $807,500 of uncollected
bridge offering subscriptions will be made before the December 3, 1997 deadline.
"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.
As of October 10, 1997, the Company was not a party to any material
litigation. All previous litigation has been resolved to the Company's
satisfaction.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Earnings (Loss) Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
There was a Form 8-K filed on August 18, 1997, concerning the
Company's acquisition of Dr. Bores' furniture, fixtures and
inventory.
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: November 12, 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
September 30, 1997
Net Loss $ (503,999)
Net Loss Per Share $ (.03)
Weighted Average Shares Outstanding 18,402,869
The loss per share is based upon the weighted average number of shares
outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,699
<SECURITIES> 0
<RECEIVABLES> 16,808
<ALLOWANCES> 0
<INVENTORY> 43,031
<CURRENT-ASSETS> 69,638
<PP&E> 170,227
<DEPRECIATION> (16,173)
<TOTAL-ASSETS> 257,502
<CURRENT-LIABILITIES> 487,116
<BONDS> 0
0
0
<COMMON> 18,626
<OTHER-SE> (248,180)
<TOTAL-LIABILITY-AND-EQUITY> 257,662
<SALES> 0
<TOTAL-REVENUES> 26,398
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 515,841
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,056
<INCOME-PRETAX> (503,999)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (503,999)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
