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, 1998
[ ] 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: 21,629,842
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CORONADO INDUSTRIES, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
Page
----
PART I
Item 1 Financial Statements 1
Item 2. Management's Discussion and Analysis
or Plan of Operation 8
PART II
Item 1. Legal Proceedings 12
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matter to a Vote of Security Holders N/A
Item 5. Other Matters N/A
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
CORONADO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1998 and December 31, 1997
September 30, December 31,
1998 1997
(Unaudited) (Audited)
----------- -----------
ASSETS
Current Assets:
Cash $ 253,727 $ 65,631
Accounts Receivable, net
-Trade 78,767 7,809
-Other 3,999 3,999
Inventory 60,447 43,031
Prepaid Expenses 29,228 104,500
---------- ---------
Total Current Assets 426,168 224,970
Property and Equipment, net 143,934 149,402
Other Assets:
Intangible Assets 33,717 36,345
---------- ---------
Total Assets $ 603,819 $ 410,717
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes Payable $ 0 $ 224,631
Note Payable to Related Party -
Current Portion 38,445 39,375
Accounts Payable 24,376 76,690
Accrued Salaries 180,000 153,673
Accrued Payroll Taxes 19,475 22,222
---------- ---------
Total Current Liabilities $ 262,296 $ 516,591
Long-term Debt 0 39,375
---------- ---------
Total Liabilities 262,296 555,966
---------- ---------
Stockholders' Equity (Deficit):
Preferred Stock 0 0
Common Stock - $.001 par value;
25,000,000 shares authorized, 21,629,842
shares outstanding at September 30, 1998;
18,962,653 outstanding at December 31, 1997 21,674 18,962
Additional Paid-in Capital 2,215,496 730,622
Accumulated Deficit (1,895,647) (894,833)
---------- ---------
Total Stockholders' Equity (Deficit) 341,523 (145,249)
---------- ---------
Total Liabilities And Stockholders'
Equity (Deficit) $ 603,819 $ 410,717
========== =========
1
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CORONADO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
Nine Months Three Months
------------------------ -------------------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues
Scottsdale $ 241,515 $ 26,398 $ 61,748 $ 26,398
Clearwater -- -- -- --
----------- ---------- ----------- -----------
Total Revenues 241,515 26,398 61,748 26,398
----------- ---------- ----------- -----------
Cost of Patient Revenues
Scottsdale 385,330 141,318 128,540 141,318
Clearwater 46,262 -- 46,262 --
----------- ---------- ----------- -----------
Total Cost of Revenues 431,592 141,318 174,802 141,318
----------- ---------- ----------- -----------
Gross Loss (190,077) (114,920) (113,054) (114,920)
General and Administrative
Expenses 797,686 374,523 238,113 137,030
----------- ---------- ----------- -----------
Loss from Operations (987,763) (489,443) (351,167) (251,950)
Interest Expense (13,117) (15,056) (945) (7,576)
Other Income 66 500 -- --
----------- ----------- ----------- -----------
Net Loss (1,000,814) (503,999) (352,112) (259,526)
=========== =========== =========== ===========
Basic Loss per Share $ (.05) $ (.03) $ (.02) $ (.01)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 20,296,248 18,344,253 21,606,842 18,344,253
=========== =========== =========== ===========
2
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CORONADO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
September 30, September 30,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $(205,557) $(215,255)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (12,481) (151,146)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 75,000
Repayment of debt (37,500) --
Proceeds from stock sale -- 298,457
--------- ---------
NET INCREASE (DECREASE) IN CASH (255,538) 7,056
CASH, beginning of period 509,265 2,643
--------- ---------
CASH, end of period $ 253,727 $ 9,699
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(352,112) $(259,526)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 876 937
Depreciation 6,733 9,666
Stock issued for services 46,000 --
Interest added to loan 945 --
(Increase)/decrease in:
Accounts receivable 16,525 (16,908)
Inventory (17,416) (15,267)
Patents -- (448)
Professional retainers -- 5,000
Prepaid expenses 25,772 --
Increase (decrease) in:
Accounts payable 9,470 7,929
Accrued salaries 50,000 50,000
Accrued expenses -- 11,387
Accrued payroll taxes 7,650 (8,025)
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $(205,557) $(215,255)
========= =========
3
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CORONADO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
September 30, September 30,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $ (786,209) $(403,081)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (26,400) (159,860)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 25,000 267,000
Repayment of debt (282,970) --
Proceeds from stock sales 1,258,675 298,457
---------- ---------
NET INCREASE (DECREASE) IN CASH 188,096 2,516
CASH, beginning of period 65,631 7,183
---------- ---------
CASH, end of period $ 253,727 $ 9,699
========== =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss (1,000,814) (508,999)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 2,628 2,239
Depreciation 31,868 13,607
Stock issued for services 221,000 --
Interest added to loan 945 --
(Increase)/decrease in:
Accounts receivable (70,958) (16,908)
Inventory (17,416) (32,464)
Patents -- (26,843)
Professional retainers -- (5,000)
Prepaid expenses 75,272 --
Increase (decrease) in:
Accounts payable (52,314) 39,845
Accrued salaries 26,327 105,000
Accrued expenses -- 26,442
Accrued payroll taxes (2,747) --
---------- ---------
NET CASH USED IN OPERATING ACTIVITIES $ (786,209) $(403,081)
========== =========
4
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CORONADO INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For The Nine Month Period Ended September 30, 1998
Total
Common Stock Stock-
------------------- Additional Retained Holders'
Shares Paid-in Earnings Treasury Equity
Outstanding Amount Capital (Deficit) Stock (Deficit)
----------- ------ ------- --------- ----- -------
Balance at
December
31, 1997 18,962,653 $18,962 $ 730,622 $ (894,833) $ -- $(145,249)
Stock issued
for services 191,000 235 243,265 -- -- 243,500
Proceeds
from sale
of stock, net 2,465,367 2,466 1,236,209 -- -- 1,238,675
Conversion of
debt 10,822 11 5,400 -- -- 5,411
Net loss -- -- -- (1,000,814) -- (1,000,814)
---------- ------- ---------- --------- ----- ---------
Balance at
September
30, 1998 21,629,842 $21,674 $2,215,496 $(1,895,647) $ -- $ 341,523
========== ======= ========== =========== ===== =========
5
<PAGE>
Coronado Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
In the opinion of management, the accompanying financial statements reflect all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the Company's financial position as of September 30, 1998 and the results
of its operations for the three and nine months ended September 30, 1998.
Although management believes that the disclosures in these financial statements
are adequate to make the information presented not misleading, certain
information and footnote disclosures normally included in financial statements
that have been prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities Exchange Commission.
The results of operations for the three and nine months ended September 30, 1998
are not necessarily indicative of the results that may be expected for the full
year ending December 31, 1998. The accompanying consolidated financial
statements should be read in conjunction with the more detailed financial
statements, and the related footnotes thereto, filed with the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the financial position, results of
operations, cash flows and changes in stockholder's equity of Coronado
Industries, Inc., and its wholly-owned subsidiaries. All material intercompany
transactions, accounts and balances have been eliminated.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure 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 estimates.
2. NOTES PAYABLE:
At December 31, 1997, notes payable consist of the following:
Notes payable to Hayden Investment, with interest at 15%,
due April 30, 1998 through July 20, 1998; unsecured. $ 224,631
Less: current portion (224,631)
----------
$ --
==========
This debt was repaid in full in March 1998.
In February 1998 the Company issued a $25,000 convertible promissory note which
bore a 15% annual interest rate. This note was repaid in May 1998 with $20,000
paid in cash and $5,000 in principal and $411 accrued interest converted to
10,822 shares of common stock.
6
<PAGE>
CORONADO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At September 30, 1998, notes payable to a related party consist of the
following:
Notes payable to Dr. Leo Bores, with 10% annual interest,
$37,500 principal due on January 18, 1998; unsecured. $38,445
Less: current portion (38,445)
-------
$ --
=======
3. STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK AND COMMON STOCK WARRANTS:
The Company issued 568,400 shares of common stock for $574,091, net of costs of
$138,659, through private offerings throughout the year ended December 31, 1997.
During the nine-month period ended September 30, 1998 the Company issued
2,465,367 shares of common stock for net offering proceeds of $1,238,675. In
relation to those offerings, the Company issued a total of 1,681,123 common
stock warrants to the underwriter and its representatives. The warrants have an
exercise price of $2.00 per share through December 31, 1998, and then $2.50 per
share through December 31, 2000, when they expire.
4. BASIC LOSS PER SHARE:
For the nine and three month periods ending September 30, 1998 and 1997, basic
loss per share includes no dilution and is computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share are not presented as
their affect is antidilutive.
5. SEGMENT INFORMATION:
The Company divides its revenues and costs on the following geographic basis for
segment reporting purposes:
9 Month 3 Month
------- -------
Scottsdale revenues $ 241,515 $ 61,748
Scottsdale costs 385,330 128,540
--------- ---------
$(143,815) $ (66,792)
Clearwater revenues 0 0
Clearwater costs 46,262 46,262
--------- ---------
$ (46,262) $ (46,262)
General corporate revenues 0 0
General corporate costs 810,737 239,058
--------- ---------
$(810,737) $(239,058)
The Company's assets are allocated on the following geographic basis for segment
reporting purposes:
Scottsdale $211,200
Clearwater 11,350
General corporate 381,269
--------
Total Assets $603,819
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, this document contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Company intends
that such forward-looking statements be subject to the safe harbors created
thereby. Such forward-looking statements involve risks and uncertainties and
include, but are not limited to, statements regarding future events and the
Company's plans and expectations. The Company's actual results may differ
materially from such statements. Although the Company believes that the
assumptions underlying the forward-looking statements herein are reasonable, any
of the assumptions could prove inaccurate and, therefore, there can be no
assurance that the results contemplated in such forward-looking statements will
be realized. In addition, the business and operations of the Company are subject
to substantial risks which increase the uncertainties inherent in the
forward-looking statements included in this document. The inclusion of such
forward-looking information should not be regarded as a representation by the
Company or any other person that the future events, plans or expectations
contemplated by the Company will be achieved.
YEAR 2000 ISSUES
The Company believes its present operations are Year 2000 compliant because the
Company's current use of computers on the headquarters level is minimal and the
primary customer of the Company's treatment centers is the federal government.
At the headquarters level the Company's computers are used exclusively for word
processing, as opposed to accounting, functions. Since the Company's present and
future product sales will be done on a cash-on-delivery or pre-paid basis, the
Company will have no significant accounts receivable for product sales. All of
the Company's employee payroll functions are handled by a nationwide third-party
vendor which has advised the Company that its operations are Year 2000
compliant.
With respect to the Company's treatment centers, the Company purchased a
computer software system in December 1997 which was represented as Year 2000
compliant and the Company's computers purchased in 1997 use an operating system
which is represented as Year 2000 compliant. The primary payor of the treatment
center's claims for services is the Medicare division of the United States
federal government. In limited situations, insurance companies are the secondary
or primary third-party payors. At this time Medicare and the insurance companies
with which the Scottsdale treatment center deals have advised the treatment
center that their systems are Year 2000 compliant.
At this time the Company believes the risks to its operations from a Year 2000
problem are minimal, because the only substantial risk is in the Medicare
system. If the Medicare system develops a Year 2000 problem, the Company
believes several hundred thousand doctor's offices across the country will have
similar problems, necessitating a quick response by Medicare. At this time the
Company has no contingency plans for resolving any unforeseen Year 2000
problems.
8
<PAGE>
QUARTER ENDING SEPTEMBER 30, 1998
OPERATIONS. Registrant was a development stage company through the quarter ended
September 30, 1997, with revenues having been generated from its Scottsdale
glaucoma treatment center starting on September 1, 1997. Therefore, there is no
comparable prior year's operations with which to compare the three and nine
month operating results of September 30, 1998.
NINE MONTHS
For the nine-month period ended September 30, 1998 Registrant experienced a net
loss from operations of $1,000,814, which was comprised of a net loss from
Registrant's Scottsdale treatment center of $143,815, a net loss from
Registrant's Clearwater treatment center of $46,262 and its general and
administrative expenses incurred at the corporate level of $797,686. 78.8% of
Registrant's corporate expenses consisted of officers salaries of $150,000
(18.8%), professional expenses of $148,330 (18.6%) and shareholder services and
media promotion of $330,461 (41.4%). Registrant expects its professional
expenses to remain at a high level as a result of its continued attempts to
obtain debt financing in 1998, as well as incurring the continuing consulting
costs for its FDA application presently estimated at $10,000 to $25,000 per
quarter. Registrant expects no change in its officers salaries in the remainder
of 1998. Since most of Registrant's shareholder services expenses are paid with
Registrant's stock and not cash, Registrant's shareholder services expenses are
likely to remain high for the remainder of 1998.
In August 1998 the Registrant filed a 510(k) application with the FDA, seeking
an exemption from premarket registration with the FDA for the Registrant's
product as a "glaucoma treatment device." On October 30, 1998 the FDA rejected
the Registrant's 510(k) application. The Registrant had anticipated this FDA
decision and, therefore, had received "investigational device exemption" study
approvals in 1994 and 1998 in preparation of such 510(k) rejection. To sell its
product in the U.S. as a glaucoma treatment device, Registrant must now either:
(i) successfully petition the FDA to re-classify its product from a Class III
device to a Class I device on the basis that a similar suction device has been
used on the eyes of patients for over 30 years; or (ii) successfully submit a
premarket application ("PMA") for product registration with the FDA through the
submission and approval of a product development protocol ("PDP") before the
submission of the PMA to the FDA. At this time Registrant believes, without
assurance, that the patients treated and the method of treatment at the
Registrant's Scottsdale treatment center under the Registrant's 1994 and 1998
IDE studies will qualify as valid clinical patient studies under any future PDP
approved by the FDA. The Registrant remains hopeful that it will receive FDA
approval for the commercial sale of its patented product in the U.S. as a
glaucoma treatment device prior to October 1, 1999. However, there can be no
assurance that its patented product will ever be approved for commercial
distribution as a glaucoma treatment device in the U.S. by the FDA.
During the first nine months of 1998 Registrant's Scottsdale treatment center
generated $241,515 of gross revenues. Included in these revenues are billings
for the Registrant's patented procedure from the last quarter of 1997 which were
rebilled to Medicare in the first quarter, because Medicare began to pay for the
patented procedure. The Company generally recognizes services rendered as
revenues when rendered to the patient. However, at the end of the final quarter
of 1997 the Company wrote-off approximately $35,000 of revenues from its
patented procedure because Medicare was refusing to pay for these procedures at
December 31, 1997. It is not currently known whether Medicare will continue to
pay Registrant for the patented procedure in the future. At the present time
Medicare is paying over 95% of the amount charged by the Company for its
patented treatments. Any amount not paid by Medicare or another third-party
9
<PAGE>
payor for the Registrant's patented procedure or a traditional diagnostic or
treatment procedure is written off by the Company on a patient-by-patient basis
when the payment is received by the Company, which is the general practice in
the medical profession. The Company does not believe the amount of such
write-offs has had any material impact on the Company's revenues or results of
operations in 1998.
In March 1998 the Scottsdale treatment center began receiving reimbursement for
the Registrant's patented procedure from Medicaid's western regional
administration center, which was one of the objectives of opening the Scottsdale
treatment center. Through September 30, 1998, the Scottsdale treatment center
has treated approximately 120 glaucoma patients with Registrant's patented
procedure, all of which are included in Registrant's 1994 and 1998 IDE studies
which will likely be submitted to the FDA in the PMA process.
Revenues were increasing at the Scottsdale treatment center until the summer
slow down occurred in May and June 1998. At this time the Registrant does not
expect revenues at the Scottsdale treatment center to increase to the break-even
point again in the near future. (Such break-even analysis does not include the
allocation of any general and administrative expenses.) There is no assurance
that the Scottsdale treatment center will ever be profitable, and therefore, the
Registrant is considering alternatives for the Scottsdale treatment center,
including sale, closure or joint-venture of the treatment center. The sale,
closure or joint-venture of the Scottsdale treatment center is likely to have a
substantial negative impact on the Registrant's balance sheet by way of
write-off or charge against revenues. However, the Registrant can move the
equipment from the Scottsdale center to the Clearwater center without incurring
any loss on that equipment. Any charges or loss incurred at the Scottsdale
treatment center, like all losses in the past, are recoverable from the sale of
the Registrant's patented equipment in the U.S. prior to FDA product approval
(see below).
85.1% of the Scottsdale center's expenses were represented by advertising costs
of $90,117 (23.4%) and personnel salaries of $237,740 (61.7%). As a result of
the summer slow down, the Registrant reduced its personnel at the center in July
1998 and again in October 1998. Registrant expects its 1998 advertising costs
for the Scottsdale center in the remainder of 1998 to remain comparable to that
spent in the first nine months of 1998.
In July 1998 the Registrant commenced with its plans to open a glaucoma
treatment center in Clearwater, Florida which will be the initial step in
receiving Medicare billing clearance from the southeast regional center of
Medicare. The Registrant was successful in negotiating a three-year lease on
office space which commenced in October 1998 and Registrant thought it had
negotiated an employment contract with a suitable physician to serve as medical
director of the Clearwater center. However, the negotiations with the doctor
were not completed and the Registrant has not been able to locate a suitable
medical director as yet. The Registrant currently plans on opening its
Clearwater treatment center within three months of securing the services of a
suitable medical director and obtaining sufficient financing for the center (see
below). The Registrant is hopeful, without any assurance, that the right
physician will be able to make the Clearwater treatment center much more
profitable than the Scottsdale center. 84.0% of the Clearwater center's $46,262
total expenses were represented by travel costs of $27,886 (60.3%) and personnel
salaries of $10,958 (23.7%). As a result of the Clearwater center not being
opened, the Registrant moved its Clearwater manager's responsibilities to
Scottsdale in October 1998. Registrant expects its travel expenses for the
Clearwater center to be lower in future quarters, but travel will continue to
remain an additional expense which it does not incur with its Scottsdale center.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES. On a short-term and long-term basis Registrant
requires only minimal capital to sustain its manufacturing of the patented
equipment, because of Registrant's current inventory levels. However, on a
short-term basis Registrant requires approximately $400,000 to $600,000 to
adequately fund the first year's operation of its planned Clearwater glaucoma
treatment centers. Registrant does not now have sufficient capital to fund the
first year of Clearwater treatment center without additional funding from
external sources or profits from the sale of its patented equipment. Registrant
is presently planning to secure debt financing in 1998 or 1999 to finance the
Clearwater treatment center. However, at this time Registrant has received no
commitments from any source to provide such financing.
In October 1998 the Registrant commenced the sale of a limited number of units
of its patented equipment to ophthalmologists in the United States over the next
several months, pursuant to FDA investigational device exemption regulations.
These FDA regulations permit the Registrant to recover from the sale of its
product an amount equal to its costs of preparing its product for FDA approval.
The Registrant's patented product was presented to a number of U.S. physicians
at the convention of American Academy of Ophthalmologists in New Orleans in
November 1998. The Registrant has arranged with a lender for the financing of
purchases of up to 200 units of the Registrant's patented equipment by U.S.
ophthalmologists. The monthly payment for the equipment by the physician will be
approximately equal to the dollar amount reimbursed to the physician by Medicare
for the treatment of one glaucoma patient each month. The Registrant expects,
without assurance, that its limited sale of its product to U.S. physicians in
the coming months will have a positive impact on the Registrant's short-term
liquidity.
Prior to and as a result of the presentation of the Registrant's patented
equipment at the New Orleans' convention of ophthalmologists in November 1998,
the Registrant has held discussions with potential distributors for the
Registrant's product in the U.S. on a non-exclusive and an exclusive basis. The
Registrant also had negotiations in November 1998 with a European distributor
concerning exclusive distribution of the Registrant's product in Europe pursuant
to a multi-year agreement with annual minimum order quantities. The Registrant
expects negotiations on one or more U.S. and European distribution agreements to
continue over the next several weeks; however, there is no assurance that any
distribution contracts will ever be executed by the Registrant. Any distribution
agreement executed in the near future by the Registrant will likely have a
positive impact on the Registrant's liquidity and profitability in 1999.
On a long-term basis, Registrant anticipates, without assurances, that the sale
of its product in the U.S. and internationally will provide sufficient liquidity
to the Registrant.
During the first half of 1998 Registrant received a total of $1,238,675 from two
private placement offerings of its securities. Registrant expects these funds,
along with the future profitably of product sales, will provide financial
stability for the Registrant's operations in 1999.
In December 1996 through April 1997 Registrant issued a series of promissory
notes to a third party aggregating $220,000, all payable one year after issuance
and bearing 15% annual interest. These notes and accrued interest were repaid in
full in March 1998.
11
<PAGE>
In February 1998 Registrant issued a $25,000 convertible promissory note at 15%
annual interest. The interest on this note ceased on March 30, 1998. 5,000
shares of Registrant's common stock were issued to the holder in February 1998
as additional interest on this note. $20,000 of the principal of this note was
repaid and the remaining principal and interest was converted to Registrant's
common stock in May 1998.
In July 1997 the Registrant issued a $75,000 promissory note bearing 10% annual
interest in partial consideration for the purchase of medical equipment and
office furnishings at the Scottsdale treatment center. This note requires a
$37,500 principal payment on July 18, 1998 (which has been made) and a $37,500
final principal payment on January 18, 1999.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There have been no legal proceedings instituted by or against the
Registrant during the quarter ending September 30, 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K
There were no Reports on Form 8-K filed during the quarter ended
September 30, 1998.
12
<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 13, 1998 By: /s/ Gary R. Smith
------------------ ---------------------------------------
Gary R. Smith, President (Chief
Executive Officer) and Treasurer
(Chief Financial and Accounting Officer)
13
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