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, 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: 21,583,842
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CORONADO INDUSTRIES, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JUNE 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 10
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 10
SIGNATURES 11
<PAGE>
CORONADO INDUSTRIES, INC.
BALANCE SHEETS
June 30, 1998 and December 31, 1997
June 30, December 31,
1998 1997
(Unaudited) (Audited)
----------- -----------
ASSETS
Current Assets:
Cash $ 509,265 $ 65,631
Accounts Receivable, net
-Trade 95,292 7,809
-Other 3,999 3,999
Inventory 43,031 43,031
Prepaid Expenses 55,000 104,500
---------- ---------
Total Current Assets 706,587 224,970
Property and Equipment, net 138,186 149,402
Other Assets:
Intangible Assets 34,593 36,345
---------- ---------
Total Assets $ 879,366 $ 410,717
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Notes Payable $ 0 $ 224,631
Note Payable to Related Party -
Current Portion 75,000 39,375
Accounts Payable 14,906 76,690
Accrued Salaries 130,000 153,673
Accrued Payroll Taxes 11,825 22,222
---------- ---------
Total Current Liabilities $ 231,731 $ 516,591
Long-term Debt 0 39,375
---------- ---------
Total Liabilities 231,731 555,966
---------- ---------
Stockholders' Equity (Deficit):
Preferred Stock 0 0
Common Stock - $.001 par value;
25,000,000 shares authorized, 21,583,842
shares outstanding at June 30, 1998;
18,962,653 outstanding at December 31, 1997 21,584 18,962
Additional Paid-in Capital 2,169,586 730,622
Accumulated Deficit (1,543,535) (894,833)
---------- ---------
Total Stockholders' Equity (Deficit) 647,635 (145,249)
---------- ---------
Total Liabilities And Stockholders'
Equity (Deficit) $ 879,366 $ 410,717
========== =========
1
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
Six Months Three Months
------------------------ -------------------------
1998 1997 1998 1997
---- ---- ---- ----
Revenues $ 179,767 $ -- $ 80,650 $ --
Cost of Patient Revenues 256,790 -- 124,832 --
----------- ---------- ----------- -----------
Gross Loss 77,023 -- 44,182 --
General and Administrative
Expenses 559,573 237,493 341,130 136,183
----------- ---------- ----------- -----------
Loss from Operations (636,596) (237,493) (385,312) (136,183)
Interest Expense (12,172) (7,480) (1,161) (6,314)
Other Income 66 500 -- --
----------- ----------- ----------- -----------
Net Loss (648,702) (244,473) (386,473) (142,497)
=========== =========== =========== ===========
Basic Loss per Share $ (0.3) $ (.01) $ (0.2) $ (.01)
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 19,979,061 18,344,253 20,754,324 18,344,253
=========== =========== =========== ===========
2
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
June 30, June 30,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $(215,898) $(114,897)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (2,175) (8,514)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 0 100,000
Repayment of debt (20,058) --
Proceeds from stock sale 537,203 --
--------- ---------
NET INCREASE (DECREASE) IN CASH 299,072 (23,411)
CASH, beginning of period 210,193 26,054
--------- ---------
CASH, end of period $ 509,265 $ 2,643
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(386,473) $(142,497)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 876 732
Depreciation 6,733 977
Stock issued for services 165,000 --
Increase in:
Accounts receivable (18,091) --
Inventory -- (11,932)
Patents -- (18,841)
Professional retainers -- (2,000)
Prepaid expenses (4,250) --
Increase (decrease) in:
Accounts payable (11,689) 29,525
Accrued salaries 30,000 19,000
Accrued expenses -- 6,314
Accrued payroll taxes 1,996 3,825
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $(215,898) $(114,897)
========= =========
3
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
June 30, June 30,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
CASH FLOWS USED IN OPERATING ACTIVITIES:
Cash paid for operating expenses $ (580,652) $(187,826)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (13,919) (8,714)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 25,000 192,000
Repayment of debt (245,470) --
Proceeds from stock sales 1,258,675 --
---------- ---------
NET INCREASE (DECREASE) IN CASH 443,634 (4,540)
CASH, beginning of period 65,631 7,183
---------- ---------
CASH, end of period $ 509,265 $ 2,643
========== =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $ (648,702) $(244,473)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 1,752 1,302
Depreciation 25,135 1,962
Stock issued for services 175,000 --
Increase in:
Accounts receivable (87,483) --
Inventory -- (17,197)
Patents -- (26,841)
Professional retainers -- (5,000)
Prepaid expenses 49,500 --
Increase (decrease) in:
Accounts payable (61,784) 31,916
Accrued salaries (23,673) 55,000
Accrued expenses -- 7,480
Accrued payroll taxes (10,397) 8,025
---------- ---------
NET CASH USED IN OPERATING ACTIVITIES $ (580,652) $(187,826)
========== =========
4
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For The Six Month Period Ended June 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 145,000 145 197,355 -- -- 197,500
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 -- -- -- (648,702) -- (648,702)
---------- ------- ---------- --------- ----- ---------
Balance at
June
30, 1998 21,583,842 21,584 2,169,586 (1,543,535) -- 647,635
========== ======= ========== =========== ===== =========
5
<PAGE>
Coronado Industries, Inc.
NOTES TO 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 financial position as of June 30, 1998 and the results of its
operations for the three and six months ended June 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 six months ended June 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)
----------
$ --
==========
6
<PAGE>
CORONADO INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
in cash and $5,000 in principal and $411 accrued interest in common stock. 5,000
additional shares were issued in February 1998 as additional interest.
At June 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 July 18, 1998 and remaining
principal on January 18, 1998; unsecured. $75,000
Less: current portion 75,000
-------
$ --
=======
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 six-month period ended June 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.
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 Registrant 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
Registrant's plans and expectations. The Registrant's actual results may differ
materially from such statements. Although the Registrant 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 Registrant 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
Registrant or any other person that the future events, plans or expectations
contemplated by the Registrant will be achieved.
OPERATIONS. Registrant was a development stage company through the quarter
ended September 30, 1997, with no revenues having been generated. Also, prior to
November 5, 1996 Registrant had been a dormant shell company with no operations
since 1994. Therefore, there is no comparable prior year's operations to which
to compare the second quarter 1998 and six month operating results.
THREE MONTHS
For the quarter ended June 30, 1998 Registrant experienced a net loss from
operations of $385,312, which was comprised of a net loss from Registrant's
Scottsdale treatment center of $44,182 and its general and administrative
expenses incurred at the corporate level of $341,130. The Registrant's corporate
expenses increased by $122,687 (56.2%) during the second quarter over the first
quarter of 1998, primarily as a result of $101,994 increase in shareholder
services and media promotion expenses and a $14,991 increase in professional
expenses during the second quarter. 81.7% of Registrant's corporate expenses
consisted of officers salaries of $50,000 (14.7%), professional expenses of
$55,468 (16.3%) and shareholder services and media promotion of $172,935
(50.7%). Registrant expects its professional expenses to remain at a high level
as a result of its continued attempts to obtain financing in 1998 for one
additional treatment center, as well as incurring the continuing costs of its
FDA application. 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.
During the second quarter of 1998 Registrant's Scottsdale treatment center
generated $80,650 of gross revenues. Included in these revenues are billings for
PNT because Medicare began to pay for the PNT procedure in March 1998. It is not
currently known whether Medicare will continue to pay for the PNT procedure in
the future. Revenues increased at Registrant's Scottsdale treatment center in
April 1998 to the break-even point. However, the Scottsdale treatment center
experienced decreased patient visits in May and June of 1998, probably because a
substantial number of patients and potential patients left the Phoenix area to
escape the summer heat. The Registrant does not expect revenues at the
Scottsdale treatment center to increase to the break-even point again until
September or October 1998. There is no assurance that the Scottsdale treatment
8
<PAGE>
center will ever be profitable, and therefore, the Registrant is considering
alternatives for the Scottsdale treatment center. 82.4% of the center's expenses
were represented by advertising costs of $29,033 (23.3%) and personnel salaries
of $73,734 (59.1%). As a result of the summer slow down at the Scottsdale
treatment center, the Registrant reduced its personnel expense at the center in
July 1998. Registrant may increase its personnel expenses at the center in the
second half of 1998, but only after the break-even point is achieved. Registrant
expects its 1998 advertising costs for the Scottsdale center to remain
comparable to that spent in the second quarter of 1998.
SIX MONTHS
For the six-month period ended June 30, 1998 Registrant experienced a net
loss from operations of $636,596, which was comprised of a net loss from
Registrant's Scottsdale treatment center of $77,023 and its general and
administrative expenses incurred at the corporate level of $559,573. 78.6% of
Registrant's corporate expenses consisted of officers salaries of $100,000
(17.9%), professional expenses of $95,945 (17.1%) and shareholder services and
media promotion of $243,876 (43.6%). Registrant expects its professional
expenses to remain at a high level as a result of its continued attempts to
obtain financing in 1998 for one additional treatment center, as well as
incurring the continuing costs of its FDA application. 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.
During the first half of 1998 Registrant's Scottsdale treatment center
generated $179,767 of gross revenues. Included in these revenues are prior
quarters billings for PNT which were rebilled to Medicare in the first quarter,
because Medicare began to pay for the PNT procedure. It is not currently known
whether Medicare will continue to pay Registrant for the PNT procedure in the
future. Revenues were increasing at the Scottsdale treatment center until the
summer slow down occured 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 until September or October 1998. 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.
87.8% of the center's expenses were represented by advertising costs of $61,360
(23.9%) and personnel salaries of $163,980 (63.9%). As a result of the summer
slow down, the Registrant reduced its personnel expense at the center in July
1998. Registrant may increase its personnel expenses at the center in the second
half of 1998, but only after the break-even point is achieved. Registrant
expects its 1998 advertising costs for the Scottsdale center to remain
comparable to that spent in the first half of 1998.
LIQUIDITY AND CAPITAL RESOURCES. On a short-term and long-term basis
Registrant requires only minimal capital to sustain its manufacturing of the
patented Fixation Device and the patented suction rings, 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 any additional glaucoma treatment centers. Registrant believes it currently
has sufficient capital to fund the commencement of its second treatment center
in Clearwater, Florida, including purchase or lease of approximately $200,000 of
medical equipment and furnishings. Registrant is presently planning to conduct
another private placement of its securities or secure debt financing in 1998 to
secure financing for one additional treatment center. However, at this time
Registrant has received no commitments from any source to provide such
financing. The Registrant is currently planning on selling a limited number of
units of its Fixation Device to ophthalmologists in the United States over the
next several months, pursuant to FDA investigational device exemption rules and
regulations. Such sales, if made, would have a favorable impact upon the
Registrant's liquidity.
9
<PAGE>
On a long-term basis, Registrant anticipates, without assurances, that its
initial glaucoma treatment centers will be sufficiently profitable to permit
additional glaucoma treatment centers and product marketing to be funded during
subsequent years from a combination of internal and external sources.
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 the Scottsdale treatment center, will
provide financial stability for the Registrant's current operations in 1998.
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.
In February 1998 Registrant issued a $25,000 convertible promissory note
which bears 15% interest. The interest on this note ceased on March 30, 1998
when Registrant offered to repay this note and the holder indicated a
possibility of converting into equity. 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 June 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
June 30, 1998.
10
<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 7, 1998 By: /s/ Gary R. Smith
----------------- ------------------------------
Gary R. Smith, President (Chief
Executive Officer) and Treasurer
(Chief Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 509,265
<SECURITIES> 0
<RECEIVABLES> 95,292
<ALLOWANCES> 0
<INVENTORY> 43,031
<CURRENT-ASSETS> 706,587
<PP&E> 192,419
<DEPRECIATION> 54,233
<TOTAL-ASSETS> 879,366
<CURRENT-LIABILITIES> 231,731
<BONDS> 0
0
0
<COMMON> 21,584
<OTHER-SE> 626,051
<TOTAL-LIABILITY-AND-EQUITY> 879,366
<SALES> 179,767
<TOTAL-REVENUES> 179,767
<CGS> 256,790
<TOTAL-COSTS> 816,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,172
<INCOME-PRETAX> (648,702)
<INCOME-TAX> 0
<INCOME-CONTINUING> (648,702)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (648,702)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
