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
For the quarterly period ended - March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 (480) 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 March 31, 2000: 34,810,422.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
CORONADO INDUSTRIES, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
Page
----
PART I
Item 1 Financial Statements 1
Item 2. Management's Discussion and Analysis
or Plan of Operation 4
PART II
Item 1. Legal Proceedings 5
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 5
SIGNATURES 6
<PAGE>
CORONADO INDUSTRIES, INC.
BALANCE SHEETS
March 31, December 31,
2000 1999
----------- -----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash $ 13,929 $ 3,454
Inventory 24,265 24,265
Prepaid Expenses 50,000
----------- -----------
Total Current Assets 88,194 27,719
Property and Equipment, net 115,828 115,767
Other Assets:
Intangible Assets, net 27,894 28,833
Deferred Loan Expense 24,500 26,000
Deposits 7,750
----------- -----------
Total Assets $ 264,166 $ 198,319
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note Payable to Related Party -
Current Portion $ 225,407 $ 94,252
Accounts payable 6,388 79,960
Accrued salaries 350,863 276,090
Other liabilities 8,814 2,835
----------- -----------
Total Current Liabilities 591,472 453,137
Long-term Debt 230,000 230,000
----------- -----------
Total Liabilities 821,472 683,137
----------- -----------
Stockholders' Equity:
Preferred Stock - $.0001 par value: 3,000,000
shares authorized, none issued or outstanding 0 --
Common Stock - $.001 par value; 50,000,000
shares authorized; 33,385,046 shares outstanding
on December 31, 1999; 34,810,422 shares
outstanding at March 31, 2000 34,810 33,385
Additional Paid-in Capital 3,918,235 3,170,378
Accumulated Deficit (4,510,351) (3,688,581)
Total Stockholders' Equity (Deficit) (557,306) (484,818)
----------- -----------
Total Liabilities And Stockholders' Equity $ 264,166 $ 198,319
=========== ===========
1
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
March 31, March 31
2000 1999
------------ ------------
(Unaudited) (Unaudited)
Product Revenues $ 0 $ 46,000
Patient Revenue 0 28,005
------------ ------------
Total Revenues 0 74,005
Cost of Product Revenues 0 3,900
Cost of Patient Revenues 0 67,255
------------ ------------
Total Cost of Revenues 0 71,155
------------ ------------
Gross Profit 0 2,850
General and Administrative Expenses:
Salaries and wages 113,750 0
Public relations 50,000 0
Marketing 440,250 0
Legal and professional fees 102,817 0
FDA expense 25,206 0
Rent expense 22,904 0
Miscellaneous expenses 51,645 154,963
------------ ------------
Total general and administrative expenses 806,391 154,963
Loss from Operations (806,391) (152,113)
------------ ------------
Interest Expense (18,129) (600)
Other Income 2,750 0
------------ ------------
Net Loss (821,770) (152,713)
============ ============
Basic Loss per Share $ (0.02) $ (0.00)
============ ============
Weighted Average Shares Outstanding 34,136,439 31,591,734
============ ============
2
<PAGE>
CORONADO INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
For The Three Month Period Ended March 31, 2000
<TABLE>
<CAPTION>
Total
Common Stock Stock-
------------------------- Additional Retained Holders'
Shares Paid-in Earnings Treasury Equity
Outstanding Amount Capital (Deficit) Stock (Deficit)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1999 33,385,046 $ 33,385 $ 3,170,378 $(3,688,581) $ -- $ (484,818)
Stock issued
for services 1,187,777 1,188 699,070 -- -- 700,258
Stock issued
for salaries 37,599 38 33,987 -- -- 34,025
Stock options
issued for services 200,000 200 14,800 -- -- 15,000
Net loss -- -- -- (821,770) -- (821,770)
----------- ----------- ----------- ----------- ----------- -----------
Balance at
March 31,2000 34,810,422 $ 34,810 $ 3,918,235 $(4,510,351) $ -- $ (557,306)
=========== =========== =========== =========== =========== ===========
</TABLE>
3
<PAGE>
CORONADO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
March 31, March 31,
2000 1999
--------- ---------
(Unaudited) (Unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Cash received from customers $ 2,750 $ 0
Cash paid to suppliers and employees (125,541) (68,411)
Interest paid (12,150) 0
--------- ---------
Net cash used by operating activities (134,941) (68,411)
--------- ---------
CASH FLOW USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment (7,281) 0
Deposits on fixed assets (7,750) 0
--------- ---------
Net cash used by investing activities (15,031) 0
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from borrowings 239,160 24,000
Repayment of notes payable (93,713) 0
Services for stock 0 15,778
Cash received from sale of stock 15,000 0
--------- ---------
Net cash provided by financing activities 160,447 39,778
--------- ---------
NET INCREASE (DECREASE) IN CASH 10,475 (28,633)
CASH, beginning period 3,454 36,844
--------- ---------
CASH, end of period $ 13,929 $ 8,211
========= =========
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(821,770) $(152,713)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 7,220 7,900
Amortization 939 939
Stock issued for services 650,255 0
Stock issued for salaries 34,025 0
Interest added to principle of notes payable 5,979 0
Changes in Assets and Liabilities:
(Increase) decrease in:
Accounts receivable 0 (2,321)
Prepaid expenses 0 18,145
Inventory 0 600
Deferred loan expenses 1,500 0
Increase (decrease) in:
Accounts payable (87,863) 9,039
Accrued salaries 74,774 50,000
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES $(134,941) $ (68,411)
========= =========
4
<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 normal recurring accruals) necessary to present
fairly the Company's financial position as of March 31, 2000 and the results of
its operations for the three months ended March 31, 2000. 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 months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the full year
ending December 31, 2000. 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, 1999.
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. BASIC LOSS PER SHARE:
For the three month period ending March 31, 2000, 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
<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. 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. At this time the Company believes
the risks to its operations from a Year 2000 problem are minimal.
QUARTER ENDING MARCH 31, 2000
OPERATIONS. Since Registrant closed its Scottsdale glaucoma treatment center on
March 2, 1999, the first quarter of the 2000 fiscal year can not be compared to
the operations for the first quarter of the prior year.
For the quarter ending March 31, 2000 Registrant experienced a net loss of
$821,770, which was comprised primarily of its general and administrative
expenses incurred at the corporate level of $806,391 and net interest expense of
$15,379. 86.0% of Registrant's first quarter 2000 corporate expenses consisted
6
<PAGE>
of officers' salaries of $75,000 (9.3%), professional expenses of $128,023
(15.9%) and shareholder services and media promotion of $490,250 (60.8%). In
comparison, during first quarter 1999 67.7% of Registrant's corporate expense of
$154,963 consisted of officers' salaries of $50,000 (32.3%), professional
expenses of $44,830 (28.4%) and shareholder services and media promotion of
$10,000 (6.5%). The increase in officers' salaries in 2000 over 1999 occurred in
April 1999 when the annual salary of each of the Registrant's two officers was
increased by $50,000. The increase in professional expenses in 2000 over 1999
occurred as a result of Dr. Bores being involved in the FDA application process
full time in 2000 and increased legal expenses incurred in the FDA application
process and listing Registrant's stock for trading on a German exchange. The
increase in shareholder services and media promotion in 2000 over 1999 resulted
from an agreement with a new shareholder relations firm being reached in 2000
and the commencement of a European product marketing campaign in 2000. Over 80%
of the corporate expenses in 2000 were paid with Registrant's common stock in
order to preserve Registrant's cash resources. Registrant expects its management
salaries to increase in the second half of 2000 because on April 1, 2000 Dr.
LiVecchi was granted an annual salary of $75,000 and Registrant will be required
to appoint as many as two new outside Directors in 2000 in order to obtain
listing for its stock on the NASD NMS or Small Cap market. Registrant expects
its professional expenses in 2000 to remain at a high level as a result of its
continuing costs for its FDA application presently estimated at $15,000 per
month. As Registrant continues its foreign marketing efforts in 2000, its
promotional expenses will likely remain high.
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.
However, the Registrant will incur substantial travel expenses in the future in
managing the Clearwater treatment center, expenses which were not involved in
managing the Scottsdale treatment center.
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. Because of the
Registrant's cash position at year-end and general and administrative cash
expenses totaling approximately $164,000, Registrant suffered from a liquidity
shortage during the first quarter. Registrant was required to borrow a total of
7
<PAGE>
$225,407 through March 31, 2000 from its two officers, Richard and Gary Smith.
Unless substantial product sales are achieved in the near future, Registrant
will continue to experience a liquidity shortage. There can be no assurance as
to when Registrant's product will be approved for sale in the United States by
the FDA or when foreign sales will commence in a substantial manner. Registrant
will likely be forced to borrow additional funding from its management
throughout the remainder of 2000; however, there is no assurance Registrant will
be able to obtain any financing in the future.
Registrant also requires approximately $400,000 to $600,000 to adequately fund
the first year's operation of its planned Clearwater glaucoma treatment center.
Registrant is presently planning to secure financing in 2000 to finance the
Clearwater treatment center. However, at this time Registrant has received no
commitments from any source to provide such financing and its financing sources
appear limited.
As a result of the presentation of the Registrant's patented equipment at the
various conventions of ophthalmologists in 1998 and 1999, the Registrant has
held discussions with potential distributors for the Registrant's product in the
U.S. and internationally on a non-exclusive and an exclusive basis. The
Registrant expects negotiations on one or more U.S. and European distribution
agreements to continue throughout 2000; however, there is no assurance that any
distribution contracts will ever be executed by the Registrant.
As of April 1, 2000 Registrant had warrants for over 1,300,000 shares of
Registrant's common stock held be some 25 individuals as a result of
Registrant's 1997 and 1998 private placements. These warrants have an exercise
price of $2.50 and an expiration date of December 31, 2000. Registrant is
hopeful that a substantial number of these warrants will be exercised in the
second half of 2000, if the stock underlying the warrants can be registered with
the SEC and the market price of Registrant's stock can rise above and remain at
$4.00 per share.
Registrant is hopeful it can acquire one or more assets or companies in 2000
which can provide Registrant with cashflow with which to fund its operations.
Registrant would attempt to finance such acquisitions with cash from the
exercise of outstanding warrants or its common stock. However, there is no
assurance that Registrant will be able to complete any acquisition in the
future. Additionally, compliance with state and federal securities laws may make
any attempted acquisitions time-consuming and expensive.
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.
Through March 31, 2000 the Registrant received loans of approximately $112,500
from each of G. Richard Smith and Gary R. Smith, the Registrant's Chairman and
President, respectively. These loans accrue annual interest at the rate of 15%.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In February 2000, Registrant was served with a demand for arbitration in
San Diego, California by a former public relations firm of Registrant. This firm
claims a monetary debt of approximately $19,000 and the issuance of 300,000
shares of Registrant's common stock. Registrant does not deny the monetary debt,
but claims the written agreement with this public relations firm includes no
provision for the issuance of Registrant's stock. At this time there can be no
assurance of the outcome of this arbitration.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K
No filings on Form 8-K with the Commission were made by Registrant
during the quarter ending March 31, 2000.
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: May 11, 2000 By: /s/ Gary R. Smith
------------- ------------------------------------
Gary R. Smith, President (Chief
Executive Officer) and Treasurer
(Chief Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 13,929
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 24,265
<CURRENT-ASSETS> 88,194
<PP&E> 115,828
<DEPRECIATION> 7,220
<TOTAL-ASSETS> 264,166
<CURRENT-LIABILITIES> 591,472
<BONDS> 230,000
0
0
<COMMON> 34,810
<OTHER-SE> (557,306)
<TOTAL-LIABILITY-AND-EQUITY> 264,166
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 806,391
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,129
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (821,770)
<EPS-BASIC> 0.02
<EPS-DILUTED> 0
</TABLE>
