Continental Fuels 10QSB 2005 Q3 Quarterly report (small business)

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 September 30, 2005
o	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.

(Exact name of small business issuer as specified in its charter)

Nevada	22-3161629
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

16857 E. Saguaro Blvd., Fountain Hills, Arizona 85268

(Address of principal executive offices)

(480) 837-6810

(Issuer’s telephone number)

Not applicable

(Former name, former address and former fiscal year, if changed since last report.)

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 o

State the number of shares outstanding of each of the issuer’s classes of common equity, as of November 17, 2005:  232,683,581

Transitional Small Business Disclosure Format (check one): Yes o No x

CORONADO INDUSTRIES, INC.

Form 10-QSB

For the Quarterly Period Ended September 30, 2005

Table of Contents

		Page
PART I	Financial Information	3
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Unaudited Consolidated Statements of Operations	5
	Unaudited Consolidated Statement of Changes in Stockholders’ Equity (Deficit)	6
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004	7
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2005 and 2004	9
	Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis or Plan of Operation	14
Item 3.	Controls and Procedures	16
PART II	Other Information	17
Item 1.	Legal Proceedings	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
Signatures		18

2

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 30, 2005 (Unaudited) and December 31, 2004
ASSETS
	(Unaudited)
	September 30,		December 31,
	2005		2004
CURRENT ASSETS
Cash & Cash Equivalents	$	8,113	$	58
Accounts Receivable		17,565		41,286
Inventory		30,384		15,132
Prepaid Expenses		17,105		14,966
Deferred Compensation		–		20,833
TOTAL CURRENT ASSETS	$	73,167	$	92,275
Property and Equipment-Net		8,649		10,259
Deposits		4,520		4,520
TOTAL ASSETS	$	86,336	$	107,054
See the accompanying notes to these unaudited consolidated financial statements.

3

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 30, 2005 (Unaudited) and December 31, 2004
(Continued)
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
	(Unaudited)
	September 30,			December 31,
	2005			2004
CURRENT LIABILITIES
Notes Payable	$	100,000		$	100,000
Notes Payable to Related Parties		392,000			383,000
Accounts Payable		69,117			70,583
Accrued Salaries		281,250			688,317
Accrued Interest		8,231			4,802
Accrued Taxes and Expenses		114,004			141,135
TOTAL CURRENT LIABILITIES	$	964,602		$	1,387,837
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock - $0.0001 par value; 3,000,000 shares authorized, none issued or outstanding		–			–
Common Stock - $0.001 par value; 400,000,000 shares authorized, 225,038,656 and 183,291,938 shares issued and outstanding, respectively		225,039			183,291
Additional Paid In Capital		14,279,708			12,485,478
Accumulated Deficit		(15,383,013	)		(13,949,552	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(878,266	)		(1,280,783	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	86,336		$	107,054
See the accompanying notes to these unaudited consolidated financial statements.

4

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine and Three Months Ended September 30, 2005 and 2004
	(Unaudited)						(Unaudited)
	Nine Months Ended September 30,						Three Months Ended September 30,
	2005			2004			2005			2004
REVENUE
Product Revenue	$	88,330		$	–		$	17,550		$	–
COST OF SALES
Cost of Product Revenues		35,680			–			4,225			–
GROSS PROFIT (LOSS)		52,650			–			13,325			–
General & Administrative Expenses
Salaries and wages		809,398			691,871			292,854			192,019
Sales and Marketing Expense		116,644			104,762			19,752			53,128
Legal and professional fees		169,256			225,071			39,417			70,882
FDA expense		82,350			214,096			55,700			150,196
Rent expense		45,616			25,179			9,040			9,345
Other		208,980			135,002			43,414			61,380
		1,432,244			1,395,981			460,177			536,950
INCOME (LOSS) FROM OPERATIONS		(1,379,594	)		(1,395,981	)		(446,852	)		(536,950	)
OTHER INCOME (EXPENSE)
Interest Expense		(53,867	)		(56,005	)		(17,402	)		(21,228	)
		(53,867	)		(56,005	)		(17,402	)		(21,228	)
NET LOSS	$	(1,433,461	)	$	(1,451,986	)	$	(464,254	)	$	(558,178	)
BASIC LOSS PER SHARE	$	(0.01	)	$	(0.01	)	$	–		$	–
WEIGHTED AVERAGE SHARES OUTSTANDING		193,624,261			168,674,823			216,286,487			172,203,376
See the accompanying notes to these unaudited consolidated financial statements.

5

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the Nine Months Ended September 30, 2005
					Additional		Retained			Stockholders’
	Common Stock				Paid-In		Earnings			Equity
	Shares		Par Value		Capital		(Deficit)			(Deficit)
Balance at December 31, 2003		160,502,022	$	160,502	$	10,693,968	$	(11,854,616	)	$	(1,000,146	)
Stock Issued for Services		11,543,488		11,543		1,151,094		–			1,162,637
Common Stock Issued for Cash		100,000		100		6,900		–			7,000
Stock Options Exercised		400,000		400		21,600		–			22,000
Stock Issued for Salaries, Debt and Interest		10,746,428		10,746		611,916		–			622,662
Net Loss		–		–		–		(2,094,935	)		(2,094,935	)
Balance at December 31, 2004		183,291,938		183,291		12,485,478		(13,949,552	)		(1,280,783	)
Stock Issued for Debt and Interest		23,139,130		23,139		297,471		–			320,610
Stock Issued for Services		17,957,588		17,959		724,792		–			742,751
Capital Contribution		–		–		751,417		–			751,417
Stock Options Exercised		650,000		650		20,550		–			21,200
Common Stock Issued for Cash		–		–		–		–			–
Net Loss		–		–		–		(1,433,461	)		(1,433,461	)
Balance at September 30, 2005		225,038,656	$	225,039	$	14,279,708	$	(15,383,013	)	$	(878,266	)
See the accompanying notes to these unaudited consolidated financial statements.

6

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2005 and 2004
	(Unaudited)
	Nine Months Ended September 30,
	2005			2004
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(1,433,461	)	$	(1,451,986	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		1,610			1,763
Stock issued for salaries, consulting & interest		452,204			249,376
Common stock and options issued for services		298,157			534,712
Changes in Assets and Liabilities:
Inventory		(15,252	)		(24,765	)
Prepaid expenses		(2,139	)		22,123
Deferred Compensation		20,833			37,500
Accounts Receivable		23,721
Accounts payable		(1,466	)		(3,534	)
Accrued salaries		281,250			281,250
Accrued interest		3,429			(18,172	)
Accrued taxes		35,969			43,031
NET CASH USED IN OPERATING ACTIVITIES		(335,145	)		(328,702	)
CASH FLOW FROM INVESTING ACTIVITIES
Disposition of Equipment		–			8,535
NET CASH PROVIDED BY INVESTING ACTIVITIES		–			8,535
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuance		–			7,000
Proceeds from borrowings		322,000			371,900
Repayment on Notes Payable, Related Party		–			(13,400	)
Repayment on Notes Payable		–			(33,616	)
Proceeds from exercise of stock options		21,200			21,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		343,200			352,884
Net change in cash and cash equivalents		8,055			32,717
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		58			10,724
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8,113		$	43,441
See the accompanying notes to these unaudited consolidated financial statements.

7

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2005 and 2004
(Continued)
	(Unaudited)
	Nine Months Ended September 30,
	2005		2004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid	$	42,525	$	39,750
Non Cash Transactions:
Issuance of common stock for salaries and consulting		444,594		221,214
Issuance of common stock for services & options		298,157		534,713
Issuance of common stock for interest		7,610		28,162
Issuance of common stock for debt		313,000		594,500
Accrued officers’ salaries and taxes contributed to capital		751,417		–
See the accompanying notes to these unaudited consolidated financial statements.

8

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2005 and 2004
	(Unaudited)
	Three Months Ended September 30,
	2005			2004
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss	$	(464,254	)	$	(558,178	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation		528			588
Stock issued for salaries, consulting & interest		179,124			77,400
Common stock and options issued for services		97,763			189,961
Changes in Assets and Liabilities:
Prepaid Expenses		(8,783	)		29,267
Deposits		4,520			–
Inventory		(2,298	)		(5,698	)
Deferred Compensation		–			12,500
Accounts Receivable		3,435			–
Accounts payable		(15,971	)		4,670
Accrued salaries		93,750			93,750
Accrued interest		(828	)		(5,889	)
Accrued taxes and expenses		14,344			14,343
NET CASH USED IN OPERATING ACTIVITIES		(98,670	)		(147,286	)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft		(6,217	)		–
Proceeds from borrowings		110,000			161,500
Proceeds from stock issuance		–			7,000
Proceeds from exercise of stock options		3,000			–
Repayment on Notes Payable		–			(5,603	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		106,783			162,897
Net change in cash and cash equivalents		8,113			15,611
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		–			27,830
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8,113		$	43,441
See the accompanying notes to these unaudited consolidated financial statements.

9

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended September 30, 2005 and 2004
(Continued)
	(Unaudited)
	Three Months Ended September 30,
	2005		2004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	17,600	$	15,750
Non Cash Transactions:
Issuance of common stock for salaries and consulting		177,568		66,696
Issuance of common stock for services		97,763		189,961
Issuance of common stock for interest		1,556		10,704
Issuance of common stock for debt		85,000		298,500
See the accompanying notes to these unaudited consolidated financial statements.

10

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION:

In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 2005 and the results of its operations, changes in stockholders’ deficit, and cash flows for the three months ended September 30, 2005. Although management believes that the disclosures in these consolidated 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 accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities Exchange Commission.

The result of operations for the three months ended September 30, 2005 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2005. The accompanying consolidated financial statements should be read in conjunction with the more detailed consolidated financial statements, and the related footnotes thereto, filed with the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2004.

REVENUE RECOGNITION:

The Company recognizes revenue based on guidance provided in Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.” The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price is fixed or determinable, and collectibility is reasonably assured. We recognize revenue when title passes to the customer upon shipment. The Company has established a right of return policy that is accounted for as a warranty provision under SFAS No. 5, “Accounting for Contingencies.” The Company does not have any post shipment obligations.

PRINCIPLES OF CONSOLIDATION:

The consolidated financial statements include the financial position, results of operations, cash flows and changes in stockholders’ deficit 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 accounting principles generally accepted in the United States of America 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.

11

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

STOCK BASED COMPENSATION:

The Company has adopted FAS No. 123, “Accounting for Stock-Based Compensation.”  Under FAS No. 123, companies can, but are not required to, elect to recognize compensation expense for all stock-based awards using a fair value methodology. The Company has adopted the disclosure-only provisions, as permitted by FAS No. 123. The Company applies APB Opinion No. 25 and related interpretations in accounting for its stock-based plans. Accordingly, there is no related compensation expense recorded in the Company’s financial statements for the periods presented. The Company did not grant any options during the three months ended September 30, 2005, therefore the loss as reported and the pro forma loss are as follows:

	Three Months Ended September 30,
	2005			2004
Net Income / (Loss):
As Reported	$	(464,254	)	$	(558,178	)
Add:   Stock-based employee compensation expense included in reported net income, net of related tax effects	$	–		$	–
Deduct:  Total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects	$	–		$	–
Pro forma net loss	$	(464,254	)	$	(558,178	)
Less per share:
As reported	$	0.00		$	(0.00	)
Pro forma	$	0.00		$	(0.01	)

NOTE 2 - EARNINGS PER SHARE

Basic earnings per common share is calculated by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are calculated by adjusting the weighted average outstanding shares, assuming conversion of all potentially dilutive instruments. No adjustments were made to reported net income in the computation of earnings per share.

As of September 30, 2005 and 2004, the Company had approximately 163,188,499 and 93,632,499 shares of dilutive securities. Diluted earnings per share are not presented, as their affect is antidilutive (reduces the loss per share).

12

CORONADO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3 - EQUITY

During August 2005, three officers exercised options to purchase 6,824,182 shares of common stock through the conversion of an aggregate of $86,555 of debt and interest.

NOTE 4 - GOING CONCERN

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not made an operating profit since its reorganization in 1996. Further, the Company has a working capital deficit of $891,435 and a negative net worth of $878,266.

At this time the greatest impediment to the Company’s profitability is the FDA approval of the sale of its products in the United States. The Company has been attempting to negotiate the protocol for a clinical study in the United States which would be relatively short in duration and inexpensive to complete. The previous finding of a “significant patient risk” by the FDA has thus far been a problem to negotiating a favorable clinical study protocol. The Company is hopeful that the results of a recent animal study and a new presentation of older patient records will permit a favorable clinical study protocol to be granted by the FDA within the next year.

If a favorable clinical study protocol were granted by the FDA the Company anticipates it will be about two years after the clinical study commences before the Company’s products could be sold in the U.S. The estimated cost of the clinical study is several million dollars. The Company is hopeful a major medical equipment distributor will pay the majority of the clinical study expenses as consideration for receiving the U.S. or worldwide marketing rights to the products. If the Company is unable to obtain third party funding of the clinical study, the Company will seek equity or debt financing for the clinical study. There is no assurance that the Company will be able to adequately fund any clinical study permitted by the FDA.

Until the Company receives its FDA approval the Company will be dependent on loans from its management and improved international sales. During 2004 the Company received its Type 2a product classification and began shipping its products overseas pursuant to four distribution contracts. The Company recorded product revenue of approximately $88,330 during the first three quarters of 2005. The Company anticipates slightly increased product revenues in 2006 from these European distribution agreements.

The financial statements do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the uncertainty of the Company’s ability to continue as a going concern.

13

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.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions about assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation allowances for inventory and accounts receivable, and impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The SEC suggests that all registrants list their most “critical accounting policies” in Management’s Discussion and Analysis section. A critical accounting policy is one which is both important to portrayal of the Company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management believes the following critical accounting policies affect its more significant judgments and estimates in the preparation of its consolidated financial statements.

These policies include, but are not limited to, the carrying value of the inventory and fixed assets, the life of fixed assets, the expensing of the costs relating to FDA and European licensing activities, and the valuation of common stock related to compensation and other services. Complex judgments and estimates underlie these critical accounting policies, such as the estimated life of fixed assets for depreciation purposes, the market valuation of inventory in reporting inventory at the lower of cost or market, dividing consultants’ compensation between expense categories of FDA licensing activities and sales activities, dividing compensation and payments to third parties between cost of goods sold category and general and administrative expense, and the determination of the market value of restricted stock when issued as compensation or as repayment for loans.

14

Three Months Ending September 30, 2005

Operations

Registrant continued delivery of its PNT products to its European distributors in the third quarter of 2005. Total sales were $17,550, with a cost of goods sold of $4,225. Registrant’s gross margin on its products sold was approximately 76%, but its marketing expenses for these European sales far exceeded the gross sales. Registrant expects its European sales to continue throughout 2005; however, profitability from European sales is not likely in 2005. There can be no assurance that Registrant’s operations will ever be profitable.

For the quarter ending September 30, 2005 Registrant experienced a net loss of $464,254, which was comprised primarily of its general and administrative expenses incurred at the corporate level of $460,177 and net interest expense of $17,402. 88.6% of Registrant’s third quarter 2005 corporate expenses consisted of salaries and wages of $292,854 (63.6%), professional expenses of $95,117 (20.7%) and selling and media promotion of $19,752 (4.3%). In comparison, during third quarter 2004 86.8% of Registrant’s corporate expense of $536,950 consisted of salaries and wages of $192,019 (35.8%), professional expenses of $221,078 (41.2%) and selling and media promotion of $53,128 (9.9%). The increase in salaries and wages during the 2005 quarter resulted from salary increases for non-management personnel and the hiring of the European marketing consultant in late 2004. The decrease in promotional expenses in 2005 resulted from engaging two media relations firms in 2004. The substantial decrease in professional expenses in 2005 over 2004 occurred as a result of unusual expenses in connection with the Registrant’s product approval in Europe during the 2004 quarter. Over 30% of the corporate expenses in 2005 were paid with Registrant’s common stock in order to preserve Registrant’s cash resources. Registrant expects its management salaries to be stable in the last quarter of 2005. Registrant may compensate its management and employees with stock options and stock bonuses in the future when significant events occur, such as FDA protocol approval, European contracts executed, increased sales, worldwide or U.S. distribution agreements executed, or medical journal publication. Registrant expects its professional and promotional expenses throughout the remainder of 2005 to grow as its European marketing activities continue and new FDA approval efforts commence.

Liquidity and Capital Resources

Because of Registrant’s current inventory levels, Registrant requires only minimal capital to sustain its manufacturing of the patented equipment. Because of the Registrant’s cash position at year-end and general and administrative expenses totaling approximately $2,000,000 per year, the Registrant suffered from a liquidity shortage during the third quarter of 2005. During the third quarter of 2005 Registrant was required to borrow a total of $80,000 from its three Directors which was repaid in November 2005 with restricted common stock. Unless substantial product sales are achieved in the near future, Registrant will continue to experience a liquidity shortage. There can be no assurance that Registrant’s product will be approved for sale in the United States by the FDA or when foreign sales will commence in a substantial number. Registrant will likely be forced to borrow additional funding from its management throughout the remainder of 2005 and in 2006; however, there is no assurance Registrant will be able to obtain any financing in the future.

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.

At October 31, 2005 Registrant had received loans of $335,000 from G. Richard Smith, Registrant’s Chairman, $30,000 from Gary R. Smith, Registrant’s President, and $75,000 rom Dr. John LiVecchi, a Director of Registrant. See Item 2 of Part II below. The $300,000 loan from G. Richard Smith bears interest at 16% per annum and the other loans from Directors bear interest at 15% per annum. Also at September 30, 2005 Registrant had received loans totaling $100,000 from a third-party. These loans accrue interest at the rate of 15% per annum and are convertible into 600,000 common stock shares at the end of their one-year terms.

15

Nine Months Ending September 30, 2005

Operations

Registrant continued delivery of its PNT products to its European distributors in the first three quarters of 2005. Total sales were $88,330, with a cost of goods sold of $35,680. Registrant’s gross margin on its products sold was approximately 60%, but its marketing expenses for these European sales far exceeded the gross sales. Registrant expects its European sales to continue throughout 2005; however, profitability from European sales is not likely in 2005. There can be no assurance that Registrant’s operations will ever be profitable.

For the nine months ending September 30, 2005, Registrant experienced a net loss of $1,433,461 which was comprised primarily of its general and administrative expenses incurred at the corporate level of $1,432,244 and net interest expense of $53,867. 82.2% of Registrant’s 2005 nine-month corporate expenses consisted of salaries and wages of $809,398 (56.5%), professional expenses of $251,606 (17.6%) and selling and media promotion of $116,644 (8.1%). In comparison, during the first nine months of 2004 88.5% of Registrant’s corporate expense of $1,395,981 consisted of salaries and wages of $691,871 (49.6%), professional expenses of $439,167 (31.5%) and selling and media promotion of $104,762 (7.5%). The increase of salaries and wages in 2005 over 2004 resulted from increased salaries for non-management personnel. The decrease in professional expenses in 2005 over 2004 occurred as a result of the unusual expenses in connection with the Registrant’s product approval in Europe in the 2004 period. The slight increase in selling and media promotion in 2005 over 2004 resulted from increased European marketing activities in 2005.

Item 3.   Controls and Procedures.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness, as of September 30, 2005, of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

There have been no changes in the our internal control over financial reporting during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings. 

There are no material legal proceedings pending for the Registrant at September 30, 2005.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds. 

In November 2005 Registrant issued (i) 3,393,322 restricted shares to G. Richard Smith, Registrant’s Chairman, in conversion of $35,528.08 of loan principal and accrued interest; (ii) 2,895,160 restricted shares to Gary R. Smith, Registrant’s President, in conversion of $30,312.33 of loan principal and accrued interest; and (iii) 7,283,432 restricted shares to John T. LiVecchi, Registrant’s Director, in conversion of $76,257.53 of loan principal and accrued interest. These shares were issued under Section 4(2) of the Securities Act of 1933.

In November 2005 Registrant issued (i) 11,938,873 restricted shares to G. Richard Smith, Registrant’s Chairman, in conversion of $125,000 of accrued salary; and (ii) 5,969,436 restricted shares to John T. LiVecchi, Registrant’s Director, in conversion of $62,500 of accrued salary. These shares were issued under Section 4(2) of the Securities Act of 1933.

All other equity securities issued by Registrant during the quarter ended September 30, 2005 were registered under the Act with the SEC or disclosed in a previous Form S-8 filing.

Item 3.   Defaults Upon Senior Securities.

Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5.  Other Information.

Not applicable.

Item 6.  Exhibits.

Exhibit Number	Description
31.1	Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certificate of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certificate of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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 21, 2005	By:	/s/  G. Richard Smith
		G. Richard Smith Chairman (Chief Executive Officer)

Date:  November 21, 2005	By:	/s/  Gary R. Smith
		Gary R. Smith Treasurer (Chief Accounting Officer)

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