U.S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-16423
CITADEL ENVIRONMENTAL GROUP, INC.
(Exact name of small business issuer as specified in its charter)
California 84-0907969
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3617 East Thousand Oaks Blvd
Thousand Oaks, CA 91362
(Address of Principal Executive Offices) (Zip Code)
(805) 777-3450
(Registrant's Telephone Number, Including Area Code)
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 o file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Class Outstanding at November 30, 1997
Common Stock,
no par value 6,279,709
Transitional Small Business Disclosure Format: Yes No X
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CITADEL ENVIRONMENTAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
MARCH 31, DEC. 31,
Assets 1997 1996
Current Assets:
Cash and cash equivalents $ 0 $ 43,256
Accounts receivable 671,751 0
Notes receivable 59,500 50,000
Other current assets 10,275 69
Total current assets 741,526 93,325
Property and equipment 615,597 0
Goodwill 2,065,128 0
Other non-current assets 91,685 0
$ 3,513,936 $ 93,325
Liabilities
Current Liabilities:
Accounts payable $ 198,802 $ 75,473
Bank overdraft 111,523 0
Accrued expenses 390,394 0
Notes payable 1,812,536 1,225,836
Stock subscriptions 0 280,000
Minority interest 167,705 0
Other current liabilities 33,947 50,279
Total current liabilities 2,714,907 1,631,588
Long-term debt 113,368 0
Stockholders' Equity (Deficiency)
Preferred stock, Series A,$0.01 par,
1,500,000 shares authorized, issued
and outstanding 15,000 15,000
Preferred stock, Series B, $0.01 par,
1,500,000 shares authorized, issued
and outstanding 15,000 15,000
Preferred stock, Series C, $0.01 par,
2,000,000 shares authorized, issued
and outstanding 20,000 20,000
Preferred stock - convertible, no par value
1,280,000 shares authorized, 111,500
shares issued and outstanding 111,500 0
Common stock, no par value, 25,000,000
shares authorized, 3,418,252 issues and
outstanding 4,420,782 2,112,637
Accumulated deficit (3,896,621) (3,700,900)
Total stockholder's equity (deficiency) 685,661 (1,538,263)
$ 3,513,936 $ 93,325
See notes to condensed consolidated financial statements
1
CITADEL ENVIRONMENTAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
Three Months ended March 31,
(unaudited)
1997 1996
Revenues $ 0 $ 0
Costs and Expenses:
Selling, general and administrative 200,721 1,040
200,721 1,040
Operating loss (200,721) (1,040)
Other revenue (expense) -
Gain on sale of asset 0 28,952
Net income (loss) $ (200,721) $ 27,912
Net income (loss) per share $ (0.11) $ 0.04
Weighted average number of common shares
outstanding 1,857,249 732,744
See notes to condensed consolidated financial statements
2
CITADEL ENVIRONMENTAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months ended March 31,
(unaudited)
1997 1996
Cash flows from operating activities:
Net income (loss) $ (200,721) $ 27,912
Adjustments to reconcile net income (loss)
to net cash provided (used) by
operating activities:
Depreciation 0 0
Increase (decrease) in accounts payable and
other current liabilities (56,699) (262)
Increase in accrued expenses 173,821 0
Increase in bank overdraft 18,843 0
(64,756) 27,650
Cash flows from investing activities:
Investment in affiliate (90,000) 12,500
Cash flows from financing activities:
Proceeds from sale of convertible preferred
stock 111,500 0
Net increase (decrease) in cash and
cash equivalents (43,256) 40,150
Cash and cash equivalents:
Beginning of Year 43,256 1,565
End of year $ 0 $ 41,715
See notes to condensed financial statements
3
CITADEL ENVIRONMENTAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements included in this Form 10-QSB have been
prepared by Citadel Environmental Group, Inc. (the "Company"),
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting
principles, have been condensed, or omitted, pursuant to such rules
and regulations. These financial statements should be read in
conjunction with the financial statements and related notes
included in the Company's December 31, 1996 Form 10-KSB.
The financial statements presented herein, as of March 31, 1997,
reflect in the opinion of management, all adjustments necessary for
a fair presentation of financial position and the results of
operations for the periods presented. The results of operations
for any interim period are not necessarily indicative of the
results for the full year.
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries in which the Company
has a controlling interest. All significant inter-company
transactions and balances have been eliminated.
2. INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed by dividing net income (loss)
applicable to common stock by the weighted average number of shares
of common stock and common share equivalents outstanding during
each period.
3. INCOME TAXES
Income taxes are calculated using the liability method specified
by Statement of Financial Accounting Standards No.109 (SFAS 109),
"Accounting for Income Taxes". Management provides a valuation
allowance against its deferred tax assets to the extent that
management concludes that it is more likely than not that the
Company will not benefit from the utilization of such deferred
tax assets.
4. ACQUISITION OF APPLIED MEDICAL RECOVERY, INC.
On March 26, 1997, the Company acquired a 64.45% interest in
Applied Medical Recovery, Inc. ("AMR"), an Arizona corporation,
engaged in reprocessing and recycling of non-critical medical
instruments and devices in exchange for 1,633,608 shares of common
stock valued at $2,042,010. The acquisition was accounted for
using the purchase method of accounting and resulted in goodwill of
$1,737,971. Goodwill will be amortized over a 20 year period.
AMR and its subsidiaries have developed a proprietary service which
allows for the recovery and re-use of previously used and
contaminated, (disposable) non-critical surgical instruments and
related medical devices. The FDA has not yet developed regulations
for the new niche reprocessing industry. However,
4
the regulations are expected to be issued by late 1997 or early
1998. Until there are published standards, AMR is following FDA
Regulation #1722513 which relates to good manufacturing practices.
Prior to
the creation of the independent re-processor of surgical
instruments and/or medical devices, only hospitals
reprocessed instruments. Hospitals do not fall under the
regulation of the FDA and therefore no known regulations are
currently in place. Instruments and/or devices are segregated and
collected at the point of use in specially designated containers,
reprocessed at AMR's plants and are "sold back" to the healthcare
facility (point of origin) for reuse. AMR believes that its
reprocessing system may save the healthcare facility up to 50% in
instrument replacement costs.
5. OFFICER'S SEVERANCE AGREEMENT
On January 14, 1997 the Company entered into an agreement with
Richard Landi, accepting his retirement as President of the Company
effective February 1, 1997. Pursuant to the agreement Landi is
entitled to full compensation from February 1, 1997 through January
1, 1998 at $8,333 per month, payable bi-monthly. The Company made
payments through March 31, 1997 and has not made any further
payment to date. The Company is seeking arbitration to reach a
mutually satisfactory settlement regarding the unpaid balance of
$83,333.
6. STOCK SUBSCRIPTIONS
On August 5, 1996 the Company issued a Private Placement Memorandum
offering up to 666,667 shares of its common stock at a price of
$1.50 per share. The common stock certificates for the 186,666
shares subscribed and paid for were not issued as of December 31,
1996. The certificates for the 186,666 shares were issued during
the quarter ended March 31, 1997 resulting in a $280,000 increase
in the common stock account.
In conjunction with the private placement of Preferred Stock
discussed in Note 7 below, the 186,666 shares of common stock were
converted to 280,000 shares preferred stock in accordance with the
terms of the Preferred Stock private placement.
7. PREFERRED STOCK PRIVATE PLACEMENT
On December 15, 1996 the Company offered through a Private
Placement Memorandum 1,000,000 shares of its Preferred, no par,
stock at $1.00 per share, plus one A Warrant and one B Warrant.
Two A Warrants allow the holder to purchase one share of Common
Stock at $1.25 per share and expire one year from date of issuance
(October 1997) or 90 days following the registration of the
underlying common shares, whichever is greater. Two B Warrants
allow the holder to purchase one share of Common Stock at $1.50 per
share and expire two years from date of issuance (October 1998) or
90 days following the registration of the underlying common shares,
whichever is greater. Concurrent with this offering the Company
issued an additional 280,000 shares of Preferred Stock during the
quarter ended March 31, 1997 in exchange for the 186,666 shares of
Common Stock sold in the August 5, 1996 Private Placement, as
discussed in Note 6 above.
On November 8, 1997 the Board of Directors voted to extend the
expiration dates for the Series A and B warrants to October 1998
and October 1999, respectively.
During the quarter ended March 31, 1997 111,500 shares were issued
pursuant to the private placement of Preferred Stock, generating
proceeds of $111,500.
5
8. LOAN TO AMR
During the quarter ended March 31,1997 the Company loaned AMR an
additional $90,000, increasing the note receivable to $140,000.
The note bears interest at the rate of 10% per annum, is payable
in monthly interest payments and is eliminated in consolidation.
See Note 10. Subsequent Event - Loan Agreement with Applied Medical Recovery.
9. SUBSEQUENT EVENT - PREFERRED STOCK PRIVATE PLACEMENT
On April 30, 1997 the December 15, 1996 Private Placement Offering
closed. The results of the offering are as follows:
Subscriptions Shares Funds
Convertible Preferred, no par 717,500 $717,500
Series A Warrants 717,500 0
Series B Warrants 717,500 0
Concurrent with this offering the Company issued an additional
280,000 shares of Preferred Stock and 280,000 Series A and B
Warrants during the quarter ended March 31, 1997 in exchange for
the 186,666 shares of Common Stock sold in the August 5, 1996
Private Placement, as discussed in Note 6 above.
In summary, as of April 30, 1997 the Company had issued and
outstanding the following:
Convertible Preferred Stock, no par 997,500 shares
Series A Warrants 997,500 warrants
Series B Warrants 997,500 warrants
10. SUBSEQUENT EVENTS - LOAN AGREEMENT WITH APPLIED MEDICAL
RECOVERY, INC.
On July 1, 1997, Citadel entered into a loan agreement with AMR.
The loans are covered by a Multiple Advance Promissory Note in the
amount of $3,500,000, bearing interest at Wells Fargo prime rate
plus two percent (2%) per annum with principal and interest due
and payable on or before July 1,1998. The note is secured by a
Security Agreement on all of the assets of AMR and its
subsidiaries. As of November 1, 1997, Citadel has advanced
$745,000 to AMR pursuant to this Multiple Advance Promissory Note.
The $140,000 loan to AMR as of March 31, 1997 was consolidated into
this loan agreement.
11. SUBSEQUENT EVENT - RETIREMENT OF SERIES A, B, AND C PREFERRED
STOCK
The Company issued 2,840,000 shares of Citadel Common Stock during
the quarter ended June 30, 1997 in exchange for all of the
Series A, B and C Preferred Stock outstanding and the cancellation
of $1,100,000 in indebtedness.
6
CITADEL ENVIRONMENTAL GROUP, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Citadel's focus is to acquire controlling interest in operating
companies in growth industries and increase the value of the
investment by providing or locating the managerial, administrative
and financial assistance necessary to facilitate growth. The
Company is dependent upon additional debt or equity financing in
order to provide these services for the benefit of its controlled
subsidiaries. There is no assurance that the Company will be able
to raise such capital.
On March 26, 1997, the Company acquired a 64.45% interest in
Applied Medical Recovery, Inc. ("AMR"), an Arizona corporation,
engaged in reprocessing and recycling of non-critical medical
instruments and devices in exchange for 1,633,608 shares of common
stock valued at $2,042,010. The acquisition was accounted for
using the purchase method of accounting.
Plan of Operations
The Company intends to assist AMR's expansion of its medical
reprocessing and recovery activities on a national and
international basis. The medical reprocessing and recovery business
has four distinct operating segments.
1) Through 47 independent sales representatives, AMR
contacts individual hospitals and surgical centers
and offers, on a fee for service basis, to reprocess
their non-critical medical instruments and devices.
To date, AMR's primary business has come from the
southeast and northeast sections of the United
States and since inception in 1995, AMR has serviced
over 200 accounts. AMR has developed several
innovative approaches to obtaining instruments from
its customers which have increased the quantity of
the instruments recovered and therefore reprocessed.
AMR established a "mail away" program in 1996 which
substantially increased the amount of instruments
recovered from those facilities which entered AMR's
program. All instruments received from a hospital
are reprocessed and then returned to that facility.
Ownership of these instruments is generally retained
by the hospital. AMR is paid a fee for reprocessing
which averages approximately 50% of the price the
hospital originally paid for the instrument.
2) AMR is targeting hospital groups whereby it can
contract for reprocessing on behalf of a number of
hospitals and surgical centers with common
ownership. Under this approach, AMR can reprocess
instruments and then act as a central supply for the
entire group. In this case, depending on the size of
the group, and the volume of instruments involved,
AMR may joint venture a facility with a major
hospital or healthcare group and process their
instruments exclusively. This would provide
substantial savings to the group and improve
inventory controls for the individual hospitals
involved.
7
3) The Company is negotiating with a major medical
waste transportation and disposal firm which would
generate for AMR a substantial supply of instruments
to be reprocessed. Although no assurance can be
given that AMR will be successful in these
negotiations, under the terms of the agreement, the
waste company would deliver the instruments, for a
fee, to a decontamination center owned and operated
by AMR. The instruments would then be decontaminated
and sent to the Phoenix plant for reprocessing and
then returned back to the hospital of origin. That
hospital would then be charged a fee, or the
instruments could be held in AMR's inventory for
overseas sales (See Item 4 below).
4) Instruments and devices received by AMR which are
not under contract with a healthcare facility become
the property of AMR and will, if suitable for
reprocessing, be held in AMR's inventory. AMR
believes that there is a substantial overseas market
for disposable instruments which are currently
thrown away in the United States. AMR intends,
either through joint ventures or direct sales to
international distributors, to sell reprocessed
instruments overseas and then reprocess through
offshore facilities the instruments several more
times, depending on the instrument. Once the
instrument is outside the United States it can have
a separate reprocessing operation. AMR currently
has no overseas contractual relationships.
AMR currently has 34 employees of whom seven are employed at the
corporate office, five of which are executives and two of which are
clerical. The remaining employees are employed at the Phoenix
facility. When the Phoenix facility is fully operational it will
have the capacity to accomodate up to three shifts per day, with a single
shift employing approximately 40 employees.
Citadel expects to assist in the national and international
expansion of AMR by providing capital (generally in the form of
loans) and certain management expertise. Citadel has committed to
AMR that Citadel would make available a $1,500,000 working capital
line of credit and assist in obtaining an additional $2,000,000 in
debt financing for expansion. As of March 31, 1997 the Company has
advanced AMR $140,000. As of November 30, 1997, Citadel has loaned
AMR $745,000 under the line of credit with future borrowing
dependent upon Citadel's ability to raise additional capital. To
date, the additional $2,000,000 in debt has not yet been secured.
Absent the additional financing, AMR will not have the capital
necessary to achieve its plan of operations.
Liquidity and Capital Resources
The Company's cash and cash equivalents at March 31, 1997 are $0
compared to $43,256 at December 31, 1996. The decrease in cash
and cash equivalents of $43,256 is principally due to $111,500 in
proceeds from the private placement of Preferred Stock discussed
below (see "Private Placement - Preferred Stock") less an
additional loan of $90,000 to AMR and the cash requirements of
operations for the period. The cash requirements of the operating
loss for the period of $(200,721) were increased by a $56,669
decrease in accounts payable and decreased by a $173,821 increase
in accrued expenses and a $18,843 increase in bank overdraft,
resulting in a $ 64,756 net use of cash by operations.
8
Acquisition of Applied Medical Recovery, Inc.
On March 26, 1997, the Company acquired a 64.45% interest in
Applied Medical Recovery, Inc. ("AMR"), an Arizona corporation,
engaged in reprocessing and recycling of non-critical medical
instruments and devices in exchange for 1,633,608 shares of common
stock valued at $2,042,010. The acquisition was accounted for
using the purchase method of accounting and resulted in goodwill of
$1,737,971. Goodwill will be amortized over a 20 year period.
AMR and its subsidiaries have developed a proprietary service which
allows for the recovery and re-use of previously used and
contaminated, (disposable) non-critical surgical instruments and
related medical devices. The FDA has not yet developed regulations
for the new niche reprocessing industry. However, the regulations
are expected to be issued by late 1997 or early 1998. Until there
are published standards, AMR is following FDA Regulation #1722513
which relates to good manufacturing practices. Prior to the
creation of the independent reprocessor of surgical instruments
and/or medical devices, only hospitals
reprocessed instruments. Hospitals do not fall under the
regulation of the FDA and therefore no known regulations are
currently in place. Instruments and/or devices are segregated and
collected at the point of use in specially designated containers,
reprocessed at AMR's plants and are "sold back" to the healthcare
facility (point of origin) for reuse. AMR believes that its
reprocessing system may save the healthcare facility up to 50% in
instrument replacement costs.
No results of operations for AMR are included in consolidated operations
for the period ended March 31, 1997.
Separate unaudited financial statements for AMR are attached as
follows:
Balance Sheets as of March 31, 1997 and December 31, 1996 F-1
Statements of Operations for the Three Months Ended
March 31, 1997 and 1996 F-2
Statements of Cash Flows for the Three Months Ended
March 31, 1997 and 1996 na
Notes to Financial Statements F-4
__________________
na - Not available
Officer's Severance Agreement
On January 14, 1997 the Company entered into an agreement with
Richard Landi, accepting his retirement as President of the Company
effective February 1, 1997. Pursuant to the agreement Landi is
entitled to full compensation from February 1, 1997 through January
1, 1998 at $8,333 per month, payable bi-monthly. The Company made
payments through March 31, 1997 and has not made any further
payment to date. The Company is seeking arbitration to reach a
mutually satisfactory settlement regarding the unpaid balance of
$83,333.
Stock Subscriptions
On August 5, 1996 the Company issued a Private Placement Memorandum
offering up to 666,667 shares of its common stock at a price of
$1.50 per share. The common stock certificates for the 186,666
shares subscribed and paid for were not issued as of December 31,
1996. The certificates for the 186,666 shares were issued during
the quarter ended March 31, 1997 resulting in a $280,000 increase
in the common stock account.
9
In conjunction with the private placement of Preferred Stock
discussed below, the 186,666 shares of common stock were converted
to 280,000 shares preferred stock in accordance with the terms of
the Preferred Stock private placement.
Preferred Stock Private Placement
On December 15, 1996 the Company offered through a Private
Placement Memorandum 1,000,000 shares of its Preferred, no par,
stock at $1.00 per share, plus one A Warrant and one B Warrant.
Two A Warrants allow the holder to purchase one share of Common
Stock at $1.25 per share and expire one year from date of issuance
(October 1997) or 90 days following the registration of the
underlying common shares, whichever is greater. Two B Warrants
allow the holder to purchase one share of Common Stock at $1.50 per
share and expire two years from date of issuance (October 1998) or
90 days following the registration of the underlying common shares,
whichever is greater. Concurrent with this offering the Company
issued an additional 280,000 shares of Preferred Stock during the
quarter ended March 31, 1997 in exchange for the 186,666 shares of
Common Stock sold in the August 5, 1996 Private Placement, as
discussed above.
On November 8, 1997 the Board of Directors voted to extend the
expiration dates for the Series A and B warrants to October 1998
and October 1999, respectively.
During the quarter ended March 31, 1997 111,500 shares were issued
pursuant to the private placement of Preferred Stock, generating
proceeds of $111,500.
Loan to AMR
During the quarter ended March 31,1997 the Company loaned AMR an
additional $90,000, increasing the note receivable to $140,000.
The note bears interest at the rate of 10% per annum and is payable
in monthly interest payments. This note receivable was
subsequently consolidated into a Multiple Advance Promissory Note.
See "Subsequent Event - Loan Agreement with Applied Medical
Recovery", below.
Subsequent Event - Preferred Stock Private Placement
On April 30, 1997 the December 15, 1996 Private Placement Offering
closed. The results of the offering are as follows:
Subscriptions Shares Funds
Convertible Preferred, no par 717,500 $ 717,500
Series A Warrants 717,500 0
Series B Warrants 717,500 0
Concurrent with this offering the Company issued an additional
280,000 shares of Preferred Stock and 280,000 Series A and B
Warrants during the quarter ended March 31, 1997 in exchange for
the 186,666 shares of Common Stock sold in the August 5, 1996
Private Placement, as discussed above.
In summary, as of April 30, 1997 the Company had issued and
outstanding the following:
Convertible Preferred Stock, no par 997,500 shares
Series A Warrants 997,500 warrants
Series B Warrants 997,500 warrants
10
Subsequent Events - Loan Agreement with Applied Medical
Recovery, Inc.
On July 1, 1997, Citadel entered into a loan agreement with AMR.
The loans are covered by a Multiple Advance Promissory Note in the
amount of $3,500,000, bearing interest at Wells Fargo prime rate
plus two percent (2%) per annum with principal and interest due
and payable on or before July 1,1998. The note is secured by a
Security Agreement on all of the assets of AMR and its
subsidiaries. As of November 1, 1997, Citadel has advanced
$745,000 to AMR pursuant to this Multiple Advance Promissory Note.
Subsequent Event - Retirement of Series A, B, and C Preferred Stock
The Company issued 2,840,000 shares of Citadel Common Stock during
the quarter ended June 30, 1997 in exchange for all of the
Series A, B and C Preferred Stock outstanding and the cancellation
of $1,100,000 in indebtedness.
Statement of Financial Accounting Standards No. 129
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure" (SEAS No. 129) issued by the
FASB is effective for financial statements with fiscal years ending
after December 15, 1997. The new standard reinstates various
securities disclosure requirements previously in effect under
Accounting Principles Board Opinion No. 15, which has been
superseded by SEAS No. 128. The Company does not expect the
adoption of SFAS No. 129 to have a material effect on its financial
position or results of operations.
Statement of Financial Accounting Standards No. 130
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS No. 130) issued by the FASB is
effective for financial statements with fiscal years beginning
after December 15, 1997. Earlier application is permitted. SEAS
130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-
purpose financial statements. The Company has not determined the
effect on its financial position or results of operations from the
adoption of this statement.
Statement of Financial Accounting Standards No. 131
Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS No.
131) issued by the FASB is effective for financial statements
beginning after December 15, 1997. The new standard requires that
public business enterprises report certain information about
operating segments in complete sets of financial statements of the
enterprise and in condensed financial statements of interim periods
issued to shareholders. It also requires that public business
enterprises report certain information about their products and
services, the geographic areas in which they operate and their
major customers. The Company does not expect adoption of SEAS No.
131 to have a material effect on its financial position or results
of operations.
11
PART II. OTHER INFORMATION
Item 1.Legal Proceedings - Not Applicable
Item 2.Changes in Securities - Not Applicable
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 and Reports on Form 8-K.
a) Exhibits:
None
b) Reports on Form 8-K were filed as follows:
None
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Citadel Environmental Group, Inc.
(Registrant)
Date: December 11, 1997 By: Louis F. Coppage
President
13
APPLIED MEDICAL RECOVERY, INC.
CONDENSED BALANCE SHEETS
(unaudited)
MARCH 31, DEC 31,
1997 1996
Current Assets:
Cash and cash equivalents
$ 0 $ na
Accounts receivable 671,751 na
Notes receivable 59,500 na
Other current assets 10,206 na
Total current assets 741,457 na
Property and equipment 615,597 na
Goodwill 327,157 na
Other non-current assets 91,685 na
$ 1,775,896 $ na
Liabilities
Current Liabilities:
Accounts payable $ 154,831 $ na
Bank overdraft 92,680 na
Accrued expenses 216,573 na
Notes payable 726,700 na
Total current liabilities 1,190,784 na
Long-term debt 113,368 na
Stockholders' Equity
Common stock 1,273,291 na
Accumulated deficit (801,547) na
Total stockholder's equity 471,744 na
$ 1,775,896 $ na
na - Not available
See Notes to Condensed Financial Statements
F-1
APPLIED MEDICAL RECOVERY, INC.
CONDENSED STATEMENT OF OPERATIONS
For The Three Months Ended March 31,
(unaudited)
1997 1996
Revenues $ 339,835 $ na
Operating Expenses 581,920 na
Other Expenses 8,263 na
590,183 na
Net Loss $ (250,348) $ na
na - Not available.
See Notes to Condensed Financial Statements
F-2
APPLIED MEDICAL RECOVERY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements presented herein, as of March 31, 1997,
reflect in the opinion of management, all adjustments necessary for
a fair presentation of financial position and the results of
operations for the periods presented. The results of operations
for any interim period are not necessarily indicative of the
results for the full year.
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries in which the Company
has a controlling interest. All significant inter-company
transactions and balances have been eliminated.
F-3