-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J4y9Wv+a0X0tGlOszqih9BSN743WN0ld987MZGbhrNZTqWx2B9FBQB6enOqs/MmQ 2aEpF8v5EHBXcmkw3HGvnw== 0001011438-97-000069.txt : 19970521 0001011438-97-000069.hdr.sgml : 19970521 ACCESSION NUMBER: 0001011438-97-000069 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970520 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MYO DIAGNOSTICS INC CENTRAL INDEX KEY: 0001029312 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 954089525 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 333-19285 FILM NUMBER: 97612159 BUSINESS ADDRESS: STREET 1: 3760 S ROBERTSON BLVD CITY: CULVER CITY STATE: CA ZIP: 90232 BUSINESS PHONE: 3105595500 MAIL ADDRESS: STREET 1: 3760 S ROBERTSON CITY: CULVER CITY STATE: CA ZIP: 90232 10QSB 1 FORM 10-QSB =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1997 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________________ to ___________________. Commission file number 333-19285 MYO DIAGNOSTICS, INC. (Exact Name of Small Business Issuer as Specified in its Charter) CALIFORNIA 95-4089525 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3760 South Robertson Boulevard Culver City, California 90232 (Address of Principal Executive Offices) (310) 559-5500 (Issuer'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 to file such reports), and (2) has been subject to such filing requirements for 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: Common Stock, no par value, 8,226,037 shares issued and outstanding as of May 1, 1997. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] =============================================================================== PAGE 1 MYO DIAGNOSTICS, INC. INDEX TO FORM 10-QSB PART I FINANCIAL INFORMATION PAGE Item 1. Financial Statements: Balance Sheet (unaudited) as of March 31, 1997 3 Statements of Operations (unaudited) for the Three Months Ended March 31, 1997 and 1996 4 Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 1997 and 1996 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II OTHER INFORMATION Item 1. Legal Proceedings 9 Item 2. Changes in Securities 9 Item 3. Defaults Upon Senior Securities 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 PAGE 2
MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET (Unaudited) March 31, 1997 ----------- ASSETS ------ Current assets: Cash $ 219,413 Accounts receivable - less allowance for doubtful accounts of $25,672 --- Prepaid expenses and other assets 12,535 ---------- Total current assets 231,948 Furniture and equipment, net of accumulated depreciation of $127,297 193,366 Other assets, net of accumulated depreciation of $3,305 34,283 ---------- Total assets $ 459,597 ========== LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Current liabilities: Accounts payable and accrued expenses $ 147,379 Current portion of obligations under capital lease 35,382 Notes payable to bank 400,000 ========== Total current liabilities 582,761 Obligations under capital lease 61,628 ---------- Total liabilities 644,389 ---------- Commitments and contingencies Shareholders' deficit: Preferred stock: no par value, 10,000,000 shares authorized, no shares issued and outstanding --- Common stock: no par value, 50,000,000 shares authorized, 7,746,037 shares issued and outstanding 4,300,679 Accumulated deficit during the development stage (4,485,471) ---------- Total shareholders' deficit (184,792) ---------- Total liabilities and shareholders' deficit $ 459,597 ========== The accompanying notes are an integral part of these financial statements. PAGE 3
MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (Unaudited) Three months ended March 31, 1997 1996 ---------- ---------- Revenue $ --- $ 3,000 Operating expenses: Research and development 92,847 44,856 Technical services 76,392 25,719 Sales and marketing 21,476 24,513 General and administrative 218,717 93,160 ---------- ---------- Total operating expenses 409,432 188,248 ---------- ---------- Loss from operations (409,432) (185,248) ---------- ---------- Other income (expense) Interest expense (10,286) (13,123) Interest income 3,041 6 ---------- ---------- Total other income (expense) (7,245) (13,117) ---------- ---------- Loss before provision for income taxes (416,677) (198,365) Provision for income taxes 1,052 1,070 ---------- ---------- Net loss $ (417,729) (199,435) ========== ========== Net loss per share $ (0.05) $ (0.03) ========== ========== Weighted average number of shares outstanding 7,746,037 6,549,438 ========== ==========
The accompanying notes are an integral part of these financial statements. PAGE 4
MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (Unaudited) Three months ended March 31, 1997 1996 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (417,729) $ (199,435) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 10,746 4,553 Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable --- 17,061 Prepaid expenses (7,118) (1,903) Other assets 1,129 (394) Increase (decrease) in liabilities: Accounts payable and accrued expenses 34,896 (100,500) ---------- ---------- Net Cash Used in Operating Activities (378,076) (280,618) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on notes payable to related parties --- 213,600 Net proceeds from issuance of common stock --- 60,463 Obligations under capital lease (8,655) --- ---------- ---------- Net Cash (Used in) Provided by Financing Activities (8,655) 274,063 ---------- ---------- Net Decrease in Cash (386,731) (6,555) CASH -- Beginning of Period 606,144 3,030 ---------- ---------- CASH -- End of Period $ 219,413 $ (3,525) ========== ==========
The accompanying notes are an integral part of these financial statements. PAGE 5 MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES --------------------------------------------------------- The financial statements included herein have been prepared by Myo Diagnostics, Inc. (the "Company"), without audit, according 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, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the financial statements reflect, in the opinion of management, all adjustments necessary to state fairly the financial position and results of operations as of and for the periods indicated. These financial statements should be read in conjunction with the Company's December 31, 1996 audited financial statements and notes thereto. The financial statements have been prepared on the basis of the continuation of the Company as a going concern. However, during the quarter ended March 31, 1997, the Company incurred a net loss of $418,129. The Company is also in the development stage at March 31, 1997, and recovery of the Company's assets is dependent upon future events, the outcome of which is indeterminable. Successful completion of the Company's development program and its transition to the attainment of profitable operations is dependent upon obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company's cost structure. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the Company's ability to meet its financing requirements and the success of its plans to sell its products. Further, the results of operations for the three months ended March 31, 1997, are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 1997. The Company is a development stage company as defined in Statement of Financial Accounting Standards ("SFAS") No. 7, "Accounting and Reporting by Development Stage Enterprises." The Company is devoting substantially all of its present efforts to establish a new business and its planned principal operations have not yet commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share," which will be required to be adopted on December 31, 1997. The impact of Statement 128 on the calculation of earnings per share for the quarters is not expected to be material. 2. SUBSEQUENT EVENT ---------------- On April 16, 1997, the Company issued and sold 480,000 units to institutional investors for aggregate net proceeds of $1,116,000. Each unit was comprised of one share of Common Stock and one quarter stock purchase warrant. Each whole warrant entitles the holder to purchase one share of Common Stock at a price of $3.00 per share through April 16, 1998. PAGE 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is a development stage company which has yet to realize any material revenues. The Company is ready to bring its product to market, but needs additional funding to implement its marketing plan. FORWARD LOOKING STATEMENTS AND PROJECTIONS The Company may from time to time make forward-looking statements and projections concerning future expectations. When used in this discussion, the words "estimate", "project", "anticipate" and similar expressions, are subject to certain risks and uncertainties, such as changes in general economic conditions, competition, changes in federal regulations, as well as uncertainties relating to raising additional financing and acceptance of the Company's product and services in the marketplace, including those discussed below that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as to the date hereof. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 1996. The Company incurred net losses of $417,729 for the three months ended March 31, 1997 and $199,435 for the three months ended March 31, 1996. Revenues decreased from $3,000 for the three months ended March 31, 1996 to no revenues for the three months ended March 31, 1997. Revenues in the prior year consisted primarily of fees for performance of MPR evaluations in connection with test marketing. Revenues were less for the three months ended March 31, 1997 as no new test marketing commenced during that period. The Company's operating expenses increased to $409,432 during the three months ended March 31, 1997 from $188,248 during the three months ended March 31, 1996. Research and development and technical services expenses increased $47,991 and $50,673, respectively, primarily as a result of further product development and refinement. Sales and marketing expense decreased, due to a reduction in marketing efforts as the Company focused its efforts on raising capital and further product development. General and administrative expenses increased to $218,717 during the three months ended March 31, 1997 from $93,160 during the three months ended March 31, 1996 principally as a result of a $13,911 increase in legal fees relating primarily to the Company's capital raising efforts, a $81,937 increase in compensation expenses due to the hiring of additional personnel involved, in part, in administration, and an increase of $18,600 in rental expense due to an expansion of the Company's leased facilities. FINANCIAL CONDITION The Company has funded its operating expenses principally through equity and debt financings, as the Company has had no material cash flows from operations. During the three months ended March 31, 1997, the Company funded its operations principally from proceeds obtained from the sales of Common Stock during fiscal year ended December 31, 1996, which amounted to $2,022,757. The Company has six revolving lines of credit from a commercial bank pursuant to which the company may from time to time borrow up to an aggregate of $400,000 at interest rates equal to the bank's prime rate of interest plus .75% to 1.50%. These lines, which were fully utilized at March 31, 1997, mature at various times through July 1997. The Company was able to obtain these lines of credit because six unaffiliated individuals delivered to the bank irrevocable letters of credit in support of such lines, for which these individuals PAGE 7 received options to purchase an aggregate of 400,000 shares of Common Stock for $1.13 per share. On April 16, 1997, the Company issued and sold 480,000 units to two existing shareholders for aggregate net proceeds to the Company of $1,116,000. Each unit was comprised of one share of Common Stock and one quarter stock purchase warrant. Each whole warrant entitles the holder to purchase one share of Common Stock at a price of $3.00 per share through April 16, 1998. The Company believes that the proceeds from the latest sale of units will enable the Company to fund operations through the end of fiscal 1997. While the Company also anticipates generating revenues from the sale of MPR evaluations in 1997, the amount of such revenues remains extremely uncertain due to the fact that the MPR technology is a new product. As of March 31, 1997, the Company had one contract with a distributor to market and sell the Company's MPR's System. Although the Company believes that it can fund operations through the end of fiscal 1997, it will need additional funding. The amount of additional funding (if any) the Company receives will determine the degree to which it can implement its marketing plan. Without any additional funding, the Company does not believe it will be able to develop sufficient market awareness of the MPR System to operate profitably in the foreseeable future. PAGE 8 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES On April 16, 1997, the Company issued and sold 480,000 units to institutional investors for aggregate net proceeds of $1,116,000. Each unit was comprised of one share of Common Stock and one quarter stock purchase warrant. Each whole warrant entitles the holder to purchase one share of Common Stock at a price of $3.00 per share through April 16, 1998. The Company utilized the services of Griffiths McBurney & Partners, a broker/dealer in Ontario, Canada, in connection with this transaction, which received a fee of $84,000 and warrants to purchase 43,200 shares of Common Stock at a price of $2.50 per share, exercisable through April 16, 1999. The issuance of these securities was exempt from registration pursuant to Regulation S and pursuant to Section 4(2) of the Act as a transaction not involving any public offering. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: Exhibit 27.1 Financial Data Schedule (b) Reports on Form 8-K. Report on Form 8-K dated April 22, 1997 reporting under Item 9 sales of equity securities pursuant to Regulation S. PAGE 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MYO DIAGNOSTICS, INC. Date: May 16, 1997 By: /s/ Gerald D. Appel ---------------------------------- GERALD D. APPEL, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS OF MYO DIAGNOSTICS, INC. DATED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 $219,413 0 25,672 25,672 0 221,648 320,663 127,297 459,597 582,761 0 0 0 4,300,679 (4,485,883) 459,597 0 0 0 0 409,432 0 10,286 (416,677) 1,052 (417,729) 0 0 0 (417,729) (0.05) 0
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