-----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, HrhFD1n1sS+NsA1wSQWtCR9l/Ls2oD6pOoWNATACxd8TZLSXBrVk07FZ3jNeMYnW S3cxb54yy0HDFST4GJRA0Q== 0001011438-97-000132.txt : 19970815 0001011438-97-000132.hdr.sgml : 19970815 ACCESSION NUMBER: 0001011438-97-000132 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97661467 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 June 30, 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 X No --- ---- 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, 8,223,037 shares issued and outstanding as of August 10, 1997. Transitional Small Business Disclosure Format (check one): Yes No X --- --- MYO DIAGNOSTICS, INC. INDEX TO FORM 10-QSB PART I FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements: Balance Sheet (unaudited) as of June 30, 1997 3 Statements of Operations (unaudited) for the Three Months Ended June 30, 1997 and 1996 and the Six Months Ended June 30, 1997 and 1996 4 Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 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 6. Exhibits and Reports on Form 8-K 9 PAGE 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET (UNAUDITED) JUNE 30, 1997 --------- ASSETS ------ Current assets: Cash $1,063,474 Accounts receivable - less allowance for doubtful accounts of $25,945 3,911 Prepaid expenses and other assets 11,833 ---------- Total current assets 1,079,218 Furniture and equipment, net of accumulated depreciation of $185,512 180,151 Other assets, net of accumulated amortization of $4,047 36,233 ---------- Total assets $1,295,602 ========== LIABILITIES AND SHAREHOLDERS' DEFICIT ------------------------------------- Current liabilities: Accounts payable and accrued expenses $ 83,679 Current portion of obligations under capital lease 26,546 Notes payable to bank 400,000 ---------- Total current liabilities 510,225 Obligations under capital lease 61,628 ---------- Total liabilities 571,853 ---------- 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, 8,223,037 shares issued and outstanding 5,500,679 Accumulated deficit during the development stage (4,776,930) ---------- Total shareholders' deficit 723,749 ---------- Total liabilities and shareholders' deficit $1,295,602 ==========
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 SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------------- ---------------------- 1997 1996 1997 1996 -------- -------- --------- --------- Revenue $ 5,574 $ 5,650 $ 5,445 $ 8,650 -------- -------- --------- --------- Operating expenses: Research and development 89,567 46,402 182,414 91,258 Technical services 46,365 46,897 122,744 72,616 Sales and marketing 18,248 23,191 39,724 47,704 General and administrative 163,692 130,089 374,882 223,249 -------- -------- --------- -------- Total operating expenses 317,872 246,579 719,764 434,827 -------- -------- --------- -------- Loss from operations (312,298) (240,929) (714,319) (426,177) Other income (expense) Interest expense (14,802) (14,601) (25,088) (27,724) Interest income 28,984 1,789 31,898 1,795 -------- -------- --------- -------- Total other income (expense) 14,182 (12,812) 6,810 (25,929) -------- -------- --------- -------- Loss before provision for income taxes (298,116) (253,741) (707,509) (452,106) Provision for income taxes 628 800 1,680 1,870 --------- --------- --------- --------- Net loss $(298,744) $(254,541) $(709,189) $(453,976) ========= ========= ========= ========= Net loss per share $ (0.03) $ (0.04) $ (0.09) $ (0.07) ========= ========= ========= ========= Weighted average number of shares outstanding 8,133,367 6,713,872 7,939,775 6,628,097 ========= ========= ========= =========
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) SIX MONTHS ENDED JUNE 30, ------------------------------ 1997 1996 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (709,189) $ (453,976) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 23,962 11,643 Changes in operating assets and liabilities: (Increase) decrease in assets: Accounts receivable (3,911) 7,376 Prepaid expenses (6,416) (1,453) Other assets (821) (2,421) Increase (decrease) in liabilities: Accounts payable and accrued expenses (28,932) (141,875) --------- --------- Net Cash Used in Operating Activities (725,307) (580,706) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Equipment purchases --- (63,762) --------- --------- Net Cash Used in Investing Activities --- (63,762) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on notes payable to related parties --- 83,500 Net proceeds from issuance of common stock and warrants 1,200,000 1,208,792 Obligations under capital lease (17,490) --- ---------- --------- Net Cash Provided by Financing Activities 1,182,510 1,292,292 --------- --------- Net Increase in Cash 457,203 647,824 CASH -- Beginning of Period 606,144 3,030 --------- --------- CASH -- End of Period $ 1,063,347 $ 650,854 ========= =========
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 six months ended June 30, 1997, the Company incurred a net loss of $709,189. The Company is also in the development stage at June 30, 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 six months ended June 30, 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. 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" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1996. The Company incurred net losses of $709,189 for the six months ended June 30, 1997 and $453,976 for the six months ended June 30, 1996. Revenues decreased from $8,650 for the six months ended June 30, 1996 to $5,445 for the six months ended June 30, 1997. Revenues consisted primarily of fees for performance of MPR evaluations. Revenues were less for the six months ended June 30, 1997 as fewer MPR evaluations were conducted during that period. The Company's operating expenses increased to $719,764 during the six months ended June 30, 1997 from $434,827 during the six months ended June 30, 1996. Research and development and technical services expenses increased $91,156 and $50,128, 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 $374,882 during the six months ended June 30, 1997 from $223,249 during the six months ended June 30, 1996 principally as a result of an increase of $37,200 in rental expense due to an expansion of the Company's leased facilities, a $37,160 increase in insurance costs as a result of the Company's acquisition of a directors liability policy and the increase in coverage under the Company's errors and omissions policy, a $27,198 increase in consulting fees due to the addition of members to the Company's Scientific Advisory Board and the development of clinical studies and treatment guidelines, and a $23,008 increase in compensation expenses due to the hiring of additional personnel involved, in part, in administration. 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 six months ended June 30, 1997, the Company funded its operations principally from proceeds obtained from the sales of Common Stock and Warrants to purchase Common Stock. During the six months ended June 30, 1997, the Company raised net proceeds of $1,200,000 from the sale of Common Stock and Warrants to purchase Common Stock. 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 PAGE 7 of interest plus .75% to 1.50%. These lines, which were fully utilized at June 30, 1997, mature at various times through June 10, 1998. Subsequent to June 30, 1997, the Company repaid an aggregate of $130,000 under two of the revolving lines of credit. 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 received options to purchase an aggregate of 400,000 shares of Common Stock for $1.13 per share. The Company believes that the proceeds from the latest sales of Common Stock and Warrants 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 June 30, 1997, the Company had one contract with a distributor to market and sell the Company's MPR System. Although the Company believes that it can fund operations through the end of fiscal 1997, it will need additional funding to build infrastructure, implement its marketing plan and deliver a quality product. The amount of additional funding (if any) the Company receives will determine the degree to which it can accomplish these objectives. 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 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: Exhibit 10.1 Renewal Notices with respect to Business PrimeLine Promissory Notes between Registrant and Wells Fargo Bank, National Association. Exhibit 27.1 Financial Data Schedule (b) Reports on Form 8-K. None. 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: August 13, 1997 By:/s/ Gerald D. Appel ------------------------------- GERALD D. APPEL, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD PAGE 10 EX-10.1 2 RENEWAL NOTICE June 3, 1997 Myo Diagnostics, Inc. 3760 S. Robertson Blvd. Culver City, CA 90232-2347 RE: Renewal of Business PrimeLine Application #04089961 Customer #: 5542712565 Dear Myo Diagnostics, Inc.: Wells Fargo Bank is pleased to inform you that your Business PrimeLine #5542712565, in the amount of $75,000.00 was renewed on June 3, 1997. The new maturity date is June 10, 1998. Your PrimeLine remains subject to all terms and conditions of the Business Loan Agreement, as modified by this Renewal Notice. The interest rate to be applied to the unpaid Principal balance of the Note will be at a rate of 0.75% over the Index. A non-refundable renewal fee of $300.00 will be charged to your account #0619073265. If you have any questions, please do not hesitate to call us at our toll free number 1-800-372-8242 press 1, press 3. We appreciate your business and look forward to continuing to serve as your business bank. Sincerely, Liela Alemania Documentation Representative RENEWAL NOTICE June 3, 1997 Myo Diagnostics, Inc. 3760 S. Robertson Blvd. Culver City, CA 90232-2347 RE: Renewal of Business PrimeLine Application #04089962 Customer #: 5542712565 Dear Myo Diagnostics, Inc.: Wells Fargo Bank is pleased to inform you that your Business PrimeLine #5542712565, in the amount of $65,000.00 was renewed on June 3, 1997. The new maturity date is June 10, 1998. Your PrimeLine remains subject to all terms and conditions of the Business Loan Agreement, as modified by this Renewal Notice. The interest rate to be applied to the unpaid Principal balance of the Note will be at a rate of 0.75% over the Index. A non-refundable renewal fee of $300.00 will be charged to your account #0619073265. If you have any questions, please do not hesitate to call us at our toll free number 1-800-372-8242 press 1, press 3. We appreciate your business and look forward to continuing to serve as your business bank. Sincerely, Liela Alemania Documentation Representative EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS OF MYO DIAGNOSTICS, INC. DATED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 $1,063,474 0 29,856 25,945 0 1,079,218 365,663 183,512 1,295,602 510,225 0 0 0 5,500,679 (4,776,930) 1,295,602 5,445 5,445 0 0 719,764 0 25,088 (707,509) 1,680 (709,189) 0 0 0 (709,189) (0.09) (0.09)
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