-----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, J3NOVXJfL/c99D+jTEbfEB5yd/C94pbfbuC3Gs2vtme8uYfyKC7XrHoZCQHvQ8sm kJ84xfKnAu2Okf8nN1HIPg== 0001011438-97-000157.txt : 19971117 0001011438-97-000157.hdr.sgml : 19971117 ACCESSION NUMBER: 0001011438-97-000157 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 333-19285 FILM NUMBER: 97717668 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 September 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 November 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 September 30, 1997 3 Statements of Operations (unaudited) for the Three Months Ended September 30, 1997 and 1996 and the Nine Months Ended September 30, 1997 and 1996 4 Statements of Cash Flows (unaudited) for the Nine Months Ended September 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) SEPTEMBER 30, 1997 ------------ ASSETS ------ Current assets: Cash.............................................................. $ 542,615 Accounts receivable - less allowance for doubtful accounts of $25,292............................................. 7,662 Prepaid expenses.................................................. 15,797 ---------- Total current assets......................................... 566,074 Furniture and equipment, net of accumulated depreciation of $199,012............................................. 178,704 Other assets, net of accumulated amortization of $4,344............................................................ 34,992 ---------- Total assets................................................. $ 779,770 ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable and accrued expenses............................. 109,333 Current portion of obligations under capital lease................ 24,770 Notes payable to bank............................................. 270,000 ---------- Total current liabilities.................................... 404,103 Obligations under capital lease........................................ 61,628 ---------- Total liabilities............................................ 465,731 ---------- Commitments and contingencies Shareholders' equity 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............. 5,500,680 Accumulated deficit during the development stage.................. (5,186,641) ---------- Total shareholders' equity................................... 314,039 ---------- Total liabilities and shareholders' equity................... 779,770 ==========
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MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1997 1996 1997 1996 ------ ------ ------- ------ Revenue........................................ $ 4,197 $ 5,000 $ 9,771 $ 13,650 --------- -------- -------- --------- Operating expenses: Research and development..................... 96,041 76,540 278,455 167,798 Technical services........................... 47,893 55,566 170,637 128,182 Sales and marketing.......................... 26,599 18,966 66,145 66,670 General and administrative................... 238,365 147,632 613,771 371,952 --------- -------- -------- --------- Total operating expenses................... 408,898 298,704 1,129,008 734,602 --------- -------- -------- --------- Loss from operations....................... (404,701) (293,704) (1,119,237) (720,952) Other income (expense) Interest expense............................. (11,955) (15,788) (37,043) (43,512) Interest income.............................. 6,155 3,326 38,180 5,121 --------- -------- -------- --------- Total other income (expense)............... (5,800) (12,462) 1,137 (38,391) --------- -------- -------- --------- Loss before provision for income taxes..... (410,501) (306,166) (1,118,100) (759,343) Provision for income taxes..................... 0 0 800 800 --------- -------- -------- --------- Net loss....................................... $ (410,501) $(306,166) $(1,118,900) $(760,143) ========= ========= ========= ========= Net loss per share............................. $ (0.05) $ (0.04) $ (0.14) $ (0.11) ========= ========= ========= ========= Weighted average number of shares outstanding.. 8,223,037 7,241,037 8,034,539 6,820,580 ========= ========= ========= ========= The accompanying notes are an integral part of these financial statements.
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MYO DIAGNOSTICS, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, ----------------------------------------- 1997 1996 ----------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss..................................................... $ (1,118,900) $ (760,143) Adjustments to reconcile net loss to net cash used in operating activities:....................................... Depreciation and amortization.............................. 39,929 20,463 Changes in operating assets and liabilities:............... (Increase) decrease in assets: Accounts receivable.................................... (7,662) 13,446 Prepaid expenses....................................... (10,380) (1,171) Other assets........................................... 420 (2,442) Increase (decrease) in liabilities: Accounts payable and accrued expenses.................. (3,149) (264,471) -------------- ------------ Net Cash Used in Operating Activities................ (1,099,742) (994,318) -------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Equipment purchases.......................................... (14,521) (93,541) -------------- ------------ Net Cash Used in Investing Activities...................... (14,521) (93,541) -------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: (Repayments) borrowings on notes payable to related parties..................................................... (130,000) 83,500 Net proceeds from issuance of common stock and warrants................................................ 1,200,000 1,182,327 Obligations under capital lease.............................. (19,266) 46,566 -------------- ------------ Net Cash Provided by Financing Activities.................. 1,050,734 1,312,393 -------------- ------------ Net (Decrease) Increase in Cash............................ (63,529) 224,534 CASH -- Beginning of Period.................................... 606,144 3,030 -------------- ------------ CASH -- End of Period.......................................... $ 542,615 $ 227,564 ============== ============ 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 nine months ended September 30, 1997, the Company incurred a net loss of $1,118,900. The Company is also in the development stage at September 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 nine months ended September 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 that 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 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 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996. The Company incurred net losses of $1,118,900 for the nine months ended September 30, 1997 and $760,143 for the nine months ended September 30, 1996. For the three months ended September 30, 1997 and 1996, the Company incurred net losses of $410,501 and $306,166, respectively. Revenues decreased from $13,650 for the nine months ended September 30, 1996 to $9,771 for the nine months ended September 30, 1997, and from $5,000 for the three months ended September 30, 1996 to $4,197 for the three months ended September 30, 1997. Revenues consisted primarily of fees for performance of MPR evaluations. Revenues were less for the three and nine months ended September 30, 1997 as fewer MPR evaluations were conducted during those periods. The Company's operating expenses increased to $1,129,008 during the nine months ended September 30, 1997 from $734,602 during the nine months ended September 30, 1996, and to $408,898 during the three months ended September 30, 1997 from $298,704 for the three months ended September 30, 1996. During the nine months ended September 30, 1997 compared to the nine months ended September 30, 1996, research and development and technical services expenses increased $110,657 and $42,455, respectively, primarily as a result of further product development and refinement. Research and development expenses increased $19,501, and technical services expenses decreased $7,673, for the three months ended September 30, 1997 compared to the three months ended September 30, 1996, respectively. Sales and marketing expense for the nine months ended September 30, 1997 decreased slightly compared to the nine months ended September 30, 1996 due to a reduction in marketing efforts during the first part of fiscal 1997 as the Company focused its efforts on raising capital and further product development. During the three months ended September 30, 1997, however, sales and marketing expense increased by $7,633 compared to the three months ended September 30, 1996 due to an increase in the Company's sales and marketing efforts during this three month period. During the nine months ended September 30, 1997 compared to the nine months ended September 30, 1996, general and administrative expenses increased to $613,771 from $371,952 respectively. This increase was principally as a result of an increase of $64,666 in rental and utility expenses due to an expansion of the Company's leased facilities, a $43,607 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, a $38,438 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 $35,033 increase in compensation expenses and payroll taxes due to the hiring of additional personnel involved, in part, in administration, and a $27,242 increase in legal expenses Page 7 due principally to securities and employment matters. Similarly, during the three months ended September 30, 1997 compared to the three months ended September 30, 1996, general and administrative expenses increased to $238,365 from $147,632, respectively. This increase was principally as a result of an increase of $26,494 in legal expenses, a $21,084 increase in rental and utility expenses, a $16,409 increase in consulting fees and a $15,275 increase in accounting expenses. 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 nine months ended September 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 nine months ended September 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 paid off two revolving lines of credit from a commercial bank in the total amount of approximately $130,500, in July 1997. The Company currently has four revolving lines of credit from a commercial bank pursuant to which the Company may from time to time borrow up to an aggregate of $270,000 at interest rates equal to the bank's prime rate of interest plus .75% to 1.50%. These lines, which were fully utilized at September 30, 1997, mature at various times through September 10, 1998. The Company was able to obtain these lines of credit because four 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 270,000 shares of Common Stock for $1.13 per share. The Company presently has funds to continue operations at its present level only through the end of 1997. The Company expects very little or no revenues during this period, and is attempting to raise additional capital. If the Company does not obtain additional capital by the end of 1997, it will be forced to severely curtail operations and, if additional capital is not obtained shortly thereafter, the Company may be forced to cease operations. Page 8 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 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 ExchangLe 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: November 13, 1997 By: /s/ Gerald D. Appel ---------------------------- GERALD D. APPEL, PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD (Principal Financial and Accounting Officer) Page 10 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED FINANCIAL STATEMENTS OF MYO DIAGNOSTICS, INC. DATED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 $542,615 0 32,954 25,292 0 566,074 377,716 199,012 779,770 404,103 0 0 0 5,500,680 (5,186,641) 779,770 9,771 9,771 0 0 1,129,008 0 37,043 (1,118,100) 800 (1,118,900) 0 0 0 (1,118,900) (0.14) (0.14)
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