<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-19285
PROSPECTUS SUPPLEMENT TO
PROSPECTUS DATED APRIL 7, 1997
3,255,561 SHARES
MYO DIAGNOSTICS, INC.
COMMON STOCK
This Prospectus Supplement to the Prospectus dated April 7, 1997 of Myo
Diagnostics, Inc., a California corporation (the "Company"), relates to the
offer and sale from time to time by certain shareholders (the "Selling
Shareholders") of the Company of up to 3,255,561 shares of Common Stock, no par
value (the "Shares"), of the Company.
This Prospectus Supplement should be read in conjunction with the
Prospectus dated April 7, 1997, which is to be delivered with this Prospectus
Supplement. All capitalized terms used but not defined in this Prospectus
Supplement shall have the meanings given them in the Prospectus.
There is no public market for the Common Stock, and none is likely to
develop as a result of this offering.
--------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE AND
SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
ON PAGE 5 OF THE PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus Supplement is July 2, 1997
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MYO DIAGNOSTICS, INC.
QUARTERLY FINANCIAL INFORMATION
The following financial information as of and for the three months ended
March 31, 1997 is added to the Prospectus for the purpose of updating the
interim financial information contained therein.
MYO DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31,
1997
ASSETS ---------
------
<S> <C>
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
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-2
<PAGE>
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.
S-3
<PAGE>
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.
S-4
<PAGE>
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.
S-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company's financial condition
and results of operations for the three months ended March 31, 1997 is added to
the Prospectus for the purpose of updating Management's Discussion and Analysis
of Financial Condition and Results of Operations contained therein.
INTRODUCTION
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.
S-6
<PAGE>
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 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.
S-7
