<PAGE> 1
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, 1999
[ ] 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.
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(Exact Name of Small Business Issuer as Specified in its Charter)
California
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(State or Other Jurisdiction of Incorporation or Organization)
95-4089525
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(I.R.S. Employer Identification No.)
3710 South Robertson Boulevard
Culver City, California 90232
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(Address of Principal Executive Offices)
310-559-5500
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(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,
9,523,370 shares issued and outstanding as of September 30, 1999.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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MYO DIAGNOSTICS, INC.
INDEX TO FORM 10-QSB
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Balance Sheet (unaudited) as of September 30, 1999 3
Statements of Operations (unaudited) for the
Nine months Ended September 30, 1999 and 1998 4
Statements of Cash Flows (unaudited) for the
Nine months Ended September 30, 1999 and 1998 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
<PAGE> 3
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
MYO DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(Unaudited)
Sep 30, 1999
Current Assets ____________
Cash $ 278,185
Accounts receivable 9,945
Prepaid expenses & Other Current Assets 11,136
____________
Total current assets 299,266
Furniture & Equipment, net 83,376
Capitalized Product Development Costs 1,463,513
Other Assets 39,177
____________
Total assets $ 1,885,332
Current Liabilities
Accounts Payable & Accrued Expenses 252,722
Current Portion of Leases Payable 23,807
____________
Total Current Liabilities 276,529
Non Current Liabilities
Convertible Debenture Loans 167,000
Loans from Shareholder 14,000
Capital Leases Payable 10,018
Notes Payable 25,000
____________
Total liabilities 492,547
Shareholders' Equity (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
9,073,370 and 8,323,037 issued and
outstanding 7,254,309
Paid in capital 145,000
Deficit accumulated during development stage (6,006,524)
____________
Total Shareholders' Equity 1,392,785
____________
Total Liabilities & Shareholders' Equity $ 1,885,332
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
Myo Diagnostics, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS (Unaudited)
For the Nine Months Ended September 30, 1999 and from
January 5, 1987 (Inception) to September 30, 1998
For the Period From
Nine Months Ended Inception to
September 30, September 30,
1999 1998 1999
__________ __________ __________
Revenues $ 46,401 $ - $ 154,802
Operating Expenses
Research & Development 53,349 276,887 1,127,795
Technical Services 76,418 89,493 639,170
Sales & Marketing 85,025 88,187 593,833
General & Administrative 352,264 598,098 3,577,144
__________ __________ __________
Total Operating Expenses 567,056 1,052,665 5,937,942
__________ __________ __________
Loss from Operations (520,655) (1,052,665) (5,783,140)
Other Income (Expenses)
Interest Expense (24,227) (23,719) (263,435)
Miscellaneous (1,385) - (7,860)
Interest Income - 223 103,786
__________ __________ __________
Total Other Income (Expenses) (25,612) (23,496) (141,897)
Provision for Income Taxes 46,101 1,264 38,779
__________ __________ __________
Net Loss $ (592,368)$(1,077,425)$(5,989,428)
__________ __________ __________
Basic Loss Per Share ($0.06) ($0.13) ($1.06)
__________ __________ __________
Diluted Loss Per Share ($0.06) ($0.13) ($1.06)
__________ __________ __________
Weighted Average Common Shares 9,219,870 8,469,704 5,667,699
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
Myo Diagnostics, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, 1999 & 1998 and from
January 5, 1987 (Inception) to September 30, 1998
For the
Nine Months Ended Period From
September 30, Inception to
1999 1998 Sep 30, 1998
__________ __________ __________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (592,368)$(1,077,425)$(6,006,519)
Adjustments to Net Income (Loss):
Depreciation & Amortization 58,210 47,136 425,221
Bad Debt Expense - - 26,394
Stock Options Issued for
Services Rendered - - 24,000
Common Stock Issued in Consideration for
Extension of Repayment Terms for
Notes Payable to Related Parties - - 75,600
Common Stock Issued for Services
Rendered - - 12,527
(Increase)/Decrease in:
Accounts Receivables (7,650) 67,500 (16,889)
Other Receivables 20 - 67,703
Prepaid Expenses (4,058) 6,912 (80,938)
Other Assets (1,350) 825 (32,345)
Increase/(Decrease) in:
Accounts Payable (63,634) 245,632 230,432
Other Current Liabilities (315,592) - (146,452)
__________ __________ __________
Net Cash Provided (Used) by
Operating Activities (926,422) (709,420) (5,421,266)
__________ __________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Fixed Assets (3,100) (34,240) (406,478)
Software Development Costs - - (1,470,875)
__________ __________ __________
Net Cash Provided (Used) by
Investing Activities (3,100) (34,240) (1,877,353)
See accompanying notes and accountant's report.
<PAGE> 6
Myo Diagnostics, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30, 1999 & 1998 and from
January 5, 1987 (Inception) to September 30, 1998
For the
Nine Months Ended Period From
September 30, Inception to
1999 1998 Sep 30, 1998
__________ __________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Bank Overdraft - 27,420
Issuance of Convertible Debentures - 167,000 167,000
Net Increase (Decrease) in Notes
Payables - 25,000 295,000
Net Increase (Decrease) in Notes
Payables to Related Parties (25,000) 44,000 238,090
Repayment (Borrowings) on Obligations
Under Capital Lease (33,029) (1,085) (86,379)
Net Proceeds from Issuance of
Common Stock 1,024,875 330,817 6,818,093
Increase (Decrease) in Paid-In Capital - - 145,000
__________ __________ __________
Net Cash Provided (Used) from
Financing Activities 966,845 593,152 7,576,803
__________ __________ __________
Prior Period Adjustment - -
Net Increase (Decrease) in Cash 37,324 (150,508)
Beginning Cash 240,861 150,508
__________ __________ __________
Ending Cash $ 278,185 -
__________ __________ __________
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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, 1998 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, 1999, the Company incurred a net loss of $592,368.
The Company is also in the development stage at September 30, 1999, 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, 1999 are not necessarily indicative of results to be expected for
the full fiscal year ending December 31, 1999.
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.
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.
<PAGE> 8
Results of Operations
During 1998, the Company adopted a change in the method of accounting for
the costs associated with certain research and development costs related its
product. Certain of these research and development costs are now being
capitalized in accordance with SFAS No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed. Previously, the
Company had expensed all research and development costs. As a result of this
change in accounting for research and development costs, the Company now
capitalizes costs previously expensed.
Nine Months Ended September 30, 1999 as Compared to Nine Months Ended
September 30, 1998. The Company incurred net losses of $592,368 for the nine
months ended September 30, 1999 and $1,077,425 for the nine months ended
September 30, 1998.
The Company's operating expenses decreased to $567,056 during the nine
months ended September 30, 1999 from $1,052,665 during the nine months ended
September 30, 1998 because of the change in the method of accounting for the
costs associated with certain research and development costs relating to its
product. During the nine months ended September 30, 1999 compared to the nine
months ended September 30, 1998, research and development expenses decreased
$223,538 also as a result of the change in accounting for research and
development costs. Technical service expenses decreased $13,075 as a result of
completed research and development programs. Sales and marketing expenses for
the nine months ended September 30, 1999 decreased $3,162 compared to the nine
months ended September 30, 1998 due to a slight decrease in direct marketing
efforts. During the nine months ended September 30, 1999 compared to the nine
months ended September 30, 1998, general and administrative expenses decreased
to $352,264 from $598,098 respectively because of the change in the method of
accounting.
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 September 30, 1999, the Company funded its
operations principally from the net proceeds of the sale of 450,000 shares of
Common Stock in April 1999.
The Company presently has funds to continue operations at its present level
only through March of 2000. The Company expects very little revenues during
this period, and is attempting to raise additional capital. If the Company does
not obtain additional capital by the end of March 2000, 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.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
N/A
Item 2. Changes in Securities
N/A
Item 3. Defaults Upon Senior Securities
N/A
Item 4. Submission of Matters to a Vote of Security Holders
N/A
Item 5. Other Information
N/A
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> 10
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: February 11, 2000 By: /s/ GERALD D. APPEL
-------------------------------------------
Gerald D. Appel, President, Chief Executive
Officer and Chairman of the Board
[Principal Financial and
Accounting Officer]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS OF MYO DIAGNOSTICS, INC. DATED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 278,185
<SECURITIES> 0
<RECEIVABLES> 9,945
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 299,266
<PP&E> 11,136
<DEPRECIATION> 58,210
<TOTAL-ASSETS> 1,885,332
<CURRENT-LIABILITIES> 276,529
<BONDS> 0
0
0
<COMMON> 7,254,309
<OTHER-SE> (6,006,524)
<TOTAL-LIABILITY-AND-EQUITY> 1,885,332
<SALES> 46,401
<TOTAL-REVENUES> 46,401
<CGS> 0
<TOTAL-COSTS> 567,056
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,227
<INCOME-PRETAX> (592,368)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (592,368)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
