<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 June 30, 1998
[ ] 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,
8,406,370 shares issued and outstanding as of August 1, 1998.
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 June 30, 1998 3
Statements of Operations (unaudited) for the
six months Ended June 30, 1998 and 1997 4
Statements of Cash Flows (unaudited) for the
Six months Ended June 30, 1998 and 1997 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)
Jun 30, 1998
Current Assets ____________
Cash $ -
Accounts receivable -
Prepaid expenses and other current assets 11,983
____________
Total current assets 11,983
Fixed assets 170,412
Other assets 32,501
____________
Total assets $ 214,895
Current Liabilities
Accounts payable and accrued expenses 436,387
Notes payable to bank 270,000
Current portion of leases payable 15,888
____________
Total current liabilities 722,275
Non Current Liabilities
Convertible debenture loans -
Loans from shareholders - 25,500
Capital leases payable 64,752
Notes payable 25,000
____________
Total liabilities 837,527
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
8,406,379 and 8,323,037 issued and
outstanding 5,729,971
Paid in capital 145,000
Deficit accumulated during development stage (6,497,603)
____________
Total shareholders' deficit (622,632)
____________
Total liabilities and shareholders' deficit $ 214,895
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
MYO DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Six months
ended June 30, ended June 30,
1998 1997 1998 1997
_________ _________ _________ _________
Revenues $ - $ 5,574 $ - $ 5,445
Operating Expenses:
Research and Development 101,404 89,567 223,694 182,414
Technical Services 27,183 46,365 61,264 122,744
Sales and Marketing 28,240 18,248 72,149 39,724
General and Administrative 167,205 163,692 422,272 374,882
_________ _________ _________ _________
Total Operating Expenses 324,032 317,872 779,379 719,764
_________ _________ _________ _________
Loss from Operations (324,032) (312,298) (779,379) (714,319)
Other Income (Expenses)
Interest Expense (9,490) (14,802) (16,973) (25,088)
Miscellaneous - - - -
Interest Income - 28,984 233 31,898
__________ _________ ________ _________
Total Other Income (Expenses) (9,490) 14,182 (16,750) 6,810
Loss before provision for
income taxes (333,522) (298,116) (796,129) (707,509)
Provision for income taxes 743 628 1,543 1,680
__________ __________ _________ _________
Net loss $ (455,147) $(298,744) $(797,672) $(709,189)
__________ __________ _________ _________
Net loss per share $ (0.04) $ (0.04) $ (0.09) $ (0.09)
Weighted average number of 8,364,704 8,133,367 8,364,704 7,939,775
shares outstanding
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)
Six Months ended June 30,
1998 1997
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (797,672) $ (709,189)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 31,404 23,962
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 67,500 (6,416)
Prepaid expenses 1,193 (3,911)
Other assets 600 (821)
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses 150,834 (28,932)
____________ ____________
Net Cash Used in Operating
Activities (546,141) (725,307)
____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchases (34,240) -
____________ ____________
Net Cash Used in Investing Activities (34,240) -
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank overdraft 83,552 -
Proceeds from notes payable 50,500 -
Net proceeds from issuance of common stock 290,833 1,200,000
(Repayments) borrowings of obligations under
capital lease 4,990 (17,490)
____________ ____________
Net Cash Provided by Financing Activities 429,875 1,182,510
____________ ____________
Net (Decrease) in Cash (150,508) 457,203
CASH -- Beginning of Period 150,508 606,144
____________ ____________
CASH -- End of Period $ - $ 1,063,347
<PAGE> 6
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, 1997 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, 1998, the Company incurred a net loss of $797,672. The
Company is also in the development stage at June 30, 1998, 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, 1998
are not necessarily indicative of results to be expected for the full fiscal
year ending December 31, 1998.
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.
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Results of Operations
Six Months Ended June 30, 1998 as Compared to Six Months Ended June
30, 1997. The Company incurred net losses of $797,672 for the six months
ended June 30, 1998 and $709,189 for the six months ended June 30, 1997.
The Company's operating expenses increased to $709,379 during the six
months ended June 30, 1998 from $719,764 during the six months ended June
30, 1997. During the six months ended June 30, 1998 compared to the six
months ended June 30, 1997, research and development expenses increased
$41,280 primarily as a result of product development. Technical service
expenses decreased $61,480 as a result of refinements made to the MYO D hardware
system. Sales and marketing expenses for the six months ended June 30, 1998
increased $32,425 compared to the six months ended June 30, 1997 due to an
increase in marketing efforts. During the six months ended June 30, 1998
compared to the six months ended June 30, 1997, general and administrative
expenses increased to $422,272 from $344,882 respectively. This increase was
principally as a result of an increase in consulting fees.
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, 1998, the Company funded
its operations principally from the $145,833 received from the issuance of
83,333 shares of Common Stock for $1.75 per share upon exercise of the Series B
Warrants.
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 June
30, 1998, mature at various times through June 10, 1999.
The Company presently has funds to continue operations at its present level
only through July of 1998. 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 July 1998, 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 1. Legal Proceedings
N/A
Item 2. Changes in Securities
In May 1998 the Company issued to the Ontario Municipal Employees Retirement
Board, Ontario, Canada ("OMERB"), a shareholder of the Company, 83,333 shares
of Common Stock for $1.75 per share (aggregate proceeds of $145,833) upon
exercise of Series B Warrants issued to OMERB in 1994. No underwriting
discounts or brokerage commissions were paid in connection with this issuance.
The issuance of these securities was exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2) of the Securities
Act, as a transaction not involving a public offering, and pursuant to
Regulation S as an off-shore transaction with an investor which is not a U.S.
Person.
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.
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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 JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 11,983
<PP&E> 11,983
<DEPRECIATION> 31,404
<TOTAL-ASSETS> 214,895
<CURRENT-LIABILITIES> 722,275
<BONDS> 0
0
0
<COMMON> 5,874,971
<OTHER-SE> (214,895)
<TOTAL-LIABILITY-AND-EQUITY> (6,497,603)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 779,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,973
<INCOME-PRETAX> (796,129)
<INCOME-TAX> 0
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<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (797,672)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
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