<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 March 31, 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,
8,323,037 shares issued and outstanding as of June 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 March 31, 1998 3
Statements of Operations (unaudited) for the
Three months Ended March 31, 1998 and 1997 4
Statements of Cash Flows (unaudited) for the
Three months Ended March 31, 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)
Mar 31, 1998
Current Assets ____________
Cash $ -
Accounts receivable -
Prepaid expenses and other current assets 12,655
____________
Total current assets 12,655
Fixed assets 185,847
Other assets 32,798
____________
Total assets $ 231,300
Current Liabilities
Accounts payable and accrued expenses 296,681
Notes payable to bank 270,000
Current portion of leases payable 25,805
____________
Total current liabilities 592,486
Non Current Liabilities
Convertible debenture loans -
Loans from shareholders - -
Capital leases payable 64,752
Notes payable -
____________
Total liabilities 657,238
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
8,323,037 and 8,323,037 issued and
outstanding 5,584,139
Paid in capital 145,000
Deficit accumulated during development stage (6,155,077)
____________
Total shareholders' deficit (425,938)
____________
Total liabilities and shareholders' deficit $ 231,300
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 Three Months Ended:
Mar 31, 1998 Mar 31, 1997
____________ ____________
Revenues $ - $ -
Operating Expenses
Research and Development 123,265 92,847
Technical Services 32,636 76,392
Sales and Marketing 43,909 21,476
General and Administrative 246,273 218,717
____________ ____________
Total Operating Expenses 446,083 409,432
____________ ____________
Loss from Operations (446,083) (409,432)
Other Income (Expenses)
Interest Expense (7,483) (10,286)
Miscellaneous (632) -
Interest Income 223 3,041
____________ ____________
Total Other Income (Expenses) (7,892) (7,245)
Provision for income taxes (1,172) (1,052)
____________ ____________
Net loss $ (455,147) $ (417,729)
____________ ____________
Net loss per share $ (0.05) $ (0.05)
Weighted average number of shares outstanding 8,223,037 7,746,037
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 Three Months Ended:
Mar 31, 1998 Mar 31, 1997
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (455,147) $ (417,719)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 15,672 13,214
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 67,500
Prepaid expenses 821 (7,118)
Other assets 300 1,129
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses 68,882 34,896
____________ ____________
Net Cash Used in Operating
Activities (301,972) (375,608)
____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment purchases (34,240) (2,468)
____________ ____________
Net Cash Used in Investing Activities (34,240) (2,468)
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank overdraft 25,796 -
Net proceeds from issuance of common stock - -
Increase (Decrease in Paid-In Capital 145,000
____________ ____________
(Repayments) borrowings of obligations under
capital lease 14,908 (8,655)
____________ ____________
Net Cash Provided by Financing Activities 185,704 (8,655)
____________ ____________
Net (Decrease) in Cash (150,508) (386,731)
CASH -- Beginning of Period 150,508 606,144
____________ ____________
CASH -- End of Period $ - $ 219,413
<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 three
months ended March 31, 1998, the Company incurred a net loss of $455,147. The
Company is also in the development stage at March 31, 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 three months ended March 31, 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.
<PAGE> 7
Results of Operations
Three Months Ended March 31, 1998 as Compared to Three Months Ended March
31, 1997. The Company incurred net losses of $455,147 for the three months
ended March 31, 1998 and $417,729 for the three months ended March 31, 1997.
The Company's operating expenses increased to $446,083 during the three
months ended March 31, 1998 from $409,432 during the three months ended March
31, 1997. During the three months ended March 31, 1998 compared to the three
months ended March 31, 1997, research and development expenses increased
$30,418 primarily as a result of further product development and refinement.
Technical service expenses decreased $43,756 as a result of completed research
and development programs. Sales and marketing expenses for the three months
ended March 31, 1998 increased $22,433 compared to the three months ended
March 31, 1997 due to an increase in marketing efforts. During the three
months ended March 31, 1998 compared to the three months ended March 31, 1997,
general and administrative expenses increased to $246,273 from $218,717
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 three months ended March 31, 1998, the Company funded
its operations principally from bank credit facilities.
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 March
31, 1998, mature at various times through June 10, 1999. 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 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
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> 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: 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 MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,655
<PP&E> 12,655
<DEPRECIATION> 15,672
<TOTAL-ASSETS> 231,300
<CURRENT-LIABILITIES> 592,486
<BONDS> 0
0
0
<COMMON> 5,584,139
<OTHER-SE> (425,938)
<TOTAL-LIABILITY-AND-EQUITY> (6,155,077)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 446,083
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,483
<INCOME-PRETAX> (455,147)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (455,147)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
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