SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20429
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 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 0-8735
MRI Medical Diagnostics, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0682860
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
480 Camino Del Rio South, Suite 140
San Diego, California 92108
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (619) 718-6370
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
None None
Securities registered pursuant to Section (g) of the Act:
Common Stock, No Par Value Per Share
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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 the past 90 days.
Yes No X
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 if this chapter) is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form
10-K. [X]
As of January 19, 2000, 8,600,657 shares of common stock were effectively
outstanding. The aggregate market value of the Registrant's free-trading
common stock (8,600,657 shares) held by non-affiliates on January 19, 2000
was approximately $301,023, based on the averaged bid and asked price of
the stock on January 19, 2000.
<PAGE>
APPLICABLE ONLY TO CORPORATE REGISTRANTS: As of March 31, 1999, the
following shares of the Registrant's common stock were issued and outstanding:
Common Stock, no par value
DOCUMENTS INCORPORATED BY REFERENCE: Form 8-K filed August 8, 1997
PART I
ITEM 1. BUSINESS
The Registrant, MRI Medical Diagnostics, Inc., a Colorado corporation (the
"Company"), was incorporated on November 12, 1971 as Sierra Resources, Inc.
The Company changed its name to Petro-Global, Inc. on May 27, 1987, and to
MRI Medical Diagnostics, Inc. on February 12, 1992 when, pursuant to a
change of control, the Company redirected its business purposes to medical
diagnostic imaging services. In July 1993, the Company and its wholly
owned subsidiaries each filed for bankruptcy in the Central District Court
of California. On November 7, 1995, the Court approved and declared
effective a reorganization plan for the Company, which went into effect on
January 2, 1996.
Pursuant to the Reorganization Plan, Tri-National Development Corporation,
a Wyoming corporation, obtained all of the stock of MRI Grand Terrace,
Inc., the Company's wholly owned subsidiary, in partial exchange of which
the bankruptcy estate is to receive 30% of the net proceeds on that portion
of any resulting judgment issued to MRI Grand Terrace, Inc. out of
litigation between Tri-National Development Corporation and MRI Grand
Terrace, Inc. against Citizens Business Bank, then Chino Valley Bank. On
June 3, 1998, the California Superior Court of San Bernardino County
entered a gross judgment in favor of Tri-National Development Corporation
and MRI Grand Terrace, Inc. in the approximate amount of $5,000,000.
Approximately $4,411,911 of the gross judgment was awarded to MRI Grand
Terrace, Inc. The judgment is currently under appeal and, due to the risk
of reversal, the Company is unable to estimate the amount of proceeds, if
any, that the bankruptcy estate may receive. See, "LEGAL PROCEEDINGS" below.
On July 15, 1997, the Company approved the Agreement and Plan of
Reorganization with Alpine Herbs & Nutrition International, Inc., a Nevada
Corporation ("Alpine"). The Agreement provided for the acquisition of 100%
of the common stock of Alpine for 4,000,000 post-split shares of the common
stock of the Company. The Agreement was later terminated by mutual
agreement of the parties.
The Company has no current operations, and has retained the services of
Intermountain Capital Corporation to seek possible merger candidates for
the Company and to accomplish the sale, merger, exchange, capital
investment, loan, joint venture or such other transaction as is deemed
advisable subject to the approval of the Company's Board of Directors and
shareholders.
ITEM 2. PROPERTIES
Not Applicable.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Bankruptcy Trustee continues to monitor application of the Company's
reorganization plan, specifically with respect to the collection of the
judgment rendered in favor of MRI Grand Terrace, Inc. and Tri-National
Development Corporation against Citizens Business Bank. Pursuant to the
Settlement Agreement approved by the Bankruptcy Court, the bankruptcy
estate is entitled to recover 30% of the net proceeds of any judgment
received by MRI Grand Terrace, Inc. rendered in the litigation. On August
17, 1998, Citizens Business Bank posted a $7.5 million bond and filed its
appeal on June 16, 1999 with the California Court of Appeals, San
Bernardino County. Due to the risk of reversal on appeal, the Company is
unable to estimate the proceeds, if any, that the bankruptcy estate may
recover on the judgment. Any amount recoverable by the bankruptcy estate
will be less attorney fees and any fees paid to the trustee.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fiscal year ended March 31, 1999.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is currently traded on the Over-the-Counter
Bulletin Board under the symbol "MMDI." On January 11, 2000, the Company
was notified that the stock has been tagged with an "E" code, indicating
that it will be delisted on February 9, 2000 unless the Company brings
itself into compliance with the reporting requirements of the Securities
Exchange Act of 1934.
Following is a statement of the high and low bid information for each full
quarter since the Company's stock began trading on the OTC in September
1997, including the interim period ending December 31, 1999.
QUARTER HIGH LOW CLOSE
09/30/97 1/2 3/32 13/64
12/31/97 5/16 1/8 5/32
03/31/98 11/64 3/64 3/64
06/30/98 5/64 3/64 3/64
09/30/98 3/32 3/64 3/64
12/31/98 3/64 1/32 1/32
03/31/99 1/16 1/32 3/64
06/30/98 3/32 1/32 1/32
09/30/98 1/16 1/64 1/64
12/31/99 3/64 1/64 1/32
As of December 31, 1999, there were approximately 2,470 holders of record
of the Common Stock.
The Company has not declared any cash dividends on its Common Stock since
the Company's formation in November 1971.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected historical financial data set forth below have been
derived from, and are qualified by reference to (i) the audited
Consolidated Financial Statements of the Company for the fiscal year ended
March 31, 1999 as compared to the fiscal year ended March 31, 1998 and for
the period ended December 31, 1999. The audited financial statements
referred to above are included elsewhere herein. The selected financial
data set forth below should be read in conjunction with, and are qualified
by reference to, Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and
accompanying notes included elsewhere herein.
FISCAL YEAR ENDED NINE-MONTHS
MARCH 31 ENDED DEC. 31
----------------------- --------------
1998 1999 1999
Income Statement Data:
Operating revenue(1)................$ 0 $ 0 $ 0
Expenses............................$ 0 $ 0 $ 0
Net Income..........................$ 0 $ 0 $ 0
Accumulated deficit, beginning......$(1,563,343) $(1,563,343) $(1,563,343)
Accumulated deficit, ending.........$(1,563,343) $(1,563,343) $(1,563,343)
---------- --------- ----------
Earnings per share..............$ 0 $ 0 $ 0
Balance Sheet Data (at end of period):
Total assets........................$ 0 $ 0 $ 0
Total debt..........................$ 3,413 $ 3,413 $ 3,413
Total Stockholders equity...........$ (3,413) $ (3,413) $ (3,413)
Other Financial Data:
Cash flows..........................$ 0 $ 0 $ 0
(1) Currently, the Company has no operations and is evaluating its options
in the acquisition by or merger with another Company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
YEAR ENDED MARCH 31, 1998 COMPARED TO YEAR ENDED MARCH 31, 1999
The Company had no operation during the fiscal years ended March 31, 1998
and 1999.
NINE-MONTH PERIOD ENDED DECEMBER 31, 1998 COMPARED TO DECEMBER 31, 1999
The Company has had no operations during the nine-month periods ended
December 31, 1998 and 1999.
Liquidity and Capital Resources
Pursuant to the Reorganization Plan, Tri-National Development Corporation,
a Wyoming corporation, obtained all of the stock of MRI Grand Terrace,
Inc., the Company's wholly owned subsidiary, in partial exchange of which
the bankruptcy
<PAGE>
estate is to receive 30% of the net proceeds of litigation between MRI
Grand Terrace, Inc., Tri-National Development Corporation and Citizens
Business Bank to which MRI Grand Terrace, Inc. would be entitled, pending
in the California Superior Court, San Bernardino County. On June 3, 1998,
the Superior Court entered judgment in favor of MRI Grand Terrace, Inc. and
Tri-National Development Corporation in the approximate amount of
$5,000,000. The judgment is currently under appeal. See, "LEGAL
PROCEEDINGS" above. The Company continues to monitor the appeal, and hopes
to use any resulting proceeds in its efforts to locate a potential
purchaser or merger candidate. The Company has retained the services of
Intermountain Capital Corporation to seek such possible merger candidates
for the Company and to accomplish the sale, merger, exchange, capital
investment, loan, joint venture or such other transaction as is deemed
advisable subject to the approval of the Company's Board of Directors and
shareholders.
Year 2000
The company has not experienced any negative effects as a result of the
Year 2000 problem, and, because there are no current operations, does not
anticipate related difficulties over the next six months. There is no
assurance that any of the possible merger candidates that the Company has
or will approach will be Year 2000 compliant or that such candidates will
not experience Year 2000-related "glitches" over the next six months. As
part of its due diligence in locating potential candidates, the Company
will determine the Year 2000 compliance of each such candidate.
Forward-Looking Statements
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward-looking
statements" as defined in the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended. These forward-looking statements rely on
a number of assumptions concerning future events, and are subject to a
number of risks and uncertainties and other factors, many of which are
outside the control of the Company, that could cause actual results to
differ materially from such statements.
Readers are cautioned not to put undue reliance on such forward-looking
statements, each of which speaks only as of the date hereof. Factors
and uncertainties that could affect the outcome of such forward-looking
statements include, among others, market and industry conditions, increased
competition, changes in governmental regulations, general economic
conditions, pricing pressures, and the Company's ability to continue its
growth and expand successfully into new markets and services. The
Company disclaims any intention or obligation to update publicly or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Financial Statements and Supplementary Schedule
contained in Part IV hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Company are elected annually by its shareholders to serve
during the ensuing year or until a successor is duly elected and
qualified. Executive officers of the Company are duly elected by its Board
of Directors to serve until their respective successors are elected and
qualified. The following table sets forth certain information with respect
to the directors and executive officers of the Company.
NAME AGE POSITION OR OFFICE
---- --- ------------------
Jacob J. Parker, M.D. 62 Director and President
William J. Piggott, M.D. 53 Director and Secretary
Javaid I. Sheikh 45 Director and Treasurer
JACOB J. PARKER, M.D. (62), Director and President of the Company since
March 24, 1998. Dr. Parker also serves as Vice-President of Medical
Development for Tri-National Development Corporation, a reporting company,
and has held that position he has held since 1996. Dr. Parker is currently
Medical Director and Director of Radiology for several MRI centers and
breast imaging centers in Northern California. He was previously Chief of
Radiology and Nuclear Medicine at Ross General Hospital, Clinical Professor
of Radiology at the University of California, Irvine, and Instructor of
Radiology at the University of Southern California Medical Center from 1970
to 1988. Dr. Parker received his M.D. from the University of Manitoba,
Canada in 1962.
WILLIAM J. PIGGOTT, M.D. (53), Director and Secretary of the Company since
March 24, 1998. Dr. Piggott currently operates an international medical
technology consulting firm, I.M.T.E.C., as a sole proprietorship. In the
past, he has served with or been a member of the American Society of
anesthesiologists, the California Society of Anesthesiologists, the
California Medical Association and the San Diego County Medical
Association. Dr. Piggott obtained his M.D. from the University of
California at San Diego in 1972.
JAVAID IQBAL SHEIKH, M.D. (45), Director and Vice-President of the Company
since March 24, 1998. Dr. Sheikh is an associate professor of psychiatry at
the Stanford University School of Medicine, a position he has held since
1986. At the University, Dr. Sheikh's research focuses on studying
phenomenology, vulnerability factors, and psychiatric and medical
comorbidity of panic disorder in old age, as well as treatment responses to
medication in elders with panic disorder. He is presently involved in
establishing and extending the University's preliminary finding that Late-
Onset Panic Disorder (LOPD) (onset at or after age 55) is a
phenomenologically distinct syndrome from Early-Onset Panic Disorder
(EOPD). This is being accomplished by comparing LOPD subjects with EOPD
subjects on multiple standardized measures assessing the domains of
phenomenology, vulnerability factors, and psychiatric and medical
comorbidity. Additionally, his research group has recently completed pilot
studies of both pharmacological and nonpharmacological treatment strategies
of panic disorder in old age. Presently, they are planning a large-scale
study comparing the efficacy of pharmacological and nonpharmacological
treatments of panic disorder in older adults. Finally, a pilot project to
investigate the phenomenology and treatment of anxiety in older Asian-
Americans is underway. Dr. Sheikh obtained his M.D. from King Edward
Medical College in 1978.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
None of the executive officers listed in Item 10 received compensation for
their services during the Company's fiscal year ended March 31, 1999 or the
nine-month interim period ended December 31, 1999. The Company is not
bound by any employment agreement with past or present employees of the
Company, and has no current employers other than the officers listed above.
Director Compensation
None of the directors listed in Item 10 above have received any
compensation for their services as directors of the Company for the
Company's fiscal year ended March 31, 1999 or the nine-month interim period
ended December 31, 1999.
Option Plans
The Company does not currently maintain a stock option plan, employee stock
purchase plan or any other employment compensation plan. Currently, there
are not outstanding options to purchase MRI stock.
Committees
The Company does not currently have an executive compensation committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of each
class of the Company's capital stock beneficially owned as of December 31,
1999 by (I) each person known to the Company to be the beneficial owner
of more than 5% of any class of the Company's equity securities, (ii)
each of the Company's directors and nominees, and (iii) all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE
OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C> <C>
No Par Value Jacob J. Parker 18,250 shares(2) 0.2%
Common Stock Director and President
333 Locust Ave.
San Rafael, CA 94901
No Par Value William J. Piggott 11,785 shares(2) 0.1%
Common Stock Director and Vice-Pres.
7833 Lower River Road
Grants Pass, OR 97526
No Par Value Javaid J. Sheikh 20,068 shares(2) 0.2%
Common Stock Director and Vice-Pres.
988 St. Joseph Ave.
Los Altos, CA 94024
No Par Value Michael A. Sunstein 753,449 shares(1)(2) 8.8%
Common Stock 480 Camino Del Rio S.
Suite 140
San Diego, CA 92108
<PAGE>
No Par Value Paul G. Goss 517,224 shares 6.0%
Common Stock 410 17th St., Suite 1940
Denver, CO 80202
No Par Value Ronald C. Hibbard 1,720,000 shares(3)(4) 19.99%
Common Stock 72-751 Jamie Way
Rancho Mirage, CA 92270
No Par Value Jeanne M. Hibbard 1,560,000 shares(3)(4) 18%
Common Stock 72-751 Jamie Way
Rancho Mirage, CA 92270
No Par Value Rod Jones 1,000,000 shares(4) 11.63%
Common Stock 75-560 Mary Lane
Indian Wells, CA 92210
No Par Value Craig Lesser 466,667 shares 5.4%
Common Stock 20602 Pacific Coast Hwy.
Malibu, CA 90265
No Par Value All directors 50,103 shares 0.6%
Common Stock and officers
as a group
</TABLE>
(1)15,616 shares held indirectly for Post Kirby Noonan & Sweat,
LLP.(2)During its 1999 calendar year, the Company borrowed $7,000 each from
Michael A. Sunstein, Jacob J. Parker, William J. Piggott, Javaid J. Sheikh
and Delanorte Investment, Inc. to pay expenses. Each of the lenders has
agreed that the Company may pay back the loans in shares of restricted
common stock of the Company at a per share rate of $.05. To date, none of
these shares have been issued.(3)Includes 1,520,000 shares held jointly by
Ronald C. Hibbard and Jeanne M. Hibbard.(4) These shares were issued
pursuant to the Agreement and Plan of Reorganization with Alpine Herbs &
Nutrition International, Inc., a Nevada Corporation ("Alpine") on July 15,
1997. Of the 4 million shares issued pursuant to this Plan, 3.9 million
shares were cancelled and returned to treasury pursuant to the subsequent
termination of the Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During its fiscal year ended March 31, 1999 and the nine-month interim
period ended December 31, 1999, the Company borrowed funds from each of its
officers and directors in an amount of $7,000 each, to be repaid with
restricted shares of the Company's common stock at a rate of $.05 per
share. These shares have not been issued. These funds, along with $14,000
borrowed from Michael A. Sunstein and Delanorte Investments, Inc., were
borrowed in order to pay expenses incurred by the Company, including
amounts due to the Company's transfer agent.
Advisory Services Agreement
The Company has retained the services of Intermountain Capital Corporation
to seek possible merger candidates for the Company and to accomplish the
sale, merger, exchange, capital investment, loan, joint venture or such
other transaction as is deemed advisable subject to the approval of the
Company's Board of Directors and shareholders. Pursuant to the agreement,
the Company is obligated to issue 500,000 shares of its common stock to
Intermountain. These shares have not yet been issued.
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements. The following financial information for the
Company for the fiscal years ended March 31, 1998 and 1999 is filed
as part of this report.
MRI Medical Diagnostics and
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . .F-1
Balance Sheets at March 31, 1998 and 1999 . . . . . . . . . . . . .F-2
Statements of Income & Retained Earnings for
March 31, 1998 and 1999 . . . . . . . . . . . . . . . . . . . . . .F-3
Statements of Cash Flows for March 31, 1998 and 1999. . . . . . . .F-4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-5
Balance Sheets at December 31, 1998 and 1999. . . . . . . . . . . .F-6
Statements of Income & Retained Earnings
December 31, 1998 and 1999. . . . . . . . . . . . . . . . . . . . .F-7
Statements of Cash Flows for December 31, 1998 and 1999 . . . . . .F-8
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-9
2. Financial Statement Schedules.
Not Applicable.
3. Exhibits
Exhibit No.
- ------------
*3.1 Articles of Incorporation of Registrant.
*3.2 By-Laws of Registrant.
*10.1 MRI/Colorado agreement to acquire MRI/California.
*10.2 MRI/Coloardo agreement to acquire Grand Terrace retirement hotel.
*10.3 MRI/Colorado agreement to acquire Sierra Cardiac.
**10.4 Agreement and Plan of Reorganization dated June 20, 1997 between
Registrant and Alpine Herbs & Nutrition International, Inc.
10.5 Advisory Agreement between the Registrant and Intermountain
Capital Corporation dated February 19, 1999.
23.1 Consent of Ludlow & Harrison, LLP
23.2 Consent of Popov & McCullogh, LLP
27.1 Financial Data Schedule
99.1 Order Approving Application to Compromise Controversy entered
on August 31, 1995 by Federal Bankruptcy Court.
* Previously filed with Amended Form 10-K filed June 21, 1993.
** Previously filed with Form 8-K filed July 15, 1997.
(b) Reports on Form 8-K
During the fiscal year ended March 31, 1999, no reports were filed on
Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
MRI Medical Diagnostics, Inc.
Dated: February 4, 2000 /s/Jacob J. Parker
----------------------------
Jacob J. Parker, M.D.
President
Dated: February 4, 2000 /s/William J. Piggott
----------------------------
William J. Piggott, M.D.
Executive Vice President
Dated: February 4, 2000 /s/Javaid I. Sheikh
----------------------------
Javaid I. Sheikh, M.D.
Executive Vice President
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL
STATEMENT SCHEDULE
Page
- ----
Financial Statements
MRI Medical Diagnostics and
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . .F-1
Balance Sheets at March 31, 1998 and 1999 . . . . . . . . . . . . .F-2
Statements of Income & Retained Earnings for
March 31, 1998 and 1999. . . . . . . . . . . . . . . . . . . . . .F-3
Statements of Cash Flows for March 31, 1998 and 1999. . . . . . . .F-4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-5
Balance Sheets at December 31, 1998 and 1999 . . . . . . . . . . .F-6
Statements of Income & Retained Earnings for
December 31, 1998 and 1999 . . . . . . . . . . . . . . . . . . . .F-7
Statements of Cash Flows for December 31, 1998 and 1999 . . . . . .F-8
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
We have audited the accompanying balance sheets of MRI Medical Diagnostics,
Inc. as of March 31, 1998 and 1999, and the related statements of income,
retained earnings, cash flows and stockholders' equity for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit on accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance that the financial statements are free of
material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as assessing the
overall financial statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MRI Medical
Diagnostics, Inc. as of March 31, 1998 and 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ LUDLOW & HARRISON
Ludlow & Harrison
A CPA Corporation
August 13, 1999
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
BALANCE SHEETS
MARCH 31, 1999
1999 1998
---- ----
Total Assets $ 0 $ 0
----------- -----------
Total Current Liabilities $ 3,413 $ 3,413
----------- -----------
Stockholders' Equity
Capitol Stock 1,559,930 1,559,930
Common, No Par Value
Authorized 50,000,000 Shares
Issued 12,500,657 Shares
Less: 3,900,000 (Alpine Herbs Cancellation)
= 8,600,657
Preferred, No Par Value
Authorized 10,000,000 Shares
Issued 0 Shares
Accumulated Deficit (1,563,343) (1,563,343)
----------- -----------
Total Stockholders' Equity $ (3,413) $ (3,413)
----------- -----------
Total Liabilities and
Stockholders' Equity $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
STATEMENTS OF INCOME & RETAINED EARNINGS
MARCH 31, 1999
1999 1998
---- ----
Revenues $ 0 $ 0
----------- -----------
Expenses $ 0 $ 0
----------- -----------
Net Income $ 0 $ 0
----------- -----------
Accumulated deficit, beginning $(1,563,343) $(1,563,343)
----------- -----------
Accumulated deficit, ending $(1,563,343) $(1,563,343)
----------- -----------
Earnings per share $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
STATEMENT OF CASH FLOWS
MARCH 31, 1999
1999 1998
---- ----
Cash flow for year $ 0 $ 0
----------- -----------
Cash at beginning of year $ 0 $ 0
----------- -----------
Cash at end of year $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998 AND 1999
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The business of the Company in the past has consisted of the
acquisition, development and operation of outpatient medical diagnostic
imaging facilities. Currently, the Company is not operating and is
evaluating its options in the acquisition or merger with another Company.
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
BALANCE SHEETS
DECEMBER 31, 1999
1999 1998
---- ----
Total Assets $ 0 $ 0
----------- -----------
Total Current Liabilities $ 3,413 $ 3,413
----------- -----------
Stockholders' Equity
Capitol Stock 1,559,930 1,559,930
Common, No Par Value
Authorized 50,000,000 Shares
Issued 12,500,657 Shares
Less: 3,900,000 (Alpine Herbs Cancellation)
= 8,600,657
Preferred, No Par Value
Authorized 10,000,000 Shares
Issued 0 Shares
Accumulated Deficit (1,563,343) (1,563,343)
----------- -----------
Total Stockholders' Equity $ (3,413) $ (3,413)
----------- -----------
Total Liabilities and
Stockholders' Equity $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
STATEMENTS OF INCOME & RETAINED EARNINGS
DECEMBER 31, 1999
1999 1998
---- ----
Revenues $ 0 $ 0
----------- -----------
Expenses $ 0 $ 0
----------- -----------
Net Income $ 0 $ 0
----------- -----------
Accumulated deficit, beginning $(1,563,343) $(1,563,343)
----------- -----------
Accumulated deficit, ending $(1,563,343) $(1,563,343)
----------- -----------
Earnings per share $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
STATEMENT OF CASH FLOWS
DECEMBER 31, 1999
1999 1998
---- ----
Cash flow for year $ 0 $ 0
----------- -----------
Cash at beginning of year $ 0 $ 0
----------- -----------
Cash at end of year $ 0 $ 0
----------- -----------
<PAGE>
MRI MEDICAL DIAGNOSTICS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The business of the Company in the past has consisted of the
acquisition, development and operation of outpatient medical diagnostic
imaging facilities. Currently, the Company is not operating and is
evaluating its options in the acquisition or merger with another Company.
EXHIBIT 10.5
INTERMOUNTAIN CAPITAL CORPORATION
410 17TH STREET, SUITE 1940
DENVER, COLORADO 80202
303-592-1001 303-592-1846
February 19, 1999 Via Fax 415 721-0298
Dr. Jerry Parker, President
MRI Medical Diagnostics Inc.
333 Locust Drive
San Rafael, CA 94901
Re: Advisory Agreement
Dear Dr. Parker:
This Agreement confirms our mutual understanding that Intermountain Capital
Corporation ("ICC" or "Advisors") will represent MRI Medical Diagnostics,
Inc. ("MRI" or "Client") as Advisors on the following terms and conditions:
TRANSACTION
The purpose of this engagement is to assist Client and/or its shareholders,
principals and related parties ("Affiliates") to accomplish a sale, merger,
exchange, capital investment, loan, joint venture or other transaction
involving all or part of the business interests of Client, including but
not limited to the stock and assets owned directly or indirectly by Client
or Affiliates described generally as follows:
To market, locate and acquire, on terms acceptable to Client, a
privately held emerging growth company which desires to become a
publicly held company for merger or reverse acquisition into MRI, in
order to increase shareholder value in MRI ("Transaction").
Advisors understand and acknowledge that the current management of MRI
recently agreed to acquire control of MRI with the intent of transfering
its medical assets and businesses to MRI. Management has since determined
that MRI is not a suitable vechicle for their business plan, however
acknowledges that it has the responsibility to find another business
candidate for MRI and will retain management control until a suitable
Transaction is accomplished; however, management will relinquish director
and management control upon the consumation of the Transaction. Advisors
also acknowledge Management has advanced approximately $20,000 for clean-up
of MRI (transfer agent fees, professional auditing and SEC reporting fees)
and desires to have those monies returned to them upon consumation of the
Transaction. Management or MRInt agrees to take all appropriate action to
keep MRI current and in good standing
<PAGE>
with all applicable Federal and State authorities and trading on the OTC-
Bulletin Board Exchange.
Client hereby engages Advisors on an exclusive basis to advise it on the
Transaction during the term of this Agreement. ICC shall advise the Client
on the valuation, structure, pricing and financing of target companies and
on the merger or reverse acquisition process itself. Client shall have the
sole right to accept or reject any offer received. Client shall forward to
Advisors all inquires from any person or entity during the term of this
Agreement.
COMPENSATION
As a retainer for availability of services and to cover planning, research
and the preparation of marketing documentation, in addition to the
advancement of certain out-of pocket expenses for this Transaction, Client
shall issue to Advisors upon execution of this Agreement, 500,000 shares of
its common stock The Company agrees that these shares shall not be reduced
as a result of the Transaction and agrees that in the event of a reverse
split of shares in the Transaction to issue such additional shares to
Advisors to equal 500,000 shares ownership upon the consumation of the
Transaction. Further, Advisors shall have demand registration rights on
all of these shares..
If a transaction is consummated, Client shall pay Advisors a sucess fee
based on the total value of consideration received by Client or Affiliates
("Consideration"), directly or indirectly, in connection with this
Transaction. Consideration may include, but is not limited to, properties
in cash, stock, real and personal property, warrants and options, fees,
notes, debentures or other debt, assumption or relief of debt (including
guarantees) and all other elements of value exchanged, or to be exchanged
in connection with the Transaction. The amount of the fee shall be
calculated from the following schedule on total Consideration so
established:
10% of the first $1,000,000 of Consideration, or any part; plus
8% of the second $1,000,000 of Consideration, or any part; plus
6% of the third $1,000,000 of Consideration, or any part; plus
4% of the balance of the total Consideration in the Transaction.
Advisors fee is payable in certified funds at the time of closing of the
Transaction. Client will include language in the Transaction documents
describing Client's fee responsibility to Advisor. Upon request Client
will provide Advisor with copies of all Transaction documents and will
provide Advisors with adequate advance notice of the time and place of
closing, which Advisors will have the right to attend. Client hereby
authorizes the disbursing agent for the Transaction to pay Advisors fee.
Any forfeited option, earnest money or back-out penalty is to be divided
equally with Advisor.
COSTS
Client agrees to reimburse Advisors the out-of pocket expenses incurred on
behalf of Client upon the availability of funds or at the time of closing
of the Transaction, which
<PAGE>
ever occurs first. Client understands that it is responsible for payment
of all costs and fees of agencies, transfer agents and professionals
necessary to keep MRI current and in good standing with all Federal and
State authorities and trading on the OTC-Bulletin Board exchange. However,
Advisors understand Client has limited funds for such expenses at the
present time and agree to advance such reasonable and necessary funds on
behalf of Client in its sole discretion for fees of agencies, professional
fees, transfer agent fees, marketing expenses and the like. Such expenses
shall be documented by Advisors and shall be reimbursed by Client upon the
availability of funds or upon closing of the Transaction, whichever occurs
first.
TERM
This Agreement shall remain in effect for two (2) years from this date and
shall continue thereafter until terminated by either party upon thirty (30)
days prior written notice. Client's fee obligation shall survive this
Agreement for Transactions with parties contacted or with whom discussions
and/or negotiations were initiated during its term.
STANDARD TERMS
The attached Standard Terms and Conditions are incorporated into this
Agreement. If this Agreement is acceptable, please sign in the space
provided below, and return an orriginally signed Agreement to Advisor for
its records. We look forward to working with you on this project.
Very truly yours,
Intermountain Capital Corporation
by /s/ PAUL G. GOSS
---------------------------------------
Paul G. Goss, Managing Director
The foregoing Agreement is hereby accepted this 19th day of February, 1999.
MRI Medical Diagnostics, Inc
by /s/ JERRY PARKER
---------------------------------------
Dr. Jerry Parker, President
<PAGE>
The following Standard Terms and Conditions are incorporated into the
client fee agreement (Agreement) dated February 19, 1999.
SERVICES: Advisor is an independent contractor. Advisor will identify and
present to Client parties which Advisor deems suitable for the intended
Transaction. Advisor will prepare documents for the purpose of describing
and presenting information relevant to possible transactions; will
participate in plant visits, discussions and negotiations where Client
deems appropriate, will work with Client's attorney and accountants under
the direction of Client; and will otherwise assist Client as an Advisor to
bring the Transaction to a close. In performing these services, Advisor
will obtain Client's prior approval of information to be released and will
employ the resources of the Advisor's network to the extent appropriate,
However, Advisor makes no representation, express or implied, that it will
effect a Transaction as a result of the services furnished under this
Agreement.
AUTHORITY: The person executing this Agreement on Client's behalf hereby
represents and warrants, knowing that Advisor will rely thereon, that the
signature is duly authorized to bind the Client to the Agreement.
INFORMATION: Client shall furnish to Advisor complete and accurate current
and historical business information, and shall promptly inform Advisor of
any changes which may materially effect its business or Advisor services
under this agreement. Client warrants the accuracy of all information
provided and to be provided by Client to Advisor in the course of
activities under this Agreement.
INDEMNIFICATION: Recognizing that transactions of the type contemplated by
this Agreement sometimes result in litigation and that Advisor's role is
advisory, Client agrees to indemnify Advisor, its officers, directors,
employees, agents and affiliates, against any suits, losses, claims,
damages or liabilities, joint or several, including shareholder actions, to
which the indemnified parties may be subject in connection with the
services rendered, and to reimburse the indemnified parties for any legal
or other expenses reasonably incurred by them in connection therewith.
However, Client shall not be responsible for any loss, claim, damage or
liability resulting from the willful misfeasance or gross negligence of an
indemnified party.
ARBITRATION. Any controversy, dispute, or claim between the parties
relating to this Agreement shall he resolved by binding arbitration in
accordance with the rules of the American Arbitration Association.
CONSIDERATION. Any portion of the consideration to be determined after
Closing shall be considered additive to Consideration paid at closing for
the purpose of applying the schedule of fees. The value of all
Consideration shall be at face value, without discount for the timing of
receipt.
DISCLOSURE OF FEE. Advisor shall have the right, but not the obligation, to
disclose to any party to the Transaction Client's fee responsibility to
Advisor. Unless specifically agreed to in writing with Client, Advisor
shall receive compensation in connection with the Transaction only from
Client.
SUCCESSORS AND ASSIGNS: This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective assigns and
representatives.
JURISDICTION: This Agreement shall be interpreted under and governed by the
laws of the State of Colorado.
ENTIRE AGREEMENT. This is the entire Agreement between the parties
pertaining to its subject matter, and supersedes all prior agreements,
representations and understandings of the parties. No modification of this
Agreement shall be binding unless agreed to in writing by the parties.
EXHIBIT 23.1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the reference to our firm under the captions
"Experts" and to the use of our report dated August 13, 1999 relating to
the financial statements for the fiscal year ended March 31, 1999 on Form
10-K of MRI Medical Diagnostics, Inc. to be filed with the Securities and
Exchange Commissions on or about February 3, 2000.
/s/ LUDLOW & HARRISON
February 3, 2000
EXHIBIT 23.2
POPOV & MCCULLOUGH, LLP
- ------------------------------ATTORNEYS AT LAW---------------------------
Regents Park Financial Centre
4180 La Jolla Village Drive, Suite 315
La Jolla, California 93027
------
Tel: (858) 457-2900
Fax: (858) 457-2950
February 3, 2000
MRI Medical Diagnostics, Inc.
480 Camino Del Rio South
Suite 140
San Diego, California 92108
Gentlemen:
We hereby consent to the use of our name in the Form 10-K to be filed by
MRI Medical Diagnostics, Inc. on or about February 1, 2000 in the section
captioned "Legal Matters," and we also consent to the filing of this
opinion as an exhibit thereto. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations
of the Commission thereunder.
Very truly yours,
POPOV & MCCULLOGH, LLP
/s/ GRETCHEN COWEN
Gretchen Cowen, Esq.
GC/jhr
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (1,563,343)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1
Franklin C. Adams, Esquire
(State Bar No. 85351)
A Professional Corporation
370 West Sixth Street, Suite 110
San Bernardino, California 92401-1152
Telephone No.: (714) 888-2123
Attorney for Chapter 11 Trustee, Arturo Cisneros
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re CASE NO. SB 93-20802-DN
MRI Medical Diagnostics, Inc. CHAPTER 11
a Colorado Corporation
ORDER APPROVING
APPLICATION TO COMPROMISE
CONTROVERSY
Debtors.
Date: August 29, 1995
Time: 10:30 AM
Courtroom: 1
The Application to Compromise Controversy of Arturo Cisneros,
Chapter 11 Trustee, came on for hearing at the above date, time and place
having been continued from August 8, 1995. Franklin C. Adams appeared on
behalf of Arturo Cisneros, Chapter 11 Trustee, who was also present;
Norman L. Hanover appeared on behalf of Michael Sunstein and Tri-National
Development Corporation; Paul Brent appeared on behalf of Gary Pagar for
Med-First. The Court Finds that due and proper notice of said
Application of Compromise and Controversy was duly given; and with cause
appearing;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED
That the Application to Compromise Controversy be and is hereby
approved with the following modifications thereto;
<PAGE>
a. That the sum of $80,000.00 shall be paid to Arturo
Cisneros, Trustee in good funds, United States dollars, no later than
September 27, 1995, with the balance of funds, $20,000.00, to be due and
owing pursuant to the terms and conditions of the application, that being
June 1, 1996.
b. The estate shall, in addition to the above amount, receive
30% of the net proceeds of litigation presently pending in the San
Bernardino County Superior Court against Chino Valley Bank in which MRI
Grand Terrace, a wholly owned subsidiary of the Debtor, would otherwise
be entitled.
c. The estate shall retain a security interest in the stock
of MRI Grand Terrace, to be released upon payment of all sums due under
said agreement and the terms and conditions of the good faith settlement
and order thereon.
d. The terms as set forth, Application to Compromise
Controversy shall be incorporated herein as part of this order except as
otherwise modified herein.
e. The Trustee is authorized to execute any and all documents
necessary to effectuate the terms and conditions of the compromise and
sale of stock.
f. The Trustee shall also as part of the terms and conditions
of sale and compromise and with reference to the pending Chapter 7 case
in San Diego Bankruptcy Court, Southern District of California Case No.
95-06288JM for Grand Terrace Inc. do the following:
Either obtain the removal of the action of the pending Chapter 7
case from the San Diego Court of the Southern District of California to
the San Bernardino Division of the Bankruptcy
<PAGE>
Court of the Central District of California or, in the alternative, the
Trustee shall use his best efforts to have the aforementioned case
dismissed. Either the actual removal or best efforts by the Trustee to
obtain the dismissal of the case shall be deemed satisfaction of this
condition.
g. Pursuant to the Application to Compromise Controversy, the
Trustee is also authorized to pay to the law firm of Duckor & Spradling
the sum of $22,600.00 as follows:
i. One half, or $13,300.00, upon receipt of the funds due to
be deposited with the Trustee on September 27, 1995.
ii. The remaining one half upon receipt of the balance of the
settlement funds due on June 1, 1996.
2. Trustee is also directed to return to Med-First the $15,000 deposit
initially paid to the Trustee.
Date: AUG 31 1995
--------------------
/s/ DAVID N. NAUGLE
----------------------------------
David N. Naugle, Judge of the United
States Bankruptcy Court
Approved as to form and content:
Date: 8/30/95 /s/ NORMAN L. HANOVER
----------------------------------
NORMAN L. HANOVER, Attorney for
Tri National Development
Corporation
Date: 8/31/95 /s/ TIMOTHY J. FARRIS
----------------------------------
TIMOTHY J. FARRIS, ESQ.
Office of the United States Trustee
<PAGE>
In re Chapter 11
MRI Medical Diagnostics, Inc., Case No.:
a Colorado Corporation SB 93-20802-DN
NOTICE OF ENTRY OF JUDGMENT OR ORDER
AND CERTIFICATE OF MAILING
TO ALL PARTIES IN INTEREST ON THE ATTACHED SERVICE LIST:
1. You are hereby notified, pursuant to Local Bankruptcy Rule
116(1)(a)(iv), that a judgment or order entitled (specify):
ORDER APPROVING APPLICATION TO COMPROMISE CONTROVERSY
was entered on (specify date): AUG 31 1995
2. I hereby certify that I mailed a copy of this notice and a true copy
of the order or judgment to the persons and entities on the attached
service list on (specify date):
Dated: AUG 31, 1995 JON D. CERETTO
Clerk of the Bankruptcy Court
/s/
---------------------------------
Deputy Clerk
<PAGE>
SERVICE LIST
------------
Timothy J. Farris, Esq.
Office of the U.S. Trustee
106 Federal Building
699 North Arrowhead Avenue
San Bernardino, CA 92401
Arturo Cisneros, Trustee
290 N. "D" Street, Ste. 723
San Bernardino, CA 92401
Franklin C. Adams
Attorney at Law
370 W. Sixth Street, Suite 110
San Bernardino, CA 92401
Norman L. Hanover
Attorney for Tri National Development Corp.
HANOVER & SCHNITZER
P.O. Box 71
San Bernardino, CA 92402
Mark K. Worcester, Esq.
PINTO, GROMET, DUBIA & WORCESTER
2 Park Plaza, Suite 300
Irvine, CA 92714
Steven Cote
ARTER & HADDEN
Jamboree Center
2 Park Plaza, Ste 700
Irvine, CA 92714-8517
Ronald H. Kabot
2 Lake Helix Dr.
La Mesa, CA 91941
Scott L Metzger
DUCKOR & SPRADLING
401 West A Street, Suite 2400
San Diego, Ca 92101-7809
Paul Brent
STEINBERG, NUTTER & BRENT
501 Colorado Ave., #300
Santa Monica, CA 90401-2426
Gary Pagar
MEDFIRST CAPITAL RESOURCES, INC.
600 Corporate Point, Ste 200
Culver City, CA 90230
