<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] 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 0-10128
PERSONAL DIAGNOSTICS, INCORPORATED
(Exact name of registrant as specified in its charter)
New Jersey 22-2325136
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
PO Box 5310, Parsippany, NJ 07054
(Address of principal executive offices) (Zip Code)
(201) 952-9000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at January 15, 1998
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<S> <C>
Common Stock, $.01 par value 5,014,000
</TABLE>
Page 1 of 11
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PERSONAL DIAGNOSTICS, INCORPORATED
<TABLE>
<CAPTION>
Index Page No.
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<S> <C>
Part I Financial Information
Item 1. Financial Statements:
Balance Sheets - December 31, 1997 and September 30, 1997 3
Statements of Operations - For the Three Months Ended
December 31, 1997 and 1996 4
Statements of Cash Flows - For the Three Months Ended 5
December 31, 1997 and 1996
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
Page 2 of 11
<PAGE> 3
PERSONAL DIAGNOSTICS, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents (including three month Treasury Bills) $ 6,950,000 $ 6,117,000
Property held for development and sale-net 855,000 1,661,000
Other current assets 5,000 7,000
------------ ------------
Total Current Assets 7,810,000 7,785,000
------------ ------------
TOTAL ASSETS $ 7,810,000 $ 7,785,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,000 $ 12,000
Accrued payroll 43,750 --
Current liabilities of discontinued operations 100,000 125,000
Other current liabilities 91,250 93,000
------------ ------------
Total Current Liabilities 245,000 230,000
------------ ------------
STOCKHOLDERS' EQUITY:
Common Stock,$.01 par value; authorized,
25,000,000 shares; issued and outstanding,
5,014,000 shares 50,000 50,000
Capital in excess of par value 13,420,000 13,420,000
Accumulated deficit (5,905,000) (5,915,000)
------------ ------------
Total Stockholders' Equity 7,565,000 7,555,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,810,000 $ 7,785,000
============ ============
</TABLE>
See accompanying notes to financial statements.
Page 3 of 11
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PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------------
1997 1996
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<S> <C> <C>
INCOME:
Interest $ 82,000 $ 76,000
Trading gains (losses) 17,000 438,000
---------- ----------
99,000 514,000
---------- ----------
EXPENSES:
General and administrative 89,000 358,000
---------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES 10,000 156,000
PROVISION (BENEFIT)
FOR INCOME TAXES -- --
---------- ----------
NET INCOME (LOSS) $ 10,000 $ 156,000
========== ==========
NET INCOME (LOSS) PER COMMON
SHARES OUTSTANDING $ -- $ 0.03
========== ==========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,050,000 5,014,000
========== ==========
</TABLE>
See accompanying notes to financial statements.
Page 4 of 11
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PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 10,000 $ 156,000
Adjustments to reconcile net income (loss) to net
cash flows from operating activities:
Provision for loss on property held for sale -- 120,000
Changes in assets and liabilities:
Property held for development and sale 806,000 (894,000)
Accounts payable and accrued liabilities 15,000 192,000
Other current assets 2,000 (3,000)
---------- -----------
Net cash flows from operating activities 833,000 (429,000)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment -- --
Proceeds from disposal of property and equipment -- --
---------- -----------
Net cash flows from investing activities -- --
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options -- --
---------- -----------
Net cash flows from financing activities -- --
---------- -----------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 833,000 (429,000)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 6,117,000 6,910,000
---------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $6,950,000 $ 6,481,000
========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 5 of 11
<PAGE> 6
PERSONAL DIAGNOSTICS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The balance sheet at the end of the preceding fiscal year has been derived
from the audited balance sheet contained in the Company's Form 10-K and is
presented for comparative purposes. All other financial statements are
unaudited. In the opinion of management, all adjustments which include only
normal recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have been made.
The results of operation for interim periods are not necessarily indicative of
the operating results for the full year.
Footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-K for the most recent fiscal year.
2. TRADING SECURITIES
For the three months ending December 31, 1997 and 1996, there was no
charge or credit to earnings representing the change in the net unrealized
holding loss on trading securities. At December 31, 1997 the Company had no open
trading or investment positions.
At December 31, 1997 approximately 80% of total Company's assets were
held in United States Treasury Bills. Since it is the intention of the Company
to acquire or develop an operating business, the Company presently intends to
risk no more than 20% of net worth in trading or investment activities.
3. PROPERTY HELD FOR DEVELOPMENT AND SALE
The Company presently owns one property in Washington D.C., which it
acquired with the intention to improve and resell. The property is in the
process of renovation. As mentioned in note 4 to the Company's Form 10-K, a
second property carried at a cost of $810,000 was sold on October 20, 1997. For
the year ended September 30, 1997, the Company had provided a full allowance of
$151,000 for the loss on the sale of this property.
Page 6 of 11
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4. STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------
1997 1996
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<S> <C> <C>
Supplemental disclosure of cash flows information-
Income taxes paid/(refunded) $-0- $-0-
==== ====
</TABLE>
Page 7 of 11
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PERSONAL DIAGNOSTICS, INCORPORATED
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
At December 31, 1997, the Company had a cash and Treasury Bill balance of
$6,950,000 which represents an $833,000 increase from the $6,117,000 balance at
September 30, 1997. This $833,000 increase results entirely from cash flow from
operations which includes the result of net income of $10,000 combined with the
proceeds from the sale of a property for $806,000 and changes in operating
assets and liabilities of $17,000. The Company's working capital position at
December 31, 1997 was $7,565,000 as compared to a September 30, 1997 balance of
$7,555,000.
Management intends to continue in business and has no intention to
liquidate the Company. The Company has considered various business alternatives
including the possible acquisition of an existing business, but to date has
found possible opportunities unsuitable or excessively priced. The Company is
also considering developing a business itself, believing that start up costs may
be preferable to the premiums required to purchase a going concern. The Company
does not contemplate limiting the scope of its search to any particular
industry. Management has considered the risk of possible opportunities as well
as their potential rewards. Management has invested considerable time evaluating
and finally rejecting numerous proposals for possible acquisition or
combination. The Company believes present valuation levels requested for
alternative operating entities are excessive partly due to the expectations of
sellers being raised by generally high stock market valuations. The Company has
decided to focus its present operating activities on the acquisition,
improvement and resale of real property. This decision does not preclude the
possibility of becoming involved in the future with additional businesses in
other areas.
The Company presently owns one property in Washington D.C. which it
acquired with the intention to improve and resell. The property is in the
process of renovation. As mentioned in note 4 to the Company's Form 10-K, a
second property carried at a cost of $810,000 was sold on October 20, 1997. For
the year ended September 30, 1997, the Company had provided a full allowance of
$151,000 for the loss on the sale of this property.
The Company intends to continue its investing and trading activities and
as a consequence the future financial results of the Company may be subject to
substantial fluctuations. Mr. Michael, the President of the Company is a
graduate of Harvard Business School (MBA). As part of the Company's investment
activities the Company may buy and sell a variety of equity, debt or derivative
securities including market index options and future contracts. Such investment
often involves a high degree of risk and must be considered extremely
speculative. Futures Contracts are particularly risky since a relatively small
amount of capital controls a large nominal market value thus greatly
exaggerating the exposure to potential losses.
The focus of the Company's efforts is to acquire or develop an operating
business. The Company presently intends to risk no more than 20% of net worth in
trading or investment activities. At December 31, 1997, the Company had
approximately 80% of its assets in United States Treasury Bills. At December 31,
1997 the Company had no outstanding investment or trading positions.
Page 8 of 11
<PAGE> 9
Results of Operations
Three Months Ended December 31, 1997
Net income (loss)
The Company realized a profit in the current three-month period of $10,000
versus a gain of $156,000 in the prior year period. Interest income increased
$6,000 to $82,000 primarily due to more invested funds. Trading gains equaled
$17,000 compared to trading gains of $438,000 in the prior year period. General
and administrative expenses of $89,000 were $269,000 lower than the prior year
period of $358,000 due primarily to a special investment performance bonus of
$150,000 paid to President John H. Michael in connection with trading gains
achieved last year. In addition, last year's real estate operations were
impacted by a special allowance of $120,000 for the diminished value of one of
its properties.
During the current and prior year quarter the Company had not recorded an
income tax provision due to available tax carryforwards.
Page 9 of 11
<PAGE> 10
PERSONAL DIAGNOSTICS, INCORPORATED
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
Page 10 of 11
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
PERSONAL DIAGNOSTICS, INCORPORATED
Registrant
Date: January 15, 1998 By: /s/ John H. Michael
-----------------------------
John H. Michael, Chairman
(on behalf of the registrant)
Page 11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,950,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 860,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,810,000
<CURRENT-LIABILITIES> 245,000
<BONDS> 0
0
0
<COMMON> 50,000
<OTHER-SE> 7,515,000
<TOTAL-LIABILITY-AND-EQUITY> 7,810,000
<SALES> 0
<TOTAL-REVENUES> 99,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 89,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
