<PAGE>
US Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the quarterly period ended March 31, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
Commission File Number 0-12365
MIRACOR DIAGNOSTICS, INC.
(formerly known as MEDICAL DEVICE TECHNOLOGIES, INC.)
(Name of small business issuer in its charter)
Utah 58-1475517
---------------- ---------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
9191 Towne Centre Drive, Suite 420, San Diego, California 92122
(Address of principal executive offices)
Issuer's telephone number: (858) 455-7127
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 the past 90 days. Yes X No
--- ---
State issuer's revenues for its most recent fiscal year $3,924,987.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of April 30, 2000, was $2,667,456.
As of April 30, 2000, Registrant had outstanding 10,748,748 shares of common
stock and 0 shares of 6% cumulative convertible Series A preferred stock.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 F-1
Consolidated Statements of Operations for the Three Months
Ended March 31, 2000 and 1999 F-3
Consolidated Statements of Stockholders' Equity for the
Three Months Ended March 31, 2000 F-4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1999 F-5
Notes to Consolidated Financial Statements F-8
Item 2. Management's Discussion and Analysis and Plan of Operation 3
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................ 10
Item 2. Changes in Securities............................................ 10
Item 3. Defaults Upon Senior Securities.................................. 10
Item 4. Submission of Matters to a Vote of Security Holders.............. 10
Item 5. Other Information................................................ 10
Item 6. Exhibits and Reports on Form 8-K................................. 10
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
See attached consolidated financial statements and notes thereto for the period
ended March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the notes thereto appearing in Part I, Item 1 in this Form
10-QSB.
Forward-Looking Statements
- --------------------------
The following discussion as well as in other Items in this Form 10-QSB contain
forward-looking statements regarding the Company, its business, prospects and
results of operations that are subject to certain risks and uncertainties posed
by many factors and events that could cause the Company's actual business,
prospects and results of operations to differ materially from those that may be
anticipated by such forward-looking statements. Factors that may affect such
forward-looking statements include, without limitation: the impact of
competition on the Company's revenues, changes in law or regulatory requirements
that adversely affect or preclude customers from using the Company's services
for certain applications; ability to acquire additional medical diagnostic
imaging centers; and failure by the Company to keep pace with emerging
technologies.
When used in this discussion as well as in other Items in this Form 10-QSB,
words such as "believes", "anticipates", "expects", "intends" and similar
expressions are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this report. The Company undertakes no obligation to
revise any forward-looking statements in order to reflect events or
circumstances that may subsequently arise. Readers are urged to carefully review
and consider the various disclosures made by the Company in this report and
other reports filed with the Securities and Exchange Commission that attempt to
advise interested parties of the risks and factors that may affect the Company's
business.
The Company
- -----------
Miracor Diagnostics, Inc. (the "Company") was previously a development stage
medical device company. In the third quarter of 1998, the Company redefined its
business focus to medical diagnostic imaging services and emerged as an
operating company through the acquisition of medical resonance imaging (MRI)
centers in Orlando and Jacksonville, Florida, Toledo, Ohio, and the general
partnership interest of another center in Oak Brook, Illinois. In April 1999,
the Company acquired the remaining 50% limited partnership interest in the Oak
Brook center.
On February 9, 2000, the Company closed the acquisition of 80% of three centers
located in Palm Harbor, St. Petersburg and Tampa, Florida. These newly acquired
centers have approximately $2,500,000 in annual revenues.
In its approximate fifteen-year history, the use of MRI has become the medical
imaging modality of choice for a rapidly increasing list of applications and
continues to exhibit rapid growth. Unlike x-ray and computer aided tomography
(CT), MRI is not a radiation-based imaging technology and thus safer to
patients. Manufacturers of MRI equipment are continuing investment in new
technology and upgrades to further improve MRI capabilities.
3
<PAGE>
During 1999, the Company's activities focused on improvement of its capital
structure and operations of the acquired MRI centers. As a result, the acquired
debt from the MRI acquisitions was reduced, equity was increased $1 million and
used for working capital and quarterly losses of approximately $400,000 in the
first and second quarters were reduced to approximately $75,000 in the fourth
quarter. Additionally, the Company identified suitable acquisition targets to
position the Company for growth.
The Company plans to seek, investigate and acquire additional controlling
interests in business opportunities that are similar in nature to its existing
medical diagnostic imaging centers in order to further grow the Company.
In the immediate future, the Company is seeking additional financing for its
working capital requirements, for expansion of it existing operations and
acquisition or more MRI centers.
The Company was incorporated on February 6, 1980, under the laws of the State of
Utah, initially under the name of Gold Probe, Inc. In September 1981, the
Company and the Hailey Oil Company, Inc., a Mississippi corporation, entered
into an Agreement and Plan of Reorganization whereby the Company acquired Hailey
Oil Company, Inc. and exchanged 4,500,000 shares of its common stock for all the
issued and outstanding shares of Hailey Oil Company, Inc. Also, pursuant to the
reorganization in January 1982, the Company changed its name to Hailey Energy
Corporation, effected a one (1) for five (5) reverse split of its common stock,
and decreased its authorized number of shares to 25,000,000. In October 1986,
the number of authorized shares of the Company was increased to 100,000,000. In
November 1990, the Company effected a one (1) for thirty (30) reverse split of
its common stock and increased the par value of its common stock to $0.15 per
share. In November 1992, the Company changed its name from "Hailey Energy
Corporation" to "Cytoprobe Corporation". In January 1994, the Company effected a
one (1) for six (6) reverse split of its common stock. In April 1995, the
Company changed its name to Medical Device Technologies, Inc. to reflect the
Company's broadening base of medical products. In June 1996, the Company
effected a one (1) for two (2) reverse split of its common stock. On March 6,
1998, the Company effected a one (1) for thirty-five (35) reverse split of its
common stock. The par value of the Company's common stock remained at $0.15 per
share and the number of authorized shares of common stock (100,000,000) remained
unchanged. In October 1999, the Company changed its name to Miracor Diagnostics,
Inc. to reflect the Company's focus in medical diagnostic imaging services.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed with the Commission can be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street NW,
Washington, DC 20549. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov. As of
December 31, 1999, the Company's common stock, par value $.15 per share, is
traded over-the-counter under the symbol "MRDG". The Company's Redeemable Common
Stock Purchase Warrants (the "Redeemable Warrants") and common stock, which
previously traded on the National Association of Securities Dealers Automated
Quotation (NASDAQ) SmallCap Market under the symbols MEDDW and MEDD were
delisted by NASDAQ on September 30, 1997 and March 26, 1998, respectively. The
Company's 6% Cumulative Convertible Series A Preferred Stock, par value $.01 per
share (the "Preferred Stock"), which previously traded on the NASDAQ SmallCap
Market under the symbol "MEDDP", converted to common stock at a ratio of 4/35
(four thirty-fifths) shares of common stock to 1 (one) share of Preferred Stock
on July 24, 1997. There were no shares of Preferred Stock outstanding at March
31, 2000.
4
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Acquisitions
- ------------
On July 14, 1998, the Company acquired either the stock or substantially all of
the assets and liabilities of Vision Diagnostics, Inc. and Affiliates. Vision
Diagnostics, Inc. and Affiliates was in the business of providing medical
diagnostic services. The affiliated group of companies includes Vision
Diagnostic, Inc., Regional MRI of Orlando, Inc., Regional MRI of Jacksonville,
Ltd. and Regional MRI of Toledo, Inc. In addition, Vision is the general partner
in West Regional MRI Limited Partnership located in Oak Brook, Illinois.
Vision Diagnostics, Inc. is the 50% general partner in West Regional MRI Limited
Partnership. On April 7, 1999, the Company acquired the remaining 50% interest
in West Regional MRI Limited Partnership at a purchase price of $1,300,000 and
recorded goodwill associated with this transaction of $762,265. The consolidated
financial statements reflect all of the assets, liabilities, revenues and
expenses of the partnership. Prior to this acquisition, the limited partners'
share of the partnership's net income has been presented as minority partners
share of income consolidated partnership interest in the accompanying
consolidated statement of operations for the three month period ended March 31,
1999.
On February 9, 2000, the Company acquired 80% ownership in Ultra MRI &
Diagnostics Services ("Ultra") with a combination of 20% in the form of a
payable and 80% in Restricted Rule 144 common stock. The purchase price was
$1,900,800 and goodwill associated with this transaction was recorded at
$1,505,209, which included direct costs associated with the purchase. Total
assets were approximately $1.8 million and total liabilities were approximately
$1.3 million as of February 9, 2000. The amount payable to the principals in
aggregate is $125,000 on August 9, 2000, $125,000 on November 9, 2000 and
$130,160 is due November 9, 2001. The principals' share of the shareholders'
capital had been reflected as a minority interest on the accompanying
consolidated balance sheet at March 31, 2000. The principals' share of the
corporation's net income has been presented as minority interest share of income
in the accompanying consolidated statement of operations for the three month
period ended March 31, 2000. Ultra is a multi-site diagnostic imaging business
with offices in Palm Harbor, St. Petersburg and Tampa, Florida. Ultra had
approximately $2.5 million in revenue in 1999.
The Company plans to seek, investigate and, if such investigation warrants, to
acquire controlling interest in business opportunities that are similar in
nature to our existing medical diagnostic imaging centers. The Company plans to
concentrate its search to opportunities that are located near its existing MRI
centers, but will not restrict its search in other geographical locations. The
Company may seek a business opportunity in the form of firms which have recently
commenced operations or are mature businesses.
In seeking business opportunities, the Company will base its decision upon the
objectives of seeking long-term appreciation in its market value. The analysis
of new business opportunities will be pursued under guidelines and objectives
established by the Company's officers and directors, and will attempt to analyze
all relevant factors and make a determination based upon reasonable
investigative measures and available data. Management of the Company will
utilize the services of its present attorney and accountants in the
investigation of prospective acquisitions. The Company may also utilize the
services of hired consultants.
5
<PAGE>
Risks
- -----
As the Company acquires additional MRI centers with existing revenue streams and
additional financing transactions, the working capital requirements of the
Company can be expected to increase. The Company's ability to collect the
accounts receivable associated with providing MRI services will be a significant
factor in meeting its working capital needs.
The Company may incur operating losses in the coming year. In the immediate
future, in order to fund its current working capital deficit, expansion of its
existing operations and acquire additional MRI centers, the Company intends to
complete additional private placements of debt and/or equity securities. The
Company's ability to obtain additional sources of financing cannot be assured.
Growth of the Company is dependent on its ability to obtain additional funding
to expand its existing operations and acquire other MRI centers.
Results of Operations
- ---------------------
The three months ended March 31, 2000 compared to the three months ended March
31, 1999.
Revenues
- --------
Net revenues for the three months ended March 31, 2000 were $1,746,307 compared
to $803,686 for the three months ended March 31, 1999. The increase of
117.3% is primarily attributed to business growth through increased marketing
and to a lesser extent, the acquisition of Ultra MRI Diagnostic Services as of
February 2000. Revenue from the MRI centers generated from providing scanning,
X-ray and reading services for the medical industry accounted for all of the net
revenues in the first quarter of 2000 and 1999.
Operating Expenses
- ------------------
Sales, General and Administrative
Sales, general and administrative costs were $1,640,944 in the first quarter of
2000 as compared to $1,168,824 in the first quarter of 1999, representing an
increase of 40.4%. This increase was primarily attributed to the operating costs
resulting from the February 2000 acquisition of Ultra MRI & Diagnostics Services
and the increased corporate costs associated with the acquisition process as
well as with providing services to the newly acquired centers.
6
<PAGE>
Net Loss
The Company's net loss for the three month period ended March 31, 2000 was
($45,157) as compared to ($417,821) for the three month period ended March 31,
1999, representing a 89.2% decline. The decrease in net loss was primarily
attributable to increased revenues. The increase of 117.3% in revenue is
primarily attributed to business growth through increased marketing and to a
lesser extent, the acquisition of Ultra MRI Diagnostic Services as of February
2000. Loss per common share for the first quarter of 2000 was ($0.01) as
compared to a ($0.09) loss per common share for the first quarter of 1999. This
reduction in loss per common share was attributable to the reduced net loss in
the first three month period of 2000 compared to the same period in 1999 and to
the increase in the weighted average number of common shares outstanding as of
March 31, 2000 as compared to March 31, 1999.
Liquidity and Capital Resources
- -------------------------------
To date, the Company has funded its capital requirements for its current medical
diagnostic imaging operations from cash flows from its operations and the public
and private sale of debt and equity securities and the issuance of common stock
in exchange for services. The Company's cash position at March 31, 2000 was
$105,915 as compared to $19,122 at March 31, 1999, representing a 454% increase.
In the first quarter of 2000, $48,238 of net cash was provided by operating
activities. The Company received $54,772 from increases in the line of credit
and $191,016 from the proceeds of Restricted Rule 144 common stock issued during
the first three months of 2000. Net cash provided by operating activities in the
first three months of 2000 included a net loss of ($45,157). Contributing to
this net loss was a decrease in other net assets (excluding cash) of ($613,117),
which was offset by $706,512 in common stock paid for services and interest in
lieu of cash, depreciation/amortization, minority interest, bad debt expense and
accrued compensation expense. Changes in current assets and current liabilities
resulted in a deficit in the Company's working capital position of $95,316 at
March 31, 2000 as compared to a negative working capital of $1,258,564 at
December 31, 1998. The Company's current deficit in working capital requires the
Company to obtain funds in the short-term, and in the longer term to continue to
provide services in its' current MRI centers and to acquire additional MRI
centers. The Company is seeking to fund these and other operating needs in the
next 12 months from funds to be obtained through the proceeds of additional
private placements or public offerings of debt or equity securities, or both.
In the immediate future, in order to fund its current working capital deficit,
expansion of its existing operations as well as acquire additional MRI sites for
growth, the Company intends to seek to complete additional private placements of
debt and/or equity securities. The Company's ability to obtain additional
sources of financing cannot be assured. Growth of the Company is dependent on
its ability to obtain such additional funding.
7
<PAGE>
Pursuant to an investment letter dated February 23, 1999 with an individual, the
Company received $25,000 for the purchase of 62,500 shares of Restricted Rule
144 common stock at a purchase price of $.40 per share. Pursuant to an
investment letter dated March 8, 1999 with an individual, the Company received
$100,000 for the purchase of 250,000 shares of Restricted Rule 144 common stock
at a purchase price of $.40 per share. Pursuant to an investment letter dated
March 12, 1999 with an individual, the Company received $10,000 for the purchase
of 25,000 shares of Restricted Rule 144 common stock at a purchase price of $.40
per share. Pursuant to investment letters dated May 25, 1999 and June 7, 1999
with a limited liability company, the Company received $100,000 for the purchase
of 250,000 shares and $50,000 for the purchase of 125,000 shares, respectively.
Both investment letters were to purchase shares of Restricted Rule 144 common
stock at a purchase price of $.40 per share. Pursuant to an investment letter
dated May 25, 1999 with a corporation, the Company received $100,000 for the
purchase of 250,000 shares of Restricted Rule 144 common stock at a purchase
price of $.40 per share. Pursuant to an investment letter dated September 15,
1999 with a limited liability company, the Company received $50,000 for the
purchase of 66,667 shares of Restricted Rule 144 common stock at a purchase
price of $.75 per share. Pursuant to an investment letter dated December 4, 1999
with a limited liability company, the Company received $50,000 for the purchase
of 111,111 shares of Restricted Rule 144 common stock at a purchase price of
$.45 per share. As of December 31, 1999, all 1,140,278 shares had been issued.
In September 1999, the Company issued $50,000 in principal amount of 10%
Promissory notes payable, due March 31, 2000, to two directors and an individual
to finance operations. As additional consideration for these loans, the
individual lenders, including the directors, were awarded total warrants to
purchase 40,000 shares of common stock at an exercise price of $0.625 per share.
In connection with the issuance of the warrants to the individuals, the company
is recognizing additional interest expense of $10,938, which is being amortized
over the terms of the loans. Accrued interest expense and warrant amortization
to interest expense related to these loans amounted to $1,667 and $1,944,
respectively, as of December 31, 1999.
Pursuant to an investment letter dated February 7, 2000 with an individual, the
Company received $50,000 for the purchase of 125,000 shares of Restricted Rule
144 common stock at a purchase price of $.40 per share. Pursuant to an
investment letter dated February 8, 2000 with an individual, the Company
received $50,000 for the purchase of 125,000 shares of Restricted Rule 144
common stock at a purchase price of $.40 per share. Pursuant to investment
letters dated March 10, 2000 with six individuals, the Company received $90,000
for the total purchase of 138,600 shares of Restricted Rule 144 common stock at
a purchase price of $.65 per share. As of March 31, 2000, all 388,6000 shares
had been issued.
8
<PAGE>
PLAN OF OPERATION
Emergence from a Development Stage Company
- ------------------------------------------
The Company emerged in 1998 from a development stage to an operating company
through the corporate acquisition of Vision Diagnostics, Inc. and affiliates.
The Company's Capital Requirements
- ----------------------------------
The Company's greatest cash requirements during 2000 will be for funding growth
through expansion of its existing operations and for future acquisitions of
additional MRI centers.
The Company is seeking to fund activities and other operating needs in the next
twelve months from funds to be obtained through private placements or public
offerings of debt or equity securities.
Subsequent to the next 12 months, the Company plans to finance its long-term
operations and capital requirements with the profits and funds generated from
the revenues of its MRI centers. The Company may obtain future funding through
new private financings and public offerings of debt and equity securities.
These financial statements have been prepared assuming that the Company will
continue as a going concern. The Company has never been and is not now
profitable, and has negative working capital. Growth of the Company is dependent
on the success of its MRI centers which were acquired in July 1998 and February
2000.
Year 2000 Compliance
- --------------------
In the past, many computers, software programs, and other information technology
("IT systems"), as well as other equipment relying on microprocessors or similar
circuitry ("non-IT systems"), were written or designed using two digits, rather
than four, to define the applicable year. As a result, if not addressed these
systems may not have been able to properly interpret dates beyond the Year 1999,
which may have led to business disruptions. Accordingly, the Company identified
and performed all needed material modifications and testing of significant
systems, and communicated with customers, suppliers, banks and others with whom
it does significant business to determine their Year 2000 readiness and the
extent to which the Company was vulnerable to any other organization's Year 2000
issues.
The Company considers the transition into the year 2000 successful from the
perspective of its systems. In addition to the changeover to January 1, 2000, it
has been shown that certain other dates may also present similar problems for
some systems. The Company continues to monitor the situation. To date, the
Company has not experienced any material Year 2000 issues with respect to its
systems, customers or suppliers.
The Company estimates that the total cost to the Company of Year 2000 activities
has been less than $10,000.
9
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to the Company's Form 10-KSB for the year ended December 31, 1999.
There are no other legal proceedings to which the Company is a party which could
have a material adverse effect on the Company.
ITEM 2. CHANGES IN SECURITIES
See Part I, Item 2.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable
PART IV
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule
Reports on Form 8-K The Company filed current reports on Forms
8-K which were issued on February 24, 2000 and May 4,
2000.
10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MIRACOR DIAGNOSTICS, INC.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ M. Lee Hulsebus Chief Executive Officer, President, May 15, 2000
- ------------------------ and Chairman
M. Lee Hulsebus
/s/ Ross S. Seibert Chief Financial Officer May 15, 2000
- ------------------------
Ross S. Seibert
11
<PAGE>
<TABLE>
MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
- ------ March 31, December 31,
2000 1999
--------------- ---------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 105,915 $ 106,517
Accounts receivable (net of allowance of $1,749,182
and $1,308,016) 3,750,478 2,723,306
Prepaid expenses and other assets 64,255 33,965
--------------- ---------------
Total current assets 3,920,648 2,863,788
--------------- ---------------
Property and equipment:
Equipment under capital leases 4,235,633 3,398,458
Machinery and equipment 252,320 211,706
Leasehold improvements 528,599 426,632
Furniture and fixtures 41,938 33,799
--------------- ---------------
5,058,490 4,070,595
Less accumulated depreciation (2,005,029) (1,866,309)
--------------- ---------------
Net property and equipment 3,053,461 2,204,286
Intangible assets:
Goodwill 6,293,352 4,788,143
Organization costs 160,930 160,930
Less accumulated amortization (365,654) (319,427)
--------------- ---------------
6,088,628 4,629,646
Other assets 264,584 231,015
--------------- ---------------
Total assets $ 13,327,321 $ 9,928,735
=============== ===============
</TABLE>
See notes to consolidated financial statements.
F-1
<PAGE>
<TABLE>
MIRACOR DIAGNOSTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------ March 31, December 31,
2000 1999
--------------- ---------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 867,213 $ 849,560
Accrued expenses 390,279 491,470
Lines of credit 634,556 506,384
Due to Shareholders - current portion 250,000 -
Notes payable - current portion 1,029,098 939,112
Capital lease obligations - current portion 844,818 669,307
--------------- ---------------
Total current liabilities 4,015,964 3,455,833
--------------- ---------------
Other liabilities:
Due to Shareholders - long term 130,160 -
Note payable - long term 597,724 683,656
Capital lease obligations - long term 3,192,960 2,683,535
--------------- ---------------
Total liabilities 7,936,808 6,823,024
--------------- ---------------
Minority interest 121,907 -
--------------- ---------------
Commitments and contingencies (note 6)
Stockholders' equity
Series I convertible preferred stock (247,500 shares
authorized; 0 issued and outstanding) - -
6% cumulative convertible Series A preferred stock,
and $.01 par value (1,972,500 shares authorized;
0 shares issued and outstanding) - -
Preferred stock, $.01 par value (10,000,000 shares
authorized; 0 shares issued and outstanding) - -
Common stock, $.15 par value (100,000,000 shares
authorized; 10,698,810 and 7,980,956 outstanding) 1,604,822 1,197,143
Common stock to be issued (935,170 and 770 shares) 584,134 23,494
Warrants 122,750 122,750
Additional paid-in capital 28,943,750 27,705,952
Deferred stock compensation 32,534 30,599
Accumulated deficit (26,019,384) (25,974,227)
--------------- ---------------
Total stockholders' equity 5,268,606 3,105,711
--------------- ---------------
Total liabilities and stockholders' equity $ 13,327,321 $ 9,928,735
=============== ===============
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three Months ended March 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Patient service revenue $ 2,326,158 $ 1,093,560
Discounts and allowances (579,851) (289,874)
--------------- ---------------
Net revenues 1,746,307 803,686
--------------- ---------------
Operating expenses:
Sales, general and administrative 1,640,944 1,168,826
--------------- ---------------
Total operating expenses 1,640,944 1,168,826
--------------- ---------------
Income/(Loss)from operations 105,363 (365,140)
Other income (expense):
Interest expense (168,360) (84,262)
Other income 27,524 11,932
--------------- ---------------
Loss before minority interest (35,473) (437,470)
Minority interest (9,684) 19,649
--------------- ---------------
Net loss $ (45,157) $ (417,821)
=============== ===============
Loss per share:
Basic and diluted loss per common share $ (0.01) $ (0.09)
=============== ===============
Weighted average common shares outstanding 8,034,824 4,782,417
=============== ===============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Three
Months ended March 31, 2000
(unaudited)
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL COMMON
------------------------- ------------------------- PAID-IN STOCK
SHARES AMOUNT SHARES AMOUNT CAPITAL TO BE ISSUED
------------ ------------ ------------ ------------ ------------- ------------
<S> <C><C> <C> <C> <C> <C>
Balance, January 1, 2000 - $ - 7,980,956 $ 1,197,143 27,705,952 $ 23,494
Common stock issued for compensation, interest,
principal of notes payable and services - - 300,429 45,064 232,690 -
Restricted Section 144 common stock issued
for compensation, interest and services - - 302,575 45,387 122,492 -
Restricted Section 144 common stock sold - - 388,600 58,290 131,710 -
Restricted Section 144 common stock issued for principal
and accrued interest on capital lease obligation - - 125,000 18,750 30,078
Restricted Section 144 common stock issued
for acquisition of Ultra MRI & Diagnostics Services - - 1,600,000 240,000 720,000 560,640
Common Stock issued for the conversion of employee
stock options - - 1,250 188 828
Accrued stock compensation - - - - - -
Net loss - - - - - -
------------ ------------ ------------ ------------ ------------- ------------
Balance, March 31, 2000 - $ - 10,698,810 $ 1,604,822 $ 28,943,750 $ 584,134
============ ============ ============ ============ ============= ============
</TABLE>
(continued below)
<TABLE>
<CAPTION>
WARRANTS DEFERRED ACCUMULATED
COMPENSATION DEFICIT TOTAL
------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balance, January 1, 2000 $ 122,750 $ 30,599 $ (25,974,227) $ 3,105,711
Common stock issued for compensation, interest,
principal of notes payable and services - - - 277,754
Restricted Section 144 common stock issued
for compensation, interest and services - - - 167,879
Restricted Section 144 common stock sold - - - 190,000
Restricted Section 144 common stock issued for principal
and accrued interest on capital lease obligation - - - 48,828
Restricted Section 144 common stock issued
for acquisition of Ultra MRI & Diagnostics Services - - - 1,520,640
Common Stock issued for the conversion of employee
stock options - - - 1,016
Accrued stock compensation - 1,935 - 1,935
Net loss - - (45,157) (45,157)
------------ ------------ --------------- ---------------
Balance, March 31, 2000 $ 122,750 $ 32,534 $ (26,019,384) $ 5,268,606
============ ============ =============== ===============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION> Three Months ended March 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (45,157) $ (417,821)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Stock paid for services and interest 371,737 253,138
Compensation recognized relating to accrued
employee stock grants and warrants 1,935 -
Minority interest 9,684 (19,649)
Bad debt expense 131,489 -
Depreciation and amortization 191,667 163,893
Changes in assets and liabilities excluding
net assets acquired:
Accounts receivable (343,744) 157,959
Prepaid expenses and other current assets 17,569 (195,166)
Other assets (56,186) (12,135)
Accounts payable and accrued expenses (230,756) (52,001)
--------------- ---------------
Net cash provided by (used in) operating activities 48,238 (121,782)
--------------- ---------------
Cash flows from investing activities:
Purchase of property and equipment (17,870) -
Cash acquired in purchase of company 1,083 -
--------------- ---------------
Net cash used in investing activities (16,787) -
--------------- ---------------
Cash flows from financing activities:
Proceeds from notes payable - 100,000
Principal payments on notes payable (68,470) (33,396)
Increase in line of credit 54,772 -
Proceeds from issuing common stock 191,016 135,000
Principal payments on capital lease obligations (209,371) (138,606)
--------------- ---------------
Net cash provided by (used in) financing activities (32,053) 62,998
--------------- ---------------
Net decrease in cash and cash equivalents (602) (58,784)
Cash and cash equivalents, beginning of period 106,517 77,906
--------------- ---------------
Cash and cash equivalents, end of period $ 105,915 $ 19,122
=============== ===============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
2000 1999
--------------- ---------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<S> <C> <C>
PAYMENTS FOR:
Interest $ 117,421 $ 69,617
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION:
STOCK ISSUED FOR:
Legal, professional and employee services and interest 371,737 253,138
Principal payments on notes payable and capital lease obligations 122,724 -
--------------- ---------------
$ 494,461 $ 253,138
=============== ===============
</TABLE>
During the period ended March 31, 2000, the Company acquired the net assets of
Ultra MRI & Diagnostics Services in exchange for 2,534,400 shares of Restricted
Rule 144 common stock and a payable of $380,160. The net assets acquired were as
follows:
Cash $ 1,083
Accounts receivable 814,917
Property and equipment 970,025
Other Assets 31,963
Accounts payable and other liabilities (93,916)
Capital lease obligations (943,135)
Notes payable (146,421)
Lines of credit (73,400)
----------------
$ (561,116)
================
Common stock issued $ 1,520,640
Due to shareholders 380,160
Direct costs of acquisition 53,302
Minority interest 112,223
Goodwill (1,505,209)
----------------
$ 561,116
================
During the first quarter ended 2000 and 1999, deferred compensation expense of
$1,935 and $0, respectively, were recorded relating to accrued employee stock
grants in order to value such shares at the estimated fair market value at the
date of grant.
During the first quarter of 1999, short-term convertible notes payable in the
amount of $15,000 were converted along with accrued interest payable of $1,608
into 55,119 shares of Restricted Rule 144 common stock.
During the first quarter of 1999, an additional 200,000 shares of Restricted
Rule 144 common stock, valued at $87,500, were issued in connection with the
acquisition of Vision Diagnostics, Inc. Accordingly, goodwill associated with
this transaction was increased by $87,500.
F-6
<PAGE>
On April 7, 1999, the Company acquired the remaining ownership of West Regional
MRI Limited Partnership at a purchase price of approximately $1,300,000.
Associated with this transaction, the Company recorded goodwill of $762,265,
warrants and the related deferred interest valued at $105,250, additional notes
payable for $500,000 due to the limited partners and refinanced a capital lease
agreement for an additional $650,000 due to a finance company. The deferred
interest is being amortized over sixty months, which is the term of the
associated note payable. The $500,000 limited partnership note payable has an
interest rate of 8.5%, payable in quarterly installments of $41,665, final
payment due June 15, 2002. The $650,000 note payable to a finance company has an
interest rate of 12.92% and was added to the refinance of a capital lease with
an additional $100,000 representing the purchase option price of the equipment.
It has a revised sixty month payment of $27,119 with final payment due March
2004. Warrant amortization to interest expense related to the above note payable
amounted to $15,788 for the year ended December 31, 1999 and $5,263 for the
three months ended March 31, 2000.
In September 1999, the Company issued $50,000 in principal amount of 10%
Promissory notes payable, due March 31, 2000, to two directors and an individual
to finance operations. As additional consideration for these loans, the
individual lenders, including the directors, were awarded total warrants to
purchase 40,000 shares of common stock at an exercise price of $0.625 per share.
In connection with the issuance of the warrants to the individuals, the company
is recognizing additional interest expense of $10,938, which is being amortized
over the terms of the loans. Accrued interest payable and warrant amortization
to interest expense related to these loans amounted to $1,667 and $1,944,
respectively, as of December 31, 1999. Accrued interest payable and warrant
amortization to interest expense related to these loans amounted to $2,917 and
$1,457, respectively, as of March 31, 2000.
In 1999, the Company entered into a capital lease agreement with a financing
company. Such agreement finances MRI equipment with a purchase price of $905,700
over a sixty-month period with interest of 3.9% and monthly payment of $16,747.
See notes to consolidated financial statements.
F-7
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
For the Three Months Ended March 31, 2000 and 1999
(1) STATEMENT OF INFORMATION FURNISHED
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal and recurring
accruals) necessary to present fairly the Company's financial position for the
interim reporting period as of March 31, 2000, and the results of operations for
the three month period ended March 31, 2000 and 1999 and cash flows for the
three month period March 31, 2000 and 1999. These results have been determined
on the basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's 1999 Annual
Report on Form 10-KSB.
The results of operations for the three month period ended March 31, 1999 are
not necessarily indicative of the results to be expected for any other period or
for the full year.
Certain amounts in the 1999 Financial Statements have been reclassified to
conform with the 2000 presentation.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. The accompanying consolidated financial
statements should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1999.
(2) LOSS PER COMMON SHARE
Loss per common share has been computed based upon the weighted average number
of common shares outstanding during the years presented. Common stock
equivalents resulting from the issuance of the stock options and warrants have
not been included in the per share calculations because such inclusion would be
antidilutive.
(3) GOODWILL
In connection with the Vision and Ultra acquisitions, consideration paid
exceeded the estimated fair value of the assets acquired (including estimated
liabilities assumed as part of the transaction) by approximately $6,100,000. The
excess of the consideration paid over the fair value of the net assets acquired
has been recorded as goodwill and is being amortized on a straight line basis
over 40 years.
(4) LINE OF CREDIT
The Company has a line of credit with a finance company at prime plus 3% under
which the Company may borrow up to $1,500,000 or the "borrowing base" as
defined. Balance due August 2000, renewable for consecutive one-year periods. At
March 31, 2000 and December 31, 1999, the outstanding balance was $562,658 and
$506,384, respectively.
The Company has a line of credit with a bank at prime plus 1.75% under which the
Company may borrow up to $50,000. At March 31, 2000, the outstanding balance was
$50,000.
The Company has a line of credit with a bank at 10.5% under which the Company
may borrow up to $25,000. At March 31, 2000, the outstanding balance was
$21,898.
F-8
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(5) NOTES PAYABLE
-------------
<TABLE>
Notes payable consisted of the following:
<CAPTION>
March 31, December 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Note payable to individuals, interest at 8.5%, quarterly payments of
$41,665, due March 2003. $ 394,156 $ 447,376
Note payable to an individual, interest at 10%, monthly principal payments
of $9,809 plus accrued interest with a final balloon payment October 2000. 284,448 313,873
Note payable to a finance company, interest at 10%, monthly payments of
$10,000, due March 2002. 209,753 234,059
Note payable to an individual, monthly payments of $15,000, due
September 2000. 112,039 114,019
Note payable to bank, with interest at prime plus 2%. Balance was due
August 1998. 102,378 100,047
Note payable to a finance company, interest at 10.5%, monthly payments of
$2,150, Due March 2004. 83,950 88,121
Note payable to an individual, interest at 2.79%, monthly payments of $2,500,
Due December 2002. 79,336 86,250
Note payable to a bank, with interest at 9.75%, monthly payments of $3,027
beginning May 2000, due October 2002. 78,055 81,239
Note payable to a bank, interest at 4% above discount rate, quarterly
principal payments of $9,311 plus accrued interest beginning April 2000,
due January 2002. 74,489 75,060
Notes payable to directors, interest at 10%,due March 2000. 50,000 50,000
Note payable to a bank, interest at 8.5%, monthly payments of $1,819, due
June 2002. 43,273 -
Note payable to a bank, interest at 8%, monthly payments of $1,429, due
December 2001. 29,139 -
Note payable to a bank, interest at 13.9%, monthly payments of
$1,249, due May 2002. 23,288 -
Note payable to a bank, with a variable interest rate, monthly
payments of $1,629, due May 2001. 20,127 -
Note payable to a bank, interest at 12.25%, monthly payments of $796,
due December 2001. 14,962 -
Note payable to a bank, interest at 10%, monthly payments of $372,
due October 2001. 6,555 -
Other, interest ranging from 6% to 10%. 20,874 32,724
--------------- ---------------
$ 1,626,822 $ 1,622,768
Less current portion 1,029,098 $ 939,112
--------------- ---------------
Long-term portion $ 597,724 $ 683,656
=============== ===============
</TABLE>
F-9
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
On April 7, 1999, the Company acquired the remaining ownership of West Regional
MRI Limited Partnership at a purchase price of approximately $1,300,000.
Associated with this transaction, the Company recorded goodwill of $762,265,
warrants and the related deferred interest valued at $105,250, additional notes
payable for $500,000 due to the limited partners and refinanced a capital lease
agreement for an additional $650,000 due to a finance company. The deferred
interest is being amortized over sixty months, which is the term of the
associated note payable. The $500,000 limited partnership note payable has an
interest rate of 8.5%, payable in quarterly installments of $41,665, final
payment due June 15, 2002. The $650,000 note payable to a finance company has an
interest rate of 12.92% and was added to the refinance of a capital lease with
an additional $100,000 representing the purchase option price of the equipment.
It has a revised sixty month payment of $27,119 with final payment due March
2004. Warrant amortization to interest expense related to the above note payable
amounted to $15,788 for the year ended December 31, 1999 and $5,263 for the
quarter ended March 31, 2000.
F-10
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(6) STOCKHOLDERS' EQUITY
--------------------
PREFERRED STOCK
In April 1995, the Company amended its Articles of Incorporation to authorize
10,000,000 shares of $.01 par value preferred stock. In December 1995, the
Company further amended its Articles of Incorporation to authorize 187,500 of
Series I convertible preferred stock in conjunction with its private placement
offering, the Company issued 153,750 shares of Series I convertible preferred
stock with an assigned value of $384,375 (see note 3). On January 19, 1996, the
Company again amended its Articles of Incorporation to increase the authorized
shares of Series I convertible preferred stock from 187,500 to 247,500. On
January 24, 1996, the Company issued an additional 93,750 shares of Series I
convertible preferred stock. These preferred shares were considered an original
issue discount associated with the notes payable and were amortized over
approximately the first five months of 1996.
On June 24, 1996, the Company completed a public offering of 1,500,000 shares of
6% cumulative convertible Series A preferred stock (the "Preferred Stock") and
1,500,000 redeemable common stock purchase warrants (the "Redeemable Warrants")
resulting in gross proceeds of $7.65 million. The Company received approximately
$4 million after repayment of short-term debt and costs associated with the
offering. The Preferred Stock is convertible into four thirty-fifths (4/35)
share of common stock $43.75 per share and for a total of $131.25. As part of
the terms of this offering, the holders of the Series I convertible preferred
stock exchanged their preferred stock for the Preferred Stock on a one for one
basis at no cost. Each share of Preferred Stock, by its terms, automatically
converted into four thirty-fifths (4/35) share of common stock on July 24, 1997.
During the first quarter of 1997, 94,920 shares of Preferred Stock were
converted into 10,848 shares of common stock; and during the second quarter of
1997, 31,927 shares of Preferred Stock were converted into 3,649 shares of
common stock. On July 24, 1997, each of the then-outstanding shares of Preferred
Stock, by their terms, automatically converted into four thirty-fifths (4/35)
share of common stock.
COMMON STOCK
On June 20, 1996, the directors of the Company approved a one-for-two reverse
split of the common stock. On March 6, 1998, the directors of the Company
approved an additional one-for-thirty-five reverse split of the common stock of
the Company. There was no change in the common stock voting rights, par value or
authorized shares. All share balances have been retroactively restated in the
accompanying consolidated financial statements to reflect the reverse stock
splits.
F-11
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(6) CONTINUED
---------
COMMON STOCK - CONTINUED
On September 9, 1996, the Company issued 2,047 shares of common stock as a
dividend for the period through August 31, 1996 for the Preferred Stockholders
of record as of August 12, 1996. On November 11, 1996, the Company declared a
common stock dividend of 3,186 shares to Preferred Stockholders of record as of
December 10, 1996. On June 12, 1997 the Company declared a common stock dividend
of 4,345 shares to Preferred Stockholders of record as of June 27, 1997 and on
July 24, 1997 declared a common stock dividend of 571 shares to Preferred
Stockholders of record as of July 24, 1997. The shares for November 1996
dividend and for the June 1997 dividend were issued in January 1997 and July
1997, respectively and, accordingly, were recorded as common stock dividend
distributable and additional paid-in capital at December 31, 1996 and at June
20, 1997, respectively. The number of shares paid on the Preferred Stock as a
dividend was calculated based on the 10 day moving average price of the common
stock during the 30 days prior to the declaration date, subject to a maximum
price of $105.00 and minimum price of $42.00 per share. Fractional shares were
rounded up.
During the year ended December 31, 1996, as a result of individuals exercising
4,643 private warrants, the Company issued 4,643 shares of common stock for
$275,000. No warrants were exercised in 1999, 1998 or 1997.
Pursuant to certain employment agreements in January and September 1997, 7,856
and 536 shares of accrued employee common stock grants were issued,
respectively. Accordingly, deferred stock compensation of $247,500 and $25,444
was reclassified to common stock and additional paid-in capital in the first and
third quarters of 1997, respectively.
Pursuant to an investment letter dated June 26, 1998 with an individual, the
Company received $55,000 for the purchase of 55,000 shares of Restricted Rule
144 Common Stock at a purchase price of $1.00 per share. As of December 31,
1998, all such shares had been issued.
F-12
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(6) CONTINUED
---------
On July 14, 1998, the Company acquired either the stock or substantially all of
the assets and liabilities of Vision Diagnostics, Inc. and Affiliates for a
total of 3,461,356 Restricted Rule 144 common shares. At December 31, 1998,
2,599,677 shares have been issued and 861,679 are to be issued upon the
completion of escrow requirements. As of March 31, 2000, 861,624 of the escrow
shares have been issued.
During the first quarter of 1999, an additional 200,000 shares of Restricted
Rule 144 common stock, valued at $87,500, were issued in connection with the
acquisition of Vision Diagnostics, Inc. Accordingly, goodwill associated with
this transaction was increased by $87,500.
Pursuant to an investment letter dated February 23, 1999 with an individual, the
Company received $25,000 for the purchase of 62,500 shares of Restricted Rule
144 common stock at a purchase price of $.40 per share. Pursuant to an
investment letter dated March 8, 1999 with an individual, the Company received
$100,000 for the purchase of 250,000 shares of Restricted Rule 144 common stock
at a purchase price of $.40 per share. Pursuant to an investment letter dated
March 12, 1999 with an individual, the Company received $10,000 for the purchase
of 25,000 shares of Restricted Rule 144 common stock at a purchase price of $.40
per share. Pursuant to investment letters dated May 25, 1999 and June 7, 1999
with a limited liability company, the Company received $100,000 for the purchase
of 250,000 shares and $50,000 for the purchase of 125,000 shares, respectively.
Both investment letters were to purchase shares of Restricted Rule 144 common
stock at a purchase price of $.40 per share. Pursuant to an investment letter
dated May 25, 1999 with a corporation, the Company received $100,000 for the
purchase of 250,000 shares of Restricted Rule 144 common stock at a purchase
price of $.40 per share. Pursuant to an investment letter dated September 15,
1999 with a limited liability company, the Company received $50,000 for the
purchase of 66,667 shares of Restricted Rule 144 common stock at a purchase
price of $.75 per share. Pursuant to an investment letter dated December 4, 1999
with a limited liability company, the Company received $50,000 for the purchase
of 111,111 shares of Restricted Rule 144 common stock at a purchase price of
$.45 per share. As of December 31, 1999, all 1,140,278 shares had been issued.
Pursuant to an investment letter dated February 7, 2000 with an individual, the
Company received $50,000 for the purchase of 125,000 shares of Restricted Rule
144 common stock at a purchase price of $.40 per share. Pursuant to an
investment letter dated February 8, 2000 with an individual, the Company
received $50,000 for the purchase of 125,000 shares of Restricted Rule 144
common stock at a purchase price of $.40 per share. Pursuant to investment
letters dated March 10, 2000 with six individuals, the Company received $90,000
for the total purchase of 138,600 shares of Restricted Rule 144 common stock at
a purchase price of $.65 per share. As of March 31, 2000, all 388,6000 shares
had been issued.
On February 9, 2000, the Company acquired 80% ownership in Ultra MRI &
Diagnostics Services ("Ultra") with a combination of a $380,160 payable and
2,534,400 shares of Restricted Rule 144 common stock. At March 31, 2000,
1,600,000 shares have been issued and 934,400 shares are to be issued upon the
completion of escrow requirements.
In each of the four most current years, the Company's board of directors has
annually approved a stock compensation plan, the most recent which registered
500,000 shares of common stock under Form S-8 on May 5, 2000, whereby services
are obtained in exchange for issuance of free trading stock of the
Company. Shares may be awarded under this plan until May 1, 2005. During the
three months ended March 31, 2000 and 1999, 300,429 and 178,700 shares,
respectively, of common stock under Form S-8 registrations were issued for
directors fees, employee bonus, compensation, interest, legal and professional
services provided to the Company.
F-13
<PAGE>
MIRACOR DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(7) ULTRA ACQUISITION
--------------------
On February 9, 2000, the Company acquired 80% ownership in Ultra MRI &
Diagnostics Services with a combination of 20% in the form of a payable and 80%
in Restricted Rule 144 common stock. The purchase price was $1,900,800 and
goodwill associated with this transaction was recorded at $1,505,209, which
included direct costs associated with the purchase. Total assets were
approximately $1.8 million and total liabilities were approximately $1.3 million
as of February 9, 2000. The amount payable to the principals in aggregate is
$125,000 on August 9, 2000, $125,000 on November 9, 2000 and $130,160 is due
November 9, 2001. The principals' share of the shareholders' capital had been
reflected as a minority interest on the accompanying consolidated balance sheet
at March 31, 2000. The principals' share of the corporation's net income has
been presented as minority interest share of income in the accompanying
consolidated statement of operations for the three month period ended March 31,
2000. Ultra is a multi-site diagnostic imaging business with offices in Palm
Harbor, St. Petersburg and Tampa, Florida. Ultra had approximately $2.5 million
in revenue in 1999.
Had the acquisition occurred January 1, 1999, consolidated revenues for the
three months ended March 31, 1999 would have been approximately $1.7 million,
net loss would have been approximately ($350,000) and loss per share would have
been ($0.07).
Had the acquisition occurred January 1, 2000, consolidated revenues for the
three months ended March 31, 2000 would have been approximately $2.7 million,
net income would have been approximately $18,000 and earnings per share would
have been $0.01.
(8) SUBSEQUENT EVENT
-----------------
In April 2000, the Company entered into a $15 million private equity line for
the purchase of common stock, subject to registration and certain other
conditions and limited to a percentage of trading volume.
F-14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 105,915
<SECURITIES> 0
<RECEIVABLES> 5499660
<ALLOWANCES> 1749182
<INVENTORY> 0
<CURRENT-ASSETS> 3920648
<PP&E> 5058490
<DEPRECIATION> (2005029)
<TOTAL-ASSETS> 13327321
<CURRENT-LIABILITIES> 4015964
<BONDS> 0
0
0
<COMMON> 1604822
<OTHER-SE> 3663789
<TOTAL-LIABILITY-AND-EQUITY> 13327321
<SALES> 2326158
<TOTAL-REVENUES> 1746307
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1613420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 168360
<INCOME-PRETAX> (45157)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45157)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45157)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
