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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended DECEMBER 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from ___________________to____________________
Commission File Number 33-13110-NY
MEDTECH DIAGNOSTICS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-2831380
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization Identification No.)
201 S. BISCAYNE BLvd, SUITE 2950, MIAMI, FL 33131
(Address of principal executive offices) (Zip code)
(305) 536-8500
(Issuer's telephone number, including area code)
Check 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 periods 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[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: January 31, 1998 - 281,400,000
Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]
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MEDTECH DIAGNOSTICS, INC.
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PAGES
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheet - December 31, 1997 3
Statements of Operations - Three months ended December 31, 1997 and 1996 4
Statements of Cash Flows - Three months ended December 31, 1997 and 1996 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
PART II. OTHER INFORMATION
Item 1. Legal proceedings 9
Item 2. Changes in securities 9
Item 3. Defaults upon senior securities 9
Item 4. Submission of matters to a vote of security holders 9
Item 5. Other information 9
Item 6. Exhibits and reports on Form 8-K 9
SIGNATURES 10
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MEDTECH DIAGNOSTICS, INC.
Balance Sheet
December 31, 1997
- Unaudited -
ASSETS
Current Assets:
Cash and cash equivalents $ 228,970
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,781
Commitments and contingencies
Stockholders' equity
Common stock, par value $.00001; authorized,
500,000,000 shares; 281,400,000 issued and
outstanding 2,814
Capital in excess of par value 1,436,745
Accumulated deficit (1,213,370)
--------------
226,189
--------------
$ 228,970
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The accompanying notes are an integral part of these statements
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MEDTECH DIAGNOSTICS, INC.
Statements of Operations
For the three months ended December 31, 1997 and 1996
- Unaudited -
THREE MONTHS ENDED
DECEMBER 31,
---------------------------
1997 1996
---------- ----------
Interest income $ 2,644 $ 1,574
Costs and expenses:
General & administrative 1,587 2,200
---------- ----------
Net income (loss) $ 1,057 $ (626)
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Net income (loss) per common share $ - $ -
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Weighted average number of
shares outstanding (thousands) 281,400 281,400
========== ==========
The accompanying notes are an integral part of these statements
4
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<TABLE>
MEDTECH DIAGNOSTICS, INC.
Statements of Cash Flows
For the three months ended December 31, 1997 and 1996
<CAPTION>
- Unaudited -
THREE MONTHS ENDED
DECEMBER 31,
--------------------------
1997 1996
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Net income (loss) $ 1,057 $ (626)
Adjustments to reconcile net loss to
net cash used in operating activities:
Changes in operating assets and liabilities:
(Decrease) increase in accounts payable and
accrued expenses (3,969) 550
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Net cash used in operating activities (2,912) (76)
--------- ---------
Net decrease in cash and cash equivalents (2,912) (76)
Cash and cash equivalents at beginning of period 231,882 243,606
--------- ---------
Cash and cash equivalents at end of period $ 228,970 $ 243,530
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The accompanying notes are an integral part of these statements
5
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MEDTECH DIAGNOSTICS, INC.
Notes to Financial Statements
December 31, 1997
NOTE A - SUMMARY OF ACCOUNTING PRINCIPLES
The accompanying unaudited financial statements of Medtech Diagnostics, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim reporting and instructions to Form 10-QSB.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of management, the
accompanying interim financial statements reflect all adjustments, consisting
only of normal recurring accruals, necessary to present fairly the Company's
financial position and its results of operations and cash flows for the three
month period ended December 31, 1997 and 1996.
It is suggested that these interim financial statements be read in conjunction
with the Company's 1997 Annual Report on Form 10-KSB. The results of operations
for the interim periods are not necessarily indicative of the results to be
expected for the complete fiscal year.
1. Organization and operations
Medtech Diagnostics Inc., previously a development stage company
incorporated under the laws of Delaware on October 27, 1986, was engaged in
research and testing which it hoped would lead to the development of a home
Pap Test Kit. In 1991, the Company suspended all operations except for
necessary administrative expenses. The Company is currently seeking
companies to merge with or acquire, so as to best utilize the Company's
cash and corporate structure.
2. Basis of presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has sustained losses
since inception resulting in an accumulated deficit of $1,214,427 as of
September 1997. This raises substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include
any adjustments that may result should the Company be unable to continue in
existence.
3. Net income (loss) per common share
Net income (loss) per common share is based on the average common shares
outstanding during the respective periods.
6
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MEDTECH DIAGNOSTICS, INC.
Notes to Financial Statements (continued)
December 31, 1997
NOTE A - SUMMARY OF ACCOUNTING PRINCIPLES (continued)
4. Cash and cash equivalents
For the purposes of the Statements of Cash Flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or
less to be cash equivalents.
5. Concentration of credit risk
The Company maintains certain cash balances at one financial institution
located in Miami, Florida. These balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. As of December 31, 1997,
uninsured balances aggregate approximately $128,000.
NOTE B - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
As of September 30, 1997, the Company had net operating loss carryforwards of
approximately $1,214,000 for income tax purposes, which expire in varying
amounts beginning September 30, 2002 through 2012. Federal tax rules impose
limitations on the use of net operating losses following certain changes in
ownership. Such a change of control occurred during the fiscal year ended
September 30, 1996. As a result, the Company's ability to utilize the net
operating loss carryforwards existing prior to the ownership change is subject
to an annual limitation of approximately $14,000 and accordingly, the maximum
net operating loss presently available is approximately $230,000.
The Company has determined that the realization of the loss carryforwards does
not meet the recognition criteria under SFAS No. 109 and, accordingly, a 100%
valuation allowance has been established for the tax benefit of these items.
NOTE C - RELATED PARTY TRANSACTIONS
Currently, the Company, at no charge to the Company, utilizes a portion of the
premises occupied by a company of which the Company's officers are principals.
7
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which the Company's
management believes to be relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the financial statements and notes thereto included
elsewhere herein.
RESULTS OF OPERATIONS
In 1991, the Company suspended all operations except for necessary
administrative matters and ceased to be an operating company. As such, for the
three months ended December 31, 1997 and 1996, the Company had no revenue from
operations. Given the virtual suspension of the Company's operations, except for
necessary administrative matters, the Company's officers have waived current
compensation.
During the three months ended December 31, 1997 and 1996, the Company received
interest income of $2,644 and $1,574, respectively. General and administrative
expenses for the three months ended December 31, 1997 and 1996 were $1,587 and
$2,200, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company had working capital of $226,189. The
Company's management is currently seeking to arrange for a merger, acquisition
or other arrangement by and between the Company and a viable operating entity,
although there is no assurance that this will occur.
8
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults upon Senior Securities None
Item 4. Submission of Matters to a Vote of
Security Holders None
Item 5. Other Information None
Item 6. a - Exhibits
27.1 Financial Data Schedule
b - Reports on Form 10-K none
9
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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 duly authorized.
MEDTECH DIAGNOSTICS, INC.
February 2, 1998 by: /S/ STEVEN N. BRONSON
---------------------------------------------
Steven N. Bronson
President and Chief Executive Officer
February 2, 1998 by: /S/ JAMES S. CASSEL
---------------------------------------------
James S. Cassel
Secretary, Treasurer and Principal Accounting
Officer
10
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
27.1 Financial Data Schedule
<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> 228,970
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 228,970
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 228,970
<CURRENT-LIABILITIES> 2,781
<BONDS> 0
0
0
<COMMON> 2,814
<OTHER-SE> 1,436,745
<TOTAL-LIABILITY-AND-EQUITY> 228,970
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,644)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,057
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
