SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended September 30, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________ to ________
Commission File Number 33-131110-NY
Medtech Diagnostics, Inc.
(Name of small business issuer in its charter)
Delaware 11-2831380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
16 East 52nd Street, Suite 501, New York, NY 10022
(Address of principal executive offices) (Zip code)
(212) 872-1623
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 |_|
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $8,337
As of January 8, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based upon the average bid and asked prices of
such stock on that date was $1,060,020. Shares of Common Stock held by each
officer and director and by each person who owns 10% or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily conclusive
and does not constitute an admission of affiliate status.
As of January 8, 1999, there were issued and outstanding 281,400,000 shares of
the registrant's Common Stock, par value $.00001 per share.
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PART I
Item 1 - Description of Business
Medtech Diagnostics, Inc. (the "Company"), was incorporated under the laws of
the State of Delaware on October 27, 1986. In October 1991, the Company
suspended all operations, except for necessary administrative matters and ceased
to be an operating company.
In January 1993, the Company consummated an agreement with Beverley Hills
Bancorp. ("BHB") wherein BHB acquired a controlling interest in the Company. On
June 5, 1996, BHB sold its entire interest in the Company's Common Stock to
Messrs. Steven N. Bronson and James S. Cassel. In September, 1998, Mr. Cassel
sold an aggregate of 70,500,000 shares of the Company's Common Stock,
representing Mr. Cassel's entire interest in the Company, to Mr. Bronson.
The Company is currently seeking merger or acquisition partners so as to best
utilize the Company's cash and corporate structure.
The Company currently has no full time employees and its sole officer and
director is Steven N. Bronson.
Item 2 - Description of Property
The Company presently maintains its corporate and administrative offices at 16
East 52nd Street, Suite 501, New York, New York 10022. The Company utilizes a
portion of the premises occupied by Catalyst Financial Corp., a full service
brokerage investment banking firm, with which Mr. Bronson is a principal. Due to
the curtailed nature of the Company's operations Catalyst Financial Corp. has,
until further notice, waived the payment of rent by the Company. No rent was
paid by the Company during the fiscal years ended September 30, 1998 and 1997.
Item 3 - Legal Proceedings
As of January 8, 1999, the Company is not a party to any material legal
proceedings.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders by the Company during
the fourth quarter of the fiscal year covered by this report.
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<PAGE>
PART II
Item 5 - Market for Common Stock and Related Stockholder Matters
The Company's Common Stock, par value $.00001 per share, is traded in the
over-the counter market.
The following table sets forth the range of high and low closing bid prices for
the Company's Common Stock for the periods indicated as reported by the National
Quotation Bureau, Inc. These prices represent quotations between dealers, do not
include retail markups, mark down or commissions, and do not necessarily
represent actual transactions.
Bid Price
-------------------
Calendar Years Low High
------- -------
1998: First Quarter $.0001 $.0001
Second Quarter $.0001 $.0001
Third Quarter $.0001 $.0001
Fourth Quarter $.0001 $.0001
1997: First Quarter $.00125 $.00125
Second Quarter $.00125 $.00125
Third Quarter $.00125 $.00125
Fourth Quarter $.0001 $.0001
As of January 8, 1999, the National Quotation Bureau, Inc. reported that the
closing bid and asked prices on the Company's Common Stock were $.0001 and
$.015, respectively.
As of January 8, 1999, the Company's Common Stock was held by approximately 90
record holders, who the Company believes held for in excess of 300 beneficial
holders.
The Company has never paid any cash dividends on its Common Stock and does not
anticipate paying any cash dividends in the foreseeable future.
Item 6 - Management's Discussion and Analysis
General
In October 1991, the Company suspended all operations except for necessary
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<PAGE>
administrative matters and ceased to be an operating company. As such, for the
fiscal year ended September 30, 1998, the Company had no revenues from
operations. Given the virtual suspension of the Company's operations except for
necessary administrative matters, the Company's sole officer has waived
compensation.
Results of Operations
During the year ended September 30, 1998 ("Fiscal 98"), the Company earned
interest of $8,337 as compared to $8,990 of interest earned in the year ended
September 30, 1997 ("Fiscal 97"), a decrease of $653. During Fiscal 98, the
Company incurred general and administrative expenses of $13,571, a decrease of
$6,893 over Fiscal 97 expenses of $20,464. The decrease was primarily due to
decreases in printing costs associated with the Company's Securities and
Exchange Commission filings via EDGAR.
Liquidity and Capital Resources
During Fiscal 98, the Company satisfied its working capital needs from cash on
hand at the beginning of the year and cash generated from interest income during
the year. As of September 30, 1998, the Company had working capital of $219,898.
This working capital is expected to be sufficient to provide the Company with
sufficient capital while it seeks 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.
Item 7 - Financial Statements
The financial statements and related notes are included as part of this report
as indexed in the appendix on page 10.
Item 8 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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<PAGE>
PART III
Item 9 - Directors and Executive Officers; Compliance With Section 16(a) of the
Exchange Act
The executive officers and directors of the Company are as follows:
Name Age Position
- ---- --- --------
Steven N. Bronson 33 Sole Officer and Director
Steven N. Bronson has served as the Company's sole officer and director since
September, 1998 and as the Company's Chairman, President and Chief Executive
Officer during the period of June, 1996 through September, 1998. Due to the
curtailed nature of the Company's business activities, Mr. Bronson does not
devote full time to the affairs of the Company. Mr. Bronson is the President of
Catalyst Financial Corp., a full service securities brokerage and investment
banking firm and has held that position since September 24, 1998. During the
period of 1991 through September 23, 1998, Mr. Bronson was President of Barber &
Bronson Incorporated, a full service securities brokerage investment banking
firm. In addition, Mr. Bronson is the Chief Executive Officer and a director of
Mikron Instrument Company, Inc., a publicly traded corporation.
The Company's By-Laws provide for the election of directors at the annual
meeting of shareholders, such directors to hold office until the next annual
meeting and until their successors are duly elected and qualified. The By-Laws
also provide that the annual meeting of shareholders be held each year at such
time, date and place as the Board of Directors shall determine by resolution.
Directors may be removed at any time for cause by the Board of Directors and
with or without cause by a majority of the votes cast by the shareholders
entitled to vote for the election of directors.
Officers will normally be elected at the annual meeting of the Board of
Directors held immediately following the annual meeting of shareholders, to hold
office for the term for which elected and until their successors have been duly
elected and qualify. Officers may be removed by the Board of Directors at any
time with or without cause.
For the year ended September 30, 1998, based solely on its review of copies of
Forms 3 and 4 received by it, and written representations that no Forms 5 were
required, the Company believes that these Forms were timely filed pursuant to
Section 16 of the Securities Exchange Act of 1934, with the exception of the
late filing of a Form 3 and a Form 4 (filing made on Form 5) by Steven N.
Bronson, each of such Forms relating to one transaction.
Item 10 - Executive Compensation
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<PAGE>
Due to the reduced level of the Company's operations, no compensation has been
paid to any of the Company's executive officers during the fiscal year ended
September 30, 1998.
The Company does not presently have any option, bonus, retirement or profit
sharing plans.
Item 11 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of January 8, 1999 by (i) each person or entity
known by the Company to own beneficial more than 5% of the outstanding Common
Stock, (ii) each director, (iii) each executive officer, and (iv) all directors
and executive officers of the Company as a whole. Except as otherwise noted
below, the listed beneficial owner has sole voting and investment power with
respect to such shares and the address of the listed beneficial owner is that of
the Company.
Number of Percent
Name and Address Shares owned of class
- ---------------- ------------ --------
Steven N. Bronson 141,000,000 50.10%
Estate of Jeffrey Wenig (1)
9 Dickens Avenue
Dix Hills, NY 20,000,000 7.10%
All directors and executive officers
as a group (1 person) 141,000,000 50.10%
Item 12 - Certain Relationships and Related Transactions
The Company utilizes a portion of the premises occupied by Catalyst Financial
Corp., with which Mr. Bronson is a principal. Due to the curtailed nature of the
Company's operations Catalyst Financial Corp has, until further notice, waived
the payment of rent by the Company.
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<PAGE>
Item 13 - Exhibits List and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed as part of this Annual Report on Form
10-KSB for the year ended September 30, 1998.
Exhibit No. Exhibit Description
----------- -------------------
3.1 Articles of Incorporation of the Company. (1)
3.2 By-Laws of the Company. (1)
27 Financial Data Schedule (EDGAR version only).
----------
(1) Incorporated herein by reference to the same numbered Exhibit to the
Company's earlier Form 10-KSB filings under Commission file number
33- 13110-NY.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the fourth quarter
of the year ended September 30, 1998.
(c) Financial Statements
The financial statements and related notes of the Company begin on page 12
in the appendix. The report of the independent certified public
accountants on the Company's financial statements begin on page 11 in the
appendix.
(d) Financial Statement Schedules
Financial statement schedules have been omitted because of the absence of
conditions under which they are required or because the required material
information is included in the financial statements or related notes
included herein.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Medtech Diagnostics, Inc.
January 12, 1999 by: /s/ Steven N. Bronson
---------------------
Steven N. Bronson
Sole Officer
In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
January 12, 1999 by: /s/ Steven N. Bronson
---------------------
Steven N. Bronson
Sole Officer (inclusive of Chief
Executive Officer and Principal
Accounting Officer) and Director
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<PAGE>
APPENDIX
Item 7 - Financial Statements
Medtech Diagnostics, Inc.
Index to Financial Statements
Page:
Report of Independent Certified Public Accountants 11
Balance Sheet 12
Statements of Operations 13
Statement of Changes in Stockholders' Equity 14
Statements of Cash Flows 15
Notes to Financial Statements 16
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Medtech Diagnostics, Inc.
We have audited the accompanying balance sheet of Medtech Diagnostics, Inc. as
of September 30, 1998, and the related statements of operations, changes in
stockholders' equity and cash flows for the years ended September 30, 1998 and
1997. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether 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 evaluating the overall financial statement presentation.
We believe that our audits provide 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 Medtech Diagnostics, Inc. as of
September 30, 1998, and the results of its operations and its cash flows for the
years ended September 30, 1998 and 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company previously had been in the
development stage and during fiscal 1992 has suspended all operations except for
necessary administrative matters. The Company has not recorded any revenue from
operations and has incurred losses since inception, which raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are described in Note A. The financial statements do not
include any adjustments that may result from the outcome of this uncertainty.
GRANT THORNTON LLP
Melville, New York
January 5, 1999
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Medtech Diagnostics, Inc.
BALANCE SHEET
September 30, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $223,398
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $3,500
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 (1,219,661)
-----------
219,898
-----------
$223,398
===========
The accompanying notes are an integral part of this statement.
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Medtech Diagnostics, Inc.
STATEMENTS OF OPERATIONS
Year ended September 30, 1998
1998 1997
------------ ------------
Interest income $8,337 $8,990
Costs and expenses
General and administrative 13,571 20,464
Net loss $5,234 $11,474
============ ============
Net loss per common share -
basic and diluted $ -- $ --
============ ============
Weighted average number of
shares outstanding 281,400,000 281,400,000
============ ============
The accompanying notes are an integral part of these statements.
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Medtech Diagnostics, Inc.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
Capital in Total
Common Stock excess of Stockholders'
Shares Amount par value Deficit Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at October 1, 1996 281,400,000 $2,814 $1,436,745 $(1,202,953) $236,606
Net Loss for the year ended
September 30, 1997 -- -- -- (11,474) (11,474)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1997 281,400,000 2,814 1,436,745 $(1,214,427) 225,132
Net loss for the year ended
September 30, 1998 -- -- -- (5,234) (5,234)
----------- ----------- ----------- ----------- -----------
Balance at September 30, 1998 281,400,000 $2,814 $1,436,745 $(1,219,661) $219,898
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE>
Medtech Diagnostics, Inc.
STATEMENTS OF CASH FLOWS
Years ended September 30,
1998 1997
--------- ---------
Cash flows from operating activities
Net loss $(5,234) $(11,474)
Adjustments to reconcile net loss to
net cash used in operating activities:
Changes in operating assets and liabilities:
Decrease in accounts payable and
accrued expenses (3,250) (250)
--------- ---------
Net cash used in operating activities (8,484) (11,724)
--------- ---------
Net decrease in cash and cash equivalents (8,484) (11,724)
--------- ---------
Cash and cash equivalents beginning of year 231,882 243,606
--------- ---------
Cash and cash equivalents end of year $223,398 $231,882
========= =========
Supplemental disclosure of cash flow information:
Income taxes paid $491 $521
========= =========
The accompanying notes are an integral part of these statements.
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<PAGE>
Medtech Diagnostics, Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 and 1997
NOTE A - ORGANIZATION AND BASIS OF PRESENTATION
Organization and Operations
Medtech Diagnostics, Inc. (the "Company"), previously a development stage
company incorporated under the laws of the State of Delaware on October
27, 1987, 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 matters.
Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has sustained
operating losses since inception, resulting in an accumulated deficit of
$1,219,661 at September 30, 1998. This raises substantial doubt about the
Company's ability to continue as a going concern. The financial statements
do not include any adjustments that may result should the Company be
unable to continue in existence.
The Company is currently seeking companies to merge with or acquire, so as
to best utilize the Company's cash and corporate structure.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
Net Loss Per Common Share
In fiscal 1998, the Company adopted Statement of Financial Accounting
Standards No. 128 ("SFAS No. 128"), Earnings Per Share, which supersedes
Accounting Principles Board Opinion No. 15. Pursuant to SFAS No. 128, net
loss per common share is computed by dividing net loss available to common
stockholders by the weighted-average number of shares outstanding during
the period. Diluted earnings per share would reflect the potential
dilution that could occur if the Company had outstanding securities or
other contracts to issue common stock that could be exercised or converted
into common stock or result in the issuance of common stock. For the
fiscal years ended September 30, 1998 and 1997, there is no difference
between basic and diluted net loss per share or between the basic and
diluted net loss per share as previously reported.
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Medtech Diagnostics, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 1998 and 1997
NOTE B (continued)
Cash and Cash Equivalents
All short-term investments with a maturity of three months or less when
purchased are considered to be cash equivalents. Cash equivalents, which
consist primarily of certificates of deposit, are stated at cost which
approximates fair value.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and contingency disclosures
included in the financial statements. Ultimate results could differ from
these estimates.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents. The Company places its cash and cash equivalents with
institutions insured by the Federal Deposit Insurance Corporation up to
$100,000. As of September 30, 1998, uninsured balances aggregated
approximately $124,000.
NOTE C - INCOME TAXES
Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes," requires the use of an asset and liability
approach in accounting for income taxes. Deferred income taxes reflect the
net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. A valuation allowance is established to
reduce deferred tax assets if it is more likely than not that all, or some
portion, of such deferred tax assets will not be realized. The ultimate
realization of the deferred tax asset depends on the Company's ability to
generate sufficient taxable income in the future.
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Medtech Diagnostics, Inc.
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 1998 and 1997
NOTE C (continued)
At September 30, 1998, the Company has net operating loss carryforwards of
approximately $1,220,000 which expire in varying amounts beginning
September 30, 2002 through September 30, 2013. 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 $235,000.
NOTE D - 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 sole officer and
director is a principal. Further, that company provides certain
administrative services to the Company at no charge to the Company.
Through September, 1998, the Company, at no charge to the Company,
utilized a portion of the premises occupied by a company of which the
Company's former officers were principals. Further, that company provided
certain administrative services to the Company at no charge to the
Company.
NOTE E - CHANGE IN OWNERSHIP AND CONTROL
On June 5, 1996, pursuant to the terms of a Stock Purchase Agreement (the
"Agreement"), Beverly Hills Bancorp sold 141,000,000 shares of the
Company's common stock, representing 50.1% of the Company's issued and
outstanding common stock, to Steven N. Bronson and James S. Cassel (the
"Purchasers").
In September 1998, Mr. Cassel sold an aggregate of 70,500,000 shares of
the Company's common stock, representing Mr. Cassel's entire interest in
the Company, to Mr. Bronson who is the Company's sole officer and
director.
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<PAGE>
Exhibit Index
Exhibit Description
- ------- -----------
27 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<CASH> 223,398
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 223,398
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 223,398
<CURRENT-LIABILITIES> 3,500
<BONDS> 0
0
0
<COMMON> 2,814
<OTHER-SE> 217,084
<TOTAL-LIABILITY-AND-EQUITY> 223,398
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 13,571
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (8,337)
<INCOME-PRETAX> (5,234)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,234)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,234)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
