FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 33-131110-NY
MEDTECH DIAGNOSTICS, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 22-1895668
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 Third Avenue, Suite 201, New York, NY 10022
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(Address of Principal Executive Office) (Zip Code)
(212) 610-2778
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(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of registrant's Common Stock, $.00001 par value,
outstanding as of May 10, 2000 was 296,400,000 shares.
1
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MEDTECH DIAGNOSTICS, INC.
INDEX
Page No.
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PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements............................... 3
Balance Sheets.............................................. 3
Statements of Operations.................................... 4
Statements of Cash Flows ................................... 5
Notes to Financial Statements............................... 6
Item 2. Management's Discussion And Analysis Of
Financial Condition And Results Of Operations...... 7
PART II - OTHER INFORMATION................................. 8
Item 1. Legal Proceedings................................... 8
Item 6. Exhibits & Reports on Form 8-K...................... 9
SIGNATURES.................................................. 10
2
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
MEDTECH DIAGNOSTICS, INC.
CONDENSED BALANCE SHEETS
MARCH 31, 2000 AND SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
(Unaudited) September 30,
ASSETS March 31, 2000 1999
- -----------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,381 $ 47,677
Loan receivable (Note 2) 1,000 1,000
- -----------------------------------------------------------------------------------
$ 3,381 $ 48,677
- -----------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
- -----------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 12,617 $ 27,579
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STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $.00001 par value; 500,000,000 shares
authorized; 281,400,000 shares issued and outstanding 2,814 2,814
Capital in excess of par value 1,436,745 1,436,745
Accumulated deficit (1,448,795) (1,418,461)
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Total stockholders' equity (deficiency) (9,236) 21,098
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$ 3,381 $ 48,677
===================================================================================
</TABLE>
See accompanying notes.
3
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MEDTECH DIAGNOSTICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
-----------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DIVIDEND AND INTEREST INCOME $ 131 $ 1,459 $ 587 $ 5,946
OPERATING EXPENSES
General and administrative 26,979 8,278 30,921 8,386
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NET LOSS ($ 26,848) ($ 6,819) ($ 30,334) ($ 2,440)
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NET LOSS PER COMMON SHARE - BASIC AND DILUTED Nil Nil Nil Nil
- -----------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 281,400,000 281,400,000 281,400,000 281,400,000
=================================================================================================================
</TABLE>
See accompanying notes.
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MEDTECH DIAGNOSTICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 30,334) ($ 2,440)
Adjustment to reconcile net loss to net cash used in operating activities:
Decrease in accounts payable and accrued expenses (14,962) (3,500)
- -----------------------------------------------------------------------------------------------------
Net cash used in operating activities, representing
the net decrease in cash and cash equivalents for the period (45,296) (5,940)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 47,677 223,398
- -----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 2,381 $ 217,458
===================================================================================================
</TABLE>
See accompanying notes.
5
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MEDTECH DIAGNOSTICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB for quarterly reports under section 13
or 15(d) of the Securities and Exchange Act of 1934. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and six month periods ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending September 30, 2000. For
further information, refer to the audited financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended September 30, 1999.
The balance sheet at September 30, 1999, has been derived from the Company's
audited balance sheet at that date.
NOTE 2. LOAN RECEIVABLE
The Company made two advances, evidenced by a loan receivable, totaling $170,000
to Abtech Industries, Inc. ("Abtech"), an intended merger target. The loans are
unsecured, bear interest at 10% per annum, and had a scheduled maturity on or
before March 31, 2000, unless cancelled in connection with the merger agreement.
Subsequent to September 30, 1999, the merger agreement was cancelled. Abtech has
defaulted under the loan agreement, and the Company is vigorously seeking
recovery of the loan. The Company has reduced the carrying value of the
receivable to $1,000 as of September 30, 1999.
NOTE 3. SUBSEQUENT EVENTS
On April 28, 2000, the Company acquired all of the issued and outstanding stock
of DelOtto Systems, Inc. (DelOtto) for 15,000,000 newly issued shares of the
Company's common stock.
On May 5, 2000, the Company borrowed $100,000 from its chairman for working
capital purposes. The borrowing is evidenced by a 10% demand promissory note
that is payable no later than August 31, 2000.
NOTE 4. NET LOSS PER COMMON SHARE
Basic and diluted net loss per common share was computed by dividing the net
loss by the weighted number of shares of common stock outstanding during each
period.
6
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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 together with the Company's financial statements and the notes to
financial statements, which are included in this report.
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 and six months ended March 31, 2000 and 1999, the Company had no revenue
from operations. Given the virtual suspension of the Company's operations,
except for necessary administrative matters, the Company's sole officer has not
received any current compensation.
The Company has adopted a new business strategy which will be to
acquire Internet and technology related companies in their early stages of
development and to provide those companies with management, marketing and
administrative services, as well as funding. The Company plans to acquire
Internet and technology-based businesses that offer unique and proprietary
technology solutions designed to help businesses become more competitive. The
Company plans to make acquisitions and strategic investments in businesses that
have developed unique, turn key systems that provide their clients with an
ability to improve processes and gain market share.
During the three-months ended March 31, 2000 and 1999, the Company
received interest income of $131 and $1,459, respectively. General and
administrative expenses for the three-months ended March 31, 2000 and 1999 were
$26,979 and $8,278, respectively. During the six months ended March 31, 2000 and
1999, the Company received interest income of $587 and $5,946, respectively.
General and administrative expenses for the six months ended March 31, 2000 and
1999 were $30,921 and $8,386, respectively.
The decrease in interest income for the periods referenced above is due
to the fact that the Company loaned a third party $170,000 in connection with an
agreement regarding a potential merger with that third party. Merger
negotiations between the Company and the third party have been terminated and
the third party failed to repay the loan. On November 22, 1999, the Company
commenced a legal action to recover the $170,000 from the third party. There can
be no assurances that the Company will recover any part of the monies loaned to
the third party. As such, the Company has recorded an adjustment to its
financial statements of $169,000 as a provision for the loan to the third party.
The increase in general and administrative expenses for the periods
referenced above is due primarily to increased legal expenses associated with
the Company's new business strategy, including, among other things, the
preparation and filing of a proxy statement in connection with a Special Meeting
of Stockholders of the Company and the acquisition of DelOtto Systems, Inc.
On March 17, 2000, the Board of Directors of the Company appointed
Justin Model, Alan Rosenberg and Leonard Hagan to serve as directors of the
Company to fill three of the vacancies on its Board of Directors and to serve
until their next election. Each of the directors were nominated for reelection
at a Special Meeting of Stockholders that was held on May 11, 2000. At the
Special Meeting all of the directors were reelected except for Justin Model.
7
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Certain of the matters discussed herein include forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act of 1934. Statements that are predictive in nature, that
depend upon or refer to future events or conditions, or that include words such
as "expects", "anticipates", "intends", "plans", "believes", "estimates" and
similar expressions are forward-looking statements. The actions of current and
potential new competitors, changes in technology, seasonality, business cycles,
new regulatory requirements and other factors may impact greatly upon strategies
and expectations and are outside our direct control.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 2000, 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 March 31, 2000, the
Company had cash on hand in the amount of $2,381. The Company will need
additional funds in order to effectuate its new business strategy, although
there is no assurance that the Company will be able to obtain such additional
funds, if needed. Even if the Company is able to obtain additional funds there
is no assurance that the Company will be able to effectuate its new business
strategy.
On May 5, 2000, Steven N. Bronson, the Company's Chairman, loaned the
Company $100,000 to be used for working capital and to assist in the
implementation of the Company's new business strategy. The principal amount of
the loan bears interest at the rate of 10 percent per annum and is repayable by
the Company upon demand, but in no event later than August 31, 2000.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On or about August 3, 1999, in connection with an agreement with a
third party, who was a potential merger candidate, the Company made unsecured
loans to the third party totaling $170,000, which bear interest at the rate of
10% per annum. The agreement, as amended, between the Company and the third
party is annexed as an Exhibit to the Company's Form 10-KSB for the year ended
September 30, 1999 and is expressly incorporated herein by reference. The merger
negotiations between the Company and the third-party have been cancelled and the
third party has failed to repay the loans as required by the agreement. On or
about November 22, 1999, the Company commenced a lawsuit to recover the $170,000
loaned to the third party. The action is entitled: MedTech Diagnostics, Inc. v.
Abtech Industries, Inc. and is pending in the New York State Supreme Court, New
York County and has been assigned Index No. 99-605288. The Company has entered
into a settlement agreement whereby Abtech Industries, Inc. has agreed to pay
the Company $170,000, plus interest at a rate of 10% on that sum from August 3,
1999, on or before May 15, 2000. The settlement agreement is secured by a
confession of judgment executed by Abtech Industries, Inc. There is no assurance
that the Company will be able to recover any of the moneys loaned to the third
party.
The Company is not a party to any other material legal proceedings.
8
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Item 6. Exhibits And Reports On Form 8-K
a. Exhibits
The exhibit listed below is filed as part of this report.
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
No reports on Form 8-K were filed for the period ended March
31, 2000.
On May 3, 2000 the Company filed a current report on Form 8-K,
which disclosed that on March 17, 2000 Justin Model, Alan
Rosenberg and Leonard Hagan were appointed to serve as
directors of the Company to fill three of the vacancies on its
Board of Directors. The Form 8-K also disclosed that on April
28, 2000, the Company acquired all of the issued and
outstanding capital stock of DelOtto Systems, Inc., a
Pennsylvania corporation, in exchange for 15,000,000 shares of
the Company's authorized but unissued common stock. The
Company's current report on Form 8-K, dated May 3, 2000, is
incorporated herein by reference.
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 thereunto duly authorized.
May 12, 2000
MEDTECH DIAGNOSTICS, INC.
By: /s/ Steven N. Bronson
---------------------------
Steven N. Bronson, President
(Principle Executive Officer),
as Registrant's duly authorized officer
10
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<ALLOWANCES> 0
<INVENTORY> 0
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<INCOME-PRETAX> (30334)
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