<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-24696
NATIONAL DIAGNOSTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-3248917
------------------------------ ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
755 West Brandon Blvd., Brandon, Florida 33511
---------------------------------------- ------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (813) 661-9501
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 Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Class: Common Stock, No Par Value Outstanding at July 27, 1998: 8,880,000
Transitional Small Business Disclosure Format (check one) YES [ ] NO [X]
Page 1 of 13
<PAGE> 2
NATIONAL DIAGNOSTICS, INC.
INDEX TO FORM 10-QSB/A
<TABLE>
<CAPTION>
Page
Number
------
PART I. FINANCIAL STATEMENTS
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets at
December 31, 1997 and March 31, 1998 3
Condensed Consolidated Statements of Operations
for the three months ended March 31, 1997
and 1998 5
Condensed Consolidated Statements of Cash Flows for three
months ended March 31, 1997 and 1998 6
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 2. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31,
December 31, 1998
1997 (Unaudited)
------------ ------------
Current assets:
<S> <C> <C>
Cash $ - $ 28,107
Accounts receivable, net of allowance of $1,011,942
and $601,350 in 1997 and 1998, respectively 2,058,647 2,610,598
Prepaid expenses and other current assets 148,903 198,732
------------ ------------
Total current assets 2,207,550 2,837,437
------------ ------------
Property and equipment
Less: accumulated depreciation and 9,974,924 9,974,924
amortization (4,574,173) (4,905,968)
------------ ------------
Net property and equipment 5,400,751 5,068,956
------------ ------------
Other assets:
Excess of purchase price over net assets acquired,
net of accumulated amortization of $85,751 and
$91,870 in 1997 and 1998 respectively 403,711 397,591
Deposits 54,941 55,000
Marketable securities - 2,000,000
Other 41,894 35,830
------------ ------------
Total other assets 500,546 2,488,421
------------ ------------
$ 8,108,847 $ 10,394,814
============ ============
</TABLE>
See Accompanying Notes.
3
<PAGE> 4
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
March 31,
December 31, 1998
1997 (Unaudited)
------------- ------------
Current liabilities:
<S> <C> <C>
Line of credit $ 1,309,612 $ 1,318,726
Note payable, other 62,500 -
Notes due to related parties - 178,500
Current installments of long-term debt 413,243 398,663
Current installments of obligations
under capital leases 3,820,933 3,718,776
Accounts payable 1,655,858 1,795,430
Accrued radiologist fees 439,066 318,828
Accrued expenses, other 696,814 875,375
------------ ------------
Total current liabilities 8,398,026 8,604,298
Long-term liabilities:
Long-term debt, excluding current installments 594,064 594,064
Obligations under capital leases,
excluding current installments - -
Deferred lease payments 175,136 159,692
------------ ------------
Total liabilities 9,167,226 9,358,054
------------ ------------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, no par value, 1,000,000
shares authorized, 500,000 shares issued and
368,815 shares outstanding in 1998 - 1,475,260
Common stock, no par value, 9,000,000
shares authorized, 2,628,577 and 8,880,000
shares issued and outstanding in 1997 and 1998,
respectively 779 1,936
Additional paid-in capital 2,899,138 3,422,720
Retained earnings (accumulated deficit) (3,958,296) ( 3,863,156)
------------ ------------
Net stockholders' equity (deficit) (1,058,379) 1,036,760
------------- ------------
$ 8,108,847 $ 10,394,814
============ ============
</TABLE>
See Accompanying Notes.
4
<PAGE> 5
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, March 31,
1997 1998
(Unaudited) (Unaudited)
------------- ------------
<S> <C> <C>
Revenue, net $ 2,576,888 $ 2,797,303
------------- ------------
Operating expenses:
Direct operating expenses 1,398,496 1,231,119
General and administrative 967,295 1,052,991
Depreciation and amortization 366,085 343,979
------------- ------------
Total operating expenses 2,731,876 2,628,089
------------- ------------
Operating income (loss) (154,988) 169,214
Interest expense 169,746 155,540
Other income (loss) 5,482 81,464
------------- ------------
Income (loss) before income taxes (319,252) 95,138
Income taxes - -
------------- ------------
Net income (loss) (319,252) 95,138
Dividends to preferred shareholders (intrinsic value of
beneficial conversion features - see Note 2) - 25,568,750
------------- ------------
Net loss available to common shareholders $ (319,252) $(25,473,612)
============= ============
Net (loss) per
common share $ ( .12) $ (7.46)
============= ============
Weighted average number of common
shares outstanding 2,628,577 3,414,906
============= ============
</TABLE>
See Accompanying Notes.
5
<PAGE> 6
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, March 31,
1997 1998
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (319,252) $ 95,138
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Income taxes - -
Depreciation and amortization 366,085 343,979
Provision for bad debts (9,519) (410,591)
Increase in accounts receivable (208,461) (141,359)
Loss on disposition of equipment 2,770 -
(Increase) decrease in prepaid expenses
and other current assets 66,892 (49,829)
Increase in accounts payable 171,333 139,572
Decrease in accrued radiologist fees (46,027) (120,238)
Decrease in other accrued expenses 66,648 178,561
Decrease in deferred lease payments (15,444) (15,444)
------------ -----------
Net cash provided by operating activities 75,025 19,789
------------ -----------
Cash flows provided (used) by investing activities:
Purchases of property and equipment (138,447) -
Increase in organization & other assets (63,185) -
Increase in deposits (619) (59)
------------ -----------
Net cash used by investing activities (202,251) (59)
------------ -----------
Cash flows provided (used) by financing activities:
Increase (net) in line of credit 52,736 9,114
Repayment of long-term borrowing (19,613) (14,580)
Proceeds of borrowing from related parties 125,000 116,000
Repayment of borrowing from related parties (4,166) -
Principal payments under capital lease obligations (135,050) (102,157)
Proceeds from borrowing on other notes payable 205,000 -
Repayments of borrowing on other notes payable (49,047)
------------ -----------
Net cash (used) by financing activities 174,860 8,377
------------ -----------
Net increase (decrease) in cash 47,634 28,107
Cash at beginning of period 104,335 -
------------ -----------
Cash at end of period $ 151,969 $ 28,107
============ ===========
</TABLE>
6
<PAGE> 7
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CONTINUED
<TABLE>
Supplemental disclosure of cash flow information:
<S> <C> <C>
Interest paid $ 150,957 $ 89,520
============ ===========
Non-cash investing activity:
Stock issued in exchange for marketable securities $ - $ 2,000,000
============ ===========
</TABLE>
The Company recognized $25,568,750 of preferred dividends for the first quarter
of 1998 based on the intrinsic value of beneficial conversion features (see
Note 2).
See Accompanying Notes.
7
<PAGE> 8
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
1) SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by National Diagnostics, Inc., and
Subsidiaries (the "Company") for quarterly financial reporting
purposes are the same as those disclosed in the Company's annual
financial statements. In the opinion of management, the accompanying
condensed consolidated financial statements reflect all adjustments
(which consist only of normal recurring adjustments) necessary for a
fair presentation of the information presented.
The quarterly condensed consolidated financial statements herein have
been prepared by the Company without audit. Certain information and
footnote disclosures included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Although the Company management believes the
disclosures are adequate to make the information not misleading, it is
suggested that these quarterly condensed consolidated financial
statements be read in conjunction with the audited annual financial
statements and footnotes thereto.
In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
OPERATIONAL MATTERS AND LIQUIDITY
The Company had a net profit for the quarter ending March 31, 1998 of
$95,138 and at March 31, 1998 has a working capital deficiency of
approximately $(5,767,000) after reclassification of all long-term
lease payments to current (more fully discussed below). Prior to a
private placement for $2,000,000 in securities on March 27, 1998 the
Company had a deficiency of net assets of $(963,000) which have
collectively resulted in the Company being in default of its major
lease and loan agreements. In view of these matters, recoverability of
a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operation of
the Company, which in turn is dependent upon the Company's ability to
maintain its level of profitability and its ability to cure its lease
and loan defaults. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities
that might be necessary should the Company be unable to continue in
existence. The following commentary addresses the Company's operations
for the first quarter of 1998 and its plan for future operations.
The Company attributes the profit in the first quarter to increased
revenues and the effect of cost cutting the Company had undertaken.
Additionally, the Company's relatively new start up facility (Orange
Park) has begun to achieve a level of profitability with a first
quarter profit of $73,000 contrasted to a loss of $(195,000) for the
corresponding period in 1997. However, due to the expansion and growth
the Company's working capital has decreased to the extent that the
Company has fallen behind in meeting its lease, vendor and certain
loan obligations. Most of the vendors have been cooperative by
allowing extended terms. The Company expects to conclude discussions
with its major lessor in July of 1998 with a satisfactory solution to
cure the default which will bring the leases to current status. Other
lessors have also been cooperative with extended terms. During this
period the Company has not received a waiver of default from its
lessors and therefore, has reclassified all long-term lease
obligations to short-term. The Company, in February of 1998,
8
<PAGE> 9
NATIONAL DIAGNOSTICS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
entered into a Definitive Merger Agreement with American Enterprise
Solutions, Inc. ("AES"). In addition to funding the Company on an as
need basis (through March 31, 1998 AES has loaned the Company
$116,000), on March 27, 1998, AES exchanged securities of Halis, Inc.
(OTCBB:HLIS) valued at $2,000,000 for 500,000 shares of the Company's
Series A Preferred Stock. The value approximated market value of the
Halis, Inc. securities at time of exchange less a volume block
discount of approximately 10%. The Company intends to use the greater
portion (at least seventy-five percent) or all of the Halis securities
as collateral for extended terms on its lease obligations. The Company
believes with a continued increase in revenues, cost containment
measures and a successful conclusion to discussions with its major
lessor that the Company's financial condition will continue to
strengthen, though no absolute assurances can be given.
At March 31, 1998, the market value of the Halis, Inc. securities
increased only slightly. At July 27, 1998, the market value increased
by $560,000.
2) PREFERRED STOCK TRANSACTION
In March, 1997, the Securities and Exchange Commission (SEC) announced
its position on accounting for the issuance of convertible preferred
stock with a nondetachable conversion feature that is deemed "in the
money" at the date of issue (a "beneficial conversion feature"). The
beneficial conversion feature is initially recognized and measured by
allocating a portion of the preferred stock proceeds equal to the
intrinsic value of that feature to additional paid-in capital. This
initial value is calculated at the date of issue as the difference of
the conversion price and the quoted market price of the company's
common stock into which the security is convertible, multiplied by the
number of shares into which the security is convertible. The discount
resulting from the allocation of proceeds in the beneficial
convertible feature is treated as dividend and is recognized as a
return to the preferred shareholder over the minimum period in which
the preferred shareholders can realize that return (i.e. from the date
the securities are issued to the date they are first convertible). The
accounting for the beneficial conversion feature requires the use of
an unadjusted quoted market price (i.e., no valuation discounts
allowed) as the full value used in order to determine the intrinsic
value dividend. The intrinsic value of the dividends to the preferred
shareholder is deducted from the net income before calculating the net
loss per common share. The intrinsic value of beneficial conversion
features to preferred shareholders is $25,568,750. Upon merger with
AES, the effect of the beneficial conversion features is reversed.
3) LEGAL ACTION
The Company was a defendant in a suit filed on January 5, 1998 by Lake
City Medical Group, P.A. for past due rents approximating $16,500. The
Company reached an out of court settlement for which the Company
agreed to pay $12,000. Payment, as agreed, was paid by the Company on
April 6, 1998.
The Company became aware on May 20,1998, that Carnegie Capital, Ltd.
("Carnegie Capital") filed suit for foreclosure against the Company
and its wholly owned partnership, Sundance Partners for alleged
default of a second mortgage note held by Carnegie Capital. The debt
outstanding at July 1, 1998, approximates $150,000 plus interest
approximating $14,000 which the Company has provided for. The property
involved is the fixed site facility occupied by the Company's Orange
Park diagnostic subsidiary. The Company has filed a counter suit
alleging certain improprieties on the part of Carnegie Capital.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the condensed
consolidated financial statements and notes thereto included elsewhere herein.
RESULTS OF OPERATIONS
Net revenues for the three months ended March 31, 1998 were $2,797,000 compared
to $2,577,000 for the same period in 1997, representing a 8% increase. The
increase is primarily attributable to an increase in the volume of procedures
performed.
Direct operating expenses for the three months ended March 31, 1998 were
$1,231,000 compared to $1,398,000 for the same period in 1997, representing a
12% decrease. Direct operating expenses as a percentage of net revenue
decreased to 44% from 54% for the three months ended March 31, 1998 and 1997,
respectively. The decrease in direct operating expenses was primarily due to
the Company achieving lower medical supply costs and radiology fees.
General and administrative expenses for the three months ended March 31, 1998
were $1,053,000 compared to $967,000 for the same period in 1997, representing
a 9% increase. A portion of this increase is due to an increase in property
taxes on the relatively new equipment acquired for the Riverside start-up.
Depreciation and amortization costs decreased to $344,000 from $366,000 for the
quarters ending March 31, 1998 and 1997, respectively. This is primarily
attributable to the Riverside start-up costs being fully amortized. Interest
expense has decreased to $156,000 from $170,000 for the quarters ending March
31, 1998 and 1997, respectively. This is the result of the amortization of the
Company's debt.
The increase in revenues and greater reduction in operating costs for the
quarter resulted in a net profit of $95,000 compared to a loss of $(319,000)
for the same period in 1997. The relatively new Riverside facility contributed
a loss of approximately $(30,000), compared to a loss of $(195,000) for the
corresponding 1997 period. The Orange Park facility (its fixed site opened July
of 1995) produced a profit of approximately $73,000 compared to the loss of
$(122,000) for the same period in 1997. Brandon (the Company's most mature
center) experienced a profit of approximately $223,000 compared to a profit of
$158,000 for the same period in 1997. The Company attributes the profit to
several factors which include: increased revenues; reduction of personnel
costs; and containment of radiology fees and medical supply costs.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company has a working capital deficiency of
approximately $(5,767,000) after reclassification of all long-term lease
payments to current (more fully discussed below). Prior to a private placement
for $2,000,000 in securities on March 27, 1998, the Company had a deficiency of
net assets of $(963,000), which have collectively resulted in the Company being
in default of its major lease and loan agreements. The Company has been in
discussion with its major lessor to obtain a satisfactory arrangement which
will cure the defaults. The Company expects to favorably conclude these
discussions by the end of July. During this period the Company has not received
a waiver of default and therefore, has reclassified its long-term lease
obligation to short term. Additionally, the Company is also in default of a
second mortgage loan on one of its fixed site facilities. In March of 1998, the
Company entered into a private placement with American Enterprise Solutions,
Inc. ("AES") wherein it exchanged 500,000 shares of Company Series A Preferred
Stock for 8,000,000 shares of Halis, Inc. (OTCBB:HLIS) valued at $2,000,000.
The value approximated the market value of the Halis, Inc. securities at the
time of exchange less a volume block discount of approximately 10%. The Company
intended to use at least seventy-five percent of these securities to
collateralize extended terms of its financial obligations and/or liquidate a
portion to otherwise help cure the Company's financial arrearages.
10
<PAGE> 11
In February of 1998, the Company entered into a Definitive Agreement to Merge
with AES. Through March 31, 1998, AES has loaned to the Company $116,000 on an
as need basis. There is no formal commitment to continue this funding. In
March, 1998, AES exercised its conversion right with a portion of its Series A
Preferred Stock at the rate of 44.11 shares of Common Stock to one share of
Preferred Stock, giving AES 65% of the total 8,880,000 shares of Common Stock
outstanding. Subsequently, the CEO/Director of AES was appointed to fill a
vacancy on the Board and office of CEO for the Company. The Company,
subsequently, has set out to arrange with all vendors a plan which will help
the Company become current with its obligations, although, there is no
assurance this can be achieved.
The Company has a $2,000,000 line of credit with Health Care Financial
Partners, Inc. ("HCFP"), a lender specializing in medical receivables. The
lender has a first security interest on all accounts receivable. Interest is a
prime plus 2%. The Company had borrowed in excess of the borrowing base
availability and at March 31, 1998 the excess and loan balance approximated
$19,000 and $1,319.000, respectively. A term loan with HCFP was in arrears
approximately $39,000 with a balance at March 31, 1998, of $220,000. HCFP has
allowed the Company to make payment of $4,000 per day toward the arrearages. At
July 27, 1998, the over advance on the line approximated $6,000 with a loan
balance of approximately $1,130,000. At July 27, 1998, the Company had reduced
its arrearage on the term loan to $9,000 with a balance approximating $152,000.
In the quarter ending March 31, 1998, the company increased its cash by
approximately $28,000. Operations contributed $20,000 of the total increases.
Financing contributed $8,000.
The Company had intended to curtail its external expansion (new start-ups or
acquisitions) until the Company's current relatively new start-ups achieve
acceptable levels of operation, and/or the Company achieved additional capital
infusion. It is likely that external expansion will not take place until
subsequent to the merger; at which time the Company will evaluate the synergies
developing through merger and the recourses available to the Company then
develop a plan for further external expansion.
As a result of its cost cutting measures, increasing revenues, its relatively
new start-up beginning to achieve profitability, if costs can be contained, if
the Company's vendors continue work with the Company, and if the Company is
successful in curing its lease and loan defaults, the Company believes that its
presently anticipated short-term needs for operation, capital repayments and
capital expenditures for its current operations can be satisfied. The Company
feels that its ability in the short-term to improve its working capital is
reasonably attainable. There is no assurance that these short-term needs can be
met.
The Company's long term growth strategies will require additional funds. The
Company feels that the financial resources will be more easily attainable
subsequent to the merger. In the event that the Company proceeds with the
establishment of additional facilities, or encounters favorable acquisition
opportunities in the near future, the Company may incur, from time to time,
additional indebtedness and attempt to issue equity or debt securities in
public or private transactions. There is no assurance that the Company will be
successful in securing additional financing or capital through equity or debt
securities.
The Company's financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. The Company's independent
certified public accountant's report on the Company's 1997 Financial Statements
contained in the Company's Annual Form 10-KSB included a going concern
qualification. The information contained in Note 2 to the Financial Statements
included in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997 remains relevant related to the status of certain of
the Company's operational and funding matters and, accordingly, should be
referred to in conjunction with this Form 10-QSB.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was a defendant in a suit filed on January 5, 1998 by Lake City
Medical Group, P.A. for past due rents approximating $16,500. The Company
reached an out of court settlement for which the Company agreed to pay $12,000.
Payment, as agreed, was paid by the Company on April 6, 1998.
The Company and its wholly owned partnership, Sundance Partners, were named in
a suit of foreclosure filed May 12, 1998, in the Circuit Court in the Fourth
Circuit in and for Clay County, State of Florida, Civil Division, by Carnegie
Capital, Ltd. ("Carnegie Capital"), a second mortgage note holder. The debt
outstanding at July 1, 1998, approximates $150,000 plus interest approximating
$14,000 which the Company has provided for. The property involved is the fixed
site facility occupied by the Company's Orange Park diagnostic subsidiary. The
Company has filed a counter suit alleging certain improprieties on the part of
Carnegie Capital.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as part of this report:
3.3 Articles of Amendment to Articles of Incorporation (Exhibit 10.50,
pages 11-15 of Exhibit B to the Company's Form 8-K dated April 10,
1998 is incorporated by reference herein).
10.49 Merger Agreement dated February 23, 1998 by and between National
Diagnostics, Inc., a Florida Corporation, and American Enterprise
Solutions, Inc., a Florida Corporation. (Exhibit 10.49 to the
Company's Form 8-K dated March 10, 1998 is incorporated by reference
herein).
10.50 Stock Purchase Agreement dated March 17, 1998 by and between National
Diagnostics, Inc., a Florida Corporation and American Enterprise
Solutions, Inc., a Florida Corporation. (Exhibit 10.50 to the
Company's Form 8-K dated April 10, 1998 is incorporated by reference
herein).
10.52 Second Amendment to Merger Agreement by and between National
Diagnostics, Inc. and American Enterprise Solutions, Inc. effective
April 29, 1998. (Exhibit 10.52 to the Company's Form 10-KSB for
December 31, 1997 is incorporated by reference herein).
10.53 First Amendment to Merger Agreement by and between National
Diagnostics, Inc. and American Enterprise Solutions, Inc. effective
March 17, 1998.
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company filed on March 10, 1998, a Form 8-K indicating a Merger
Agreement dated February 23, 1998 by and between National Diagnostics,
Inc., a Florida Corporation, and American Enterprise Solutions, Inc.,
a Florida Corporation.
The Company filed on April 10, 1998, a Form 8-K indicating a private
placement valued at $2,000,000 wherein National Diagnostics, Inc.
issued 500,000 shares of Series A Preferred Stock of NATD to American
Enterprise Solutions, Inc. ("AES") in exchange for 8,000,000 shares of
Common Stock of Halis, Inc. (OTCBB:HLIS). On March 27, 1998, AES
exercised its right to convert 131,185 shares of Series A Preferred
Stock for 5,786,570 shares of Common Stock of the Company. After
conversion, AES holds 65% of the total 8,880,000 shares of Common
Stock outstanding.
12
<PAGE> 13
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.
Date: July 30, 1998
NATIONAL DIAGNOSTICS, INC.
/s/ Curtis Alliston
-------------------------------------
Curtis L. Alliston
President and Chief Operating Officer
/s/ Dennis Hult
-------------------------------------
Dennis C. Hult
Comptroller
13
<PAGE> 14
NATIONAL DIAGNOSTICS, INC.
EXHIBIT INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------ ----------------------- ----
<S> <C> <C>
3.3 Articles of Amendment to Articles of Incorporation (Exhibit 10.50,
pages 11-15 of Exhibit B to the Company's Form 8-K dated April 10,
1998 is incorporated by reference herein).
10.49 Merger Agreement dated February 23, 1998 by and between National
Diagnostics, Inc., a Florida Corporation, and American Enterprise
Solutions, Inc., a Florida Corporation. (Exhibit 10.49 to the
Company's Form 8-K dated March 10, 1998 is incorporated by reference
herein).
10.50 Stock Purchase Agreement dated March 17, 1998 by and between National
Diagnostics, Inc., a Florida Corporation and American Enterprise
Solutions, Inc., a Florida Corporation. (Exhibit 10.50 to the
Company's Form 8-K dated April 10, 1998 is incorporated by reference
herein).
10.52 Second Amendment to Merger Agreement by and between National
Diagnostics, Inc. and American Enterprise Solutions, Inc. effective
April 29, 1998. (Exhibit 10.52 to the Company's unamended Form 10-KSB
for March 31, 1998 is incorporated by reference herein).
10.53 First Amendment to Merger Agreement by and between National
Diagnostics, Inc. and American Enterprise Solutions, Inc. effective
March 17, 1998. (Exhibit 10.53 to the Company's unamended Form 10-KSB
for March 31, 1998 is incorporated by reference herein).
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESTATED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
AMENDED FINANCIAL STATEMENTS OF NATIONAL DIAGNOSTICS, INC. FOR THE THREE MONTHS
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
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0
1,475,260
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