U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

OR

Commission File Number0-21320

Magna-Lab Inc.

(Exact name of registrant as specified in its charter)

Room 105, Building 5, 31 Xishiku Avenue, Xicheng District, Beijing, China

            (Address of principal executive offices and Zip code)

+86 (010) 6615-5141

(Issuer's telephone number including area code)

 ___________________________________________________________________

     (Former name, former address and former fiscal year, if changed since last report)

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 ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☒      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 – October 10, 20192, 2020 

MAGNA-LAB INC. AND SUBSIDIARY

CONTENTS

All items which are not applicable or to which the answer is negative have been omitted from this report.

PART I: FINANCIAL INFORMATION

Item 1. - Financial Statements

MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to the unaudited condensed consolidated financial statements.

MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended August 31, 2019 and 2018

(unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements.

MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS

For the three and six months ended August 31, 20192020 and 20182019

(unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements.

MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICITCASH FLOWS

For the three and six months ended August 31, 20182020 and August 31, 2019

(unaudited)

For the three and six months ended August 31, 2018:

For the three and six months ended August 31, 2019:

See accompanying notes to the unaudited condensed consolidated financial statements.

MAGNA-LAB INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION AND CONSOLIDATION:

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X for smaller reporting companies and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include the accounts of Magna-Lab Inc. and its wholly owned subsidiary, Cardiac MRI, Inc. (collectively, the “Company”) and all significant intercompany transactions and balances have been eliminated in consolidation. All adjustments which are of a normal recurring nature and, in the opinion of management, necessary for a fair presentation have been included. These interim unaudited condensed consolidated financial statements should be read in conjunction with the more complete information and the Company’s audited consolidated financial statements and related notes thereto included in the Company's annual report on Form 10-K for the year ended February 28, 2019. The operating results forFor the three and six months ended August 31, 2020 and August 31, 2019 are not necessarily indicative of(unaudited)

For the results that may be expected forthree and six months ended August 31, 2020:

For the year ending February 29, 2020. All dollar amounts are roundedthree and six months ended August 31, 2019:

See accompanying notes to the nearest thousand dollars.unaudited condensed consolidated financial statemen

MAGNA-LAB INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR

THE THREE AND SIX-MONTH

PERIODS ENDED August 31, 2020 AND 2019

(Unaudited)

NOTE 2 - DISCUSSION1 –ORGANIZATION AND DESCRIPTION OF THE COMPANY'S ACTIVITIES AND GOING CONCERN CONSIDERATION:BUSINESS

Company Activities -The Company

Magna-Lab Inc. (the “Company”), a New York corporation, is focused on engaging in a “reverse merger” transaction with an unrelated business that would benefit from the Company’s public reporting status.  Additional activities have included preserving cash, making settlements with creditors, attempting to raise capital, and continuing the Company’s public reporting.

The Company was previously engaged in research, development, and commercialization activities until it ceased such activities during the period September 2002 through March 2003.  The Company’s efforts to raise additional capital or enter into a strategic arrangement in order to complete commercialization of its cardiac diagnostic Illuminator products and development of its Artery View product or to seek other means to realize value through sale, license or otherwise have been unsuccessful and therefore, in January 2017, the Company sold such technology to its President and CEO in exchange for relief from certain liabilities.

COVID-19

On March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease.

Covid-19 and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Representation of Interim Financial Statements

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X for smaller reporting companies and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”).  All adjustments which are of a normal recurring nature and, in the opinion of management, necessary for a fair presentation have been included.  These interim unaudited condensed consolidated financial statements should be read in conjunction with the more complete information and the Company’s audited consolidated financial statements and related notes thereto included in the Company's annual report on Form 10-K for the year ended February 29, 2020.  The operating results for the six months ended August 31, 2020 are not necessarily indicative of the results that may be expected for the year ending February 28, 2021.  

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of the Company have been prepared in accordance with GAAP. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses or recognized when incurred. The unaudited condensed consolidated financial statements include the accounts of Magna-Lab Inc. and its wholly-owned subsidiary, Cardiac MRI, Inc. (collectively, the “Company”) and all significant intercompany transactions and balances have been eliminated in consolidation.

Going Concern Consideration -

As indicated in the accompanying interim unaudited condensed consolidated financial statements, at August 31, 2019,2020, the Company had approximately $1,000$-0- of cash and approximately $1,733,000 in negative working capital of approximately $1,484,000 and a stockholders’ deficit and negative cash flows from operations. For the six months ended August 31, 2019, the Company had a net loss of approximately $69,000 and utilized approximately $17,000 of cash in operating activities. Further, losses are continuing subsequent to August 31, 2019.$1,484,000. These factors, among others, indicate that the Company is in need of additional financing or a strategic arrangement in order to continue its planned activities for the fiscal year that began on March 1, 2019.2020. The Company’s plans to deal with this uncertainty are described above in “Company Activities.” Management’s plans to raise capital, enter into a strategic arrangement or sell or merge with an unrelated business have not been successful to date and there can be no assurance that management’s plans can be realized at all. While a shareholder providedHistorically, substantially all of the Company withCompany’s financing, has come from stockholder loans. There can be no assurance that additional stockholder loans subsequentwill be extended to August 31, 2019 (Note 4), such amounts are not sufficient to continue operations for the coming twelve months and the Company has no commitment for further financing. Company.

These factors, among others, raise substantial doubt about the Company’s ability to continue operations as a going concern.  No adjustments have been made in the accompanying condensed consolidated financial statements to the amounts and classification of assets and liabilities which could result should the Company be unable to continue as a going concern.

NOTE 3 – NET LOSS PER COMMON SHARE:Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Income Taxes

The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions every quarter to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.

Net Income (Loss) Per share

The Company complies with the accounting and reporting requirements of U.S. GAAP with respect to computing its net loss per common share. Net loss per common share is computed based on the weighted average number of shares of Class A Common Stock and Class B Common sharesStock outstanding.

Basic loss(loss) per share excludes dilution and is computed by dividing loss available to common stockholders by the weighted average common shares outstanding for the period.  Diluted loss(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.  Since there are no options, warrants or derivative securities outstanding, basic and diluted lossincome (loss) per share were the same for the three and six monthsix-month periods ended August 31, 20192020 and 2018.2019.  

Recent Accounting Pronouncements

We have reviewed accounting pronouncements issued and have adopted any that are applicable to the Company. We have determined that none had a material impact on our financial position, results of operations, or cash flows for the periods presented.

Certain other accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material.

NOTE 3 – STOCK PURCHASE AGREEMENT DATED JUNE 30, 2020

On June 30, 2020, Joel S. Kanter, individually and as representative for (i) the 607,727 shares of Class A Common Stock of the Company owned by Magna Acquisition LLC (“MALLC”), (ii) the $1,453,811 of promissory notes owed by the Company to MALLC and to Joel S. Kanter (collectively, the “Notes”), and (iii) as representative for the four directors and/or officers owning 106,032 shares of Class A Common Stock of the Company (the “Seller”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Seller agreed to sell 202,576 shares of Class A Common Stock and the Notes to Activist Investing LLC, an entity owned by David Lazar (“Activist”) for $105,000. The 202,576 shares represented approximately 17.2% of the 1,179,329 shares of Class A Common Stock and Class B Common Stock of the Company’s outstanding shares of common stock, which is not a majority. However, Mr. Lazar became the Company’s sole director and officer on or about July 18, 2020 and caused Activist to convert the Notes (which were currently not convertible as of the date of the Stock Purchase Agreement) into 116,697,438 shares of Class A Common Stock of the Company on September 23, 2020. As a result, on or about July 18, 2020, there was a change of control of the Company. There is no family relationship or other relationship between the Seller and Activist. An Amendment to the Stock Purchase Agreement clarified the responsibilities of the parties for filing tax returns, and that references to the Company included Cardiac MRI, Inc., the Company’s 100% subsidiary.

NOTE 4 – NOTES PAYABLE –AND ACCRUED INTEREST TO RELATED PARTY:PARTIES

The balance of notes payable and accrued interest was approximately $1,472,000 and $1,406,000, as of August 31, 2020 and February 29, 2020, respectively. Notes payable at August 31, 2020 include 12% unsecured notes originally payable to the Company’s principal stockholder, Magna Acquisition LLC (“MALLC”), a related party, in the aggregate principal amount of approximately $687,000, plus approximately $650,000$762,000 of interest accrued.accrued interest. In addition, notes payable at August 31, 2020 include 10% unsecured notes originally payable to Joel S. Kanter, a former director of the Company (who is also a manager of MALLC) in the aggregate principal amount of approximately $14,000,$19,000 plus an immaterial amountapproximately $4,000 of accrued interest.

Pursuant to the Stock Purchase Agreement dated June 30, 2020 between MALLC, Joel S. Kanter and Activist Investing LLC (“Activist”), Activist acquired the notes payable and accrued interest accrued. Allfrom MALLC and Joel S. Kanter effective July 2, 2020. See Note 3 above.

Effective September 23, 2020, all amounts outstanding and originally payable to MALLC and to Joel S. Kanter and then payable to Activist were converted into 116,697,438 shares of such notes become due 120 days after issuance and, as such, approximately $687,000 principal amountClass A Common Stock of the MALLC notes are overdueCompany. See Note 8 below.

NOTE 5 – DUE TO RELATED PARTIES

The balance of $9,000 at August 31, 2019. The notes that2020 represents amounts paid by David Lazar and John Lowy, two directors of the Company at August 31, 2020, for Company expenses. These liabilities are overdue bear interest at 15% per year for the MALLC notes,noninterest bearing and at 12% per year for the director notes, subsequent to their maturity date.are due on demand.

The Company intends to make a proposal to this principal stockholder and to this director to convert all amounts outstanding to them (including overdue amounts) into common stock of the Company.NOTE 6 – GAIN FROM DEBT EXTINGUISHMENT

NOTE 5 – ACCOUNTS PAYABLE AND ACCRUALS:

Accrued expenses and other current liabilities includes approximately $18,000 payable to a third party, guaranteed by our principal stockholder, for amounts paid to an account payable in October 2007 on our behalf. This amount is repayable if the proposed merger transaction with this party was not completed. This party subsequently merged with a third party and abandoned its possible transactionIn connection with the Company, however there has not beenStock Purchase Agreement dated June 30, 2020, Activist performed a demand for repaymentreview of this amount. The Company believes it would be entitledthree old (dating from 1996 to an offset for recovery of certain costs from this third party associated with that proposed transaction pursuant to understandings between the parties.

Some of the amounts recorded as2010) vendor accounts payable may have passedbalances (totaling approximately $191,000) and received a legal opinion that such outstanding accounts payable and accrued liabilities aggregating approximately $191,000 were time barred by the statute of limitations for purposesand the Company recorded the relief of those liabilities and a gain from debt extinguishment of $191,000 as of July 2, 2020.

NOTE 7 – GAIN FROM SETTLEMENT OF ACCOUNTS PAYABLE

In connection with the closing of the vendor seeking recoveryStock Purchase Agreement (see Note 3 above), the Seller agreed to pay approximately $37,000 to settle certain liabilities of such monies. Thethe Company has not undertaken a formal study to evaluate recorded payables past the statute of limitations for purposes of possible write-off of such payables. See also Notes 3 and 8 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2019stock transfer. Edgarizing and other services (approximately $18,000) and approximately $19,000 to settle a liability for other information on outstanding liabilitiesservices of our former Treasurer and related matters.

There was no activitySecretary (Chief Financial Officer) over an extended period of time aggregating approximately $186,000. The $167,000 excess of the $204,000 total debt satisfied over the $37,000 total cash paid has been recognized as a gain from settlement of accounts payable in the restructuring accrual for the pre-1997 activities during the three months ended August 31, 2019 or 2018. The Company periodically adjusts2020.

NOTE 8 – SUBSEQUENT EVENTS.

Amended and Restated Stock Purchase Agreement effective September 23, 2020

On September 23, 2020, Activist Investor LLC (“Activist”), the remaining accrual based on the statusowner of 116,697,438 shares of common stock of the mattersCompany (the “Shares”) upon conversion of approximately $1,472,000 of promissory notes acquired by Activist after Activist purchased control of the Company in July 2020 (see Note 3), agreed to sell the Shares to Liu Lina (the “Purchaser”), a resident of China, for $255,000, pursuant to an Amended and activity givenRestated Stock Purchase Agreement (the “A&R Stock Purchase Agreement”). The first agreement between Activist and the passagePurchaser was superseded because it had the incorrect name of time.Activist. Activist is owned 100% by David Lazar. The Shares represent approximately 99.0% of the 117,876,762 shares of Class A Common Stock of the Company’s outstanding shares of common stock.

NOTE 6 –STOCK-BASED COMPENSATION:The sale of the Shares to Ms. Liu was completed on October 2, 2020. Ms. Liu, as the 99.0% majority stockholder of the Company then appointed as directors of the Company the following three persons: Wang Jun, Wang Yang and Bai Zhihui as directors and Ms. Liu as CFO, Treasurer and Secretary (together, the “Designees”). As a result, there was a change of control of the Company; and the change of management will be completed on or about October 12, 2020 (the “New Management Date”), 10 days after the Company’s Information Statement pursuant to SEC Rule 14f-1 was filed with the SEC and mailed to the Company’s stockholders. There is no family relationship or other relationship between Activist and the Purchaser.

In accordance with GAAP, the Company recognizes the cost of employee services received in exchange for awards of equity instruments in the financial statements based on the grant date fair value of those awards. Stock awards to consultants and other non-employees are accounted for based on an estimate of their fair value at the time of grant. The fair value of each option or warrant grant under GAAP is estimated on the date of the grant using the Black-Scholes option pricing modelconnection with the following weighted-average assumptions: risk free interest rate of 5%; no dividend yield; expected option lives of five to nine yearssale under the A&R Stock Purchase Agreement, Mr. Lazar resigned as an officer and expected volatility in excess of 200%.

In April 2004, the Board of Directors agreed to reserve 90,000 shares of class A common stock for issuance todirector, John B. Lowy and Dovid Kotkes have resigned as directors, and management in the event that their efforts result in Board approval of a merger or financing transaction. The criteria for recognition of this share compensation was met on July 24, 2008 and the Company recorded stock-based compensation expense of approximately $10,000 reflectingappointed the fair valueDesignees as the directors of the 90,000 shares atCompany, on the dateNew Management Date. As a result thereof, the Designees became the directors of entry intothe Company, on or about October 12, 2020.  As part of the agreement, at the closing bid price ofCardiac MRI Inc., the Company’s stock. Because of cash constraints, the Company has not been ablewholly owned subsidiary, was assigned to issue such shares. However, for accounting purposes, the Company has accounted for such shares as though they have been issued.Mr. Lazar.

NOTE 7 – EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS:

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying interim unaudited condensed consolidated financial statements.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Some of the statements contained in this report discuss our plans and strategies for our business or state other forward-looking statements, as this term is defined in the Private Securities Litigation Reform Act of 1995.  Statements that are not statements of historical facts may be deemed to be forward-looking statements.  The words "anticipate," "believe," "estimate," "expect," "plan," "intend," "should," "seek," "will," and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them.  These forward-looking statements reflect the current views of our management.  However, various risks, uncertainties and contingencies could cause our actual results, performance or achievements to differ materially from those expressed in, or implied by, these statements.   See our Form 10-K for the year ended February 28, 201929, 2020 for a discussion of certain known risks; also see Part II, Item 1A.

Overview, Background and History

We are currently a “shell company” with no meaningful assets or operations other than our efforts to identify and merge with an operating company.  We no longer have any full-time employees and our Chief Executive and Chief Financial Officers serve on a part-time consulting basis.

Prior to March 2003, our business had been focused on pre-revenue development and commercialization of disposable medical devices designed to enhance the effectiveness of magnetic resonance imaging in detection and diagnosis of heart disease.  Due to the unavailability of funding, beginning in the fall of 2002 we essentially ceased all of our operations including product development and commercialization activities.  Our efforts to realize value for our prior business and MRI technology have been unsuccessful.  As a result, we view our most viable option to be merging with an unrelated operating company that would benefit from our status as a reporting company in a so-called “reverse merger” transaction.  Entering into a “reverse merger” would likely involve very substantial dilution to the existing stockholders.  It would, however, provide an opportunity to return some value to stockholders.  While we have identified and explored merging with a number of candidates over the past few years and entered into definitive agreements with one candidate (which agreement was subsequently terminated), we have no commitments to merge with any company at the present time.

In January 2017, the Company’s President and Chief Executive Officer (the “CEO”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with the Company. Under the Purchase Agreement, the CEO purchased all of the intellectual property rights, any and all physical assets, any and all permits and all non-financial books, records, files, design specification, software and other data related to the Company’s magnetic resonance imaging technology. In exchange for purchased assets, the CEO (a) assumed all liabilities of the Company related exclusively to the purchased assets and (b) agreed to forgiveness of all indebtedness owing from the Company totaling approximately $110,000 including intellectual property counsel fees and costs, $68,000 of which had been paid by and is therefore due to the CEO for payments he has made on the Company’s behalf in prior years in an attempt to preserve certain intellectual property rights at that time. The CEO ceased making such payments several years ago and, as such, the underlying intellectual property became compromised.

In order to raise cash to continue our efforts to pursue a reverse merger, on October 31, 2005, the Company consummated a stock purchase agreement with Magna Acquisition LLC (“MALLC”) which resulted in a change of control of our Company. Under the agreement, we sold 300,000 shares of Class A Common Stock to MALLC for gross proceeds of $190,000, before expenses. Contemporaneous with the new investment, MALLC purchased from our former principal stockholder 307,727 shares of the Company’s Class A Common Stock, representing all the shares of our common stock owned by that stockholder. Two of our directors

In January 2017, the Company’s President and our Chief FinancialExecutive Officer serve as sole managers of MALLC,at the time (the “CEO Purchaser”) entered into an Asset Purchase Agreement (the “Initial Purchase Agreement”) with the ability to vote and disposeCompany.  Under the Initial Purchase Agreement, the CEO Purchaser purchased all of the intellectual property rights, any and all physical assets, any and all permits and all non-financial books, records, files, design specification, software and other data related to the Company’s magnetic resonance imaging technology.  In exchange for purchased assets, the CEO Purchaser (a) assumed all liabilities of the Company related exclusively to the purchased assets and (b) agreed to forgiveness of all indebtedness owing from the Company totaling approximately $110,000 including intellectual property counsel fees and costs, $68,000 of which had been paid by and is therefore due to the CEO Purchaser for payments he has made on the Company’s behalf in prior years in an attempt to preserve certain intellectual property rights at that time.  The CEO Purchaser ceased making such payments several years ago and, as such, the underlying intellectual property became compromised. 

On June 30, 2020, Joel S. Kanter, individually and as representative for (i) the 607,727 shares of ourClass A Common Stock of the Company owned by Magna Acquisition LLC (“MALLC”), (ii) the $1,453,811 of promissory notes owed by the Company to MALLC and to Joel S. Kanter (collectively, the “Notes”), and (iii) as representative for the four directors and/or officers owning 106,032 shares of Class A Common Stock of the Company (the “Seller”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Seller agreed to sell 202,576 shares of Class A Common Stock and the Notes to Activist Investing LLC, an entity owned by majority vote. These directors have assumedDavid Lazar (“Activist”) for $105,000. The 202,576 shares represented approximately 17.2% of the 1,179,329 shares of Class A Common Stock and Class B Common Stock of the Company’s outstanding shares of common stock, which is not a lead rolemajority. However, Mr. Lazar became the Company’s sole director and officer on or about July 18, 2020 and caused Activist to convert the Notes (which were currently not convertible as of the date of the Stock Purchase Agreement) into 116,697,438 shares of Class A Common Stock of the Company on September 23, 2020. As a result, on or about July 18, 2020, there was a change of control of the Company. There is no family relationship or other relationship between the Seller and Activist. An Amendment to the Stock Purchase Agreement clarified the responsibilities of the parties for filing tax returns, and that references to the Company included Cardiac MRI, Inc., the Company’s 100% subsidiary.

In connection with managementthe sale under the Stock Purchase Agreement, the members of the Company’s Board of Directors resigned and appointed Mr. Lazar as the sole director of the Company, subject to the filing and dissemination of an Information Statement, which was filed on July 6, 2020, and the passage of the 10-day period set forth in pursuing financingSEC Rule 14f-1. The Company’s officers also resigned at the same time, namely Lawrence A. Minkoff, Ph.D., Chief Executive Officer and merger candidatesKenneth C. Riscica, Treasurer, Secretary and operating matters.Chief Financial Officer. As a result thereof, on or about July 18, 2020, Mr. Lazar then became the sole Director and officer of the Company.

MALLC has been responsible for substantially all of our funding since October 2005 and until December 2018.June 30, 2020.  During the period from October 2005 through and including DecemberAugust 31, 2018,2020, MALLC loaned us an aggregate of approximately $687,000 under a series of promissory notes payable that mature 120 days from issuance.  AtThe balance of notes payable and accrued interest was approximately $1,472,000 and $1,406,000, as of August 31, 2019,2020 and February 29, 2020, respectively. Notes payable include 12% unsecured notes payable to MALLC, in the aggregate principal amount of approximately $687,000, face amountplus approximately $762,000 of suchinterest accrued.  In addition, notes were beyond their maturity date and therefore due on demand. Thepayable include 10% unsecured notes bore interest at 12% per year which increasedpayable to 15% per year for periods beyond maturity. During May and July, 2019. Aa former director of the Company loaned(who is also a manager of MALLC) in the Companyaggregate principal amount of approximately $10,000$19,000 plus approximately $4,000 of accrued interest. All of such notes become due 120 days after issuance and, $4,000, respectively, under unsecuredas such, approximately $687,000 principal amount of the notes payable with substantiallyto MALLC are overdue at August 31, 2020. Approximately $17,000 of the same terms as the MALLC notes payable exceptto the former director are overdue. The notes that the interest rate decreased from 12% to 10% and the penalty interest rate decreased from 15% to 12%. The Company intends to make a proposalare overdue (the notes payable to MALLC and the notes payable to thisthe former director) bear interest at 15% and 12% per year, respectively. The noteholders have not asserted that the Company is in default.

On June 2020, the former director loaned to us an additional approximately $9,000.

We entered into an agreement with MALLC and the former director to convert all of the amounts outstanding to them (including overdue amounts) into common stock of the Company.

While we have reduced our expenditures very significantly, we do not have sufficient cash to continue our activities for the coming twelve months. We currently do not have any commitments for new funding.

Financial Condition, LiquidityRecent Developments

COVID-19

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and Capital Resources -Atis continuing to spread throughout other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.” COVID-19 has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide. The business of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, the duration of the pandemic, and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extended period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.

Change of Control

On September 23, 2020, Activist Investing LLC (the “Seller”), the owner of 116,697,438 shares of common stock (the “Shares”) upon conversion of $1,453,811 of promissory notes acquired by the Seller after the Seller purchased control of the Company in July 2020, agreed to sell the Shares to Liu Lina (the “Purchaser), a resident of China, for $255,000, pursuant to an Amended and Restated Stock Purchase Agreement (the “A&R Stock Purchase Agreement”). The first agreement between the Seller and the Purchase was superseded because it had the incorrect name of the Seller. The Seller is owned 100% owned by David Lazar. The Shares represent approximately 99.0% of the 117,876,762 shares of Class A Common Stock of our outstanding shares of common stock.

The sale of the Shares to Ms. Liu was completed on October 2, 2020. Ms. Liu, as the 99.0% majority stockholder of then appointed as directors of the Company the following three persons: Wang Jun, Wang Yang and Bai Zhihui as directors and Ms. Liu as CFO, Treasurer and Secretary (together, the “Designees”). As a result, there was a change of control of the Company; and the change of management was completed on or about October 12, 2020 (the “New Management Date”), ten (10) days after the Company’s Information Statement pursuant to SEC Rule 14f-1 was filed with the SEC and mailed to the Company’s stockholders. There is no family relationship or other relationship between the Seller and the Purchaser.

In connection with the sale under the Stock Purchase Agreement, Mr. Lazar resigned as an officer and director, and John B. Lowy and Dovid Kotkes have resigned as directors, and have appointed the Designees as our directors, on the New Management Date. As a result thereof, the Designees became the directors of the Company, on or about October 10, 2020.

As of the date hereof, our authorized capital stock consists of 120,000,000 shares of common stock, par value $.001 per share, of which 117,876,762 shares of Class A Common Stock and 567 shares of Class B Common Stock are issued and outstanding, and 5,000,000 shares of Preferred Stock, par value $.001 per share, none of which shares are issued or outstanding. Holders of shares of our Class A Common Stock are entitled to one vote per share with respect to all matters to be acted on by the stockholders; and holders of shares of our Class B Common Stock are entitled to five votes per share and each share of Class B Common Stock is convertible into one share of Class A Common Stock.

Results of Operations for the Three Months Ended and Six Months Ended August 31, 2019,2020 compared to the Company hadThree Months Ended and Six Months Ended August 31, 2019

Operating expenses for the three months ended and the six months ended August 31, 2020 were approximately $1,000 cash$21,000 and approximately $1,733,000 in negative working capital$28,000 compared to $8,000 and stockholders’ deficit$17,000 for the three months ended and negative cash flows from operations. For the six months ended August 31, 2019 due to comparable levels of activities on both periods. Other income (expense) was approximately $305,000 for the Company had a net loss of approximately $69,000 and utilized approximately $17,000 of cash in operating activities. Further, losses are continuing subsequent2020 six month period compared to $(52,000) during the same period ended August 31, 2019. These factors, among others, indicate that the Company isThe increase in needother was attributable to gains from debt extinguishment and gains from settlement of additional financing or a strategic arrangement in order to continue its planned activitiesaccounts payable for the fiscal year that began on March 1, 2019. These factors, among others, raise substantial doubt about the Company’s ability to continue operations as a going concern.period ended August 31, 2020.  

Our plan of operations for the coming twelve months is to pursue our “reverse merger” strategy by seeking, evaluating and negotiating with merger candidates and to continue to take actions to preserve our cash and continue our public reporting. We do not have the cash resources to continue our plan for the coming twelve months, even at our reduced expenditure levels. As such, we may have to take further measures or cease activities altogether, including terminating our public reporting status.

We currently have no material commitments for capital expenditures.

Results of Operations –During the three and six months ended August 31, 2019, our2020 we recorded a net loss was approximately $35,000 and $69,000, respectively,income of $277,000 compared to a net loss of approximately $37,000 and $82,000, respectively, in$69,000 for the three and six months ended August 31, 2018. The decrease in the loss is due principally to lower costs of occupancy and insurance as the Company made reductions in these expenses. Such decreases were offset somewhat by the higher debt levels and higher default interest in the three and six months ended August 31, 2019 that resulted in an increase in interest expense.2019.

Our expenses, particularly professional and consulting fees, can increase significantly if we are actively engaged in negotiations for a merger transaction.  There can be no assurance that any of our activities will result in any transaction. Our interest expenses are increasing with additional outstanding borrowings which are increasingly at default interest rates (15% on outstanding debt to MALLC).

Off BalanceFinancial Condition, Liquidity and Capital Resources   

Going concern

As indicated in the accompanying interim unaudited condensed consolidated financial statements, at August 31, 2020, the Company had approximately $-0- of cash, negative working capital of approximately $1,484,000 and an accumulated deficit of $28,812 ,000. These factors, among others, indicate that the Company is in need of additional financing or a strategic arrangement in order to continue its planned activities for the fiscal year that began on March 1, 2020. The Company’s plans to deal with this uncertainty are described above in “Company Activities.” Management’s plans to raise capital, enter into a strategic arrangement or sell or merge with an unrelated business have not been successful to date and there can be no assurance that management’s plans can be realized at all. Historically, substantially all of the Company’s financing, has come from stockholder loans. There can be no assurance that additional stockholder loans will be extended to the Company.

These factors, among others, raise substantial doubt about the Company’s ability to continue operations as a going concern.  No adjustments have been made in the accompanying condensed consolidated financial statements to the amounts and classification of assets and liabilities which could result should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements -

The Company has no material off balance sheet arrangements that are likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

Critical Accounting Principles –

We have identified critical accounting principles that affect our interim unaudited condensed consolidated financial statements by considering accounting policies that involve the most complex or subjective decisions or assessments as well as considering newly adopted principals.  They are:See Note 2 – Summary Of Significant Accounting Policies.

Going Concern Consideration – Our interim unaudited condensed consolidated financial statements have been prepared assuming we areAs of August 31, 2020, the impact of COVID-19 on our business continued to unfold. As a “going concern.” We areresult, many of our estimates and assumptions carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, our estimates may change in need of immediate substantial additional capital or a strategic business arrangement in order to continue our planned activities. There can be no assurance that our plans to address this need can be realized. As such, we may be unable to continue operations as a going concern. No adjustments have been made in the interim unaudited condensed consolidated financial statements that could result should we be unable to continue as a going concern.future periods.

Our other accounting policies, which we do not consider critical accounting policies, are contained in Note 1 to the Consolidated Financial Statements at February 28, 2019 contained in our Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the sensitivity of income or loss to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market driven rates or prices. We are not presently engaged in any substantive commercial business. Accordingly, the risks associated with foreign exchange rates, commodity prices, and equity prices are not significant. Our debt obligations contain interest rates that are fixed and we do not enter into derivatives or other financial instruments for trading or speculative purposes.Not applicable.

Item 4T.4. Controls and Procedures

In June 2018, the Company’s auditors advised the Audit Committee that they believe that a material weakness in internal accounting controls exists by reason of the impact of the Company’s financial constraints on its ability to continue its timely public reporting as well as the lack of desirable segregation of duties, among other matters.  Based on this information, management has revised its conclusion on the adequacy of its disclosure controls and its internal accounting controls to that stated below.

(a)Evaluation of Disclosure Controls and Procedures. The Company’s senior management is responsible for establishing and maintaining a system of disclosure controls and procedures (as definedthat are designed to ensure that information required to be disclosed in Rules 13a-15(e) and 15d-15(e)the reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) designed to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’sour management, including itsour principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any control and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company has evaluatedWe conducted an evaluation, under the supervision and with the participation of our principal executive and financial officers, of the effectiveness of the design and operation of itsour disclosure controls and procedures underas of August 31, 2020. Based upon their evaluation and subject to the supervision offoregoing, the principal executive and with the participation of management, including the Chief Executive Officer and our Chief Financial Officerfinancial officers have concluded that, as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded thatreport, our disclosure controls and procedures are not effective.effective at a reasonable assurance level.

(b) Changes in Internal Control Over Financial Reporting. There have not been any  Management determined there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) underthat occurred during the Exchange Act) during our most recently completed fiscal quarter which is the subject ofcovered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.reporting, except that as of the date hereof, and due to the change of control completed on October 2, 2020, there are no members of the Audit Committee, which was established by our Board of Directors for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements by our independent auditors.  The Board of Directors has not determined whether to appoint any members to the Audit Committee.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Any investmentThere have been no other material developments with respect to previously reported legal proceedings discussed in our common stock involves a high degree of risk.Some of these many known risks that affect an investment in our Company (there can be others) include:

For a more complete listing and description of these and other risks that the Company faces please see our Annual Report on Form 10-K for the year ended February 28, 2019.29, 2020.

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. Our Annual Report on Form 10-K for the year ended February 29, 2020 includes a detailed discussion of our risk factors under the heading “Part I, Item 1A-Risk Factors.” There are no changes from the risk factors previously disclosed in our Annual Report on Form 10-K. You should carefully consider the risk factors discussed in our Annual Report on Form 10-K as well as the other information in this report before deciding whether to invest in shares of our common stock. The occurrence of any of the risks discussed in the Annual Report on Form 10-K could harm our business, financial condition, results of operations or growth prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On June 30, 2020 Joel S. Kanter, individually and as representative for (i) the 607,727 shares of common stock of the Company owned by Magna Acquisition LLC (“MALLC”), (ii) the $1,453,811 of promissory notes owed by the Company to MALLC and to Joel S. Kanter (collectively, the “Notes”), and (iii) as representative for the four directors and/or officers owning 106,032 shares of Class A Common Stock of the Company ( the “Seller”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Seller agreed to sell 202,576 shares of Class A Common Stock and the Notes to Activist Investing LLC., an entity owned by David Lazar (the “Activist”) for $105,000. The 202,576 shares sold pursuant to the Stock Purchase Agreement represent approximately 17.2% of the 1,179,329 shares of Class A Common Stock and Class B Common Stock of the Company’s outstanding shares of common stock. Mr. Lazar caused Activist to convert the Notes into 116,697,438 shares of the Company’s Class A Common Stock at a conversion price of $0.01246 per share, which resulted in Activist becoming the majority stockholder of the Company on or about July 18, 2020. An Amendment to the Stock Purchase Agreement clarified the responsibilities of the parties for filing tax returns, and that references to the Company included Cardiac MRI, Inc., the Company’s wholly-owned subsidiary. There were no net proceeds to the Company as a result of the Stock Purchase Agreement. The securities were sold in transactions exempt from registration under Rule 506(b) of Regulation D.

Item 3. Defaults Upon Senior SecuritiesSecurities.

As discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview, Background and History, approximately $687,000 principal amount of 12% notes payable to Magna Acquisition LLC (“MALLC) are in default at August 31, 2019 as a result of their non-payment when due. Such notes now carry a default rate of interest of 15%.None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. - Exhibits

____________

(1) Included as exhibit to our Current Report on Form 8-K filed on July 2, 2020

(2) Included as exhibit to our Current Report on Form 8-K filed on October 2, 2020

* Filed with the Form 10Q for the period ended May 31, 2019

** Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INDEX TO EXHIBITS

* Filed in connection with the Form 10Q for the period ended May 31, 2019

** Filed herewith.