FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1999
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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 0-10128
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PERSONAL DIAGNOSTICS, INCORPORATED
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(Exact name of registrant as specified in its charter)
New Jersey 22-2325136
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
PO Box 5310, Parsippany, NJ 07054
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(Address of principal executive (Zip Code)
offices)
(201) 952-9000
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if
changed since last report)
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 __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at February 4, 2000
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Common Stock, $.01 par value 4,080,000
Page 1 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
Index Page No.
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Part I Financial Information
Item 1. Financial Statements:
Balance Sheets - December 31, 1999 and September 30, 1999 3
Statements of Operations - For the Three Months Ended
December 31, 1999 and 1998 4
Statements of Cash Flows - For the Three Months Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results 7
of Operations
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Page 2 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
BALANCE SHEETS
December 31, September 30,
1999 1999
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(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and equivalents (including three month Treasury Bills) $ 5,420,000 $ 5,694,000
Property held for development and sale 906,000 893,000
Other current assets 4,000 2,000
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Total Current Assets 6,330,000 6,589,000
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TOTAL ASSETS $ 6,330,000 $ 6,589,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,000 $ 5,000
Current liabilities of discontinued operations - 25,000
Other current liabilities 117,000 58,000
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Total Current Liabilities 120,000 88,000
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STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value; authorized, 25,000,000
shares; issued and outstanding, 4,864,000 shares 48,000 48,000
Capital in excess of par value 13,302,000 13,302,000
Accumulated deficit (6,200,000) (5,909,000)
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7,150,000 7,441,000
Less: Treasury stock 784,000 shares, at cost (940,000) (940,000)
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Total Stockholders' Equity 6,210,000 6,501,000
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TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 6,330,000 $ 6,589,000
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See accompanying notes to financial statements.
Page 3 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31,
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1999 1998
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INCOME:
Interest $ 67,000 $ 62,000
Trading gains (losses) (285,000) -
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(218,000) 62,000
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EXPENSES:
General and administrative 73,000 32,000
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INCOME BEFORE INCOME TAXES (291,000) 30,000
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PROVISION (BENEFIT) FOR INCOME TAXES - -
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NET INCOME (LOSS) $ (291,000) $ 30,000
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BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $ (0.07) $ 0.01
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AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,080,000 4,080,000
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See accompanying notes to financial statements.
Page 4 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
December 31,
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1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (291,000) $ 30,000
Adjustments to reconcile net income (loss) to net
cash flows from operating activities:
Changes in assets and liabilities:
Property held for development and sale (13,000) -
Accounts payable and accrued liabilities 32,000 (34,000)
Other current assets (2,000) (2,000)
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Net cash flows from operating activities (274,000) (6,000)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment - -
Proceeds from disposal of property and equipment - -
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Net cash flows from investing activities - -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of outstanding shares - -
Proceeds from exercise of stock options - -
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Net cash flows from financing activities - -
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INCREASE (DECREASE) IN CASH AND EQUIVALENTS (274,000) (6,000)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 5,694,000 5,386,000
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CASH AND EQUIVALENTS, END OF PERIOD $5,420,000 $5,380,000
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See accompanying notes to financial statements.
Page 5 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The balance sheet at the end of the preceding fiscal year has been
derived from the audited balance sheet contained in the Company's Form 10-K and
is presented for comparative purposes. All other financial statements are
unaudited. In the opinion of management, all adjustments which include only
normal recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have been made.
The results of operation for interim periods are not necessarily indicative of
the operating results for the full year.
Footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10-K for the most recent fiscal year.
2. TRADING SECURITIES
For the three months ending December 31, 1999, the Company incurred a
loss of $285,000 on trading and investment activities compared with no gain or
loss in the prior year period. There was no charge or credit to earnings
representing the change in the net unrealized holding loss on trading
securities during the quarter ending December 31, 1999 or during the comparable
year earlier period.
It should be noted that subsequent to December 31, 1999 the Company had
experienced favorable investment and trading results and, while there can be no
absolute assurance, Management believes that its overall trading and investment
activities for the full six months ending March 31, 2000 will be profitable. The
Company intends ultimately to acquire or develop an operating business. At
December 31, 1999 over 70% of total Company's assets were held in the form of
United States Treasury Bills.
3. PROPERTY HELD FOR DEVELOPMENT AND SALE
The Company owns one property in Washington D.C., which it intends to
sell. The renovation process will be completed by June 30, 2000.
4. STATEMENT OF CASH FLOWS
Three Months Ended
December 31,
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1999 1998
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Supplemental disclosure of cash flows information-
Income taxes paid/(refunded) $-0- $-0-
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Page 6 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
At December 31, 1999, the Company had a cash and Treasury Bill balance
of $5,420,000 which represents an $274,000 decrease from the $5,694,000 balance
at September 30, 1999. This $274,000 decrease results entirely from cash flow
from operations which includes the result of a net loss of $291,000 coupled with
expenditures for property held for development and sale of $13,000 offset by
changes in operating assets and liabilities of $30,000. The Company's working
capital position at December 31, 1999 was $6,210,000 as compared to a September
30, 1999 balance of $6,501,000.
Management intends to continue in business and has no intention to
liquidate the Company. The Company has considered various business alternatives
including the possible acquisition of an existing business, but to date has
found possible opportunities unsuitable or excessively priced. The Company is
also considering developing a business itself, believing that start up costs may
be preferable to the premiums required to purchase a going concern. The Company
does not contemplate limiting the scope of its search to any particular
industry. Management has considered the risk of possible opportunities as well
as their potential rewards. Management has invested considerable time evaluating
and finally rejecting numerous proposals for possible acquisition or
combination. The Company believes present valuation levels requested for
alternative operating entities are excessive partly due to the expectations of
sellers being raised by generally high stock market valuations. The Company has
decided to focus its present operating activities on the acquisition,
improvement and resale of real property. This decision does not preclude the
possibility of becoming involved in the future with additional businesses in
other areas. The Company presently owns one property in Washington D.C. which it
intends to sell. The renovation proces will be completed by June 30, 2000.
The Company intends to continue its investment and trading activities
and as a consequence the future financial results of the Company may be subject
to substantial fluctuations. Mr. Michael, the President of the Company is a
graduate of Harvard Business School (MBA). As part of the Company's investment
activities the Company may buy and sell a variety of equity, debt or derivative
securities including market index options and future contracts. Such investment
often involves a high degree of risk and must be considered extremely
speculative. Futures Contracts are particularly risky since a relatively small
amount of capital controls a large nominal market value thus greatly
exaggerating the exposure to potential losses. During the quarter the Company
incurred a loss on its trading and investment activities of $285,000 as compared
with no gain or loss in the prior year period. It should be noted that
subsequent to December 31, 1999 the Company has experienced favorable investment
and trading results, and while there can be no absolute assurance, Management
believes that its overall trading and investment activities for the full six
months ending March 31, 2000 will be profitable.
The ultimate goal of the Company is to acquire or develop an operating
business. At December 31, 1999 the Company held approximately 70% of its assets
in the form of United States Treasury Bills.
Page 7 of 10
Results of Operations
Three Months Ended December 31, 1999
Net income (loss)
The Company incurred a loss of $291,000 in the current three-month
period versus a profit of $30,000 in the prior year period. Interest income
increased $5,000 to $67,000 primarily due to higher interest rates. Trading
losses in the current quarter were $285,000 compared to no gain or loss in the
prior year period. General and administrative expenses of $73,000 were $41,000
higher than the prior year period of $32,000. The increase of $41,000 was due
primarily to a higher level of compensation paid to President John Michael.
During the current year quarter the Company did not record an income
tax benefit because tax losses could not be utilized. During the prior year
quarter the Company did not record an income tax provision due to available tax
carryforwards.
Page 8 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
Page 9 of 10
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.
PERSONAL DIAGNOSTICS, INCORPORATED
Registrant
Date: February 4, 2000 By:
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John H. Michael, Chairman
(on behalf of the registrant)
Page 10 of 10