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 June 30, 2000
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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
(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)
(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 August 9, 2000
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Common Stock, $.01 par value 3,820,000
Page 1 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
Index Page No.
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Part I Financial Information
Item 1. Financial Statements:
Balance Sheets - June 30, 2000 and September 30, 1999 3
Statements of Operations - For the Three and Nine Months Ended
Statements of Cash Flows - For the Nine Months Ended June 30, 2000 and 1999 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
Exhibit 27.1: Financial Data Schedule
Page 2 of 10
PERSONAL DIAGNOSTICS, INCORPORATED
BALANCE SHEETS
June 30, June 30,
2000 1999
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(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,580,000 $ 5,098,000
Investment securities held-to-maturity -- 596,000
Property held for development and sale -- 893,000
Other current assets -- 2,000
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Total Current Assets 6,580,000 6,589,000
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TOTAL ASSETS $ 6,580,000 $ 6,589,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,000 $ 5,000
Current liabilities of discontinued operations -- 25,000
Other current liabilities 55,000 58,000
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Total Current Liabilities 60,000 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 (See Note 5) 48,000 48,000
Capital in excess of par value 13,302,000 13,302,000
Accumulated deficit (5,890,000) (5,909,000)
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7,460,000 7,441,000
Less: Treasury stock 784,000 shares, at cost (940,000) (940,000)
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Total Stockholders' Equity 6,520,000 6,501,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 6,580,000 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 Nine Months Ended
June 30, June 30,
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2000 1999 2000 1999
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INCOME:
Interest $ 91,000 $ 63,000 $ 231,000 $ 183,000
Trading gains -- 8,000 300,000 180,000
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91,000 71,000 531,000 363,000
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EXPENSES:
General and administrative 143,000 21,000 512,000 153,000
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INCOME (LOSS) BEFORE
INCOME TAXES (52,000) 50,000 19,000 210,000
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PROVISION (BENEFIT)
FOR INCOME TAXES -- -- -- --
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NET INCOME (LOSS) $ (52,000) $ 50,000 $ 19,000 $ 210,000
=========== ============ =========== ===========
BASIC AND DILUTED
NET INCOME (LOSS) PER SHARE $ (0.01) $ 0.01 $ 0.01 $ 0.05
=========== ============ =========== ===========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING $4,080,000 4,080,000 4,080,000 4,080,000
=========== ============ =========== ===========
See accompanying notes to financial statements.
Page 4 of 10
PERSONAL DIAGNOSTICS INCORPORATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
June 30,
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,000 $ 210,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Changes in assets and liabilities:
Property held for development and sale 893,000 --
Accounts payable and accrued liabilities (28,000) 26,000
Other current assets 2,000 (5,000)
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Net cash flow from operating activities 886,000 231,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment securities 596,000 --
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Net cash flows from investing activities 596,000 --
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INCREASE IN CASH AND EQUIVALENTS 1,482,000 231,000
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 5,098,000 5,386,000
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CASH AND EQUIVALENTS, END OF PERIOD $ 6,580,000 $ 5,617,000
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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
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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 operations 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
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For the three months ending June 30, 2000 the Company incurred no gain
or loss on trading and investment activities compared with a gain of $8,000 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 June 30, 2000 or during the comparable year earlier period. The
Company intends ultimately to acquire or develop an operating business.
3. PROPERTY HELD FOR DEVELOPMENT AND SALE
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On April 6, 2000 the Company sold its remaining real estate and certain
related furniture and fixtures to President John H. Michael for a total selling
price of $940,000. The sale price was established based upon an appraisal of the
property conducted by an independent appraiser designated by Riggs Bank. The
Company realized a gain of approximately $1,000 on this transaction, which has
been included in general and administrative expenses on the statement of
operations.
4. STATEMENT OF CASH FLOWS
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Nine Months Ended
June 30,
2000 1999
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Supplemental disclosure of cash flows information-
Income taxes paid/(refunded) $-0- $-0-
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5. SUBSEQUENT EVENT
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On August 6, 2000 the Company repurchased 260,000 shares from President
John H. Michael at $1.35 per share for a total purchase price of $351,000. This
price was slightly below the bid price of the Company's shares and about $0.25
below the liquid net asset value per share. Subsequent to this transaction, the
Company has 3,820,000 shares outstanding. Company President, John H. Michael,
owns in excess of 80% of this total.
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
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At June 30, 2000, the Company had a cash and Treasury Bill balance of
$6,580,000, which represents a $1,482,000 increase from the $5,098,000 balance
at September 30, 1999. This $1,482,000 increase results from cash flow from
operations of $886,000 which includes the result of net income of $19,000
coupled with the disposal of property held for development and sale of $893,000
offset by changes in operating assets and liabilities of $26,000 combined with
cash flows from investing activities of $596,000. The Company's working capital
position at June 30, 2000 was $6,520,000 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. During the quarter the Company sold its one property in Washington
D.C. to President John H. Michael for a total selling price of $940,000. The
sale price was established based upon an appraisal of the property conducted by
an independent appraiser designated by Riggs Bank. The Company realized a gain
of approximately $1,000 on this transaction, which has been included in general
and administrative expenses on the statement of operations.
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 three-month period
ended June 30, 2000 the Company incurred no gain or loss on its trading and
investment activities as compared to a gain of $8,000 in the prior year period.
The ultimate goal of the Company is to acquire or develop an operating business.
On August 6, 2000 the Company repurchased 260,000 shares from President
John H. Michael at $1.35 per share for a total purchase price of $351,000. This
price was slightly below the bid price of the Company's shares and about $0.25
below the liquid net asset value per share. Subsequent to this transaction, the
Company has 3,820,000 shares outstanding. Company President, John H. Michael,
owns in excess of 80% of this total.
Page 7 of 10
Results of Operations
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Three Months Ended June 30, 2000
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Net income (loss)
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The Company experienced a loss of $52,000 in the current three-month
period versus a profit of $50,000 in the prior year period. Interest income
increased $28,000 to $91,000 primarily due to higher interest rates. No trading
gains or losses were incurred in the current quarter as compared to a gain of
$8,000 in the prior year period. General and administrative expenses of $143,000
were $122,000 higher than the prior year period of $21,000. The increase of
$122,000 was due primarily to a higher level of compensation paid to President
John Michael of which a portion was related to the year-to-date increased level
of trading profits.
During the current 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 expense due to the availability of tax
loss carryforwards.
Nine Months Ended June 30, 2000
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Net income (loss)
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The Company experienced a profit of $19,000 in the current nine-month
period versus a profit of $210,000 in the prior year period. Interest income
increased $48,000 to $231,000 primarily due to higher interest rates. Trading
gains in the current nine-month period were $300,000 compared to a gain of
$180,000 in the prior year period. General and administrative expenses of
$512,000 were $359,000 higher than the prior year period of $153,000. The
increase of $359,000 was due primarily to a higher level of compensation paid to
President John Michael related to the increased level of trading profits.
During the current and prior year nine-month period the Company did not
record an income tax expense due to the availability of tax loss 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: August 10, 2000 By:
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John H. Michael, Chairman
(on behalf of the registrant)
Page 10 of 10