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, 1998
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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
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 offices) (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
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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 January 15, 1999
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Common Stock, $.01 par value 4,080,000
PERSONAL DIAGNOSTICS, INCORPORATED
Index Page No.
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Part I Financial Information
Item 1. Financial Statements:
Balance Sheets - December 31, 1998 and September 30, 1998 3
Statements of Operations - For the Three Months Ended
December 31, 1998 and 1997 4
Statements of Cash Flows - For the Three Months Ended
December 31, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 9
PERSONAL DIAGNOSTICS, INCORPORATED
BALANCE SHEETS
December 31, September 30,
1998 1998
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(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and equivalents (including three month Treasury Bills) $ 5,380,000 $ 5,386,000
Property held for development and sale 893,000 893,000
Other current assets 2,000 --
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Total Current Assets 6,275,000 6,279,000
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TOTAL ASSETS $ 6,275,000 $ 6,279,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,000 $ 14,000
Current liabilities of discontinued operations 25,000 50,000
Other current liabilities 70,000 70,000
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Total Current Liabilities 100,000 134,000
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STOCKHOLDERS' EQUITY:
Common Stock,$.01 par value; authorized,
25,000,000 shares; issued and outstanding,
5,164,000 shares 51,000 51,000
Capital in excess of par value 13,524,000 13,524,000
Accumulated deficit (6,100,000) (6,130,000)
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7,475,000 7,445,000
Less: Treasury stock 1,084,000 shares, at cost (1,300,000) (1,300,000)
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Total Stockholders' Equity 6,175,000 6,145,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,275,000 $ 6,279,000
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See accompanying notes to financial statements.
PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31,
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1998 1997
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INCOME:
Interest $ 62,000 $ 82,000
Trading gains (losses) - 17,000
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62,000 99,000
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EXPENSES:
General and administrative 32,000 89,000
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INCOME BEFORE
INCOME TAXES 30,000 10,000
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PROVISION (BENEFIT)
FOR INCOME TAXES - -
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NET INCOME $ 30,000 $ 10,000
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BASIC AND DILUTED
NET INCOME PER SHARE $ 0.01 $ -
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AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,080,000 5,050,000
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See accompanying notes to financial statements.
PERSONAL DIAGNOSTICS, INCORPORATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
December 31,
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,000 $ 10,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Changes in assets and liabilities:
Property held for development and sale - 806,000
Accounts payable and accrued liabilities (34,000) 15,000
Other current assets (2,000) 2,000
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Net cash flows from operating activities (6,000) 833,000
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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 (6,000) 833,000
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 5,386,000 6,117,000
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CASH AND EQUIVALENTS, END OF PERIOD $ 5,380,000 $ 6,950,000
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See accompanying notes to financial statements.
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 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
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For the three months ending December 31, 1998 and 1997, there was no
charge or credit to earnings representing the change in the net unrealized
holding loss on trading securities. At December 31, 1998 the Company had no open
trading or investment positions. During the quarter the Company incurred no gain
or loss on its trading and investment activities as compared with a profit of
$17,000 in the prior year period. During the quarter the Company's had no
exposure to financial derivatives.
At December 31, 1998 approximately 80% of total Company's assets were
held in United States Treasury Bills. Since it is the intention of the Company
to acquire or develop an operating business, the Company presently intends to
risk no more than 15% of net worth in trading or investment activities.
3. PROPERTY HELD FOR DEVELOPMENT AND SALE
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The Company presently owns one property in Washington D.C., which it
acquired with the intention to improve and resell. The property is in the
process of renovation which is expected to be completed during fiscal 1999.
4. STATEMENT OF CASH FLOWS
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Three Months Ended
December 31,
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1998 1997
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Supplemental disclosure of cash flows information-
Income taxes paid/(refunded $-0- $-0-
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PERSONAL DIAGNOSTICS, INCORPORATED
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
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At December 31, 1998, the Company had a cash and Treasury Bill balance
of $5,380,000 which represents an $6,000 decrease from the $5,386,000 balance at
September 30, 1998. This $6,000 decrease results entirely from cash flow from
operations which includes the result of a net profit of $30,000 and changes in
operating assets and liabilities of $36,000. The Company's working capital
position at December 31, 1998 was $6,175,000 as compared to a September 30, 1998
balance of $6,145,000.
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 expects no adverse impact from the Year 2000 computer
issue. The Company presently owns one property in Washington D.C. which it
acquired with the intention to improve and resell. The property is in the
process of renovation that is expected to be completed in fiscal 1999.
The Company intends to continue its investing 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 no gain or loss on its trading and investment activities as compared
with a profit of $17,000 in the prior year period. During the quarter the
Company had no exposure to financial derivatives.
The focus of the Company's efforts is to acquire or develop an
operating business. The Company presently intends to risk no more than 15% of
net worth in trading or investment activities. At December 31, 1998, the Company
had approximately 80% of its assets in United States Treasury Bills. At December
31, 1998 the Company had no outstanding investment or trading positions.
Results of Operations
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Three Months Ended December 31, 1998
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Net income (loss)
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The Company recorded income of $30,000 in the current three-month
period versus a profit of $10,000 in the prior year period. Interest income
decreased $20,000 to $62,000 primarily due to lower interest rates. There was no
trading activity in the current quarter compared to trading gains of $17,000 in
the prior year period. General and administrative expenses of $32,000 were
$57,000 lower than the prior year period of $89,000. The reduction of $57,000
was due primarily to a lower level of compensation paid to President John
Michael.
During the current and prior year quarter the Company had not recorded
an income tax provision due to available tax carryforwards.
PERSONAL DIAGNOSTICS, INCORPORATED
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PART II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
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: January 29, 1999 By: /s/ John H. Michael
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John H. Michael, Chairman
(on behalf of the registrant)