SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20429
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000
[ ] 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 0-8735
MRI MEDICAL DIAGNOSTICS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0682860
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
480 Camino Del Rio South, Suite 140
San Diego, California 92108
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (619) 718-6370
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which registered
None None
Securities registered pursuant to Section (g) of the Act:
Common Stock, No Par Value Per Share
(Title of each class)
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 No X
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 if this chapter) is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form10-K.
[X]
As of May 31, 2000, 13,700,657 shares of common stock were effectively
outstanding. The aggregate market value of the Registrant's free-trading
common stock (6,896,400 shares) held by non-affiliates on May 31, 2000, was
approximately $1,131,440.60, based on the averaged bid and asked price of
the stock on May 31, 2000.
APPLICABLE ONLY TO CORPORATE REGISTRANTS: As of May 31, 2000, the
following shares of the Registrant's common stock were issued and
outstanding: Common Stock, no par value
DOCUMENTS INCORPORATED BY REFERENCE: None
PART I
ITEM 1. BUSINESS
The Registrant, MRI Medical Diagnostics, Inc., a Colorado corporation
(the "Company"), was incorporated on November 12, 1971 as Sierra Resources,
Inc. The Company changed its name to Petro-Global, Inc. on May 27, 1987,
and to MRI Medical Diagnostics, Inc. on February 12, 1992 when, pursuant to
a change of control, the Company redirected its business purposes to
medical diagnostic imaging services. In July 1993, the Company and its
wholly owned subsidiaries each filed for bankruptcy in the Central District
Court of California. On November 7, 1995, the Court approved and declared
effective a reorganization plan for the Company, which went into effect on
January 2, 1996.
Pursuant to the Reorganization Plan, Tri-National Development
Corporation, a Wyoming corporation, obtained all of the stock of MRI Grand
Terrace, Inc., the Company's wholly owned subsidiary, in partial exchange
of which the bankruptcy estate is to receive 30% of the net proceeds on
that portion of any resulting judgment issued to MRI Grand Terrace, Inc.
out of litigation between Tri-National Development Corporation and MRI
Grand Terrace, Inc. against Citizens Business Bank, then Chino Valley Bank.
On June 3, 1998, the California Superior Court of San Bernardino County
entered a gross judgment in favor of Tri-National Development Corporation
and MRI Grand Terrace, Inc. in the approximate amount of $5,000,000.
Approximately $4,411,911 of the gross judgment was awarded to MRI Grand
Terrace, Inc. The judgment is currently under appeal and, due to the risk
of reversal, the Company is unable to estimate the amount of proceeds, if
any, that the bankruptcy estate may receive. See, "LEGAL PROCEEDINGS"
below. In the event of recovery on the judgment, the amount received by
the Company will be less the amounts due the claimants in the bankruptcy
proceedings and fees paid to the bankruptcy trustee. The Company is unable
to determine the extent of such claims and fees at this time.
On July 15, 1997, the Company approved the Agreement and Plan of
Reorganization with Alpine Herbs & Nutrition International, Inc., a Nevada
Corporation ("Alpine"). The Agreement provided for the acquisition of 100%
of the common stock of Alpine for 4,000,000 post-split shares of the common
stock of the Company. The Agreement was later rescinded by mutual
agreement of the parties and the share certificates for 3,900,000 shares
issued were canceled on the Company's books with the understanding that the
original certificates would be returned to the Company.
Current management has become aware that certificates for
approximately 2,500,000 of the shares issued as part of the rescinded
transaction with Alpine have not been submitted to the Company for
cancellation. Management is in the process of trying to obtain these share
certificates for cancellation. The Company has issued stop transfer
instruction to its transfer agent to prohibit transfer of these shares.
However, recent revisions to the Colorado Uniform Commercial Code may
result in these instructions being treated as an adverse, third party
claim, and the Company may be forced to obtain an injunction to prevent
transfer of the shares. Should such an action be necessary, the holders of
the certificates may be held liable to the Company for their bad faith
retention of the certificates.
The Company has no current operations, and has retained the services
of Intermountain Capital Corporation to seek possible merger candidates for
the Company and to accomplish the sale, merger, exchange, capital
investment, loan, joint venture or such other transaction as is deemed
advisable subject to the approval of the Company's Board of Directors and
shareholders.
1
On June 1, 2000, the Company received a Letter of Intent from a
Delaware corporation, the terms of which would provide for the reverse
acquisition of the Company through the acquisition of a majority interest
in its common stock. The Letter of Intent has been signed on behalf of the
Company; however, there can be no assurance as to if and when the
contemplated transaction will be consummated. The parties are still in
the due diligence phase of negotiations.
ITEM 2. PROPERTIES
Not Applicable.
ITEM 3. LEGAL PROCEEDINGS
The Bankruptcy Trustee continues to monitor application of the
Company's reorganization plan, specifically with respect to the collection
of the judgment rendered in favor of MRI Grand Terrace, Inc. and
Tri-National Development Corporation against Citizens Business Bank.
Pursuant to the Settlement Agreement approved by the Bankruptcy Court, the
bankruptcy estate is entitled to recover 30% of the net proceeds of any
judgment received by MRI Grand Terrace, Inc. rendered in the litigation.
On August 17, 1998, Citizens Business Bank posted a $7.5 million bond and
filed its appeal on June 16, 1999 with the California Court of Appeals, San
Bernardino County. Due to the risk of reversal on appeal, the Company is
unable to estimate the proceeds, if any, that the bankruptcy estate may
recover on the judgment. Any amount recoverable by the bankruptcy estate
will be less attorney fees and any fees paid to the trustee.
Current management has become aware that certificates for
approximately 2,500,000 of the shares issued as part of the rescinded
transaction with Alpine have not been submitted to the Company for
cancellation. Management is in the process of trying to obtain these share
certificates for cancellation. The Company has issued stop transfer
instruction to its transfer agent to prohibit transfer of these shares.
However, recent revisions to the Colorado Uniform Commercial Code may
result in these instructions being treated as an adverse, third party
claim, and the Company may be forced to obtain an injunction to prevent
transfer of the shares. Should such an action be necessary, the holders of
the certificates may be held liable to the Company for their bad faith
retention of the certificates.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
the fiscal year ended March 31, 2000.
2
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is currently traded on the Over-the-Counter
Bulletin Board under the symbol "MMDI." Following is a statement of the
high and low bid information for each full quarter since the Company's
stock began trading on the OTC in September 1997, including the incomplete
period ending June 6, 2000.
QUARTER HIGH LOW CLOSE
09/30/97 1/2 3/32 13/64
12/31/97 5/16 1/8 5/32
03/31/98 11/64 3/64 3/64
06/30/98 5/64 3/64 3/64
09/30/98 3/32 3/64 3/64
12/31/98 3/64 1/32 1/32
03/31/99 1/16 1/32 3/64
06/30/98 3/32 1/32 1/32
09/30/98 1/16 1/64 1/64
12/31/99 3/64 1/64 1/32
03/31/00 29/64 1/32 1/4
06/16/00 21/64 1/8 3/16
As of December 31, 1999, there were approximately 2,475 holders of
record of the Common Stock.
The Company has not declared any cash dividends on its Common Stock
since the Company's formation in November 1971.
ITEM 6. SELECTED FINANCIAL DATA
The following selected historical financial data set forth below have
been derived from, and are qualified by reference to (i) the audited
Consolidated Financial Statements of the Company for the fiscal year ended
March 31, 2000 as compared to the fiscal year ended March 31, 1999. The
audited financial statements referred to above are included elsewhere
herein. The selected financial data set forth below should be read in
conjunction with, and are qualified by reference to, Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and the Financial Statements and accompanying notes included elsewhere herein.
3
FISCAL YEAR ENDED
MARCH 31
1999 2000
---- ----
Income Statement Data:
Operating revenue (1) . . . . . . . . . . . $ 0 $ 0
Expenses. . . . . . . . . . . . . . . . . .
Net Income. . . . . . . . . . . . . . . . . $ 0 $ 0
Accumulated deficit, beginning. . . . . . . $(1,563,343) $(1,582,079)
Accumulated deficit, ending . . . . . . . . $(1,563,343) $(1,582,079)
----------- -----------
Earnings per share. . . . . . . . . $ 0 $ 0
Balance Sheet Data (at end of period):
Total assets. . . . . . . . . . . . . . . . $ 0 $ 0
Total debt. . . . . . . . . . . . . . . . . $ 3,413 $ 22,149
Total Stockholders equity . . . . . . . . . $ (3,413) $ (22,149)
Other Financial Data:
Cash flows. . . . . . . . . . . . . . . . . $ 0 $ (18,736)
(1) Currently, the Company has no operations and is evaluating its options
in the acquisition by or merger with another Company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
YEAR ENDED MARCH 31, 1999 COMPARED TO YEAR ENDED MARCH 31, 2000
The Company had no operation during the fiscal years ended March 31,
1999 and 2000.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to the Reorganization Plan, Tri-National Development
Corporation, a Wyoming corporation, obtained all of the stock of MRI Grand
Terrace, Inc., the Company's wholly owned subsidiary, in partial exchange
of which the bankruptcy estate is to receive 30% of the net proceeds of
litigation between MRI Grand Terrace, Inc., Tri-National Development
Corporation and Citizens Business Bank to which MRI Grand Terrace, Inc.
would be entitled, pending in the California Superior Court, San Bernardino
County. On June 3, 1998, the Superior Court entered judgment in favor of
MRI Grand Terrace, Inc. and Tri-National Development Corporation in the
approximate amount of $5,000,000. The judgment is currently under appeal.
See, "LEGAL PROCEEDINGS" above. The Company continues to monitor the
appeal, and hopes to use any resulting proceeds in its efforts to locate a
potential purchaser or merger candidate. The Company has retained the
services of Intermountain Capital Corporation to seek such possible merger
candidates for the Company and to accomplish the sale, merger, exchange,
capital investment, loan, joint venture or such
4
other transaction as is deemed advisable subject to the approval of the
Company's Board of Directors and shareholders.
YEAR 2000
The Company has not experienced any negative effects as a result of
the Year 2000 problem, and, because there are no current operations, does
not anticipate related difficulties over the next few months. There is no
assurance that any of the possible merger candidates that the Company has
or will approach will be Year 2000 compliant or that such candidates will
not experience Year 2000-related "glitches" over the next six months. As
part of its due diligence in locating potential candidates, the Company
will determine the Year 2000 compliance of each such candidate.
FORWARD-LOOKING STATEMENTS
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward-looking
statements" as defined in the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended. These forward-looking statements rely on
a number of assumptions concerning future events, and are subject to a
number of risks and uncertainties and other factors, many of which are
outside the control of the Company, that could cause actual results to
differ materially from such statements.
Readers are cautioned not to put undue reliance on such
forward-looking statements, each of which speaks only as of the date
hereof. Factors and uncertainties that could affect the outcome of such
forward-looking statements include, among others, market and industry
conditions, increased competition, changes in governmental regulations,
general economic conditions, pricing pressures, and the Company's ability
to continue its growth and expand successfully into new markets and
services. The Company disclaims any intention or obligation to update
publicly or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Financial Statements contained in Part IV hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Company are elected annually by its shareholders to
serve during the ensuing year or until a successor is duly elected and
qualified. Executive officers of the Company are duly elected by its Board
of Directors to serve until their respective successors are elected and
qualified. The following table sets forth certain information with respect
to the directors and executive officers of the Company.
NAME AGE POSITION OR OFFICE
Jacob J. Parker, M.D. 62 Director and Vice-President
William J. Piggott, M.D. 55 Director and Secretary
Javaid I. Sheikh 46 Director, President and Treasurer
JACOB J. PARKER, M.D. (62), Director and Vice-President of the Company
since June 20, 2000. He held the office of President for the Company from
March 4, 1998 until that date. Dr. Parker also serves as Vice-President
of Medical Development for Tri-National Development Corporation, a
reporting company, and has held that position he has held since 1996. Dr.
Parker is currently Medical Director and Director of Radiology for several
MRI centers and breast imaging centers in Northern California. He was
previously Chief of Radiology and Nuclear Medicine at Ross General
Hospital, Clinical Professor of Radiology at the University of California,
Irvine, and Instructor of Radiology at the University of Southern
California Medical Center from 1970 to 1988. Dr. Parker received his M.D.
from the University of Manitoba, Canada in 1962.
WILLIAM J. PIGGOTT, M.D. (55), Director and Secretary of the Company
since March 24, 1998. Dr. Piggott currently operates an international
medical technology consulting firm, I.M.T.E.C., as a sole proprietorship.
In the past, he has served with or been a member of the American Society of
anesthesiologists, the California Society of Anesthesiologists, the
California Medical Association and the San Diego County Medical
Association. Dr. Piggott obtained his M.D. from the University of
California at San Diego in 1972.
JAVAID IQBAL SHEIKH, M.D. (46), Director, President and Treasurer of
the Company since June 20, 2000. He held the office of Vice-President from
March 4, 1998 until appointed President on June 20, 2000. Dr. Sheikh is an
associate professor of psychiatry at the Stanford University School of
Medicine, a position he has held since 1993. At the University, Dr.
Sheikh's research focuses on studying phenomenology, vulnerability factors,
and psychiatric and medical comorbidity of panic disorder in old age, as
well as treatment responses to medication in elders with panic disorder.
Dr. Sheikh obtained his M.D. from King Edward Medical College in 1978.
ITEM 11. EXECUTIVE COMPENSATION
None of the executive officers listed in Item 10 received compensation
for their services during the Company's fiscal year ended March 31, 2000.
The Company is not bound by any employment agreement with past or present
employees of the Company, and has no current employees other than the
officers listed above.
6
DIRECTOR COMPENSATION
None of the directors listed in Item 10 above have received any
compensation for their services as directors of the Company for the
Company's fiscal year ended March 31, 2000.
OPTION PLANS
The Company does not currently maintain a stock option plan, employee
stock purchase plan or any other employment compensation plan. Currently,
there are no outstanding options to purchase MRI stock.
COMMITTEES
The Company does not currently have an executive compensation committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
each class of the Company's capital stock beneficially owned as of May,
2000, by (i) each person known to the Company to be the beneficial owner
of more than 5% of any class of the Company's equity securities, (ii)
each of the Company's directors and nominees, and (iii) all directors and
executive officers of the Company as a group.
7
TITLE NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE
OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
No Par Value Jacob J. Parker 243,317 shares(2)(5) 0.178%
Common Stock Director and Vice-President
333 Locust Ave.
San Rafael, CA 94901
No Par Value William J. Piggott 151,785 shares(2) 0.1%
Common Stock Director and Secretary
7833 Lower River Road
Grants Pass, OR 97526
No Par Value Javaid I. Sheikh 160,068 shares(2) 0.12%
Common Stock Director, President
and Treasurer
988 St Joseph Ave,
Los Altos, CA 94024
No Par Value Michael A. Sunstein 1,351,488 shares(1)(2) 9.86%
Common Stock 480 Camino del Rio South
Suite 140
San Diego, CA 92108
No Par Value Ronald C. Hibbard 1,720,000 shares(3)(4) 12.56%
Common Stock 72-751 Jamie Way
Rancho Mirage, CA 92270
No Par Value Jeanne M. Hibbard 1,560,000 shares(3)(4) 11.38%
Common Stock 72-751 Jamie Way
Rancho Mirage, CA 92270
No Par Value Rod Jones 1,000,000 shares(4) 7.3%
75-560 Mary Lane
Indian Wells, CA 92210
No Par Value All directors and 555,170 shares 0.41%
Common Stock officers as a group
(1) Includes 15,616 shares held indirectly for Post Kirby Noonan & Sweat,
LLP, 401,948 shares held by Tri-National Development Corporation, a company
in which Mr. Sunstein is an officer, director and majority shareholder, and
140,000 issued on February 17, 2000 as repayment of a loan to the Company.
8
(2) During its 1999 calendar year, the Company borrowed $7,000 each from
Jacob J. Parker, William J. Piggott, Javaid J. Sheikh and Michael A.
Suntein to pay expenses. Each of the lenders agreed that the Company could
pay back the loans in shares of restricted common stock of the Company. On
February 17, 2000, the Company issued 140,000 shares each to these persons
as repayment of their loans to the Company.
(3) Includes 1,520,000 shares held jointly by Ronald C. Hibbard and Jeanne
M. Hibbard and 40,000 shares held in trusts for which Mrs. Hibbard acts as
trustee. Mr. Hibbard is deceased and 200,000 of the 1,720,00 shares
attributable to him are apparently being held by his estate.
(4) These shares were issued pursuant to the Agreement and Plan of
Reorganization with Alpine Herbs & Nutrition International, Inc., a Nevada
Corporation ("Alpine") on July 15, 1997. Of the 4 million shares issued
pursuant to this Plan, 3.9 million shares were cancelled and returned to
treasury pursuant to the subsequent recission of the Plan.
(5) Includes 85,067 shares held by Ross Radiology Medical Group, Inc., Dr.
Parker's pension trust.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During its fiscal year ended March 31, 1999 and the nine-month interim
period ended December 31, 1999, the Company borrowed funds from each of its
officers and directors in an amount of $7,000 each, to be repaid with
restricted shares of the Company's common stock. On February 17, 2000, the
Company issued 140,000 shares each to its officers and directors in full
payment of these loans. These funds, along with $14,000 borrowed from
Michael A. Sunstein and Delanorte Investments, Inc., were borrowed in order
to pay expenses incurred by the Company, including amounts due to the
Company's transfer agent. In February 2000, the Company issued 140,000
shares to each of Palomar Investment, Inc., a company in which Michael A.
Suntein, as community property with his spouse, maintains a majority
ownership interest, and Delanorte Investments, Inc. in repayment of these loans.
ADVISORY SERVICES AGREEMENT
The Company has retained the services of Intermountain Capital
Corporation to seek possible merger candidates for the Company and to
accomplish the sale, merger, exchange, capital investment, loan, joint
venture or such other transaction as is deemed advisable subject to the
approval of the Company's Board of Directors and shareholders. Pursuant to
the agreement, the Company issued 500,000 shares of its common stock to
Intermountain in February 2000.
9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements. The following financial information for the
Company for the fiscal years ended March 31, 1999 and 2000 is filed as part
of this report.
MRI Medical Diagnostics and
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . .F-1
Balance Sheets at March 31, 1999 and 2000 . . . . . . . . . . . . .F-2
Statements of Income & Retained Earnings for
March 31, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . . .F-3
Statements of Cash Flows for March 31, 1999 and 2000. . . . . . . .F-4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-5
2. Financial Statement Schedules.
Not Applicable.
3. Exhibits
Exhibit No.
- ------------
* 3.1 Articles of Incorporation of Registrant.
* 3.2 By-Laws of Registrant.
* 10.1 MRI/Colorado agreement to acquire MRI/California.
* 10.2 MRI/Colorado agreement to acquire Grand Terrace retirement
hotel.
* 10.3 MRI/Colorado agreement to acquire Sierra Cardiac.
** 10.4 Agreement and Plan of Reorganization dated June 20, 1997
between Registrant and Alpine Herbs & Nutrition
International, Inc.
*** 10.5 Advisory Agreement between the Registrant and Intermountain
Capital Corporation dated February 19, 1999.
23.1 Consent of Ludlow & Harrison, LLP
23.2 Consent of Popov & McCullogh, LLP
27.1 Financial Data Schedule
*** 99.1 Order Approving Application to Compromise Controversy
entered on August 31, 1995 by Federal Bankruptcy Court.
* Previously filed with Amended Form 10-K filed June 21, 1993.
** Previously filed with Form 8-K filed July 15, 1997.
*** Previously filed with Form 10-K filed February 4, 2000.
(b) Reports on Form 8-K
During the fiscal year ended March 31, 1999, no reports were filed on
Form 8-K.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MRI MEDICAL DIAGNOSTICS, INC.
Dated: June 28, 2000 /s/ JACOB J. PARKER
--------------------------------------
Jacob J. Parker, M.D.
Executive Vice-President
Dated: June 28, 2000 /s/ WILLIAM J. PIGGOTT
--------------------------------------
William J. Piggott, M.D.
Secretary
Dated: June 28, 2000 /s/ JAVAID I. SHEIKH
--------------------------------------
Javaid I. Sheikh, M.D.
President
11
INDEX TO FINANCIAL STATEMENTS
MRI Medical Diagnostics and
Independent Auditors' Report. . . . . . . . . . . . . . . . . . . .F-1
Balance Sheets at March 31, 1999 and 2000 . . . . . . . . . . . . .F-2
Statements of Income & Retained Earnings for
March 31, 1999 and 2000. . . . . . . . . . . . . . . . . . . . . .F-3
Statements of Cash Flows for March 31, 1999 and 2000. . . . . . . .F-4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . .F-5
LUDLOW & HARRISON
a CPA corporation
3545 Camino Del Rio South, Suite D (619) 283-3333
San Diego, CA 92108 Fax: (619) 2837997
INDEPENDENT AUDITOR'S REPORT
----------------------------
We have audited the accompanying balance sheets of MRI Medical Diagnostics,
Inc. as of March 31, 1999 and 2000, and the related statements of income,
retained earnings, cash flows and stockholders' equity for the years ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit on accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance that the financial statements are free of
material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as assessing the
overall financial statements presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MRI Medical
Diagnostics, Inc. as of March 31, 1999 and 2000, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ LUDLOW & HARRISON
Ludlow & Harrison
A CPA Corporation
June 19, 2000
F-1
MRI MEDICAL DIAGNOSTICS, INC.
Balance Sheets
March 31,
2000 1999
---- ----
Total Assets $ - $ -
========== ==========
Accounts Payable $ 22,149 $ 3,413
---------- ----------
Total Current Liabilities 22,149 3,413
---------- ----------
Stockholders' Equity
Capital Stock
Common, no par value
Authorized 50,000,000 shares,
outstanding 8,600,657 shares
Preferred, no par value
Authorized 10,000,000 shares,
no shares issued 1,599,930 1,599,930
Accumulated Deficit (1,582,079) (1,563,343)
---------- ----------
Total Stockholders' Equity ( 22,149) ( 3,413)
---------- ----------
Total Liabilities and Stockholders' Equity $ - $ -
========== ==========
See accountant's report and notes to financial statements.
F-2
MRI MEDICAL DIAGNOSTICS, INC.
Statements of Income and Retained Earnings
March 31,
2000 1999
---- ----
Revenues $ - $ -
Expenses 18,736 -
---------- ----------
Net Income ( 18,736) -
Accumulated deficit, beginning (1,563,343) (1,563,343)
---------- ----------
Accumulated deficit, ending $(1,563,343) $(1,563,343)
---------- ----------
Earnings per share $( .0022) $ -
========== ==========
See accountant's report and notes to financial statements.
F-3
MRI MEDICAL DIAGNOSTICS, INC.
Statements of Cash Flows
March 31,
2000 1999
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $( 18,736) $ -
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Increase in accounts payable 18,736 -
---------- ----------
NET CASH PROVIDED
BY OPERATING ACTIVITIES - -
CASH AT BEGINNING OF YEAR - -
---------- ----------
CASH AT OF YEAR $ - $ -
========== ==========
See accountant's report and notes to financial statements.
F-4
MRI MEDICAL DIAGNOSTICS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 AND 2000
Note A - Significant Accounting Policies
Nature of Business
- ------------------
The business of the Company in the past has consisted of the acquisition,
development and operation of outpatient medical diagnostic imaging
facilities. Currently, the Company is not operating and is evaluating its
options in the acquisition or merger with another company.
Taxes
- -----
The Company owes taxes to the Franchise Tax Board of the State of
California. The minimum tax in the State of California for the privilege
of doing business within the State of California is $800 per year.
F-5