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, 2001
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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 5544, Parsippany, NJ 07054
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(Address of principal executive (Zip Code)
offices)
(201) 952-9000
(Registrant's telephone number, including area
code)
Not applicable
(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 February 1, 2002
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Common Stock, $.01 par value 3,740,000
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, 2001 and September 30, 2001 3
Statements of Operations - For the Three Months Ended
December 31, 2001 and 2000 4
Statements of Cash Flows - For the Three Months Ended December 31, 2001 and 2000 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,
2001 2001
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(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 2,197,000 $ 3,806,000
Due from brokers -- 977,000
Trading securities 4,340,000 1,575,000
Other current assets 3,000 7,000
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Total Current Assets 6,540,000 6,365,000
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TOTAL ASSETS $ 6,540,000 $ 6,365,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 66,000 $ 56,000
Accrued compensation 44,000 --
Income taxes payable 54,000 15,000
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Total Current Liabilities 164,000 71,000
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STOCKHOLDERS' EQUITY:
Common Stock,$.01 par value; authorized,
25,000,000 shares; issued 3,740,000 37,000 37,000
Capital in excess of par value 11,914,000 11,914,000
Accumulated deficit (5,575,000) (5,657,000)
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Total Stockholders' Equity 6,376,000 6,294,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,540,000 $ 6,365,000
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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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2001 2000
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INCOME:
Interest $ 38,000 $ 70,000
Trading gains 173,000 495,000
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211,000 565,000
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EXPENSES:
General and administrative 75,000 461,000
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INCOME BEFORE INCOME TAXES 136,000 104,000
PROVISION FOR INCOME TAXES 54,000 --
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NET INCOME $ 82,000 $ 104,000
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WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING -
Basic 3,740,000 3,740,000
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Diluted 3,768,000 3,762,000
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NET INCOME PER SHARE-
Basic and Diluted $ 0.02 $ 0.03
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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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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 82,000 $ 104,000
Adjustments to reconcile net income to net
cash flows from operating activities:
Changes in assets and liabilities:
Due from brokers 977,000 --
Trading securities (2,765,000) --
Accounts payable and accrued liabilities 93,000 448,000
Other current assets 4,000 1,000
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Net cash flows from operating activities (1,609,000) 553,000
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INCREASE (DECREASE) IN CASH AND EQUIVALENTS (1,609,000) 553,000
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 3,806,000 6,082,000
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CASH AND EQUIVALENTS, END OF PERIOD $ 2,197,000 $ 6,635,000
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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 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
For the three months ending December 31, 2001 the Company recognized a
gain of $173,000 on trading and investment activities compared with a gain of
$495,000 in the prior year period. There was a credit to earnings of $145,000
representing the change in the net unrealized holding gains on trading
securities during the quarter ending December 31, 2001 compared to no charge or
credit during the comparable year earlier period. The Company intends ultimately
to acquire or develop an operating business.
3. STATEMENT OF CASH FLOWS
Three Months Ended
December 31,
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2001 2000
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Supplemental disclosure of cash flows information-
Income taxes paid $15,000 $-0-
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In October 2000, the Company retired all of its treasury stock, which
consisted of 1,124,000 shares that were carried at a cost of $1,399,000 at
September 30, 2000.
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, 2001, the Company had a cash and equivalents balance of
$2,197,000, which represents a $1,609,000 decrease from the $3,806,000 balance
at September 30, 2001. This $1,609,000 decrease results entirely from cash flow
from operations, which includes net income of $82,000 offset by changes in
operating assets and liabilities of $1,691,000 consisting primarily of purchases
of trading securities for $2,765,000, receipt of monies due from brokers of
$977,000 and a net increase in accrued liabilities for $97,000. The Company's
working capital position at December 31, 2001 was $6,376,000 as compared to a
September 30, 2001 balance of $6,294,000.
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. During fiscal 2001, the Company
actively entertained a proposal to acquire the packaging and material subsidiary
of Paper Pak Products, Inc. After considerable evaluation, site visits and
financial analysis the Company was not satisfied that there was sufficient
organizational cohesion or proprietary product differentiation. Also during the
year management evaluated and rejected an opportunity to acquire a major
interest in a regional finance company. This business specializes in high yield
consumer automobile loans in the Mid-Atlantic region. Management decided there
was excessive risk of credit quality deterioration and rejected this
opportunity. Finally, the Company considered and rejected a proposal for a
reverse merger made by an Australian marketing organization.
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 invested substantial time evaluating
and considering numerous proposals for possible acquisition or combination
developed by management or presented by investment professionals, the Company's
advisors and others. During the past four years the Company has limited its'
activities to relatively small real estate projects and modest trading and
investment activities. The Company continues to consider acquisitions, business
combinations, or start up proposals, which could be advantageous to
shareholders. No assurance can be given that any such project, acquisition or
combination will be concluded.
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 a market index options and future contracts. Such
investments often involve 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. It is the intention of management
to acquire or develop an operating business.
Page 7 of 10
Results of Operations
Three Months Ended December 31, 2001
Net income
Net income consists of interest and trading gains and losses and
general and administrative expenses. The Company realized income of $82,000 in
the current three-month period versus income of $104,000 in the prior year
period. Interest income decreased $32,000 to $38,000 primarily due to lower
interest rates. Trading gains of $173,000 were achieved in the current quarter
as compared to gains of $495,000 in the prior year period. General and
administrative expenses of $75,000 were $386,000 lower than the prior year
period of $461,000. The decrease of $386,000 was due primarily to a lower level
of compensation accrued to President John Michael of which a significant portion
was related to the increased level of trading profits achieved in the prior year
quarter.
During the current quarter the Company recorded an income tax provision
of $54,000 as its' tax loss carryforwards were not available to offset this
investment type income. No provision for taxes was required in the prior year's
first quarter.
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 8, 2002 By: /s/ John H. Michael
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John H. Michael, Chairman
(on behalf of the registrant)
Page 10 of 10