10-Q 1 b316603_10q.txt QUARTERLY REPORT 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 ------------------ 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 ---------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2325136 ---------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) PO Box 5544, Parsippany, NJ 07054 --------------------------- ----- (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 --- --- 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 ----- ------------------------------- Common Stock, $.01 par value 3,740,000 Page 1 of 10 PERSONAL DIAGNOSTICS, INCORPORATED

~~March~~Index ~~31,~~Page ~~September~~No. ~~30, 2001 2000~~ -----~~-------~~ --------~~----~~ ~~(UNAUDITED)~~Part ~~ASSETS~~I ~~CURRENT~~Financial ~~ASSETS:~~Information ~~Cash~~Item ~~and equivalents $~~ 1~~,205,000~~. $Financial ~~6,082,000~~Statements: ~~Trading~~Balance ~~securities~~Sheets ~~$ 5,450,000 $~~ -- ~~Other~~December ~~current~~31, ~~assets~~2001 --and 1September 30,~~000~~ ~~------------~~2001 ~~------------~~3 ~~Total~~Statements ~~Current~~of ~~Assets~~Operations ~~6,655,000 6,083,000~~ -~~-----------~~ ~~------------~~For ~~TOTAL~~the ~~ASSETS~~Three $Months ~~6,655,000~~Ended $December 631,~~083,000~~ ~~============~~2001 ~~============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable~~ and ~~accrued~~2000 ~~expenses~~4 $Statements ~~39,000~~of $Cash ~~44,000~~Flows ~~Accrued compensation 470,000~~ -- ~~------------~~For ~~------------~~the ~~Total~~Three ~~Current~~Months ~~Liabilities~~Ended ~~509,000~~December 4431,~~000~~ ~~------------~~2001 ~~------------~~and ~~STOCKHOLDERS'~~2000 ~~EQUITY:~~5 ~~Common~~Notes ~~Stock,$.01~~to ~~par~~Financial ~~value;~~Statements ~~authorized,~~6 ~~25,000,000~~Item ~~shares;~~2. ~~issued~~Management's ~~and~~Discussion ~~outstanding, 3,740,000 shares~~ and ~~4,864,000~~Analysis ~~shares,~~of ~~respectively~~Financial ~~37,000~~Condition ~~48,000~~and ~~Capital~~Results in7 ~~excess~~ of ~~par~~Operations ~~value~~Part ~~11,914,000~~II ~~13,302,000~~Other ~~Accumulated~~Information ~~deficit~~Item ~~(5,805,000) (5,912,000) ------------ ------------~~ 6~~,146,000~~. ~~7,438,000~~Exhibits ~~Less:~~and ~~Treasury~~Reports ~~stock~~on ~~1,124,000~~Form ~~shares, at cost~~ 8--K (1,399,000) ------------ ------------ Total Stockholders' Equity 6,146,000 6,039,000 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,655,000 $ 6,083,000 ============ ============9

Page 2 of 10 PERSONAL DIAGNOSTICS, INCORPORATED BALANCE SHEETS

~~Three~~December ~~Months Ended Six Months Ended March~~ 31, ~~March~~September 3130, 2001 2001 ------------ ------------ (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 ------------ ------------ ~~2001~~Total ~~2000~~Current ~~2001~~Assets ~~2000~~6,540,000 6,365,000 ---------- --~~--------~~ ---------- --~~--------~~ ~~INCOME:~~TOTAL ~~Interest~~ASSETS $ 656,540,000 $ 736,365,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ ~~135~~66,000 $ ~~140~~56,000 ~~Trading~~Accrued ~~gains~~compensation 2544,000 ~~585,000~~-- ~~520~~Income taxes payable 54,000 ~~300~~15,000 ---------- --~~--------~~ ---------- --~~--------~~ ~~90,000~~Total ~~658,000~~Current ~~655~~Liabilities 164,000 ~~440~~71,000 ---------- --~~--------~~ ---------- --~~--------~~ ~~EXPENSES~~STOCKHOLDERS' EQUITY: ~~General~~Common ~~and~~Stock,$.01 ~~administrative~~par 87value; authorized, 25,000,000 ~~296~~shares; issued 3,740,000 ~~548~~37,000 ~~369~~37,000 ~~----------~~Capital ~~----------~~in ~~----------~~excess ~~----------~~of ~~INCOME~~par ~~BEFORE~~value ~~INCOME TAXES 3~~11,914,000 ~~362~~11,914,000 ~~107~~Accumulated deficit (5,575,000) 71(5,657,000) ---------- --~~--------~~ ---------- --~~--------~~ ~~PROVISION~~Total ~~FOR~~Stockholders' ~~INCOME~~Equity ~~TAXES~~6,376,000 --6,294,000 -- -- -- ------~~----~~ ---------- --~~--------~~ ~~----------~~TOTAL ~~NET~~LIABILITIES ~~INCOME~~AND $STOCKHOLDERS' ~~3,000~~EQUITY $ ~~362~~6,~~000 $ 107~~540,000 $ 716,000 ========== ========== ========== ========== BASIC AND DILUTED NET INCOME PER SHARE $ -- $ 0.09 $ 0.03 $ 0.02 ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 3365,~~740,~~000 ~~4,080,000 3,740,000 4,080,000~~ ========== ==~~========~~ ========== ==~~======== DILUTED 3,798,973 4,080,000 3,780,572 4,080,000 ========== ========== ========== ==========~~

See accompanying notes to financial statements. Page 3 of 10 PERSONAL DIAGNOSTICS, INCORPORATED STATEMENTS OF OPERATIONS (UNAUDITED)

~~Six~~Three Months Ended ~~March~~December 31, --------------------------------- 2001 2000 ------------ ----------- ~~CASH FLOWS FROM OPERATING ACTIVITIES~~INCOME: ~~Net~~Interest ~~income~~ $ ~~107~~38,000 $ 7170,000 ~~Adjustments to reconcile net income to net cash flows from operating activities: Changes in assets and liabilities:~~ Trading ~~securities~~gains (5173,~~450,~~000) ~~-- Property held for development and sale -- (37~~495,000) ~~Accounts payable and accrued liabilities 465,000 220,000 Other current assets 1,000 2,000~~ ----------- ----------- ~~Net cash flows from operating activities (4~~211,~~877,~~000) ~~256~~565,000 ----------- ----------- ~~CASH FLOWS FROM INVESTING ACTIVITIES~~EXPENSES: ~~Sale/(Proceeds)~~General ofand ~~investment~~administrative ~~securities~~75,000 --461,000 -- --------~~---~~ ----------- ~~Net~~INCOME ~~cash~~BEFORE ~~flows~~INCOME ~~from~~TAXES ~~investing~~136,000 ~~activities~~104,000 --PROVISION FOR INCOME TAXES 54,000 -- ----------- ----------- ~~INCREASE~~NET ~~(DECREASE)~~INCOME IN$ ~~CASH AND EQUIVALENTS (4~~82,~~877,~~000) ~~256~~$ 104,000 ~~CASH~~========== ~~AND~~========== ~~EQUIVALENTS,~~WEIGHTED ~~BEGINNING~~AVERAGE OFCOMMON ~~PERIOD~~SHARES 6OUTSTANDING - Basic 3,~~082~~740,000 53,~~694~~740,000 ~~-----------~~========== ~~-----------~~========== ~~CASH~~Diluted ~~AND~~3,768,000 ~~EQUIVALENTS~~3,762,000 ~~END~~========== OF========== ~~PERIOD~~NET INCOME PER SHARE- Basic and Diluted $ ~~1,205,000~~0.02 $ ~~5,950,000~~0.03 =========== ===========

See accompanying notes to financial statements. Page 4 of 10 PERSONAL DIAGNOSTICS, INCORPORATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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

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 -------------------- John H. Michael, Chairman (on behalf of the registrant) Page 10 of 10

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