U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended:
August 31, 2017
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OR
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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For the transition period from ________ to ________
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Commission File Number
0-21320
Magna-Lab Inc.
(Exact name of registrant as specified in
its charter)
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New York
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11-3074326
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(State or other jurisdiction
of incorporation or organization)
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(IRS Employer Identification No.)
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6800 Jericho Turnpike, Suite 120W, Syosset, NY 11791
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(Address of principal
executive offices and Zip code)
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(516) 393 5874 (or c/o 212 986 9700)
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(Issuer's telephone number including area
code)
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(Former name, former
address and former fiscal year, if changed since last report)
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Check whether the issuer (1)
filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ☐
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
(Do not check if a smaller reporting company)
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Smaller reporting company ☒
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Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding
of each of the issuer's classes of common equity as of the latest practicable date – October 13, 2017
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Class A Common Stock, $.001 Par
Value
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1,178,762
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Class B Common Stock, $.001 Par
Value
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567
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Class
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Shares
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MAGNA-LAB INC. AND SUBSIDIARY
CONTENTS
All items which are not applicable or to which the answer is
negative have been omitted from this report.
PART I: FINANCIAL INFORMATION
Item 1. - Financial Statements
MAGNA-LAB INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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August 31,
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February 28,
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2017
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2017
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(unaudited)
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CURRENT ASSETS:
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Cash
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$
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1,000
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$
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1,000
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Prepaid expense
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3,000
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3,000
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Total current assets
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$
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4,000
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$
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4,000
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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CURRENT LIABILITIES:
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Notes payable and accrued interest payable to a stockholder
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$
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1,019,000
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$
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935,000
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Accounts payable
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334,000
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325,000
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Accrued expenses and other current liabilities
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109,000
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116,000
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Total current liabilities
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1,462,000
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1,376,000
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COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)
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STOCKHOLDERS' DEFICIT:
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Preferred stock, par value $.01 per share, 5,000,000 shares authorized,
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none issued
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—
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—
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Common stock, Class A, par value $.001 per share, 120,000,000 shares
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authorized, 1,178,762 shares, issued and outstanding at August 31, 2017
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and February 28, 2017
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1,000
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1,000
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Common stock, Class B, par value $.001 per share, 3,750,000 shares
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authorized, 18,750 shares issued, 10,000 shares forfeited, 8,183 shares
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converted to Class A and 567 shares outstanding at August 31, 2017
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and February 28, 2017
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—
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—
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Additional paid in capital
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27,290,000
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27,290,000
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Accumulated deficit
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(28,749,000
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)
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(28,663,000
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Total stockholders' deficit
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(1,458,000
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)
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(1,372,000
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Total liabilities and stockholders’ deficit
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$
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4,000
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$
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4,000
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See accompanying notes
to the unaudited condensed consolidated financial statements.
MAGNA-LAB INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended August
31, 2017 and 2016
(unaudited)
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Three months ended
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Six months ended
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August 31,
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August 31,
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2017
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2016
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2017
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2016
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REVENUES
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$
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—
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$
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—
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$
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—
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$
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—
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OPERATING EXPENSES:
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General and administrative
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22,000
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14,000
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44,000
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30,000
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LOSS FROM OPERATIONS
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(22,000
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(14,000
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(44,000
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(30,000
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OTHER EXPENSE – Interest expense
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21,000
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19,000
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42,000
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37,000
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NET LOSS BEFORE INCOME TAX
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(43,000
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(33,000
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(86,000
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(67,000
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PROVISION FOR INCOME TAXES
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—
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—
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—
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—
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NET LOSS
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$
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(43,000
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$
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(33,000
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$
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(86,000
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$
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(67,000
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WEIGHTED AVERAGE NUMBER
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OF COMMON SHARES OUTSTANDING
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1,179,000
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1,179,000
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1,179,000
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1,179,000
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NET LOSS PER COMMON SHARE,
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Basic and diluted
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$
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(0.04
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$
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(0.03
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$
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(0.07
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$
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(0.06
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See accompanying notes
to the unaudited condensed consolidated financial statements.
MAGNA-LAB
INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
For the six months ended August 31, 2017
and 2016
(unaudited)
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2017
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2016
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$
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(86,000
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$
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(67,000
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Adjustments to reconcile net loss to net cash used in operating activities:
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Effect on cash of changes in operating assets and liabilities:
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Prepaid expenses
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—
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(1,000
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Accounts payable, accrued liabilities and all other
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44,000
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41,000
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NET CASH USED IN OPERATING ACTIVITIES
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(42,000
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(27,000
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CASH PROVIDED BY FINANCING ACTIVITIES:
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Proceeds received from notes payable to stockholder
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42,000
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25,000
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NET DECREASE IN CASH
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—
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(2,000
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CASH:
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Beginning of period
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1,000
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11,000
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End of period
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$
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1,000
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$
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9,000
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See accompanying notes
to the unaudited condensed consolidated financial statements.
MAGNA-LAB INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'
DEFICIT
For the six months ended August 31, 2017
(unaudited)
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Common Stock
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Additional
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Total
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Class A
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Class B
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Paid In
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Accumulated
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Stockholders’
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Deficit
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BALANCE, February 28, 2017
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1,178,762
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$
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1,000
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567
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$
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—
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$
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27,290,000
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$
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(28,663,000
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)
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$
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(1,372,000
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)
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NET LOSS
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—
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—
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—
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—
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—
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(86,000
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)
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(86,000
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BALANCE, August 31, 2017
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(unaudited)
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1,178,762
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$
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1,000
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567
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$
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—
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$
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27,290,000
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$
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(28,749,000
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)
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$
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(1,458,000
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)
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See accompanying notes
to the unaudited condensed consolidated financial statements.
MAGNA-LAB INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
NOTE 1 -
BASIS OF PRESENTATION AND CONSOLIDATION:
The accompanying interim unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X for smaller reporting
companies and do not include all of the information and disclosures required by accounting principles generally accepted in the
United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of Magna-Lab
Inc. and its wholly owned subsidiary, Cardiac MRI, Inc. (collectively, the “Company”) and all significant intercompany
transactions and balances have been eliminated in consolidation. All adjustments which are of a normal recurring nature and, in
the opinion of management, necessary for a fair presentation have been included. These interim unaudited condensed consolidated
financial statements should be read in conjunction with the more complete information and the Company’s audited consolidated
financial statements and related notes thereto included in the Company's annual report on Form 10-K for the year ended February
28, 2017. The operating results for the three and six months ended August 31, 2017 are not necessarily indicative of the results
that may be expected for the year ending February 28, 2018. All dollar amounts are rounded to the nearest thousand dollars.
NOTE 2
- DISCUSSION OF THE COMPANY'S ACTIVITIES AND
GOING CONCERN CONSIDERATION:
Company Activities -
The Company is focused on engaging in a “reverse merger” transaction with an unrelated business that would benefit
from the Company’s public reporting status. Additional activities have included preserving cash, making settlements with
creditors, attempting to raise capital and continuing the Company’s public reporting.
The Company was previously
engaged in research, development and commercialization activities until it ceased such activities during the period September 2002
through March 2003. The Company’s efforts to raise additional capital or enter into a strategic arrangement in order to complete
commercialization of its cardiac diagnostic Illuminator products and development of its Artery View product or to seek other means
to realize value through sale, license or otherwise have been unsuccessful and therefore, in January 2017, the Company sold such
technology to its President and CEO in exchange for relief from certain liabilities.
Going Concern Consideration
- As indicated in the accompanying
interim unaudited condensed consolidated financial statements, at August 31, 2017, the Company had approximately $1,000 of cash
and approximately $1,458,000 in negative working capital and stockholders’ deficit and negative cash flows from operations.
For the six months ended August 31, 2017, the Company had a net loss of approximately $86,000 and utilized approximately $42,000
of cash in operating activities. Further, losses are continuing subsequent to August 31, 2017. These factors, among others, indicate
that the Company is in need of additional financing or a strategic arrangement in order to continue its planned activities for
the fiscal year that began on March 1, 2017. The Company’s plans to deal with this uncertainty are described above in “Company
Activities.” Management’s plans to raise capital, enter into a strategic arrangement or sell or merge with an unrelated
business have not been successful to date and there can be no assurance that management’s plans can be realized at all. While
a shareholder provided the Company with an additional loan subsequent to August 31, 2017 (Note 4), such amounts are not sufficient
to continue operations for the coming twelve months and the Company has no commitment for further financing. These factors, among
others, raise substantial doubt about the Company’s ability to continue operations as a going concern. No adjustments have
been made in the accompanying condensed consolidated financial statements to the amounts and classification of assets and liabilities
which could result should the Company be unable to continue as a going concern.
NOTE 3 –
NET LOSS PER COMMON SHARE:
The Company complies with the accounting and reporting requirements
of U.S. GAAP with respect to computing its net loss per common share. Net loss per common share is computed based on the weighted
average number of Class A Common and Class B Common shares outstanding.
Basic loss per share excludes dilution and is computed by dividing
loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share
reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since there are no
options, warrants or derivative securities outstanding, basic and diluted loss per share were the same for the three and six month
periods ended August 31, 2017 and 2016.
NOTE 4 –
NOTES PAYABLE – RELATED PARTY:
Notes payable include 12% unsecured notes payable to the Company’s
principal stockholder, Magna Acquisition LLC (“MALLC”) in the aggregate principal amount of $566,000, plus approximately
$453,000 of interest accrued. Such notes become due 120 days after issuance and, as such, approximately $539,000 principal amount
of such notes are overdue at August 31, 2017. The notes that are overdue bear interest at 15% per year subsequent to their maturity
date.
The Company intends to make a proposal to this principal stockholder
to convert all amounts outstanding to them (including overdue amounts) into common stock of the Company.
Subsequent to August 31, 2017 MALLC loaned an additional approximately
$11,000 to the Company on the same terms as above.
NOTE 5 –
ACCOUNTS PAYABLE AND ACCRUALS:
Accrued expenses and other current liabilities includes approximately
$18,000 payable to a third party, guaranteed by our principal stockholder, for amounts paid to an account payable in October 2007
on our behalf. This amount is repayable if the proposed merger transaction with this party was not completed. This party subsequently
merged with a third party and abandoned its possible transaction with the Company, however there has not been a demand for repayment
of this amount. The Company believes it would be entitled to an offset for recovery of certain costs from this third party associated
with that proposed transaction pursuant to understandings between the parties.
Some of the amounts recorded as accounts payable may have passed
the statute of limitations for purposes of the vendor seeking recovery of such monies. The Company has not undertaken a formal
study to evaluate recorded payables past the statute of limitations for purposes of possible write-off of such payables. See also
Notes 3 and 8 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the
year ended February 28, 2017 for other information on outstanding liabilities and related matters.
There was no activity in the restructuring accrual for the pre-1997
activities during the three and six months ended August 31, 2017 or 2016. The Company periodically adjusts the remaining accrual
based on the status of the matters and activity given the passage of time.
NOTE 6 –
STOCK-BASED COMPENSATION:
In accordance with GAAP, the Company recognizes the cost of
employee services received in exchange for awards of equity instruments in the financial statements based on the grant date fair
value of those awards. Stock awards to consultants and other non-employees are accounted for based on an estimate of their fair
value at the time of grant. The fair value of each option or warrant grant under GAAP is estimated on the date of the grant using
the Black-Scholes option pricing model with the following weighted-average assumptions: risk free interest rate of 5%; no dividend
yield; expected option lives of five to nine years and expected volatility in excess of 200%.
In April 2004, the Board of Directors agreed to reserve 90,000
shares of class A common stock for issuance to directors and management in the event that their efforts result in Board approval
of a merger or financing transaction. The criteria for recognition of this share compensation was met on July 24, 2008 and the
Company recorded stock-based compensation expense of approximately $10,000 reflecting the fair value of the 90,000 shares at the
date of entry into the agreement at the closing bid price of the Company’s stock. Because of cash constraints, the Company
has not been able to issue such shares. However, for accounting purposes, the Company has accounted for such shares as though they
have been issued.
NOTE 7 –
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS:
Management does not believe that any recently issued, but not
yet effective, accounting standards if currently adopted would have a material effect on the accompanying interim unaudited condensed
consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Forward Looking
Statements
Some of the statements
contained in this report discuss our plans and strategies for our business or state other forward-looking statements, as this term
is defined in the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical facts may
be deemed to be forward-looking statements. The words "anticipate," "believe," "estimate," "expect,"
"plan," "intend," "should," "seek," "will," and similar expressions are intended
to identify these forward-looking statements, but are not the exclusive means of identifying them. These forward-looking statements
reflect the current views of our management. However, various risks, uncertainties and contingencies could cause our actual results,
performance or achievements to differ materially from those expressed in, or implied by, these statements. See our Form 10-K for
the year ended February 28, 2017 for a discussion of certain known risks; also see Part II, Item 1A.
Overview, Background and History
We are currently a
“shell company” with no meaningful assets or operations other than our efforts to identify and merge with an operating
company. We no longer have any full-time employees and our Chief Executive and Chief Financial Officers serve on a part-time consulting
basis.
Prior to March 2003, our business had been
focused on pre-revenue development and commercialization of disposable medical devices designed to enhance the effectiveness of
magnetic resonance imaging in detection and diagnosis of heart disease. Due to the unavailability of funding, beginning in the
fall of 2002 we essentially ceased all of our operations including product development and commercialization activities. Our efforts
to realize value for our prior business and MRI technology have been unsuccessful. As a result, we view our most viable option
to be merging with an unrelated operating company that would benefit from our status as a reporting company in a so-called “reverse
merger” transaction. Entering into a “reverse merger” would likely involve very substantial dilution to the existing
stockholders. It would, however, provide an opportunity to return some value to stockholders. While we have identified and explored
merging with a number of candidates over the past few years, and entered into definitive agreements with one candidate (which agreement
was subsequently terminated) we have no commitments to merge with any company at the present time.
In January 2017, the Company’s President
and Chief Executive Officer (the “CEO”) entered into an Asset Purchase Agreement (the “Purchase Agreement”)
with the Company. Under the Purchase Agreement, the CEO purchased all of the intellectual property rights, any and all physical
assets, any and all permits and all non-financial books, records, files, design specification, software and other data related
to the Company’s magnetic resonance imaging technology. In exchange for purchased assets, the CEO (a) assumed all liabilities
of the Company related exclusively to the purchased assets and (b) agreed to forgiveness of all indebtedness owing from the Company
totaling approximately $110,000 including intellectual property counsel fees and costs, $68,000 of which had been paid by and is
therefore due to the CEO for payments he has made on the Company’s behalf in prior years in an attempt to preserve certain
intellectual property rights at that time. The CEO ceased making such payments several years ago and, as such, the underlying intellectual
property became compromised.
In order to raise cash to continue our efforts
to pursue a reverse merger, on October 31, 2005, the Company consummated a stock purchase agreement with Magna Acquisition LLC
(“MALLC”) which resulted in a change of control of our Company. Under the agreement, we sold 300,000 shares of Class
A Common Stock to MALLC for gross proceeds of $190,000, before expenses. Contemporaneous with the new investment, MALLC purchased
from our former principal stockholder 307,727 shares of the Company’s Class A Common Stock, representing all the shares of
our common stock owned by that stockholder. Two of our directors and our Chief Financial Officer serve as sole managers of MALLC,
with the ability to vote and dispose of the shares of our Company owned by MALLC by majority vote. These directors have assumed
a lead role with management in pursuing financing and merger candidates and operating matters.
MALLC has been responsible for substantially
all of our funding since October 2005. During the period from October 2005 to August 31, 2017, MALLC loaned us an aggregate $566,000
under a series of promissory notes payable that mature 120 days from issuance. At August 31, 2017, approximately $539,000 face
amount of such notes were beyond their maturity date and therefore due on demand. The notes bear interest at 12% per year increasing
to 15% per year for periods beyond maturity. Subsequent to August 31, 2017, MALLC loaned the Company an additional approximately
$11,000 on the same terms as above. The Company intends to make a proposal to MALLC to convert all of the amounts outstanding to
them (including overdue amounts) into common stock of the Company.
While we have reduced our expenditures very
significantly, we do not have sufficient cash to continue our activities for the coming twelve months. We currently do not have
any commitments for new funding.
Financial Condition, Liquidity and Capital
Resources -
At August 31, 2017, the Company had approximately $1,000 cash and approximately $1,458,000 in negative working
capital and stockholders’ deficit and negative cash flows from operations. For the six months ended August 31, 2017, the
Company had a net loss of approximately $86,000 and utilized approximately $42,000 of cash in operating activities. Further, losses
are continuing subsequent to August 31, 2017. Although our principal investor loaned us an additional approximately $11,000 subsequent
to August 31, 2017, this is not sufficient for our operations for the next twelve months and we have no commitments for future
funding. These factors, among others, indicate that the Company is in need of additional financing or a strategic arrangement in
order to continue its planned activities for the fiscal year that began on March 1, 2017. These factors, among others, raise substantial
doubt about the Company’s ability to continue operations as a going concern.
Our plan of operations
for the coming twelve months is to pursue our “reverse merger” strategy by seeking, evaluating and negotiating with
merger candidates and to continue to take actions to preserve our cash and continue our public reporting. We do not have the cash
resources to continue our plan for the coming twelve months, even at our reduced expenditure levels. As such, we may have to take
further measures or cease activities altogether, including terminating our public reporting status.
We currently have no material commitments
for capital expenditures.
Results of Operations –
During
the three and six months ended August 31, 2017, our net loss was approximately $43,000 and $86,000, respectively, compared to a
net loss of approximately $33,000 and $67,000, respectively, in the three and six months ended August 31, 2016. The increase in
the loss is due principally to the higher debt levels and higher default interest in the three and six months ended August 31,
2017 that resulted in an increase in interest expense as well as certain costs associated with exploring a merger candidate.
Our expenses, particularly
professional and consulting fees, can increase significantly if we are actively engaged in negotiations for a merger transaction.
There can be no assurance that any of our activities will result in any transaction. Our interest expenses are increasing with
additional outstanding borrowings which are increasingly at default interest rates (15%).
Off Balance Sheet Arrangements -
The Company has no material off balance
sheet arrangements that are likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.
Critical
Accounting Principles
–
We have identified critical accounting principles
that affect our interim unaudited condensed consolidated financial statements by considering accounting policies that involve the
most complex or subjective decisions or assessments as well as considering newly adopted principals. They are:
Going Concern Consideration
–
Our interim unaudited condensed consolidated financial statements have been prepared assuming we are a “going concern.”
We are in need of immediate substantial additional capital or a strategic business arrangement in order to continue our planned
activities. There can be no assurance that our plans to address this need can be realized. As such, we may be unable to continue
operations as a going concern. No adjustments have been made in the interim unaudited condensed consolidated financial statements
that could result should we be unable to continue as a going concern.
Our other accounting policies, which we
do not consider critical accounting policies, are contained in Note 1 to the Consolidated Financial Statements at February 28,
2017 contained in our Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
Market risk is the
sensitivity of income or loss to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market
driven rates or prices. We are not presently engaged in any substantive commercial business. Accordingly, the risks associated
with foreign exchange rates, commodity prices, and equity prices are not significant. Our debt obligations contain interest rates
that are fixed and we do not enter into derivatives or other financial instruments for trading or speculative purposes.
Item 4T. Controls and Procedures
(a)
Evaluation of Disclosure Controls
and Procedures.
The Company’s senior management is responsible for establishing and maintaining a system of disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange
Act”) designed to ensure that the information required to be disclosed by the Company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and
principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
The Company has evaluated the effectiveness
of the design and operation of its disclosure controls and procedures under the supervision of and with the participation of management,
including the Chief Executive Officer and our Chief Financial Officer as of the end of the period covered by this report. Based
on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
are effective.
(b)
Changes in Internal Control
Over Financial Reporting.
There have not been any changes in our internal control over financial reporting (as such term is
defined in Rules 13a-15(f) under the Exchange Act) during our most recently completed fiscal quarter which is the subject of this
report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
There are inherent limitations in any system
of internal control. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that its objectives are met. Further, the design of a control system must consider that resources are not unlimited and the benefits
of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgment in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons,
by collusion of two or more people, or by management override of the controls.
_____________________________________
PART II - OTHER INFORMATION
Item 1A. Risk Factors
Any investment in our
common stock involves a high degree of risk.
Some of these many known risks that affect an investment
in our Company (there can be others) include:
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·
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we have incurred significant net losses in the past and unless we receive additional financing, we
may be forced to cease all operations and liquidate our Company,
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·
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we may issue shares of our capital stock or debt securities to raise capital and to complete a business
combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership,
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·
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in order to simplify our operations to make a merger transaction potentially more attractive to an
unrelated business, we have divested ourselves of any of our remaining cardiac MRI technology, or other technology,
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·
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if we merge with an unrelated business, it is likely that our current officers and directors may resign
upon consummation of a business combination,
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·
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because of our limited resources and the significant competition for business combination opportunities,
we may not be able to consummate a business combination with suitable growth potential,
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·
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we may be unable to obtain additional financing that may be needed to fund the operations and/or growth
of the target business,
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·
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we have no full time employees and are substantially dependent on the efforts of part-time management
and members of the Board of Directors, working for per-diem or no cash compensation, none of whom are bound by term employment
agreements and
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·
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our significant stockholders and executive officers and directors currently are able, by virtue of
their position as managers of Magna Acquisition LLC, a 56% stockholder of the Company, to influence matters requiring stockholder
approval and their interests may conflict with those of other stockholders.
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For a more complete listing
and description of these and other risks that the Company faces please see our Annual Report on Form 10-K for the year ended February
28, 2017.
Item 3. Defaults Upon Senior Securities
As discussed in Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Overview, Background and History, approximately $539,000
principal amount of 12% notes payable to Magna Acquisition LLC (“MALLC) are in default at August 31, 2017 as a result of
their non-payment when due. Such notes now carry a default rate of interest of 15%.
Subsequent
to August 31, 2017, MALLC loaned the Company another approximately $11,000 on the same terms as the prior loans.
Item 6. - Exhibits
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31.1
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Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a – 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a – 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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10.49
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Note Payable to Magna Acquisition LLC dated March 6, 2017.*
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10.50
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Note Payable to Magna Acquisition LLC dated March 7, 2017.*
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10.51
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Note Payable to Magna Acquisition LLC dated April 10, 2017.*
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10.52
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Note Payable to Magna Acquisition LLC dated April 11, 2017.*
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10.53
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Note Payable to Magna Acquisition LLC dated April 28, 2017.*
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10.54
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Note Payable to Magna Acquisition LLC dated May 31, 2017.*
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10.55
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Note Payable to Magna Acquisition LLC dated June 6, 2017.*
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10.56
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Note Payable to Magna Acquisition LLC dated June 13, 2017.
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10.57
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Note Payable to Magna Acquisition LLC dated June 29, 2017.
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10.58
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Note Payable to Magna Acquisition LLC dated July 13, 2017.
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10.59
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Note Payable to Magna Acquisition LLC dated July 31, 2017.
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10.60
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Note Payable to Magna Acquisition LLC dated September 5, 2017.
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* Filed in connection with the Form 10Q for the period ended May 31, 2017
SIGNATURES
In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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MAGNA-LAB INC.
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(Registrant)
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Date: October 16, 2017
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By:
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/s/
Lawrence A. Minkoff
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Lawrence A. Minkoff,
Chairman, President and Chief Scientific Officer (Principal
Executive Officer)
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By:
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/s/ Kenneth C. Riscica
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Kenneth C.
Riscica, Treasurer and Secretary (Principal
Financial and Accounting Officer)
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INDEX TO EXHIBITS
* Filed in connection with the Form 10Q for the period ended May 31, 2017