-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OIXWEr0F2tY+8FcA/35I3rY6jMerxs+atOOdMJdqwf9HSMewyR+TnZMY6JR/Gtqp +RgCsnG8LyK9YlKtnBz9Ew== 0001005477-02-000150.txt : 20020413 0001005477-02-000150.hdr.sgml : 20020413 ACCESSION NUMBER: 0001005477-02-000150 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAGNA LAB INC CENTRAL INDEX KEY: 0000895464 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 113074326 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21320 FILM NUMBER: 2509750 BUSINESS ADDRESS: STREET 1: 6800 JERICHO TURNPIKE #120W CITY: SYOSSET STATE: NY ZIP: 11797 BUSINESS PHONE: 5163935874 MAIL ADDRESS: STREET 1: 6800 JERICHO TURNPIKE #120W CITY: SYOSSET STATE: NY ZIP: 11797 10QSB 1 d02-35624.txt FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: November 30, 2001 ----------------- |_| 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 0-21320 ------- Magna-Lab Inc. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) New York 11-3074326 ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 6 Kimball Lane, Lynnfield, MA 01940 ----------------------------------------------- (Address of principal executive offices) (781) 246-4884 --------------------------- (Issuer's telephone number) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 |X| 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 - January 7, 2002 Class A Common Stock, $.001 Par Value 74,078,796 - ------------------------------------------------ -------------------- Class B Common Stock, $.001 Par Value 380,142 - ------------------------------------------------ --------------------- Class Shares Transitional Small Business Disclosure Format (check one) Yes ( ) No (X) PART I: FINANCIAL INFORMATION Item 1. - Financial Statements MAGNA-LAB INC. AND SUBSIDIARY CONTENTS PART 1 - FINANCIAL INFORMATION (UNAUDITED) ITEM 1. - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS 2 CONSOLIDATED STATEMENTS OF OPERATIONS 3 CONSOLIDATED STATEMENTS OF CASH FLOWS 4 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6-8 ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 9-11 PART II - OTHER INFORMATION ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS 12 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8K 12 SIGNATURES 13 All items which are not applicable or to which the answer is negative have been omitted from this report. 1 MAGNA-LAB INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS November 30, 2001 (unaudited) and February 28, 2001
November 30, February 28, 2001 2001 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,443,000 $ 5,816,000 Deposits and prepaid expenses 82,000 82,000 ------------ ------------ Total current assets 4,525,000 5,898,000 PROPERTY AND EQUIPMENT, net 71,000 5,000 OTHER ASSETS, Restricted cash 59,000 0 ------------ ------------ $ 4,655,000 $ 5,903,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 934,000 $ 379,000 Accrued expenses and other current liabilities 291,000 255,000 ------------ ------------ Total current liabilities 1,225,000 634,000 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, par value $.01 per share, 5,000,000 shares authorized, no shares issued -- -- Common stock, Class A, par value $.001 per share, 120,000,000 shares authorized, 74,078,796 and 70,278,140 shares issued and outstanding 74,000 70,000 Common stock, Class B, par value $.001 per share, 3,750,000 shares authorized, 1,875,000 shares issued, 380,142 and 380,798 shares outstanding 1,000 1,000 Capital in excess of par value 25,869,000 24,576,000 Accumulated deficit (22,514,000) (19,378,000) ------------ ------------ Total stockholders' equity 3,430,000 5,269,000 ------------ ------------ $ 4,655,000 $ 5,903,000 ============ ============
See accompanying notes to consolidated financial statements 2 MAGNA-LAB INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended Nine months ended November 30, November 30, ------------------------------- ------------------------------- 2001 2000 2001 2000 --------------------------------------------------------------------- REVENUES $ -- $ -- $ -- $ -- ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Selling, general and administrative 782,000 263,000 1,712,000 535,000 Stock compensation charge 178,000 225,000 525,000 275,000 Research and development 493,000 145,000 1,026,000 540,000 ------------ ------------ ------------ ------------ 1,453,000 633,000 3,263,000 1,350,000 ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE): Interest expense -- -- -- -- Interest income 29,000 39,000 127,000 81,000 ------------ ------------ ------------ ------------ NET LOSS $ (1,424,000) $ (594,000) $ (3,136,000) $ (1,269,000) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED 72,500,000 53,985,000 71,100,000 43,995,000 ============ ============ ============ ============ NET LOSS PER SHARE, BASIC AND DILUTED $ (0.02) $ (0.01) $ (0.04) $ (0.03) ============ ============ ============ ============
See accompanying notes to consolidated financial statements 3 MAGNA-LAB INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents (unaudited)
Nine months ended November 30, ----------------------------- 2001 2000 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(3,136,000) $(1,269,000) ----------- ----------- Adjustments: Depreciation and amortization 3,000 3,000 Non-cash charge for options/warrants 525,000 275,000 Effect on cash of changes in operating assets and liabilities: Deposits and prepaid expenses -- -- Accounts payable and other current liabilities and all other 585,000 (557,000) ----------- ----------- Total adjustments 1,113,000 (279,000) ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (2,023,000) (1,548,000) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (69,000) -- Cash pledged to secure lease (59,000) -- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (128,000) -- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of Class A common shares in private placement 836,000 995,000 Stock subscriptions and deposits collected 3,250,000 Exercise of options 140,000 Receipt of prepayment of subscription receivable -- -- Receipt of non-refundable deposit from Noga -- -- Cost of private placements (58,000) (461,000) Other equity -- 28,000 ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 778,000 3,952,000 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,373,000) 2,404,000 CASH AND CASH EQUIVALENTS: Beginning of period 5,816,000 1,372,000 ----------- ----------- End of period $ 4,443,000 $ 3,776,000 =========== =========== SUPPLEMENTAL INFORMATION ON NON-CASH TRANSACTIONS Common stock issued to settle account payable $ -- $ 18,000 =========== =========== Bridge loans settled with issuance of Class A common stock $ -- $ 20,000 =========== ===========
See accompanying notes to consolidated financial statements 4 MAGNA-LAB INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the nine months ended November 30, 2001 (unaudited)
Common Stock -------------------------------------------------- Capital in Class A Class B Excess -------------------------------------------------- of Par Accumulated Shares Amount Shares Amount Value Deficit --------------------------------------------------------------------------------------- BALANCES, February 28, 2001 70,278,140 $70,000 380,798 $1,000 $ 24,576,000 $(19,378,000) CONVERT B TO A SHARES 656 -- (656) -- -- -- OPTION/WARRANT CHARGE -- -- -- -- 525,000 -- SHARES ISSUED IN PRIVATE PLACEMENT 3,800,000 4,000 -- -- 832,000 -- COST OF PRIVATE PLACEMENT -- -- -- -- (64,000) NET LOSS -- -- -- -- -- (3,136,000) --------------------------------------------------------------------------------------- BALANCES, November 30, 2001 74,078,796 $74,000 380,142 $1,000 $ 25,869,000 $(22,514,000) =======================================================================================
See accompanying notes to consolidated financial statements 5 MAGNA-LAB INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION: The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America. All adjustments which are of a normal recurring nature and, in the opinion of management, necessary for a fair presentation have been included. These statements should be read in conjunction with the more complete information and consolidated financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended February 28, 2001. NOTE 2 - DISCUSSION OF THE COMPANY'S ACTIVITIES/PRODUCTS AND CASH REQUIREMENTS: Company Activities - Magna-Lab Inc. and Subsidiary (the "Company") has been engaged in research and development activities and, in May and June 2001, received U.S. marketing clearance from the U.S. Food and Drug Administration ("FDA") for its first two products. These two products, Illuminator Probe (formerly called Cardiac View Probe) and Illuminator Surface Coil (formerly called Cardiac View Surface Coil), are Magnetic Resonance Imaging ("MRI") receiving coils that are intended to non-invasively aid in the production of high resolution MRI images of the aortic arch, the descending aorta and the coronary vessels of the heart and associated structures in the thoracic region to advance the definitive diagnosis of Coronary Artery Disease ("CAD"). When the Illuminator Probe is used in conjunction with the Illuminator Surface Coil the two products would surround the heart, allowing the generation of additional imaging information. The Company developed these products, and another product still under development for intravascular MRI imaging, in a collaboration with the Cardiovascular Institute of the Mount Sinai School of Medicine ("MSSM") in New York. The collaboration with MSSM concluded in October 2000 and the Company's development efforts are ongoing. The Company has engaged a third party manufacturer to produce the Illuminator products and the Company has received the initial production quality product during the third quarter ended November 30, 2001. The Company's marketing efforts are expected to include post FDA clearance marketing studies. Discussions are currently under way with several institutions regarding conducting such studies. The Company's activities have been supported largely by equity financings including approximately $6,913,000 raised in the fiscal year ended February 28, 2001 and approximately $836,000 raised in the nine months ended November 30, 2001. At November 30, 2001, the Company has approximately $4,443,000 in cash and cash equivalents and approximately $3,300,000 in working capital which, together with remaining investment commitments (see note 6), the Company believes is adequate to support its planned operations forthe two quarters following November 30, 2001 and that we will require additional financing to fund our planned operations during the quarter that begins June 1, 2001, unless we conclude to reduce or defer certain planned activities. NOTE 3 - LOSS PER SHARE OF COMMON STOCK: Net loss per share is computed based on the weighted average number of Class A Common and Class B Common shares outstanding. Dilutive options and warrants outstanding would be considered in the computation of net income per share under the treasury stock method when their effect is to reduce reported net income per share. NOTE 4 - DEVELOPMENT ACTIVITIES: In October 2000, the Company completed its multi-year collaborative research agreement with the Cardiovascular Institute of the Mount Sinai School of Medicine (New York City) and Dr. Valentin Fuster (as principal investigator). In May and June 2001, respectively, the Company received clearance to market its Illuminator Probe and Illuminator Surface Coil from the FDA. 6 There were no charges or payments for this collaboration in the current fiscal year as it is complete. Operations for the three and nine months ended November 30, 2000 include charges of $0 and $125,000, respectively, and $600,000 in payments in the nine months then ended in connection with this collaboration. The Company has also agreed to pay royalties, within a range defined in the agreement, to MSSM for the sole and exclusive right to use, make, have made, sell and otherwise exploit the results of the collaboration. In October 2001 the Company signed an agreement with Brigham and Women's hospital, an affiliate of Harvard Medical School ("BWH") under which BWH will conduct a clinical study of the Company's Illuminator products. The purpose of the study is to further investigate the clinical utility of using the Company's proprietary MRI coils in diagnosing heart disease. To the extent that BWH concludes to do any non-clinical cases, those would require the completion of a review by the hospital's Institutional Review Board. The studies began in October 2001 and are expected to take place over a period of six months. In January 2002, we entered into an agreement with Massachusetts General Hospital, an affiliate of Harvard Medical School, to conduct a study of our intravascular catheter coil to obtain in-vivo, high-resolution MRI images of the coronary vessel walls in a series of studies using animals. The project is scheduled to begin in January 2002 and to continue for approximately four months. NOTE 5 - PROPERTY AND EQUIPMENT: Details of property and equipment at November 30, 2001 are as follows: Property and equipment $478,000 Less: accumulated depreciation and amortization and write-downs (407,000) -------- $ 71,000 -------- NOTE 6 - OTHER MATTERS Increase in authorized shares of Class A common stock and shares of Class A common stock available for stock options - On August 21, 2001, the shareholders of the Company approved the amendment of the Company's Amended Certificate of Incorporation to increase the authorized shares of Class A common stock from 100,000,000 to 120,000,000. Also on August 21, 2001, the shareholders of the Company approved the increase in the number of shares of Class A common stock available under the Company's 1992 Stock Option Plan from 14,000,000 to 18,000,000. During the quarter ended November 30, 2001, options to purchase 1,500,000 shares at $0.28 were granted to an officer and Director of the Company. Financing matters - The Company has agreed to sell up to $1,500,000 of Class A common stock to or at the direction of a principal stockholder, who committed to purchase such amount when a former officer of the Company failed to fund such amount pursuant to a prior commitment. The purchase price for such shares would be the same as the former officer's prior commitment, or $.22 per share. During the nine months ended November 30, 2001, the Company sold approximately 3,800,000 shares aggregating $836,000 under such arrangement. Deposits and prepaid expenses - Deposits and prepaid expenses include principally amounts on deposit with the Company's third party manufacturer. The vendor deposit amount will be deducted from the final billings due from this vendor. Deposits of approximately $25,000 relating to the meeting of the Transcatheter Therapeutics organization scheduled for September 16, 2001 in Washington, DC were written off in the quarter ended November 30, 2001 as the Company has been unable to determine their realizability. Due to events in New York and Washington on 7 September 11, 2001, that meeting was cancelled. The Company will continue to pursue a refund or credit from such cancellation. Non cash charge for warrants/options issued to consultants - The non cash charge for warrants/options results from the application of Black Sholes methodology to options granted to non-employee members of management and to warrants granted to an investor relations firm. See Form 10-KSB for the year ended February 28, 2001 for additional information. NOTE 7 - COMMITMENTS AND CONTINGENCIES: Facility lease; other assets - In August 2001, the Company entered into a sublease for a 5,600 square foot office facility to serve as its headquarters. The sublease calls for payments of approximately $12,000 per month plus a proportionate share of utilities. The lease term extends until June 30, 2004. The Company has provided a letter of credit in favor of its landlord in the amount of approximately $59,000 as security. Such letter of credit is secured by the Company's pledge of approximately $59,000 of cash on deposit at a commercial bank. Such cash is shown as non-current restricted cash in the accompanying consolidated financial statements. Debt Reduction Program and Litigation - Information regarding the Debt Reduction Program commenced in 1997 and various litigation matters is contained in Note 8 to Consolidated Financial Statements contained in the Company's Form 10-KSB for the year ended February 28, 2001. There has been no material change in the status of these matters during the nine months ended November 30, 2001. NOTE 8 - SUBSEQUENT EVENT: In December 2001, the Company entered into agreements for financial advisory services with two investment banks. Such agreements call for the issuance of 2,000,000 warrants to purchase the Company's common stock at prices from $0.80 to $1.50 during a period extending 18 to 24 months. In addition, the agreements called for a payment upon signing and ongoing fees aggregating approximately $160,000 per year. Such agreements are cancelable upon 45 days notice. Of the warrants granted, 1,000,000 would be forfeited if the Company terminated such agreements in or prior to March 2002. The Company expects to take a charge to operations, in addition to the cash expense, for an amount associated with the warrants over the periods of the agreements. 8 Item 2. Management's Discussion and Analysis or Plan of Operation EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS REPORT AND THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANINGS OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW IN FACTORS THAT MAY AFFECT FUTURE RESULTS (b) Management's Discussion and Analysis or Plan of Operations - Overview We have been engaged in research and development activities and, in May and June 2001, received U.S. marketing clearance from the FDA for our first two products. These two products, Illuminator Probe(TM) (formerly called Cardiac View Probe) and Illuminator Surface Coil(TM) (formerly called Cardiac View Surface Coil), are intended to non-invasively aid in the production of high resolution MRI images of the aortic arch, the descending aorta and the coronary vessels of the heart and associated structures in the thoracic region to advance the definitive diagnosis of CAD. We developed these products, and another product still under development for intravascular MRI imaging, in a collaboration with the Cardiovascular Institute of the Mount Sinai School of Medicine in New York. The collaboration with Mount Sinai concluded in October 2000. We have engaged a third party manufacturer to produce the Illuminator products and we received the first production quality product during October 2001. We have no product sales and have incurred net operating losses and negative cash flows since inception. Our marketing efforts are currently focused on establishing clinical studies to further investigate the clinical utility of our products. We established our first such study with Brigham and Women's Hospital, an affiliate of Harvard Medical School, in October 2001. In January 2002, we entered into an agreement with Massachusetts General Hospital, an affiliate of Harvard Medical School, to conduct a study of our intravascular catheter coil to obtain in-vivo, high-resolution MRI images of the coronary vessel walls in a series of studies using animals. Plan of Operations and Liquidity During the next 12 months, we anticipate that our expenditures will increase significantly as we build the infrastructure and other resources necessary to commercialize our products. During this period, we anticipate that our operations will include the following principal activities: o Initiating and supporting post clearance marketing studies at participating healthcare institutions. o Recruiting sales, additional development and administrative personnel. o Engaging in marketing activities and programs. o Funding and supervising third party manufacturing activities including the build up of inventories. o Refining our existing products and continuing development of our planned products. o Establishing infrasturcture and systems necessary to support our planned growth. o Developing a comprehensive healthcare reimbursement strategy. 9 Our plans would increase our total head count by approximately 10 or more people, depending on the pace of developments. During this period, we also intend to increase the current level of research and development expenditures as we continue to focus on refining our existing products and developing new products. Our activities have been supported largely by equity financings including approximately $6,913,000 (gross) raised during the fiscal year ended February 28, 2001 and $836,000 (gross) raised during the nine months ended November 30, 2001. At November 30, 2001, we had approximately $4,443,000 in cash and cash equivalents and approximately $3,300,000 in working capital. In addition, we have agreed to sell up to $1,500,000 ($664,000 of which is remaining) of Class A common stock to or at the direction of a principal stockholder, who committed to purchase such amount when a former officer failed to fund such amount pursuant to a prior commitment. The purchase price for such shares would be the same as the officer's prior commitment, or $.22 per share. Operating expenses for the three months ended November 30, 2001 increased over the same period of the prior year principally because of additional personnel added since the prior year, marketing efforts associated with the Illuminator products (including participation as an exhibitor at the November 2001 meetings of the American Heart Association and the Radiological Society of North America), costs associated with regulatory matters including CE marking and increased costs associated with the current stage of our Intellectual Property matters among other items. Operating expenses for the nine months ended November 30, 2001 increased over the same period of the prior year principally due to the factors discussed above as well as spending on a reimbursement study, attendance as an exhibitor at the annual scientific meeting of the American College of Cardiology in March 2001 and costs associated with regulatory matters including FDA submittals, among other items. Cash used by operations during the nine months ended November 30, 2001 totaled approximately $2,023,000 and capital expenditures were approximately $128,000 (including cash we pledged to secure an approximately $59,000 letter of credit that secures our sublease in Lynnfield, Massachusetts). We expect cash used by operations to increase in the fourth quarter ending February 28, 2002 to pay down a high level of accounts payable at November 30, 2001 as well as a planned higher level of current expenses. We anticipate that our existing cash and working capital at November 30, 2001, together with the remaining investment commitment discussed above, will be sufficient to meet our planned spending for the two quarters following November 30, 2001 and that we will require additional financing during the quarter which begins June 1, 2002, unless we conclude to reduce or defer certain planned activities. Should the remaining investment commitment not be made for any reason, we would expect to be able to adjust our spending so that our operations could continue for such period. Our plan of operation and capital requirements are dependent upon a number of factors such as those described below. Factors That May Affect Future Results Our future operating results are dependent upon many factors including, but not limited to our ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its plan of operations when needed, (ii) successfully develop and continuously improve its products and planned products, Illuminator and Artery View, (iii) successfully accomplish its business development and marketing efforts to commercialize and develop sufficient reimbursement for procedures involving any products developed, (iv) develop relationships with the physician community well as recruit new collaborators necessary to gain wide exposure of the Company's technology, (v) develop products which do not infringe the intellectual property rights of others, (vi) protect its intellectual property rights from infringement by others with patents and other protections, (vii) build the management and human resources and infrastructure necessary to support the growth of its business, (viii) pay its debts including any residual or contingent obligations that may exist relative to its discontinued product, as well as (i) competitive factors and developments beyond the Company's control and (ii) general economic conditions and conditions in the financial, technology and medical markets. 10 In addition, our business is subject to numerous risk factors including those associated with the medical technology market (which is rapidly changing), general economic conditions, and competition, among other risks. In addition the Company is exposed to those risks which are typical of a new business without existing revenues including, but not limited to: dependence on management and key executives, uncertainties of market acceptance, the time and expense of adoption of new technology/products, the need to obtain third party reimbursement for procedures involving the our devices at levels the Company considers acceptable, competing with enterprises with greater financial, management, marketing and other resources than us, the ability to raise capital on acceptable terms when needed and the ability to recruit necessary human resources when needed. - ---------- 11 PART II - OTHER INFORMATION Item 2. - Changes in Securities and Use of Proceeds During the quarter ended November 30, 2001, the Company sold 3,000,000 shares of class A common stock to a private investor in consideration for an aggregate of $660,000 in cash. The sale was made pursuant to a prior financing arrangement in which the Company agreed to sell up to $1,500,000 of Class A common stock at $0.22 per share to or at the direction of a principal stockholder and the principal stockholder agreed to purchase such stock on such terms. The investor has represented that it is an accredited investor within the meaning of the Securities Act of 1933. The Company paid a fee of $46,200 in connection with this investment. The Company believes that the offering is exempt from the registration requirements of such Act by virtue of Section 4(2) thereof. Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits None (b) The Company filed no reports on Form 8-K during the quarter ended November 30, 2001. 12 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. MAGNA-LAB INC. -------------------------------------------- (Registrant) Date: January 11, 2002 By: /s/ John R. Geisel -------------------------------------------- John R. Geisel, Chief Executive Officer (Principal Executive Officer), By: /s/ Kenneth C. Riscica -------------------------------------------- Treasurer and Secretary (Principal Financial and Accounting Officer) 13 -----END PRIVACY-ENHANCED MESSAGE-----