x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: May 31, 2012
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ________________
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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 | ||
(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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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company x
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(Do not check if a smaller reporting company)
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Class A Common Stock, $.001 Par Value
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1,176,025
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Class B Common Stock, $.001 Par Value
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3,304
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Class
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Shares
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PART 1 – FINANCIAL INFORMATION
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Item 1. – Financial Statements
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Condensed Consolidated Balance Sheets
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1
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Condensed Consolidated Statements of Operations (unaudited)
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2
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Condensed Consolidated Statements of Cash Flows (unaudited)
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3
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Condensed Consolidated Statement of Stockholders’ Deficit (unaudited)
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4
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Notes to Condensed Consolidated Financial Statements (unaudited)
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5 - 7
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Item 2. - Management’s Discussion and Analysis of Financial Condition And Results of Operations
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8 - 9
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Item 3. – Quantitative and Qualitative Disclosures about Market Risk
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9 - 10
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Item 4T. – Controls and Procedures
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10
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PART II - OTHER INFORMATION
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Item 1A. – Risk Factors
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10
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Item 3. – Defaults Upon Senior Securities
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11
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Item 6. – Exhibits
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11
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SIGNATURES
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11
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ASSETS | ||||||||
May 31,
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February 29,
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|||||||
2012 . | 2012 . | |||||||
(unaudited)
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CURRENT ASSETS:
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Cash
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$ | 4,000 | $ | 7,000 | ||||
Prepaid expense
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- | 3,000 | ||||||
Total current assets
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$ | 4,000 | $ | 10,000 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
CURRENT LIABILITIES:
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Notes payable and accrued interest payable to a shareholder
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$ | 400,000 | $ | 390,000 | ||||
Accounts payable (including approximately $68,000 which is payable to
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the Company’s President for expenses he paid on the Company’s behalf)
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393,000 | 391,000 | ||||||
Accrued expenses and other current liabilities
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37,000 | 32,000 | ||||||
Total current liabilities
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830,000 | 813,000 | ||||||
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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- | - | ||||||
Common stock, Class A, par value $.001 per share, 120,000,000 shares
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authorized, 1,176,025 shares issued and outstanding
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1,000 | 1,000 | ||||||
Common stock, Class B, par value $.001 per share, 3,750,000 shares
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authorized, 18,750 shares issued and 3,304 shares outstanding
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- | - | ||||||
Capital-in-excess of par value
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27,180,000 | 27,180,000 | ||||||
Accumulated deficit
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(28,007,000 | ) | (27,984,000 | ) | ||||
Total stockholders' deficit
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(826,000 | ) | (803,000 | ) | ||||
Total liabilities and stockholders’ deficit
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$ | 4,000 . | $ | 10,000 |
2012
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2011
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REVENUES
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$ | - | $ | - | ||||
OPERATING EXPENSES:
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General and administrative
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13,000 | 14,000 | ||||||
LOSS FROM OPERATIONS
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(13,000 | ) | (14,000 | ) | ||||
OTHER EXPENSE - Interest expense
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10,000 | 9,000 | ||||||
NET LOSS
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$ | (23,000 | ) | $ | (23,000 | ) | ||
WEIGHTED AVERAGE NUMBER
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OF COMMON SHARES OUTSTANDING
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1,179,000 | 1,179,000 | ||||||
NET LOSS PER COMMON SHARE,
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basic and diluted
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$ | (0.02 | ) | $ | (0.02 | ) |
2012
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2011
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (23,000 | ) | $ | (23,000 | ) | ||
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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3,000 | 3,000 | ||||||
Accounts payable, accrued liabilities and all other
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17,000 | 16,000 | ||||||
NET CASH USED IN OPERATING ACTIVITIES
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(3,000 | ) | (4,000 | ) | ||||
NET INCREASE (DECREASE) IN CASH
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(3,000 | ) | (4,000 | ) | ||||
CASH:
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Beginning of period
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7,000 | 7,000 | ||||||
End of period
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$ | 4,000 | $ | 3,000 |
Capital-in-
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Common Stock |
Excess
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Class A | Class B |
of Par
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Accumulated
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Shares
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Amount
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Shares
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Amount
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Value
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Deficit
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BALANCES, February 29, 2012
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1,176,025 | $ | 1,000 | 3,304 | $ | - | $ | 27,180,000 | $ | (27,984,000 | ) | |||||||||||||
NET LOSS (unaudited)
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- | - | - | - | - | (23,000 | ) | |||||||||||||||||
BALANCES, May 31, 2012
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(unaudited)
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1,176,025 | $ | 1,000 | 3,304 | $ | - | $ | 27,180,000 | $ | (28,007,000 | ) |
Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of OperationsForward Looking Statements
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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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if we merge with an unrelated business, we would likely divest of any of our remaining cardiac MRI technology, partly in connection with or in anticipation of a merger with an unrelated business or such technology may remain with the Company and not receive any priority in allocation of any funding that may be available,
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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 shareholders and executive officers and directors currently are able, by virtue of their position as managers of Magna Acquisition LLC, a 56% shareholder of the Company, to influence matters requiring stockholder approval and their interests may conflict with those of other shareholders.
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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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MAGNA-LAB INC.
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(Registrant)
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Date: July 11, 2012
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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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No.
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Description
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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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Dated: July 11, 2012
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By:
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/s/ Lawrence A. Minkoff
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Lawrence A. Minkoff
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President (principal executive officer)
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Dated: July 11, 2012
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By:
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/s/ Kenneth C. Riscica
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Kenneth C. Riscica, Treasurer & Secretary
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(principal financial officer)
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(1)
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such Quarterly report on Form 10-Q for the quarter ended May 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in such Quarterly report on Form 10-Q for the quarter ended May 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of Magna-Lab, Inc.
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July 11, 2012
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/s/ Lawrence A. Minkoff
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Name: Lawrence A. Minkoff
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Title: President (principal executive officer)
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(1)
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such Quarterly report on Form 10-Q for the quarter ended May 31, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in such Quarterly report on Form 10-Q for the quarter ended May 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of Magna-Lab, Inc.
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July 11, 2012
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/s/ Kenneth C. Riscica
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Name: Kenneth C. Riscica
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Title: Treasurer & Secretary (principal financial officer)
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NOTE 3 - NET LOSS PER COMMON SHARE
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
NOTE 3 - NET LOSS PER COMMON SHARE |
The Company complies with the accounting and reporting requirements of U.S. Generally Accepted Accounting Principles (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 month periods ended May 31, 2012 and 2011. |
NOTE 2 - COMPANY'S ACTIVITIES AND GOING CONCERN CONSIDERATION
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
NOTE 2 - 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 Companys public reporting status. Additional activities have included preserving cash, making settlements with creditors, attempting to raise capital and continuing its 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 Companys 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.
Going Concern Consideration - As indicated in the accompanying condensed consolidated financial statements, at May 31, 2012, the Company had approximately $4,000 of cash and approximately $826,000 in negative working capital and stockholders deficit and negative cash flows from operations. For the three months ended May 31, 2012, the Company had a net loss of approximately $23,000 and utilized approximately $3,000 of cash in operating activities. Further, losses are continuing subsequent to May 31, 2012. 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, 2012. The Companys plans to deal with this uncertainty are described above in Company Activities. Managements plans to raise capital, enter into a strategic arrangement or merge with an unrelated business have not been successful to date and there can be no assurance that managements plans can be realized at all. These factors, among others, raise substantial doubt about the Companys 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. |
Condensed Consolidated Statement of Stockholders' Deficit (USD $)
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Class A Common Stock
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Class B Common Stock
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Capital in Excess of Par Value
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Accumulated Deficit
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Total
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Value, Balance, Beginning at Feb. 29, 2012 | $ 1,000 | $ 3,304 | $ 27,180,000 | $ (27,984,000) | $ (803,000) |
Shares, Balance, Beginning at Feb. 29, 2012 | 1,176,025 | ||||
Net Loss | (23,000) | (23,000) | |||
Value, Balance, Ending at May. 31, 2012 | $ 1,000 | $ 3,304 | $ 27,180,000 | $ (28,007,000) | $ (826,000) |
Shares, Balance, Ending at May. 31, 2012 | 1,176,025 |
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NOTE 1 - BASIS OF PRESENTATION AND CONSOLIDATION
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
NOTE 1 - BASIS OF PRESENTATION AND CONSOLIDATION |
The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X for small business issuers and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America. 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 condensed consolidated financial statements should be read in conjunction with the more complete information and the Companys audited consolidated financial statements and related notes thereto included in the Company's annual report on Form 10-K for the year ended February 29, 2012. The operating results for the three months ended May 31, 2012 are not necessarily indicative of the results that may be expected for the year ending February 28, 2013.
Management has evaluated subsequent events through July 11, 2012 in preparing these condensed consolidated financial statements. |
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
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May 31, 2012
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Feb. 29, 2012
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Liabilities | ||
Approximate amount due to Company's President for expenses paid on the Company's behalf (in dollars) | $ 68,000 | $ 68,000 |
Stockholders Equity | ||
Preferred Stock Par Value | $ 0.01 | $ 0.01 |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Common Stock Class A Par Value | $ 0.001 | $ 0.001 |
Common Stock Class A Shares Authorized | 120,000,000 | 120,000,000 |
Common Stock Class A Shares Issued | 1,176,025 | 1,176,025 |
Common Stock Class A Shares Outstanding | 1,176,025 | 1,176,025 |
Common Stock Class B Par Value | $ 0.001 | $ 0.001 |
Common Stock Class B Shares Authorized | 3,750,000 | 3,750,000 |
Common Stock Class B Shares Issued | 18,750 | 18,750 |
Common Stock Class B Shares Outstanding | 3,304 | 3,304 |
Document and Entity Information
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3 Months Ended | ||
---|---|---|---|
May 31, 2012
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Jul. 10, 2012
Class A Common Stock
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Jul. 10, 2012
Class B Common Stock
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Entity Registrant Name | MAGNA LAB INC | ||
Entity Central Index Key | 0000895464 | ||
Document Type | 10-Q | ||
Document Period End Date | May 31, 2012 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --05-28 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 1,176,025 | 3,304 | |
Document Fiscal Period Focus | Q1 | ||
Document Fiscal Year Focus | 2012 |
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
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3 Months Ended | |
---|---|---|
May 31, 2012
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May 31, 2011
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Income Statement [Abstract] | ||
REVENUES | $ 0 | $ 0 |
OPERATING EXPENSES: | ||
Selling, general and administrative | 13,000 | 14,000 |
LOSS FROM OPERATIONS | (13,000) | (14,000) |
OTHER EXPENSE - Interest expense | 10,000 | 9,000 |
NET LOSS | $ (23,000) | $ (23,000) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED | 1,179,000 | 1,179,000 |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | $ (0.02) | $ (0.02) |
NOTE 6 - STOCK BASED COMPENSATION
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
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 Companys 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 5 - ACCOUNTS PAYABLE AND ACCRUALS
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUALS | Approximately $106,000 of accounts payable relates to intellectual property counsel fees and costs including approximately $68,000 of which has been paid by and is therefore due to the Companys Chairman and President for payments he has made on the Companys behalf to preserve certain intellectual property rights.
Accrued expenses and other current liabilities includes approximately $18,000 payable to a third party, guaranteed by our principal shareholder, 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 is 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 is entitled to recovery of certain costs from this third party associated with that proposed transaction pursuant to understandings between the parties.
See also Notes 3 and 8 to the audited consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended February 29, 2012 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 months ended May 31, 2012 or 2011. The Company periodically adjusts the remaining accrual based on the status of the matters and activity given the passage of time. |
NOTE 7 - EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
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3 Months Ended |
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May 31, 2012
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Notes to Financial Statements | |
NOTE 7 - EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS |
In May 2011, the FASB and International Accounting Standards Board (IASB) (collectively the Boards) issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04). ASU 2011-04 created a uniform framework for applying fair value measurement principles for companies around the world and clarified existing guidance in US GAAP. ASU 2011-04 is effective for the first reporting annual period beginning after December 15, 2011 and shall be applied prospectively. The adoption of this standard had no impact on the Companys condensed consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220), Presentation of Comprehensive Income. This update is intended to increase the prominence of other comprehensive income in the financial statements by requiring public companies to present comprehensive income either as a single statement detailing the components of net income and total net income, the components of other comprehensive income and total other comprehensive income, and a total for comprehensive income or using a two statement approach including both a statement of income and a statement of comprehensive income. The option to present other comprehensive income in the statement of changes in equity has been eliminated. The amendments in this update, which should be applied retrospectively, are effective for public companies for fiscal years, and interim periods beginning after December 15, 2011. The adoption of this guidance did not have any impact on the Company's condensed consolidated financial statements.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles -- Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This update allows an entity, when conducting its annual or interim goodwill impairment analysis, to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after conducting this assessment, an entity determines that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then performing the two-step goodwill impairment test is unnecessary. The amendments in this update are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 and early adoption is permitted. The adoption of this guidance did not have any impact on the Company's condensed consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements. |
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
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3 Months Ended | |
---|---|---|
May 31, 2012
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May 31, 2011
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|
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (23,000) | $ (23,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Prepaid expenses | 3,000 | 3,000 |
Accounts payable, accrued liabilities and all other | 17,000 | 16,000 |
NET CASH USED IN OPERATING ACTIVITIES | (3,000) | (4,000) |
NET INCREASE (DECREASE) IN CASH | (3,000) | (4,000) |
CASH: | ||
Beginning of period | 7,000 | 7,000 |
End of period | $ 4,000 | $ 3,000 |
NOTE 4 - NOTES PAYABLE
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3 Months Ended |
---|---|
May 31, 2012
|
|
Notes to Financial Statements | |
NOTE 4 - NOTES PAYABLE |
Notes payable include 12% unsecured notes payable to the Companys principal shareholder in the aggregate principal amount of $273,000, plus approximately $127,000 of interest accrued. Such notes become due 120 days after issuance and, as such, all $273,000 principal amount of such notes are overdue at May 31, 2012. 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 shareholder to convert all amounts outstanding to them (including overdue amounts) into common stock of the Company.
On June 5, 2012, this shareholder loaned the Company an additional $25,000 on the same terms as above. |