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U.S. SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM 10-Q 

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: May 31, 2017

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission File Number 0-21320

 

Magna-Lab Inc.

(Exact name of registrant as specified in its charter)

 

  New York   11-3074326  
  (State or other jurisdiction of incorporation or organization)   (IRS Employer Identification No.)  

 

 

  6800 Jericho Turnpike, Suite 120W, Syosset, NY 11791  
  (Address of principal executive offices and Zip code)  
     
  (516) 393 5874 (or c/o 212 986 9700)  
  (Issuer's telephone number including area code)  

 

     
  (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 ☒ 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 ☐ Accelerated filer ☐
Non-accelerated filer  ☐
(Do not check if a smaller reporting company)
Smaller reporting company ☒

 

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 – July 11, 2017

 

  Class A Common Stock, $.001 Par Value   1,178,762  
  Class B Common Stock, $.001 Par Value   567  
  Class   Shares  

 

 

MAGNA-LAB INC. AND SUBSIDIARY

 

CONTENTS

 

PART 1 – FINANCIAL INFORMATION  
   
Item 1. – Financial Statements  
   
Condensed Consolidated Balance Sheets 1
   
Condensed Consolidated Statements of Operations (unaudited) 2
   
Condensed Consolidated Statements of Cash Flows (unaudited) 3
   
Condensed Consolidated Statement of Stockholders’ Deficit (unaudited) 4
   
Notes to Condensed Consolidated Financial Statements (unaudited) 5 - 7
   
Item 2. – Management’s Discussion and Analysis of Financial Condition  And Results of Operations 8 - 9
   
Item 3. – Quantitative and Qualitative Disclosures about Market Risk 10
   
Item 4T. – Controls and Procedures 10
   
PART II - OTHER INFORMATION  
   
Item 1A. – Risk Factors 10
   
Item 3. – Defaults Upon Senior Securities 11
   
Item 6. – Exhibits 11
   
SIGNATURES 12

 

All items which are not applicable or to which the answer is negative have been omitted from this report.

 

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PART I: FINANCIAL INFORMATION

 

Item 1. - Financial Statements

 

MAGNA-LAB INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

ASSETS      
   May 31,  February 28,
   2017  2017
    (unaudited)      
CURRENT ASSETS:          
Cash  $1,000   $1,000 
Prepaid expense   —      3,000 
Total current assets  $1,000   $4,000 
           
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES:          
Notes payable and accrued interest payable to a stockholder  $978,000   $935,000 
Accounts payable   323,000    325,000 
Accrued expenses and other current liabilities   115,000    116,000 
Total current liabilities   1,416,000    1,376,000 
           
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)          
           
STOCKHOLDERS' DEFICIT:          
Preferred stock, par value $.01 per share, 5,000,000 shares authorized,          
none issued   —      —   
Common stock, Class A, par value $.001 per share, 120,000,000 shares          
authorized, 1,178,762 shares, issued and outstanding at May 31, 2017          
and February 28, 2017   1,000    1,000 
Common stock, Class B, par value $.001 per share, 3,750,000 shares          
authorized, 18,750 shares issued, 10,000 shares forfeited, 8,183 shares          
converted to Class A and 567 shares outstanding at May 31, 2017          
and February 28, 2017   —      —   
Additional paid in capital   27,290,000    27,290,000 
Accumulated deficit   (28,706,000)   (28,663,000)
Total stockholders' deficit   (1,415,000)   (1,372,000)
           
Total liabilities and stockholders’ deficit  $1,000   $4,000 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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MAGNA-LAB INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended May 31, 2017 and 2016

(unaudited)

 

   2017  2016
       
REVENUES  $ —    $   —    
       
OPERATING EXPENSES:          
General and administrative   23,000    16,000 
           
LOSS FROM OPERATIONS   (23,000)   (16,000)
           
OTHER EXPENSE - Interest expense   20,000    18,000 
           
NET LOSS BEFORE INCOME TAX   (43,000)   (34,000)
           
PROVISION FOR INCOME TAXES   —      —   
           
NET LOSS  $(43,000)  $(34,000)
           
WEIGHTED AVERAGE NUMBER          
OF COMMON SHARES OUTSTANDING   1,179,000    1,179,000 
           
NET LOSS PER COMMON SHARE,          
basic and diluted  $(0.04)  $(0.03)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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MAGNA-LAB INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended May 31, 2017 and 2016

(unaudited)

 

   2017  2016
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(43,000)  $(34,000)
Adjustments to reconcile net loss to net cash used in operating activities:          
Effect on cash of changes in operating assets and liabilities:          
Prepaid expenses   3,000    3,000 
Accounts payable, accrued liabilities and all other   18,000    23,000 
           
NET CASH USED IN OPERATING ACTIVITIES   (22,000)   (8,000)
           
CASH PROVIDED BY FINANCING ACTIVITIES:          
Proceeds received from notes payable to stockholder   22,000    —   
           
NET INCREASE (DECREASE) IN CASH   —      (8,000)
CASH:          
Beginning of period   1,000    11,000 
End of period  $1,000   $3,000 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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MAGNA-LAB INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

For the three months ended May 31, 2017 (unaudited)

 

   Common Stock  Additional     Total
   Class A  Class B  Paid In  Accumulated  Stockholders’
   Shares  Amount  Shares  Amount  Capital  Deficit  Deficit
BALANCE, February 28, 2017   1,178,762   $1,000    567   $—     $27,290,000   $(28,663,000)  $(1,372,000)
                                    
NET LOSS   —      —      —      —      —      (43,000)   (43,000)
                                    
BALANCE, May 31, 2017 (unaudited)   1,178,762   $1,000    567   $—     $27,290,000   $(28,706,000)  $(1,415,000)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

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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 months ended May 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 May 31, 2017, the Company had approximately $1,000 of cash and approximately $1,415,000 in negative working capital and stockholders’ deficit and negative cash flows from operations. For the three months ended May 31, 2017, the Company had a net loss of approximately $43,000 and utilized approximately $22,000 of cash in operating activities. Further, losses are continuing subsequent to May 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 May 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.

 

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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, 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 $546,000, plus approximately $432,000 of interest accrued. Such notes become due 120 days after issuance and, as such, approximately $517,000 principal amount of such notes are overdue at May 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 May 31, 2017, during June 2017, MALLC loaned an additional $15,000 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 months ended May 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.

 

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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.

 

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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 May 31, 2017, MALLC loaned us an aggregate $546,000 under a series of promissory notes payable that mature 120 days from issuance. At May 31, 2017, approximately $517,000 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. In June 2017, MALLC loaned the Company an additional $15,000 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.

 

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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 May 31, 2017, the Company had approximately $1,000 cash and approximately $1,415,000 in negative working capital and stockholders’ deficit and negative cash flows from operations. For the three months ended May 31, 2017, the Company had a net loss of approximately $43,000 and utilized approximately $22,000 of cash in operating activities. Further, losses are continuing subsequent to May 31, 2017. Although our principal investor loaned us an additional $15,000 in June 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 months ended May 31, 2017, our net loss was approximately $43,000 compared to a net loss of approximately $34,000 in the three months ended May 31, 2016. The increase in the loss is due principally to the higher debt levels and higher default interest in the three months ended May 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.

 

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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:

 

·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,

 

·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,

 

·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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·if we merge with an unrelated business, it is likely that our current officers and directors may resign upon consummation of a business combination,

 

·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,

 

·we may be unable to obtain additional financing that may be needed to fund the operations and/or growth of the target business,

 

·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

 

·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.

 

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 $517,000 principal amount of 12% notes payable to Magna Acquisition LLC (“MALLC) are in default at May 31, 2017 as a result of their non-payment when due. Such notes now carry a default rate of interest of 15%.  In June 2017, MALLC loaned the Company another $15,000 on the same terms as the prior loans.

 

Item 6. - Exhibits

 

31.1Certification 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.

31.2Certification 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.

32.1Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10.49Note Payable to Magna Acquisition LLC dated March 6, 2017.

10.50Note Payable to Magna Acquisition LLC dated March 7, 2017.

10.51Note Payable to Magna Acquisition LLC dated April 10, 2017.

10.52Note Payable to Magna Acquisition LLC dated April 11, 2017.

10.53Note Payable to Magna Acquisition LLC dated April 28, 2017.

10.54Note Payable to Magna Acquisition LLC dated May 31, 2017.

10.55Note Payable to Magna Acquisition LLC dated June 6, 2017.

 

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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: July 14, 2017 By: /s/ Lawrence A. Minkoff  
    Lawrence A. Minkoff, Chairman, President and Chief Scientific Officer (Principal Executive Officer)  
       
  By: /s/ Kenneth C. Riscica  
    Kenneth C. Riscica, Treasurer and Secretary (Principal Financial and Accounting Officer)  

 

 

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INDEX TO EXHIBITS

 

 No.Description

 

31.1Certification 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.

31.2Certification 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.

32.1Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

10.49Note Payable to Magna Acquisition LLC dated March 6, 2017.

10.50Note Payable to Magna Acquisition LLC dated March 7, 2017.

10.51Note Payable to Magna Acquisition LLC dated April 10, 2017.

10.52Note Payable to Magna Acquisition LLC dated April 11, 2017.

10.53Note Payable to Magna Acquisition LLC dated April 28, 2017.

10.54Note Payable to Magna Acquisition LLC dated May 31, 2017.

10.55Note Payable to Magna Acquisition LLC dated June 6, 2017.