PINX:MAGAA Magna-Lab Inc Class A Quarterly Report 10-Q Filing - 5/31/2012

Effective Date 5/31/2012

PINX:MAGAA Fair Value Estimate
Premium
PINX:MAGAA Consider Buying
Premium
PINX:MAGAA Consider Selling
Premium
PINX:MAGAA Fair Value Uncertainty
Premium
PINX:MAGAA Economic Moat
Premium
PINX:MAGAA Stewardship
Premium
 
 
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:  May 31, 2012
 
OR
 
 
o
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 smaller reporting company 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 x      No o

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 o
 
Accelerated filer o
Non-accelerated filer o
 
Smaller reporting company x
(Do not check if a 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 x      No o
 
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 10, 2012
 
Class A Common Stock, $.001 Par Value
 
1,176,025
Class B Common Stock, $.001 Par Value
 
3,304
Class
 
Shares
 
 
 

 
 
MAGNA-LAB INC. AND SUBSIDIARY
 
 
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
9 - 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
11
 
All items which are not applicable or to which the answer is negative have been omitted from this report.
 
 
 

 
PART I: FINANCIAL INFORMATION
 
               Item 1. - Financial Statements
 
MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

  ASSETS            
   
May 31,
   
February 29,
 
      2012 .       2012 .  
   
(unaudited)
         
CURRENT ASSETS:
               
Cash
  $ 4,000     $ 7,000  
Prepaid expense
    -       3,000  
                 
Total current assets
  $ 4,000     $ 10,000  
                 
    LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
CURRENT LIABILITIES:
               
Notes payable and accrued interest payable to a shareholder
  $ 400,000     $ 390,000  
Accounts payable (including approximately $68,000 which is payable to
               
the Company’s President for expenses he paid on the Company’s behalf)
    393,000       391,000  
Accrued expenses and other current liabilities
    37,000       32,000  
Total current liabilities
    830,000       813,000  
                 
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, 1,176,025 shares issued and outstanding
    1,000       1,000  
Common stock, Class B, par value $.001 per share, 3,750,000 shares
               
authorized, 18,750 shares issued and 3,304 shares outstanding
    -       -  
Capital-in-excess of par value
    27,180,000       27,180,000  
Accumulated deficit
    (28,007,000 )     (27,984,000 )
Total stockholders' deficit
    (826,000 )     (803,000 )
                 
Total liabilities and stockholders’ deficit
  $ 4,000 .     $ 10,000  
 
See accompanying notes to the condensed consolidated financial statements.
 
 
1

 
MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended May 31, 2012 and 2011
(unaudited)
 
   
2012
   
2011
 
             
REVENUES
  $ -     $ -  
                 
OPERATING EXPENSES:
               
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
    1,179,000       1,179,000  
                 
NET LOSS PER COMMON SHARE,
               
basic and diluted
  $ (0.02 )   $ (0.02 )
 
See accompanying notes to the condensed consolidated financial statements.
 
 
2

 
MAGNA-LAB INC. AND SUBSIDIARY
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended May 31, 2012 and 2011
(unaudited)

             
   
2012
   
2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (23,000 )   $ (23,000 )
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
    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  
 
See accompanying notes to the condensed consolidated financial statements.
 
 
3

 
MAGNA-LAB INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the three months ended May 31, 2012 (unaudited)
 
                           
Capital-in-
       
     Common Stock  
Excess
       
    Class A     Class B    
of Par
   
Accumulated
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Value
   
Deficit
 
                                     
                                     
BALANCES, February 29, 2012
    1,176,025     $ 1,000       3,304     $ -     $ 27,180,000     $ (27,984,000 )
NET LOSS (unaudited)
    -       -       -       -       -       (23,000 )
BALANCES, May 31, 2012
                                               
(unaudited)
    1,176,025     $ 1,000       3,304     $ -     $ 27,180,000     $ (28,007,000 )
 
See accompanying notes to the condensed consolidated financial statements.
 
 
4

 
MAGNA-LAB INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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 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 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.

NOTE 2 - DISCUSSION OF THE COMPANY'S ACTIVITIES/PRODUCTS 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 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 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.

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 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 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.  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. 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.
 
 
5


 
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 4 – NOTES PAYABLE:

Notes payable include 12% unsecured notes payable to the Company’s 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.

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 Company’s Chairman and President for payments he has made on the Company’s 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 Company’s 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 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.
 
 
6


 
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 Company’s 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.
 
 
7

 
Item 2. 
Management's Discussion and Analysis of Financial Condition and Results of OperationsForward 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 29, 2012 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 shareholders.  It would, however, provide an opportunity to return some value to shareholders.  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 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 shareholder.  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, 2012, MALLC loaned us an aggregate $273,000 under a series of promissory notes payable that mature 120 days from issuance.  At May 31, 2012, $230,000 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.  On June 5, 2012, MALLC loaned us an additional $25,000 on the same terms as the prior notes.  The Company intends to make a proposal to MALLC to convert all of the amounts outstanding to them (including overdue amounts) into common stock of the Company.

While we have reduced our expenditures very significantly, we do not have sufficient cash to continue our activities for the coming twelve months.  We currently do not have any commitments for new funding.
 
 
8


 
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Condition, Liquidity and Capital Resources - At May 31, 2012, the Company had approximately $4,000 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.  While our principal shareholder did loan us an additional $25,000 in June 2012, such amount is not sufficient to fund our operations for the coming twelve months.  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, 2012.  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.

Should we enter into a “reverse-merger” transaction, it is highly unlikely that any funds would be allocated to our prior cardiac diagnostic business (which business would require significant capital).  Further, we do not have the cash to preserve the intellectual property of that business and therefore we have ceased making efforts to preserve such technology and we may be forced to abandon it altogether.

We currently have no material commitments for capital expenditures.

Results of Operations – During the three months ended May 31, 2012, our net loss was approximately $23,000 compared to a net loss of approximately $23,000 in the three months ended May 31, 2011.  The higher debt levels and higher default interest in the three months ended May 31, 2012 resulted in an increase in interest expense of approximately $3,000 which was offset by decreases in other operating costs.

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 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:

Use of Estimates, Going Concern Consideration – Our 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 adjustment has been made in the condensed consolidated financial statements which could result should we be unable to continue as a going concern.

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.
 
 
9

 
 
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,
 
·
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,
 
 
10

 
 
 
·
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 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.

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 29, 2012.

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, $273,000 principal amount of 12% notes payable to Magna Acquisition LLC (“MALLC) are in default at May 31, 2012 as a result of their non-payment when due.  Such notes now carry a default rate of interest of 15%.   MALLC has waived the cross default that would otherwise result from the above default with respect to an additional $25,000 principal amount of notes payable to MALLC that were issued subsequent to the above defaults.   
 
Item 6.   Exhibits
 
 
31.1 
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.
 
31.2 
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.
 
32.1 
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.
 
32.2
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.
  
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 11, 2012 
 
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)
 
 
11


 
INDEX TO EXHIBITS
                      
No.
Description
 
31.1
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.
31.2
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.
32.1
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.
32.2
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.
 
 

PINX:MAGAA Magna-Lab Inc Class A Quarterly Report 10-Q Filling

Magna-Lab Inc Class A PINX:MAGAA Stock - Get Quarterly Report SEC Filing of Magna-Lab Inc Class A PINX:MAGAA stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:MAGAA Magna-Lab Inc Class A Quarterly Report 10-Q Filing - 5/31/2012
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Title |  Date |  Author |  Collection |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Popularity |  Our Choices |  Most Recent Title |  Date |  Company |  Symbol |  Interest |  Popularity

Previous: PINX:MAGAA Magna-Lab Inc Class A Annual Report 10-K Filing - 2/29/2012  |  Next: PINX:MAGAA Magna-Lab Inc Class A Quarterly Report 10-Q Filing - 8/31/2012