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, 2019 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 and until December 2018. During the period from October 2005 through and including December 31, 2018, MALLC loaned us an aggregate approximately $687,000 under a series of promissory notes payable that mature 120 days from issuance. At November 30, 2019, approximately $687,000 face amount of such notes were beyond their maturity date and therefore due on demand. The notes bore interest at 12% per year which increased to 15% per year for periods beyond maturity. During 2019, a director of the Company loaned the Company an aggregate of approximately $17,000 under unsecured notes payable with substantially the same terms as the MALLC notes payable except that the interest rate decreased from 12% to 10% and the penalty interest rate decreased from 15% to 12%. The Company intends to make a proposal to MALLC and to this director 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 November 30, 2019, the Company had approximately $1,000 cash and approximately $1,768,000 in negative working capital and stockholders' deficit and negative cash flows from operations. For the nine months ended November 30, 2019, the Company had a net loss of approximately $103,000 and utilized approximately $20,000 of cash in operating activities. Further, losses are continuing subsequent to November 30, 2019. 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, 2019. These factors, among others, raise substantial doubt about the Company's ability to continue operations as a going concern.

Our plan of operations for the coming twelve months is to pursue our "reverse merger" strategy by seeking, evaluating and negotiating with merger candidates and to continue to take actions to preserve our cash and continue our public reporting. We do not have the cash resources to continue our plan for the coming twelve months, even at our reduced expenditure levels. As such, we may have to take further measures or cease activities altogether, including terminating our public reporting status.

We currently have no material commitments for capital expenditures.

Results of Operations - During the three and nine months ended November 30, 2019, our net loss was approximately $34,000 and $103,000, respectively, compared to a net loss of approximately $33,000 and $115,000, respectively, in the three and nine months ended November 30, 2018. The decrease in the loss is due principally to lower costs of occupancy and insurance as the Company made reductions in these expenses. Such decreases were offset somewhat by the higher debt levels and higher default interest in the three and nine months ended November 30, 2019 that resulted in an increase in interest expense.

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% on outstanding debt to MALLC and 12% on outstanding director notes).

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.





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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, 2019 contained in our Form 10-K.

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