-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ODBmiaLkh0fk8aK+/8A6IVkpFnCmsyMYpW8YkD7lxORMpFXUJDcqtup8WU3T5kKs HXFMQUdDK0CGTcmPo7IKsA== 0000931731-98-000240.txt : 19980817 0000931731-98-000240.hdr.sgml : 19980817 ACCESSION NUMBER: 0000931731-98-000240 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INMEDICA DEVELOPMENT CORP CENTRAL INDEX KEY: 0000726037 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 870397815 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-12968 FILM NUMBER: 98688080 BUSINESS ADDRESS: STREET 1: P O BOX 27557 STREET 2: 495 EAST 4500 SOUTH SUITE 230 CITY: SALT LAKE CITY STATE: UT ZIP: 84127 BUSINESS PHONE: 8012639190 MAIL ADDRESS: STREET 1: P O BOX 27557 STREET 2: 495 EAST 4500 SOUTH SUITE 230 CITY: SALT LAKE CITY STATE: UT ZIP: 84127 FORMER COMPANY: FORMER CONFORMED NAME: INMED DEVELOPMENT CORP DATE OF NAME CHANGE: 19840815 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION --------------------------------------- Washington, D.C. 20549 ---------------------- Form 10 - QSB ------------- Quarterly Report Under Section 13 or 15 (d) ------------------------------------------- of the Securities Exchange Act of 1934 -------------------------------------- For the Quarterly Period Ended June 30, 1998 -------------------------------------------- Commission File No. 0-12968 --------------------------- INMEDICA DEVELOPMENT CORPORATION -------------------------------- (Exact name of small business issuer as specified in its charter) Utah 87-0397815 ---- ---------- (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 825 N. 300 West, Salt Lake City, Utah 84103 ------------------------------------------- (Address of principal executive offices) Registrant's telephone number including area code (801) 521-9300 - ----------------------------------------------------------------- Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act of 1934 during the preceding 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 The number of shares outstanding of the registrant's only class of common stock, par value $.001 per share, as of August 1, 1998 was 8,550,899 shares. 1 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET ASSETS As of June 30, 1998 -------------- (Unaudited) CURRENT ASSETS: Cash $ 53,311 Prepaid expenses 8,464 ----------- Total current assets 61,775 EQUIPMENT AND FURNITURE, at cost, less accumulated depreciation of $250,987 2,002 OTHER ASSETS 2,196 Total assets $ 65,973 ============ See notes to condensed consolidated financial statements. 2 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET(CONTINUED) LIABILITIES AND STOCKHOLDERS' DEFICIT As of June 30, 1998 -------------- (Unaudited) CURRENT LIABILITIES: Current portion of note payable $ 145,000 Consulting fee payable to related parties 47,633 Accounts payable 603 Accrued payroll 792 ---------- Total current liabilities 194,058 ---------- STOCKHOLDERS' DEFICIT: Common stock, $.001 par value; 20,000,000 shares authorized, 8,550,899 outstanding 8,551 Preferred shares, 10,000,000 shares authorized; Series A preferred stock, cumulative and convertible, $4.50 par value, 1,000,000 shares designated, 25,356 shares outstanding 114,102 Additional paid-in capital 6,795,087 Accumulated deficit (7,045,825) ---------- Total stockholders' deficit ( 128,085) ---------- Total liabilities and stockholders' deficit $ 65,973 ========== See notes to condensed consolidated financial statements. 3 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three For the Six Months Ended Months Ended June 30, June 30, ------------------------ ------------------------ 1998 1997 1998 1997 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) ROYALTY REVENUES $ 67,360 $ 108,000 $ 67,360 $ 108,000 ----------- ----------- ----------- ----------- OPERATING EXPENSES: General and administrative 46,168 59,875 117,132 107,715 Research and development 89,284 43,382 155,642 75,065 ----------- ----------- ----------- ----------- Total operating expenses 135,452 103,257 272,774 182,780 ----------- ----------- ----------- ----------- (LOSS) INCOME FROM OPERATIONS (68,092) 4,743 (205,414) (74,780) ----------- ----------- ----------- ----------- OTHER (EXPENSE) INCOME: Interest income 388 134 983 140 Interest expense (3,207) (9,105) (6,421) (18,608) ----------- ----------- ----------- ----------- Total other expense (2,819) (8,971) (5,438) (18,468) ----------- ----------- ----------- ----------- NET LOSS (70,911) (4,228) (210,852) (93,248) PREFERRED STOCK DIVIDENDS (2,281) (2,282) (4,563) (4,564) ----------- ----------- ----------- ----------- NET LOSS APPLICABLE TO COMMON SHARES $ (73,192) $ (6,510) $ (215,415) $ (97,812) =========== =========== =========== =========== Net loss per common share (basic and diluted) $ (.01) $ (.00) $ (.03) $ (.01) =========== =========== =========== =========== Weighted average number of common shares outstanding 8,550,899 7,999,232 8,550,899 7,999,232 =========== =========== =========== ===========
See notes to condensed consolidated financial statements. 4 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS DECREASE (INCREASE) IN CASH For the Six Months Ended June 30, -------------------------- 1998 1997 ----------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (215,415) $ (93,248) Adjustments to reconcile net loss to net cash provided by (used in) operating activities- Depreciation 432 582 Expense related to stock options issued as compensation for services 63,000 Change in assets and liabilities- Decrease in royalties receivable 67,200 209,280 Decrease in prepaid expenses 9,999 12,962 Increase in consulting fees payable to related party 25,998 - (Decrease) increase in accounts payable (428) 1,219 Decrease in accrued payroll (6,152) (7,829) Decrease in interest payable (4,752) (8,362) Decrease in related party payable (25,000) (39,000) ----------- ----------- Net cash provided by (used in) operating activities (80,555) 75,604 ----------- ----------- See notes to condensed consolidated financial statements. 5 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Six Months Ended June 30, 1998 1997 --------- --------- (Unaudited) CASH FLOWS FROM FINANCING ACTIVITIES: Preferred stock dividends paid (4,563) (4,564) Principal payments on note payable to related party - (67,500) --------- --------- Net cash used in financing activities (4,563) (72,064) --------- --------- NET (DECREASE) INCREASE IN CASH (85,118) 3,540 CASH AT BEGINNING OF THE PERIOD 138,429 177,586 --------- --------- CASH AT END OF THE PERIOD $ 53,311 $ 181,126 ========= ========= See notes to condensed consolidated financial statements. 6 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1-Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310b of Regulation SB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated statements include the accounts of InMedica Development Corporation and its wholly owned subsidiary, MicroCor, Inc. ("MicroCor"). All material intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and six month periods ended June 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the consolidated financial statements included in the Company's Form 10-KSB for the year ended December 31, 1997. Royalties received from the Johnson and Johnson agreement are presently the Company's sole source of revenue and the Company is not able to estimate the duration or amount of future royalties from the Johnson and Johnson agreement. Accordingly, there can be no assurance as to continuing royalty receipts. The Company generated a net loss from operations of $205,414 during the period ended June 30, 1998 and as of June 30, 1998, the Company had an accumulated deficit of $7,045,825. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The Company's continued existence is dependent upon its ability to achieve a viable operating plan. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION Liquidity and Capital Resources - ------------------------------- For the three months ended March 31, 1998, no operating revenues were recognized due to the revenue recognition policy of the Company and the timing of the receipt of revenues. Total revenues for the six months ended June 30, 1998 were $67,360, or $40,640 less than the same period of the prior year. The Company's sole source of revenue is royalties received from J & J Medical, Inc. ("JJMI"). These royalties are paid to the Company on a quarterly basis. Royalty revenues being received by the Company may be insufficient to sustain research and development costs, fund operations and retire indebtedness when it comes due. InMedica consequently continues to look for funding sources. The royalty agreement with JJMI, has been pledged to secure repayment of the $145,000 note payable to the Company's Chief Executive Officer. The note is due on or before June 22, 1999. The Company is presently paying quarterly interest payments on the note. InMedica intends to continue to look for funding sources to retire the note as to which it has no commitments. Funds invested in the development of the proposed hematocrit device have been expensed as research and development and the ability of the Company to use the device as a means of securing funding for the Company is totally dependent upon the success of further research and development efforts in producing a viable device suitable for commercialization. Results of Operations - --------------------- See "Liquidity and Capital Resources" for an explanation as to the lack of revenues during the quarter ended March 31, 1998. The net loss from operations of $205,414 for the six months ended June 30, 1998 increased by $130,634 compared to the comparable period of the prior year as royalty revenues declined by $40,640 and research and development expenses increased by $80,577 compared to the prior year. The increase in research and development expenses was due to payments made under an hematocrit research and development contract with Medical Physics and to an employee and the expense of issuance of certain options relating to research and development. Interest expense declined for the period ended June 30, 1998 when compared to the same period in 1997 due to a substantial reduction in the principal amount of the note owing to the Company's Chief Executive Officer in September, 1997, resulting in lower interest payments thereafter. General and administrative expenses increased due to expense associated with the issuance of stock options. The Company does not expect that its operations will be directly affected by the Year 2000 issue, but is unable to forecast the indirect effect, if any, of computer malfunction related to the issue, on its future operations in the 8 medical technology markets. However, the Company has contacted JJMI and has been assured that JJMI is aware of the issue and acting responsibly to avoid any adverse impact on JJMI's ability to conduct its operations which presently generate royalty income for the Company. PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults Upon Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and reports on Form 8-K: Exhibits: (1) Financial Data Schedule 9 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. INMEDICA DEVELOPMENT CORPORATION /s/ Larry E. Clark -------------------------------- By Larry E. Clark, Chairman /s/ Richard Bruggeman -------------------------------- Date: August 13, 1998 By Richard Bruggeman, Treasurer -- 10 EXHIBITS Exhibits filed with the Form 10-QSB of InMedica Development Corporation, SEC File No. 0-12968: Exhibit No. SB Item No. Description - ----------- ----------- ----------- 1 (27) Financial Data Schedule 11 EX-27 2 FDS --
5 6-MOS DEC-31-1998 JUN-30-1998 53311 0 0 0 0 61775 252989 250987 65973 194058 0 0 114102 8551 (250738) 65973 0 67360 0 272774 0 0 6421 (210852) 0 0 0 0 0 (210852) (.03) (.03) Additional paid in capital less accumulated deficit
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