PRER14C 1 sch14ca1-111004.txt SCHEDULE 14C Information Statement Pursuant to Section 14(c) of the Securities Act of 1934 (Amendment No. 1 ) Check appropriate box: [x] Preliminary Information Statement [ ] Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2) [ ] Definitive Information Statement INMEDICA DEVELOPMENT CORPORATION -------------------------------- Name of Registrant as Specified in its Charter Payment of Filing Fee (check applicable box) [ ] No fee required [ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11 1) Title of each class of securities to which transaction applies - None 2) Aggregate number of securities to which transaction applies - None 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11(c)(2) Total Amount: How Determined: . 4) Proposed maximum aggregate value of transaction: 5) Total Fee paid: . [x] fee paid previously with preliminary materials [ ] check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount previously paid: 2) Form, schedule or registration statement number: 3) Filing party 4) Date filed 1 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD December 6, 2004 TO THE SHAREHOLDERS OF INMEDICA DEVELOPMENT CORPORATION: The Annual Meeting of Shareholders of InMedica Development Corporation (the "Company") will be held at 3:00 pm pm local time, Monday, December 6, 2004 in the Sun Valley Room (on the Mezzanine) at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah to consider and vote upon the following proposals: 1. The approval of the sale of the stock of MicroCor (an 80% owned subsidiary of InMedica) in order to fund continued development of the hematocrit technology, being a sale of all or substantially all of the assets of the Company. 2. The election of five directors (Larry E. Clark, Ralph Henson, Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee) to serve for one year or until a successor is elected and qualified 3. Ratification of the appointment of Robison Hill & Co. as the independent public accountants of the corporation. Information regarding the matters to be acted on at the Annual Meeting is contained in the Information Statement accompanying this Notice. Shareholders of record as of Friday, November 12, 2004 are entitled to notice of and to vote at the Shareholders' Meeting. Shareholders are or may be entitled to dissenter's rights as to proposal number 1 above. BY ORDER OF THE BOARD OF DIRECTORS Salt Lake City, Utah Larry E. Clark, Chairman November 16, 2004 2 INMEDICA DEVELOPMENT CORPORATION 825 North 300 West, Suite N132 Salt Lake City, Utah 84103 801-521-9300 INFORMATION STATEMENT This Information Statement is being furnished to shareholders of InMedica Development Corporation, a Utah corporation, ("InMedica" or the "Company"), in connection with the Annual Meeting of its shareholders to be held on Monday December 6, 2004 at 3:00 pm, local time, in the Sun Valley Room (on the Mezzanine) at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah, and at any adjournment thereof (the "Meeting"). At the Meeting, InMedica shareholders will be asked (1) to approve the sale of the stock of MicroCor, Inc. (an 80% owned subsidiary of InMedica) to Wescor, Inc. in order to fund continued development of the Company's hematocrit technology, (2) to elect five directors to serve for one year or until a successor is elected and qualified, and (3) to ratify the selection of Robison Hill & Co. as the Company's independent public accountants. This Information Statement and Notice of Meeting are first being mailed to shareholders of InMedica on or about November 16, 2004. Notice is also being mailed to preferred shareholders of InMedica although they have no voting rights at the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY Only holders of record of InMedica Common Stock (also referred to herein as "common shares" or "shares") as of the close of business on November 12, 2004 (the "Record Date") will be entitled to notice of and to vote at the Meeting. As of the Record Date, there were 16,382,993 shares of InMedica Common Stock issued and outstanding. Holders of a majority of the outstanding shares in person or by proxy must be present in order to establish a quorum to conduct business at the meeting. The affirmative vote of the holders of a majority of such shares present is required to elect directors and to approve the sale of the stock of MicroCor, Inc. (an 80% owned subsidiary) to Wescor, Inc. in order to fund continued development of the Company's hematocrit technology . Each holder of common shares is entitled to one vote for each share held. If a holder of shares present at the meeting abstains from voting, the shares will still be counted towards the presence of a quorum. Cumulative voting is not permitted. 3 FIRST PROPOSAL: TO APPROVE THE SALE OF THE STOCK OF MICROCOR, INC. (AN 80% OWNED SUBSIDIARY OF INMEDICA) TO WESCOR, INC. IN ORDER TO FUND CONTINUED DEVELOPMENT OF THE COMPANY'S HEMATOCRIT TECHNOLOGY SUMMARY TERM SHEET InMedica Development Corporation ("InMedica") conducts research and development of medical technology to measure human hematocrit by non-invasive means. On September 7, 2004, InMedica entered into a Joint Development Agreement (the "Agreement") to fund further development of the hematocrit technology by the sale of its stock ownership in MicroCor, Inc., it's 80% owned subsidiary and principal asset, to Wescor, Inc.. Chi Lin owns the additional 20% of MicroCor and has also agreed to the sale. MicroCor owns the four patents granted on the hematocrit technology. Further all other technology rights of InMedica and Chi Lin in the hematocrit technology are being transferred or licensed to MicroCor. BACKGROUND OF THE SALE PROPOSAL. During 2003 InMedica's board of directors explored a number of possible means to continue and complete the development of its Non-Invasive Hematocrit Technology. A number of large, successful medical device companies were approached with the proposal to complete the project, however, none were willing to pursue the project until the technology was fully developed and clinically validated. InMedica management then began to search for smaller companies who might wish to partner to complete the project. A number were approached, but none had the resources readily available for such a project. InMedica's board of directors then narrowed its focus to local companies but once again, could find no one willing to pursue a reasonable proposal due to the risks involved and the large investment required. In mid 2003, management contacted Wescor, Inc. a private medical device company located in nearby Logan Utah. While interested in the project and having resources and capability to do the work, they were not interested in pursuing the project unless they could achieve ownership of the technology. In its partially developed and yet-to-be clinically proved state, the price Wescor might be willing to pay for the Technology would be quite small and not likely be attractive to InMedica. However, during further discussions, extending over more than nine months and involving both the Chairman and President of InMedica, and the principals of Wescor, Inc., it became apparent that, were the technology fully developed and clinically proven, the value to Wescor would be substantially higher. As a result, the parties developed the terms of the Agreement, by which Wescor could control the amount of its total investment and have control of the 4 day to day development process (InMedica retained the right to appoint three of five members of MicroCor's board of directors). The initial 15% stock sale would also provide InMedica with needed operating capital and give Wescor an initial interest in the Technology for an investment of $375,000. Further, if successful, Wescor would acquire additional ownership of MicroCor up to 49% and a right to buy out InMedica and Chi Lin once commercialization had begun. However the Company and Chi Lin retained a trump option to outbid Wescor for the Technology and in any event were granted royalty rights from commercialization of the product. The board of directors believes the terms are fair in that potentially as the value of the Technology was established or increased with further development and clinical success, all parties would consequently share in the possible increased value of the Technology. Although Wescor may discontinue development efforts in its discretion, the Agreement provides a negotiated arrangement by which the Company can accomplish additional development of the Technology, without additional fund raising and still share in the potential of the Technology through an appraised buy back or royalty rights. InMedica determined to permit Wescor to assume day to day control of the development of the technology because InMedica has only two part-time employees, a President and a CFO, and no technical staff. The Company has principally relied on contracts with outside developers to advance the development of the Technology. Wescor, on the other hand, has all of the required resources to manage the day to day operations of a company whose focus is the development of medical products. Again, InMedica retains overall control of MicroCor through its ownership and control of MicroCor's Board of Directors. In the event Wescor discontinued efforts to develop the Technology, InMedica would again pursue the business plan described in Management's Discussion and Analysis (See Form 10QSB for the period ended September 30, 2004.) The sale of the MicroCor stock will be a sale of all or substantially all of the assets of InMedica, pursuant to the terms of the Agreement, assuming Wescor is successful in completion of development of the Technology. A copy of the Agreement is attached as Exhibit A. Certain terms of the Agreement are set forth below: PARTIES: InMedica Development Corporation - Seller 825 N. 300 West, Suite N132 Salt Lake City, Utah 84103 Telephone: 801-521-9300 Chi Lin Technology Company, Ltd. - Seller 717 N. 71 Te Lun Road, Jen Te Hsian Tainan County, Taiwan, R.O.C. Telephone: 011-886-06-279-1194 Wescor, Inc. - Buyer 459 South Main Street Logan, Utah 84321 USA Telephone: 435-752-6011 5 MicroCor, Inc. - Asset to be sold 825 N. 300 West, Suite N132 Salt Lake City, Utah 84103 Telephone: 801-521-9300 EFFECTIVE DATE: o September 7, 2004 subject to approval of the InMedica shareholders within 45 days, which may be extended to 90 days o Larry Clark (Chairman and Director of the Company), Ralph Henson (Director and CEO of the Company), Richard Bruggeman (Director and CFO of the Company), and Chi Lin (principal shareholder of the Company) are required by the Agreement to vote their shares in favor of approving this transaction. Collectively these four shareholders own a majority of the issued and outstanding stock of InMedica (See "Common Stock Ownership"). Clark, Henson, Bruggeman and Chi Lin are affiliates of the Company but have no affiliation with Wescor or with one another, other than their service as officers and directors of the Company. Chi Lin has appointed two members of the board of directors of the Company. TERMS: o InMedica and Chi Lin sell as of September 7, 2004, a total of 15% of MicroCor stock to Wescor for $375,000 paid $30,000 down and the balance in installments over 18 months and MicroCor grants each seller a royalty with a minimum royalty commencing in 18 months o Wescor assumes day to day management of MicroCor and agrees to use its best efforts at its expense to develop the hematorcrit technology. o Wescor may earn up to 49% total ownership of MicroCor by funding and conducting additional development of hematocrit technology in three Phases o Upon successful completion of the third Phase (first commercial production),Wescor has an option to purchase the remaining MicroCor shares from Chi Lin and InMedica for a value determined fair by independent appraisal o The agreement may be terminated if Wescor fails to complete any Phase or defaults in payments to InMedica or Chi Lin o Pro Form Financial Statements are attached showing the effect of the sale on InMedica As the attached financial statements indicate, the sale has been accounted for as a sale of an investment and partial interest in InMedica's consolidated subsidiary. INCOME TAX CONSEQUENCES. For U.S. federal income tax purposes, the sale is expected to result in the recognition of a gain of $60,000 by InMedica. However the Company's cumulative net operating losses can be used to offset the amount of the taxable gain on the sale, and as a result we expect to pay no federal income taxes on the sale. Further, the sale transaction will result in 6 no capital gain or loss for the InMedica shareholders and no distribution to shareholders in connection with the transaction is anticipated. Accordingly, the sale should not result in a taxable event under U.S. federal income tax laws for InMedica shareholders in the United States. The foregoing does not address any state or local tax consequences. Our shareholders are advised to consult with their tax advisors for a more detailed analysis of any federal, state or local tax consequences. GENERAL. The Agreement is subject to a condition that the sale of MicroCor stock described in the Agreement be approved by the shareholders of InMedica. . Shareholder approval must occur within 45 days of the effective date, although the time for approval may be extended an additional 45 days. An additional requirement of the Agreement is that Chi Lin, Larry E. Clark, Richard Bruggeman and Ralph Henson (who collectively own more than 50% of the outstanding stock of InMedica) have each agreed and are required to vote their shares in favor of the transaction . ONCE APPROVED, NO FURTHER SHAREHOLDER APPROVAL WILL BE SOUGHT BY INMEDICA RELATING TO THIS AGREEMENT AND THE BOARD OF DIRECTORS AND OFFICERS OF INMEDICA WILL BE AUTHORIZED TO CARRY OUT THE SALE OF OWNERSHIP OF THE MICROCOR STOCK PURSUANT TO THE TERMS OF THE AGREEMENT (except that if a merger transaction were agreed to by the parties, then approval of such transaction would be submitted to the shareholders at a later date). As a result, the Agreement will result in the disposition of part or all of the ownership of MicroCor by InMedica, depending on the stage when the Agreement is either terminated or concluded. There is no assurance that Wescor will be successful in developing the hematrocrit technology or that it will continue the development project to conclusion. THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1, APPROVING THE SALE OF OWNERSHIP OF THE MICROCOR STOCK AS DESCRIBED HEREIN IN ORDER TO FUND ADDITIONAL DEVELOPMENT OF THE HEMATOCRIT TECHNOLOGY. DESCRIPTION OF AGREEMENT. Effective September 7, 2004, InMedica and MicroCor entered into the Agreement pursuant to which Wescor, a Utah medical technology company ("Wescor") has agreed to purchase 15% of the issued and outstanding common stock of MicroCor on a pro-rata basis from InMedica and from Chi Lin Technology Co, Ltd of Tainan, Taiwan, ("Chi Lin") for $375,000. Prior to the consummation of the transaction InMedica held 80% of the issued and outstanding common stock of MicroCor and Chi Lin owned 20%. Following the transaction, InMedica holds 68%, Chi Lin holds 17% and Wescor holds 15% of the issued and outstanding stock of MicroCor. The purchase monies will be paid $300,000 to InMedica and $75,000 to Chi Lin, payable $30,000 down and the balance in installments over 18 months. Twenty percent of each payment made to InMedica will be applied to outstanding debt owing from InMedica to Wescor in the present amount of $114,969.93. The debt to Wescor is for operating expenses advanced by Wescor to InMedica during the negotiation of the Agreement In the event Wescor is successful in producing a working prototype using the hematocrit technology, capable of meeting FDA GMP requirements 7 suitable for conducting clinical trials (Phase1), MicroCor will issue 500,000 additional restricted shares of stock to Wescor. Thereafter if Wescor completes clinical trials and obtains the FDA's clearance to market such products (Phase 2), 500,000 additional restricted shares of MicroCor stock will be issued to Wescor. Then, upon manufacturing and initial introduction into the US market of such products (Phase 3), MicroCor will issue to Wescor an additional 700,000 restricted shares of stock, giving Wescor a total of 49% of the issued and outstanding stock of MicroCor. These additional shares to be issued to Wescor will be in consideration of each Phase of development work by Wescor. The number of shares has been determined during a process of arms length negotiation between InMedica and Wescor. Among other things, during such negotiations, the board of directors of InMedica considered the need for funding to continue development of its technology, its present financial condition and the reputation and experience of Wescor. In addition, upon completion of Phase 3, Wescor will have the option to purchase all (but not less than all) the remaining stock of MicroCor for 90 days. The value of the remaining MicroCor shares will be determined by appraisal or by a value suggested by Wescor. As a result, the Agreement may result in the disposition of all or substantially all of the assets of InMedica, other than in the ordinary course of business. In either event, InMedica and Chi Lin will have the right to obtain a fairness opinion and to exercise a trump option to purchase all of the shares of MicroCor owned by Wescor at 110% of the appraised value or the suggested value. However Wescor may revive its option by increasing the purchase price by at least 10%. This option procedure may be repeated as many times as is necessary until a purchaser has been determined. Wescor has also been granted a right of first refusal in the event of a bona fide third party offer to acquire MicroCor. MicroCor has granted certain royalty and revenue royalty rights to InMedica and Chi Lin under the Agreement as follows: the total Revenue Royalty payable by MicroCor, including both the InMedica Revenue Royalty (described in Section 6.2.3 of the Agreement) and the Chi Lin Revenue Royalty (described in Section 6.2.4 of the Agreement) (collectively the "Total Revenue Royalties"), shall be calculated as follows: The sum of (i) in any given calendar year, four percent (4%) of the first $5,000,000 in Sales and Licensing Revenues, three percent (3%) of Sales and Licensing Revenues in amounts exceeding $5,000,000 but not exceeding $20,000,000, and two percent (2%) of Sales and Licensing Revenues in amounts exceeding $20,000,000; plus (ii) twenty five percent (25%) of all Royalty Revenues. Further, a minimum royalty of $200,000 per year begins 18 months after the effective date and is payable by Wescor to InMedica and Chi Lin. However in the event that any party (including Wescor) or third party acquires eighty percent control of MicroCor, the new control party has the right to buy out the royalty rights from InMedica and Chi Lin for $1,000,000 or 100% of five times the sum of the minimum royalty payments for the immediately preceding 12 months, whichever is greater. The buyout proceeds would be shared 80-20 by InMedica and Chi Lin. As a part of the transaction, InMedica transferred all of its rights in the non-invasive hematocrit technology to MicroCor and Chi Lin licensed to MicroCor all rights relating to the non-invasive technology owned by Chi Lin on a royalty free basis. Further, Wescor assumed the responsibility to manage the day to day affairs of MicroCor and to continue the development of the 8 non-invasive hematocrit technology. However Wescor's management of MicroCor may be terminated if no prototype has been developed in 12 months, or if no FDA clearance is obtained within 18 months, or if no first production has begun within 24 months or if Wescor has not fulfilled payment obligations under the contract. DIRECTOR APPOINTMENTS. Chi Lin is a principal shareholder of InMedica and has the right to nominate two directors to serve on InMedica's board of directors. During the term of the Joint Development Agreement, InMedica will continue to appoint three of five members of the board of directors of MicroCor and Chi Lin and Wescor will each be entitled to appoint one board member. WESCOR. Wescor is a privately held company engaged in developing, manufacturing, and marketing medical instruments, appliances, and related products for the diagnostic laboratory market for more than three decades. Wescor's Biomedical Products Division has established a reputation for quality products as well as quality technical support for its products. Wescor is a leader in the laboratory diagnosis of cystic fibrosis with its Macroduct(R) and Nanoduct(R) Sweat Testing Systems. The Aerospray(R) family of automatic slide stainer-cytocentrifuges of Wescor are widely used in hematology and microbiology laboratories, providing the newest technology in microscope slide staining as well as cytocentrifugation. Wescor is also a leader in osmometry with its Vapro(R) Vapor Pressure Osmometer. The Wescor Membrane Osmometer makes a direct measurement of Colloid Osmotic Pressure in whole blood or serum. DISSENTERS' RIGHTS. Shareholders of InMedica, including the holders of the Preferred Shares, are entitled under Utah law to dissent from approval of Proposal 1 (the sale of the MicroCor stock) and obtain payment from the Company of the fair value of shares held by the shareholder. "Fair value" of a dissenter's shares means the value of the shares immediately before the corporate action to which the dissenter objects, excluding any appreciation or depreciation in value on account of anticipation of the corporate action. HOWEVER, UPON COMPLIANCE WITH THE DISSENTER'S RIGHTS PROVISIONS DESCRIBED BELOW, DISSENTERS MAY NOT IMMEDIATELY RECEIVE CASH PAYMENT FOR THEIR SHARES due to provisions of the Utah Code that prohibit redemptions of shares in cash where the corporation "would not be able to pay its debts as they become due in the usual course of business" or "the corporation's total assets would be less than the sum of its total liabilities" (Utah Code Annotated 16-10a-640(3)). The Board of Directors has determined that if any significant number of shareholders exercised dissenter's rights, the Company would likely be unable to pay its debts as they come due and its liabilities may exceed its assets. IN SUCH CASE, THE BOARD OF DIRECTORS MAY LEGALLY ONLY BE ABLE TO ISSUE PROMISSORY NOTES TO ANY DISSENTING SHAREHOLDERS FOR THE FAIR VALUE OF THEIR SHARES, THE INTEREST AND PRINCIPAL OF WHICH WOULD BE PAYABLE ONLY AT AN UNDETERMINED FUTURE DATE AND ONLY IF AND WHEN FUNDS ARE LEGALLY AVAILABLE FOR PAYMENT AS PROVIDED IN THE UTAH CODE. The issuance of such notes would be subject to compliance with the registration or exemption provisions of the Securities Act of 1933 and such notes would likely be restricted securities that would not be transferable without compliance with the requirements of the Securities Act of 1933. The principal amount of the notes would be determined based on the fair value of the dissenter's stock as of the meeting date. A copy of Utah Code Annotated 9 16-10a-1320 providing for notice of dissenter's rights is set forth below: 16-10A-1320. NOTICE OF DISSENTERS' RIGHTS. (1) If a proposed corporate action creating dissenters' rights under Section 16-10A-1302 is submitted to a vote at a shareholders' meeting, the meeting notice must be sent to all shareholders of the corporation as of the applicable record date, whether or not they are entitled to vote at the meeting. The notice shall state that shareholders are or may be entitled to assert dissenters' rights under this part. The notice must be accompanied by a copy of this part and the materials, if any, that under this chapter are required to be given the shareholders entitled to vote on the proposed action at the meeting. Failure to give notice as required by this subsection does not affect any action taken at the shareholders' meeting for which the notice was to have been given. (2) If a proposed corporate action creating dissenters' rights under Section 16-10A-1302 is authorized without a meeting of shareholders pursuant to Section 16-10A-704, any written or oral solicitation of a shareholder to execute a written consent to the action contemplated by Section 16-10A-704 must be accompanied or preceded by a written notice stating that shareholders are or may be entitled to assert dissenters' rights under this part, by a copy of this part, and by the materials, if any, that under this chapter would have been required to be given to shareholders entitled to vote on the proposed action if the proposed action were submitted to a vote at a shareholders' meeting. Failure to give written notice as provided by this subsection does not affect any action taken pursuant to Section 16-10A-704 for which the notice was to have been given. Enacted by Chapter 277, 1992 General Session In order to assert dissenter's rights, a shareholder must cause InMedica to receive a written notice of his/her intent to demand payment for shares if Proposal number 1 is approved. Further, the attempted exercise of dissenter's rights will be invalid if the "dissenter" votes in favor of Proposal number 1. The dissenter must also have been a shareholder at the time the vote was taken on Proposal number 1. A shareholder that does not satisfy the three requirements stated in this paragraph is not entitled to payment for shares. The content of the Company's notice of dissenter's rights is specified by Utah Code Annotated 16-10a-1322 as follows: 16-10A-1322. DISSENTERS' NOTICE. (1) If proposed corporate action creating dissenters' rights under Section 16-10A-1302 is authorized, the corporation shall give a written dissenters' notice to all shareholders who are entitled to demand payment for their shares under this part. (2) The dissenters' notice required by Subsection (1) must be sent no later than ten days after the effective date of the corporate action creating dissenters' rights under Section 16-10A-1302, and shall: (a) state that the corporate action was authorized and the effective date or proposed effective date of the corporate action; 10 (b) state an address at which the corporation will receive payment demands and an address at which certificates for certificated shares must be deposited; (c) inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received; (d) supply a form for demanding payment, which form requests a dissenter to state an address to which payment is to be made; (e) set a date by which the corporation must receive the payment demand and by which certificates for certificated shares must be deposited at the address indicated in the dissenters' notice, which dates may not be fewer than 30 nor more than 70 days after the date the dissenters' notice required by Subsection (1) is given; (f) state the requirement contemplated by Subsection 16-10A-1303(3), if the requirement is imposed; and (g) be accompanied by a copy of this part. Enacted by Chapter 277, 1992 General Session The demand from the dissenter must (1) be in writing and may use the form attached hereto as Exhibit B for that purpose; (2) must include with the demand, the original certificates for the shares in accordance with the terms of the dissenter's notice; (3) must certify that the shareholder acquired beneficial ownership of the shares before the date of the first announcement (September 8, 2004) to the newsmedia or shareholders of the terms of the proposed corporate action creating the dissenter's rights and (4) must certify in writing whether he or the person on whose behalf he asserts dissenters' rights acquired beneficial ownership of the shares before that date. A copy of a form to be used in demanding payment is attached hereto as a part of Exhibit B or the dissenter may use another writing. THE DISSENTER'S DEMAND MUST BE SUBMITTED TO THE COMPANY ON OR BEFORE JANUARY 5, 2005. THE HOLDERS OF MORE THAN 50% OF THE ISSUED AND OUTSTANDING STOCK OF INMEDICA ARE CONTRACTUALLY COMMITTED TO VOTE IN FAVOR OF PROPOSAL 1. AS A RESULT, THE EFFECTIVE DATE OF THE DISSENTER'S NOTICE ATTACHED AS EXHIBIT B WILL BE DECEMBER 6, 2004, THE DATE OF APPROVAL OF THE TRANSACTION, WHICH COMMENCES THE 30 DAY PERIOD FOR DISSENTERS TO EXERCISE THEIR RIGHTS. Required disclosures relating the notice are included in this Information Statement. A dissenter who has demanded payment retains all rights as a shareholder (except the right to transfer the shares) until the effective date of the corporate action (November 12, 2004) after which the dissenter has only the right to receive payment for his/her shares. A shareholder who does not demand payment and deliver his/her share certificates to the Company by the date set in the dissenter's notice is not entitled to payment for the shares. Where a record holder holds all or part of its shares in InMedica on behalf of a nominee or beneficial owner, then the record holder may dissent as to less than all of the shares it holds of record, by giving written notice to InMedica identifying each dissenter's name and address and the number of shares as to which dissenter's rights are exercised by that beneficial owner. In such cases the shares held by the dissenting beneficial owner and the balance of the shares held by the record holder will be treated as if the shares had been registered in different names. However the dissenting beneficial owner must dissent as to all shares the dissenter holds, directly or indirectly in the Company. And, the dissenter must assure that each record holder holding shares on the dissenter's behalf provides its consent to the dissent not later than the 11 date on which the beneficial shareholder asserts dissenter's rights. Upon receipt of the demand for payment and the certificates for the shares, the Company shall pay the Company's estimate of the fair value of the shares, plus interest from the meeting date. Payment is governed by Utah Code Annotated 16-10a-1325 as follows: 16-10A-1325. PAYMENT. (1) Except as provided in Section 16-10A-1327, upon the later of the effective date of the corporate action creating dissenters' rights under Section 16-10A-1302, and receipt by the corporation of each payment demand pursuant to Section 16-10A-1323, the corporation shall pay the amount the corporation estimates to be the fair value of the dissenter's shares, plus interest to each dissenter who has complied with Section 16-10A-1323, and who meets the requirements of Section 16-10A-1321, and who has not yet received payment. (2) Each payment made pursuant to Subsection (1) must be accompanied by: (a) (i) (A) the corporation's balance sheet as of the end of its most recent fiscal year, or if not available, a fiscal year ending not more than 16 months before the date of payment; (B) an income statement for that year; (C) a statement of changes in shareholders' equity for that year and a statement of cash flow for that year, if the corporation customarily provides such statements to shareholders; and (D) the latest available interim financial statements, if any; (ii) the balance sheet and statements referred to in Subsection (i) must be audited if the corporation customarily provides audited financial statements to shareholders; (b) a statement of the corporation's estimate of the fair value of the shares and the amount of interest payable with respect to the shares; (c) a statement of the dissenter's right to demand payment under Section 16-10A-1328; and (d) a copy of this part. (Enacted by Chapter 277, 1992 General Session) In the event a dissenter has not accepted an offer made by a corporation under Section 16-10A-1327, the dissenter may notify the Company in writing of his/her own estimate of the fair value of the shares and demand payment of the estimated amount, plus interest, less any payment made by the Company if: (1) the dissenter believes that the amount paid or offered by the Company is less than the fair value of the shares; or (2) the Company fails to make payment within 60 days after the date set by the corporation as the date by which it must receive the payment demand; or (3) the corporation, having failed to take the proposed corporate action creating dissenters' rights, does not return the deposited certificates. However a dissenter waives the right to demand payment of his own estimate of the value of the shares unless he causes the Company to receive the notice of his demand for payment of a different value within 30 days after the Company made or offered payment for his shares. If a dissenter's demand for payment of a different valuation than that offered by the Company remains unresolved, the Company shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value 12 of the shares and the amount of interest. If the Company does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unresolved the amount demanded. FINANCIAL STATEMENTS See the pro-forma financial statements included with this information statement. Audited financial statements for the Company's year ended December 31, 2003 and unaudited statements for the period ended September 30, 2004 are incorporated by reference to the Company's Form 10KSB for the year ended December 31, 2003 and the Company's Form 10QSB for the nine months ended September 30, 2004, which are included in the Company's annual report to shareholders which accompanies this Information Statement. SECOND PROPOSAL: TO ELECT THE BOARD OF DIRECTORS The Company is proposing that five directors be elected to serve until a successor is elected and qualified as follows: Larry E. Clark, Ralph Henson, Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee. Additional information for your consideration in connection with the election of directors follows: COMMON STOCK OWNERSHIP The following table shows the common stock ownership of nominees, directors, officers, and principal shareholders of the Company as of November 9, 2004. Nature of Number of Name and Position Ownership Shares Owned Percent ----------------- --------- ------------ ------- Chi Lin Technologies Direct 5,328,204 1 32.5% 717 No. 71, Te Lun RD Jen Te Hsian Tainan County, Taiwan Principal Shareholder (table continued on next page) 1 - Excludes the right to purchase shares sufficient to maintain its 33 1/3% ownership interest in the Company in the event of the issuance of additional shares, such as the proposed issuance of shares to management under the subscription agreements and the 400,000 shares recently issued to Larry Clark (See "Management Indebtedness and Transactions") 13 Larry E. Clark Direct 1,828,000 2 Chairman & Nominee Indirect 769,025 3 --------- ------------ ------- Total 2,597,025 15.9% Ralph Henson Direct 225,000 4 1.4% President, Director Chief Executive Officer & Nominee Richard Bruggeman Direct 174,387 5 1.1% Director, Chief Indirect 464,975 6 2.8% Financial Officer Options 75,000 .5% --------- ------------ ------- & Nominee Total 714,362 4.3% Sheng Jung Chiang Indirect * 7 Director & Nominee Mao-Song Lee Indirect * 8 Director & Nominee All Executive Officers Direct and and Directors as a Indirect 8,789,591 53.6% group (5 persons) Options 75,000 .4% --------- ------------ ------- Total 8,864,591 53.9% 2 - Excludes subscription to purchase 440,000 restricted shares of common stock (See "Management Indebtedness and Transactions." 3 - Shares held by Larry Clark and Jacquelyn Clark as Trustees of the Larry and Jacquelyn Clark Family Trust 4 - Excludes subscription to purchase 240,000 restricted shares of common stock (See "Management Indebtedness and Transactions." 5 - Includes 400 shares held in individual IRAs and 4,620 shares held by Mr. Bruggeman as Trustee of a family trust. Excludes subscription to purchase 101,000 restricted shares of common stock (See "Management Indebtedness and Transactions." Excludes subscriptions 6 - Shares held by Mrs. Bruggeman. 7 - Mr. Chiang is vice president of Chi Lin Technologies Co. Ltd. which holds 5,328,204 shares. Chi Lin also has anti-dilution rights to acquire an additional 524,983 restricted common shares at a price of $.10 per share incident to the issuance of stock to certain members of management (See "Management Indebtedness and Transactions.") 8 - Dr.Lee is vice president of Chi Lin Technologies Co. Ltd. which holds 5,328,204 shares. Chi Lin also has anti- dilution rights to acquire an additional 524,983 restricted common shares at a price of $.10 per share incident to the issuance of stock to certain members of management (See "Management Indebtedness and Transactions.") 14 Shares shown in the forgoing table as directly owned are owned beneficially and of record, and such record shareholder has sole voting, investment, and dispositive power. Calculations of the percentage of shares in the foregoing table assumes the exercise of options, to which the percentage relates. Percentages calculated for totals assume the exercise of options comprising such totals. The Company has relied upon the latest filing on Form 13D furnished to the Company for total shares held by principal shareholders. See also "Management Indebtedness and Transactions" for a description of a transaction in which certain members of management will acquire an additional 1,181,000 restricted shares or 7.6% of the common stock of InMedica for $.10 per share. CHANGE IN CONTROL. Effective May 10, 2001 the Company sold 5,328,204 shares of its common stock to Chi Lin Technology Co. Ltd. of Taiwan, Republic of China., pursuant to a Stock Purchase Agreement (the "Agreement"). The Company also caused its wholly owned subsidiary, MicroCor, Inc. to sell 29,420 shares of its common stock to Chi Lin. Following the transaction Chi Lin owned one third of the issued and outstanding stock of the Company and 20% of the issued and outstanding stock of MicroCor. Funds for the purchase of the stock came from the working capital of Chi Lin. The Agreement also granted Chi Lin anti-dilution rights permitting it to purchase additional shares to maintain its one third percentage ownership in the event InMedica issues additional shares. Chi Lin has further rights to receive additional shares to maintain its percentage ownership in the event outstanding options are exercised. The agreement also gives Chi Lin the right to nominate two of five directors to InMedica's board of directors. InMedica may not increase the size of the board to more than five without the prior consent of Chi Lin. Effective December 21, 2001 the Company appointed two directors nominated by Chi Lin. DIRECTORS AND EXECUTIVE OFFICERS At the meeting, five directors are to be elected to hold office for one year or until their successors are elected and qualified. The persons named in the table below are nominees for director. Name Age Director Since Larry E. Clark 82 1995 Ralph Henson 59 1999 Richard Bruggeman 49 1995 Sheng Jung Chiang 58 2001 Mao-Song Lee 56 2002 Certain information follows regarding the executive officers and directors of InMedica and their business backgrounds for at least the last five years. 15 LARRY E. CLARK - Chairman of the Board since April 1995. Mr. Clark was president of Clark-Knoll & Associates, Inc., a Denver, Colorado management consulting firm specializing in mergers and acquisitions from 1963 to 1969. He served as president of Petro-Silver, Inc., a small public company based in Salt Lake City, Utah, which engaged in the oil and gas business from 1970 to 1975. Beginning in 1975 and continuing to December, 2003, Mr. Clark was president of Larry Clark & Associates, a private company which engaged in a corporate mergers and acquisitions business or business consulting. In 1981, Mr. Clark formed Hingeline-Overthrust Oil & Gas, Inc., a Utah public company, which merged with Whiting Petroleum Corporation of Denver, Colorado in December 1983. Mr. Clark served as a director of Whiting Petroleum from 1983 until 1992 when Whiting Petroleum merged with IES Industries and Mr. Clark returned to full time employment as president of Larry Clark & Associates. Mr. Clark was President of InMedica from April 1995 until December, 1999. Mr. Clark graduated from the U.S. Merchant Marine Academy with a BS degree in Naval Science in 1943 and received a degree in Business Administration from the University of Wyoming in 1948. RALPH HENSON - Director, President and Chief Executive Officer of the Company since December 1999. Prior to his employment with InMedica, Mr. Henson worked from 1996 until 1999 as Director of Sales and acting Director of Clinical Programs of In-line Diagnostics of Farmington, Utah. He was also employed from 1987 to 1994 with Mallinckrodt Medical in sales and marketing, including service as Export Sales and Marketing Manager for Mallinckrodt Sensor Systems of Hannef, Germany. From 1994 to 1995 he was national sales manager with HemoCue, Inc. of Mission Viejo, California. RICHARD BRUGGEMAN - Director and Secretary/Treasurer and Chief Financial Officer of the Company since April, 1995 and full time employee of the Company during 2002. Since 2003, Mr. Bruggeman has been employed part time with Kitchen Resource, Inc., a Utah based firm distributing kitchen appliances. He was employed part time or full time as Controller of Kitchen Specialties, Inc. from 1993 to December, 2001, a Salt Lake City firm distributing kitchen appliances in the United States and Canada.. From 1986 until 1993 he was employed by the Company's subsidiary, MicroCor, Inc. as financial manager. During the period 1983-1985, he was a sole practitioner in accounting and from 1981-1983 he was employed by the Salt Lake City public accounting firm of Robison Hill & Co. He has since had no affiliation with that accounting firm. He graduated from the University of Utah in 1981 with a B.S. degree in accounting. SHENG JUNG (ROBERT S.) CHIANG - Director of the Company since May, 2001. Mr. Chiang was vice president and secretary general of Onking Chain Store Co. Ltd., a company organized in the Republic of China (hereinafter "Taiwan") from November, 1988 through June, 2000 when he became the Vice President of Chi Lin Technology Co. Ltd, a Taiwanese company. He has been employed with Chi Lin Technology since June, 2000. Mr. Chiang has a BA from the National Chen Chi University and an MBA from the National Taiwan University. MAO-SONG LEE - Director of the Company since October, 2002. Since February, 2001 he has been employed full time by Chi Lin Technology Co. Ltd. as Technical Vice President. From ____1998 until _____2000 he was General Manager, 16 Pilot Plants for Union Chemical Laboratories, Industrial Technology Research Institute of the Republic of China (Taiwan). During the period 1994-1997 he was Director of the Engineering Plastics Division for Union Chemical Laboratories, Industrial Technology Research Institute. From 1983 until 1991 he was Director of the Polymer Division, Union Chemical Laboratories, Industrial Technology Research Institute. He received a B.S. and M.S. from the National Cheng Kung University of Taiwan in 1970 and 1972, respectively. He also received a Ph.D. and an M.B.A. from the National Tsing Hua University of Taiwan in 1987 and from the National Cheng Chi University in 1994, respectively. Each director serves until the next annual meeting of shareholders or until a successor is elected and qualified. Officers serve at the pleasure of the board of directors. No arrangement or understanding exists between any officer or director and any other person pursuant to which he was nominated or elected as director or selected as an officer, except the Stock Purchase Agreement with Chi Lin Technologies Co. Ltd. (See "Change in Control"). Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of equity securities of the Company. Officers, directors and shareholders holding greater than ten percent are required to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on review of the copies of any such reports furnished to the Company, during the fiscal year ended December 31, 2003, and thereafter, all Section 16(a) filing requirements applicable to officers, directors and shareholders holding greater than ten percent were complied with. BOARD OF DIRECTORS MEETINGS AND ATTENDANCE AT SHAREHOLDER MEETINGS The Company does not have nominating or audit committees of the Board. The full board conducts the function of an audit committee. There was one meeting of the Board of Directors held during the fiscal year ended December 31, 2003 and there have been two meeting of the board of directors during 2004. Messrs. Chiang and Lee were unable to attend one of the board meetings. All directors attended the last annual shareholder meeting of the Company. The Company expects all directors to be in attendance at shareholder meetings and attempts to schedule meetings at a time when all directors will be able to attend, however conflicting schedules, particularly with the two directors from Taiwan may on occasion preclude their attendance at shareholder meetings which are held in the United States. AUDIT COMMITTEE FINANCIAL EXPERT The Company's board of directors does not have an "audit committee financial expert," within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, serving on its audit committee. The board of directors believes that all members of its audit committee are financially literate and experienced in business matters, and that 17 one or more members of the audit committee are capable of (i) understanding generally accepted accounting principles ("GAAP") and financial statements, (ii) assessing the general application of GAAP principles in connection with our accounting for estimates, accruals and reserves, (iii) analyzing and evaluating our financial statements, (iv) understanding our internal controls and procedures for financial reporting; and (v) understanding audit committee functions, all of which are attributes of an audit committee financial expert. However, the board of directors believes that there is not any audit committee member who has obtained these attributes through the experience specified in the SEC's definition of "audit committee financial expert." Further, like many small companies, it is difficult for the Company to attract and retain board members who qualify as "audit committee financial experts," and competition for these individuals is significant. The board believes that its current audit committee is able to fulfill its role under SEC regulations despite not having a designated "audit committee financial expert." NOMINATING COMMITTEE The full board of directors of the Company functions as a nominating committee to select potential additional directors of the Company. The board has not specifically designated a separate nominating committee because all five members of the board of directors desire to be involved in the selection of any new director. The board does not have a specific charter to govern its actions as a nominating committee, nor are any members of the board "independent" . Due to the relatively small size of the Company, the risks associated with service on the board of a public company and the limited or negligible compensation available to such directors, the Company considers it unlikely that a qualified person would serve on the board who was truly independent. However, the board's unwritten policy for consideration of potential members of the board nominated by shareholders is to seriously consider any potential board member that has personal relationships and/or expertise that might be beneficial to the Company's business. The Company has in the past and expects to continue in the future to be interested in discussions with persons interested in the Company's business and able to make a significant contribution to the success of the Company's technology. Shareholders that desire to introduce persons to the Company's board of directors should contact Larry E. Clark, Chairman of the Board or Ralph Henson, Chief Executive Officer of the Company with any suggestions or recommendations for director. These persons may be reached through the Company's office telephone 801-521-9300 during regular business hours. A copy of the resume of any candidates should be submitted with the inquiry. At the present time, the Company is not actively searching for additional board members, however members of the board are interested in meeting qualified persons. Qualified persons normally would be persons that have at least a college education and professional or technical experience in the medical products industry. The Company is especially interested in persons with fund raising contacts or technology development contracts. Generally shareholder nominees would be evaluated in the same manner as any other nominee. The nominees identified on the Company's current proposal for election of directors were each originally nominated by the Company's chief executive officer or by Chi Lin Technologies, Co. Ltd, which has the contractual right to nominate two 18 directors. Specifically, Larry E. Clark became a director upon the nomination of Alan Kaminsky who was then CEO and a 5% plus shareholder. Messrs Henson and Bruggeman were each nominated by Mr. Clark while Mr. Clark was serving as CEO and while Mr. Clark was a 10% plus shareholder. Messrs.Chiang and Lee were nominated by Chi Lin, a principal shareholder and control person of the Company, owning approximately 33 1/3% of the stock of the Company. SECURITY HOLDER COMMUNICATIONS Shareholders of the Company may communicate directly with the board of directors by contacting the Company's offices during regular business hours. The Company's telephone number is 801-521-9300. Communications to individual directors may be made by mail addressed to the director care of InMedica Development Corporation at the Company's offices 825 North 300 West, Suite N132, Salt Lake City, Utah 84103. EXECUTIVE COMPENSATION The table below discloses the compensation of the chief executive officer of the Company during the three fiscal years ended December 31, 2003: Annual Compensation Long Term Compensation Restricted Stock Common Stock Awards Underlying Name Year Salary Bonus Options Other -------------------------------------------------------------------------------- Ralph Henson (CEO) 2003 $ 24,000 - - - - Ralph Henson (CEO) 2002 $ 96,000 - - - - Ralph Henson (CEO) 2001 $ 86,333 - - - $15,000 9 9 - Value of shares issued for services. Compensation of officers and employees is determined by the Board of Directors. Officers, Ralph Henson and Richard Bruggeman are also members of the Board of Directors. During 2004 Mr. Henson has been compensated in the amount of $46,664, through September, 2004. Since the beginning of the last fiscal year, there have been no stock options or stock appreciation rights granted to or exercised by officers named in the executive compensation table. The Company presently has no plan for the payment of any annuity or pension retirement benefits to any of its officers or directors, and no other remuneration payments, contingent or otherwise, are proposed to be paid in the future to any officer or director, directly or indirectly. 19 InMedica executed employment contracts with its Chief Executive Officer, Ralph Henson, and its Chief Financial Officer, Richard Bruggeman, on April 25, 2001. Mr. Henson's contract employed him full time for the period April 1, 2001 until March 31, 2003. Compensation payable for his services was $7,000 per month during 2001 and $8,000 per month for the balance of the contract. Mr. Bruggeman's contract provided for his part time employment as the Chief Financial Officer of the Company from April 1, 2001 until March 31, 2003. He had the right to increase the employment to full time if warranted by the Company's business, at a compensation to be negotiated. Compensation under the contract was $3,500 per month during 2001 and $4,000 per month for the remaining term of the contract. The Company entered into a consulting contract with Larry E. Clark, its Chairman, effective April 1, 2001, pursuant to which the Company compensates the Chairman $2,000 per month in consulting fees. Fees under the contract are presently being accrued. (See "Management Indebtedness and Transactions") DIRECTORS' COMPENSATION Directors may be compensated at the rate of $100 for attendance at each board meeting, but did not receive compensation for meetings during the last three years. MANAGEMENT INDEBTEDNESS AND TRANSACTIONS No officer, director, nominee for director, or associate of any such officer, director or nominee has been, since the beginning of the last fiscal year, or is presently indebted to the Company. There have been no transactions since the beginning of the Company's last fiscal year, nor are there any proposed transactions, in which any officer, director, nominee or principal security holder has a direct or indirect material interest, except as described herein and in the disclosure below: Effective September 27, 2004 Larry E. Clark, Ralph Henson and Richard Bruggeman each subscribed to purchase shares of the Company in the following amounts respectively: 840,000, 240,000, and 101,000 at a price of $.10 per share. The closing bid price on the date of subscription was $.10 per share. The Subscription exercise is contingent on the Company paying each of the three individuals the amount of their accrued but unpaid wages or consulting fees in the amounts of $84,000, $34,998, and $16,002, respectively. The 1,181,000 shares to be purchased will constitute 7.6% of the issued and outstanding stock of the Company, acquired for total consideration of $118,100. THIRD PROPOSAL: TO RATIFY APPOINTMENT OF INDEPENDENT ACCOUNTANTS RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS The independent accounting firm selected and being recommended for the 20 current fiscal year is Robison Hill & Co. Representatives of Robison Hill & Co. are expected to be present at the Annual Meeting of Shareholders and will have an opportunity to make a statement if they desire to do so and will be expected to be available to respond to appropriate questions. The independent public accounting firm which conducted the audit of the financial statements of InMedica for the most recent fiscal year was Robison Hill & Co. The following is a summary of the fees billed to us by Robison, Hill & Company for professional services rendered for the years ended December 31, 2003 and 2002: Service 2003 2002 ------------------------------ ------------------ ------------------ Audit Fees $ 12,100 $ 9,890 Audit-Related Fees - - Tax Fees 300 575 All Other Fees - - ------------------ ------------------ Total $ 12,400 $ 10,465 ================== ================== AUDIT FEES. Consists of fees billed for professional services rendered for the audits of our consolidated financial statements, reviews of our interim consolidated financial statements included in quarterly reports, services performed in connection with filings with the Securities & Exchange Commission and related comfort letters and other services that are normally provided by Robison, Hill & Company in connection with statutory and regulatory filings or engagements. TAX FEES. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors The Audit Committee, is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services as allowed by law or regulation. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specifically approved amount. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval and the fees incurred to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. The Audit Committee pre-approved 100% of the Company's 2003 audit fees, audit-related fees, tax fees, and all other fees to the extent the services occurred after May 6, 2003, the effective date of the Securities and Exchange Commission's final pre-approval rules. 21 During the registrant's two most recent fiscal years and any subsequent interim period there were no disagreements with accountants on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, or any other disagreements, which disagreement(s) if not resolved to the satisfaction of the former accountant would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports. The former accountants' report for the period of their engagement did not contain an adverse opinion or disclaimer of opinion but were modified for uncertainty as to whether the registrant would continue as a going concern. However, there was no qualification or modification as to audit scope or accounting principles. DELIVERY OF DOCUMENTS TO SECURITY HOLDERS WHO SHARE AN ADDRESS One copy of this information statement and the annual report will be delivered to each security holder who shares the same address, unless the Company has received contrary instructions from one or more of the security holders. Written notification requesting a single copy in lieu of multiple copies or requesting multiple copies in lieu of a single copy should be addressed to InMedica Development Corporation, 825 North 300 West, Suite N132, Salt Lake City, Utah 84103 (telephone: 801-521-9300). SHAREHOLDER PROPOSALS Shareholder proposals intended to be presented at the 2005 Annual Meeting of Shareholders must be received by InMedica at its corporate offices on or before April 5, 2005 in order to be included in the Information Statement relating to that meeting. THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST, COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2003, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUEST FOR SUCH INFORMATION SHOULD BE DIRECTED TO RICHARD BRUGGEMAN, P.O. BOX 27557, SALT LAKE CITY, UTAH 84127. INFORMATION INCORPORATED BY REFERENCE The following documents are incorporated by reference in this Information Statement: 1. Form 10KSB A/1 of InMedica Development Corporation for the year ended December 31, 2003 2. Form 10QSB of InMedica Development Corporation for the quarter ended September 30, 2004. 22 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS Effective September 7, 2004, InMedica Development Corporation ("InMedica") and its subsidiary, MicroCor, Inc. ("MicroCor") entered into a Joint Development Agreement pursuant to which Wescor, Inc., a Utah medical technology company ("Wescor") purchased 15% of the issued and outstanding common stock of MicroCor on a pro-rata basis from InMedica and from Chi Lin Technology Co, Ltd of Tainan, Taiwan, ("Chi Lin") for $375,000. Prior to the consummation of the transaction InMedica held 80% of the issued and outstanding common stock of MicroCor and Chi Lin owned 20%. Following the transaction, InMedica holds 68%, Chi Lin holds 17% and Wescor holds 15% of the issued and outstanding stock of MicroCor. The purchase monies will be paid $300,000 to InMedica and $75,000 to Chi Lin, payable in installments over 18 months. Twenty percent of each payment made to InMedica will be applied to outstanding debt owing from InMedica to Wescor in the present amount of $114,969.93. If Wescor completes phases 1, 2, and 3 of the Joint Development Agreement, Wescor will be issued 1,700,000 shares of MicroCor common stock following which Wescor would hold 49% of the issued and outstanding stock of MicroCor, InMedica would hold 40.8% and Chi Lin would hold the remaining 10.2%. In addition, upon completion of phase 3, Wescor will have an option to purchase all, 100%, of the remaining issued and outstanding stock of MicroCor from InMedica and Chi Lin. MicroCor has also granted certain royalty and revenue royalty rights to InMedica and Chi Lin. The following unaudited pro forma condensed combined financial statements are based on the above three scenarios as follows: (Contingency 1) the initial sale of 15% of MicroCor; (Contingency 2) the initial sale of 15% plus the sale of an additional 34% of MicroCor for a total of 49% (following completion of phases 1, 2 and 3); and (Contingency 3) the initial sale of 15% plus the additional 34% and the sale of the additional 51% of MicroCor for a total sale of 100% (contingent upon phases 1, 2 and 3 and the exercise by Wescor of its option to buy the remaining 51%) The following unaudited pro forma condensed combined financial statements are based on the consolidated December 31, 2003 audited and September 30, 2004 unaudited historical financial statements of InMedica incorporated by reference herein (See "FINANCIAL STATEMENTS"). The unaudited pro forma condensed combined balance sheet assumes the sale occurred as of September 30, 2004. The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2004 presents the results of operations assuming the sale was completed on January 1, 2004. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2003 presents the results of operations, assuming the sale was effective on January 1, 2003. The unaudited pro forma condensed combined financial statements have been prepared by management of InMedica based on the financial statements incorporated herein. The pro forma adjustments include certain assumptions and preliminary estimates as discussed in the accompanying notes and are subject to change. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. These pro forma financial statements should be read in conjunction with the accompanying notes and the historical financial information of InMedica (including the notes thereto) incorporated by reference in this filing. See "FINANCIAL STATEMENTS." PF-1 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 1 - Sale of 15%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 - 153,545 Research & development 9,929 - 9,929 ------------------ ------------------- ------------------- Net Loss from Operations (163,474) - (163,474) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- Minority Interest 166,468 - 166,468 ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $8,768 $80,359 Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $8,768 $74,685 ================== =================== =================== Income (Loss) per share $ - $ - $ 0.00 ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-2 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 1 - Sale of 15%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 - 174,203 Research & development 24,723 - 24,723 ------------------- ------------------- ------------------ Net Loss from Operations (198,926) - (198,926) Other Income (expense) 47 11,377 A 11,424 ------------------- ------------------- ------------------ Minority Interest 29,727 17,836 B 47,563 ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $29,213 $(139,939) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $29,213 $(147,505) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ (0.01) =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-3 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET SEPTEMBER 30, 2004 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- ASSETS Current assets $273,099 - $273,099 Fixed assets (net) 442 - 442 ------------------ ------------------- ------------------- Total Assets $273,541 - $273,541 ================== =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & accrued expenses $78,396 $ - $78,396 Related party payable 84,000 - 84,000 Note payable 108,970 - 108,970 Preferred dividend payable 24,589 - 24,589 ------------------ ------------------- ------------------- Total Current Liabilities 295,955 - 295,955 ------------------ ------------------- ------------------- Minority Interest (62,386) (53,028) A (115,414) ------------------ ------------------- ------------------- Stockholders' Equity: Preferred Stock 94,573 - 94,573 Common stock 15,983 - 15,983 Paid in capital 8,264,260 - 8,264,260 Accumulated deficit (8,334,844) - (8,334,844) 53,028 A 53,028 ------------------ ------------------- ------------------- Total Stockholders' Equity (Deficit) 39,972 53,028 93,000 ------------------ ------------------- ------------------- Total Liabilities and Stockholders' Equity $273,541 - $273,541 ================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-4 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 - 153,545 Research & development 9,929 850,000 C 859,929 ------------------ ------------------- ------------------- Net Loss from Operations (163,474) (850,000) (1,013,474) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- Minority Interest 166,468 141,498 B 307,966 ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $(699,734) $(628,143) Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $(699,734) $(633,817) ================== =================== =================== Income (Loss) per share $ - $ - $ (0.04) ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-5 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 2 - Sale of 49%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 - 174,203 Research & development 24,723 850,000 C 874,723 ------------------- ------------------- ------------------ Net Loss from Operations (198,926) (850,000) (1,048,926) Other Income (expense) 47 11,377 A 11,424 ------------------- ------------------- ------------------ Minority Interest 29,727 561,465 B 591,192 ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $(277,158) $(446,310) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $(277,158) $(453,876) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ (0.03) =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-6 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET SEPTEMBER 30, 2004 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- ASSETS Current assets $273,099 $(191) B $272,908 1,020,000 C 1,020,000 Fixed assets (net) 442 - 442 ------------------ ------------------- ------------------- Total Assets $273,541 $1,019,809 $1,293,350 ================== =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & accrued expenses $78,396 - $78,396 Related party payable 84,000 - 84,000 Note payable 108,970 - 108,970 Preferred dividend payable 24,589 - 24,589 ------------------ ------------------- ------------------- Total Current Liabilities 295,955 - 295,955 ------------------ ------------------- ------------------- Minority Interest (62,386) 62,386 B - ------------------ ------------------- ------------------- Stockholders' Equity: Preferred Stock 94,573 - 94,573 Common stock 15,983 - 15,983 Paid in capital 8,264,260 - 8,264,260 Accumulated deficit (8,334,844) (62,577) B (8,397,421) 1,020,000 C 1,020,000 ------------------ ------------------- ------------------- Total Stockholders' Equity (Deficit) 39,972 957,423 997,395 ------------------ ------------------- ------------------- Total Liabilities and Stockholders' Equity $273,541 $1,019,809 $1,293,350 ================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-7 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------ ------------------- ------------------- Revenues: $ - $ - $ - Expenses: General & administrative 153,545 (86,526) D 67,019 Research & development 9,929 (9,929) D - ------------------ ------------------- ------------------- Net Loss from Operations (163,474) 96,455 (67,019) Other Income (expense) 68,597 8,768 A 77,365 ------------------ ------------------- ------------------- (11,202) D (11,202) Minority Interest 166,468 (166,468) D - ------------------ ------------------- ------------------- Net Income (Loss) $71,591 $(72,447) $(856) Preferred Stock Dividends $(5,674) - $(5,674) ------------------ ------------------- ------------------- Net Income (Loss) to Common Stockholders $65,917 $(72,447) $(6,530) ================== =================== =================== Income (Loss) per share $ - $ - $ 0.00 ================== =================== =================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-8 UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 Contingency 3 - Sale of 100%
Pro Forma Pro Forma Combined InMedica Adjustments Balance ------------------- ------------------- ------------------ Revenues: $ - $ - $ - Expenses: General & administrative 174,203 (123,958) D 50,245 Research & development 24,723 (24,723) D - ------------------- ------------------- ------------------ Net Loss from Operations (198,926) 148,681 (50,245) Other Income (expense) 47 (47) C - Other Income (expense) 11,377 A 11,377 ------------------- ------------------- ------------------ Minority Interest 29,727 (29,727) D - ------------------- ------------------- ------------------ Net Income (Loss) $(169,152) $130,284 $(38,868) Preferred Stock Dividends $(7,566) - $(7,566) ------------------- ------------------- ------------------ Net Income (Loss) to Common Stockholders $(176,718) $130,284 $(46,434) =================== =================== ================== Income (Loss) per share $ (0.01) $ - $ 0.00 =================== =================== ================== Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial statements. PF-9 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (1) GENERAL Pursuant to the sale, InMedica will receive $300,000, with $30,000 paid on closing and $270,000 paid in monthly installments of $15,000 plus interest at prime plus 2% in exchange for shares of InMedica's Majority owned subsidiary MicroCor. As a special provision of the agreement InMedica will payback to WesCor 20% of the initial payment of $30,000 and 20% of each monthly payment as payment on the amounts previously loaned to InMedica by WesCor. (2) PRO FORMA ADJUSTMENTS The adjustments to the accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2004, are described below: (A) Record additional minority interest resulting from sale of MicroCor stock. (B) Remove 100% of MicroCor. (C) Record sale of 100% of remaining interest in MicroCor stock at an assumed price of $.50 per share for a total of $1,020,000, based on the selling price of the initial 15%, and assuming the $1,020,000 is paid in full at time of exercise. The adjustments to the accompanying unaudited pro forma condensed combined statements of operations for the year ended December 31, 2003 and the nine months ended September 30, 2004 are described below: (A) Record interest income on note receivable. (B) Record additional minority interest. (C) Record issuance of 1,700,000 shares of MicroCor common stock in exchange for research and development expenses, estimated at $.50 per share. (D) Remove 100% of MicroCor. PF-10