WINDGEN ENERGY, INC. - Annual Report: 2008 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
þ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
fiscal year ended December 31,
2008
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from _________ to _________
Commission
file number 0-12968
INMEDICA
DEVELOPMENT CORPORATION
(Exact
name of registrant as specified in its charter)
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Utah
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87-0397815
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(State
of Incorporation)
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(I.R.S.
Employer Identification
No.)
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3104
E. Camelback Road, Suite 242
Phoenix,
Arizona 85016
(Address
of principal executive offices)
(480)
991-9500
(Registrant’s telephone
number, including area code)
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Securities
Registered Pursuant to Section 12(b) of the Act:
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None
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Securities
Registered Pursuant to Section 12(g) of the Act:
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Title of Each Class
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Name of Each Exchange on which
Registered
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Common
Stock, $.001 par value
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None
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
o No þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
o No þ
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities 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 þ No o
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act:
| Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No þ
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates: $1,043,208 based on 8,693,402 non affiliate shares
outstanding at $.12 per share, which is the average bid and asked price of the
common shares as of the last business day of the registrant’s most recently
completed second fiscal quarter.
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 18,629,493 shares of common stock,
$.001 par value, as of March 31, 2009.
2
ANNUAL
REPORT ON FORM 10-K
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This
Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and should be read in conjunction with the Financial Statements of
InMedica Development Corporation (the “Company” or “InMedica”). Such
statements are not historical facts and reflect our current views regarding
matters such as operations and financial performance. In general,
forward-looking statements are identified by such words or phrases as “expects,”
“anticipates,” “believes,” “could,” “approximates,” “estimates,” “may,”
“intends,” “predicts,” “projects,” “plans,” or “will,” or the negative of those
words or other terminology. These
statements are not guarantees of future performance and involve certain
known and unknown inherent risks, uncertainties and other factors that are
difficult to predict; our actual results could differ materially from
those expressed in these forward-looking statements, including those risks and
other factors described elsewhere in this Annual Report. The
cautionary factors, risks and other factors presented should not be construed as
exhaustive. Other risks not presently known to us, or that we
currently believe are immaterial, could also adversely affect our business,
financial condition or results of operations.
Each forward-looking statement
should be read in context with, and with an understanding of, the various
disclosures concerning our business made elsewhere in this Annual Report, as
well as other public reports filed by us with the United States Securities and
Exchange Commission. Readers should not place undue reliance on any
forward-looking statement as a prediction of actual results of developments.
Except as required by applicable law or regulation, we undertake no obligation
to update or revise any forward-looking statement contained in this Annual
Report.
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BUSINESS
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General
InMedica
Development Corporation (“InMedica” or the “Company”) was incorporated as a Utah
corporation on June 16, 1983. In 1985, the Company acquired MicroCor,
Inc., a Utah corporation (“MicroCor”), engaged in the development of certain
medical technology products. During the last fiscal year, MicroCor, a 57%
owned subsidiary of the Company, continued to engage in research and development
on MicroCor’s hematocrit technology (see “Product Development” below) pursuant to the Joint Development Agreement
(the “Agreement”) with Wescor, Inc. (“Wescor”). Wescor assumed
day-to-day management of MicroCor as of September 7, 2004; however, InMedica has
the right to appoint three of five directors of MicroCor. Since
December 30, 2008, the day-to-day management was transferred to three of
MicroCor’s directors: Larry Clark, Ralph Henson and Richard
Bruggeman. InMedica and MicroCor received no revenues from operations
during the last fiscal year. (See “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations -
Results of Operations” below).
Principal
Products
During
the years 1986 and 1987, MicroCor developed, manufactured and marketed a
portable electrocardiograph (“ECG”) monitor. About 450 units were manufactured
and sold. In July 1989, MicroCor signed a research and development contract with
Critikon (a predecessor to Johnson & Johnson Medical, Inc.) to develop a
medical instrument which would incorporate and enhance the technologies already
developed in the MicroCor portable ECG monitor and combine them with
technologies developed by Critikon. The research and development portion of the
contract was completed in July 1990, and resulted in the design of a new product
line. The product line was successfully marketed by Johnson & Johnson
Medical, Inc. during the 1990’s, providing royalty income to
InMedica. The product line has now been phased out and the royalty
income has ceased.
Product
Development
For the
past 19 years, the Company has conducted research or engaged in fund raising to
support research and development of a method for measuring hematocrit
non-invasively (without drawing blood) and has applied for patents covering this
technology. Hematocrit is the percentage of blood volume made up by red blood
cells and is a common laboratory test performed invasively by drawing a blood
sample from the patient. During May 1997, the Company employed
Dr. Gail Billings, a bio-medical researcher and, effective August 29, 1997, the
Company engaged Medical Physics, Inc., a biomedical research company located in
Salt Lake City, Utah, to conduct further research and development on the
project. The researchers engaged in additional research through 1998. During
1999, the researchers completed production of a transportable prototype device
for use in demonstrating the technology. During 2001, the Company
entered into a Development, Licensing and Manufacturing Agreement with Chi Lin
Technologies Co., Ltd. for further development of the technology, which has now
been superseded by the Agreement with Wescor. To date the
research and development of MicroCor, its various engineers, affiliates and
contractors has not completed a prototype suitable for
commercialization. The Company believes the Wescor prototype has been
designed and constructed to meet the regulatory requirements for clinical trials
which may be required to obtain regulatory approval for marketing, however, the
Company’s
view is that while the design and construction may meet regulatory requirements,
there is no certainty that the device would perform with the accuracy needed for
approval.
Government
Regulation
Medical
products may be subject to regulation by the Food and Drug Administration (the
“FDA”)
pursuant to the Federal Food, Drug and Cosmetic Act and other federal and state
laws regarding the regulation, manufacture and marketing of products in which
InMedica may be involved. The laws of foreign nations may also apply to any
international marketing of such products. To the extent InMedica has acquired or
developed an interest in medical products or the companies manufacturing such
products, InMedica’s business may be indirectly affected by such regulation.
Testing of MicroCor’s non-invasive hematocrit technology is subject to prior
approval and supervision of an Internal Review Board of a medical facility
overseeing the testing. Marketing of any new product line that might be
developed based on the Company’s non-invasive hematocrit device would be subject
to prior approval by the FDA.
The
disclosure on the facing sheet of this Form 10-K that the Company is not a
“shell company” as defined in Rule 12b-2 of the Rules of the Securities Exchange
Act of 1934 (the “Exchange Act”), is
based on the Company’s conclusion that it has more than “nominal operations” as
described in Rule 12b-2. The Company’s operations consist of
ongoing operating expenses reported in its statement of operations, paid
employees, a stated business purpose of development of the hematocrit
technology, a history of pursuing this purpose, a past history of revenues from
operations and ongoing research and development conducted by its majority-owned
subsidiary, MicroCor, Inc. In the event the Company were
determined to be a “shell company,” it would be precluded from using Form S-8 to
register securities issued to employees and would be required to make certain
disclosures on Form 8-K regarding any transaction that causes it to cease being
a shell company. Such disclosures consist of filings with the
Securities and Exchange Commission of the same type of information that would be
required to be filed in registering a class of securities under the Exchange
Act. Examples of transactions that could cause a company to
cease to be a shell company include a “reverse acquisition” or “back door
registration” of a “shell company” with an operating company. The
effect of such disclosure requirement is to increase the disclosure requirements
for the non-reporting or non-registered company in a “reverse acquisition” or
“back door registration” as more fully described in SEC Release Nos. 33–8587 and
34–52038. The Company has no present plans or commitments to engage
in a “reverse acquisition,” “back door registration” or similar transaction or
to register stock on Form S-8. The
Company has developed a plan to form and fund a new subsidiary, ValuMobile, LLC.
(See “Option Agreements” and “Subsequent Events”
below.)
Patents
As of
December 12, 1995, the Company’s application for a patent entitled “Method and
Apparatus for Non-Invasively Determining Hematocrit,” was allowed by the U.S.
Patent Office and the Patent issued on June 18, 1996 with a term of 17 years.
The Company was also issued an additional patent that claims priority from
October 4, 1990, the date of filing of the Company’s “Method and Apparatus for
Non-Invasively Determining Hematocrit.” The patent term runs from
October 4, 1990 for a period of 17 years and expired on October 4,
2007. As of October 3, 2000, the Company was issued a third
patent called “System and Method for In-Vivo Hematocrit Measurement Using
Impedance and Pressure Plethysmography.” In December 2003, the
Company received a Notice of Allowance of Claim from the U.S. Patent and
Trademark office. On July 20, 2004, MicroCor was issued a
fourth patent: Patent 6,766,191, “System And Method For In-Vivo Hematocrit
Measurement Using Impedance And Pressure Plethysmography.” All
of the Company’s patents are now owned by MicroCor, pursuant to the Agreement
with Wescor.
Raw
Materials
Materials
and electronic components used in the production and development of a hematocrit
measuring device and like products are components readily available through
various suppliers.
Competition
InMedica
is not presently a significant competitive factor in the medical products
industry. The medical products industry is dominated by large and
well-established corporations with vastly greater financial and personnel
resources than those of InMedica. There can be no assurance that the product in
which InMedica has an interest will be successfully developed and able to
compete profitably in the marketplace. Further, there is no assurance that
MicroCor and Wescor will be able to complete research, development and marketing
of MicroCor’s hematocrit technology in advance of any competitors that may
be developing competing technologies.
Research and
Development Costs
Research
and development costs for the two years ended December 31, 2008 and 2007 were $0
and $0, respectively. The absence of research and development
costs of the Company in 2008 and 2007 was the result of the assumption of
research and development by Wescor pursuant to the Joint Development
Agreement. None of the expenses were incurred on customer-sponsored
research activities relating to the development of new products.
Employees
InMedica
had no employees as of December 31, 2008.
Option Agreements
Chi
Lin Agreement
On September
10, 2008, Chi Lin Technologies Co., Ltd. (“Chi
Lin”),
an entity of the Republic of China, granted a one-year option to
Synergistic Equities Ltd., a Belize corporation (“Synergistic”),
to purchase 6,043,704 issued and outstanding shares of common stock of the
Company currently owned by Chi Lin and 425,000 shares of common stock currently
owned by Chi Lin in MicroCor, Inc., a Utah corporation (“MicroCor”),
for
the aggregate sum of $107,000 US (the “Synergistic Option”). The agreement
with Chi Lin is hereinafter referred to as (the “Chi
Lin Agreement”).
The Company owns 57% of the issued and outstanding stock of
MicroCor. If all 6,043,704 shares of common stock of the Company were
purchased pursuant to the Synergistic Option, Synergistic would own 32.4% of the
Company’s issued and outstanding shares of common stock.
In
connection with the grant of the Synertistic Option, Chi Lin granted to Larry
Clark, Ralph Henson and Richard Bruggeman, the former executive officers and
Directors of the Company (see “Change in
Control” below), and the survivors or survivor of them, with full power
of substitution, for a period of one year, an irrevocable proxy empowering
Clark, Henson and Bruggeman to unanimously vote the InMedica shares held by Chi
Lin in any vote on a proposed merger or acquisition with x-Mobility, Ron
Conquest, and/or affiliates. Use of the proxy is limited to use at any
shareholders’ meeting or any consent resolution of the shareholders of InMedica
that may be necessary or recommended by counsel to approve a merger or
acquisition transaction between InMedica and Synergisitc and/or its affiliates,
including Ron Conquest, x-Mobility and/or others. The Synergistic Option
expires on September 10, 2009.
SNG
Agreement
On
December 8, 2008, the Company entered into a stock purchase option
agreement with SNG Consulting, LLC, an Arizona limited liability company
(“SNG”). The agreement with SNG is hereinafter referred to as (the
“SNG Agreement”). Pursuant
to the terms of the SNG Agreement,
the Company granted to SNG a
one-year option to purchase up to 5,000,000 restricted shares of Company’s
common stock at a purchase price of $0.01 per share (the “SNG
Option”). The SNG Agreement is transferable by SNG. As
consideration for the SNG Agreement, SNG transferred to the Company 100%
ownership of ValuMobile, LLC, a Nevada limited liability
company (“ValuMobile”). ValuMobile was newly formed at the time
the SNG Agreement was entered into by the Company. The SNG Agreement
further provides that SNG and any of its affiliates shall not collectively
acquire more than 88% of the outstanding common stock of the Company until such
time as the Company or ValuMobile has been funded with at least
$1,500,000. The SNG Option expires on December 31,
2009.
The
sole member of SNG is Ashley Conquest, the daughter of Ronald Conquest.
Mr. Conquest is the new Chairman of the Board and Chief Executive Officer of the
Company (see, “Change in Control”
below). Ashley Conquest and Ronald Conquest serve as the co-managers
of ValuMobile.
LI
Agreement
On
December 8, 2008, the Company entered into a stock purchase option
agreement with Law Investments CR, S.A., a Costa Rica corporation
(“LI”). The agreement with LI is hereinafter referred to as (the “LI Agreement”).
Pursuant to the terms of the LI Agreement, the Company granted to LI a
one-year option to purchase up to 15,000,000 restricted shares of the Company’s
common stock at a purchase price of $0.0075 per share (the “LI
Option”). The
LI Agreement is transferable by LI. The LI Agreement provides that the first
$75,000 received from the purchase of Company’s common stock pursuant to the LI
Agreement shall be distributed to Company’s wholly-owned subsidiary, ValuMobile,
as a contribution to capital. The LI Agreement further provides that
LI and any of its affiliates shall not collectively acquire more than 88% of the
outstanding common stock of the Company until such time as the Company or
ValuMobile has been funded with at least $1,500,000. The LI Option expires
on December 31, 2009. Ronald Conquest, who is the new Chairman of the
Board and Chief Executive Officer of the Company (see, “Change in Control” below), is a director and
President of LI.
Subsequent
Events
Agreement with MicroCor,
Inc.
On
January 30, 2009, the Company entered into an agreement with MicroCor, LI
and SNG (the “MicroCor
Agreement”). In the
MicroCor Agreement, the parties agreed that the Company, LI, and SNG will vote
their respective ownership interest in MicroCor, if any, for the election of
Larry E. Clark, Ralph Henson, and Richard Bruggeman, the three former Directors
of Company (see, “Change in
Control” below), as Directors of MicroCor. The MicroCor
Agreement also provides for the Company to create a class of preferred stock,
without dividend or voting rights, which will receive 100% of any future benefit
from the sale, spin off, merger or liquidation of MicroCor or the
commercialization of its hematocrit technology (the “Series B Preferred
Stock”). The shares of the Series B Preferred Stock will be
distributed as a dividend, subject to compliance with federal and state
securities laws and regulations, to the Company’s common stockholders, as of the
record date of January 30, 2009. The MicroCor Agreement also provides
that the MicroCor Board of Directors shall have sole discretion to reach
agreements and settlements with creditors and shareholders of MicroCor,
including the Company, without the consent of the Company’s Board of Directors
as then constituted. These settlements and agreements may be in the
best interest of MicroCor and the holders of the Series B Preferred Stock, and
not necessarily the Company. The term of the MicroCor Agreement and
the Series B Preferred Stock is the later of: (i) two years
commencing on January 30, 2009; (ii) the resolution of the MicroCor Board to
abandon further development of the hematocrit technology; or (iii) the spin off,
merger or liquidation of MicroCor or its hematocrit
technology.
The creation of the Series B Preferred Stock,
as discussed above, will modify the rights of those who become holders of
the Company’s common stock after January 30, 2009. All financial benefits
from MicroCor’s hematocrit technology, if any, will be distributed to the
holders of the Series B Preferred Stock after payment of all MicroCor’s debts
and no MicroCor assets will be distributed to the Company’s common
stockholders.
Change in Control
Resignations of Directors and Officers; Appointment
of New Directors and Officers
Effective
January 30, 2009, Larry E. Clark, Ralph Henson and Richard Bruggeman resigned
Directors of the Company. Further, Mr. Clark resigned as Chairman of
the Company, Mr. Henson resigned as President and Chief Executive Officer of the
Company, and Mr. Bruggeman resigned as Secretary/Treasurer and Chief Financial
Officer of the Company, all effective January 30, 2009. There were no
disagreements between Mr. Clark, Mr. Henson, Mr. Bruggeman and the
Company.
Effective
January 30, 2009, Ronald Conquest, Wayne R. Myers, and Christopher R. Miller
were appointed as Directors of the Company. Additionally, Mr.
Conquest was appointed as Chairman and Principal Executive Officer, Mr. Myers
was appointed as President and Principal Operating Officer, and Mr. Miller was
appointed as Secretary/Treasurer and Principal Financial
Officer. There are no family relationships between
Messrs. Conquest, Myers and Miller.
With
the resignation of the Company’s three Directors and officers and the
appointment of three new Directors and officers, control of the
Company has changed.
Potential Exercise of
Options
Currently,
the Company has 18,629,493 shares of common stock issued and
outstanding. If all 20,000,000 shares of common stock are purchased
by LI and SNG pursuant to the LI Agreement and the SNG Agreement (see “Option Agreements - LI Agreement” and “SNG Agreement” above), LI and SNG would own a
total of 51.8% of the Company’s issued and outstanding shares of common
stock.
If
LI purchases all 15,000,000 shares available to be purchased pursuant to the LI
Agreement and SNG purchases no shares pursuant to the SNG Agreement, LI would
own 44.6% of the Company’s outstanding shares of common stock.
If
SNG purchases all 5,000,000 shares available to be purchased pursuant to the SNG
Agreement and LI purchases no shares pursuant to the LI Agreement, SNG would own
21.2% of the Company’s outstanding shares of common stock.
In
the event all options are exercised, Synergistic, SNG and LI would
collectively own 67.4% of Company’s issued and outstanding shares of common
stock. Ronald Conquest, who is the new Chairman of the Board and
Chief Executive Officer of the Company (see “Resignations of Directors and Officers; Appointment
of New Directors and Officers” above), has served as
an agent for Synergistic, but is not an officer, director or shareholder of
Synergistic.
ValuMobile Operations
The
ability of the Company to commence operations in its new ValuMobile subsidiary
has been hampered in 2009 by the recent economic recession. The Company’s future
operations in its ValuMobile subsidiary will be dependent upon securing the
funding contemplated by the LI Agreement and the SNG Agreement. At
the present time the Company has entered into no agreement or understanding to
obtain such funding.
During
the 2008 fiscal year, the Company leased office space on a month-to-month basis
located at 825 North 300 West, Suite N132, in Salt Lake City, Utah.
Commencing
in February 2009, the Company moved its offices to 3104 E. Camelback Road, Suite
242, Phoenix, Arizona 85016. The Company currently pays no rent to
occupy this space.
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LEGAL
PROCEEDINGS
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The
Company is not currently a party to any pending lawsuit or legal
proceeding.
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SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
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The
Company did not submit any matters to a vote of security holders in the fourth
quarter of fiscal 2008.
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MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY
SECURITIES
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Market Information
The
common stock of InMedica is traded in the over-the-counter market and is quoted
on the “FINRA OTC Bulletin Board.” The table below sets forth, for the calendar
quarters indicated, the high and low closing bid prices for the InMedica common
stock as reported by the FINRA OTC Bulletin Board. These quotations represent
prices between dealers without adjustment for retail markups, markdowns or
commissions and may not represent actual transactions.
| Bid Price | ||||||||
| Quarter Ended |
High
|
Low | ||||||
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March
31, 2007
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$ | .23 | $ | .15 | ||||
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June
30, 2007
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.17 | .10 | ||||||
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September
30, 2007
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.17 | .10 | ||||||
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December
31, 2007
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.13 | .06 | ||||||
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March
31, 2008
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.0667 | .0467 | ||||||
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June
30, 2008
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.0333 | .0167 | ||||||
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September
30, 2008
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.02 | .02 | ||||||
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December
31, 2008
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.0167 | .01 | ||||||
Stockholders
On March
5, 2009, there were approximately 519 record holders of the InMedica common
stock. Such record holders do not include individual participants in securities
position listings.
Dividends
InMedica
has not paid cash dividends on its common stock since
organization. For the foreseeable future, InMedica expects that
earnings, if any, will be retained for use in the business or be used to retire
obligations of the Company.
Series A Preferred
Stock
Four
stockholders own an aggregate of 21,016 shares of the Company’s Series A
Preferred Stock, which is 8% convertible preferred. There is no
public market for the Series A Preferred Stock. Aggregate
accumulated annual dividends payable on the preferred stock as of December 31,
2008 were $56,743.
Securities Authorized for Issuance -
Series B Preferred Stock
The creation of the Series B
Preferred Stock pursuant to the MicroCor Agreement will modify the rights of
those who become holders of the Company’s common stock after January 30,
2009. All financial benefits from MicroCor’s hematocrit technology, if
any, will be distributed to the holders of the Series B Preferred Stock after
payment of all of MicroCor’s debts and no MicroCor assets will be distributed to
the Company’s common stockholders. See “Item 1. Business - Subsequent
Events” above.
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SELECTED FINANCIAL
DATA
|
Not applicable.
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Plan of
Operation
During
the 12 months beginning January 2008, the Company’s plan of operation was to
continue to work cooperatively with MicroCor and Wescor in the development of
the Company’s portable hematocrit device. However, Wescor advised the
Company and Chi Lin that its parent corporation was interested in shifting
Wescor’s resources previously dedicated to the research and development of the
hematocrit technology to other projects. As a result, Wescor ceased
all research and development efforts on the hematocrit
technology. Wescor continues to be interested in bringing on a
new partner to continue the research and development or perhaps in selling its
interest in the Technology. The Company is presently discussing the
matter with Wescor. No present plans or commitments for other
alternatives have been made. During 2008, the Company funded
administrative operations with the proceeds of minimum royalty payments from
MicroCor and from loans from the Company’s officers and directors. Wescor, in the past, has
loaned MicroCor sufficient funds to enable MicroCor to pay one half of the
minimum royalty. These minimum payments to the Company from MicroCor
have ceased. Payment of the balance of the minimum royalty was
deferred by the Company. The Company has in the past borrowed from
affiliates; however, such borrowing is not expected to be available in the
future to meet obligations or to fund research and development. In past years,
salaries of employees and consulting fees have been accrued and later settled by
the issuance of restricted stock. If necessary, InMedica will also look for
other funding sources.
Results of
Operations
The
Company had an accumulated deficit of $9,042,965 as of December 31,
2008. No revenues from operations were received in 2008 and
2007. No revenues from operations are expected during
2009. The Company had a net loss from operations of
$348,860 for the year ended December 31, 2008, compared to a net loss from
operations of $194,699 for the year ended December 31, 2007. The
increase in net loss from operations resulted primarily from the issuance of
stock options to LI and SNG during September 2008, which generated an increase
compensation expense.
Liquidity and
Capital Resources
The
minimum royalty payments in 2008 and 2007 and loans from the Company’s officers
and directors have provided minimum operating capital to the
Company. During 2008, the Company’s CEO and CFO deferred payments of
$2,000 per month in salary. These deferrals ended December 31,
2008.
During
the years 2008 and 2007, liquidity was generated by borrowings from Wescor, the
Company’s officers and directors and from the payment of minimum royalties to
InMedica by MicroCor. The Company may need to engage in fund
raising during 2009 in order to meet future cash needs.
Subsequent Event
ValuMobile
Operations
The
ability of the Company to commence operations in its new ValuMobile subsidiary
has been hampered in 2009 by the recent economic recession. The Company’s future
operations in its ValuMobile subsidiary will be dependent on securing the
funding contemplated by the LI Agreement and the SNG Agreement. At
the present time the Company has entered into no agreement or understanding to
obtain such funding.
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QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET
RISK
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Not
applicable.
|
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
|
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS’ REPORT
DECEMBER
31, 2008 AND 2007
INDEX
TO FINANCIAL STATEMENTS
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Certified
Public Accountants
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A
PROFESSIONAL CORPORATION
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Brent
M. Davies, CPA
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David
O. Seal, CPA
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W.
Dale Westenskow, CPA
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Barry
D. Loveless, CPA
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| Stephen M. Halley, CPA |
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS’ REPORT
To the
Board of Directors and Stockholders of
InMedica
Development Corporation
We have
audited the accompanying consolidated balance sheets of InMedica Development
Corporation and subsidiary (the “Company”) as of December 31, 2008 and 2007, and
the related consolidated statements of operations, stockholders’ equity, and
cash flows for the two years then ended (all expressed in U.S.
dollars). These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our
opinion, such financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2008 and 2007, and the
results of its operations and its cash flows for the two years then ended in
conformity with accounting principles generally accepted in the United States of
America.
MEMBERS OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS
MEMBERS OF
THE SEC PRACTICE SECTION and THE PRIVATE COMPANIES PRACTICE
SECTION
1366 East
Murray-Holladay Road, Salt Lake City, Utah 84117-5050
Telephone
801/272-8045, Facsimile 801/277-9942
The
accompanying consolidated financial statements for the years ended December 31,
2008 and 2007 have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 1 to the consolidated financial
statements, the Company’s recurring losses from operations raise substantial
doubt about its ability to continue as a going concern. Management’s
plans concerning these matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
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/s/ Robison, Hill & Co. | |
| Certified Public Accountants | |||
Salt Lake
City, Utah
April 7,
2009
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December
31,
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December
31,
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|||||||
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2008
|
2007
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|||||||
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ASSETS
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||||||||
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Current
Assets
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||||||||
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Cash
& Cash Equivalents
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$ | 1,794 | $ | 2,706 | ||||
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Prepaid
Expenses & Other
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1,100 | 200 | ||||||
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Total
Current Assets
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2,894 | 2,906 | ||||||
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Equipment
& Furniture, at Cost,
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||||||||
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Less
Accumulated Depreciation of $255,221
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and
$254,856, respectively
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– | 365 | ||||||
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TOTAL
ASSETS
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$ | 2,894 | $ | 3,271 | ||||
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LIABILITIES
& STOCKHOLDER'S EQUITY
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||||||||
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Current
Liabilities
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||||||||
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Related
Party Consulting Fees Payable
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$ | – | $ | 78,000 | ||||
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Accounts
Payable
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6,665 | 5,503 | ||||||
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Accrued
Interest
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34,351 | 16,495 | ||||||
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Related
Party Royalty Payable
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113,333 | 73,333 | ||||||
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Related
Party Note Payable
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187,385 | – | ||||||
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Note
Payable
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21,509 | – | ||||||
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Preferred
Stock Dividends Payable
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56,743 | 49,177 | ||||||
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Current
Portion of Long-Term Debt
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160,000 | 140,000 | ||||||
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Total
Current Liabilities
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652,619 | 283,125 | ||||||
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Long-Term
Convertible Promissory Note
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72,633 | 60,617 | ||||||
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Total
Liabilities
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652,619 | 423,125 | ||||||
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Minority
Interest
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(291,211 | ) | (192,611 | ) | ||||
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Stockholders'
Equity (Deficit)
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||||||||
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Preferred
Stock, 10,000,000 shares authorized; Series A cumulative
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||||||||
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convertible
preferred stock, 8% cumulative, $4.50 par value,
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||||||||
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1,000,000
shares designated, 21,016 shares outstanding (aggregate
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||||||||
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liquidation
preference of $151,316)
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94,573 | 94,573 | ||||||
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Common
Stock, $.001 par value: 40,000,000 shares authorized,
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18,629,493
and 18,629,493.share outstanding
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18,629 | 18,629 | ||||||
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Additional
Paid-in Capital
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8,571,249 | 8,426,839 | ||||||
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Accumulated
Deficit
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(9,042,965 | ) | (8,767,284 | ) | ||||
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Total
Stockholders' Equity (Deficit)
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(358,514 | ) | (227,243 | ) | ||||
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TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY
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$ | 2,894 | $ | 3,271 | ||||
The
accompanying notes are an integral part of these financial
statements.
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For
the Years Ended
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December
31,
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2008
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2007
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ROYALTY
REVENUES
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$ | – | $ | – | ||||
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OPERATING
EXPENSES
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General
& Administrative
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204,450 | 194,699 | ||||||
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Compensation
Expense from Stock Options
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144,410 | – | ||||||
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Research
& Development
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– | – | ||||||
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Total
Operating Expense
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348,860 | 194,699 | ||||||
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LOSS
FROM OPERATIONS
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(348,860 | ) | (194,699 | ) | ||||
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OTHER
INCOME (EXPENSE)
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||||||||
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Interest
Income
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– | – | ||||||
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Interest
Expense
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(17,855 | ) | (13,586 | ) | ||||
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Other
Income
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– | – | ||||||
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Total
Other Income (Expenses), Net
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(17,855 | ) | (13,586 | ) | ||||
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INCOME
(LOSS) BEFORE MINORITY INTEREST
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(366,715 | ) | (208,285 | ) | ||||
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MINORITY
INTEREST
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98,600 | 99,250 | ||||||
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NET
INCOME (LOSS)
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(268,115 | ) | (109,035 | ) | ||||
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PREFERRED
STOCK DIVIDENDS
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(7,566 | ) | (7,566 | ) | ||||
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NET
INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS
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$ | (275,681 | ) | $ | (116,601 | ) | ||
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NET
INCOME (LOSS) PER COMMON SHARE (BASIC & DILUTED)
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$ | (0.01 | ) | $ | (0.01 | ) | ||
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WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
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BASIC
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18,629,493 | 18,629,493 | ||||||
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DILUTED
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18,661,017 | 18,661,017 | ||||||
The
accompanying notes are an integral part of these financial
statements.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
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Additional
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||||||||||||||||||||||||
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Preferred
Stock
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Common
Stock
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Paid-in
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Accumulated
|
|||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Balance,
January 1, 2007
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21,016 | $ | 94,573 | 18,629,493 | $ | 18,629 | $ | 8,426,839 | $ | (8,650,683 | ) | |||||||||||||
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Common
stock issued for
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Convertible
promissory notes
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– | – | – | – | – | – | ||||||||||||||||||
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Preferred
stock dividends
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– | – | – | – | – | (7,566 | ) | |||||||||||||||||
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Net
loss
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– | – | – | – | – | (109,035 | ) | |||||||||||||||||
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Balance,
December 31, 2007
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21,016 | 94,573 | 18,629,493 | 18,629 | 8,426,839 | (8,767,284 | ) | |||||||||||||||||
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Stock
options
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– | – | – | – | 144,410 | – | ||||||||||||||||||
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Preferred
stock dividends
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– | – | – | – | – | (7,566 | ) | |||||||||||||||||
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Net
loss
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– | – | – | – | – | (268,115 | ) | |||||||||||||||||
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Balance,
December 31, 2008
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21,016 | $ | 94,573 | 18,629,493 | $ | 18,629 | $ | 8,571,249 | $ | (9,042,965 | ) | |||||||||||||
The accompanying notes are an integral
part of these financial statements.
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For
the Years Ended
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December
31,
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2008
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2007
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
Income (Loss)
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$ | (268,115 | ) | $ | (109,035 | ) | ||
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Adjustments
to reconcile net loss to net cash used in
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||||||||
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operating
activities:
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Depreciation
and amortization
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365 | 493 | ||||||
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Stock
option compensation expense
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144,410 | – | ||||||
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Interest
income from amortization or discount on notes receivable
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– | – | ||||||
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Minority
interest in losses
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(98,600 | ) | (99,250 | ) | ||||
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Changes
in assets and liabilities:
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Prepaid
expenses
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(900 | ) | – | |||||
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Related
party consulting fees payable
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24,000 | 24,000 | ||||||
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Accounts
payable
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22,672 | 5,503 | ||||||
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Accrued
interest
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17,855 | 13,585 | ||||||
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Related
party royalty payable
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40,000 | 40,000 | ||||||
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Accrued
payroll and related taxes
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48,000 | – | ||||||
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Net
cash used in operating activities
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(70,313 | ) | (124,704 | ) | ||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Purchase
of equipment
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– | – | ||||||
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Proceeds
from note receivable
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– | – | ||||||
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Net
cash provided by (used in) investing activities
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– | – | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Proceeds
from notes payable
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32,016 | 93,331 | ||||||
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Proceeds
from related party loans
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37,385 | |||||||
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Payments
on notes payable
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– | – | ||||||
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Proceeds
from sale of common stock
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– | – | ||||||
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Net
cash provided by (used in) financing activities
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69,401 | 93,331 | ||||||
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NET
INCREASE IN CASH
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(912 | ) | (31,373 | ) | ||||
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CASH
AT BEGINNING OF THE YEAR
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2,706 | 34,079 | ||||||
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CASH
AT END OF THE YEAR
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$ | 1,794 | $ | 2,706 | ||||
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SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
|
||||||||
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Cash
paid during the year for interest
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$ | – | $ | – | ||||
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Cash
paid during the year for income taxes
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$ | 200 | $ | 200 | ||||
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SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING & FINANCING ACTIVITIES
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||||||||
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Convertible
promissory notes exchanged for 500,000 shares of common
stock
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$ | – | $ | – | ||||
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Sale
of subsidiary stock for notes receivable
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$ | – | $ | – | ||||
The
accompanying notes are an integral part of these financial
statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of
Operations
InMedica
Development Corporation ("InMedica") and its majority-owned subsidiary,
MicroCor, Inc. ("MicroCor") (collectively referred to as the "Company"),
historically have engaged in the research, development and sale of medical
technology and fund raising to support such activities. During the
years 1986 and 1987, MicroCor developed and marketed a portable
electrocardiograph ("ECG") monitor and manufactured and sold about 450
units. In July 1989, MicroCor signed a research and development
contract with Johnson and Johnson Medical, Inc. ("Johnson and
Johnson") for further development of the ECG technology. As a result
of the agreement, Johnson and Johnson manufactured and marketed a product line
under the name of Dinamap PlusTM which
incorporated the Company's ECG technology. Royalties received from
Johnson and Johnson were the Company's sole source of revenue through the year
2000. In 2001, Johnson and Johnson stopped manufacturing and
marketing the Dinamap PlusTM product
line; therefore, MicroCor no longer receives royalties from Johnson and
Johnson.
Since 1989, the Company has engaged in
research and development of a device to measure hematocrit non-invasively (the
"Non-Invasive Hematocrit Technology" and/or the
“Technology”). Hematocrit is the percentage of red blood cells in a
given volume of blood. At the present time, the test for hematocrit
is performed invasively by drawing blood from the patient and testing the blood
sample in the laboratory. The Hematocrit Technology is
owned by MicroCor, Inc., which is a 57% owned subsidiary of the
Company. Other owners of the subsidiary are Wescor, Inc. (29%)
and Chi Lin Technologies Company, Ltd. (14%). The
Company has the right to appoint three of five directors of MicorCor and each of
the other owners has the right to appoint one director of
MicroCor. To date the research and development of MicroCor, its
various engineers, affiliates and contractors, including Wescor, has not
completed a prototype suitable for
commercialization. Commercialization of the Non-Invasive Hematocrit
Technology is dependent upon favorable testing, Food and Drug Administration
(“FDA”) approval, financing of further research and development and, if
warranted, financing of manufacturing and marketing activities.
Basis of
Presentation
The Company’s consolidated financial
statements have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. The consolidated financial statements do not include any
adjustment relating to recoverability and classification of recorded amounts of
assets and liabilities that might be necessary should the Company be unable to
continue as a going concern. The Company generated negative cash
flows from operations of $70,313 and $124,704 in 2008 and 2007, respectively, and
net losses from operations of $268,115 and $109,035 in 2008 and 2007,
respectively. As of December 31, 2008 the Company had an
accumulated deficit of $9,042,965 and a stockholders’ deficit of $358,514. 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 execute its operating plan and to obtain additional debt or
equity financing. There can be no assurance the necessary debt or
equity financing will be available, or will be available on terms acceptable to
the Company. Management's operating plan includes pursuing additional
fund raising as well as research and development.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Patents
The Company has four patents covering
various aspects of its Technology which expire from 2007 to 2013.
Principles of
Consolidation
The consolidated financial statements
include the accounts of InMedica and MicroCor. All material
inter-company accounts and transactions have been eliminated.
On
December 12, 2008, the Company acquired 100% of the membership interests of
ValuMobile, LLC, a Nevada limited liability company in consideration of the
grant of a stock purchase option to SNG Consulting, LLC, an Arizona limited
liability company for purchase of the Company’s common
stock. ValuMobile LLC is a newly formed limited liability company
with no operations at December 31, 2008.
Income
Taxes
The Company accounts for income taxes
using the asset and liability method. Deferred income taxes are determined based
on the estimated future tax effects of differences between the financial
reporting and tax reporting bases of assets and liabilities given the provisions
of currently enacted tax laws. A valuation allowance is provided when
it is more likely than not that all or some portion of the deferred income tax
assets will not be realized.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equipment and
Furniture
Equipment
and furniture are recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets which range from three to
five years.
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Equipment
and Furniture consist of the following:
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December
31,
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|||||||
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2008
|
2007
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|||||||
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Equipment
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$ | 244,033 | $ | 244,033 | ||||
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Furniture
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11,188 | 11,188 | ||||||
| 255,221 | 255,221 | |||||||
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Less
accumulated depreciation
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(255,221 | ) | (254,856 | ) | ||||
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Total
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$ | – | $ | 365 | ||||
Depreciation expense for the years
ended December 31, 2008 and 2007 was $365 and $493, respectively.
Research and
Development
Research and development costs are
expensed as incurred.
Net Loss Per Common
Share
Basic net
loss per common share is computed by dividing net loss by the weighted average
number of common shares outstanding during the year. Diluted net loss
per common share ("Diluted EPS") reflects the potential dilution that could
occur if stock options or other common stock equivalents were exercised or
converted into common stock. At December 31, 2008 and 2007,
respectively, there were 31,524 and 31,524 potentially dilutive common stock
equivalents. The computation of Diluted EPS does not assume exercise
or conversion of securities that would have an anti-dilutive effect on net loss
per common share.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive
Income
There are no components of
comprehensive income other than the net loss.
Cash
Equivalents
For the
purpose of reporting cash flows, the Company considers all highly liquid debt
instruments purchased with maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment
purposes.
Concentration of Credit
Risk
The
Company has no significant off-balance-sheet concentrations of credit risk such
as foreign exchange contracts, options contracts or other foreign hedging
arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
Fair Value of Financial
Instruments
The
carrying value of the Company's financial instruments, including receivables,
accounts payable, accrued liabilities, and notes payable at December 31, 2008
and 2007 approximates their fair values due to the short-term nature of these
financial instruments.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting
Standards
In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 provides
companies with an option to report selected financial assets and liabilities at
fair value. The objective of SFAS 159 is to reduce both complexity in accounting
for financial instruments and the volatility in earnings caused by measuring
related assets and liabilities differently. Generally accepted accounting
principles have required different measurement attributes for different assets
and liabilities that can create artificial volatility in earnings. The FASB has
indicated it believes that SFAS 159 helps to mitigate this type of
accounting-induced volatility by enabling companies to report related assets and
liabilities at fair value, which would likely reduce the need for companies to
comply with detailed rules for hedge accounting. SFAS 159 also establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. SFAS 159 does not eliminate disclosure
requirements included in other accounting standards, including requirements for
disclosures about fair value measurements included in SFAS 157 and SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." SFAS 159 is effective
for the Company as of the beginning of fiscal year 2008. The adoption of this
pronouncement is not expected to have an impact on the Company's financial
position, results of operations or cash flows.
In
December 2007, the FASB issued No. 160, “Noncontrolling Interests in Financial
Statements, an amendment of ARB No. 51" (“SFAS 160"). SFAS 160 amends
ARB 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This
Statement is effective for fiscal years beginning on or after December 15,
2008. Early adoption is not permitted. Management is currently
evaluating the effects of this statement, but it is not expected to have any
impact on the Company’s financial statements.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 1 - NATURE OF
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Standards
(continued)
In
December 2007, the FASB issued No. 141(R), “Business Combinations” (“SFAS
141(R)”. SFAS 141(R) provides companies with principles and
requirements on how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree as well as the recognition and
measurement of goodwill acquired in a business combination. SFAS 141(R) also
requires certain disclosures to enable users of the financial statements to
evaluate the nature and financial effects of the business combination.
Acquisition costs associated with the business combination will generally be
expensed as incurred. SFAS 141(R) is effective for business combinations
occurring in fiscal years beginning after December 15, 2008, which will require
the Company to adopt these provisions for business combinations occurring in
fiscal 2009 and thereafter. Early adoption of SFAS 141(R) is not
permitted. Management is currently evaluating the effects of this
statement, but it is not expected to have any impact on the Company’s financial
statements.
In March
2008, the FASB issued No. 161, “Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133. (“SFAS
161"). SFAS 161 requires enhanced disclosures about an entity's
derivative and hedging activities and thereby improves the transparency of
financial reporting. This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. This Statement encourages, but does
not require, comparative disclosures for earlier periods at initial
adoption. Management is currently evaluating the effects of this
statement, but it is not expected to have any impact on the Company’s financial
statements.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 2 - NOTES
PAYABLE
Notes payable consisted of the
following:
|
December
31,
|
December
31,
|
|||||||
|
2008
|
2007
|
|||||||
|
WesCor,
Inc. Overhead Note,
|
||||||||
|
Due
December 31, 2010 including interest
|
||||||||
|
at
prime 4.00% at December 31, 2008
|
||||||||
|
Unsecured
convertible at $.10 per share
|
$ | 72,633 | $ | 60,617 | ||||
|
WesCor,
Inc. Secured Convertible Promissory Note,
|
||||||||
|
Due
March 6, 2009 including interest
|
||||||||
|
at
prime plus 2 6.00% at December 31, 2008
|
||||||||
|
Unsecured
convertible at $.10 per share
|
160,000 | 140,000 | ||||||
|
Less
Current Portion
|
(160,000 | ) | (140,000 | ) | ||||
|
Total
Long-Term Convertible Promissory Notes
|
$ | 72,633 | $ | 60,617 | ||||
On December 31, 2008, the Company
converted $21,509 of accounts payable due to its attorney into a promissory
note. The note is due on demand and carries an interest rate of 6%
per annum. This note is secured by the proceeds of option exercises
by SNG Consulting LLC pursuant to its option to acquire 5,000,000 shares of the
common stock of the Company, but only by such proceeds as correspond to
exercises after the initial minimum share purchase option exercise by Law
Investments. In the event of such option exercise, such revenues
shall be applied first to the retirement of these notes. (See Note
5).
NOTE 3 - INCOME
TAXES
Deferred income tax assets consisted of
the following:
|
December
31,
|
December
31,
|
|||||||
|
2008
|
2007
|
|||||||
|
Net
operating loss carryforwards
|
$ | 793,931 | $ | 760,884 | ||||
|
Future
deductions temporary differences related
|
||||||||
|
to
compensation, reserves, and accruals
|
5,821 | 6,995 | ||||||
|
Less
valuation allowance
|
(799,752 | ) | (767,879 | ) | ||||
|
Deferred
income tax assets
|
$ | – | $ | – | ||||
The
valuation allowance increased $31,873 in 2008. At December 31, 2008,
the Company has consolidated net operating loss carryforwards for federal income
tax purposes of $2,457,992. These net operating loss carryforwards
expire at various dates beginning in 2009 through 2028. Due to the
uncertainty with respect to ultimate realization, the Company has established a
valuation allowance for all deferred income tax assets.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 4 - COMMON STOCK
TRANSACTIONS
During the last three years the Company
made the following sales of unregistered common stock in reliance upon Section
4(2) of the Securities Act of 1933:
|
Date
|
Shares
|
Shareholder
|
Price
|
|||||
|
October
6, 2006
|
150,000
|
Dean
A. Clark, Trustee
|
$ | 15,000 | ||||
|
October
6, 2006
|
150,000
|
David
P. Martin
|
$ | 15,000 | ||||
|
October
6, 2006
|
95,000
|
Julie
P. Cheney
|
$ | 9,500 | ||||
|
October
6, 2006
|
95,000
|
Lloyd
A. Hardcastle
|
$ | 9,500 | ||||
|
October
6, 2006
|
10,000
|
Michael
L. Schwab
|
$ | 1,000 | ||||
NOTE 5 - STOCK OPTIONS
On
December 8, 2008, the Company entered into an option agreement with Law
Investments CR, S.A., a Costa Rica corporation, whereby the Company granted to
Law Investments a one-year option to purchase up to 15,000,000 restricted shares
of the Company’s common stock at a purchase price of $0.0075 per
share. This agreement is transferable by Law
Investments. The Law Investment agreement provides that the first
$75,000 received from the purchase of the Company’s common stock pursuant to the
Law Investment agreement shall be distributed to the Company’s wholly-owned
subsidiary, ValuMobile, LLC, a Nevada limited liability company as a
contribution to capital. The Law Investment agreement further
provides that Law Investment and any of its affilitates shall not collectively
acquire more than 88% of the outstanding common stock of the Company until such
time as the Company or ValuMobile has been funded with at least
$1,500,000. The sole member of SNG is Ashley Conquest, the daughter
of Ronald Conquest, who was appointed a Director and Officer of the Company on
January 30, 2009.
On
December 8, 2008, the Company entered into an option agreement with SNG
Consulting, LLC, an Arizona limited liability company, whereby the Company
granted to SNG a one-year option to purchase up to 5,000,000 restricted shares
of the Company’s common stock at a purchase price of $0.01 per
share. This agreement is transferable by SNG. As
consideration for the SNG Agreement, SNG transferred to the Company 100%
ownership of ValuMobile. ValuMobile was newly formed at the time the
SNG Agreement was entered into by the Company. The SNG agreement
further provides that Law Investment and any of its affilitates shall not
collectively acquire more than 88% of the outstanding common stock of the
Company until such time as the Company or ValuMobile has been funded with at
least $1,500,000. Ronald Conquest, who was appointed a Director and
Officer of the Company on January 30, 2009, is the President of Law
Investments.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 5 - STOCK OPTIONS
(Continued)
The Black
Scholes option pricing model was used to calculate the fair value of the options
granted. During the year ended December 31, 2008, the Company recognized
compensation expense of $144,410 related to the stock options. The
following assumptions were used in the fair value calculations:
Risk free
rate – 0.53%
Expected
term – 1 year
Expected
volatility of stock – 202.6%
Expected
dividend yield – 0%
The
Company’s stock price at December 8, 2008 was $0.01.
A summary
of this stock option activity for 2007 and 2008 was as follows:
|
Weighted
|
||||||||
|
Average
|
||||||||
|
Option
|
Exercise
|
|||||||
|
Shares
|
Price
|
|||||||
|
Outstanding
at January 1, 2007
|
– | $ | – | |||||
|
Granted
|
– | – | ||||||
|
Forfeited
or expired
|
– | – | ||||||
|
Outstanding
at December 31, 2007
|
– | – | ||||||
|
Granted
|
20,000,000 | 0.008125 | ||||||
|
Forfeited
or expired
|
– | – | ||||||
|
Outstanding
at December 31, 2008
|
20,000,000 | $ | 0.008125 | |||||
The
following table summarizes information about stock options issued to
non-employees outstanding at December 31, 2008:
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
|
Weighted
|
||||||||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||||||||
|
Range
of
|
Contractual
|
Average
|
Average
|
|||||||||||||||||||
|
Exercise
|
Number
|
Life
|
Exercise
|
Number
|
Exercise
|
|||||||||||||||||
|
Prices
|
Outstanding
|
(in
years)
|
Price
|
Exercisable
|
Price
|
|||||||||||||||||
| $ | 0.0075 – 0.01 | 20,000,000 | 1 | $ | 0.008125 | 20,000,000 | 0.008125 | |||||||||||||||
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 6 - PREFERRED
STOCK
The
Company is authorized to issue 10,000,000 shares of preferred
stock. The Company's board of directors designated 1,000,000 shares
of this preferred stock as Series A Cumulative Convertible Preferred Stock
("Series A Preferred") with a par value of $4.50 per share. Holders
of the Series A Preferred receive annual cumulative dividends of eight percent,
payable quarterly, which dividends are required to be fully paid or set aside
before any other dividend on any class or series of stock of the Company is
paid. As of December 31, 2008, cumulative preferred stock dividends
payable in the amount of $56,743, or $2.70 per share are due and
payable. Holders of the Series A Preferred receive no voting rights
but do receive a liquidation preference of $4.50 per share, plus accrued and
unpaid dividends. Series A Preferred stockholders have the right to
convert each share of Series A Preferred to the Company's common stock at a rate
of 1.5 common shares to 1 preferred share.
NOTE 7 – EARNINGS PER
SHARE
The following data show the amounts
used in computing earnings per share and the effect on income and the weighted
average number of shares of dilutive potential common stock:
|
For
the Years Ended
|
||||||||
|
December
31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Net
Income (Loss)
|
$ | (268,115 | ) | $ | (109,035 | ) | ||
|
Less:
preferred dividends
|
(7,566 | ) | (7,566 | ) | ||||
|
Income
(Loss) available to common stockholders used in basic EPS
|
$ | (275,681 | ) | $ | (116,601 | ) | ||
|
Convertible
preferred stock
|
7,566 | 7,566 | ||||||
|
Convertible
notes payable
|
– | – | ||||||
|
Income
(Loss) available to common stockholders after assumed
|
||||||||
|
Conversion
of dilutive securities
|
$ | (268,115 | ) | $ | (109,035 | ) | ||
|
Weighted
average number of common shares used in basic EPS
|
18,629,493 | 18,629,493 | ||||||
|
Effect
of dilutive securities:
|
||||||||
|
Convertible
preferred stock
|
31,524 | 31,524 | ||||||
|
Convertible
notes payable
|
– | – | ||||||
|
Options
|
– | – | ||||||
|
Weighted
average number of common shares and dilutive potential
|
||||||||
|
common
stock used in diluted EPS
|
18,661,017 | 18,661,017 | ||||||
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 8 - RELATED PARTY
TRANSACTIONS
The
Company has a consulting arrangement with an entity owned by the Company's
chairman whereby the Company agreed to pay $2,000 per month. Either
party can terminate the arrangement at any time upon 30 days prior
notice. Accrued but unpaid consulting fees do not bear
interest. As of December 31, 2008, $102,000 was owed under the
arrangement. On December 31, 2008, the Company converted this
$102,000 of accrued consulting into a promissory note. The note is
due on demand and carries an interest rate of 6% per annum. The note
is secured by any and all revenues received by MicroCor from the sale,
disposition or commercialization of the Hematocrit Technology.
During
2008, the Company received $20,500 in loans from officers and directors of the
Company. The same officers and directors also paid expenses of
$16,885 on behalf of the Company. At December 31, 2008, the Company
executed promissory notes with the officers and directors for the amounts loaned
above. The notes are due on demand and carry an interest rate of 6%
per annum. These loans are secured by the proceeds of option
exercises by SNG Consulting LLC pursuant to its option to acquire 5,000,000
shares of the common stock of the Company, but only by such proceeds as
correspond to exercises after the initial minimum share purchase option exercise
by Law Investments. In the event of such option exercise, such
revenues shall be applied first to the retirement of these notes. (See Note
5).
On
December 31, 2008, the Company converted $48,000 of accrued payroll due to
officers into promissory notes. The notes are due on demand and carry
an interest rate of 6% per annum. The notes are secured by any and
all revenues received by MicroCor from the sale, disposition or
commercialization of the Hematocrit Technology.
Wescor
has loaned to MicroCor sufficient funds to enable Microcor to pay one half of
the minimum royalty owing to InMedica under the Joint Development
Agreement. Funds from the minimum royalty are used by InMedica to
fund administrative expenses of the Company. Repayment of the loan to
Wescor by MicroCor is secured by a 20% security interest in any future revenues
from the sale of the hematocrit technology by MicroCor, until the loan is repaid
in full.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 9 - JOINT DEVELOPMENT
AGREEMENT
Effective
September 7, 2004, InMedica and MicroCor entered into the Joint Development
Agreement pursuant to which Wescor, a Utah medical technology company ("Wescor")
assumed responsibility for the day-to-day operation of MicroCor and the conduct
of research and development of the Hematocrit Technology. The
Agreement provides that in the event Wescor is successful in producing a working
prototype using the hematocrit technology, capable of meeting FDA GMP
requirements suitable for conducting clinical trials (Phase1), MicroCor
will issue 500,000 additional restricted shares of MicroCor 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 by MicroCor. 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 its 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 determination of Wescor's completion of
the above three Phases will be made by MicroCor's board which is controlled by
InMedica. In the event of a disagreement between the parties as to fulfillment
of the above standards, the parties intend to negotiate in good faith to resolve
the matter.
The
number of shares to be issued by MicroCor to Wescor for services has been
determined during a process of arms length negotiation between InMedica and
Wescor. During such negotiations, the board of directors of InMedica considered
the need for funding to continue development of the hematocrit technology, the
Company's present financial condition (ie. lack of cash flow, limited capital
assets and limited borrowing capacity), the lack of interest expressed by the
larger companies contacted by the board of directors (in the absence of an FDA
cleared prototype), the lack of present capacity of the smaller companies
contacted by the board (other than Wescor) and the reputation and experience of
Wescor in development of medical technology. Based on these considerations, the
board concluded that, in its judgment, the Agreement should be
pursued. The initial 500,000 restricted shares of MicroCor were
issued to Wescor during the third quarter of 2005.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 9 - JOINT DEVELOPMENT
AGREEMENT (Continued)
Upon
completion of Phase 2, and again upon completion of Phase 3, Wescor will have
the option to purchase all (but not less than all) the remaining stock of
MicroCor from InMedica and Chi Lin, for 90 days. The buyout price to Wescor for
the remaining MicroCor shares will be 90% of an appraised value or a value
suggested by Wescor. Wescor will choose the appraiser subject to the
right of InMedica and Chi Lin to object to the selection. In the case of an
objection Wescor will make another selection until the parties are in agreement.
Following receipt of Wescor's notice of appraised value or suggested value,
InMedica and Chi Lin will have the right to obtain a fairness opinion at their
expense, before acting on Wescor's offer. The fairness opinion of the value of
the MircoCor stock will be obtained from a business valuation expert, chosen by
InMedica and Chi Lin, as to which Wescor has no reasonable objection. If the
fairness opinion reports that Wescor's appraised or suggested value is not
within a fair range, Wescor's option to purchase the balance of the MicroCor
stock from Chi Lin and InMedica will terminate. However, if Wescor's appraised
or suggested value is determined by the fairness opinion to be within a fair
range, InMedica and Chi Lin will still have the opportunity to acquire the
complete ownership of MicroCor through a "trump" option allowing them to offer
to purchase all of the shares of MicroCor owned by Wescor at 110% of Wescor's
appraised value or suggested value. In such
case, Wescor may chose to sell its ownership of MicroCor to InMedica and Chi Lin
or may revive its first option by a notice to InMedica and Chi Lin increasing
the purchase price so as to be based on at least 110% of the valuation used as
the trump option value by InMedica and Chi Lin. This option procedure,
essentially bidding for the right to purchase all of the MicroCor stock, may be
repeated as many times as is necessary until a purchaser has been determined. If
Wescor is ultimately the purchaser, the Agreement will terminate except for the
royalty rights of InMedica and Chi Lin. Wescor has also been granted a right of
first refusal in the event of a bona fide third party offer to acquire
MicroCor.
Wescor
recently advised the Company and Chi Lin that its parent corporation was
interested in shifting Wescor’s resources previously dedicated to the research
and development of the Hematocrit Technology to other projects. As a
result, Wescor ceased all research and development efforts on the Hematocrit
Technology. Wescor continues to be interested in bringing on a new
partner to continue the research and development or perhaps in selling its
interest in the Technology. The Company is presently discussing the
matter with Wescor. No present plans or commitments for other
alternatives have been made.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 10 - ROYALTY
RIGHTS
In
connection with the Joint Development Agreement, MicroCor has granted certain
revenue royalty rights to InMedica and Chi Lin under the Agreement based on
future annual revenues from the hematocrit technology and calculated as follows:
Annual royalties will equal the sum of 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 (revenues from
licensing of the hematocrit technology to others). The total royalties are split
between InMedica and Chi Lin with InMedica receiving a percentage of total
royalties equal to a fraction, the numerator of which is the total world
revenues from sales of the hematocrit technology, less the revenues from sales
in Asia; and the denominator of which is the total world revenues from sales.
The Chi Lin royalty is a percentage of total royalties equal to a fraction, the
numerator of which is revenue from sales in Asia; and the denominator of which
is the total world revenues from sales. Asia is defined to mean Australia, New
Zealand and the countries of Asia (including without limitation, Indonesia,
Malaysia and the island countries of the Western Pacific Rim; but excluding
Russia, Turkey and the countries of the Middle East from Iran and to the west).
Further, a minimum royalty of $200,000 per year begins 18 months after the
effective date and is payable by MicroCor to InMedica and Chi Lin on an 80%-20%
basis without regard to whether actual sales have been made. However in the
event that any party (including Wescor) or a 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. At the present time, MicroCor is paying 50% of the minimum
royalty to InMedica and Chi Lin is deferring its minimum royalty
amounts.
NOTE 11 – UNCERTAIN TAX
POSITIONS
Effective
January 1, 2007, the Company adopted the provisions of FASB Interpretation No.
48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB
Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and measurement of
tax positions taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. The adoption of the provisions of FIN 48
did not have a material impact on the company’s condensed consolidated financial
position and results of operations. At December 31, 2008, the company had no
liability for unrecognized tax benefits and no accrual for the payment of
related interest.
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDING DECEMBER 31, 2008 AND 2007
NOTE 11 – UNCERTAIN TAX POSITIONS
(Continued)
Interest
costs related to unrecognized tax benefits are classified as “Interest expense,
net” in the accompanying consolidated statements of operations. Penalties, if
any, would be recognized as a component of “Selling, general and administrative
expenses”. The Company recognized $0 of interest expense related to unrecognized
tax benefits for the year ended December 31, 2008. In many cases the
company’s uncertain tax positions are related to tax years that remain subject
to examination by relevant tax authorities. With few exceptions, the company is
generally no longer subject to U.S. federal, state, local or non-U.S. income tax
examinations by tax authorities for years before 2005. The following describes
the open tax years, by major tax jurisdiction, as of December 31,
2008:
|
United
States (a)
|
2005
– Present
|
|
|
(a)
Includes federal as well as state or similar local jurisdictions, as
applicable.
|
||
|
CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
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, which disagreement(s) if not resolved to the satisfaction of the
former accountants would have caused them to make reference to the subject
matter of the disagreement(s) in connection with their reports. The
former accountants’ reports for the period of their engagement did not contain
an adverse opinion or disclaimer of opinion. However the former
accountants’ reports were each modified for uncertainty whether the registrant
would continue as a going concern. There was no qualification or
modification as to audit scope or accounting principles.
| ITEM 9A(T). |
CONTROLS AND
PROCEDURES
|
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting for the small business issuer. The Company’s
Chief Executive Officer and Chief Financial Officer have concluded, based on an
evaluation required by paragraph (b) of Section 240.13a-15 or 240.15d-15 of the
Rules of the Securities Exchange Act of 1934 (the “Exchange Act”),
conducted as of the end of the period covered by this Annual Report on Form
10-K, that the Company’s disclosure controls and procedures (as defined in
Exchange Act Rules 13a–15(e) or 240.15d-15(e)) have functioned
effectively. For purposes of this Item, the term “disclosure controls and
procedures” means
controls and other procedures of the Company that are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the issuer’s
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure. This annual report
does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation
by the Company’s registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to provide
only management’s report in this annual report.
There
have been no changes in the Company’s internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Section 240.13a-15 or 240.15d-15 of the Rules of the Exchange Act, that occurred
during the Company’s last fiscal quarter (the Company’s fourth fiscal quarter in
the case of an annual report) that have materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting. There
was, however, a change in the Company’s internal control over financial
reporting on January 30, 2009, as a result of the Company’s officers and
Directors resigning on that date and new officers and Directors being appointed.
At this time the Company does not believe this change in management will
materially affect the effectiveness of the Company’s internal control over
financial reporting in the future. (See “Item 10. Directors, Executive Officers and
Corporate Governance - Subsequent Events”
below.)
| ITEM 9B. |
OTHER
INFORMATION
|
Not
applicable.
| ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE
GOVERNANCE
|
Directors and
Executive Officers of InMedica
The
following table furnishes information concerning the officers and Directors of
InMedica during fiscal year 2008, and their business backgrounds for at least
the last five years:
|
Name
|
Age
|
Position
|
||
|
Larry
E. Clark
|
87
|
Chairman
of the Board
|
||
|
Ralph
Henson
|
64
|
Chief
Executive Officer and Director
|
||
|
Richard
Bruggeman
|
54
|
Chief
Financial Officer and
Director
|
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 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.
Subsequent
Events
New Directors and
Executive Officers of InMedica
The
following table furnishes information concerning the executive officers and
Directors of InMedica elected on January 30, 2009, and their business
backgrounds for at least the last five years.
|
Name
|
Age
|
Position
|
||
|
Ronald
Conquest
|
64
|
Chairman
of the Board, Chief Executive Officer and Director
|
||
|
Wayne
R. Meyers
|
55
|
President
and Director
|
||
|
Christopher
R. Miller
|
40
|
Chief
Financial Officer and
Director
|
Ronald Conquest - Director, Chairman of the
Board and Chief Executive Officer of the Company since January 30,
2009. Over the
past four decades, Mr. Conquest has developed a diversified business management
background, including ownership and/or operation of, or
involvement with, a wide variety of public and private companies in the United States,
Canada, Mexico, Brazil, United Kingdom, Costa Rica, Peoples Republic of
China, and the Commonwealth of Independent States (former USSR).
Mr.
Conquest’s executive experience includes Chairman of the Board and CEO level
corporate management, along with domestic and international corporate finance
with public and private corporations. Mr. Conquest’s corporate structuring
background includes corporate mergers, acquisitions and reorganizations,
initial public offerings, public shell reverse mergers, corporate public
relations and securities market making. He also has experience
in concept development, business plan development, business organization,
strategic planning, start-up, sales, marketing and promotion, and personnel
management. Since 2001, he has acted as a financial consultant with
regard to investment and merchant banking and acquisitions and mergers under the
trade name The Conquest Group located in Phoenix, Arizona. Mr. Conquest
was educated at the University of Oklahoma, studying Mathematics and
Engineering.
Wayne R. Myers - Director
and President of the Company since January 30, 2009. Mr. Myers
is a senior level telecommunications executive with broad strategic business
development expertise and wide experience in sales management in the USA,
Europe, Middle East, Africa and India. From
2006 to present, Mr. Myers has served as founder and Chief Executive Officer of
x-Mobility Ltd. located in London, United Kingdom. x-Mobility Ltd. is
a cellular telephone service provider/MVNO carrier focusing on fixed mobile
convergence targeting SMEs with unique applications for vertical markets with
distribution through major brands. From
June 2003 through November 2005, Mr. Myers served as Chief Operating
Officer of Comoretel Holdings Ltd., London, United Kingdom, a telecommunication
company providing unique patented UIFN/ITFS applications for emerging markets
worldwide. From
June 1997 through November 2003, Mr. Myers served as President–Europe and Senior Vice
President of Global Business Development for VIATEL Inc., Paris,
France/London, United Kingdon. VIATEL Inc. is a
telecommunication company providing voice, data, Internet and broadband services
marketed to the enterprise, SME and consumer markets utilizing direct and
channel sales distribution. Mr. Myers was also recently appointed
as a Director of Peach Amber Ltd. of London, United Kingdom.
Christopher R. Miller - Director and Chief
Financial Officer of the Company since January 30, 2009. Mr. Miller
graduated from Arizona State University in 1994 with a Bachelor of Science
Degree in Finance. From 1994
through 2000, Mr. Miller held various positions at U-Haul® International,
Inc. As Treasurer of U-Haul® Self Storage Corporation (a subsidiary of
U-Haul® International) and Senior Financial Analyst for UHAL, Mr. Miller’s
responsibilities included the organization, underwriting, negotiation, auditing,
financial modeling, management and reporting for the company’s acquisitions and
financings. Mr. Miller was involved with the management, purchase and
financing of over $300 million of self-storage facilities funded primarily
through CMBS placements and synthetic lease transactions involving Merrill
Lynch-Canada, First Union, Wells Fargo and GE Capital. Mr. Miller’s
responsibilities also included the management, development and mentoring of
three MBA level financial analysts comprising U-Haul’s Management Information
Analysis Department, along with producing U-Haul’s monthly Board of Directors
presentation on company financial performance. Beginning
in late 2000, Mr. Miller became Chief Financial Officer for AutoAuto Wash®, a
start-up operation of car wash facilities. His active employment
included capital raising, operations, facility openings, accounting and
marketing, facilitating the growth of the chain to 27 facilities nationally in
just over a year. From 2002
through the present, Mr. Miller has been providing financial consulting services
to a wide variety of organizations specializing in asset valuation, business
start-up and financing and private and public company valuations. Projects
include self-storage portfolio acquisitions, retail start-up operations and
exclusive high-rise and low-density beachfront condominium developments.
Beginning
in June 2006 to the present, Mr. Miller has been providing public company
valuation, financial modeling and due diligence services to Doherty &
Company, LLC, a Los Angeles based licensed broker-dealer specializing in venture
capital, private equity funding, mergers and acquisitions advisory, and
valuations for early stage companies. Since 2003, Mr. Miller has
offered specialized consulting services to entrepreneurs, private investment
companies and licensed securities brokers-dealers under the name Sun Capital,
LLC located in Phoenix, Arizona.
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.
Section 16(a)
Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors
and executive officers, and persons who own more than 10% of a registered class
of the Company’s equity securities to file with the Securities and Exchange
Commission (“SEC”) initial reports of
ownership and reports of changes in ownership of equity securities of the
Company. Officers, directors and shareholders holding greater than 10% 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,
2008, and thereafter, all Section 16(a) filing requirements applicable to
officers, directors and shareholders holding greater than 10% have been
filed, except
Synergistic Equities Ltd. and Law Investments CR, S.A. and their respective
affiliates, as option holders of more than 10% of the Company’s equity
securities, have not filed the required Section 16(a) forms with the SEC or the
Company and SNG Consulting LLC and its affiliate, as an option holder of more
than 10% of the Company’s equity securities, only filed the required Section
16(a) forms with the SEC and the Company on April 9, 2009. However, Mr.
Conquest, in his capacity as President and a Director of LI, filed
his Form 3 with the SEC and the Company, relating to his indirect beneficial
ownership of the LI Option on April 10, 2009. Mr. Conquest disclaims any
beneficial ownership interest in the LI Option or the underlying
shares.
Code of
Ethics
The
Company has adopted a code of ethics for its principal executive officer,
principal financial officer, principal accounting officer or controller, and
persons performing similar functions. A copy of the Code of Ethics
will be furnished upon request without charge.
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. Like many small companies,
it is difficult for the Company to attract and retain Board members who qualify
as “audit committee financial experts.”
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 three
members of the Board of Directors desire to be involved in the selection of any
new director.
| ITEM 11. |
EXECUTIVE
COMPENSATION
|
The table
below discloses the compensation of the chief executive officer of the Company
during the three fiscal years ended December 31, 2008:
|
Executive
Compensation Table
|
|||||
|
Annual
Compensation
|
|||||
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Ralph
Henson
Chief
Executive Officer
|
2008
2007
2006
|
30,000
(1)
84,000
(2)
33,000
|
–
–
–
|
$0
$65,000
$65,000
|
$ 30,000
$149,000
$
98,000
|
____________
|
(1)
|
Paid
or reimbursed by Wescor.
|
|
(2)
|
|
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. Directors have not been compensated for services
and there are no plans for any director compensation.
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 have
historically been accrued until the Company was able to pay the Chairman or
issued restricted stock in satisfaction of its obligations to the
Chairman.
In December 2008, the Company
entered into the LI Agreement and the SNG Agreement concerning options to
purchase up to 20,000,000 shares of the Company’s common stock (see “Item 1. Business - Option
Agreements” above). Since Ronald Conquest was a co-manager of the
Company’s ValuMobile subsidiary and is the President and a Director of Law
Investments CR, S.A. and Ashley Conquest is a co-manager of the Company’s
ValuMobile subsidiary and is the manager of SNG Consulting, LLC, the issuance of
the options for 20,000,000 common stock shares resulted in a $144,410
compensation expense under the SEC’s required Black-Scholes method of valuing
stock options. Mr. Conquest has disclaimed any beneficial interest in
the LI Options and the underlying common stock.
Compensation
Committee, Interlocks and Insider Participation
The full
Board of Directors of the Company functions as a compensation
committee. The Board has not specifically designated a separate
compensation committee due to the relatively small size of the
Company.
Subsequent
Event
During
2009, it is projected that Ronald Conquest, the new Chairman of the Board and
Chief Executive Officer, will receive compensation of $5,000 per month
beginning June 1, 2009, and no bonus or other compensation is effective as of
the date of this report.
| ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
|
The
following table sets forth certain information as of March 31, 2009, with
respect to the beneficial ownership of the Company’s common stock by each
executive officer and Director of the Company and each person known by the
Company to be the beneficial owner of more than 5% of the Company’s outstanding
shares of common stock.
|
Name,
Address and Position
of
Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership (1)
|
Percent
of
Class
(2)
|
||
| Principal Stockholders: | ||||
|
Chi
Lin Technologies Co., Ltd.
717
No. 71, Te Lun RD
Jen
Te Hsian, Taiwan
|
6,043,704
(3)
|
32.4%
|
||
|
Larry
E. Clark
1036
Oak Hills Way
Salt Lake City, Utah 84108
|
2,937,025
|
15.8%
|
||
|
Synergistic
Equities Ltd.
55
Frederick Street
Nassau,
Bahamas
|
6,043,704
(3)
|
32.4%
|
||
|
SNG
Consulting LLC
15029 N. Thompson Peak
Parkway
Suite
B111-520
Scottsdale,
Arizona 85260
|
5,000,000
(4)
|
21.2%
|
||
|
Ashley
Conquest
15029 N. Thompson Peak
Parkway
Suite
B111-520
Scottsdale,
Arizona 85260
|
5,000,000
(4)
|
21.2%
|
||
|
Law
Investments CR, S.A.
14550
Frank Lloyd Wright Blvd.
Suite
100
Scottsdale, Arizona
85260
|
15,000,000 (5)
|
44.6%
|
|
Name,
Address and Position
of
Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership (1)
|
Percent
of
Class
(2)
|
||
| Officers and Directors:(6) | ||||
|
Ronald
Conquest,
Chairman,
Chief Executive Officer
and Director
|
15,000,000 (5)
|
44.6%
|
||
|
Wayne
R. Myers
President
and Director
|
0
|
0%
|
||
|
|
|
|
||
|
Christopher
R. Miller
Secretary/Treasurer,
Chief
Financial Officer
and Director
|
0
|
0%
|
||
|
All
Executive Officers and Directors as
a |
15,000,000
(5)
|
44.6%
|
_______________
|
(1)
|
Except
as otherwise indicated, we believe that the beneficial owners of the
common stock listed above, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject
to community property laws where applicable. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect
to securities. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such option or warrants, but are not deemed outstanding for
purposes of computing the percentage ownership of any other person.
The inclusion herein of such shares listed as beneficially owned does not
constitute an admission of beneficial
ownership.
|
|
(2)
|
Based
on 18,629,493 shares of common stock issued and outstanding as of
March 31, 2009 and assumes the exercise of options, to which the
percentage relates.
|
|
(3)
|
These
shares are presently owned by Chi Lin Technologies Co., Ltd., but were
optioned to Synergistics Equities, Ltd. on September 10,
2008.
|
|
(4)
|
These
shares represent the shares to be issued upon exercise of the option
granted by the Company to SNG Consulting, LLC on December 8,
2008, of which Ashley Conquest is the sole member and
manager.
|
|
(5)
|
These
shares represent the shares to be issued upon exercise of the option
granted by the Company to Law Investments CR, S.A. on December
8, 2008, of which Ronald Conquest is a director and
President. Mr. Conquest disclaims any beneficial ownership
interest in the option or the underlying
shares.
|
|
(6)
|
The address of our
officers and Directors is c/o InMedica Development Corporation, 3104 E.
Camelback Road, Suite 242, Phoenix, Arizona
85016.
|
| ITEM 13. |
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
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
securityholder has a direct or indirect material interest, except as
follows:
At
December 31, 2008, the Company executed promissory notes to its three officers
and Directors at that time for the amounts due to them for accrued but unpaid
consulting fees and salaries, loans to the Company, and payments made to third
parties on behalf of the Company. The total amount of these
promissory notes is $187,385. The creditors on these promissory notes
are as follows: Larry Clark - $120,238; Richard Bruggeman - $42,147;
and Ralph Henson - $25,000. All of these promissory notes bear
interest at an annual rate of 6%. The promissory notes for accrued consulting
fees and salaries are secured by the future revenues to MicroCor from the
disposition or commercialization of its technology. The promissory
notes for the loans to the Company and payments made to third parties on behalf
of the Company are secured by the proceeds to the Company in excess of $75,000
from the exercise of the LI and the SNG Options.
On
December 8, 2008, the Company entered into a stock purchase option
agreement with Law Investments CR, S.A., a Costa Rica corporation
(“LI”). The agreement with LI is hereinafter referred to as (the “LI Agreement”).
Pursuant to the terms of the LI Agreement, the Company granted to LI a
one-year option to purchase up to 15,000,000 restricted shares of the Company’s
common stock at a purchase price of $0.0075 per share (the “LI
Option”). The
LI Agreement is transferable by LI. The LI Agreement provides that the first
$75,000 received from the purchase of Company’s common stock pursuant to the LI
Agreement shall be distributed to Company’s wholly-owned subsidiary, ValuMobile,
as a contribution to capital. The LI Agreement further provides that
LI and any of its affiliates shall not collectively acquire more than 88% of the
outstanding common stock of the Company until such time as the Company or
ValuMobile has been funded with at least $1,500,000. The LI Option expires
on December 31, 2009. Ronald Conquest, who is the new Chairman of the
Board and Chief Executive Officer of the Company (see, “Item 1. Business - Change in Control” above), is
a Director and President of LI. Mr. Conquest disclaims any
beneficial ownership interest in the option or the underlying
shares.
| ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND
SERVICES
|
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,
2008 and 2007:
|
Service
|
2008
|
2007
|
||||||
|
Audit
Fees
|
$ | 13,625 | $ | 17,500 | ||||
|
Audit-Related
Fees
|
– | – | ||||||
|
Tax
Fees
|
725 | 725 | ||||||
|
All
Other Fees
|
– | – | ||||||
|
Total
|
$ | 14,350 | $ | 18,225 | ||||
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 and 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.
Audit Committee
Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditors. The Board 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 as to the particular service or category of
services and is generally subject to a specific amount. The independent auditors
and management are required to periodically report to the Board regarding the
extent of services of the independent auditors in accordance with this
pre-approval and the fees incurred to date. The Board may also pre-approve
particular services on a case-by-case basis. The Board pre-approved 100% of the
Company’s 2007 and 2008 audit fees, audit-related fees, tax fees, and all other
fees.
| ITEM 15. |
EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES
|
(a) (1)
Financial Statements
The
Consolidated Financial Statements of the Company are set forth in Item 8 of this
Report as listed on the Index to Consolidated Financial Statements on page 14 of
this Report.
(a) (2)
Financial Statement Schedules
All
schedules are omitted because they are not applicable, or are not required, or
because the required information is included in the Consolidated Financial
Statements or notes thereto.
(a) (3)
Exhibits
|
Exhibit
No.
|
Description
|
|
|
10.1a
|
Option to
Purchase Common Stock between Synergistic Equities Ltd. and Chi Lin
Technologies Co., Ltd., dated September 10, 2008
(1)
|
|
|
10.1b
|
Proxy
dated September 10, 2008 (2)
|
|
|
10.2
|
Stock
Purchase Option Agreement between Registrant and SNG Consulting, LLC,
dated December 8, 2008 (3)
|
|
|
10.3
|
Stock
Purchase Option Agreement between Registrant and Law Investments CR, S.A.,
dated December 8, 2008 (4)
|
|
|
10.4
|
Agreement
between InMedica Development Corporation, MicroCor, Inc., Law Investments
CR, S.A., and SNG Consulting, LLC, dated January 30, 2009
(5)
|
|
|
21
|
Subsidiaries
of the Registrant *
|
|
|
31.1
|
Certification
by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act *
|
|
|
31.2
|
Certification
by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act *
|
|
|
32.1
|
Certification
by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act *
|
|
|
32.2
|
Certification
by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
*
|
__________________
|
*
|
Filed
herewith.
|
|
(1)
|
Incorporated by
reference to Exhibit 2.4 of the Current Report on Form 8-K filed by the
Registrant on February 9, 2009.
|
|
(2)
|
Incorporated by
reference to Exhibit 99.2 of the Form 10-Q for the Quarter Ended September
30, 2008 filed by the Registrant on November 14,
2008.
|
|
(3)
|
Incorporated by
reference to Exhibit 2.3 of the Current Report on Form 8-K filed by the
Registrant on February 9, 2009.
|
|
(4)
|
Incorporated by
reference to Exhibit 2.2 of the Current Report on Form 8-K filed by the
Registrant on February 9, 2009.
|
|
(5)
|
Incorporated by
reference to Exhibit 2.1 of the Current Report on Form 8-K filed by the
Registrant on February 9,
2009.
|
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| INMEDICA DEVELOPMENT CORPORATION | ||
| |
|
|
| Date: April 15, 2009 | By: | /s/ Ronald Conquest |
|
|
||
|
Ronald
Conquest
Chairman of the
Board
and
Chief Executive Officer
(Principal Executive
Officer)
|
||
In
accordance with the Securities Exchange Act of 1934, this report has been signed
by the following persons on behalf of the Company and in the capacities and on
the dates indicated:
|
Signature
|
Date
|
|||
| By: | /s/ Ronald Conquest |
April 15, 2009
|
||
|
|
||||
|
Ronald Conquest
Chairman of the Board,
Chief Executive Officer and Director
(Principal Executive
Officer)
|
| By: |
|
|||
|
|
||||
|
Wayne R. Myers
President, Chief Operating
Officer and Director
(Principal Operating Officer)
|
| By: | /s/ Christopher R. Miller |
April
15, 2009
|
||
|
|
||||
|
Christopher
R. Miller
Secretary/Treasurer,
Chief Financial Officer and Director
(Principal
Accounting Officer)
|
47