WINDGEN ENERGY, INC. - Quarter Report: 2008 September (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
ü QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended: September 30, 2008
r TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the
transition period from to
Commission
file number: 0-12968
InMedica
Development Corporation
(Exact
name of small business issuer as specified in its charter)
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UTAH
|
87-0397815
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
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825 North
300 West, Suite N132
Salt Lake
City, Utah 84103
(Address
of principal executive offices)
(801)
521-9300
(Issuer’s
telephone number)
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ü No r
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 Accelerated
filer
Non-accelerated
filer ü Smaller reporting
company
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes r No ü
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: 18,629,493 shares of $.001 par value common
stock as of September 30, 2008.
1
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET
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ASSETS
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||||||||
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As
of
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As
of
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|||||||
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September
30,
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December
31,
|
|||||||
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2008
|
2007
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|||||||
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(Unaudited)
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(audited)
|
|||||||
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CURRENT
ASSETS:
|
||||||||
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Cash
& cash equivalents
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$ | 3,532 | $ | 2,706 | ||||
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Prepaid
expenses and other
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200 | 200 | ||||||
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Total
current assets
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3,732 | 2,906 | ||||||
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EQUIPMENT
AND FURNITURE,
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||||||||
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at
cost, less accumulated depreciation of $255,130 and $254,856
respectively
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91 | 365 | ||||||
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Total
assets
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$ | 3,823 | $ | 3,271 | ||||
See notes
to consolidated financial statements
2
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET (Continued)
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LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
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As
of
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As
of
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|||||||
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September
30,
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December
31,
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|||||||
|
2008
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2007
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|||||||
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(Unaudited)
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(Unaudited)
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|||||||
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CURRENT
LIABILITIES:
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||||||||
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Related
party
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||||||||
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Consulting
fees payable
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$ | 96,000 | 78,000 | |||||
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Accounts
payable
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25,381 | 5,503 | ||||||
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Accrued
payroll
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36,000 | - | ||||||
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Accrued
interest
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29,656 | 16,495 | ||||||
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Related
party royalty payable
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103,333 | 73,333 | ||||||
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Preferred
stock dividend payable
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54,852 | 49,177 | ||||||
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Related
party loan payable
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18,000 | - | ||||||
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Current
portion of long term debt
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92,633 | 60,617 | ||||||
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Total
current liabilities
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455,855 | 283,125 | ||||||
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LONG
TERM LIABILITIES
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||||||||
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Long
term convertible promissory note
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140,000 | 140,000 | ||||||
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TOTAL
LIABILITIES
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595,855 | 423,125 | ||||||
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MINORITY
INTEREST
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(267,502 | ) | (192,611 | ) | ||||
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STOCKHOLDERS'
EQUITY:
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||||||||
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Preferred
stock, 10,000,000 shares authorized;
Series A preferred stock, cumulative and convertible, $4.50 par value,
1,000,000 shares designated, 21,016 shares issued and
outstanding
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94,573 | 94,573 | ||||||
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Common
stock, $.001 par value; 40,000,000 shares authorized, 18,629,493 issued
and outstanding
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18,629 | 18,629 | ||||||
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Additional
paid-in capital
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8,426,839 | 8,426,839 | ||||||
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Accumulated
deficit
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(8,864,571 | ) | (8,767,284 | ) | ||||
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Total
stockholder’s equity
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(324,530 | ) | (227,243 | ) | ||||
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Total
liabilities and stockholders' equity
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$ | 3,823 | $ | 3,271 | ||||
See notes
to consolidated financial statements
3
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
For
the Three
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For
the Nine
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|||||||||||||||
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Months
Ended
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Months
Ended
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|||||||||||||||
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September
30,
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September
30,
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|||||||||||||||
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2008
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2007
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2008
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2007
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|||||||||||||
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(Unaudited)
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(Unaudited)
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|||||||||||||||
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TOTAL
ROYALTY REVENUES
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$ | - | $ | - | $ | - | $ | - | ||||||||
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OPERATING
EXPENSES:
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||||||||||||||||
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General
and administrative
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42,040 | 61,183 | 153,343 | 148,551 | ||||||||||||
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Research
and development
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- | 1,009 | - | 1,009 | ||||||||||||
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Total
operating expenses
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42,040 | 62,192 | 153,343 | 149,560 | ||||||||||||
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LOSS
FROM OPERATIONS
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(42,040 | ) | (62,192 | ) | (153,343 | ) | (149,560 | ) | ||||||||
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OTHER
EXPENSE:
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||||||||||||||||
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other
expense, net
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(4,647 | ) | (3,237 | ) | (13,161 | ) | (9,110 | ) | ||||||||
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Total
other expense, net
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(4,647 | ) | (3,237 | ) | (13,161 | ) | (9,110 | ) | ||||||||
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LOSS
BEFORE MINORITY INTEREST
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(46,687 | ) | (65,429 | ) | (166,504 | ) | (158,670 | ) | ||||||||
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MINORITY
INTEREST
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23,857 | 24,759 | 74,891 | 73,680 | ||||||||||||
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NET
LOSS
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(22,830 | ) | (40,670 | ) | (91,613 | ) | (84,990 | ) | ||||||||
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PREFERRED
STOCK DIVIDENDS
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(1,891 | ) | (1,891 | ) | (5,674 | ) | (5,674 | ) | ||||||||
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NET
LOSS APPLICABLE TO COMMON STOCKHOLDERS
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(24,721 | ) | (42,561 | ) | (97,287 | ) | (90,664 | ) | ||||||||
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NET
LOSS PER COMMON SHARE
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||||||||||||||||
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(BASIC
AND DILUTED)
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$ | - | - | $ | - | $ | - | |||||||||
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Weighed
average number of common shares outstanding
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18,629,493 | 18,629,493 | 18,629,493 | 18,629,493 | ||||||||||||
See notes
to consolidated financial statements.
4
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
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For
the Nine
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||||||||
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Months
Ended
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||||||||
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September
30,
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||||||||
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2008
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2007
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|||||||
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(Unaudited)
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||||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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||||||||
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Net
loss
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$ | (91,613 | ) | $ | ( 84,990 | ) | ||
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Adjustments
to reconcile net loss to net cash used in operating
activities
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||||||||
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Depreciation
and amortization
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274 | 370 | ||||||
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Minority
interest in losses
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(74,891 | ) | (73,680 | ) | ||||
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Change
in assets and liabilities
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||||||||
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Account
receivable
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- | (90 | ) | |||||
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Consulting
fee payable to related party
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18,000 | 18,000 | ||||||
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Royalty
payable to Related party
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30,000 | 30,000 | ||||||
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Accounts
payable
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19,878 | 2,538 | ||||||
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Accrued
interest payable
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13,161 | 9,110 | ||||||
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Accrued
payroll and related taxes
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36,000 | - | ||||||
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Net
cash used in operating activities
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(49,191 | ) | (98,742 | ) | ||||
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Proceeds
from note receivable
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- | - | ||||||
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Net
cash provided by investing activities
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- | - | ||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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||||||||
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Proceeds
from notes payable
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32,017 | 70,497 | ||||||
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Proceeds
from related party loan
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18,000 | - | ||||||
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Net
cash provided by financing activities
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50,017 | 70,497 | ||||||
See notes
to consolidated financial statements.
5
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
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For
the Nine
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||||||||
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Months
Ended
|
||||||||
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September
30,
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||||||||
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2008
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2007
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|||||||
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(Unaudited)
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||||||||
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NET
INCREASE (DECREASE) IN CASH
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826 | (28,245 | ) | |||||
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CASH
AT BEGINNING OF PERIOD
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2,706 | 34,079 | ||||||
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CASH
AT END OF PERIOD
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$ | 3,532 | $ | 5,834 | ||||
See notes
to consolidated statements
6
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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Item
1.
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BASIS
OF PRESENTATION
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The
accompanying unaudited consolidated financials statements of InMedica
Development Corporation and its majority owned subsidiary, MicroCor, Inc.
(collectively the Company) have been prepared on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities that
might be necessary should the Company be unable to continue as a going
concern. The Company generated a net loss of $91,613 and $84,990 for
the nine month periods ended September 30, 2008 and 2007, respectively, and
negative cash flows from operations of $49,191 and $98,742 for the nine month
periods ended September 30, 2008 and 2007, respectively. As of
September 30, 2008, the Company had an accumulated deficit of
$8,864,571. At September 30, 2008, the Company had a stockholder’s
deficit of $324,530. 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 that the necessary debt or equity financing will be available, or will
be available on terms acceptable to the Company. Management’s
operating plan includes working to complete research, development and, if
warranted, marketing of its hematocrit technology and/or pursuing strategic
alliances and licensing agreements. See Item 2 – “Management’s
Discussion and Analysis.”
The
accompanying consolidated financial statements of the Company are unaudited.
However, in management’s opinion, all adjustments, consisting only of normal
recurring adjustments necessary for fair presentation of results for the interim
periods shown, have been made. Results for interim periods are not necessarily
indicative of those to be expected for the full year. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes to consolidated financial statements
included in the Company’s annual report on form 10-K for the year ended December
31, 2007.
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2.
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Summary
of Significant Accounting Policies
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Principles
of Consolidation - The consolidated financial statements include the accounts of
InMedica and MicroCor. All material inter-company accounts and
transactions have been eliminated.
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.
7
Item
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION
Overview. 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") and fund raising to finance the payment of research, development
and administrative expenses. Hematocrit is the percentage of red
blood cells in a given volume of human blood. Research, development
and administrative expenses of the Company relating to the Technology were
funded during the 1990’s by borrowing and by royalty revenues from the sale of a
portable ECG monitor which incorporated Company technology. The
monitor was marketed by Critikon, Inc., then a Johnson and Johnson
subsidiary. However Critikon discontinued the monitor in 2001
and InMedica has not since had revenues from operations. During 2001
the Company and its subsidiary, MicroCor, Inc. sold restricted common stock to
Chi Lin Technologies, Ltd. of the Republic of China (Taiwan) for $1,000,000 and
used the funds to continue funding of research, development and administrative
expenses. Chi Lin also signed a development agreement under which it
performed or financed the Company’s primary research and development effort
conducted initially in Taiwan and later in the United States. When remaining
funds from the stock sale were expended during 2003, the Company began searching
for additional funding and/or a partner to conduct additional research and
development. The Company’s officers and Chairman also agreed to the accrual of
their wages and consulting fees pending receipt of funds to pay those
obligations. In January 2005, the shareholders of the Company
approved an Agreement with Wescor which provided additional funding for
administrative expenses and provides for research and development of the
Hematocrit Technology by Wescor.
Plan of
Operation. Wescor recently advised the Company and
Chi Lin that its parent corporation is interested in shifting Wescor’s resources
presently dedicated to the research and development of the Hematocrit Technology
to other projects. During 2007, the Company
funded administrative operations with the proceeds of minimum royalty payments
from MicroCor. Wescor has loaned
MicroCor sufficient funds to enable MicroCor to pay one half of the minimum
royalty. 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 and the officers of the Company are presently
deferring all or part of their compensation. InMedica will look for other
funding sources or opportunities, as to which it presently has no
commitments.
8
Liquidity and Capital
Resources.
The
minimum royalty payments in the first quarter of 2008 and 2007
provided minimum operating capital to the Company. However, the
Company is currently in discussions with Wescor regarding Wescor’s continued
participation in the Joint Development Agreement. Effective January,
2008, the Company’s CEO and CFO are each deferring payment of $2,000 per month
in salary.
During
the years 2007 and 2006, liquidity was generated by borrowings from Wescor and
from the payment of minimum royalties to InMedica by
MicroCor. The Company may need to engage in fund raising during
2008 in order to meet future cash needs.
Results of
Operations.
The
Company had an accumulated deficit of $8,864,571 as of September 30,
2008. No revenues from operations were received in the quarters ended
September 30, 2008 and September 30,
2007. The Company had a net loss from
operations of $153,343 and $149,560 for the quarters ended September 30, 2008
and September 30, 2007. The increase in net loss resulted primarily
from an increase in professional fees.
|
|
Item
4T: CONTROLS AND
PROCEDURES
|
The
Company’s Chief Executive Officer and the Principal Financial Officer, evaluated
the effectiveness of the Company’s disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended)
as of June 30, 2008. Based on this evaluation, the Chief Executive Officer and
Principal Financial Officer concluded that, as of September 30, 2008, the
Company’s disclosure controls and procedures were effective.
There
were no changes in the Company’s internal controls over financial reporting that
occurred during the quarter ended September 30, 2008, that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
controls over financial reporting.
PART II - OTHER
INFORMATION
Item
1. Legal Proceedings: None
Item 1A.
Risk Factors. Material changes
from risk factors as previously disclosed in the registrant's Form
10-K: None
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds: None during the period covered by this
report.
Item
3. Defaults Upon Senior Securities: None
Item
4. Submission of Matters to a Vote of Security
Holders: None
Item
5. Other Information: Effective
September 10, 2008, Chi Lin Technology Co., Ltd. (“Chi Lin”), an entity of the
Republic of China granted an option to purchase all of its stock ownership in
InMedica (6,043,704 common shares being 32.4% of the issued and outstanding
stock of InMedica) and all of its stock ownership in MicroCor, Inc. (425,000
common shares) to Synergistic Equities Ltd., a Bahamas entity (“Synergistic
Equities”) for the aggregate sum of $107,000 US. The
Option is exercisable for a period of one year from the date of the
Option. If exercised, the Option may be deemed to result in a change
in control of InMedica Development Corporation (the
“Company”). In connection with the grant of the Option, Chi Lin
granted to Larry Clark and Ralph Henson and Richard Bruggeman, 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 Equities and/or its affiliates, including Ron Conquest, x-Mobility
and/or others.
Item
6. Exhibits:
|
(31.1)
|
Sarbanes-Oxley
Section 302 Certification – Ralph Henson
|
|
(31.2)
|
Sarbanes-
Oxley Section 302 Certification- Richard Bruggeman
|
|
(32.1)
|
Sarbanes-Oxley
Section 906 Certification
|
|
99.1
|
Option
to Purchase Common Stock dated September 10,
2008
|
|
99.2
|
Proxy
dated September 10, 2008
|
9
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INMEDICA
DEVELOPMENT CORPORATION
/s/ Ralph
Henson
By
Ralph Henson, President
/s/ Richard
Bruggeman
By
Richard Bruggeman, Treasurer
Date: November
13, 2008
10
EXHIBIT
INDEX - INMEDICA DEVELOPMENT CORPORATION
|
|
FORM
10Q – SEPTEMBER 30, 2008
|
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
(31.1)
|
Sarbanes-Oxley
Section 302 Certification – Ralph Henson
|
|
(31.2)
|
Sarbanes-
Oxley Section 302 Certification- Richard Bruggeman
|
|
(32.1)
|
Sarbanes-Oxley
Section 906 Certification
|
|
99.1
|
Option
to Purchase Common Stock dated September 10,
2008
|
|
99.2
|
Proxy
dated September 10, 2008
|