WINDGEN ENERGY, INC. - Quarter Report: 2008 June (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
P QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended: June 30, 2008
□ 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)
UTAH
|
87-0397815
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
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 P No □
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 P 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
□ No P
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 August 11, 2008.
1
PART I -
FINANCIAL INFORMATION
Item
1. Financial Statements
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET
ASSETS
As
of
|
||||
June
30, 2008
|
||||
Unaudited)
|
||||
CURRENT
ASSETS:
|
||||
Cash
& cash equivalents
|
$ | 5,075 | ||
Prepaid
expenses and other
|
200 | |||
Total
current assets
|
5,275 | |||
EQUIPMENT
AND FURNITURE,
|
||||
at
cost, less accumulated depreciation of $255,039
|
183 | |||
Total
assets
|
$ | 5,458 |
See notes
to consolidated financial statements
2
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEET (Continued)
LIABILITIES
AND STOCKHOLDERS' EQUITY
As
of
|
||||
June
30,
|
||||
2008
|
||||
(Unaudited)
|
||||
CURRENT
LIABILITIES:
|
||||
Related
party consulting fees payable
|
$ | 90,000 | ||
Accounts
payable
|
35,975 | |||
Note
payable
|
227,633 | |||
Accrued
payroll
|
24,000 | |||
Accrued
interest
|
25,009 | |||
Related
party royalty payable
|
93,333 | |||
Preferred
stock dividend payable
|
52,960 | |||
Total
current liabilities
|
548,910 | |||
MINORITY
INTEREST
|
(243,645 | ) | ||
STOCKHOLDERS'
EQUITY:
|
||||
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
|
94,573 | |||
Common
stock, $.001 par value; 40,000,000 shares authorized,
|
||||
18,629,493
issued and outstanding
|
18,629 | |||
Additional
paid-in capital
|
8,426,839 | |||
Accumulated
deficit
|
(8,839,848 | ) | ||
Total
stockholders equity
|
(299,807 | ) | ||
Total
liabilities and stockholders' equity
|
$ | 5,458 |
See notes
to consolidated financial statements
3
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
For
the Three
|
For
the Six
|
|||||||||||||||
Months
Ended
|
Months
Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
TOTAL
ROYALTY REVENUES
|
$ | - | $ | - | $ | - | $ | - | ||||||||
OPERATING
EXPENSES:
|
||||||||||||||||
General
and administrative
|
52,330 | 34,481 | 111,303 | 87,368 | ||||||||||||
Research
and development
|
- | - | - | - | ||||||||||||
Total
operating expenses
|
52,330 | 34,481 | 111,303 | 87,368 | ||||||||||||
LOSS
FROM OPERATIONS
|
(52,330 | ) | (34,481 | ) | (111,303 | ) | (87,368 | ) | ||||||||
OTHER
EXPENSE:
|
||||||||||||||||
other
expense, net
|
(4,647 | ) | (3,159 | ) | (8,514 | ) | (5,873 | ) | ||||||||
Total
other expense, net
|
(4,647 | ) | (3,159 | ) | (8,514 | ) | (5,873 | ) | ||||||||
LOSS
BEFORE MINORITY INTEREST
|
(56,977 | ) | (37,640 | ) | (119,817 | ) | (93,241 | ) | ||||||||
MINORITY
INTEREST
|
26,476 | 25,073 | 51,034 | 48,921 | ||||||||||||
NET
LOSS
|
(30,501 | ) | (12,567 | ) | (68,783 | ) | (44,320 | ) | ||||||||
PREFERRED
STOCK DIVIDENDS
|
(1,891 | ) | (1,891 | ) | (3,783 | ) | (3,783 | ) | ||||||||
NET
LOSS APPLICABLE TO COMMON STOCKHOLDERS
|
(32,392 | ) | (14,458 | ) | (72,566 | ) | (48,103 | ) | ||||||||
NET
LOSS PER COMMON SHARE (BASIC AND DILUTED)
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Weighed
average number of common shares outstanding
|
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
For
the Six
|
||||||||
Months
Ended
|
||||||||
June
30,
|
||||||||
2008
|
2007
|
|||||||
(Unaudited)
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (68,783 | ) | $ | ( 44,320 | ) | ||
Adjustments
to reconcile net loss to
|
||||||||
net
cash used in operating activities-
|
||||||||
Depreciation
and amortization
|
182 | 246 | ||||||
Minority
interest in losses
|
(51,034 | ) | (48,921 | ) | ||||
Change
in assets and liabilities
|
||||||||
Account
receivable
|
-0- | (90 | ) | |||||
Consulting
fee payable to related party
|
12,000 | 12,000 | ||||||
Royalty
payable to Related party
|
20,000 | 20,000 | ||||||
Accounts
payable
|
30,474 | -0- | ||||||
Accrued
interest payable
|
8,514 | 5,873 | ||||||
Accrued
payroll and related taxes
|
24,000 | -0- | ||||||
Net
cash used in operating activities
|
(24,647 | ) | (55,212 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds
from note receivable
|
-0- | -0- | ||||||
Net
cash provided by investing activities
|
-0- | -0- | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from notes payable
|
27,016 | 26,498 | ||||||
Payments
on notes payable
|
-0- | -0- | ||||||
Net
cash provided by financing activities
|
27,016 | 26,498 |
See notes
to consolidated financial statements.
5
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
For
the Six
|
||||||||
Months
Ended
|
||||||||
June
30,
|
||||||||
2008
|
2007
|
|||||||
(Unaudited)
|
||||||||
NET
INCREASE (DECREASE) IN CASH
|
2,369 | (28,714 | ) | |||||
CASH
AT BEGINNING OF PERIOD
|
2,706 | 34,079 | ||||||
CASH
AT END OF PERIOD
|
$ | 5,075 | $ | 5,365 |
See notes
to consolidated financial statements.
6
INMEDICA
DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
|
Basis
of Presentation
|
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 $68,783 and $44,320 for
the six month periods ended June 30, 2008 and 2007, respectively, and negative
cash flows from operations of $24,647 and $55,212 for the six month periods
ended June 30, 2008 and 2007, respectively. As of June 30, 2008, the
Company had an accumulated deficit of $8,839,848. At June 30, 2008,
the Company had a stockholder’s deficit of $299,807. 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.
2.
|
Summary
of Significant Accounting Policies
|
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. As a result, Wescor may be interested in bringing
on a new partner to conduct 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 2007, the Company funded
administrative operations with the proceeds of minimum royalty payments from
MicroCor. The
Company has in the past borrowed from affiliates, however, such borrowing is not
expected to be available in the future 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.
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
8
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 $8,839,848 as of June 30,
2008. No revenues from operations were received in the quarters ended
June 30, 2008 and June 30, 2007. The Company
had a net loss from operations of $111,303 and $87,368 for the quarters ended
June 30, 2008 and June 30, 2007. The increase in net loss resulted
primarily from an increase in professional fees.
Item
3: 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 June 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 June 30, 2008, that have materially affected,
or are reasonably likely to materially affect, the company’s internal controls
over financial reporting.
9
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
July 31, 2008, Sheng Jung Chiang and Mao-Song Ly resigned as members of the
Board of Directors of the Company.
Item
6. Exhibits:
(31.1)
|
Sarbanes-Oxley
Section 302 Certification – Ralph Henson
|
(31.2)
|
Sarbanes-
Oxley Section 302 Certification- Richad Bruggeman
|
(32.1)
|
Sarbanes-Oxley
Section 906 Certification
|
Reports
on Form 8-K: None
10
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INMEDICA
DEVELOPMENT CORPORATION
/s/ Ralph
Henson
By
Ralph Henson, President
/s/ Richard
Bruggeman
By
Richard Bruggeman, Treasurer
Date: August
13, 2008
11
EXHIBIT
INDEX - INMEDICA DEVELOPMENT CORPORATION
FORM 10Q
– JUNE 30, 2008
EXHIBIT
NUMBER
|
DESCRIPTION
|
31.1
|
Section
302 Certifications of Ralph Henson
|
31.2
|
Section
302 Certifications of Richard Bruggeman
|
32.2
|
Sarbanes-Oxley
Section 906 Certification
|