1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10 - QSB Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2000 Commission File No. 0-12968 INMEDICA DEVELOPMENT CORPORATION -------------------------------- (Exact name of small business issuer as specified in its charter) Utah 87-0397815 - ----------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification Number) 825 North 300 West Salt Lake City, Utah 84103 -------------------------- (Address of principal executive offices) Registrant's telephone number: ------------------------------ (801) 521-9300 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the 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[X] No[ ] The number of shares outstanding of the registrant's only class of common stock, par value $.001 per share, as of May 11, 2000 was 8,735,899 shares. 1 PART I - FINANCIAL INFORMATION Item 1. Financial Statements INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET ASSETS ------ As of March 31, 2000 (Unaudited) ----------- CURRENT ASSETS: Cash $ 12,058 Prepaid expenses 11,551 ---------- Total current assets 23,609 EQUIPMENT AND FURNITURE, at cost, less accumulated depreciation of $252,435 554 OTHER ASSETS 2,196 ---------- Total assets $ 26,359 ========== See notes to condensed consolidated financial statements. 2 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET (Continued) LIABILITIES AND STOCKHOLDERS' DEFICIT As of March 31, 2000 ------ (Unaudited) CURRENT LIABILITIES: Consulting fee payable to related parties $ 115,992 Notes payable to related parties 180,581 Accounts payable 28,101 Accrued payroll 792 Notes payable 10,800 Dividend payable 2,282 Total current liabilities 338,548 ---------- STOCKHOLDERS' DEFICIT: Common stock, $.001 par value; 20,000,000 shares authorized, 8,735,899 issued and outstanding 8,736 Preferred stock, 10,000,000 shares authorized; Series A preferred stock, cumulative and convertible, $4.50 par value, 1,000,000 shares designated, 25,356 shares issued and outstanding 114,102 Additional paid-in capital 6,867,035 Accumulated deficit (7,302,062) ---------- Total stockholders' deficit (312,189) ---------- Total liabilities and stockholders' deficit $ 26,359 ========== See notes to condensed consolidated financial statements. 3 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2000 1999 -------- -------- (Unaudited) TOTAL OPERATING REVENUES $ -0- -0- -------- -------- OPERATING EXPENSES: General and administrative 61,410 37,789 Research and development 4,061 2,002 --------- ----- Total operating expenses 65,471 39,791 --------- ------ LOSS FROM OPERATIONS (65,471) (39,791) --------- ------- OTHER INCOME (EXPENSE): Miscellaneous income 4 146 Interest expense (4,045) (3,172) -------- ------- Total other expense (4,041) (3,026) -------- ------- NET LOSS (69,512) ( 42,817) PREFERRED STOCK DIVIDEND (2,282) (2,282) ------- ------ NET LOSS APPLICABLE TO COMMON SHARES $ (71,794) $( 45,099) ========== ========= Net loss per common share (basic and diluted) $ (.01) $ (.01) ======== ========= Weighted average number of common shares outstanding 8,735,899 8,660,899 ========= ======== See notes to condensed consolidated financial statements. 4 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH For the Three Months Ended March 31, 2000 1999 ----------- ---------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (69,512) $( 42,817) Adjustments to reconcile net loss to net cash used in operating activities- Depreciation 152 217 Change in assets and liabilities- Decrease in royalties receivable 57,120 45,920 Decrease in prepaid expenses 4,500 4,750 Increase in consulting fee payable to related party 10,000 12,999 Decrease in accounts payable (10,207) (29,011) Decrease in accrued payroll (164) (276) Decrease in notes payable (3,600) - Increase in related-party payable 23,769 - -------- ------- Net cash provided by (used in) operating activities 12,058 ( 8,218) ---------- -------- See notes to condensed consolidated financial statements. 5 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) INCREASE (DECREASE) IN CASH For the Three Months Ended March 31, 2000 1999 ---------- ------- (Unaudited) NET INCREASE (DECREASE) IN CASH 12,058 (10,500) CASH AT BEGINNING OF PERIOD - 38,565 ------- -------- CASH AT END OF PERIOD $ 12,058 $ 28,065 ======= ======= See notes to condensed consolidated financial statements. 6 INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note A--Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310b of Regulation SB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated statements include the accounts of InMedica Development Corporation and its wholly owned subsidiary, MicroCor, Inc. ("MicroCor"). All material intercompany accounts and transactions have been eliminated. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three-month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements included in the Company's Form 10-KSB for the year ended December 31, 1999. Royalties received from the Johnson and Johnson agreement are presently the Company's sole source of revenue and the royalty is expected to terminate during 2000. The Company generated a net loss from operations of $69,512 during the period ended March 31, 2000 and as of March 31, 2000, the Company had an accumulated deficit of $7,302,062 and negative working capital of $314,939. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The Company's continued existence is dependent upon its ability to achieve a viable operating plan. Management's operating plan includes continuing to search for financing alternatives, including the formation of strategic alliances or partnerships to continue research and, if warranted, the manufacture and sale of products developed from the Non-Invasive Hematocrit Technology. However, at present, the Company has no commitments related to these matters. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources For the years ended December 31, 1999 and 1998, liquidity was generated from royalty income received from Johnson and Johnson Medical, Inc. ("JJMI"). This income is expected to terminate during 2000. InMedica continues to look for other funding sources but as of the date of this filing, it has no commitments. Due to the Company's revenue recognition policy, no operating revenues were recognized during the three months ended March 31, 2000 (See "Results of Operations"). The royalty agreement with JJMI has been pledged to secure repayment of the $145,000 related party note payable. Funds expended to develop other potential assets of the Company such as a hematocrit device have been expensed as incurred as research and development. The ability of the Company to use the hematocrit device as a means of securing funding for the Company is totally dependent upon the success of further research and development efforts in producing a viable device suitable for commercialization. Results of Operations The Company's revenue recognition policy requires sales information upon which royalties are calculated to have been received from JJMI and that cash receipts be assured prior to recording revenue. For that reason no revenues were recognized during the first quarter of 2000, although the Company expects to receive some revenues during 2000 from the JJMI contract. See Liquidity and Capital Resources. InMedica has a stockholders' deficit of $ 312,189 and an accumulated deficit of $7,302,062 as of March 31, 2000. In order for InMedica to continue research and development activities, it will require additional financing, for which it has no commitments. The loss from operations of $65,471 for the quarter ended March 31, 2000 compared to $39,791 for the quarter ended March 31, 1999 resulted from general and administrative expenses ($61,410) and research and development expenses ($4,061) being incurred while at the same time there were no revenues. Research and development expense was minimal as the decline in royalty income limited available cash during the quarter. General and administrative expense increased compared to the same period of the prior year, primarily due to additional employee expense. 8 PART II - OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults Upon Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and Reports on Form 8-K: Exhibits: 1 Financial Data Schedule Form 8-K: None 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INMEDICA DEVELOPMENT CORPORATION Dated: May 12, 1999 - -------------------- By /s/ Ralph Henson ------------------- Ralph Henson, CEO By /s/ Richard Bruggeman ------------------------ Richard Bruggeman, Treasurer 10 EXHIBITS Exhibits filed with the Form 10-QSB of InMedica Development Corporation, SEC File No. 0-12968: Exhibit No. SB Item No. Description - ----------- ----------- ----------- 1 (27) Financial Data Schedule