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, 1996
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 Identification
incorporation of organization) Number)
495 East 4500 South, Suite 230
Salt Lake City Utah 84107
(Address of principal executive offices)
Registrant's telephone number: (801) 261-5657
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 10, 1996 was
7,679,522 shares.
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PART I - FINANCIAL INFORMATION Page 1 of 2
Item 1. Financial Statements
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1996
ASSETS
March 31,
1996
-------------
(Unaudited)
CURRENT ASSETS:
Cash $ 200,442
Prepaid expenses 20,039
-------------
Total current assets $ 220,481
EQUIPMENT AND FURNITURE,
at cost, less accumulated
depreciation of $249,268 5,222
OTHER ASSETS 2,196
----------
Total assets $ 227,899
===========
See notes to condensed consolidated financial statements.
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Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1996
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31,
1996
------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of note
payable $ 50,000
Accounts payable and
accrued interest 10,642
Related-party notes
payable 113,026
-----------
Total current liabilities 173,668
-----------
NOTE PAYABLE, less
current portion 410,000
-----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value;
20,000,000 shares authorized,
7,648,064 issued and outstanding 7,648
Preferred stock, 10,000,000
shares authorized; Series A
preferred stock, cumulative
and convertible, $4.50 par
value, 1,000,000 shares
designated, 83,884 shares
issued and outstanding 377,478
Additional paid-in capital 6,145,403
Accumulated deficit (6,886,298)
-----------
Total stockholders'
deficit (355,769)
Total liabilities and -----------
stockholders' deficit $ 227,899
==========
See notes to condensed consolidated financial statements.
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three
Months Ended
March 31,
1996 1995
(Unaudited) (Unaudited)
------------------------
OPERATING REVENUE:
Royalties $ -0- $ -0-
Sales -0- -0-
------------------------
Total operating revenue -0- -0-
------------------------
OPERATING EXPENSES:
General and
administrative 36,716 45,532
Research and
development 22,029 -0-
-----------------------
Total operating expenses 58,745 45,532
-----------------------
LOSS FROM OPERATIONS (58,745) (45,532)
-----------------------
OTHER INCOME (EXPENSES):
Miscellaneous income -0- 590
Interest expense (14,954) (42,206)
-----------------------
Total other expense (14,954) (41,616)
-----------------------
NET LOSS (73,699) (87,148)
=========== ===========
Less redeemable preferred
stock dividends 7,550 -0-
----------- -----------
LOSS APPLICABLE TO COMMON
SHARES $ (81,249) $ (87,148)
========== ========
Net loss
per common share $ (.01) $ (.01)
========= =========
Weighted average number
of common share outstanding 7,485,707 7,474,403
========== =========
See notes to condensed consolidated financial statements.
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Page 1 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
1996 1995
(Unaudited) (Unaudited)
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (73,699) (87,148)
Adjustments to reconcile net
loss to net cash provided by
operating activities-
Depreciation 223 6,666
Change in assets and liabilities-
Decrease in royalties receivable 227,520 301,375
Decrease in prepaid
expenses 6,677 7,031
Decrease in accounts payable (3,004) (16,311)
and accrued liabilities (4,318) (157,245)
Decrease in related party
payable (25,500) -0-
--------- ----------
Net cash provided by
operating activities 130,903 70,679
------------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and
furniture (1,375) -0-
------------- ----------
Net cash used in
investing activities (1,375) -0-
------------- ------------
See notes to condensed consolidated financial statements.
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Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
1996 1995
(Unaudited) (Unaudited)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on
convertible debentures $(22,768) $(61,059)
Preferred Stock Dividends Paid (7,550) -0-
Principal payments of note payable (12,500) -0-
----------- -----------
Net cash used in financing activities (42,818) (61,059)
----------- -----------
NET INCREASE IN CASH 86,710 9,620
CASH AT BEGINNING OF PERIOD 113,732 3,080
---------- ----------
CASH AT END OF PERIOD $200,442 $12,700
======== =======
See notes to condensed consolidated financial statements.
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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 of normal
recurring adjustments) considered necessary for fair presentation
have been included. Operating results for the three-month period
ended March 31, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements
included in the Company's Form 10-KSB for the year ended December
31, 1995.
Note B--Retirement/Conversion of Debentures
During March and April, 1996, the Company received notice of
conversion of debentures to common stock from the remaining three
debenture holders, effective March 31, 1996. The conversion
notices resulted in the issuance of an aggregate of 164,161 shares
of common stock in satisfaction of $123,121 in remaining debenture
debt. All outstanding debentures of the Company have now been
retired by refinancing, payment or conversion to common stock.
Note C -- Subsequent Event
During April, 1996, a Preferred Stockholder converted 5,243 Series
A Preferred shares of Stock to 31,458 shares of Common Stock of the
Company. The conversion ratio was six shares of Common Stock per
share of Preferred Stock or $.75 per share of Common Stock.
Following the conversion, the Company had outstanding 78,641 shares
of Series A Preferred Stock.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the three months ended March 31, 1996, no operating
revenues were recognized due to the revenue recognition policy of
the Company and the timing of the receipt of revenues. The
Company's sole source of revenue is a royalty payment received from
J & J Medical, Inc., which is paid to the Company on a quarterly
basis. Royalty revenues being received by the Company may be
insufficient to sustain research and development costs, fund
operations and retire indebtedness when it comes due. InMedica
consequently intends to continue to look for funding sources.
InMedica achieved profitable operations during the fiscal
years ended December 31, 1994 and 1995. Profitable operations
resulted from increased royalty receipts coupled with expense
reductions and the suspension of research and development efforts
in 1994 and an extraordinary gain in 1995. However, the Company
has a total shareholders' deficit of $355,769 and an accumulated
deficit of $6,886,298 as of March 31, 1996. In order for InMedica
to continue its research and development activities and meet its
obligations, it must secure additional financing, for which it has
no commitments. It is impossible to estimate the amount of the J
& J Medical, Inc. royalties which may be received in the future.
Such income is dependent upon the continued sales of the product
line by J & J Medical Inc. which includes the Company's base
technology and upon which the royalty is paid.
The Company's President, Larry E. Clark, worked without cash
compensation during his first year with the Company. In
consideration of his continued work for InMedica, the Company has
agreed to compensate him in the sum of $7,500 per month commencing
April 16, 1996. Mr. Clark's compensation is expected to accrue
rather than be paid at the present time.
Results of Operations
See "Liquidity and Capital Resources" for an explanation as to
the lack of revenues during the quarter ended March 31, 1996. The
net loss from operations of $73,699 for the quarter consequently
resulted as compared to the net loss of $87,148 during the
comparable period of the prior year. The decrease in net loss
resulted primarily from the decrease in interest expense during the
current year as debenture debt of the Company was converted to
preferred stock or refinanced at a lower interest rate.
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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:
On May 9, 1996 the Company announced the completion of a
second round of clinical data gathering for the use in
calibration of the Company's non-invasive hematocrit
device. The performance of InMedica's device on the
aggregate test set correlated closely to the measurements
of traditionally drawn blood (0.93 correlation
coefficient). The Company intends to commence
construction of second level prototypes and to enter into
formal clinical validation studies. Continued progress
is subject to the need for additional fund raising or
development of strategic alliances for the funding of the
project, to FDA approvals, and to continued research
and development progress.
Item 6. Exhibits and Reports on Form 8-K:
Exhibits:
(1) Converstion Agreement between InMedica Development
Corporation and Clinton B. Newman dated April 23, 1996.
(2) Financial Data Schedule
Form 8-K: None
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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 13, 1996
By /s/ Larry E. Clark
-----------------------
Larry E. Clark, CEO
By /s/ Richard Bruggeman
----------------------------
Richard Bruggeman, Treasurer
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EXHIBITS
Exhibits filed with the Form 10-QSB of InMedica Development
Corporation, SEC File No. 0-12968:
Exhibit No. SB Item No. Description
1 (10) Conversion Agreement between
InMedica Development Corporation
and Clinton B. Newman dated April
23, 1996.
2 (27) Financial Data Schedule