SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Act of 1934
(Amendment No. )
--
Check appropriate box:
[x] Preliminary Information Statement
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ ] Definitive Information Statement
INMEDICA DEVELOPMENT CORPORATION
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Name of Registrant as Specified in its Charter
Payment of Filing Fee (check applicable box)
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rule
14a-6(i)(1) and 0-11
1) Title of each class of securities to which
transaction applies
2) Aggregate number of securities to which transaction
applies
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 Total Amount: How Determined:
4) Proposed maximum aggregate value of transaction 5)
Total Fee paid:
[ ] fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
1) Amount previously paid
2) Form, schedule or registration statement number
3) Filing party
4) Date filed
INMEDICA DEVELOPMENT CORPORATION
825 North 300 West, Suite N132
Salt Lake City, Utah 84103
801-521-9300
INFORMATION STATEMENT
This Information Statement is being furnished to shareholders of InMedica
Development Corporation, a Utah corporation, ("InMedica" or the "Company"), in
connection with the Annual Meeting of its shareholders to be held on Monday
December 16, 2002 at ___ pm, local time, in the ____________Room at the
_____________________, ___________________, Salt Lake City, Utah, and at any
adjournment thereof (the "Meeting"). At the Meeting, InMedica shareholders will
be asked to elect five directors to serve for one year or until a successor is
elected and qualified, to consider an amendment to the articles of incorporation
increasing the authorized common shares of the Company from 20,000,000 to
40,000,000 and to ratify the selection of Robison Hill & Co. as the Company's
independent public accountants.
This Information Statement and Notice of Meeting are first being mailed
to shareholders of InMedica on or about November 6, 2002.
We Are Not Asking You for a Proxy and You are Requested Not To Send Us a Proxy
Only holders of record of InMedica Common Stock (also referred to
herein as "common shares" or "shares") as of the close of business on November
5, 2002 (the "Record Date") will be entitled to notice of and to vote at the
Meeting. As of the Record Date, there were 15,984,613 shares of InMedica Common
Stock issued and outstanding. Holders of a majority of the outstanding shares in
person or by proxy must be present in order to establish a quorum to conduct
business at the meeting. The affirmative vote of the holders of a majority of
such shares present is required to elect directors and to approve the amendment
to the articles of incorporation. Each holder of common shares is entitled to
one vote for each share held. If the holder of shares present at the meeting
abstains from voting, the shares will still be counted towards the presence of a
quorum. Cumulative voting is not permitted.
COMMON STOCK OWNERSHIP
The following table shows the common stock ownership of nominees,
directors, officers, and principal shareholders of the Company as of November 5,
2002.
1
Nature of Number of
Name and Position Ownership Shares Owned Percent
Chi Lin Technologies Direct 5,328,204 33.3%
717 No. 71, Te Lun RD
Jen Te Hsian
Tainan County, Taiwan
Principal Shareholder
Larry E. Clark Direct 1,428,000
Chairman & Nominee Indirect 1,219,025
---------
Total 2,647,025 16.6%
Ralph Henson Direct 225,000 1.4%
President, Director
Chief Executive Officer
& Nominee
Richard Bruggeman Direct 174,387 (1) 1.1%
Director, Chief Indirect 464,975 (2) 2.9%
Financial Officer Options 75,000 .5%
-------- ---
& Nominee Total 714,362 4.4%
Sheng Jung Chiang Indirect * (3)
Director & Nominee
Mao-Song Lee Indirect * (4)
Director & Nominee
All Executive Officers Direct and
and Directors as a Indirect 8,839,591 55.3%
group (5 persons) Options 75,000 .4%
--------- ---
Total 8,914,591 55.5%
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1 Includes 400 shares held in individual IRAs and 4,620 shares held by
Mr. Bruggeman as Trustee of a family trust.
2 Shares held by Mrs. Bruggeman.
3 Mr. Chiang is vice president of Chi Lin Technologies Co. Ltd. which
holds 5,328,204 shares.
4 Dr.Lee is vice president of Chi Lin Technologies Co. Ltd. which holds
5,328,204 shares.
2
Shares shown in the forgoing table as directly owned are owned beneficially and
of record, and such record shareholder has sole voting, investment, and
dispositive power. Calculations of the percentage of ownership of shares
outstanding in the foregoing table assumes the exercise of options, to which the
percentage relates. Percentages calculated for totals assume the exercise of
options comprising such totals. The Company has relied upon the latest filing on
Form 13D furnished to the Company for total shares held by principal
shareholders.
Change in Control. Effective May 10, 2001 the Company sold 5,328,204 shares of
its common stock to Chi Lin Technology Co. Ltd. of Taiwan, Republic of China.,
pursuant to a Stock Purchase Agreement (the "Agreement"). The Company also
caused its wholly owned subsidiary, MicroCor, Inc. to sell 29,420 shares of its
common stock to Chi Lin. Following the transaction Chi Lin owned one third of
the issued and outstanding stock of both the Company and MicroCor. Funds for the
purchase of the stock came from the working capital of Chi Lin. The Agreement
also granted Chi Lin anti-dilution rights permitting it to purchase additional
shares to maintain its one third percentage ownership in the event InMedica
issues additional shares. Chi Lin has further rights to receive additional
shares to maintain its percentage ownership in the event outstanding options are
exercised. The agreement also gives Chi Lin the right to nominate two of five
directors to the board of directors. InMedica may not increase the size of the
board to more than five without the prior consent of Chi Lin. Effective December
21, 2001 the Company appointed two directors nominated by Chi Lin.
DIRECTORS AND EXECUTIVE OFFICERS
At the meeting, five directors are to be elected to hold office for one
year or until their successors are elected and qualified. The persons named in
the table below are nominees for director.
Name Age Director Since
Larry E. Clark 80 1995
Ralph Henson 57 1999
Richard Bruggeman 47 1995
Sheng Jung Chiang 56 2001
Mao-Song Lee 54 2002
Certain information follows regarding the executive officers and directors
of InMedica and their business backgrounds for at least the last five years.
LARRY E. CLARK - Chairman of the Board. 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. From 1975 to 1981 Mr.
Clark was president of Larry Clark & Associates, a private
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company which engaged in a corporate mergers and acquisitions business. 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 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. Prior to his
employment with InMedica, Mr. Henson worked from 1996 to 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. Prior to his employment with InMedica, he was employed as Controller of
Kitchen Specialties, Inc., from 1993 - 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. although 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.
SHENG JUNG (ROBERT S.) CHIANG - Director. Mr. Chiang was vice president and
secretary general of Onking Chain Store Co. Ltd. of the Republic of China
(hereinafter "Taiwan") from November, 1988 through June, 2000 when he became the
Vice President of Chi Lin Technology Co. Ltd. He has been employed with Chi Lin
Technology since June, 2000. Mr. Chiang has a BA from the National Chen Chi
University and an MBA from the National Taiwan University.
MAO-SONG LEE - Director. Dr. Lee was appointed as a director of the Company
during October, 2002. Since 2001 he has been employed by Chi Lin Technology Co.
Ltd. as Technical Vice President. From 1998 until 2000 he was General Manager,
Pilot Plants for Union Chemical Laboratories, Industrial Technology Research
Institute of the Republic of China (Taiwan). During the period 1994-1997 he was
Director of the Engineering Plastics Division for Union Chemical Laboratories,
Industrial Technology Research Institute. From 1983 until 1991 he was Director
of the Polymer Division, Union Chemical Laboratories, Industrial Technology
Research Institute. He received a B.S. and M.S. from the National Cheng Kung
University of Taiwan in 1970 and 1972, respectively. He also received a Ph.D.
and an M.B.A. from the National Cheng Kung University of Taiwan in 1987 and
1994, respectively.
Each director serves until the next annual meeting of shareholders or
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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, except those certain employment
agreements with Ralph Henson and Richard Bruggeman described below (See
Executive Compensation") and the Stock Purchase Agreement with Chi Lin
Technologies Co. Ltd. (See "Change in Control").
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of equity securities of the Company. Officers, directors
and shareholders holding greater than ten percent 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, 2001 all Section 16(a)
filing requirements applicable to officers, directors and shareholders holding
greater than ten percent were complied with, except the initial report on Form 3
of Chi Lin Technologies, a greater than 10% shareholder. The report was due in
June, 2001 and was transmitted to the SEC July 31, 2001.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Company does not have nominating, audit or compensation committees
of the Board. The full board conducts the function of an audit committee. There
were two meetings of the Board of Directors held during the fiscal year ended
December 31, 2001 and there have been two meetings of the board of directors
during 2002. No member of the board of directors attended less than 75% of all
meetings.
EXECUTIVE COMPENSATION
The table below discloses the compensation of the chief executive
officer of the Company during the three fiscal years ended December 31, 2001:
5
Annual Compensation Long Term Compensation
Restricted Stock Common Stock
Awards Underlying
Name Year Salary Bonus Options Other
- -----------------------------------------------------------------------------------------
Ralph Henson (CEO) 2001 $ 86,333 - - - $15,000 (5)
Ralph Henson (CEO) 2000 $ 69,999 - - - -
Ralph Henson (CEO) 1999 $ 5,833 - - - $31,270 (6)
Larry E. Clark (CEO) 1999 $ - - - $12,000 (7)
Compensation of officers and employees is determined by the Board of
Directors. Officers, Ralph Henson and Richard Bruggeman are also members of the
Board of Directors. During 2002 Mr. Hensen continues to be compensated in the
amount of $8,000 per month.
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. The Company's 1991
Stock Incentive Plan and 1991 Formula Stock Option Plan expired during the year
2001 and all options issued thereunder expired in 2002.
InMedica executed employment contracts with its Chief Executive
Officer, Ralph Henson, and its Chief Financial Officer, Richard Bruggeman, on
April 25, 2001. Mr. Henson's contract employs him full time for the period April
1, 2001 until March 31, 2003. Compensation payable for his services was $7,000
per month during 2001 and $8,000 per month for the balance of the contract. Mr.
Bruggeman's contract provides for his part time employment as the Chief
Financial Officer of the Company from April 1, 2001 until March 31, 2003. He has
the option to increase the employment to full time if warranted by the Company's
business, at a compensation to be negotiated. Compensation under the contract
was $3,500 per month during 2001 and $4,000 per month for the remaining term of
the contract.
The Company entered into a consulting contract with Larry E. Clark, its
Chairman,
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5 Value of shares issued as finder's fee. See "Indebtedness and
Transactions of Management".
6 Mr. Henson received 75,000 shares of restricted stock from the Company
and an additional 25,000 restricted shares from Larry Clark in
connection with his employment.
7 Consulting fees accrued for payment to a corporation owned by Mr.Clark.
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effective April 1, 2001, pursuant to which the Company compensates the Chairman
$2,000 per month in consulting fees. Fees under the contract are presently being
accrued.
DIRECTORS' COMPENSATION
Directors may be compensated at the rate of $100 for attendance at each
board meeting, but did not receive compensation for meetings during the last
three years.
MANAGEMENT INDEBTEDNESS AND TRANSACTIONS
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
security holder has a direct or indirect material interest, except as described
herein and in the disclosure below:
On April 25, 2001, the Company paid its Chairman, Larry E. Clark for
accrued consulting fees and accrued interest by issuing 1,219,025 shares of
InMedica restricted common stock to his family trust in satisfaction of $123,992
in consulting fees payable and $22,291 accrued interest on the fees. The Company
also paid Mr. Bruggeman for accrued consulting fees and accrued interest by
issuing to him 464,975 shares of InMedica restricted common stock in
satisfaction of $52,000 consulting fees payable and $3,797 interest. Shares were
issued at $.12 per share. The estimated fair value of the shares issued to Mr.
Clark and Mr. Bruggeman on April 25, 2001 was $.17 per share and accordingly,
the Company recorded additional compensation expense of $82,869.
The Company executed two promissory notes dated April 26, 2001, payable
to its Chairman, Larry E. Clark. The first note documented a series of existing
loans from Mr. Clark to the Company of $262,250 principal and $26,899 accrued
interest. The note was due in three payments during 2001. The second note
documented an additional loan from Mr. Clark to the Company of $10,000 principal
and $1,332 accrued interest. The note was due in two payments during 2001. As of
October 2001, these obligations to Mr. Clark had been paid and the notes were
cancelled.
During 2001, Mr. Henson received a finders fee for raising $1,000,000
for the Company and its subsidiary from Chi Lin Technology Co. Ltd. Mr. Henson
was issued 125,000 restricted shares of common stock of the Company as payment
of the finder's fee. See Executive Compensation table.
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PROPOSAL TO AMEND ARTICLES
The Board of Directors has approved and recommends that the
shareholders approve an amendment to the articles of incorporation increasing
the presently existing authorized common stock, $.001 par value, of the
corporation from 20,000,000 to 40,000,000 shares. The text of the proposed
amendment is as follows:
The first sentence of Article IV, paragraph (a), of the articles of
incorporation of the Company is amended and restated in its entirety so
as to read as follows: "The total number of common shares which this
corporation shall have authority to issue is 40,000,000, par value of
$0.001 per share."
No other changes to the articles of incorporation are proposed in this amendment
and the only change from the existing Article IV, paragraph (a) first sentence,
is the substitution of "40,000,000" for "20,000,000" as it appears above.
There are no preemptive rights to acquire common stock of the Company. The
foregoing proposed increase in the authorized common stock of the Company is not
made in connection with any exchange, merger, consolidation, acquisition or
similar transaction, existing or proposed. The Company has no plans or
commitments for any such transaction. The effect of the amendment will be to
double the authorized shares of the corporation and to make 20,000,000
additional shares of common stock available for issuance as permitted by law.
However there are no existing or proposed plans or commitments that would
require or result in the issuance of such shares.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2003 Annual
Meeting of Shareholders must be received by InMedica at its corporate offices on
or before April 5, 2003 in order to be included in the Information Statement
relating to that meeting.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
The independent accounting firm selected and being recommended for the
current fiscal year is Robison Hill & Co. Representatives of Robison Hill & Co.
are expected to be present at the Annual Meeting of Shareholders and will have
an opportunity to make a statement if they desire to do so and will be expected
to be available to respond to appropriate questions. The independent public
accounting firm which conducted the audit of the financial statements of
InMedica for the most recent fiscal year was Deloitte & Touche. Representatives
of Deloitte & Touche are not expected to attend the meeting.
On January 3, 2002, the Company engaged Deloitte & Touche as
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independent accountants to audit the Company's December 31, 2001 financial
statements. The former accountants, Arthur Andersen LLP, were notified of their
dismissal on January 4, 2002. The change was approved by the Company's board of
directors.
On October 18, 2002, the Company dismissed Deloitte & Touche as
independent accountants and appointed Robison Hill & Co. as independent
accountants for the Company. The change was approved by the Company's board of
directors.
During the registrant's two most recent fiscal years and any subsequent
interim period preceding the foregoing dismissal there were no disagreements
with accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, or any other agreements,
which disagreement(s) if not resolved to the satisfaction of the former
accountant would have caused it to make reference to the subject matter of the
disagreement(s) in connection with its reports. The former accountants' report
for the period of their engagement did not contain an adverse opinion or
disclaimer of opinion. However the former accountants' reports were modified for
uncertainty as to whether the registrant would continue as a going concern.
However, there was no qualification or modification as to audit scope or
accounting principles.
Audit Fees. The aggregate fees billed for professional services rendered for the
audit of the registrant's annual financial statements for the most recent fiscal
year and the reviews of the interim financial statements included in the
registrant's Forms 10-QSB for that fiscal year was $25,879.50.
Financial Information Systems Design and Implementation Fees. There were no fees
billed for the professional services described in Paragraph (c)(4)(ii) of Rule
2-01 of Regulation S-X (17 CFR 210.2-01(c)(4)(ii) rendered by the principal
accountant for the most recent fiscal year.
All Other Fees. The aggregate fees billed for for all other services rendered by
the principal accountant for the most recent fiscal year was $6,058.80. These
services consisted of tax return preparation.
The board of directors, has considered whether the provision of the
services for any Financial Information Systems Design and Implementation and All
Other Fees is compatible with maintaining the principal accountant's
independence and has concluded that the amount of such fees should not have a
material adverse effect on the independence of the principal accountants..
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DELIVERY OF DOCUMENTS TO SECURITY HOLDERS
WHO SHARE AN ADDRESS
One copy of this information statement and the annual report will be
delivered to each security holder who shares the same address, unless the
Company has received contrary instructions from one or more of the security
holders. Written notification requesting a single copy in lieu of multiple
copies should be addressed to InMedica Development Corporation, 825 North 300
West, Suite N132, Salt Lake City, Utah 84103.
THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN
REQUEST, COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 2001, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUEST FOR SUCH
INFORMATION SHOULD BE DIRECTED TO RICHARD BRUGGEMAN, P.O. BOX 27557, SALT LAKE
CITY, UTAH 84127.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD December 16, 2002
TO THE SHAREHOLDERS OF INMEDICA DEVELOPMENT CORPORATION:
The Annual Meeting of Shareholders of InMedica Development Corporation
(the "Company") will be held at ____ pm local time, Monday, December 16, 2002 in
the _________ Room at _______________, __________________, Salt Lake City, Utah
to consider and vote upon the following proposals:
1. The election of five directors (Larry E. Clark, Ralph Henson,
Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee) to serve for
one year or until a successor is elected and qualified.
2. The amendment of the articles of incorporation of the Company to
increase the authorized shares of common stock, $.001 par value, from 20,000,000
to 40,000,000.
3. Ratification of the appointment of Robison Hill & Co. as the
independent public accountants of the corporation.
Information regarding the matters to be acted on at the Annual Meeting is
contained in the Information Statement accompanying this Notice. Shareholders of
record as of Tuesday November 5, 2002 are entitled to notice of and to vote at
the Special Shareholders' Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Salt Lake City, Utah Larry E. Clark, Chairman
November 6, 2002