SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Act of 1934
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
--------------------------------
Name of Registrant as Specified in its Charter
Payment of Filing Fee (check applicable box)
[ ] No fee required
[x] 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 - None
2) Aggregate number of securities to which transaction applies
- None
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(c)(2) Total
Amount: $789,870 How Determined: $.0002 x ($300,000 +$489,870)
= $158.
4) Proposed maximum aggregate value of transaction: $789,870
5) Total Fee paid: $158.
[ ] 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
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD November 12, 2004
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, Friday, November 12,
2004 in the _____________ Room at the Sheraton City Centre Hotel, 150 West
500 South, Salt Lake City, Utah to consider and vote upon the following
proposals:
1. The approval of the sale of the stock of MicroCor (an 80% owned
subsidiary of InMedica) in order to fund continued development of the
hematocrit technology, being a sale of all or substantially all of the
assets of the Company.
2. 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
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 Thursday, October 14, 2004 are entitled to
notice of and to vote at the Shareholders' Meeting. Shareholders are or may
be entitled to dissenter's rights as to proposal number 1 above.
BY ORDER OF THE BOARD OF DIRECTORS
Salt Lake City, Utah /s/ Larry E. Clark, Chairman
October 15, 2004
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 Friday
November, 12, 2004 at ____pm, local time, in the __________Room at the Sheraton
City Centre Hotel, 150 West 500 South, Salt Lake City, Utah, and at any
adjournment thereof (the "Meeting"). At the Meeting, InMedica shareholders will
be asked (1) to approve the sale of the stock of MicroCor, Inc. (an 80% owned
subsidiary of InMedica) to Wescor, Inc. in order to fund continued development
of the Company's hematocrit technology, (2) to elect five directors to serve for
one year or until a successor is elected and qualified, and (3) 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 October 15, 2004. Notice is also being
mailed to preferred shareholders of InMedica although they have no voting rights
at the meeting.
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 October
14, 2004 (the "Record Date") will be entitled to notice of and to vote at the
Meeting. As of the Record Date, there were 15,982,993 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 sale of
the stock of MicroCor, Inc. (an 80% owned subsidiary) to Wescor, Inc. in order
to fund continued development of the Company's hematocrit technology . Each
holder of common shares is entitled to one vote for each share held. If a 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.
FIRST PROPOSAL: TO APPROVE THE SALE OF THE STOCK OF MICROCOR, INC.
(AN 80% OWNED SUBSIDIARY OF INMEDICA)
TO WESCOR, INC. IN ORDER TO FUND CONTINUED DEVELOPMENT OF THE COMPANY'S
HEMATOCRIT TECHNOLOGY
SUMMARY TERM SHEET
InMedica Development Corporation ("InMedica") conducts research and
development of medical technology to measure human hematocrit by non-invasive
means. On September 7, 2004, InMedica entered into a Joint Development Agreement
(the "Agreement") to fund further development of the hematocrit technology by
the sale of its stock ownership in MicroCor, Inc., it's 80% owned subsidiary and
principal asset. MicroCor owns the four patents granted on the hematocrit
technology. Further all other technology rights of InMedica and Chi Lin in the
hematocrit technology are being transferred or licensed to MicroCor. The sale of
the MicroCor stock will be a sale of all or substantially all of the assets of
InMedica, pursuant to the terms of the Agreement. A copy of the Agreement is
attached as Exhibit A. Certain terms of the Agreement are set forth below:
PARTIES: InMedica Development Corporation - Seller
825 N. 300 West, Suite N132
Salt Lake City, Utah 84103
Telephone: 801-521-9300
Chi Lin Technology Company, Ltd. - Seller
717 N. 71 Te Lun Road, Jen Te Hsian
Tainan County, Taiwan, R.O.C.
Telephone: 011-886-06-279-1194
Wescor, Inc. - Buyer
459 South Main Street
Logan, Utah 84321 USA
Telephone: 435-752-6011
MicroCor, Inc. - Asset to be sold
825 N. 300 West, Suite N132
Salt Lake City, Utah 84103
Telephone: 801-521-9300
EFFECTIVE DATE:
o September 7, 2004 subject to approval of the InMedica shareholders
within 45 days, which may be extended to 90 days
o Affiliates Larry Clark, Chi Lin, Ralph Henson and Richard Bruggeman are
required by contract to vote their collective majority of shares in
favor of the transaction
TERMS:
o InMedica and Chi Lin immediately sell a total of 15% of MicroCor stock
to Wescor for $375,000 paid $30,000 down and the balance in
installments over 18 months and MicroCor grants each of them a royalty
with a minimum royalty commencing in 18 months
o Wescor assumes day to day management of MicroCor and agrees to use its
best efforts at its expense to develop the hematorcrit technology.
o Wescor may earn up to 49% total ownership of MicroCor by funding and
conducting additional development of hematocrit technology in three
Phases
o Upon successful completion of the third Phase (first commercial
production),Wescor has an option to purchase the remaining MicroCor
shares from Chi Lin and InMedica for a value determined by independent
appraisal
o The agreement may be terminated if Wescor fails to complete any Phase
or defaults in payments to InMedica or Chi Lin
o Pro Form Financial Statements are attached showing the effect of the
sale on InMedica
GENERAL. The Agreement is subject to a condition that the sale of
MicroCor stock described in the Agreement be approved by the shareholders of
InMedica. . Shareholder approval must occur within 45 days of the effective
date, although the time for approval may be extended an additional 45 days. An
additional requirement of the Agreement is that Chi Lin, Larry E. Clark, Richard
Bruggeman and Ralph Henson (who collectively own more than 50% of the
outstanding stock of InMedica) each agreed to vote their shares in favor of the
transaction
ONCE APPROVED, NO FURTHER SHAREHOLDER APPROVAL WILL BE SOUGHT BY
INMEDICA RELATING TO THIS AGREEMENT AND THE BOARD OF DIRECTORS AND OFFICERS OF
INMEDICA WILL BE AUTHORIZED TO CARRY OUT THE SALE OF OWNERSHIP OF THE MICROCOR
STOCK PURSUANT TO THE TERMS OF THE AGREEMENT (except that if a merger
transaction were agreed to by the parties, then approval of such transaction
would be submitted to the shareholders at a later date). As a result, the
Agreement will result in the disposition of part or all of the ownership of
MicroCor by InMedica, depending on the stage when the Agreement is either
terminated or concluded. There is no assurance that Wescor will be successful in
developing the hematrocrit technology or that it will continue the development
project to conclusion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1,
APPROVING THE SALE OF OWNERSHIP OF THE MICROCOR STOCK AS DESCRIBED HEREIN IN
ORDER TO FUND ADDITIONAL DEVELOPMENT OF THE HEMATOCRIT TECHNOLOGY.
DESCRIPTION OF AGREEMENT. Effective September 7, 2004, InMedica and
MicroCor entered into the Agreement pursuant to which Wescor, a Utah medical
technology company ("Wescor") has agreed to purchase 15% of the issued and
outstanding common stock of MicroCor on a pro-rata basis from InMedica and from
Chi Lin Technology Co, Ltd of Tainan, Taiwan, ("Chi Lin") for $375,000. Prior to
the consummation of the transaction InMedica held 80% of the issued and
outstanding common stock of MicroCor and Chi Lin owned 20%. Following the
transaction, InMedica holds 68%, Chi Lin holds 17% and Wescor holds 15% of the
issued and outstanding stock of MicroCor. The purchase monies will be paid
$300,000 to InMedica and $75,000 to Chi Lin, payable $30,000 down and the
balance in installments over 18 months. Twenty percent of each payment made to
InMedica will be applied to outstanding debt owing from InMedica to Wescor in
the present amount of $114,969.93. The debt to Wescor is for operating expenses
advanced by Wescor to InMedica during the negotiation of the Agreement
In the event Wescor is successful in producing a working prototype
using the hematocrit technology, capable of meeting FDA GMP requirements
suitable for conducting clinical trials (Phase1), MicroCor will issue 500,000
additional shares of stock to Wescor. Thereafter if Wescor completes clinical
trials and obtains the FDA's clearance to market such products (Phase 2),
500,000 additional shares of MicroCor stock will be issued to Wescor. Then, upon
manufacturing and initial introduction into the US market of such products
(Phase 3), MicroCor will issue to Wescor an additional 700,000 shares of stock,
giving Wescor a total of 49% of the issued and outstanding stock of MicroCor.
These additional shares to be issued to Wescor will be in consideration of each
Phase of development work by Wescor. The number of shares has been determined
during a process of arms length negotiation between InMedica and Wescor. Among
other things, during such negotiations, the board of directors of InMedica
considered the need for funding to continue development of its technology, its
present financial condition and the reputation and experience of Wescor.
In addition, upon completion of Phase 3, Wescor will have the option to
purchase all (but not less than all) the remaining stock of MicroCor for 90
days. The value of the remaining MicroCor shares will be determined by appraisal
or by a value suggested by Wescor. As a result, the Agreement may result in the
disposition of all or substantially all of the assets of InMedica, other than in
the ordinary course of business. In either event, InMedica and Chi Lin will have
the right to obtain a fairness opinion and to exercise a trump option to
purchase all of the shares of MicroCor owned by Wescor at 110% of the appraised
value or the suggested value. However Wescor may revive its option by increasing
the purchase price by at least 10%. This option procedure may be repeated as
many times as is necessary until a purchaser has been determined. Wescor has
also been granted a right of first refusal in the event of a bona fide third
party offer to acquire MicroCor.
MicroCor has granted certain royalty and revenue royalty rights to
InMedica and Chi Lin under the Agreement as follows: the total Revenue Royalty
payable by MicroCor, including both the InMedica Revenue Royalty (described in
Section 6.2.3 of the Agreement) and the Chi Lin Revenue Royalty (described in
Section 6.2.4 of the Agreement) (collectively the "Total Revenue Royalties"),
shall be calculated as follows: The sum of (i) in any given calendar year, four
percent (4%) of the first $5,000,000 in Sales and Licensing Revenues, three
percent (3%) of Sales and Licensing Revenues in amounts exceeding $5,000,000 but
not exceeding $20,000,000, and two percent (2%) of Sales and Licensing Revenues
in amounts exceeding $20,000,000; plus (ii) twenty five percent (25%) of all
Royalty Revenues. Further, a minimum royalty of $200,000 per year begins 18
months after the effective date and is payable by Wescor to InMedica and Chi
Lin. However in the event that any party (including Wescor) or third party
acquires eighty percent control of MicroCor, the new control party has the right
to buy out the royalty rights from InMedica and Chi Lin for $1,000,000 or 100%
of five times the sum of the minimum royalty payments for the immediately
preceding 12 months, whichever is greater. The buyout proceeds would be shared
80-20 by InMedica and Chi Lin.
As a part of the transaction, InMedica transferred all of its rights in
the non-invasive hematocrit technology to MicroCor and Chi Lin licensed to
MicroCor all rights relating to the non-invasive technology owned by Chi Lin on
a royalty free basis. Further, Wescor assumed the responsibility to manage the
day to day affairs of MicroCor and to continue the development of the
non-invasive hematocrit technology. However Wescor's management of MicroCor may
be terminated if no prototype has been developed in 12 months, or if no FDA
clearance is obtained within 18 months, or if no first production has begun
within 24 months or if Wescor has not fulfilled payment obligations under the
contract.
DIRECTOR APPOINTMENTS. Chi Lin is a principal shareholder of
InMedica and has the right to nominate two directors to serve on InMedica's
board of directors. During the term of the Joint Development Agreement, InMedica
will continue to appoint three of five members of the board of directors of
MicroCor and Chi Lin and Wescor will each be entitled to appoint one board
member.
WESCOR. Wescor is a privately held company engaged in developing,
manufacturing, and marketing medical instruments, appliances, and related
products for the diagnostic laboratory market for more than three decades.
Wescor's Biomedical Products Division has established a reputation for quality
products as well as quality technical support for its products. Wescor is a
leader in the laboratory diagnosis of cystic fibrosis with its Macroduct(R) and
Nanoduct(R) Sweat Testing Systems. The Aerospray(R) family of automatic slide
stainer-cytocentrifuges of Wescor are widely used in hematology and microbiology
laboratories, providing the newest technology in microscope slide staining as
well as cytocentrifugation. Wescor is also a leader in osmometry with its
Vapro(R) Vapor Pressure Osmometer. The Wescor Membrane Osmometer makes a direct
measurement of Colloid Osmotic Pressure in whole blood or serum.
DISSENTERS' RIGHTS. Shareholders of InMedica, including the holders
of the Preferred Shares, are entitled under Utah law to dissent from approval of
Proposal 1 (the sale of the MicroCor stock) and obtain payment from the Company
of the fair value of shares held by the shareholder. "Fair value" of a
dissenter's shares means the value of the shares immediately before the
corporate action to which the dissenter objects, excluding any appreciation or
depreciation in value on account of anticipation of the corporate action.
HOWEVER, UPON COMPLIANCE WITH THE DISSENTER'S RIGHTS PROVISIONS DESCRIBED BELOW,
DISSENTERS MAY NOT IMMEDIATELY RECEIVE CASH PAYMENT FOR THEIR SHARES due to
provisions of the Utah Code that prohibit redemptions of shares in cash where
the corporation "would not be able to pay its debts as they become due in the
usual course of business" or "the corporation's total assets would be less than
the sum of its total liabilities" (Utah Code Annotated 16-10a-640(3)). The Board
of Directors has determined that if any significant number of shareholders
exercised dissenter's rights, the Company would likely be unable to pay its
debts as they come due and its liabilities may exceed its assets. IN SUCH CASE,
THE BOARD OF DIRECTORS MAY LEGALLY ONLY BE ABLE TO ISSUE PROMISSORY NOTES TO ANY
DISSENTING SHAREHOLDERS FOR THE FAIR VALUE OF THEIR SHARES, THE INTEREST AND
PRINCIPAL OF WHICH WOULD BE PAYABLE ONLY AT AN UNDETERMINED FUTURE DATE AND ONLY
IF AND WHEN FUNDS ARE LEGALLY AVAILABLE FOR PAYMENT AS PROVIDED IN THE UTAH
CODE. The issuance of such notes would be subject to compliance with the
registration or exemption provisions of the Securities Act of 1933 and such
notes would likely be restricted securities that would not be transferable
without compliance with the requirements of the Securities Act of 1933. The
principal amount of the notes would be determined based on the fair value of the
dissenter's stock as of the meeting date.
A copy of Utah Code Annotated 16-10a-1320 providing for notice of dissenter's
rights is set forth below:
16-10A-1320. NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights
under Section 16-10A-1302 is submitted to a vote at a shareholders'
meeting, the meeting notice must be sent to all shareholders of the
corporation as of the applicable record date, whether or not they
are entitled to vote at the meeting. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights
under this part. The notice must be accompanied by a copy of this
part and the materials, if any, that under this chapter are
required to be given the shareholders entitled to vote on the
proposed action at the meeting. Failure to give notice as required
by this subsection does not affect any action taken at the
shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights
under Section 16-10A-1302 is authorized without a meeting of
shareholders pursuant to Section 16-10A-704, any written or oral
solicitation of a shareholder to execute a written consent to the
action contemplated by Section 16-10A-704 must be accompanied or
preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy
of this part, and by the materials, if any, that under this chapter
would have been required to be given to shareholders entitled to
vote on the proposed action if the proposed action were submitted
to a vote at a shareholders' meeting. Failure to give written
notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10A-704 for which the notice was to
have been given. Enacted by Chapter 277, 1992 General Session
In order to assert dissenter's rights, a shareholder must cause InMedica
to receive a written notice of his/her intent to demand payment for shares if
Proposal number 1 is approved. Further, the attempted exercise of dissenter's
rights will be invalid if the "dissenter" votes in favor of Proposal number 1.
The dissenter must also have been a shareholder at the time the vote was taken
on Proposal number 1. A shareholder that does not satisfy the three requirements
stated in this paragraph is not entitled to payment for shares.
The content of the Company's notice of dissenter's rights is specified by
Utah Code Annotated 16-10a-1322 as follows:
16-10A-1322. DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights
under Section 16-10A-1302 is authorized, the corporation shall give
a written dissenters' notice to all shareholders who are entitled
to demand payment for their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be
sent no later than ten days after the effective date of the
corporate action creating dissenters' rights under Section
16-10A-1302, and shall:
(a) state that the corporate action was authorized and the
effective date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive
payment demands and an address at which certificates for
certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand
is received;
(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the
payment demand and by which certificates for certificated shares
must be deposited at the address indicated in the dissenters'
notice, which dates may not be fewer than 30 nor more than 70 days
after the date the dissenters' notice required by Subsection (1) is
given;
(f) state the requirement contemplated by Subsection
16-10A-1303(3), if the requirement is imposed; and
(g) be accompanied by a copy of this part.
Enacted by Chapter 277, 1992 General Session
The demand from the dissenter must (1) be in writing and may use the form
attached hereto as Exhibit B for that purpose; (2) must include with the demand,
the original certificates for the shares in accordance with the terms of the
dissenter's notice; (3) must certify that the shareholder acquired beneficial
ownership of the shares before the date of the first announcement (September 8,
2004) to the newsmedia or shareholders of the terms of the proposed corporate
action creating the dissenter's rights and (4) must certify in writing whether
he or the person on whose behalf he asserts dissenters' rights acquired
beneficial ownership of the shares before that date. A copy of a form to be used
in demanding payment is attached hereto as a part of Exhibit B or the dissenter
may use another writing. THE DISSENTER'S DEMAND MUST BE SUBMITTED TO THE COMPANY
ON OR BEFORE DECEMBER 12, 2004. THE HOLDERS OF MORE THAN 50% OF THE ISSUED AND
OUTSTANDING STOCK OF INMEDICA ARE CONTRACTUALLY COMMITTED TO VOTE IN FAVOR OF
PROPOSAL 1. AS A RESULT, THE EFFECTIVE DATE OF THE DISSENTER'S NOTICE ATTACHED
AS EXHIBIT B WILL BE NOVEMBER 12, 2004, THE DATE OF APPROVAL OF THE TRANSACTION,
WHICH COMMENCES THE 30 DAY PERIOD FOR DISSENTERS TO EXERCISE THEIR RIGHTS.
Required disclosures relating the notice are included in this proxy statement. A
dissenter who has demanded payment retains all rights as a shareholder (except
the right to transfer the shares) until the effective date of the corporate
action (November 12, 2004) after which the dissenter has only the right to
receive payment for his/her shares. A shareholder who does not demand payment
and deliver his/her share certificates to the Company by the date set in the
dissenter's notice is not entitled to payment for the shares.
Where a record holder holds all or part of its shares in InMedica on
behalf of a nominee or beneficial owner, then the record holder may dissent as
to less than all of the shares it holds of record, by giving written notice to
InMedica identifying each dissenter's name and address and the number of shares
as to which dissenter's rights are exercised by that beneficial owner. In such
cases the shares held by the dissenting beneficial owner and the balance of the
shares held by the record holder will be treated as if the shares had been
registered in different names. However the dissenting beneficial owner must
dissent as to all shares the dissenter holds, directly or indirectly in the
Company. And, the dissenter must assure that each record holder holding shares
on the dissenter's behalf provides its consent to the dissent not later than the
date on which the beneficial shareholder asserts dissenter's rights.
Upon receipt of the demand for payment and the certificates for the
shares, the Company shall pay the Company's estimate of the fair value of the
shares, plus interest from the meeting date. Payment is governed by Utah Code
Annotated 16-10a-1325 as follows:
16-10A-1325. PAYMENT.
(1) Except as provided in Section 16-10A-1327, upon the later
of the effective date of the corporate action creating dissenters'
rights under Section 16-10A-1302, and receipt by the corporation of
each payment demand pursuant to Section 16-10A-1323, the
corporation shall pay the amount the corporation estimates to be
the fair value of the dissenter's shares, plus interest to each
dissenter who has complied with Section 16-10A-1323, and who meets
the requirements of Section 16-10A-1321, and who has not yet
received payment.
(2) Each payment made pursuant to Subsection (1) must be
accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of
its most recent fiscal year, or if not available, a fiscal year
ending not more than 16 months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that
year and a statement of cash flow for that year, if the corporation
customarily provides such statements to shareholders; and
(D) the latest available interim financial statements, if any;
(ii) the balance sheet and statements referred to in
Subsection (i) must be audited if the corporation customarily
provides audited financial statements to shareholders;
(b) a statement of the corporation's estimate of the fair
value of the shares and the amount of interest payable with respect
to the shares;
(c) a statement of the dissenter's right to demand payment
under Section 16-10A-1328; and
(d) a copy of this part. (Enacted by Chapter 277, 1992 General
Session)
In the event a dissenter has not accepted an offer made by a corporation under
Section 16-10A-1327, the dissenter may notify the Company in writing of his/her
own estimate of the fair value of the shares and demand payment of the estimated
amount, plus interest, less any payment made by the Company if: (1) the
dissenter believes that the amount paid or offered by the Company is less than
the fair value of the shares; or (2) the Company fails to make payment within 60
days after the date set by the corporation as the date by which it must receive
the payment demand; or (3) the corporation, having failed to take the proposed
corporate action creating dissenters' rights, does not return the deposited
certificates. However a dissenter waives the right to demand payment of his own
estimate of the value of the shares unless he causes the Company to receive the
notice of his demand for payment of a different value within 30 days after the
Company made or offered payment for his shares. If a dissenter's demand for
payment of a different valuation than that offered by the Company remains
unresolved, the Company shall commence a proceeding within 60 days after
receiving the payment demand and petition the court to determine the fair value
of the shares and the amount of interest. If the Company does not commence the
proceeding within the 60-day period, it shall pay each dissenter whose demand
remains unresolved the amount demanded.
FINANCIAL STATEMENTS
See the pro-forma financial statements included with this
information statement. Audited financial statements for the Company's year ended
December 31, 2003 and unaudited statements for the period ended June 30, 2004
are incorporated by reference to the Company's Form 10KSB for the year ended
December 31, 2003 and the Company's Form 10QSB for the six months ended June 30,
2004, which are included in the Company's annual report to shareholders which
accompanies this Information Statement.
SECOND PROPOSAL: TO ELECT THE
BOARD OF DIRECTORS
The Company is proposing that five directors be elected to serve
until a successor is elected and qualified as follows: Larry E. Clark, Ralph
Henson, Richard Bruggeman, Sheng Jung (Robert S.) Chiang and Mao-Song Lee.
Additional information for your consideration in connection with the election of
directors follows:
COMMON STOCK OWNERSHIP
The following table shows the common stock ownership of nominees,
directors, officers, and principal shareholders of the Company as of October 14,
2004.
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 769,025
& Nominee ------------ -------
Total 2,197,025 13.7%
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 8,389,591 52.2%
group (5 persons) Options 75,000 .4%
------------ -------
Total 8,464,591 52.7%
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. Chi Lin also has anti-dilution rights to acquire an additional
524,983 restricted common shares at a price of $.10 per share incident to the
issuance of stock to certain members of management (See "Management Indebtedness
and Transactions.")
4 Dr.Lee is vice president of Chi Lin Technologies Co. Ltd. which holds
5,328,204 shares. Chi Lin also has anti- dilution rights to acquire an
additional 524,983 restricted common shares at a price of $.10 per share
incident to the issuance of stock to certain members of management (See
"Management Indebtedness and Transactions.")
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 shares 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. See also
"Management Indebtedness and Transactions" for a description of a transaction in
which certain members of management will acquire an additional 1,181,000
restricted shares or 7.6% of the common stock of InMedica for $.10 per share.
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 the Company and 20% of the issued and
outstanding stock of 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 InMedica's 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 82 1995
Ralph Henson 59 1999
Richard Bruggeman 49 1995
Sheng Jung Chiang 58 2001
Mao-Song Lee 56 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 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. He is employed part time by the Company and part time by Kitchen
Specialties, Inc. Prior to his part time employment with InMedica, he was
employed full time 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. 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 in 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 Tsing Hua University of Taiwan
in 1987 and from the National Cheng Chi University in 1994, respectively.
Each director serves until the next annual meeting of shareholders or
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 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, 2003, and thereafter, all
Section 16(a) filing requirements applicable to officers, directors and
shareholders holding greater than ten percent were complied with.
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
was one meeting of the Board of Directors held during the fiscal year ended
December 31, 2003 and there have been two meeting of the board of directors
during 2004. Two members of the board did not attend one of the 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, 2003:
Annual Compensation Long Term Compensation
Restricted Stock Common Stock
Awards Underlying
Name Year Salary Bonus Options Other
- --------------------------------------------------------------------------------------------------------
Ralph Henson (CEO) 2003 $ 24,000 - - - -
Ralph Henson (CEO) 2002 $ 96,000 - - - -
Ralph Henson (CEO) 2001 $ 86,333 - - - $15,000 (5)
5 Value of shares issued for services. .
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 2004 Mr. Henson has been compensated in
the amount of $46,664, through September, 2004.
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.
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 employed 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 provided for his part
time employment as the Chief Financial Officer of the Company from April 1,
2001 until March 31, 2003. He had the right 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, 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. (See "Management Indebtedness and
Transactions")
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:
Effective September 27, 2004 Larry E. Clark, Ralph Henson and Richard
Bruggeman each subscribed to purchase shares of the Company in the
following amounts respectively: 840,000, 240,000, and 101,000 at a price of
$.10 per share. The closing bid price on the date of subscription was $.10
per share. The Subscription exercise is contingent on the Company paying
each of the three individuals the amount of their accrued but unpaid wages
or consulting fees in the amounts of $84,000, $34,998, and $16,002,
respectively. The 1,181,000 shares to be purchased will constitute 7.6% of
the issued and outstanding stock of the Company, acquired for total
consideration of $118,100.
THIRD PROPOSAL: TO RATIFY APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
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 Robison Hill & Co.
During the registrant's two most recent fiscal years and any
subsequent interim period 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 disagreements,
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 but 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 $ 7,000.
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 all other services rendered
by the principal accountant for the most recent fiscal year was $300. 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.
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 or requesting multiple copies in lieu of a single copy
should be addressed to InMedica Development Corporation, 825 North 300
West, Suite N132, Salt Lake City, Utah 84103 (telephone: 801-521-9300).
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2005 Annual
Meeting of Shareholders must be received by InMedica at its corporate
offices on or before April 5, 2005 in order to be included in the
Information Statement relating to that meeting.
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, 2003, 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.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Effective September 7, 2004, InMedica Development Corporation
("InMedica") and its subsidiary, MicroCor, Inc. ("MicroCor") entered into a
Joint Development Agreement pursuant to which Wescor, Inc., a Utah medical
technology company ("Wescor") purchased 15% of the issued and outstanding common
stock of MicroCor on a pro-rata basis from InMedica and from Chi Lin Technology
Co, Ltd of Tainan, Taiwan, ("Chi Lin") for $375,000. Prior to the consummation
of the transaction InMedica held 80% of the issued and outstanding common stock
of MicroCor and Chi Lin owned 20%. Following the transaction, InMedica holds
68%, Chi Lin holds 17% and Wescor holds 15% of the issued and outstanding stock
of MicroCor. The purchase monies will be paid $300,000 to InMedica and $75,000
to Chi Lin, payable in installments over 18 months. Twenty percent of each
payment made to InMedica will be applied to outstanding debt owing from InMedica
to Wescor in the present amount of $114,969.93.
If Wescor completes phases 1, 2, and 3 of the Joint Development
Agreement, Wescor will be issued 1,700,000 shares of MicroCor common stock
following which Wescor would hold 49% of the issued and outstanding stock of
MicroCor, InMedica would hold 40.8% and Chi Lin would hold the remaining 10.2%.
In addition, upon completion of phase 3, Wescor will have an option to purchase
all, 100%, of the remaining issued and outstanding stock of MicroCor from
InMedica and Chi Lin.
MicroCor has also granted certain royalty and revenue royalty rights to InMedica
and Chi Lin.
The following unaudited pro forma condensed combined financial
statements are based on the above three scenarios as follows: (Contingency 1)
the initial sale of 15% of MicroCor; (Contingency 2) the initial sale of 15%
plus the sale of an additional 34% of MicroCor for a total of 49% (following
completion of phases 1, 2 and 3); and (Contingency 3) the initial sale of 15%
plus the additional 34% and the sale of the additional 51% of MicroCor for a
total sale of 100% (contingent upon phases 1, 2 and 3 and the exercise by Wescor
of its option to buy the remaining 51%)
The following unaudited pro forma condensed combined financial
statements are based on the consolidated December 31, 2003 audited and June 30,
2004 unaudited historical financial statements of InMedica incorporated by
reference herein (See "FINANCIAL STATEMENTS"). The unaudited pro forma condensed
combined balance sheet assumes the sale occurred as of June 30, 2004. The
unaudited pro forma condensed combined statement of operations for the six
months ended June 30, 2004 presents the results of operations assuming the sale
was completed on January 1, 2004. The unaudited pro forma condensed combined
statement of operations for the year ended December 31, 2003 presents the
results of operations, assuming the sale was effective on January 1, 2003.
The unaudited pro forma condensed combined financial statements have
been prepared by management of InMedica based on the financial statements
incorporated herein. The pro forma adjustments include certain assumptions and
preliminary estimates as discussed in the accompanying notes and are subject to
change. These pro forma statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the dates
indicated or which may be obtained in the future. These pro forma financial
statements should be read in conjunction with the accompanying notes and the
historical financial information of InMedica (including the notes thereto)
incorporated by reference in this filing. See "FINANCIAL STATEMENTS."
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 2004
Contingency 1 - Sale of 15%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
ASSETS
Current assets $1,844 $30,000 A $31,844
(6,000) B (6,000)
Note Receivable - 270,000 A 270,000
Fixed assets (net) 486 - 486
------------------ ------------------- -------------------
Total Assets $2,330 $294,000 $296,330
================== =================== ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $75,783 $ - $75,783
Related party payable 78,000 - 78,000
Note payable 95,869 (6,000) B 89,869
Preferred dividend payable 22,697 - 22,697
------------------ ------------------- -------------------
Total Current Liabilities 272,349 (6,000) 266,349
------------------ ------------------- -------------------
Minority Interest 90,751 54,451 C 145,202
------------------ ------------------- -------------------
Stockholders' Equity:
Preferred Stock 94,573 - 94,573
Common stock 15,983 - 15,983
Paid in capital 8,024,260 - 8,024,260
Accumulated deficit (8,495,586) 300,000 A (8,195,586)
(54,451) C (54,451)
------------------ ------------------- -------------------
Total Stockholders' Equity (Deficit) (360,770) 245,549 (115,221)
------------------ ------------------- -------------------
Total Liabilities and Stockholders' Equity $2,330 $294,000 $296,330
================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
Contingency 1 - Sale of 15%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 94,950 - 94,950
Research & development 9,424 - 9,424
------------------ ------------------- -------------------
Net Loss from Operations (104,374) - (104,374)
Other Income (expense) - 7,015 A 7,015
------------------ ------------------- -------------------
Minority Interest 13,331 7,999 B 21,330
------------------ ------------------- -------------------
Net Income (Loss) $(91,043) $15,014 $(76,029)
Preferred Stock Dividends $(3,783) - $(3,783)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $(94,826) $15,014 $(79,812)
================== =================== ===================
Income (Loss) per share $ (0.01) $ - $ 0.00
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
Contingency 1 - Sale of 15%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------- ------------------- ------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 174,203 - 174,203
Research & development 24,723 - 24,723
------------------- ------------------- ------------------
Net Loss from Operations (198,926) - (198,926)
Other Income (expense) 47 11,377 A 11,424
------------------- ------------------- ------------------
Minority Interest 29,727 17,836 B 47,563
------------------- ------------------- ------------------
Net Income (Loss) $(169,152) $29,213 $(139,939)
Preferred Stock Dividends $(7,566) - $(7,566)
------------------- ------------------- ------------------
Net Income (Loss) to Common Stockholders $(176,718) $29,213 $(147,505)
=================== =================== ==================
Income (Loss) per share $ (0.01) $ - $ (0.01)
=================== =================== ==================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 2004
Contingency 2 - Sale of 49%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
ASSETS
Current assets $1,844 $30,000 A $31,844
(6,000) B (6,000)
Note Receivable - 270,000 A 270,000
Fixed assets (net) 486 - 486
------------------ ------------------- -------------------
Total Assets $2,330 $294,000 $296,330
================== =================== ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $75,783 $ - $75,783
Related party payable 78,000 - 78,000
Note payable 95,869 (6,000) B 89,869
Preferred dividend payable 22,697 - 22,697
------------------ ------------------- -------------------
Total Current Liabilities 272,349 (6,000) 266,349
------------------ ------------------- -------------------
Minority Interest 90,751 177,872 C 268,623
------------------ ------------------- -------------------
Stockholders' Equity:
Preferred Stock 94,573 - 94,573
Common stock 15,983 - 15,983
Paid in capital 8,024,260 - 8,024,260
Accumulated deficit (8,495,586) 300,000 A (8,195,586)
(177,872) C (177,872)
------------------ ------------------- -------------------
Total Stockholders' Equity (Deficit) (360,770) 122,128 (238,642)
------------------ ------------------- -------------------
Total Liabilities and Stockholders' Equity $2,330 $294,000 $296,330
================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
Contingency 2 - Sale of 49%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 94,950 - 94,950
Research & development 9,424 850,000 C 859,424
------------------ ------------------- -------------------
Net Loss from Operations (104,374) (850,000) (954,374)
Other Income (expense) - 7,015 A 7,015
------------------ ------------------- -------------------
Minority Interest 13,331 529,329 B 542,660
------------------ ------------------- -------------------
Net Income (Loss) $(91,043) $(313,656) $(404,699)
Preferred Stock Dividends $(3,783) - $(3,783)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $(94,826) $(313,656) $(408,482)
================== =================== ===================
Income (Loss) per share $ (0.01) $ - $ (0.03)
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
Contingency 2 - Sale of 49%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------- ------------------- ------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 174,203 - 174,203
Research & development 24,723 850,000 C 874,723
------------------- ------------------- ------------------
Net Loss from Operations (198,926) (850,000) (1,048,926)
Other Income (expense) 47 11,377 A 11,424
------------------- ------------------- ------------------
Minority Interest 29,727 561,465 B 591,192
------------------- ------------------- ------------------
Net Income (Loss) $(169,152) $(277,158) $(446,310)
Preferred Stock Dividends $(7,566) - $(7,566)
------------------- ------------------- ------------------
Net Income (Loss) to Common Stockholders $(176,718) $(277,158) $(453,876)
=================== =================== ==================
Income (Loss) per share $ (0.01) $ - $ (0.03)
=================== =================== ==================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 2004
Contingency 3 - Sale of 100%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
ASSETS
Current assets $1,844 $30,000 A $31,844
(6,000) B (6,000)
(1,327) D (1,327)
1,020,000 E 1,020,000
Note Receivable - 270,000 A 270,000
Fixed assets (net) 486 - 486
------------------ ------------------- -------------------
Total Assets $2,330 $1,312,673 $1,315,003
================== =================== ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $75,783 $(70,691) D $5,092
Related party payable 78,000 - 78,000
Note payable 95,869 (6,000) B 89,869
Preferred dividend payable 22,697 - 22,697
------------------ ------------------- -------------------
Total Current Liabilities 272,349 (76,691) 195,658
------------------ ------------------- -------------------
Minority Interest 90,751 (90,751) D -
------------------ ------------------- -------------------
Stockholders' Equity:
Preferred Stock 94,573 - 94,573
Common stock 15,983 - 15,983
Paid in capital 8,024,260 - 8,024,260
Accumulated deficit (8,495,586) 300,000 A (8,195,586)
160,115 D 160,115
1,020,000 E 1,020,000
------------------ ------------------- -------------------
Total Stockholders' Equity (Deficit) (360,770) 1,480,115 1,119,345
------------------ ------------------- -------------------
Total Liabilities and Stockholders' Equity $2,330 $1,312,673 $1,315,003
================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004
Contingency 3 - Sale of 100%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 94,950 (57,229) D 37,721
Research & development 9,424 (9,424) D -
------------------ ------------------- -------------------
Net Loss from Operations (104,374) 66,653 (37,721)
Other Income (expense) - 7,015 A 7,015
------------------ ------------------- -------------------
Minority Interest 13,331 (13,331) D -
------------------ ------------------- -------------------
Net Income (Loss) $(91,043) $60,337 $(30,706)
Preferred Stock Dividends $(3,783) - $(3,783)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $(94,826) $60,337 $(34,489)
================== =================== ===================
Income (Loss) per share $ (0.01) $ - $ 0.00
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
Contingency 3 - Sale of 100%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------- ------------------- ------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 174,203 (123,958) D 50,245
Research & development 24,723 (24,723) D -
------------------- ------------------- ------------------
Net Loss from Operations (198,926) 148,681 (50,245)
Other Income (expense) 47 (47) C -
Other Income (expense) 11,377 A 11,377
------------------- ------------------- ------------------
Minority Interest 29,727 (29,727) D -
------------------- ------------------- ------------------
Net Income (Loss) $(169,152) $130,284 $(38,868)
Preferred Stock Dividends $(7,566) - $(7,566)
------------------- ------------------- ------------------
Net Income (Loss) to Common Stockholders $(176,718) $130,284 $(46,434)
=================== =================== ==================
Income (Loss) per share $ (0.01) $ - $ 0.00
=================== =================== ==================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) GENERAL
Pursuant to the sale, InMedica will receive $300,000, with $30,000 paid on
closing and $270,000 paid in monthly installments of $15,000 plus interest at
prime plus 2% in exchange shares of InMedicas Majority owned subsidiary
MicroCor.
As a special provision of the agreement InMedica will payback to WesCor 20% of
the initial payment of $30,000 and 20% of each monthly payment as payment on the
amounts previously loaned to InMedica by WesCor.
(2) PRO FORMA ADJUSTMENTS
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheet as of June 30, 2004, are described below:
(A) Record sale of MicrCor stock by recording receipt of $30,000
initial cash payment and $270,000 note receivable at $.50 per share.
(B) Record payment on notes payable to WesCor equal to 20% of the
$30,000 initial payment from sale of MicroCor stock
(C) Record additional minority interest resulting from sale of MicroCor
stock.
(D) Remove 100% of MicroCor.
(E) Record sale of 100% of remaining interest in MicroCor stock at an
assumed price of $.50 per share for a total of $1,020,000, based on the selling
price of the initial 15%, and assuming the $1,020,000 is paid in full at time of
exercise.
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations for the year ended December 31, 2003 and the
six months ended June 30, 2004 are described below:
(A) Record interest income on note receivable.
(B) Record additional minority interest.
(C) Record issuance of 1,700,000 shares of MicroCor common stock in
exchange for research and development expenses, estimated at $.50 per share.
(D) Remove 100% of MicroCor.