SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the
Securities Act of 1934
(Amendment No. 2 )
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
[ ] 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: How Determined: .
4) Proposed maximum aggregate value of transaction:
5) Total Fee paid:
[x] 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
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________________
TO THE SHAREHOLDERS OF INMEDICA
DEVELOPMENT CORPORATION:
The Special Meeting of Shareholders of InMedica Development Corporation (the
"Company") will be held at ___ pm local time, ________________ in the _________
Room at the Little America Hotel, 500 South Main Street, Salt Lake City, Utah to
consider and vote upon the following proposals:
1. The approval of the sale and issuances of the stock of MicroCor (an
80% owned subsidiary of InMedica) in order to fund continued development
of the hematocrit technology, being a potential 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 Special Meeting is
contained in the Information Statement accompanying this Notice.
Shareholders of record as of ________________________ 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 Larry E. Clark, Chairman
_____________ 2004
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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 a Special Meeting of its shareholders to be held
on ___________________ at ____ pm, local time, in the __________ Room at the
Little America Hotel, 500 South Main Street, Salt Lake City, Utah, and at any
adjournment thereof (the "Meeting"). At the Meeting, InMedica shareholders will
be asked (1) to approve the sale and issuances 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 ___________, 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
___________ 2004 (the "Record Date") will be entitled to notice of and to vote
at the Meeting. As of the Record Date, there were 16,382,993 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 and issuances 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.
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FIRST PROPOSAL: TO APPROVE THE SALE AND ISSUANCES 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 (the "hematocrit technology"). 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 stock in MicroCor, Inc., it's 80% owned
subsidiary and principal asset, to Wescor, Inc., a medical technology company
located in Logan, Utah. . Chi Lin owns the additional 20% of MicroCor and also
agreed to the sale. MicroCor owns 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.
BACKGROUND OF THE SALE PROPOSAL. Throughout 2003 InMedica's board of
directors explored a number of possible means to complete the development of its
hematocrit technology (ie. develop a prototype of the hematocrit device with FDA
clearance - the "FDA cleared prototype"). Three large medical device companies
(with annual revenues in the range of $90 million to $8 billion per year) were
orally contacted by members of the board of directors and asked about their
interest in completing the project, however, none were willing to consider the
project until the Company had an FDA cleared prototype. The InMedica board also
orally contacted five smaller companies (with annual revenues in the $4 to $16
million range), two of which were local companies, who might partner to complete
the project. However, all of these smaller companies, except one local company,
were already at capacity with other projects.
The other local company, Wescor, Inc., was initially contacted by Ralph
Henson, director and CEO of InMedica in July, 2003. The contact was made
following a call from a Wescor board member indicating that Wescor was looking
for a medical technology project. Conversations followed with Wescor's CEO,
Wayne Barlow, its VP of Research and Development, Dennis Briscoe and its Vice
President, Reed Crockett. Wescor expressed interest in the project (ie. the
development of the hematocrit technology through the FDA cleared prototype stage
and through the final stage of first production run of units for sale) and
advised the Company that it had the engineering resources and capability to do
the work.
As of January 28, 2004, Wescor and InMedica finalized a letter of intent
(the "Letter of Intent") and as of February 1,2004, a loan agreement (the "Loan
Agreement"). The Letter of Intent provided that InMedica would discontinue the
search for development partners and other funding sources for the hematocrit
technology. In exchange, Wescor agreed to loan monies under the Loan Agreement
to InMedica for three purposes: (1) administrative expenses up to $25,000 per
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month for three months (later extended through July, 2004) to be used to pay
ongoing salaries, legal, accounting and other Company administrative expenses;
the loan was to be evidenced by a promissory note called the "Overhead Note;"
(2) Wescor agreed to loan up to $20,011 to InMedica to pay accrued but unpaid
Company expenses evidenced by a promissory note called the "Accrued Expense
Note;" and (3) Wescor agreed to loan up to $200,000 to InMedica for technology
modification expenses incurred by Wescor but only expenses incurred with the
advance approval of InMedica and to be evidenced by a note known as the
"Technology Modifications Note." The notes bear interest at the prime rate as
announced from time to time by the Wall Street Journal. The Letter of Intent was
a non-binding expression of mutual intent to negotiate the terms of a possible
business venture between the companies regarding the development of the
hematocrit technology. The Letter of Intent further provided that in the event a
definitive agreement was not reached, the amounts owing on the Overhead Note
would be forgiven. Amounts advanced under the Accrued Expense Note and the
Technology Modications Note, however would not be forgiven and were secured by a
security interest in 50% of the Company's revenues from commercialization of the
hematrocrit technology, if and when achieved. Further, unpaid balances of
principal and accrued interest under any of the notes is convertible to
restricted common stock of InMedica at $.10 per share at Wescor's discretion.
Beginning with the signing of the Letter of Intent and the Loan
Agreement, Wescor advanced $108, 970 on the Overhead Note over a period of seven
months and $10,171 on the Accrued Expenses Note. No advances were made on the
Technology Modifications Note. InMedica subsequently repaid the advances on the
Accrued Expenses Note which now has a zero balance. During discussions from
January to September, 2004, InMedica's board members, Larry Clark, Ralph Henson
and Richard Bruggeman, and the Wescor principals, identified above, negotiated
the terms of the proposed sale of MicroCor stock pursuant to the Agreement. When
the parties signed a definitive Agreement effective September 7, 2004 , the
Company became obligated to repay the Overhead Note according to its terms. As
of September 30, 2004, $111,972 was owing on the Overhead Note Including accrued
interest. The Overhead Note is due and payable April 1, 2005. However Wescor
deducts 20% ($3,000 per month) of each stock payment it makes to InMedica and
applies the payment to retirement of the Overhead Note. (See "Description of
Agreement." A conversion of the principal and accrued interest owing on the
Overhead Note as of September 30, 2004 would have resulted in the issuance of
1,119,720 restricted shares or 6.4% of the issued and outstanding common stock
of InMedica However, to date, Wescor has not given notice of intent to convert
the note.
During the negotiations, InMedica determined to permit Wescor to assume
day to day control of the development of the hematocrit technology because
InMedica has only two part-time employees, a President and a CFO, and no
technical staff. The Company has principally relied on contracts with outside
developers to advance the development of the hematocrit technology. Wescor, on
the other hand, has the required resources to manage the day to day operations
of a company whose focus is the development of medical products. InMedica
retains overall control of MicroCor through its ownership and control of
MicroCor's Board of Directors. In the event Wescor discontinued efforts to
develop the hematocrit technology, InMedica would again pursue the business plan
described in Management's Discussion and Analysis (See Form 10QSB for the period
ended September 30, 2004.)
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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, assuming
Wescor is successful in completion of development of the hematocrit technology
and successfully exercises its option to purchase the MicroCor stock held by
InMedica and Chi Lin.. 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 The effective date is of the Agreement is September 7, 2004, subject to
shareholder approval.
o Larry Clark (Chairman and Director of the Company), Ralph Henson
(Director and CEO of the Company), Richard Bruggeman (Director and CFO
of the Company), and Chi Lin (principal shareholder of the Company) are
required by the Agreement to vote their shares in favor of approving
this transaction. Collectively these four shareholders own a majority
of the issued and outstanding stock of InMedica (See "Common Stock
Ownership"). Clark, Henson, Bruggeman and Chi Lin are affiliates of the
Company but have no affiliation with Wescor or with one another, other
than their service as officers and directors of the Company. Chi Lin
has appointed two members of the board of directors of the Company.
TERMS:
o As of September 7, 2004, InMedica and Chi Lin sold, a total of 15% of
MicroCor stock to Wescor (12% sold by InMedica and 3%sold by Chi Lin)
for $375,000. The purchase price was paid $30,000 down with the balance
due in installments over 18 months. See "Description of Agreement.
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o Wescor assumed day to day management of MicroCor as of September 7,
2004 and agreed to use its best efforts at its expense to develop the
hematorcrit technology. Wescor's management of MicroCor and the
Agreement may be terminated by InMedica if Wescor fails to complete any
development Phase (See "POTENTIAL MICROCOR STOCK ISSUANCES TO WESCOR")
or if Wescor defaults in payments to InMedica or Chi Lin. In the event
of such termination, Wescor would remain obligated to complete payment
for the initial 15% of the stock of MicroCor pursuant to the
installments described below (See " DESCRIPTION OF AGREEMENT"). However
if the Agreement is terminated prior to shareholder approval, the sale
of the MicroCor stock would be rescinded and InMedica and Chi Lin would
be obligated to repay amounts received from Wescor.
o Through potential additional MicroCor stock issuances to Wescor, Wescor
may earn up to 49% total ownership of MicroCor by funding and
conducting additional development of hematocrit technology in three
Phases over 18 months. The 18 month period may be extended in six month
increments by the MicroCor board of directors. See "POTENTIAL MICROCOR
STOCK ISSUANCES TO WESCOR."
o Upon successful completion of the second phase (ie. FDA cleared
prototype) and again upon successful completion of the third Phase (ie.
first production of units for sale), Wescor has an option to purchase
the remaining MicroCor shares from Chi Lin and InMedica for 90% of an
appraised value or 90% of a value suggested by Wescor, subject to a
fairness opinion obtained by InMedica. Wescor selects the appraiser
with the consent of InMedica and Chi Lin. The Company and Chi Lin will
then have a "trump option" to purchase Wescor's ownership of MicroCor
stock at an increased price. See "Options To Buy Remaining MicroCor
Stock."
o MicroCor has granted InMedica and Chi Lin an annual royalty of 4% of
the first $5,000,000 of sales and licensing revenues received from the
hematocrit technology, 3% of sales and licensing revenues exceeding
$5,000,000 but less than $20,000,000 and 2% of sales and licensing
revenues in excess of $20,000,000. The sellers are also entitled to
twenty five percent (25%) of all royalty revenues received by MicroCor
on further licensing of the hematocrit technology. A minimum royalty of
$200,000 per year is payable by MicroCor commencing 18 months from
September 7, 2004, to be split 80%-20% between InMedica and Chi Lin.
(See "Royalty Rights.")
o Pro Form Financial Statements are attached showing the effect of the
sale on InMedica As the attached financial statements indicate, the
sale has been accounted for as a sale of an investment and partial
interest in InMedica's consolidated subsidiary.
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o No opinion, report or appraisal relating to the fairness of the sales
of the MicroCor stock to Wescor has been obtained by the Company. The
terms of the transactions are based on the negotiations described above
See "BACKGROUND OF THE SALE PROPOSAL."
INCOME TAX CONSEQUENCES. For U.S. federal income tax purposes, the sale
is expected to result in the recognition of a gain of $60,000 by InMedica.
However the Company's cumulative net operating losses can be used to offset the
amount of the taxable gain on the sale, and as a result we expect to pay no
federal income taxes on the sale. Further, the sale transaction will result in
no capital gain or loss for the InMedica shareholders and no distribution to
shareholders in connection with the transaction is anticipated. Accordingly, the
sale should not result in a taxable event under U.S. federal income tax laws for
InMedica shareholders in the United States. The foregoing does not address any
state or local tax consequences. Our shareholders are advised to consult with
their tax advisors for a more detailed analysis of any federal, state or local
tax consequences.
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 has been extended. 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)
have each agreed and are required 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 AND ISSUANCES 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 AND THE ISSUANCES 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 (selling
12%) and from Chi Lin Technology Co, Ltd of Tainan, Taiwan (selling 3%), ("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 shareholder approval of the transaction, InMedica will initially
hold 68%, Chi Lin will initially hold 17% and Wescor will initially hold 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
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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 amount of $111,972 at September 30, 2004. The debt to Wescor is for
repayment of operating expenses advanced by Wescor to InMedica during the
negotiation of the Agreement. See "BACKGROUND OF THE SALE PROPOSAL."
POTENTIAL MICROCOR STOCK ISSUANCES TO WESCOR. 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 restricted shares of MicroCor
stock to Wescor. Thereafter if Wescor completes clinical trials and obtains the
FDA's clearance to market such products (Phase 2), 500,000 additional restricted
shares of MicroCor stock will be issued to Wescor by MicroCor. Then, upon
manufacturing and initial introduction into the US market of such products
(Phase 3), MicroCor will issue to Wescor an additional 700,000 restricted shares
of its 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 determination of
Wescor's completion of the above three Phases will be made by MicroCor's board
which is controlled by InMedica. In the event of a disagreement between the
parties as to fulfillment of the above standards, the parties intend to
negotiate in good faith to resolve the matter. The number of shares to be issued
by MicroCor to Wescor for services 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 the Company's hematocrit technology, the Company's
present financial condition (ie. lack of cash flow, limited capital assets and
limited borrowing capacity) and the reputation and experience of Wescor in
development of medical technology. Based on these considerations, the board
concluded that, in its judgment, the Agreement should be pursued.
OPTIONS TO BUY REMAINING MICROCOR STOCK. Upon completion of Phase 2,and
again upon completion of Phase 3, Wescor will have the option to purchase all
(but not less than all) the remaining stock of MicroCor from InMedica and Chi
Lin, for 90 days. The buyout price to Wescor for the remaining MicroCor shares
will be 90% of an appraised value or of a value suggested by Wescor. Wescor will
choose the appraiser subject to the right of InMedica and Chi Lin to object to
the selection. In the case of an objection Wescor will make another selection
until the parties are in agreement. Following receipt of Wescor's notice of
appraised value or suggested value, InMedica and Chi Lin will have the right to
obtain a fairness opinion at their expense, before acting on Wescor's offer. The
fairness opinion of the value of the MircoCor stock will be obtained from a
business valuation expert, chosen by InMedica and Chi Lin, as to which Wescor
has no reasonable objection. If the fairness opinion reports that Wescor's
appraised or suggested value is not within a fair range, Wescor's option to
purchase the balance of the MicroCor stock from Chi Lin and InMedica will
terminate.
However, if Wescor's appraised or suggested value is determined by
the fairness opinion to be within a fair range, InMedica and Chi Lin will still
have the opportunity to acquire the complete ownership of MicroCor through a
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"trump" option allowing them to offer to purchase all of the shares of MicroCor
owned by Wescor at 110% of Wescor's appraised value or suggested value. In such
case, Wescor may chose to sell its ownership of MicroCor to InMedica and Chi Lin
or may revive its first option by a notice to InMedica and Chi Lin increasing
the purchase price so as to be based on at least 110% of the valuation used as
the trump option value by InMedica and Chi Lin. This option procedure, bidding
between the parties for the right to purchase all of the MicroCor stock, may be
repeated as many times as is necessary until a purchaser has been determined. If
Wescor is ultimately the purchaser, the Agreement will terminate except for the
royalty rights of InMedica and Chi Lin. Wescor has also been granted a right of
first refusal in the event of a bona fide third party offer to acquire MicroCor.
ROYALTY RIGHTS. MicroCor has granted certain revenue royalty rights to
InMedica and Chi Lin under the Agreement based on future annual revenues from
the hematocrit technology and calculated as follows: Annual royalties will equal
the sum of 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 (revenues from licensing of the
hematocrit technology to others). The total royalties are split between InMedica
and Chi Lin with InMedica receiving a percentage of total royalties equal to a
fraction, the numerator of which is the total world revenues from sales of the
hematocrit technology, less the revenues from sales in Asia; and the denominator
of which is the total world revenues from sales. The Chi Lin royalty is a
percentage of total royalties equal to a fraction, the numerator of which is
revenue from sales in Asia; and the denominator of which is the total world
revenues from sales. Asia is defined to mean Australia, New Zealand and the
countries of Asia (including without limitation, Indonesia, Malaysia and the
island countries of the Western Pacific Rim; but excluding Russia, Turkey and
the countries of the Middle East from Iran and to the west). Further, a minimum
royalty of $200,000 per year begins 18 months after the effective date and is
payable by MicroCor to InMedica and Chi Lin on an 80%-20% basis without regard
to whether actual sales have been made. However in the event that any party
(including Wescor) or a 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 (other than those royalties referred to in the preceding
paragraph). 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 and the Agreement
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. The 24 month period may be extended in the discretion of InMedica's
board of directors.
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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.
CONSULTING FEES. Prior to the transaction with Wescor, Ralph Henson,
President of InMedica, was a full time employee of MicroCor. Since September 7,
2004, Wescor has paid Ralph Henson a temporary consulting fee of $5,000 per
month for three quarters of his working time. The temporary consulting
arrangement with Mr. Henson was first discussed with Wescor after the Joint
Development Agreement was signed on September 7, 2004. Beginning December 1,
2004, the consulting fee was discontinued and Mr. Henson became a three-quarter
time salaried employee of MicroCor. He will continue to serve as President of
InMedica and will be paid for one-quarter of his time by InMedica. No change in
his total reported salary is expected.
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
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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
12
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 news media 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_____________. 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______________, THE DATE OF APPROVAL OF THE TRANSACTION,
WHICH COMMENCES THE 30 DAY PERIOD FOR DISSENTERS TO EXERCISE THEIR RIGHTS.
Required disclosures relating to the notice are included in this Information
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 (________________) 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
13
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
14
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 September 30, 2004 are
incorporated by reference to the Company's Form 10KSB/A#1 for the year ended
December 31, 2003 and the Company's Form 10QSB for the nine months ended
September 30, 2004, copies of which accompany 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 December
10, 2004.
Nature of Number of
Name and Position Ownership Shares Owned Percent
Chi Lin Technologies Direct 5,328,204 1 32.5%
717 No. 71, Te Lun RD
Jen Te Hsian
Tainan County, Taiwan
Principal Shareholder
- -------------------------
1 - Excludes the right to purchase shares sufficient to maintain its 33 1/3%
ownership interest in the Company in the event of the issuance of additional
shares, such as the proposed issuance of shares to management under the
subscription agreements and the 400,000 shares recently issued to Larry Clark
(See "Management Indebtedness and Transactions")
15
Larry E. Clark Direct 1,828,000 2
Chairman & Nominee Indirect 769,025 3
-------
Total 2,597,025 15.9%
Ralph Henson Direct 225,000 4 1.4%
President, Director
Chief Executive Officer
& Nominee
Richard Bruggeman Direct 174,387 5 1.1%
Director, Chief Indirect 464,975 6 2.8%
Financial Officer Options 75,000 .5%
-------- -----
& Nominee Total 714,362 4.3%
Sheng Jung Chiang Indirect * 7
Director & Nominee
Mao-Song Lee Indirect * 8
Director & Nominee
Wescor, Inc. Direct -
459 South Main Street Indirect -
Logan, Utah 84321 USA Conversion Rights 1,119,720 9 6.4%
All Executive Officers Direct and
and Directors as a Indirect 8,789,591 53.6%
group (5 persons) Options 75,000 .4%
--------- --------
Total 8,864,591 53.9%
- -------------------------
2 - Excludes subscription to purchase 440,000 restricted shares of common stock
(See "Management Indebtedness and Transactions."
3 - Shares held by Larry Clark and Jacquelyn Clark as Trustees of the Larry and
Jacquelyn Clark Family Trust
4 - Excludes subscription to purchase 240,000 restricted shares of common stock
(See "Management Indebtedness and Transactions."
5 - Includes 400 shares held in individual IRAs and 4,620 shares held by Mr.
Bruggeman as Trustee of a family trust. Excludes subscription to purchase
101,000 restricted shares of common stock (See "Management Indebtedness and
Transactions." Excludes subscriptions
6 - Shares held by Mrs. Bruggeman.
7 - 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.")
8 - 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.")
9 - Based on unexercised conversion rights at September 30, 2004.
16
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 or conversion
rights 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.
17
LARRY E. CLARK - Chairman of the Board since April 1995. 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. Beginning in
1975 and continuing to December, 2003, Mr. Clark was president of Larry Clark &
Associates, a private company which engaged in a corporate mergers and
acquisitions business or business consulting. 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 was President of
InMedica from April 1995 until December, 1999. 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 of the Company
since December 1999. Prior to his employment with InMedica, Mr. Henson worked
from 1996 until 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
of the Company since April, 1995 and full time employee of the Company during
2002. Since 2003, Mr. Bruggeman has been employed part time with Kitchen
Resource, Inc., a Utah based firm distributing kitchen appliances. He was
employed part time or full time as Controller of Kitchen Specialties, Inc. from
1993 to December, 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 of the Company since May, 2001. Mr.
Chiang was vice president and secretary general of Onking Chain Store Co. Ltd.,
a company organized in the Republic of China (hereinafter "Taiwan") from
November, 1988 through June, 2000 when he became the Vice President of Chi Lin
Technology Co. Ltd, a Taiwanese company. 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.
18
MAO-SONG LEE - Director of the Company since December, 2002. Since
February, 2001 he has been employed full time by Chi Lin Technology Co. Ltd. as
Technical Vice President. From August, 1998 until January, 2001 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 MEETINGS
AND ATTENDANCE AT SHAREHOLDER MEETINGS
The Company does not have nominating or audit 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.
Messrs. Chiang and Lee were unable to attend one of the board meetings. All
directors attended the last annual shareholder meeting of the Company. The
Company expects all directors to be in attendance at shareholder meetings and
attempts to schedule meetings at a time when all directors will be able to
attend, however conflicting schedules, particularly with the two directors from
Taiwan may on occasion preclude their attendance at shareholder meetings which
are held in the United States.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company's board of directors does not have an "audit committee
financial expert," within the meaning of such phrase under applicable
regulations of the Securities and Exchange Commission, serving on its audit
19
committee. The board of directors believes that all members of its audit
committee are financially literate and experienced in business matters, and that
one or more members of the audit committee are capable of (i) understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general application of GAAP principles in connection with our
accounting for estimates, accruals and reserves, (iii) analyzing and evaluating
our financial statements, (iv) understanding our internal controls and
procedures for financial reporting; and (v) understanding audit committee
functions, all of which are attributes of an audit committee financial expert.
However, the board of directors believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies, it is difficult for the Company to attract and retain board members
who qualify as "audit committee financial experts," and competition for these
individuals is significant. The board believes that its current audit committee
is able to fulfill its role under SEC regulations despite not having a
designated "audit committee financial expert."
NOMINATING COMMITTEE
The full board of directors of the Company functions as a nominating
committee to select potential additional directors of the Company. The board has
not specifically designated a separate nominating committee because all five
members of the board of directors desire to be involved in the selection of any
new director. The board does not have a specific charter to govern its actions
as a nominating committee, nor are any members of the board "independent". Due
to the relatively small size of the Company, the risks associated with service
on the board of a public company and the limited or negligible compensation
available to such directors, the Company considers it unlikely that a qualified
person would serve on the board who was truly independent. However, the board's
unwritten policy for consideration of potential members of the board nominated
by shareholders is to seriously consider any potential board member that has
personal relationships and/or expertise that might be beneficial to the
Company's business. The Company has in the past and expects to continue in the
future to be interested in discussions with persons interested in the Company's
business and able to make a significant contribution to the success of the
Company's technology. Shareholders that desire to introduce persons to the
Company's board of directors should contact Larry E. Clark, Chairman of the
Board or Ralph Henson, Chief Executive Officer of the Company with any
suggestions or recommendations for director. These persons may be reached
through the Company's office telephone 801-521-9300 during regular business
hours. A copy of the resume of any candidates should be submitted with the
inquiry. At the present time, the Company is not actively searching for
additional board members, however members of the board are interested in meeting
qualified persons. Qualified persons normally would be persons that have at
least a college education and professional or technical experience in the
medical products industry. The Company is especially interested in persons with
fund raising contacts or technology development contracts. Generally shareholder
nominees would be evaluated in the same manner as any other nominee. The
nominees identified on the Company's current proposal for election of directors
were each originally nominated by the Company's chief executive officer or by
20
Chi Lin Technologies, Co. Ltd, which has the contractual right to nominate two
directors. Specifically, Larry E. Clark became a director upon the nomination of
Alan Kaminsky who was then CEO and a 5% plus shareholder. Messrs Henson and
Bruggeman were each nominated by Mr. Clark while Mr. Clark was serving as CEO
and while Mr. Clark was a 10% plus shareholder. Messrs.Chiang and Lee were
nominated by Chi Lin, a principal shareholder and control person of the Company,
owning approximately 33 1/3% of the stock of the Company.
SECURITY HOLDER COMMUNICATIONS
Shareholders of the Company may communicate directly with the board of
directors by contacting the Company's offices during regular business hours. The
Company's telephone number is 801-521-9300. Communications to individual
directors may be made by mail addressed to the director care of InMedica
Development Corporation at the Company's offices 825 North 300 West, Suite N132,
Salt Lake City, Utah 84103.
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 10
- --------------------------
10 - 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
21
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.
22
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.
The following is a summary of the fees billed to us by Robison, Hill & Company
for professional services rendered for the years ended December 31, 2003 and
2002:
Service 2003 2002
- ------------------------------ ------------------ ------------------
Audit Fees $ 12,100 $ 9,890
Audit-Related Fees - -
Tax Fees 300 575
All Other Fees - -
------------------ ------------------
Total $ 12,400 $ 10,465
================== ==================
AUDIT FEES. Consists of fees billed for professional services rendered for the
audits of our consolidated financial statements, reviews of our interim
consolidated financial statements included in quarterly reports, services
performed in connection with filings with the Securities & Exchange Commission
and related comfort letters and other services that are normally provided by
Robison, Hill & Company in connection with statutory and regulatory filings or
engagements.
TAX FEES. Consists of fees billed for professional services for tax compliance,
tax advice and tax planning. These services include assistance regarding
federal, state and local tax compliance and consultation in connection with
various transactions and acquisitions.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Audit Committee, is to pre-approve all audit and non-audit services provided
by the independent auditors. These services may include audit services,
audit-related services, tax services and other services as allowed by law or
regulation. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specifically approved amount. The independent
auditors and management are required to periodically report to the Audit
Committee regarding the extent of services provided by the independent auditors
in accordance with this pre-approval and the fees incurred to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.
The Audit Committee pre-approved 100% of the Company's 2003 audit fees,
audit-related fees, tax fees, and all other fees to the extent the services
occurred after May 6, 2003, the effective date of the Securities and Exchange
Commission's final pre-approval rules.
23
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.
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.
INFORMATION INCORPORATED BY REFERENCE
The following documents are incorporated by reference in this Information
Statement:
1. Form 10KSB/A#1 of InMedica Development Corporation for the year ended
December 31, 2003, SEC file number 000-12968.
2. Form 10QSB of InMedica Development Corporation for the quarter ended
September 30, 2004, SEC file number 000-12968.
24
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 amount of $111,972 as of September 30, 2004.
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 September
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 September 30, 2004. The
unaudited pro forma condensed combined statement of operations for the nine
months ended September 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."
PF-1
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Contingency 1 - Sale of 15%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 153,545 - 153,545
Research & development 9,929 - 9,929
------------------ ------------------- -------------------
Net Loss from Operations (163,474) - (163,474)
Other Income (expense) 68,597 8,768 A 77,365
------------------ ------------------- -------------------
Minority Interest 166,468 - 166,468
------------------ ------------------- -------------------
Net Income (Loss) $71,591 $8,768 $80,359
Preferred Stock Dividends $(5,674) - $(5,674)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $65,917 $8,768 $74,685
================== =================== ===================
Income (Loss) per share $ - $ - $ 0.00
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
PF-2
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.
PF-3
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 2004
Contingency 2 - Sale of 49%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
ASSETS
Current assets $273,099 - $273,099
Fixed assets (net) 442 - 442
------------------ ------------------- -------------------
Total Assets $273,541 - $273,541
================== =================== ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $78,396 $ - $78,396
Related party payable 84,000 - 84,000
Note payable 108,970 - 108,970
Preferred dividend payable 24,589 - 24,589
------------------ ------------------- -------------------
Total Current Liabilities 295,955 - 295,955
------------------ ------------------- -------------------
Minority Interest (62,386) (53,028) A (115,414)
------------------ ------------------- -------------------
Stockholders' Equity:
Preferred Stock 94,573 - 94,573
Common stock 15,983 - 15,983
Paid in capital 8,264,260 - 8,264,260
Accumulated deficit (8,334,844) - (8,334,844)
53,028 A 53,028
------------------ ------------------- -------------------
Total Stockholders' Equity (Deficit) 39,972 53,028 93,000
------------------ ------------------- -------------------
Total Liabilities and Stockholders' Equity $273,541 - $273,541
================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial
statements.
PF-4
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Contingency 2 - Sale of 49%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 153,545 - 153,545
Research & development 9,929 850,000 C 859,929
------------------ ------------------- -------------------
Net Loss from Operations (163,474) (850,000) (1,013,474)
Other Income (expense) 68,597 8,768 A 77,365
------------------ ------------------- -------------------
Minority Interest 166,468 141,498 B 307,966
------------------ ------------------- -------------------
Net Income (Loss) $71,591 $(699,734) $(628,143)
Preferred Stock Dividends $(5,674) - $(5,674)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $65,917 $(699,734) $(633,817)
================== =================== ===================
Income (Loss) per share $ - $ - $ (0.04)
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
PF-5
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.
PF-6
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 2004
Contingency 3 - Sale of 100%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
ASSETS
Current assets $273,099 $(191) B $272,908
1,020,000 C 1,020,000
Fixed assets (net) 442 - 442
------------------ ------------------- -------------------
Total Assets $273,541 $1,019,809 $1,293,350
================== =================== ===================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable & accrued expenses $78,396 - $78,396
Related party payable 84,000 - 84,000
Note payable 108,970 - 108,970
Preferred dividend payable 24,589 - 24,589
------------------ ------------------- -------------------
Total Current Liabilities 295,955 - 295,955
------------------ ------------------- -------------------
Minority Interest (62,386) 62,386 B -
------------------ ------------------- -------------------
Stockholders' Equity:
Preferred Stock 94,573 - 94,573
Common stock 15,983 - 15,983
Paid in capital 8,264,260 - 8,264,260
Accumulated deficit (8,334,844) (62,577) B (8,397,421)
1,020,000 C 1,020,000
------------------ ------------------- -------------------
Total Stockholders' Equity (Deficit) 39,972 957,423 997,395
------------------ ------------------- -------------------
Total Liabilities and Stockholders' Equity $273,541 $1,019,809 $1,293,350
================== =================== ===================
See accompanying notes to unaudited pro forma condensed combined financial
statements.
PF-7
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Contingency 3 - Sale of 100%
Pro Forma
Pro Forma Combined
InMedica Adjustments Balance
------------------ ------------------- -------------------
Revenues: $ - $ - $ -
Expenses:
General & administrative 153,545 (86,526) D 67,019
Research & development 9,929 (9,929) D -
------------------ ------------------- -------------------
Net Loss from Operations (163,474) 96,455 (67,019)
Other Income (expense) 68,597 8,768 A 77,365
------------------ ------------------- -------------------
(11,202) D (11,202)
Minority Interest 166,468 (166,468) D -
------------------ ------------------- -------------------
Net Income (Loss) $71,591 $(72,447) $(856)
Preferred Stock Dividends $(5,674) - $(5,674)
------------------ ------------------- -------------------
Net Income (Loss) to Common Stockholders $65,917 $(72,447) $(6,530)
================== =================== ===================
Income (Loss) per share $ - $ - $ 0.00
================== =================== ===================
Weighted average shares outstanding 15,982,993 15,982,993
See accompanying notes to unaudited pro forma condensed combined financial
statements.
PF-8
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.
PF-9
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 for shares of InMedica's 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 September 30, 2004, are described below:
(A) Record additional minority interest resulting from sale of MicroCor
stock.
(B) Remove 100% of MicroCor.
(C) 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
nine months ended September 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.
PF-10