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File No. 333-47924
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM SB-2/A-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IDMEDICAL.COM, INC.
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(Name of small business issuer in its charter)
Colorado 7375 84-1506325
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(State or jurisdiction of (Primary Standard Industrial I.R.S. Employer Identification No.
incorporation or organization Classification Code Number)
4333 N. 30th Street, Boulder, Colorado 80301
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(Address and telephone number of principal executive offices)
4333 N. 30th Street, Boulder, Colorado 80301
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(Address of principal place of business or intended principal place of business)
Neil A. Cox, 4333 N. 30th Street, Boulder, Colorado 80301
Telephone: (303) 447-8638
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(Name, address and telephone number of agent for service)
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Copies to:
Mitzy A. Sharp Futro, Esq.
Futro & Trauernicht, LLC
1401 Seventeenth Street, 11th Floor
Denver, Colorado 80202
Telephone: (303) 295-3360
Fax: (303) 295-1563
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Approximate date of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
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If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Security (1) Price (1) Registration
Fee
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Common Stock, $.001 par value 2,481,500 (2) $1.00 $2,466,500 $ 653.00
Common Stock, $.001 par value 1,250,000 (3) $1.10 $1,375,000 $ 365.00
Common Stock, $.001 par value 1,000,000 (3) $2.00 $2,000,000 $ 528.00
Total Registration Fee..... $1,546.00
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933.
(2) Represents outstanding shares held by selling security holders
including an indeterminate number of shares which may become issuable
in the event of a stock split, stock dividend or similar transaction
involving the common stock.
(3) Represents shares which may be issuable upon exercise of warrants
issued to three selling securityholders. Includes an indeterminate
number of shares which may become issuable in the event of a stock
split, stock dividend or similar transaction involving the common stock
pursuant to antidilution provisions of the warrants.
The Company hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the Company shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED DECEMBER ______, 2000
PRELIMINARY PROSPECTUS
IDMEDICAL.COM, INC.
4333 N. 30TH STREET
BOULDER, COLORADO 80301
PHONE: 303/447-8638
4,731,500 SHARES
COMMON STOCK
The selling securityholders named below are selling up to 4,731,500 shares of
IDMedical.com, Inc. common stock under this prospectus, including up to
2,250,000 shares they may acquire upon exercise of warrants.
This is a speculative investment and involves a high degree of risk. Carefully
consider the "Risk Factors" beginning on page 4 before purchasing this common
stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is subject to completion or amendment. These
securities may not be sold, and offers to buy may not be accepted, until the
registration statement we filed with the Securities and Exchange Commission
becomes effective.
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TABLE OF CONTENTS
SECTION PAGE
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1 Cautionary Statement Concerning Forward Looking Statements.............................3
2 Risk Factors...........................................................................4
3 Description of Business...............................................................12
4 Legal Proceedings ....................................................................22
5 Description of Property...............................................................22
6 Market for Common Stock and Related Shareholder Matters...............................22
7 Plan of Operation.....................................................................23
8 Directors and Executive Officers......................................................24
9 Ownership of Securities by Beneficial Owners and Management...........................25
10 Executive Compensation................................................................26
11 Certain Relationships and Related Transactions........................................27
12 Selling Securityholders...............................................................28
13 Plan of Distribution..................................................................30
14 Use of Proceeds.......................................................................31
15 Description of Securities.............................................................31
16 Indemnification Disclosure............................................................33
17 Changes In and Disagreements With Accountants.........................................33
18 Legal Matters.........................................................................33
19 Where You Can Find More Information...................................................33
20 Financial Statements..................................................................34
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CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
This prospectus and documents incorporated by reference contain forward-looking
statements within the meaning of:
- - Section 27 of the Securities Act of 1933; and
- - Section 21E of the Securities Exchange Act of 1934;
Forward-looking statements relate to our future operations. They estimate the
occurrence of future events and are not based on historical facts.
Forward-looking statements may be identified by terms such as:
o believes
o intends
o projects
o forecasts
o predicts
o may
o will
o expects
o estimates
o anticipates
o probable
o continue
This list is not comprehensive. Similar terms, variations of those terms, and
the negative of those terms may also identify forward-looking statements.
The "Risk Factors" discussed in this prospectus are cautionary statements. They
identify some of the factors that could cause actual results to be significantly
different from those predicted in the forward-looking statements. The
forward-looking statements and documents incorporated by reference were compiled
by our management based upon assumptions they considered reasonable. These
assumptions are subject to significant business, economic, and competitive
uncertainties and contingencies, many of which are beyond our control.
Therefore, forecasted and actual results will likely vary, and these variations
may be material.
There can be no assurance that the statements, estimates, and projections
contained in this prospectus will be achieved. Thus, we make no representation
or warranty as to their accuracy or completeness. In addition, we cannot
guarantee that any forecast in this prospectus will be achieved.
These forward-looking statements were compiled as of the date of this prospectus
or the date of the documents incorporated by reference, as the case may be. We
do not intend to update these statements, except as required by law. Therefore,
you should evaluate them by considering any changes that may have occurred after
the date these forward-looking statements appear.
We cannot guarantee the assumptions relating to the forward-looking statements
or the documents incorporated by reference will prove to be accurate. Therefore,
while these forward-looking statements contain our management's best good faith
estimates as of the date of this prospectus, we urge you and your advisors to
review these forward-looking statements, to consider the assumptions upon which
they are based, and to ascertain their reasonableness.
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RISK FACTORS
An investment in our common stock involves major risks, including those
associated with our development and our industry as a whole. You should
carefully consider the following risk factors, as well as the other information
in this prospectus, when deciding whether to purchase our common stock.
RISKS ASSOCIATED WITH DEVELOPMENT STAGE COMPANIES
AS A COMPANY IN AN EARLY STAGE OF DEVELOPMENT, IDMEDICAL FACES MANY CHALLENGES
TO ITS GROWTH
We were incorporated in June 1999 and have minimal operating history. Before
investing in our company, you must consider the risks, uncertainties, expenses,
and difficulties encountered by companies in the early stages of development.
This is especially true for companies which utilize the Internet as part of
their business. Examples of these risks and difficulties include our ability to:
o attract a large audience of users to our Internet-based
consumer healthcare network;
o increase awareness of our products and services;
o strengthen user loyalty and increase the number of registered
users;
o offer compelling on-line services;
o maintain current and develop new affiliate relationships;
o respond effectively to competitors' offerings;
o continue to develop and upgrade our technology; and
o attract, retain, and motivate qualified personnel.
We also depend on general economic conditions and continued growth in Internet
usage for commerce and communication. We cannot assure you that our business
strategy will be successful or that we will successfully address these risks or
difficulties. If we do not adequately address these risks, our business will
likely suffer.
IDMEDICAL HAS NO SIGNIFICANT REVENUES AND ANTICIPATES FURTHER LOSSES IN THE
FUTURE; WE CANNOT BE CERTAIN OF FUTURE FINANCIAL RESULTS
We have no operating history and, therefore, no significant revenues. Any future
revenues and operating results may vary significantly from quarter to quarter
due to a number of factors, not all of which are in our control. If we have a
shortfall in revenue relative to our expenses, or if our expenses increase
faster than our revenues, we may not be able to afford continued operations or
expansion. Important factors that could cause material fluctuations in our
results include:
o traffic levels on our Internet site;
o our ability to attract and retain customers;
o our ability to maintain customer satisfaction for existing and
future product and service offerings;
o new Internet sites, services, or products introduced by us or
our competitors;
o our ability to upgrade and develop our systems and
infrastructure;
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o our ability to attract new personnel in a timely and effective
manner;
o our ability to successfully integrate operations and
technologies from acquisitions, joint ventures, or other
business combinations or investments; and
o technical difficulties or system downtime affecting our
website operations.
Any revenues for the foreseeable future will depend on user subscription levels
and affiliate subscription levels. These future revenues are difficult to
forecast. In addition, we plan to increase our sales and marketing operations,
expand and develop content, and upgrade and enhance our technology and
infrastructure in order to support our anticipated growth. Many of the expenses
associated with these activities (for example, costs associated with personnel,
technology, and infrastructure) are relatively fixed in the short-term. We may
be unable to adjust spending quickly enough to offset unexpected revenue
shortfalls. If so, our operational results will suffer, preventing further
development and potentially forcing us to scale back our operations.
We believe our current reserves will be sufficient to meet operating expenses
for the next 12 months. After that time, we will either need to raise additional
funds or realize additional revenue from our business activities to meet our
cash requirements. There can be no guarantee that we will be successful in
securing additional financing should the need arise.
IDMEDICAL HAS NOT PERFORMED ANY FORMAL RESEARCH TO DETERMINE THE MARKET FOR ITS
PRODUCTS; LACK OF MARKET FOR OUR PRODUCTS WILL RESULT IN DECREASED REVENUES
We have not conducted, or engaged any other person or entity to conduct, any
formal marketing surveys or research regarding the potential for our proposed
products and services. Management's views concerning the potential for our
proposed products and services are personal and are not based upon any empirical
data or formal market research. There can be no assurance that a market for our
proposed products and services exists or, if a market does exist that it is of
the magnitude anticipated by Management. If no market exists, or if the existing
market is smaller than anticipated, we will not meet Management's expectations
for development.
IDMEDICAL MUST ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS TO BE
SUCCESSFUL; FAILURE TO DO SO WILL PLACE US AT A DISADVANTAGE TO OUR COMPETITORS
AND PREVENT FURTHER DEVELOPMENT
We are highly dependent on our corporate officers and directors. The loss of
their services would significantly delay or prevent the attainment of our
business and development objectives. In addition to our employees, we will most
likely retain consultants to complement the extensive computer hardware and
software experience of Dr. Richard J. Schaller, Sr. (our President) and the
extensive medical background and experience of Dr. Richard J. Schaller, Jr. and
Dr. Vincent E. Schaller (two of our directors). Consultants will be hired as
independent contractors, rather than employees of IDMedical.
We may be required to hire additional qualified personnel to implement our
business plan, as well as personnel with expertise in government regulation,
computer networking, and Internet software, hardware and marketing. These
requirements may also lead to the hiring of additional management personnel. We
face competition from numerous Internet companies for hiring qualified
individuals. There can be no assurance we will be able to attract and retain
these individuals on acceptable terms, if at all. Failure to do so could prevent
us from expanding our operations or continuing to operate at our current level.
IDMEDICAL DOES NOT MAINTAIN "KEY PERSON" LIFE INSURANCE, WHICH COULD RESULT IN
SIGNIFICANT FINANCIAL DETRIMENT IN THE EVENT OF A DEATH OF KEY PERSONS
We do not currently maintain "key person" life insurance on our officers',
directors', or consultants' lives. Because of our dependence on these
individuals' expertise, the loss of any of these individuals could cause
significant financial difficulties for us as we try to compensate for their
loss. See "Management."
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FUTURE ISSUANCES OF IDMEDICAL'S COMMON STOCK WILL DILUTE THE INTEREST OF CURRENT
SHAREHOLDERS
If additional shares are issued, your stock ownership will be diluted.
Additional stock or options to acquire IDMedical.com stock can be granted at any
time by the board of directors, usually without shareholder approval.
FUTURE SALES OF COMMON STOCK MAY ADVERSELY AFFECT IDMEDICAL'S CURRENT
SHAREHOLDERS BY DECREASING THE MARKET PRICE OF THE STOCK
Future sales of common stock by management personnel and others may be made
under Rule 144 of the 1933 Act. If the Rule 144 requirements are satisfied, a
person who has held their stock for one year may sell in any three-month period
a number of shares which is not greater than:
o one percent of the then outstanding shares of common stock; or
o if qualified, the average weekly trading volume in shares
during the four calendar weeks immediately prior to such sale.
A person who is not affiliated with IDMedical may also sell their shares if the
shares have been held for at least two years.
In the future, management personnel and others may acquire shares of common
stock that may be registered on Form S-8. Non-affiliates may sell these shares
without restriction by complying with applicable state securities law.
Affiliates of IDMedical may sell their shares:
o under Rule 144, but without the one-year holding period; or
o according to an effective reoffer prospectus filed for the
Form S-8.
Future sales of common stock may have an adverse effect on the market price of
our common stock. This could adversely affect our ability to obtain future
funding and could create a potential market overhang.
IDMEDICAL DOES NOT ANTICIPATE PAYING DIVIDENDS IN THE NEAR FUTURE; SHAREHOLDERS
MAY HAVE TO SELL THEIR SHARES TO REALIZE A RETURN ON THEIR INVESTMENT
The board of directors has the sole authority to determine whether cash
dividends will be paid. This decision will depend on many factors, including
earnings, capital requirements, and our financial condition. The board of
directors does not anticipate paying cash dividends in the near future. In the
absence of dividend payments, shareholders will be required to sell their shares
in a favorable market in order to realize a profit. See "Risk Factors - No
Public Market; Possible Volatility of Stock," page 11.
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IDMEDICAL DOES NOT YET HAVE AN INDEPENDENT TRANSFER AGENT, SO WE MAINTAIN THE
SOLE OWNERSHIP RECORDS OF OUR SHAREHOLDERS
We currently maintain our own stock transfer records. While we have engaged the
services of an independent transfer agent, they will not commence operations on
our behalf until this registration statement becomes effective. Until that time,
shareholders will not have the benefit of an independent record keeper that is
more qualified in maintaining shareholder records. Also, an independent transfer
agent is necessary if an active public market for our common stock develops.
THERE ARE POTENTIAL CONFLICTS OF INTEREST BETWEEN IDMEDICAL AND OUR DIRECTORS
Our officers and directors may serve as officers or directors for other
businesses having similar or different objectives. Although our officers and
directors will use their best efforts to present us with suitable opportunities,
they are under no obligation to present us with any particular opportunity.
Two of our officers and directors are engaged in activities outside of
IDMedical. They will be devoting less than 100% of their time to our affairs.
Their outside activities could also conflict with IDMedical's. In other words,
some of our directors may divide their time between our operations and
operations in which we have no interest. In dealing with potential conflicts or
conflicts which may arise as a result of their outside activities, these
directors:
o will attempt to conduct themselves in accordance with their
fiduciary obligations to us;
o will act prudently; and
o will act in our overall best interest.
RISKS RELATED TO THE INDUSTRY
OUR ABILITY TO EXPAND NETWORK INFRASTRUCTURE IS CRUCIAL TO IDMEDICAL'S CONTINUED
GROWTH; THIS ABILITY IS UNCERTAIN
We intend to continually expand and adapt our network infrastructure to
accommodate additional users, increasing transaction volumes, and changing
consumer and customer requirements. However, we may be unable to accurately
project the rate or timing of increases, if any, in website usage or to expand
and upgrade our systems and infrastructure to accommodate these increases.
Furthermore, our systems may be unable to accommodate the increases while
maintaining acceptable overall performance. Any lapse in service could cause our
users to switch to competitors' on-line services.
IDMEDICAL MAY FACE POTENTIAL LIABILITY FOR INFORMATION ACCESSED FROM OUR WEBSITE
We could be sued if confidential information from our website is used or
disclosed inappropriately. Similar claims have been brought against on-line
services in the past, sometimes successfully. While our agreements may provide
that we will be indemnified against these liabilities, this indemnification may
be inadequate. In addition, our errors and omissions insurance may not
adequately protect us against these claims.
Our business is based on establishing the IDMedical.com network as a trustworthy
and dependable provider of services. Allegations of impropriety, even if
unfounded, could have a material adverse effect on our reputation and our
business.
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WHILE IDMEDICAL'S GROWTH WILL DEPEND IN PART ON OUR PROTECTION OF PATENTS,
TRADEMARKS, COPYRIGHTS, AND PROPRIETARY RIGHTS, SUCH PROTECTION IS UNCERTAIN
Our success will depend in part on our ability to:
o obtain registration of our trademarks, service marks,
copyrights, and patents;
o maintain our trade secrets; and
o operate without infringing on the proprietary rights of
others.
This applies in the United States as well as other countries. We cannot
guarantee intellectual property protection will be granted to the extent we
desire. In addition, this protection could be challenged once granted.
The following actions may be required to enforce or defend any patents issued or
licensed to us or to determine the scope and validity of third-party proprietary
rights:
o litigation;
o interference proceedings in the United States Patent and
Trademark Office;
o oppositions in foreign countries; or
o reexaminations.
These actions could result in substantial costs and diversion of our efforts.
Where patent protection is not believed to be appropriate or obtainable,
proprietary technology and processes will most likely be protected through
confidentiality agreements and assignments with our consultants and
collaborators. There can be no assurance that:
o these agreements will provide meaningful protection;
o these agreements will not be breached;
o we will have adequate remedies for any breach; or
o our trade secrets will not otherwise become known or
independently discovered by competitors.
In addition, intellectual property matters in the Internet industry are highly
uncertain and involve complex legal and factual questions. Accordingly, the
extent of claims allowed with respect to the Internet intellectual property
rights of others cannot be predicted.
For further discussion of the intellectual property issues we face, see
Description of Business - Intellectual Property on page 20.
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IDMEDICAL'S SUCCESS WILL DEPEND IN PART ON PATIENTS' AND THE HEALTHCARE
INDUSTRY'S ACCEPTANCE OF THE INTERNET AND THIS ACCEPTANCE CANNOT BE GUARANTEED
To be successful, our network must attract a significant number of customers as
well as other participants in the healthcare industry. Our business plan assumes
that local healthcare organizations will affiliate with us, making it worthwhile
for their customers to use our services. This business plan is untested. If it
cannot be successfully implemented, our business will likely be unsuccessful
unless we can develop an alternate business plan, a costly proposition.
THERE IS INTENSE COMPETITION IN IDMEDICAL'S RAPIDLY CHANGING INDUSTRY
The number of Internet websites offering healthcare content, products, and
services is enormous and increasing at a rapid rate. These companies compete
with us for users. In addition, traditional media and healthcare providers
compete for consumers' attention through conventional means as well as new
Internet initiatives. We believe competition for healthcare consumers will
continue to increase as the Internet develops as a communication and commercial
medium.
Potentially, we will compete directly for users with numerous Internet and
non-Internet businesses, including:
o health-related on-line services or websites targeted at
consumers, such as drkoop.com, WebMD Inc., Medscape Inc.,
PersonalMD.com, and MedicaLogic, etc.;
o on-line and Internet portal companies, including America
Online, Inc., Microsoft Network, Netscape, Yahoo! Inc.,
Excite, Inc., Lycos Corporation, and Infoseek Corporation; and
o other consumer affinity groups which offer healthcare-related
content to specific demographic groups.
Differences exist which lead us to believe that current competition is not a
direct threat to our success. However, some of the competition is likely to
enjoy substantial competitive advantages compared to IDMedical, including:
o the ability to offer a wider array of on-line products and
services;
o larger production and technical staffs;
o greater name recognition and larger marketing budgets and
resources;
o larger customer and user bases; and
o substantially greater financial, technical, and other
resources.
To be competitive, we must respond promptly and effectively to the challenges
associated with technological change, evolving standards, and competitors'
innovations. Increased competition could result in a loss of market share or a
reduction in our prices or margins. Competition may increase significantly as
new companies enter the market and current competitors expand their services.
Please see "Description of Business -Competition," Page 14.
IDMEDICAL IS SUBJECT TO GOVERNMENT REGULATION RELATING TO THE INTERNET AND
MEDICAL RECORDS PRIVACY, SOME OF WHICH MAY BE ADVERSE
Since we operate an Internet-based service, our business is subject to
government regulation relating to the Internet that could impair our operations.
Due to the increasing use of the Internet as a communication and commercial
medium, the federal government has adopted laws, and may adopt additional laws
and regulations, with respect to the Internet. These laws and regulations cover
the areas of user privacy, pricing, content, taxation, copyright protection,
distribution, and characteristics and quality of production and services. For a
description of risks
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associated with governmental regulation relating to the Internet, please see
"Description of Business - Internet Policies" on page 21.
The federal government has also turned their attention to regulation of consumer
privacy with regard to medical records. While no legislation has been passed,
Congress is currently considering a bill which would protect electronic medical
records. This legislation, known as the Health Information Privacy Protection
Act (HIPPA), would be applicable to IDMedical and its employees. See
"Description of Business - Privacy Policy" on page 19.
INTERNET CAPACITY CONSTRAINTS MAY HINDER IDMEDICAL'S FUTURE DEVELOPMENT
Our success will depend, in large part, upon the continued growth of a robust
communications industry and infrastructure for providing Internet access and
carrying Internet traffic. The Internet may not be reliable at all times because
of:
o inadequate development or unexpected impairment of the
necessary infrastructure as a reliable network backbone;
o a failure to timely develop complementary products such as
high speed modems;
o delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet
activity; or
o increased government regulation.
If the Internet continues to experience significant growth in the number of
users and the level of use, its infrastructure may experience problems in
supporting the demands placed on it. These problems could lead consumers,
including our customers, to rely on sources other than the Internet for
information and services.
IDMEDICAL DEPENDS ON THE CONTINUOUS, RELIABLE AND SECURE OPERATION OF OUR
WEBSITE; A DISRUPTION IN OPERATIONS MAY CAUSE A LOSS OF CUSTOMERS AND
SUBSCRIBERS
We rely on the Internet and therefore depend upon the continuous, reliable, and
secure operation of Internet servers and related hardware and software. In the
past, several large Internet commerce companies have suffered highly publicized
system failures that resulted in adverse consequences to their customers and
subscribers. If our service is interrupted, which could occur due to reasons
beyond our control, our users will be inconvenienced and our reputation may be
diminished. This could result in significant negative publicity and litigation.
We protect our computer and communications hardware through physical and
software safeguards. However, they are still vulnerable to fire, storm, flood,
power loss, telecommunications failures, physical or software break-ins, and
similar events. We do not have full redundancy for all of our computer and
telecommunications facilities and do not, at this time, maintain a back-up data
facility. Business interruption insurance may be inadequate to protect us in the
event of a catastrophe. We also depend upon third parties to provide users with
web browsers and Internet and on-line services necessary for access to our
website. It is conceivable that our users may occasionally experience
difficulties with Internet and other on-line services due to system failures,
including failures unrelated to our systems. Any sustained disruption in
Internet access provided by third parties, such as Internet Service Providers,
could adversely impact our business.
We retain confidential customer information in our database. Therefore, it is
critical that our facilities and infrastructure remain secure and are perceived
to be secure by our consumers. Despite the implementation of security measures,
our infrastructure may be vulnerable to physical break-ins, computer viruses,
programming errors, or similar disruptive problems. A material security breach
could damage our reputation or result in liability to us.
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THERE IS CURRENTLY NO PUBLIC MARKET FOR IDMEDICAL'S STOCK, WHICH MAY INCREASE
THE VOLATILITY OF OUR STOCK PRICE AND RESTRICT SHAREHOLDERS' ABILITY TO SELL
THEIR STOCK
NO PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK
There has been no public market for our common stock. Furthermore, there can be
no assurance that an active trading market will be created or sustained in the
future. If a market does develop, on the OTC Bulletin Board or otherwise, there
can be no assurance that the market will persist or that the stock price will
rise.
Securities of companies which utilize the Internet have historically been very
volatile. Our stock can expect substantial price changes in short periods of
time due to this unpredictability. Stock markets in the United States have, from
time to time, experienced significant price and volume fluctuations that are not
necessarily related to a company's net worth or any other established criteria
of value. Substantial stock price swings may occur for the foreseeable future
and percentage changes in stock indices (such as the Dow Jones Industrial
Average) could be magnified, particularly in downward movements of the markets.
These fluctuations may adversely affect the price of our common stock.
RESTRICTIONS ON SECONDARY TRADING
Initially, our common stock will be a "penny stock," which S.E.C. regulations
define as any equity security with a market price or exercise price of less than
$5.00 per share, subject to several exceptions. The Securities Enforcement and
Penny Stock Reform Act of 1990 requires additional disclosure in connection with
any trades involving penny stocks to persons other than established customers
and accredited investors. For transactions covered by the "penny stock" rules, a
broker-dealer must:
o Make a special written determination that the penny stock is a
suitable investment for the purchaser;
o Receive the purchaser's written consent to the transaction
before the purchase;
o Deliver a standardized risk disclosure document prepared by
the S.E.C.;
o Provide the customer with additional information including
current bid and offer quotations for the penny stock;
o Disclose the commissions to be earned by the broker-dealer and
its salesperson; and
o Send monthly statements showing the market value of each penny
stock held in the customer's account.
These requirements may limit the ability of broker-dealers to sell our
securities and may affect the ability of investors to sell their shares in the
secondary market. The penny stock rules will not apply if our securities
maintain a market price exceeding $5.00. However, there can be no assurance our
common stock will reach or maintain this level.
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DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
We were incorporated in June 1999 under the laws of the State of Colorado for
the purpose of developing and storing personal medical histories on the
Internet. To date, we have conducted minimal business operations.
BUSINESS OF ISSUER
Company Overview
IDMedical.com is a development stage company that created an Internet
application consisting of a customer database of important medical information.
The website allows the patient or an authorized person to input and access the
patient's medical history on the Internet. The data input mode is designed to be
user friendly. The patient can either go into an input mode and type the data
directly into the computer or go through a question and answer session with "Dr.
E-MED," a computerized assistant that will help the patient input their medical
histories.
Data input is automated by using scroll bars and prompts. For example, after the
patient enters his or her name, a data box appears. This box allows the patient
to input the following data:
o sex, age, date of birth, marital status, and social security
number;
o current and past medical problems;
o current medications;
o allergies;
o vaccinations;
o test results; and
o past medical history, surgeries, and hospitalizations.
Once this information is entered, patients can print a copy of their medical
record for future reference. The patient's religious affiliation will also be
included on the medical record.
Once entered, patients' medical information is stored in a secure database on a
secure server. This information can be accessed on the Internet through a series
of passwords. Once in the system, the patient or physician must enter the
patient's User ID and password to access the patient's file. Through this
process, doctors can access a patient's personal and medical information stored
on our system without the need for assistance from the patient or their family.
Upon arrival at an emergency room (ER), our members present their IDMedical
membership card to the admitting nurse. This card provides all of the
information needed to access our website via the Internet. Upon entering our
website, the nurse or doctor enters the physicians' section. In this section,
they enter the member's User ID and Password, which immediately provides them
with the member's Medical History Data Sheet (MHDS). By providing this critical
information, ER personnel will be able to make a quick and accurate diagnosis.
During our beta-testing program, we enrolled over 100 members. In addition, our
website is currently being used to treat patients on an emergency basis at Kent
General Hospital in Dover, Delaware. Through the beta-testing program, six
members have been admitted for emergency care with very positive results.
Hospital staff indicated these patients were admitted in less than half the
customary time.
The medical histories on IDMedical.com are secure and confidential. At present,
the only people who will have access to a patient's medical histories will be
the patient and those physicians who know the patient's User ID and password. In
the future, registered doctors may enter the system using only the patient's
name and Social Security Number, if the member elects this option. We do not
believe it is wise to allow unlimited physician access to the medical histories
maintained on our website at this time. This capability will be made available
when we are able to reach agreements with medical societies and specialty boards
to allow verification of credentials.
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IDMedical must be able to verify that all doctors accessing the medical
histories on our website are licensed physicians. We plan on using other
websites to perform this function. For example, the American Medical Association
("AMA") has a website with a "members-only" section that physicians may access
by entering their unique AMA number. Other medical websites, including state
medical societies and the American College of Surgeons, Pediatrics, Internal
Medicine, and Emergency Physicians, have a similar setup. Once physician
verification has been accomplished on one of these websites, doctors will be
able to access IDMedical.com through a link. This approach will save us the time
and expense involved with establishing our own verification system. While we
have no current relationship or affiliation with any other medical websites, we
intend to pursue such opportunities following the official launch of our
website, scheduled for early January, 2001. The initial approach and negotiation
with these sites will be performed by our physician directors. Therefore, the
costs associated with these discussions should be minimal. After a relationship
is established, we will pay the medical website a fee for each member we receive
via referral from that website. That fee will be $5.00 per member, per year of
membership.
Doctors will be greeted with a welcome page when they access the IDMedical.com
site by a link from another medical website. Physicians visiting our website for
the first time will be given a questionnaire that will ask for personal
information, such as license number, social security number, and DEA number.
They will then select a User ID and password. The next time they visit our site,
they will only have to enter their User ID, password, and DEA number to access
our database.
Under our current pricing model (which has changed since our inception and is
subject to further change), patients will be charged $25 for a one-year
membership with IDMedical.com. A family of two can establish a one-year account
for $45. Additional family members will be charged $15 each for up to two
additional members, and $10 each for an additional two. All payments will be
made by credit card, which will help confirm the members' identity.
Additional customers and revenues will be generated through an affiliate
subscriptions program. This will be accomplished through partnering with
organizations, associations and corporations which would benefit from the
services provided by IDMedical, either directly or through their members. These
organizations will be enrolled at attractive business rates, which have not yet
been established. Examples of planned affiliates include medical practices which
will benefit from having the patient's histories on-line; hospitals which will
benefit from having out-patient histories on file and available for future
admissions; schools and universities which require physical examinations of all
their students; employers who require mandatory physicals of their employees;
and associations such as the AARP.
In addition to utilizing our services, these affiliates will benefit from our
"Dr. E-MED Rebate Program." Every referral from an affiliate that becomes a
member of IDMedical.com will earn the referring company or organization $5.00
for each year of that person's membership.
Dr. E-MED Character
In order to provide a service which is user-friendly, we have introduced the
"Dr. E-MED" character. Dr. E-MED is the customer's personal assistant to lead
them through the process of filling out their personal medical histories. We
intend to make the customer feel that Dr. E-MED is not only their on-line
Internet assistant, but also a friend they can rely on to help input their
information and keep their medical histories up-to-date, accurate, and secure.
The Dr. E-MED character is also our corporate "Internet Spokesperson." Dr. E-MED
appears on our corporate literature, including marketing materials, letterheads,
envelopes, and business cards. He will also appear on all customer medical
reports and membership cards.
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Membership Card
Every adult member of IDMedical.com receives one membership card. The member is
advised to carry this card at all times. The purpose of the membership card is
to identify our member to an attending physician in either an emergency or an
"out-of-office" medical incident.
The IDMedical.com membership card includes the member's name, social security
number and date of birth, along with the basic medical information needed by the
attending physician. This information will include the member's primary
physician and phone number, primary family contact and phone number and organ
donor preference.The membership card also provides the www.IDMedical.com
Internet address. Once logged onto the website, the physician will have the
medical information required to treat the patient.
Industry Overview
The need for medical information can arise at any time. Situations often arise
when a patient needs to be treated by an unfamiliar doctor. This can occur when
the patient's regular doctor is unavailable or when the patient is traveling
away from home or visiting the local emergency room. Timely access to the
patient's medical histories can prevent substandard care that may result in poor
or dangerous results. In addition, many medical practices have other doctors
cover their patients when they are on vacation or out of the office for the
weekend. IDMedical.com will provide doctors in both situations with the
information they need to care for unfamiliar patients in a quick, safe, and
effective manner. By utilizing the Internet to provide access to this crucial
information, IDMedical is capitalizing on one of the fastest growing media
outlets available.
The Internet has become an important alternative to traditional media, enabling
millions of consumers to seek information, communicate with one another, and
execute commercial transactions electronically. The Internet is distinct from
traditional media in that it offers real-time access to dynamic and interactive
content and instantaneous communication among users. These characteristics,
combined with the fast growth of both the number of Internet users and amount of
Internet usage, have created a powerful, rapidly expanding direct marketing and
sales channel.
Competition
The on-line healthcare market is new, rapidly evolving and intensely
competitive. IDMedical expects competition to intensify in the future since
barriers to entry are minimal, allowing current and new competitors to launch
new websites at a relatively low cost. In addition, the Internet medical
information industry is intensely active and competitive. We must compete with a
variety of other companies, including drkoop.com, WebMD Inc., Medscape Inc.,
PersonalMD.com, and MedicaLogic.
We believe we have a competitive advantage in this area, since few of our
competitors currently offer this type of service. However, companies like
drkoop.com are planning to become involved in medical histories. In addition,
PersonalMD.com already has a website that allows customers to enter their
medical histories into a database. Even so, we are unaware of any other site
dedicated solely to this purpose.
Unlike most of our competitors, our revenues will come primarily from enrollment
fees. This gives the customer ownership of his medical information. Company
policy will prohibit the disclosure or sharing of customers' personal or medical
information with third parties, including corporations and insurance companies.
Since the customer pays for these histories, they are the customer's property
and can be changed or deleted at will by the customer.
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There are other advantages and features that differentiate us from the
competition. These include the following:
1. Getting a Complete Medical History.
Our organ-by-organ approach to data entry will allow the member to
probe their memory for illnesses, creating a more complete database
than programs that simply utilize broad questions (e.g.,"Have you ever
had any surgeries?"). This capability will be available on our website
by early January 2001, as it is currently being finalized by IDMedical
staff and our consultants.
2. Easy Access to Patient's Histories By Doctors.
As part of our commitment to easy access and use, the doctors' access
area has no advertising. Furthermore, we will work with medical
societies and specialty boards to verify doctor eligibility and ensure
easy access by doctors without requiring the patient to be conscious or
the family to be present.
Once the patient grants permission, there is no need for registered
doctors to have the patient's User ID and password to enter the system.
The doctor can enter the system knowing only the patient's name and
social security number. Therefore, our system can be used as an
out-of-office patient care system. This capability will be available
once agreements are reached with medical societies and specialty
boards.
3. A Universal System For Patients and Doctors.
Physicians and patients want a universal system that is fast, easy to
enter and use, accurate, and reliable. Our focus is to help patients
get information easily and quickly, and help doctors get the
information they need in a moment's notice.
4. The Rebate Program.
Through our "Dr. E-MED Rebate Program," we will split our fees with
companies and organizations that refer people to our program. Every
referral who becomes an IDMedical.com member will earn the referring
company or organization $5.00 for each year of that person's
membership.
5. Storage of Required Preventative Health Information.
Many elementary and secondary schools, as well as colleges, require
students and teachers to have a record of their immunizations. These
histories usually include measles, mumps, rubella, diphtheria, tetanus,
pertussis and polio, as well as the results of their last TB skin test.
In its current stage of development, the IDMedical.com website can
store this information for a person to conveniently access or print.
Health care providers can also review or edit this information as new
vaccinations are given.
IDMedical believes there is a window of opportunity to develop and exploit our
application. However, the principal competitive factors in our market are name
recognition, selection, personalized services, convenience, price,
accessibility, quality of site content, reliability, and speed of fulfillment.
Therefore, our number one corporate objective is to have IDMedical.com become a
household name when people think of their medical histories.
There can be no assurance that we will be able to successfully compete against
current and future competitors. Many of our current and potential competitors
have longer operating histories, larger customer bases, and greater product
recognition than we do. They also have significantly greater financial and
marketing resources. Some of our competitors may be able to devote greater
resources to marketing and promotional campaigns, adopt more aggressive pricing
or availability policies, and devote substantially more resources to website
systems development and marketing than we can. In addition, companies that
control access to transactions through network access or
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web browsers could promote our competitors or charge us a substantial fee for
inclusion. For more information about these and other risks associated with
industry competition, see "Risk Factors."
Marketing
The following sectors will be targeted as IDMedical expands its marketing
efforts:
1) Corporate America
We believe every major corporation with traveling employees or
employees on overseas assignments can benefit from our
program. Most corporations will realize that, for a nominal
annual premium, they can provide " information insurance" that
will assist their employees in a medical emergency. In many
cases, the cost of premiums is minimal compared to the
economic cost associated with the loss or disability of one or
more employees due to unavailable or inaccurate medical
information.
2) Non Profit Organizations (NPOs)
IDMedical.com can provide NPOs with an innovative way of
raising money. Through our "Dr. E-MED Rebate program," every
referral from a NPO will earn the organization a $5.00 rebate
per member, per year of enrollment. This will provide a
recurring cash flow for the NPO. University Alumni
Associations will be specifically targeted for the "Dr. E-MED
Rebate program." The alumni populations are well educated and
computer literate, which could result in strong enrollment for
IDMedical.com.
3) Major Associations/Organizations
IDMedical.com will target associations and organizations that
have a large member population, such as the American
Association of Retired Persons (AARP). IDMedical.com will
target this association as a prime candidate for our products
and services. Our aging society has more citizens traveling
during their golden years. IDMedical.com can provide a
valuable service for these members by having their medical
histories available on the Internet. In addition, these
associations or organizations can receive substantial
financial reward for their participation through the "Dr.
E-MED Rebate program."
4) Major Insurance Companies
IDMedical.com will target large insurance companies, such as
CIGNA, Prudential, Blue Cross and Blue Shield, and encourage
their members to participate in our program. These companies
can promote the program as a form of "information insurance"
to assist their members in receiving proper medical care. In
addition to keeping medical costs down for the treatment of
their members, these companies will receive a $5.00 rebate per
member, per year of membership enrolled.
5) The General Public
IDMedical.com will directly market to the general public via
the Internet and general advertising. Strategic relationships
will be aggressively pursued with major Internet companies.
This will include alliances and marketing agreements ("Dr.
E-MED" Rebate program") with Internet Service Providers.
Initially, IDMedical.com will target a specific geographical
area in the Northeast specifically focusing on the four-state
area of New York, New Jersey, Delaware and Pennsylvania.
Advertising will be in the form of newspaper, TV and radio
ads. There will also be some direct mail outreach to selected
areas.
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6) Strategic Alliances with Businesses and Organizations
There are many businesses and organizations, both large and
small, whose employees, customers, members and attendees can
benefit from the services of IDMedical.com. Strategic
alliances will be formed with these entities, giving them an
incentive through the "Dr. E-MED Rebate program" to make their
employees, customers and members aware of IDMedical.com's
services. Alliances have already been formed with Happy
Harry's Pharmacy, a regional pharmacy chain with approximately
500,000 customers throughout Delaware and Pennsylvania, and
Dover Family Practice in Dover, Delaware, a medical practice
with approximately 30,000 patients.
7) Special Interest Consumer Markets
IDMedical.com will target five special interest consumer
markets through the Internet: African-Americans, Hispanics,
Asian-Americans, college students, and the gay and lesbian
population. These groups were selected based on criteria such
as Internet usage and buying power.
We will promote IDMedical.com by using banner advertising on
websites that cater to these groups. The ads will be paid with
cash or through the "Dr. E-MED Rebate program," where the host
website will receive $5.00 per member, per year for every
person who enrolls in IDMedical.com.
8) Strategic Medical Alliances
IDMedical.com's growth philosophy will target medical
societies whose members are physicians. These societies cross
all types of medicine and represent a prestigious affiliation
for us. We intend to pursue a multi-faceted relationship that
includes physician verification and banner advertising,
creating a win-win scenario for both parties. Examples of
medical societies that will be approached are the American
College of Surgeons and the Royal Society of Medicine.
9) Travel Industry
The travel industry presents a tremendous growth opportunity
for IDMedical.com. People who travel are most likely to be
aware of the unexpected or emergency medical needs that might
arise when out of town. Therefore, we plan to target major
travel agencies, airlines, and publications such as FODOR's.
10) Cable Networks
There are two cable channels that currently provide health
subjects 24 hours a day: "Discovery Health Network" (owned by
the Discovery Channel) and "The Health Network" (owned by
FOX). These cable companies could provide IDMedical.com a
platform for national media exposure. With the "Dr. E-Med
Rebate program," substantial monetary enticements should
encourage these cable networks to advertise our service.
11) Institutions Which Maintain Immunization Records
Our website allows for the maintenance of routine immunization
records, as well as TB skin test records. This will allow us
to market our product to school systems, universities, camps,
and work places that require mandatory submission of this
information. IDMedical can establish alliances with these
entities that will benefit both parties. The school systems
would require their members to enter their immunization
records, as well as other emergency medical information, on
IDMedical.com. In return, IDMedical will give these entities
$5.00 for each person that initially joins our program.
The ability to store routine medical histories will expand the
market of potential users of our website to all ages,
including people who don't have a history of medical problems.
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The rate and order of expansion of our marketing efforts will be dictated by the
availability of dedicated marketing funds, as well as the perceived need for
concentration in certain areas.
Hardware, Software and Future Website Design
Our Web and Database Servers have been installed at Fastnet Corporation in
Bethlehem, Pennsylvania. The first official release of our production software
has been completed, and will be put into full operation on the World Wide Web in
early December 2000.
IDMedical.com plans to continuously improve and upgrade our website and computer
platform within budgetary constraints. We have developed a hardware platform
that is upgradeable and expandable. Our initial development platform consists of
two servers, one housing our website and one housing our database. The next
stage of development is to add additional servers to handle additional volume.
The length of time necessary to do this will depend on both consumer response to
our service (which will determine the need for these upgrades) and our success
in obtaining further financing (which will determine our ability to respond to
this need).
IDMedical.com originally retained digitalNATION - a VERIO Company, Inc., to
provide server and co-location services. Later, we retained Fastnet Corporation
to provide these services. Fastnet is a leading provider of comprehensive
business Internet services, with an emphasis on serving small and mid-sized
business markets. Fastnet offers customers a broad range of Internet solutions,
including high-speed access, Web hosting, e-commerce, virtual private networks,
and other enhanced services. Fastnet supports its operations with highly
reliable and scalable infrastructure and systems including a facilities-based
Tier One national network.
On October 12, 1999, INTEL Corp. announced plans to market its authentication
services for a fee to healthcare Web firms. This technology will offer "online
credentials" to physicians providing a means to authenticate the identity of
doctors seeking to access health data in cyberspace. The American Medical
Association (AMA) will issue each doctor an INTEL created AMA "digital
credential". We feel this break-through technology will provide the security and
assurance our members need. In other words, members will know that their medical
information is only going to be viewed by healthcare providers. We intend to
approach INTEL concerning the use of this technology.
Future Products and Services
Our primary service will be our on-line interactive website for developing,
storing, and accessing medical histories on the Internet. However, we plan to
further develop this software so it can be used at home as a stand-alone program
on the customer's PC. This program will be developed to run on Microsoft Windows
and will be sold on floppy disks, CDs, and DVDs. Once the customer develops his
medical history, he can either load the data onto our website or keep it for his
own records, sharing it with his healthcare providers as needed.
Another product to be developed from our current program is a software program
that will allow physicians to store and retrieve their patients' medical
histories electronically from their offices. This product will be developed for
Microsoft Windows and will run on PCs and PC networks. The software will be sold
on floppy disks, CDs, and DVDs. This program will be capable of inputting and
storing medical histories for an entire practice. Every physician in the
practice will be able to access patient medical histories from multiple
locations, including their homes. This application has the potential to replace
current filing systems, including paper files. Future software developments
could also enable existing Electronic Medical Records (EMR) systems to integrate
with IDMedical's Internet platform.
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Schools and work places are required to keep track of important medical
information, including:
o immunization records;
o date of last TB skin test;
o blood type;
o hepatitis vaccinations schedule;
o drug allergies; and
o personal physician information
A software program could be used to consolidate this information, allowing
schools and employers to keep the necessary medical histories on file in their
medical departments. This program could be sold in CD-ROM and disk format, and
could also be downloaded from our website for a fee.
This data need not be maintained on the Internet. Instead, it could be kept on a
central computer maintained by the school or employer.
Each of these software expansions is dependent on future development efforts,
which require additional funding. The actual costs for development cannot be
determined at this time due to on-going changes in industry technology.
Privacy Policy
All medical information input by the customer is transmitted in an encrypted
format designed to keep unauthorized persons from retrieving it. The information
is stored on a secure server dedicated to IDMedical.com. IDMedical will keep the
customer's information confidential and will only share the information with
authorized healthcare providers.
Presently, Congress is considering a bill known as the Health Information
Privacy Protection Act (HIPPA). If passed in its current form, the bill would
give consumers stronger control over their own personal medical records and who
will have access to them. The bill is aimed at guarding electronic medical
records, but does not pertain to paper records.
The HIPPA standards would reduce employers' access to employee medical
information, allow patients to get copies of their own records and require
patient permission to release information in certain circumstances. However, no
consent will be needed to release information for medical treatment, payment or
health-care operations such as auditing, checking staff credentials or quality
assurance work. Anyone who reveals a person's electronic medical records for
other purposes would be subject to a fine of up to $25,000 and incarceration for
up to six years.
We believe our internal policies will be sufficient to comply with these new
laws, if passed. Our privacy policy is based on the following commitment to our
members:
o All medical histories are protected by a multi-level access
and security system using our own server. All data will be
encrypted.
o A member's medical history may only be accessed by the member,
their physician, or an authorized healthcare provider. The
member's username and password must be entered to gain access
to their file.
o Authorization of attending physicians will be through a
professional website or through the new INTEL/AMA "digital
credential," when it becomes available.
o We will have the ability to electronically verify and check
anyone who accesses our members' files. We will prosecute or
revoke the privileges of anyone who tries to violate the
security of our system.
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It is our belief that members' privacy, protection, and personal control and
ownership of their files are a top priority. A member can request to have their
files deleted from IDMedical.com at any time. We will comply with this request
and completely delete the file from our database. Our members exercise complete
control over their medical histories stored by IDMedical.
Employees
IDMedical currently has seven full-time employees. We anticipate that we will
hire three additional full-time employees in the next year, as well as a number
of part-time employees. This group will consist of professional, technical, and
support personnel.
INTELLECTUAL PROPERTY
Patent and Trade Secret Protection
We use proprietary business processes and software applications to conduct our
business on the Internet. We intend to protect our business processes and
software applications through applicable patent laws, to the extent this
protection is available. We will also aggressively protect our business
processes by establishing appropriate trade secret mechanisms including
confidentiality provisions in the contracts of our employees, consultants, and
business partners. Finally, we will establish appropriate procedures to ensure
that only those individuals with a "need to know" receive disclosure of any
aspect of our business processes.
On November 1, 2000 we filed a patent application with the United States Patent
and Trademark Office to protect our "System and Method for Securely Storing and
Retrieving Medical Information Over the Internet."
Trademarks and Service Marks
We have filed applications with the United States Patent and Trademark Office to
register the following as service marks:
1. The names IDMedical.com and IDMedical;
2. The proprietary character, "Dr. E-MED," as a logo; and
3. The character's name, "Dr. E-MED," as a word mark or "Dr.
E.Z.MED" and "Dr. IDMed" as alternative word marks.
While we intend to use these marks to identify our products and services in
various aspects of our overall marketing and sales program, their registration
has not yet been completed. If these marks become registered, we intend to
aggressively police and protect them in the United States. If any of the marks
fail to qualify for registration, we will decide whether to continue using the
unregistered mark or to select an alternative mark. Additionally, we will pursue
registration of these marks in the appropriate foreign jurisdictions if we
decide to conduct business outside of the United States. We will also seek
registration of one or more of the previous marks, or one or more different
marks, as trademarks for use in connection with future product offerings.
Copyrights
IDMedical has entered into agreements with the software developer, website
designer, and graphic artist that were selected to develop and design our
interactive website and proprietary software. We believe these agreements are
sufficient to confer upon IDMedical all rights, title, and interest in and to
the intellectual property and other proprietary rights regarding our website and
related software. These agreements include rights of indemnification of
IDMedical against, among other things, third-party claims of infringement and
misappropriation of third-party rights.
We intend to maximize the legal protection of these rights before activating our
website and engaging in full business, operations. We have filed applications
for registration of the "Dr. E-MED" character and all copyrightable aspects of
our website with the United States Copyright Office. We further intend, on an
ongoing and regular basis,
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to update our filings with the Copyright Office as new content, art, and other
copyrightable works are added to our website. We are also evaluating whether any
aspects of our proprietary software are copyrightable. If so, we will attempt to
register those aspects of our software with the Copyright Office.
INTERNET POLICIES
Consumer Issues
We are sensitive to the unique operating characteristics of the Internet,
particularly with respect to consumer concerns regarding privacy issues and
truth in advertising. Accordingly, we intend to regularly review our policies
and processes to ensure the confidentiality and limited use of information
collected by IDMedical. These processes include the use of technology to
minimize any inadvertent disclosure of, or access to, information by third
parties with whom we may have business-to-business relationships (such as any
host site) or wholly unrelated third parties. We also intend to keep abreast of,
and comply with, applicable laws relating to:
o the collection, use, and dissemination of consumer
information; and
o the content and presentation of on-line, broadcast media, and
other marketing and advertising directed at consumers.
We also recognize the need to ensure adequate handling of on-line customer
relationship issues, including contracting and credit card authorization
procedures. Accordingly, a customer contract, contracting procedures, and
disclaimers are posted on our website. These are intended to ensure binding
contracts and eliminate or minimize liability and credit card chargebacks. We
will regularly review our procedures, on-line contracts, disclaimers, and
relations with credit card transaction service providers to guarantee good
customer relations.
Business-to-Business Relationships
In addition to conventional media advertising, we intend to advertise on the
Internet through one or more Internet Service Providers. In negotiating with
these providers, we intend to achieve maximum efficiency in marketing to
Internet consumers by negotiating an appropriate fee mechanism with the service
provider(s). Negotiations are currently taking place with at least one Service
Provider.
In our Internet marketing, advertising and consumer information efforts, we are
sensitive to the need to avoid potential liability to third parties for, among
other things, inadvertent infringement of intellectual property rights.
Accordingly, we intend to minimize our potential liability by, among other
things, negotiating appropriate indemnification provisions with contracting
third parties and by adopting appropriate policies and procedures regarding the
removal of allegedly defamatory, infringing, or otherwise inappropriate
materials from our website.
We may be deemed a "service provider" within the meaning of the federal Digital
Millennium Copyright Act ("DMCA"). If so, we intend to take advantage of the
DMCA provisions whenever possible and practicable. These provisions will help
minimize potential liability under the federal Copyright Act for allegedly
infringing material posted on, or accessed through, our website.
Internet Taxation
A number of legislative proposals have been made at the federal, state and local
level, and by foreign governments, that would impose additional taxes on the
sale of goods and services over the Internet. Some states have also taken
measures to tax Internet-related activities. Although Congress recently placed a
three-year moratorium on state and local taxes on Internet access and
discriminatory taxes on electronic commerce, existing state and local laws were
expressly excepted from this moratorium. Furthermore, once this moratorium is
lifted, federal and state taxes may be imposed upon Internet commerce. This
legislation or other attempts at regulating commerce over the Internet may
substantially impair the growth of Internet commerce. This would adversely
affect our opportunity to derive financial benefit from these activities.
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Domain Names
While a domain name is technically a Company's Internet "address," it also
serves as part of the Company's identity. For this reason, we have registered
the domain names IDMedical.net and IDMedical.org. to prevent third party
registration and use of our name on the Internet. Domain names have been the
subject of significant trademark litigation in the United States. Third parties
may bring claims for infringement against us for the use of our domain name or
in respect of our .net and .org registrations.
The current system for registering, allocating, and managing domain names has
been the subject of both litigation and proposed regulatory reform. As a result,
there can be no assurance that our domain names will retain their value.
Therefore, we may have to obtain new domain names in addition to or in lieu of
our current domain names if such litigation or reform efforts result in a
restructuring of the current system.
Jurisdiction
The Internet has a global reach. It is possible that, although our transmissions
over the Internet originate primarily in the State of Colorado, other state and
foreign governments might attempt to regulate Internet activity and our
transmissions or take action against us for violations of their laws. Violations
of these laws may be alleged or charged by state or foreign governments. In
addition, these laws may be modified, or new laws enacted, in the future. Any of
the foregoing could have a material adverse effect on our business, operational
results, and financial condition.
Compliance with Applicable Laws
We intend to keep abreast of legal developments regulating business conduct on
the Internet so as to ensure continuing compliance with applicable laws.
LEGAL PROCEEDINGS
We are not a party to any current or pending legal proceedings.
DESCRIPTION OF PROPERTY
We do not own any real estate. Our current headquarters consist of approximately
1,100 square feet of rented office space in Dover, Delaware. We also maintain
administrative offices in 200 square feet of rented office space in Boulder,
Colorado.
MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS
(a) Market Information
There is currently no market for our stock and there never has been. There are
currently no shares of common stock eligible for resale under Rule 144. The
shares being registered under this registration statement are the only ones we
have agreed to register for securityholders. We are not offering or proposing to
offer any shares of common stock publicly; the shares being registered under
this registration statement are for resale by selling securityholders only.
(b) Holders
As of December 1, 2000, there were 82 holders of record of our common stock.
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(c) Dividends
We have paid no cash dividends on our common stock and management does not
anticipate that dividends will be paid in the foreseeable future.
PLAN OF OPERATION
As a development stage company, we had minimal revenues of $106.00 from our
inception in June 1999 through September 30, 2000. To date, our primary
expenditures have been limited to the October 2000 lease of two servers at a
combined cost of approximately $30,000. While certain members of management have
made capital contributions in the past, they are under no legal obligation to
make additional capital contributions in the future.
Presently, management projects that our cash requirements over the next twelve
months will be approximately $600,000. All capital purchases will be leased to
reduce cash outflow. A dedicated development server and a PC for use in
maintenance functions will be leased, at a combined cost of approximately
$15,000. The production software being developed by CB Technologies, which is
scheduled for completion in time for an early December 2000 release, is
estimated to cost approximately $230,000. Management believes we can satisfy our
cash requirements until approximately October 2001.
After October 2001, we will need to either realize additional revenue from our
business activities or raise additional funds to meet our cash requirements.
This additional funding may come from the sale of our common or preferred stock,
from governmental or private investment organizations, or from banks. There can
be no guarantee that we will be successful in securing additional financing
should the need arise. Failure to do so may prevent us from expanding our
operations or pursuing other aspects of our business plan. Such a failure may
ultimately result in IDMedical being forced to cease operations, resulting in a
loss to our investors.
Our marketing program will be implemented after our full production software is
in place in January 2001. Although no assurances can be given, management
believes, based on the amount of interest generated during our beta-testing and
test-marketing period, that revenue from future operating activities will be
sufficient to meet some or all of our projected cash requirements over the next
twelve months. At a minimum, management believes revenues should help partially
offset our cash requirements, thus reducing the amount of additional funds we
will need to raise.
We are not in the manufacturing business and do not expect to make any capital
purchases of a plant or significant equipment in the next twelve months.
During the next twelve months, we expect to hire additional employees to
implement our plan of operation and business strategies. We anticipate hiring
three full-time employees, with any remaining employees being part-time,
including professional, technical, and support personnel. All sales personnel
will be hired strictly on a commission and expense basis. These expenses are
anticipated to total approximately $500 per employee, per month.
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DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS OF THE COMPANY
We have a board of directors comprised of four members. Each director holds
office until the next annual shareholder meeting or until a successor is elected
or appointed. The members of our board of directors are:
Director of
Directors Age Company Since
--------- --- -------------
Dr. Richard J. Schaller, Sr. 59 June, 1999
Neil A. Cox 51 June, 1999
Dr. Richard J. Schaller, Jr. 35 June, 1999
Dr. Vincent E. Schaller 34 June, 1999
DR. RICHARD J. SCHALLER, SR. earned his Ph.D. in Engineering from Drexel
University in 1971. He worked in various engineering and management positions
for several Fortune 500 companies, including Westinghouse Electric Corp. and Air
Products & Chemicals. His most recent work experience was primarily in the
information technology area, where he applied computer hardware and software to
solve industrial problems. In 1993, Dr. Schaller founded the S&L Group, which
applied computer systems for electronic billing to insurance companies for
medical claims. From 1996 to the present, Dr. Schaller served as President of
Apex Affiliates Inc., a consulting organization.
NEIL A. COX graduated from West Texas State University with a B.B.A. From 1971
to 1974, he served as a First Lieutenant in the United States Army. From 1974 to
the present, Mr. Cox worked as a registered stockbroker at Rocky Mountain
Securities and Investments, Inc., located in Denver, Colorado. He has also
worked as an independent insurance broker. He is currently a director of Rocky
Mountain Securities and Investments, Inc. In accordance with Article III,
Section 40 of the National Association of Securities Dealers, Inc.'s Rules of
Fair Practice regarding outside business activities, Rocky Mountain Securities &
Investments, Inc. has no relationship or affiliation with IDMedical or
IDMedical's proposed operations.
DR. RICHARD J. SCHALLER, JR. graduated from Muhlenberg College in 1986 with a BS
in Biology and Natural Science. He graduated from Penn State University College
of Medicine with a Medical Degree in 1990. He graduated from the Eastern
Virginia Graduate School of Medicine in 1994, where he served as Chief Resident
from 1993 to 1994. Since 1994, Dr. Schaller has practiced as an emergency
physician at Memorial Hospital of Burlington County in Mount Holly, New Jersey,
as well as Overlook Hospital in Summit, New Jersey. Dr. Schaller is a medical
director of Complete Care Inc., a multi-disciplinary medical practice located in
Scotch Plains, New Jersey. He is currently a clinical instructor of emergency
medicine with the University of Medicine and Dentistry of New Jersey. In 1994,
Dr. Schaller was given the only award for "Clinical Excellence in Emergency
Medicine" by the EMRA (Emergency Medicine Residents Association). He was
selected for this national award from 3,000 resident doctors nationwide.
DR. VINCENT SCHALLER graduated Phi Beta Kappa from Muhlenberg College with a BS
in Biology and Natural Sciences. He graduated AOA in 1993 from the Milton S.
Hershey Medical Center at Penn State University College of Medicine in Hershey,
Pennsylvania. In 1996, Dr. Schaller completed his internship and residency
training in Family Practice at the Hunterdon Medical Center in Flemington, New
Jersey. Dr. Schaller is Board Certified in Family Practice with full staff
privileges at the Kent General Hospital campus of the Bayhealth Medical Center
in Dover, Delaware. His inpatient and outpatient privileges include the NICU,
nursery, pediatrics, general medicine, intensive care, and cardiac care. Dr.
Schaller is a partner in private practice at Dover Family Physicians PA in
Dover, Delaware. He is also the Chairman of the Cancer Research Committee for
Delaware State University and the Bayhealth Medical Center, and is serving on
the Regional Board of Directors for the American Cancer Society.
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EXECUTIVE OFFICERS OF THE COMPANY
Our executive officers and their respective positions are as follows:
o Richard J. Schaller, Sr., a director, has served as President
since June 1999.
o Neil A. Cox, a director, has served as Vice President,
Treasurer and Secretary since June 1999.
SIGNIFICANT EMPLOYEES OF THE COMPANY
In August, 2000, we appointed Phillip Gatto as our Chief Technical Officer. Mr.
Gatto, 61, graduated from Pennsylvania Military College with a BS in Electrical
Engineering. He also completed advanced degree work at Drexel University and the
University of Corpus Christi. Mr. Gatto began his career as a systems engineer
for the U.S. Navy, overseeing the installation of tactical data systems on
numerous ships. He then worked as a computer systems design engineer for NASA at
the Goddard Space Flight Center. From 1975 to 1982, Mr. Gatto was a regional
sales manager for Honeywell Information Systems and a marketing manager for
AT&T. In 1982, he started working as the director of national accounts operation
for Amperif Corporation. While at Amperif, Mr. Gatto was responsible for
servicing the AT&T and Bell Operating Companies' national accounts. From 1986 to
1996, Mr. Gatto worked as Principal for Business Procurement Inc. (BPI). While
at BPI, he was in charge of the company's finances and oversaw the
implementation of various computer networks. From 1996 to the present, Mr. Gatto
served as Director of Business Development for Business Technology Center (BTC)
at West Chester University. His duties at BTC include securing business
relationships for the company, designing the company's website, and serving as a
project manager on several key projects.
We have no other significant employees.
FAMILY RELATIONSHIPS
Richard J. Schaller, Sr., President and director of IDMedical, is the father of
Dr. Richard J. Schaller Jr. and Dr. Vincent E. Schaller, both directors.
Neil A. Cox, our Vice President, Treasurer, Secretary and a director, is the
brother-in-law of Richard J. Schaller, Sr.
OWNERSHIP OF SECURITIES BY BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 1, 2000, the stock ownership of
each person known by us to be the beneficial owner of 5% or more of our common
stock, each executive officer and director individually, and all executive
officers and directors as a group. No other class of voting securities is
outstanding. We believe each person has sole voting and investment power over
the shares, except as noted.
=================================================================================================================
Amount and Nature of
Name and Address of Beneficial Owner (1) Beneficial Ownership (1) Percent of Class (2)
- -----------------------------------------------------------------------------------------------------------------
Richard J. Schaller, Sr. (3) 1,850,000 18.63%
- -----------------------------------------------------------------------------------------------------------------
Neil A. Cox 1,839,000 18.51%
- -----------------------------------------------------------------------------------------------------------------
Dr. Richard J. Schaller, Jr. (3) 1,850,000 18.63%
- -----------------------------------------------------------------------------------------------------------------
Dr. Vincent E. Schaller (3) 1,850,000 18.63%
- -----------------------------------------------------------------------------------------------------------------
Includes all officers and directors of the 7,389,000 74.40%
Company as a group (4 persons)
=================================================================================================================
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- ----------
(1) Unless otherwise indicated, all shares are beneficially owned by the
persons named. The address of each person is 4333 N. 30th Street,
Boulder, Colorado 80301.
(2) Based upon 9,931,500 shares outstanding at December 1, 2000, plus the
amount of shares each person or group has the right to acquire within
60 days under options, warrants, rights, conversion privileges, or
similar obligations.
(3) Richard J. Schaller, Sr. is the father of Dr. Richard J. Schaller, Jr.
and Dr. Vincent E. Schaller. Each would be deemed to have beneficial
ownership of the shares owned by the other two. For purposes of this
chart, however, their ownership is indicated individually.
EXECUTIVE COMPENSATION
The following information discloses all plan and non-plan compensation awarded
to, earned by, or paid to our Chief Executive Officer and each of the four
highest paid executive officers of IDMedical.
SUMMARY COMPENSATION TABLE
We did not pay or accrue any compensation to or for our Chief Executive Officer
or any other executive officers of IDMedical during the fiscal year ended
December 31, 1999. Therefore, this table has been omitted.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
This table has been omitted, as we did not grant any stock options or stock
appreciation rights during 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
This table has been omitted, as no stock options were exercised during fiscal
year 1999.
LONG-TERM INCENTIVE PLANS ("LTIP") - AWARDS IN LAST FISCAL YEAR
This table has been omitted, as no executive officers received awards under any
LTIP during fiscal year 1999.
COMPENSATION OF DIRECTORS
We did not pay any compensation to our directors for service provided as a
director during fiscal year 1999. There are no formal or informal understandings
or arrangements relating to compensation. However, directors may be reimbursed
for all reasonable expenses incurred by them in conducting our business. These
expenses include out-of-pocket expenses for a variety of items including travel,
telephone, postage, and Federal Express charges.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS
Our board of directors has complete discretion as to the appropriateness of:
(a) key-man life insurance;
(b) officer and director liability insurance;
(c) employment contracts with and compensation of executive
officers and directors;
(d) indemnification contracts; and
(e) incentive plans to award executive officers and key employees.
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Our board of directors is responsible for reviewing and determining the annual
salary and other compensation of our executive officers and key employees. Our
goals are to align compensation with business objectives and performance and to
attract, retain, and reward executive officers and other key employees who
contribute to the long-term success of IDMedical. In the future, executive
compensation may include, without limitation, cash bonuses, stock option grants,
and stock reward grants. In addition, we may institute a pension plan or similar
retirement plans.
EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLANS
We currently have in effect one Employee Benefit and Consulting Services
Compensation Plan, known as the 1999 IDMedical.com, Inc. Stock Option Plan. The
plan covers 1,312,000 shares of common stock, none of which have been
registered. Under this plan, a total of 250,000 options to purchase common stock
at $0.10 per share and 110,000 options to purchase common stock at $1.10 have
been granted to date. Of these amounts, 61,000 options have been exercised.
Under the plan, we may issue shares of common stock or grant options to purchase
common stock to qualified consultants, advisors, officers, directors and
employees of IDMedical. The purpose of the plan is to promote the best interests
of IDMedical and its stockholders by providing a means of non-cash remuneration
to eligible participants who contribute to the operating progress of the
Company. The board of directors or a committee of directors administers the plan
and has the discretion to determine from time to time:
o the eligible participants to receive an award;
o the number of shares of stock issuable directly or to be
granted in accordance with options;
o the price at which the option may be exercised, or the price
per share in cash, cancellation of fees, or other payment for
which we are liable if a direct issue of stock is involved;
and
o all other terms on which each option will be granted.
The total number of shares of common stock reserved for issuance under this plan
may be increased only by a resolution of the board of directors and an amendment
to the plan. Additional shares reserved for the plan will be either authorized
and unissued common stock or reacquired common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND ORGANIZATION OVER THE LAST
FIVE YEARS
Our founders are Richard J. Schaller Sr., President and director; Neil A. Cox,
Vice President, Secretary, Treasurer and director; Dr. Richard J. Schaller Jr.,
director; and Dr. Vincent E. Schaller, director. On June 28, 1999 each founder
was issued 1,850,000 shares of IDMedical.com common stock for their capital
contribution of $10,000 each.
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SELLING SECURITYHOLDERS
The following table lists the names of the selling securityholders; the number
of shares of common stock beneficially owned by them as of December 1, 2000; the
maximum number of shares each may offer; and the number of shares of common
stock beneficially owned by each selling securityholder after the offering,
assuming all shares are sold. The number of shares sold by each selling
securityholder may depend upon a number of factors, including the market price
of the common stock. None of the selling securityholders has, or within the past
three years has had, any position, office, or other material relationship with
IDMedical.com.
MAXIMUM SHARES
SHARES SHARES BENEFICIALLY
BENEFICIALLY OFFERED IN OWNED AFTER
NAME OF SELLING OWNED PRIOR OFFERING OFFERING
SECURITYHOLDER TO OFFERING (1) NUMBER NUMBER PERCENT
- -------------- --------------- ------ ------ -------
John and Christine L. Acampora 10,000 10,000 0 0
Salvatore and Angela Accordino 5,000 5,000 0 0
Alliance Financial Network, Inc. (2) 775,000 (3) 775,000 (3) 0 0
Karen and Paul Aubrey 1,000 1,000 0 0
Augustine Fund, LP 500,000 500,000 0 0
David P. Bascelli 28,500 (4) 3,500 25,000 *
William C. Bossung (2) 775,000 (5) 775,000 (5) 0 0
Donald S. Calahan 1,000 1,000 0 0
Robert Cooper 1,000 1,000 0 0
Alan L. Cox 1,000 1,000 0 0
Andrea M. Cox 1,000 1,000 0 0
Cara G. Cox 1,000 1,000 0 0
Carol A. Cox 1,000 1,000 0 0
Christopher A. Cox 1,000 1,000 0 0
Gary I. Cox 1,000 1,000 0 0
Gregory I. Cox 1,000 1,000 0 0
Jonathan L. Cox 1,000 1,000 0 0
Patrick A. Cox 1,000 1,000 0 0
Leonard S. Cutler 5,000 5,000 0 0
Richard Cutler and Susan Leon 5,000 5,000 0 0
Frank P. and Dolores Cymbala 1,000 1,000 0 0
Devenshire Management Corporation 1,550,000 (6) 1,550,000 (6) 0 0
Antoinette M. Du Biel 10,000 10,000 0 0
Edward Du Biel 10,000 10,000 0 0
Marie Antoinette Du Biel 1,000 1,000 0 0
Douglas F. Fleet 10,000 10,000 0 0
Futro & Associates, P.C. 250,000 250,000 0 0
George G. Andrews Revocable Trust -
George G. Andrews - Trustee 3,000 3,000 0 0
Rosemarie B. Greco 50,000 50,000 0 0
Mark and Ellen Harris 2,500 2,500 0 0
John N. Harris 215,000 215,000 0 0
Ken Heng 20,000 20,000 0 0
Denise E. Hollis 1,000 1,000 0 0
Howard E. Hudson, Jr. 25,000 25,000 0 0
Humane Society of Boulder Valley 1,000 1,000 0 0
JAKL Company 2,000 2,000 0 0
J. Paul Consulting Corp. 5,000 5,000 0 0
Paul J. Kaitz 2,500 2,500 0 0
Michael and Donna Klein 50,000 50,000 0 0
Joseph E. Kovarik 3,000 3,000 0 0
Richard C. Kuesan 3,000 3,000 0 0
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MAXIMUM SHARES
SHARES SHARES BENEFICIALLY
BENEFICIALLY OFFERED IN OWNED AFTER
NAME OF SELLING OWNED PRIOR OFFERING OFFERING
SECURITYHOLDER TO OFFERING (1) NUMBER NUMBER PERCENT
- -------------- --------------- ------ ------ -------
Edward A. Kurek III and Lisa Kurek 3,000 3,000 0 0
Mark Ladzinski 5,000 5,000 0 0
Colin Milner 2,000 2,000 0 0
David and Theresa Moitozo 10,000 10,000 0 0
Juan Antonio Moran 1,000 1,000 0 0
Marsha Jean Murphy 1,000 1,000 0 0
Elizabeth A. O'Donnel 1,000 1,000 0 0
Brad M. Pacella 10,000 10,000 0 0
Deborah E. Pacella 50,000 50,000 0 0
Gerald M. and Doris L. Pacella 10,000 10,000 0 0
Gerald R. Pacella 50,000 50,000 0 0
Marc A. Pacella 10,000 10,000 0 0
Vaughn Paul 3,000 3,000 0 0
Patricia H. Plath 3,000 3,000 0 0
Michael D. Rogers 9,000 9,000 0 0
Allen J. and Randi S. Salm 15,000 15,000 0 0
Laurence A. Shadek 25,000 25,000 0 0
Anne M. Sieg 2,000 2,000 0 0
Audrey J. Smith 1,000 1,000 0 0
Paul E. Soll 125,000 125,000 0 0
St. Mary Magdalene Episcopal Church 1,000 1,000 0 0
Stagecoach Company 1,000 1,000 0 0
Dale Stonedahl 1,000 1,000 0 0
Tammy Stonedahl 1,000 1,000 0 0
Sandra A. Streeter 10,000 10,000 0 0
Ann M. Takahasi-Elliot 1,000 1,000 0 0
James W. Toot 10,000 10,000 0 0
Russel Trier 25,000 25,000 0 0
Mattheos and Efnosini Tsibogoi 16,000 16,000 0 0
Bonnie R. Tuttle 5,000 5,000 0 0
Harold Tuttle 5,000 5,000 0 0
Yucca Flats Company 3,000 3,000 0 0
H. John and Shirley L. Zarra 10,000 10,000 0 0
* Represents less than one percent.
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to their shares. The percentage of outstanding
shares held by each selling securityholder as of December 1, 2000
includes any security the person has the right to acquire within 60
days of December 1, 2000. However, such securities are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person.
(2) William C. Bossung is a principal of Alliance Financial Network, Inc.,
and each would be considered to have beneficial ownership of the shares
of the other. For purposes of this table, however, the shares owned by
each are listed separately.
(3) Includes 562,500 shares issuable upon the exercise of warrants, the
exercise of which is not permitted until February 3, 2001. However,
because the shares of common stock issuable upon exercise for the
warrants are being registered for resale in this registration
statement, they are being included in the table.
(4) Includes 25,000 shares issuable upon the exercise of options granted
under the 1999 IDMedical.com Stock Option Plan. These options may be
exercised at any time by paying the option price.
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(5) Includes 562,500 shares issuable upon the exercise of warrants, the
exercise of which is not permitted until February 3, 2001. However,
because the shares of common stock issuable upon exercise for the
warrants are being registered for resale in this registration
statement, they are included in the table.
(6) Includes 1,125,000 shares issuable upon the exercise of warrants, the
exercise of which is not permitted until February 3, 2001. However,
because the shares of common stock issuable upon exercise for the
warrants are being registered for resale in this registration
statement, they are included in the table.
We are registering the shares for resale by the selling securityholders in
accordance with registration rights granted to the selling securityholders. We
will pay the registration and filing fees, printing expenses, listing fees, blue
sky fees (if any), and fees and disbursements of our counsel in connection with
this offering. However, the selling securityholders will pay any underwriting
discounts, selling commissions, and similar expenses relating to the sale of the
shares, as well as the fees and expenses of their counsel.
In addition, we have agreed to indemnify the selling securityholders,
underwriters who may be selected by the selling securityholders, and some
affiliated parties against particular liabilities in connection with this
offering, including liabilities under the Securities Act. The selling
securityholders may agree to indemnify any agent, dealer, or broker-dealer that
participates in transactions involving sales of the shares against liabilities,
including liabilities under the Securities Act. The selling securityholders have
agreed to indemnify us and our directors and officers, as well as any person
controlling IDMedical, against a variety of liabilities, including liabilities
under the Securities Act. Insofar as indemnification for liabilities under the
Securities Act may be permitted to our directors or officers, or persons
controlling IDMedical, we have been informed that in the opinion of the SEC,
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
PLAN OF DISTRIBUTION
The selling securityholders may periodically sell all or a portion of their
shares in private transactions or, if a market for the common stock develops, on
the OTC Bulletin Board or other exchange. These sales may be at fixed prices
that are subject to change, at prevailing market prices, at prices related to
the market price, or at negotiated prices. The selling securityholders may sell
their shares by one or more of the following methods, without limitation:
(a) block trades in which a broker or dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by the
broker or dealer for its account according to this prospectus;
(c) an exchange distribution in accordance with the rules of the
exchange;
(d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
(e) privately negotiated transactions;
(f) short sales; or
(g) a combination of these selling methods.
All selling securityholders have advised us that they purchased the shares in
the ordinary course of business and at the time the selling securityholders
purchased the shares they were not a party to any agreement or other
understanding to distribute the securities, directly or indirectly.
In carrying out sales, brokers and dealers employed by the selling
securityholders may arrange for other brokers or dealers to participate. Brokers
or dealers may also receive commissions or discounts from the selling
securityholders in amounts to be negotiated that are not expected to exceed
those customary in these types of transactions. Broker-dealers acting as agents
for purchasers may receive commissions from these purchasers.
Broker-dealers may agree with the selling securityholders to sell a specified
number of shares at a stipulated price per share. If the broker-dealers are
unable to sell these shares while acting as agent for selling securityholders,
they may purchase any unsold shares as principal at the price required to
fulfill their commitment to the selling securityholders. Broker-dealers who
acquire shares as principal may resell these shares in future transactions in
the over-the-counter market or otherwise (including block transactions and sales
to and through other broker-dealers). The shares may be sold at prices and terms
prevailing at the time of sale, at prices related to the current market price,
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or at negotiated prices. Broker-dealers may pay or receive commissions from
purchasers in connection with these resales (as described above). The selling
securityholders may also sell their shares in accordance with Rule 144 of the
Securities Act, rather than under this prospectus.
The selling securityholders and any broker-dealers or agents that participate
with the selling securityholders in sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act. If so, any commissions
received by the broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
From time to time the selling securityholders may engage in the following
transactions involving our securities or derivatives of our securities, if a
market develops which allows for these types of transaction:
- "Short sale" - a sale of securities that the seller does not
own, or any sale accomplished by the delivery of a security
borrowed by or for the seller.
- "Short sale against the box" - a short sale entered into by a
seller who already owns the securities sold short and who
generally intends to deliver those securities to close the
short sale.
The sale of a significant amount of IDMedical.com common stock may reduce the
price of our stock and encourage short sales. Short sales by investors or other
parties could, if done in sufficient quantities, place further downward pressure
on the price of our common stock.
Selling securityholders may also sell and deliver their shares in connection
with these transactions or in settlement of securities loans. From time to time
the selling securityholders may pledge their shares according to the margin
provisions of the customer agreements with their brokers. Upon default by the
selling securityholders, the brokers may periodically offer and sell the pledged
shares.
We are required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling securityholders against a
variety of losses, claims, damages, and liabilities, including liabilities under
the Securities Act.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock, but we may
receive proceeds from the exercise price of the warrants. If we do receive such
proceeds, we will consider then additional working capital.
DESCRIPTION OF SECURITIES
CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common stock, par
value $.001 per share, and 1,000 shares of preferred stock, par value $.001 per
share.
COMMON STOCK
There are currently 9,931,500 shares of our common stock outstanding.
Each holder of common stock receives one vote for each share held on all matters
to be voted upon by the shareholders generally. The shares do not have
cumulative voting rights, which means that holders of more than 50% of the
shares of common stock voting for the election of directors can elect all the
directors. If this occurs, the holders of the remaining shares would not be able
to elect a single director.
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Holders of common stock are entitled to receive pro-rata dividends, if any, as
may be declared from time to time by the board of directors out of funds legally
available for the payment of dividends. This right is subject to the rights of
any holders of preferred stock. However, we presently intend to reinvest any
earnings instead of paying cash dividends to holders of common stock. In the
event of our liquidation, dissolution, or winding up, the holders of common
stock are entitled to share pro-rata in all assets remaining after payment of
liabilities. Shares of common stock have no preemptive, conversion, or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock.
PREFERRED STOCK
There are currently no shares of our preferred stock outstanding.
Preferred stock may be divided into and issued in one or more series, as may be
determined by our board of directors. The board of directors may, without
further shareholder action, determine the following regarding our preferred
stock:
o dividend rates;
o liquidation preferences;
o redemption provisions;
o sinking fund provisions;
o conversion rights;
o voting rights; and
o other rights, preferences, privileges, and restrictions of any
wholly unissued series of preferred stock and the number of
shares constituting this series.
In addition, preferred stock may have other rights, including voting and
economic rights, senior to the common stock. The issuance of preferred stock
could adversely affect the market value of our common stock. The creation of one
or more series of preferred stock also may have the effect of delaying,
deferring, or preventing a change in control of IDMedical without any action by
shareholders.
WARRANTS
There are 2,250,000 warrants outstanding at this time. Of this amount, 1,250,000
have an exercise price of $1.10 per share and 1,000,000 have an exercise price
of $2.00 per share. The warrants, held by three individuals, give their holder
the right to purchase one share of common stock. The warrants may be exercised
at any time between February 3, 2001 and February 2, 2005.
If a capital adjustment, reorganization, merger, sale of assets, or other
significant event identified in the warrant agreement occurs, the exercise price
of the warrants will be adjusted, enabling the holder of the warrants to
purchase additional shares of common stock so that:
(i) the total number of shares of common stock the holder may
purchase, multiplied by
(ii) the adjusted purchase price per share, equals
(iii) the dollar amount of the total number of shares of common
stock the holder was entitled to purchase before adjustment
multiplied by the total purchase price before adjustment.
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INDEMNIFICATION DISCLOSURE FOR SECURITIES ACT LIABILITIES
Indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers, and controlling persons under the Colorado
Business Corporation Act, our Articles of Incorporation (as amended) or Bylaws,
or otherwise. However, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
If a claim for indemnification against liabilities is made by a director,
officer, or controlling person in connection with the securities being
registered, we will ask a court of appropriate jurisdiction to determine if this
indemnification is against public policy as expressed in the Securities Act. We
will be governed by the final adjudication of this issue. This action will not
be necessary if, in the opinion of our corporate counsel, controlling precedent
has settled the question.
Expenses incurred or paid by a director, officer, or controlling person of
IDMedical in the successful defense of any action, suit, or proceeding is not
subject to the public policy limitations on indemnification.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
We have not engaged new accountants and there have been no disagreements with
our accountants regarding matters of accounting or financial disclosure.
LEGAL MATTERS
The validity of the securities offered by this prospectus is being passed upon
for the company by Futro & Trauernicht, LLC, 1401 - 17th Street, 11th Floor,
Denver, CO 80202. Futro and Associates, P.C., a member of Futro & Trauernicht,
LLC, owns 250,000 shares of common stock and is listed as a selling shareholder
in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Presently, we are not a reporting company. Therefore, we are not required to
deliver an annual report to our shareholders.
You may request a copy of any information incorporated by reference in this
prospectus, at no cost, by writing or calling us at:
IDMEDICAL.COM, INC.
4333 N. 30TH STREET
BOULDER, COLORADO 80301
TELEPHONE: 303/447-8638
You may read and copy any materials we file with the SEC at the SEC's Public
Reference Room, located at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information regarding the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330.
33
36
We are electronic filers with the SEC. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that electronically file with the SEC. The SEC's Internet site
may be found at http://www.sec.gov.
FINANCIAL STATEMENTS
Our audited financial statements as of December 31, 1999 and as of September 30,
2000 included in this prospectus have been audited by Cordovano and Harvey,
P.C., Denver, Colorado, an independent public accounting firm, as indicated in
its report with respect to these statements. The financial statements are
included in this document in reliance upon the authority of Cordovano and
Harvey, P.C., as experts in accounting, auditing and in giving these reports.
Our Financial Statements and Independent Auditor's Report for the year ended
December 31, 1999 and for the period ended September 30, 2000 are included.
34
37
DEALER PROSPECTUS DELIVERY OBLIGATION
ALL DEALERS THAT PERFORM TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
This prospectus is part of a registration statement we filed with the Securities
and Exchange Commission. You should only rely on the information or
representations contained in this prospectus. We have not authorized anyone to
provide you with different information. Do not assume that the information in
this prospectus is accurate after the date on the cover.
This common stock may not be offered in states where these types of offers are
not permitted.
35
38
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY
INDEX TO FINANCIAL STATEMENTS)
Page
----
Independent auditors' report.......................................................................F-2
Balance sheets, at September 30, 2000 and December 31, 1999........................................F-3
Statements of operations, for the nine months ended September 30, 2000, for the
period from June 17, 1999 (inception) through December 31, 1999 and
for the period from June 17, 1999 (inception) through September, 2000..........................F-4
Statement of changes in shareholders' equity from June 17, 1999 (inception)
through September, 2000........................................................................F-5
Statements of cashflows, for the nine months ended September 30, 2000, for the
period from June 17, 1999 (inception) through December 31, 1999 and
for the period from June 17, 1999 (inception) through September 30, 2000.......................F-6
Notes to financial statements.....................................................................F-7
39
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
Financial Statements
(With Independent Auditors' Report)
September 30, 2000 and December 31, 1999
Cordovano and Harvey, P.C.
Certified Public Accountants
Denver, Colorado
40
INDEPENDENT AUDITORS' REPORT
The Board of Directors
IDMEDICAL.COM, Inc.
We have audited the accompanying balance sheets of IDMEDICAL.COM, Inc. (a
development stage company) as of September 30, 2000 and December 31, 1999, and
the related statements of operations, changes in shareholders' equity, and cash
flows for the nine months ended September 30, 2000, for the period from June 17,
1999 (inception) to December 31, 1999, and for the period from June 17, 1999
(inception) to September 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IDMEDICAL.COM, Inc. as of
September 30, 2000 and December 31, 1999, and the results of its operations and
its cash flows for the nine months ended September 30, 2000, for the period from
June 17, 1999 (inception) through December 31, 1999, and for the period from
June 17, 1999 (inception) to September 30, 2000 in conformity with generally
accepted accounting principles.
/s/ CORDOVANO AND HARVEY, P.C.
- -------------------------------
Cordovano and Harvey, P.C.
Denver, Colorado
December 1, 2000
F-2
41
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE OF SHEETS
September 30, December 31,
2000 1999
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents (Note 2) ......................................... $ 846,321 $ 15,558
Prepaid expenses ........................................................... 3,936 --
------------ ------------
Total current assets .................................................. 850,257 15,558
Property and Equipment, net of accumulated depreciation
and amortization of $3,106 and $-0-, respectively (Notes 1, 2) ............. 19,287 --
Intangible assets, net of accumulated amortization of $764 and $-0-,
respectively (Notes 1, 2) .................................................. 45,871 7,924
Other Assets (Notes 1, 2) ...................................................... 11,300 18,731
------------ ------------
$ 926,715 $ 42,213
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade .................................................... $ 28,299 $ 15,352
Unearned Revenue ........................................................... 826 --
Capital lease payable (Note 2) ............................................. 3,176 --
------------ ------------
Total current liabilities ............................................. 32,301 15,352
------------ ------------
Shareholders' equity (Note 3):
Preferred stock, $.001 par value, 1,000 shares
authorized, -0- and -0- shares issued and outstanding, respectively ..... -- --
Common stock, $.001 par value, 100,000,000 shares authorized,
9,931,500 and 8,750,000 shares issued and outstanding, respectively ..... 9,931 8,750
Additional paid-in capital ................................................. 1,377,525 168,364
Outstanding common stock options of 299,000 and 250,000, respectively ...... 2,068 500
Outstanding warrants of 2,250,000 and -0-, respectively .................... 243,250 --
Deferred compensation ...................................................... (243,250) --
Deficit accumulated during the development stage ........................... (495,110) (150,753)
------------ ------------
Total shareholders' equity ............................................ 894,414 26,861
------------ ------------
$ 926,715 $ 42,213
============ ============
See accompanying notes to financial statements
F-3
42
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
June 17, 1999 June 17, 1999
(inception) (inception)
For the Nine Through Through
Months Ended December 31, September 30,
September 30, 2000 1999 2000
------------------ ------------ ------------
Revenue, net ............................................... $ 106 $ -- $ 106
Selling, general and administrative expenses:
Compensation contributed (Note 6) ...................... 94,800 123,870 218,670
Sales and marketing .................................... 8,566 51 8,617
Stock-based compensation, legal (Note 3) ............... -- 5,000 5,000
Stock-based compensation, consulting (Note 3) .......... 1,690 6,244 7,934
Organization costs ..................................... -- 1,000 1,000
Software ............................................... 10,569 11,083 21,652
Depreciation and amortization .......................... 3,870 -- 3,870
Personnel .............................................. 95,490 -- 95,490
Printing ............................................... 23,143 2,342 25,485
Consulting ............................................. 23,443 -- 23,443
ravel and entertainment ................................ 28,005 -- 28,005
Other .................................................. 60,808 1,163 61,971
------------ ------------ ------------
Loss before interest income
and income taxes ................................ (350,278) (150,753) (501,031)
Interest income ............................................ 5,921 -- 5,921
Income taxes (Note 4) ...................................... -- -- --
------------ ------------ ------------
Net loss .......................................... $ (344,357) $ (150,753) $ (495,110)
============ ============ ============
Basic and diluted loss per common share .................... $ (0.04) $ (0.02)
============ ============
Basic and diluted weighted average
number of common shares outstanding .................... 9,597,286 7,464,286
============ ============
See accompanying notes to financial statements
F-4
43
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Preferred Stock Common Stock
---------------------------- ----------------------------
Shares Par Value Shares Par Value
------------ ------------ ------------ ------------
June 17, 1999 (inception) ..................................... -- $ -- -- $ --
June 17, 1999 (inception) through December 31, 1999,
contributed services (Note 6) .................. -- -- -- --
July 1999, sale of founders stock at
$.0054 per share ............................... -- -- 7,400,000 7,400
July 1999, stock issued for services valued
at the value of the services (Note 3) .......... -- -- 1,100,000 1,100
August 1999, sale of common stock at
$.01 per share ................................. -- -- 250,000 250
October 1999, options granted to purchase 250,000
shares of common stock (Note 3) ................ -- -- -- --
Net loss for the period ....................................... -- -- -- --
------------ ------------ ------------ ------------
Balance, December 31, 1999 .... -- -- 8,750,000 8,750
January 1 through June 30, 2000,
contributed services (Note 6) .................. -- -- -- --
February 2000, capital contributed
by officers .................................... -- -- -- --
August 2000, options granted to purchase 110,000
shares of common stock (Note 3) ................ -- -- -- --
August 2000, warrants granted to purchase 2,250,000
shares of common stock (Note 3) ................ -- -- -- --
September 2000, sale of common stock at
$1.00 per share pursuant to private offering,
net of offering costs of $21,180 (Note 3) ...... -- -- 1,120,500 1,120
September 2000, exercise of stock options at
$.10 per share (Note 3) ........................ -- -- 61,000 61
Net loss for the period ....................................... -- -- -- --
------------ ------------ ------------ ------------
Balance, September 30, 2000 .... -- $ -- 9,931,500 $ 9,931
============ ============ ============ ============
Additional Outstanding
Paid-in Common Stock Outstanding Deferred
Capital Options Warrants Compensation
------------ ------------ ------------ ------------
June 17, 1999 (inception) ..................................... $ -- $ -- $ -- $ --
June 17, 1999 (inception) through December 31, 1999,
contributed services (Note 6) .................. 123,870 -- -- --
July 1999, sale of founders stock at
$.0054 per share ............................... 32,600 -- -- --
July 1999, stock issued for services valued
at the value of the services (Note 3) .......... 9,644 -- -- --
August 1999, sale of common stock at
$.01 per share ................................. 2,250 -- -- --
October 1999, options granted to purchase 250,000
shares of common stock (Note 3) ................ -- 500 -- --
Net loss for the period ....................................... -- -- -- --
------------ ------------ ------------ ------------
Balance, December 31, 1999 .... 168,364 500 -- --
January 1 through June 30, 2000,
contributed services (Note 6) .................. 94,800 -- -- --
February 2000, capital contributed
by officers .................................... 10,000 -- -- --
August 2000, options granted to purchase 110,000
shares of common stock (Note 3) ................ -- 1,690 -- --
August 2000, warrants granted to purchase 2,250,000
shares of common stock (Note 3) ................ -- -- 243,250 (243,250)
September 2000, sale of common stock at
$1.00 per share pursuant to private offering,
net of offering costs of $21,180 (Note 3) ...... 1,098,200 -- -- --
September 2000, exercise of stock options at
$.10 per share (Note 3) ........................ 6,161 (122) -- --
Net loss for the period ....................................... -- -- -- --
------------ ------------ ------------ ------------
Balance, September 30, 2000 .... $ 1,377,525 $ 2,068 $ 243,250 $ (243,250)
============ ============ ============ ============
Deficit
Accumulated
During the
Development
Stage Total
------------ ------------
June 17, 1999 (inception) ..................................... $ -- $ --
June 17, 1999 (inception) through December 31, 1999,
contributed services (Note 6) .................. -- 123,870
July 1999, sale of founders stock at
$.0054 per share ............................... -- 40,000
July 1999, stock issued for services valued
at the value of the services (Note 3) .......... -- 10,744
August 1999, sale of common stock at
$.01 per share ................................. -- 2,500
October 1999, options granted to purchase 250,000
shares of common stock (Note 3) ................ -- 500
Net loss for the period ....................................... (150,753) (150,753)
------------ ------------
Balance, December 31, 1999 .... (150,753) 26,861
January 1 through June 30, 2000,
contributed services (Note 6) .................. -- 94,800
February 2000, capital contributed
by officers .................................... -- 10,000
August 2000, options granted to purchase 110,000
shares of common stock (Note 3) ................ -- 1,690
August 2000, warrants granted to purchase 2,250,000
shares of common stock (Note 3) ................ -- --
September 2000, sale of common stock at
$1.00 per share pursuant to private offering,
net of offering costs of $21,180 (Note 3) ...... -- 1,099,320
September 2000, exercise of stock options at
$.10 per share (Note 3) ........................ -- 6,100
Net loss for the period ....................................... (344,357) (344,357)
------------ ------------
Balance, September 30, 2000 .... $ (495,110) $ 894,414
============ ============
See accompanying notes to financial statements
F-5
44
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
June 17, 1999 June 17, 1999
(inception) (inception)
For the Nine Through Through
Months Ended December 31, September 30,
September 30, 2000 1999 2000
------------ ------------ ------------
Operating activities:
Net (loss) ....................................................... $ (344,357) $ (150,753) $ (495,110)
Adjustments to reconcile net loss to net cash
used in operating activities:
Contributed services ........................................... 94,800 123,870 218,670
Options granted for services ................................... 1,690 500 2,190
Stock issued for services ...................................... -- 10,744 10,744
Amortization and depreciation .................................. 3,870 -- 3,870
Changes in current assets and current liabilities:
Prepaid expenses ............................................... (3,936) -- (3,936)
Unearned Revenue ............................................... 826 -- 826
Accounts payable ............................................... 12,947 15,352 28,299
------------ ------------ ------------
Net cash used in operating activities ....................... (234,160) (287) (234,447)
------------ ------------ ------------
Investing activities:
Cash paid for copyright ........................................ (61) (424) (485)
Cash paid for trademark ........................................ (525) (1,935) (2,460)
Cash paid for website .......................................... (38,650) (7,500) (46,150)
Cash paid for patent ........................................... (8,840) -- (8,840)
Equipment purchases ............................................ (17,861) -- (17,861)
------------ ------------ ------------
Net cash used in investing activities ....................... (65,937) (9,859) (75,796)
------------ ------------ ------------
Financing activities:
Proceeds from sale of common stock, net of offering costs ...... 1,116,116 25,704 1,141,820
Proceeds from exercise of stock options ........................ 6,100 -- 6,100
Lease payments ................................................. (1,356) -- (1,356)
Contributed capital (Note 3) ................................... 10,000 -- 10,000
------------ ------------ ------------
Net cash provided by financing activities ................... 1,130,860 25,704 1,156,564
------------ ------------ ------------
Net change in cash ................................................... 830,763 15,558 846,321
Cash and cash equivalents at beginning of period ..................... 15,558 -- --
------------ ------------ ------------
Cash and cash equivalents at end of period .................. $ 846,321 $ 15,558 $ 846,321
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ....................................................... $ 425 $ -- $ 425
============ ============ ============
Income taxes ................................................... $ -- $ -- $ --
============ ============ ============
Non-cash investing and financing activities:
Equipment purchased under capital lease (Note 2) ............... $ 4,532 $ -- $ 4,532
============ ============ ============
See accompanying notes to financial statements
F-6
45
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND BASIS OF PRESENTATION
IDMEDICAL.COM, Inc. was incorporated on June 17, 1999 to
capitalize on the growing demand for online medical records
systems through the systematic acquisition of paying members for
targeted marketing groups which include corporations,
organizations or associations. The goal of the Company is to
become the premier national provider of online medical records
systems. The Company is a development stage enterprise in
accordance with Statement of Financial Accounting Standard (SFAS)
No. 7.
Inherent in the Company's business are various risks and
uncertainties, including its limited operating history, historical
operating losses, dependence upon strategic alliances, and the
limited history of the need for internet services. The Company's
future success will be dependent upon its ability to create and
provide effective online medical records systems, the continued
acceptance of the Internet and the Company's ability to develop
and provide new products that meet customers changing
requirements, including the effective use of leading technologies,
to continue to enhance its current systems, and to influence and
respond to emerging industry standards and other technological
changes on a timely and cost-effective basis.
(b) USE OF ESTIMATES
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(c) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with
original maturities of three months or less when acquired to be
cash equivalents.
(d) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated
useful lives of the related assets, generally ranging from three
to five years. Property and equipment under capital leases are
stated at the present value of minimum lease payments and are
amortized using the straight-line method over the shorter of the
lease term or the estimated useful lives of the assets. Leasehold
improvements are amortized using the straight-line method over the
estimated useful lives of the assets or the term of the lease,
whichever is shorter.
(e) INTANGIBLE ASSETS
Intangible assets consist of a copyright and web site and software
costs:
Copyright
Costs are amortized over the estimated useful life of three years
on the straight-line basis.
F-7
46
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Web site and Software
The Company has adopted EITF 00-2, "Accounting for Web Site
Development costs." This EITF requires that costs of developing a
web site including the costs of developing services that are
offered to visitors (chat rooms, search engines, e-mail,
calendars, and so forth), and should be accounted for in
accordance with AICPA Statement of Position 98-1 "Accounting For
the Costs of Computer Software Developed for Internal Use" (SOP
98-1).
In accordance with the provisions of SOP 98-1 the cost of
developing and implementing the Company's internet web site was
expensed until the Company determined that the web site would
result in future economic benefit and management was committed to
funding the project. Any costs incurred during the preliminary
project stage such as legal costs associated with the software or
web site agreements was expensed. Thereafter, all direct external
implementation and development costs were capitalized and
amortized using the straight-line method over the remaining
estimated useful lives, not exceeding three years. The Company
capitalized direct external implementation and development costs
of $46,150 and $7,500, respectively, during the nine months ended
September 30, 2000 and the period from June 17, 1999 (inception)
to December 31, 1999. The Company recorded amortization expense
related to the capitalized web site costs of $641 and $-0-,
respectively for the nine months ended September 30, 2000 and for
the period from June 17, 1999 (inception) to December 31, 1999.
Preliminary project stage and post implementation costs were
expensed.
(f) OTHER ASSETS
Other assets include various patent and trademark application
costs and deferred offering costs. The Company will begin
amortizing the patent and trademark costs as the applications are
approved. Deferred offering costs consist of legal, accounting and
printing costs incurred in connection with the Company's private
offering. The deferred costs were offset against the proceeds from
the offering, at the closing of the offering.
(g) IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the carrying value of its long-lived assets
under the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of (Statement No.
121). Statement No. 121 requires impairment losses to be recorded
on long-lived assets used in operations, including goodwill, when
indicators of impairment are present and the undiscounted future
cash flows estimated to be generated by those assets are less than
the assets' carrying amount. In addition, the recoverability of
goodwill is further evaluated under the provisions of APB Opinion
No. 17, Intangible Assets, based upon estimated fair value. If
such assets are impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying value or fair value, less
costs to sell.
(h) REVENUE RECOGNITION
The Company recognizes membership fees ratably over the period of
the membership. Fees received in advance are reflected as unearned
revenue in the accompanying financial statement.
F-8
47
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(i) SALES AND MARKETING COSTS
Marketing expense includes the costs of advertising and other
general sales and marketing costs. The Company expenses the cost
of advertising and promoting its services as incurred.
(j) FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
The Company has concentrated its credit risk for cash by
maintaining balances in its checking accounts, money market
account, and certificate of deposit, which may at times, exceed
amounts insured by the U.S. Federal Deposit Insurance Corporation
("FDIC"). The maximum loss that would have resulted from that risk
totaled $509,065, at September 30, 2000 for the excess of the
deposit liabilities reported by the banks over the $100,000
maximum covered by federal insurance. The Company has not
experienced any losses in such accounts and believes it is not
exposed to any significant credit risk to cash.
The carrying amounts of cash and cash equivalents, accounts
payable, and capital lease payable approximate fair value due to
the short-term maturity of the instruments.
(k) STOCK BASED COMPENSATION
The Company accounts for stock-based compensation arrangements in
accordance with Statement of financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation," which
permits entities to recognize as expense over the vesting period
the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 allows entities to continue to apply
the provisions of Accounting Principle Board ("APB") Opinion No.
25 and provide pro forma net earnings (loss) disclosures for
employee stock-based compensation as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has
elected to continue to apply the provisions of APB Opinion No. 25
and provide the pro forma disclosure provisions of SFAS No. 123.
(l) LOSS PER COMMON SHARE
The Company has adopted Statement of Financial Accounting
Standards No. 128 ("SFAS 128") which requires the disclosure of
basic and diluted earnings per share. Basic earnings per share is
calculated using income available to common shareowners divided by
the weighted average of common shares outstanding during the year.
Diluted earnings per share is similar to basic earnings per share
except that the weighted average of common shares outstanding is
increased to include the number of additional common shares that
would have been outstanding if the dilutive potential common
shares, such as options or warrants, had been issued. As of
September 30, 2000 and December 31, 1999, there were 299,000 and
250,000 vested common stock options outstanding, respectively,
which were excluded from the calculation of net income (loss) per
share-diluted because they were antidilutive. Also excluded from
the calculation of net income (loss) per share-diluted were
2,250,000 warrants granted during the nine months ended September
30, 2000, all of which do not vest until February 3, 2001 and
would also be antidilutive.
F-9
48
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(2) BALANCE SHEET COMPONENTS
Cash and Cash Equivalents
September 30, December 31,
2000 1999
------------ ------------
Main Operating Account ........................... $ 206,367 $ 15,558
Checking Account ................................. 34,060 --
Money Market Account ............................. 302,697 --
Certificate of Deposit ........................... 302,759 --
Card Services Account ............................ 438 --
------------ ------------
$ 846,321 $ 15,558
============ ============
Property and equipment
September 30, December 31,
2000 1999
------------ ------------
Property and equipment under capital lease ....... $ 4,532 $ --
Leasehold improvements ........................... 2,802 --
Furniture and equipment .......................... 15,059 --
------------ ------------
22,393 --
Less accumulated depreciation and amortization ... (3,106) --
------------ ------------
$ 19,287 $ --
============ ============
On April 26, 2000 the Company entered into a one year capital lease agreement
whereby the Company is purchasing certain furniture and equipment at a 15%
interest rate. Minimum monthly payments under the lease are $445. Principal left
to be paid is $3,176.
Intangible Assets
September 30, December 31,
2000 1999
------------ ------------
Web site ............................... $ 46,150 $ 7,500
Copyright .............................. 485 424
Less accumulated amortization .......... (764) --
------------ ------------
$ 45,871 $ 7,924
============ ============
Other Assets
September 30, December 31,
2000 1999
------------ ------------
Patent ................................. $ 8,840 $ --
Deferred offering costs ................ -- 16,796
Trademark .............................. 2,460 1,935
------------ ------------
$ 11,300 $ 18,731
============ ============
F-10
49
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(3) CAPITAL STOCK
a) Common stock
In July 1999 the Company issued 1,100,000 shares of its $.001 par
value common stock in exchange for consulting services valued at
$10,744 which is recorded as stock based compensation in the
accompanying financial statements. Of this amount $5,000 was
attributable to legal fees and $5,744 was for consulting services.
The transactions were valued at the value of the services.
During the period from May 2000 to September 2000, the Company
sold 1,120,500 shares of its $.001 par value common stock for
$1.00 per share in a private offering pursuant to an exemption
from registration under Rule 506 (a) of Regulation D of the
Securities Act of 1933, as amended. Net proceeds from the offering
totaled $1,099,320, after deducting offering expenses of $21,180.
In February 2000, officers contributed a total of $10,000 for
working capital.
b) Preferred stock
The Company is authorized to issue 1,000 shares of $.001 par value
preferred stock. The corporation may divide and issue the
Preferred Shares in series. Each Series when issued shall be
designated to distinguish them from the shares of all other
series. The relative rights and preferences of these series
include preference of dividends, redemption terms and conditions,
amount payable upon shares of voluntary or involuntary
liquidation, terms and condition of conversion as well as voting
powers.
c) Stock options
The Company has adopted a non-qualified stock option and stock
grant plan for the benefit of key personnel and others providing
significant services. An aggregate of 1,312,000 shares of common
stock has been reserved under the plan. Options granted pursuant
to the plan will be exercisable at a price no less than the market
value of the shares of common stock on the date of grant. There
were 299,000 and 250,000 options outstanding under this plan as of
September 30, 2000 and December 31, 1999, respectively. According
to the Company's policy, options granted to non-employees are
accounted for under the fair value method, while options granted
to employees and directors are accounted for using the intrinsic
method. The fair value of the Company's common stock was
determined by the board of directors based on contemporaneous
equity transactions and other analysis.
Option Pricing Model
The fair value of each option granted has been estimated as of the
grant date using the Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate of
5.8 percent, expected volatility of zero percent, expected life of
three to five years, and no expected dividends. From June 17, 1999
(inception) to December 31, 1999, the weighted average exercise
price and fair value of options granted were $.10 and $.002,
respectively on the date of grant for options granted with an
exercise price greater than the fair value of the stock. During
the nine months ended September 30, 2000, the weighted average
exercise price and fair value of options granted was $1.10 and
$.169, respectively on the date of grant for options granted with
an
F-11
50
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
exercise price greater than the fair value of the stock. There
were no options granted with exercise prices that equaled or were
less than the fair value of the underlying stock on the date of
grant.
The fair value of each warrant granted has been estimated as of
the grant date using the Black-Scholes option pricing model with
the following weighted-average assumptions: risk-free interest
rate of 5.8 percent, expected volatility of zero percent, expected
life of three to five years, and no expected dividends. From June
17, 1999 (inception) to December 31, 1999, there were no warrants
granted. During the nine months ended September 30, 2000, the
weighted average exercise price and fair value of warrants granted
was $1.55 and $.1065, respectively on the date of grant for
warrants granted with an exercise price greater than the fair
value of the stock. There were no warrants granted with exercise
prices that equaled or were less than the fair value of the
underlying stock on the date of grant.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options and warrants, which
have no vesting restrictions and are fully transferable. Option
valuation models also require the input of highly subjective
assumptions such as expected option life and expected stock price
volatility. Because the Company's stock-based awards have
characteristics significantly different from those of traded
options and because changes in the subjective input assumptions
can materially affect the fair value estimate, the Company
believes that the existing option valuation models do not
necessarily provide a reliable single measure of the fair value of
its stock-based awards.
Options granted to non-employees accounted for under the fair
value method
On October 15, 1999 the Company entered into agreements with seven
unrelated third party consultants to provide technical advisory
services, software development services, printing services, and
graphic services to the Company. The Company granted the
consultants fully vested options to purchase 250,000 shares of the
Company's common stock. On October 15, 1999 the fair value of the
stock was $.0054. The options are exercisable at $.10 and expire
on October 14, 2004. The Company determined the fair value of the
options in accordance with SFAS 123 to be $.002 and have recorded
stock based compensation expense of $500.
On August 1, 2000 the Company entered into an agreement with one
unrelated third party consultant to provide web site consulting
services to the Company. The Company granted the consultant fully
vested options to purchase 10,000 shares of the Company's common
stock. On August 1, 2000 the fair value of the stock was $1.00.
The options are exercisable at $1.10 and expire on July 31, 2005.
The Company determined the fair value of the options in accordance
with SFAS 123 to be $.169 and have recorded stock based
compensation expense of $1,690.
Options granted to employees accounted for under the fair value
method
An employee of the Company was granted an option to purchase
100,000 shares of common stock on August 1, 2000. Had compensation
expense been recorded based on the fair value at the grant date,
and charged to expense over vesting periods, consistent with the
provisions of SFAS 123, the Company's net income and net income
per share would have decreased to the pro forma amounts indicated
below:
F-12
51
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
September 30, December 31,
2000 1999
------------ ------------
Net loss, as reported ............................ $ (344,357) $ (150,753)
Decrease due to:
Employee stock options .................... (16,900) --
Executive employment options .............. -- --
------------ ------------
Pro forma net income ............................. $ (361,257) $ (150,753)
============ ============
As reported:
Net income per share - basic and diluted ......... $ (0.04) $ (0.02)
============ ============
Pro Forma:
Net income per share - basic and diluted ..... $ (0.04) $ (0.02)
============ ============
SUMMARY
A summary of the Company's stock option awards to purchase shares
of common stock as of December 31, 1999 and September 30, 2000 and
the changes during the period from June 17, 1999 (inception) to
December 31, 1999, and for the nine months ended September 30,
2000:
Fixed Options Number
----------------------------------------------------------------------------
Outstanding at June 17, 1999 (inception) --
Granted...................................................... 250,000
Exercised.................................................... --
Canceled..................................................... --
--------------
Outstanding at December 31, 1999............................. 250,000
Granted...................................................... 110,000
Exercised.................................................... (61,000)
Canceled..................................................... --
--------------
Outstanding at September 30, 2000............................ 299,000
==============
d) Warrants
On August 1, 2000, the Company entered into agreements with three
unrelated third party consultants to provide investment banking
services to the Company. The Company granted the consultants
warrants to purchase 1,250,000 shares of the Company's common
stock at an exercise price of $1.10. On August 1, 2000 the fair
value of the stock was $1.00. The warrants are exercisable
beginning on February 3, 2001 and expire on February 2, 2005. The
Company determined the fair value of the options in accordance
with SFAS 123 to be $.121 and has recorded deferred compensation
of $151,250.
Also on August 1, 2000, the Company entered into agreements with
the same three unrelated third party consultants as mentioned in
the above paragraph. The Company granted the consultants warrants
to purchase 1,000,000 shares of the Company's common stock at an
exercise price of $2.00. On August 1, 2000 the fair value of the
stock was $1.00. The warrants
F-13
52
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
are exercisable on February 3, 2001 and expire on February 2,
2005. The Company determined the fair value of the options in
accordance with SFAS 123 to be $.092 and have recorded deferred
compensation of $92,000.
A total of 2,250,000 warrants were granted and deferred
compensation of $243,250 is recorded in the accompanying financial
statements.
(4) INCOME TAXES
A reconciliation of U.S. statutory federal income tax rate to the
effective rate follows for the nine months ended September 30,
2000, for the period from June 17, 1999 (inception) through
December 31, 1999, and for the period from June 17, 1999
(inception) through September 30, 2000:
June 17, 1999 June 17, 1999
Nine months (inception) (inception)
ended through through
September 30, December 31, September 30,
2000 1999 2000
------------ ------------ ------------
U.S. statutory federal rate, graduated ........... 8.64% 14.31% 27.56%
State income tax rate, net of federal ............ 4.63% 4.63% 3.35%
Net operating loss (NOL) for which
no tax benefit is currently available ........ (13.27)% (18.94)% (30.91)%
------------ ------------ ------------
0.00% 0.00% 0.00%
============ ============ ============
The benefit for income taxes from operations consisted of the
following components at September 30, 2000 and December 31, 1999,
respectively: current tax benefit of $46,373 and $28,717,
respectively, resulting from a net loss before income taxes, and
deferred tax expense of $46,373 and $28,717, respectively,
resulting from the valuation allowance recorded against the
deferred tax asset resulting from net operating losses. The change
in the valuation allowance for the nine months ended September 30,
2000 and for the period from June 17, 1999 (inception) through
December 31, 1999 was $17,656 and $28,717, respectively. NOL
carryforwards at December 31, 1999 will begin to expire in 2019.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the asset
will be realized. At that time, the allowance will either be
increased or reduced; reduction could result in the complete
elimination of the allowance if positive evidence indicates that
the value of the deferred tax asset is no longer impaired and the
allowance is no longer required.
Should the Company undergo an ownership change, as defined in
Section 382 of the Internal Revenue Code, the Company's tax net
operating loss carryforwards generated prior to the ownership
change will be subject to an annual limitation which could reduce
or defer the utilization of those losses.
(6) RELATED PARTY TRANSACTIONS
Certain officers of the Company provided services such as
administration, accounting and project management, at no charge.
The value of those services was recognized in the accompanying
F-14
53
IDMEDICAL.COM,INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
financial statements through a charge to compensation and a
corresponding credit to paid-in capital. The Company recognized
contributed services totaling $94,800 and $123,870, respectively,
for the nine months ended September 30, 2000 and the period from
June 17, 1999 (inception) through December 31, 1999.
F-15
54
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION AND LIMITATION OF DIRECTORS' LIABILITY
Our Bylaws provide that we may indemnify any person, or that person's testator
or intestate successor, made or threatened to be made a party to any action or
proceeding because that person was a director or officer of IDMedical or served
any other corporation in any capacity at our request. These actions or
proceedings could be domestic or foreign, civil or criminal, judicial or
administrative, or at the federal or state level. Any indemnification provided
by IDMedical will be in the manner and to the extent permitted by law.
Further, we may enter into agreements with officers and directors to indemnify
and hold them harmless in the event claims or legal actions are brought against
them due to acts done or decisions made within the authorized scope of their
position with IDMedical. These agreements will provide indemnification to the
maximum extent permitted by law.
The Colorado Business Corporation Act allows us to eliminate the personal
liability of our directors to us or our stockholders for monetary damages
resulting from a breach of the fiduciary duty of loyalty and care as a director,
except for:
(a) circumstances where the director breached his duty of loyalty
to us or our Shareholders;
(b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(c) circumstances under which a director votes for or assents to
an unlawful distribution; and
(d) transactions from which the director directly or indirectly
derived an improper personal benefit.
The Colorado Business Corporation Act also states that directors and officers
will not be personally liable for any injury to person or property arising out
of a tort committed by an employee unless:
1. the director or officer was personally involved in the
situation giving rise to the litigation; or
2. the director or officer committed a criminal offense in
connection with the situation.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Exclusive of underwriting compensation, our estimated expenses in connection
with the issuance and distribution of the securities being registered are:
SEC Filing Fee for Registration Statement $ 1,546
Accounting Fees $ 7,000
Legal Fees and Expenses $ 45,000
Miscellaneous $ 10,000
Total: $ 58,546
We will pay all of these expenses.
II-1
55
RECENT SALES OF UNREGISTERED SECURITIES
A. On July 1, 1999 we sold 7,400,000 shares of our common stock. The sale was
to four officers and directors of the Company and did not involve an
underwriter. The total cash received from this sale was $40,000.
All purchasers were accredited investors and we believe this private
placement was exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
B. On July 1, 1999, we sold 850,000 shares of our common stock. The sale,
which did not involve an underwriter, was to William C. Bossung (212,500
shares), Alliance Financial Network, Inc. (212,500 shares), and Devenshire
Management Corporation (425,000). The sale was pursuant to previously
negotiated agreements, in exchange for services rendered to the Company
having a collective value of $5,744.
All purchasers were accredited investors and we believe this private
placement was exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
C. On July 1, 1999, we sold 250,000 shares of our common stock. The sale was
to Futro & Associates, P.C and did not involve an underwriter. The sale was
pursuant to previously negotiated agreements, in exchange for services
rendered to the Company having a collective value of $5,000.
The purchaser was an accredited investor and we believe this private
placement was exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
D. On August 5, 1999, we sold 250,000 shares of our common stock. The sale was
to two accredited investors and did not involve an underwriter. The total
cash received from this sale was $2,500.
All purchasers are accredited investors and we believe this private
placement is exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
E. We offered 1,500,000 shares of our common stock through a private placement
that commenced in November 1, 1999 and concluded on September 30, 2000. The
first sale of stock in the private placement occurred in May 2000. The
offering did not involve an underwriter and was made to a group of 53
investors. A total of 1,120,500 shares of stock were sold during the course
of the private placement; the remaining 379,500 shares remained unsold. The
total cash received through the private placement was $1,120,500.
The purchasers consisted of 27 accredited investors and 26 non-accredited
investors. We believe this private placement was exempt from registration
under Sections 4(2) and Rule 506 of the Securities Act of 1933. The
transaction did not involve a public offering, no sales commissions were
paid, and a restrictive legend was placed on each certificate evidencing
the shares.
II-2
56
F. On August 1, 2000, we granted 1,250,000 warrants. Each warrant has an
exercise price of $1.10 and entitles the holder to one share of our common
stock. The warrants may be exercised at any time between February 3, 2001
and February 2, 2005. The warrants were issued to William C. Bossung
(312,500 warrants), Alliance Financial Network, Inc. (312,500 warrants) and
Devenshire Management Corporation (625,000 warrants). They were issued for
services to be rendered to the Company. An underwriter was not involved in
this sale.
All purchasers were accredited investors and we believe this private
placement was exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
G. On August 1, 2000, we granted 1,000,000 warrants. Each warrant has an
exercise price of $2.00 and entitles the holder to one share of our common
stock. The warrants may be exercised at any time between February 3, 2001
and February 2, 2005. The warrants were issued to William C. Bossung
(250,000 warrants), Alliance Financial Network, Inc. (250,000 warrants) and
Devenshire Management Corporation (500,000 warrants). They were issued for
services to be rendered to the Company. An underwriter was not involved in
this sale.
All purchasers were accredited investors and we believe this private
placement was exempt from registration under Sections 4(2), 4(6) and Rule
506 of the Securities Act of 1933. The transaction did not involve a public
offering, no sales commissions were paid, and a restrictive legend was
placed on each certificate evidencing the shares.
II-3
57
LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
3.1 Articles of Incorporation, as currently in effect.
(Incorporated by reference to Exhibit 3.1 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
3.2 Bylaws as currently in effect. (Incorporated
by reference to Exhibit 3.2 of the company's
Registration Statement on Form SB-2, filed
October 13, 2000).
5.1 Opinion of Counsel, Futro & Trauernicht, LLC.
(Incorporated by reference to Exhibit 5.1 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
10.1 IDMedical.com, Inc. 1999 Stock Option Plan.
(Incorporated by reference to Exhibit 10.1 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
10.2 Form of Common Stock Purchase Warrant, exercise
price $1.10 (Incorporated by reference to Exhibit
10.2 of the company's Registration Statement on Form
SB-2, filed October 13, 2000).
10.3 Form of Common Stock Purchase Warrant, exercise
price $2.00 (Incorporated by reference to Exhibit
10.3 of the company's Registration Statement on Form
SB-2, filed October 13, 2000).
10.4 Contract with digitalNATION - a VERIO company - Inc.
for Web hosting, executed November 19, 1999.
(Incorporated by reference to Exhibit 10.4 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
10.5 Contract with Fastnet Corporation for Web hosting,
executed October 17, 2000. (Filed with this
Registration Statement).
10.6 Contract with Happy Harry's Discount Drug Stores for
establishment of a referral service, executed June
7, 2000. (Filed with this Registration Statement).
10.7 Contract with Dover Family Physicians, P.A. for
establishment of a referral service, executed April
14th, 2000. (Filed with this Registration
Statement).
23.1 Consent of Futro & Trauernicht, LLC. (Included in
Exhibit 5.1).
23.3 Consent of Cordovano & Harvey, P.C. (Filed with this
Registration Statement).
24.1 Power of Attorney (included in Part II of this
Registration Statement under the caption
"Signatures")
27 Financial Data Schedule. (Filed with this
Registration Statement).
II-4
58
UNDERTAKINGS
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events that,
individually or together, represent a fundamental change in
the information in the registration statement. However, any
increase or decrease in the volume of securities offered
(assuming the total dollar value of securities offered does
not exceed the registered amount) and any deviation from the
low or high end of the estimated offering range may be
reflected in the form of prospectus filed with the SEC in
accordance with Rule 424(b). This procedure can be used if the
combined volume and price changes represent no more than a 20%
change in the maximum aggregate offering price (explained in
the "Calculation of Registration Fee" table in the effective
registration statement); and
(iii) To include any additional or changed material information in
the plan of distribution.
(2) For the purpose of determining any liability under the Securities Act,
to treat each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions,
or otherwise, the issuer has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
The issuer therefore undertakes:
(1) In the event that a claim for indemnification against liabilities
arising under the Securities Act of 1933 (other than the payment by the
issuer of expenses incurred or paid by a director, officer or controlling
person of the issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the issuer will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will governed by the final adjudication of such
issue.
II-5
59
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in the City of Denver, State of
Colorado on December 18, 2000.
IDMEDICAL.COM, INC.
By: /s/ Richard J. Schaller, Sr.
-------------------------------------
Richard J. Schaller, Sr., President,
CEO, and Principal Executive Officer
By: /s/ Neil A. Cox
-------------------------------------
Neil A. Cox, Treasurer, CFO,
Principal Accounting Officer and
Principal Financial Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of IDMedical.com, Inc.,
hereby severally constitute Richard J. Schaller, Sr. and Neil A. Cox, and each
of them singly, our true and lawful attorneys with full power to them, and each
of them singly, to sign for us and in our names in the capacities indicated
below the Registration Statement filed herewith and any and all amendments to
said Registration Statement, and generally to do all such things in our name and
behalf in our capacities as officers and directors to enable IDMedical.com, Inc.
to comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said attorneys, or any of
them, to said Registration Statement and any and all amendments thereto.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Name Title Date
---- ----- ----
/s/ Richard J. Schaller, Sr President, CEO, Principal December 4, 2000
- ------------------------------ Executive Officer and Director
Richard J. Schaller, Sr.
/s/ Neil A. Cox Vice President, Secretary, December 4, 2000
- ------------------------------ Treasurer, Principal Accounting
Neil A. Cox Officer, Principal Financial
Officer and Director
/s/ Richard J. Schaller, Jr. Director December 4, 2000
- ------------------------------
Richard J. Schaller, Jr.
/s/ Vincent E. Schaller Director December 4, 2000
- ------------------------------
Vincent E. Schaller
II-6
60
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Articles of Incorporation, as currently in effect.
(Incorporated by reference to Exhibit 3.1 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
3.2 Bylaws as currently in effect. (Incorporated by
reference to Exhibit 3.2 of the company's
Registration Statement on Form SB-2, filed October
13, 2000).
5.1 Opinion of Counsel, Futro & Trauernicht, LLC.
(Incorporated by reference to Exhibit 5.1 of the
company's Registration Statement on Form SB-2,
filed October 13, 2000).
10.1 IDMedical.com, Inc. 1999 Stock Option Plan.
(Incorporated by reference to Exhibit 10.1 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
10.2 Form of Common Stock Purchase Warrant, exercise price
$1.10 (Incorporated by reference to Exhibit 10.2 of
the company's Registration Statement on Form SB-2,
filed October 13, 2000).
10.3 Form of Common Stock Purchase Warrant, exercise price
$2.00 (Incorporated by reference to Exhibit 10.3 of
the company's Registration Statement on Form SB-2,
filed October 13, 2000).
10.4 Contract with digitalNATION - a VERIO company - Inc.
for Web hosting, as executed November 10, 1999.
(Incorporated by reference to Exhibit 10.4 of the
company's Registration Statement on Form SB-2, filed
October 13, 2000).
10.5 Contract with Fastnet Corporation for Web hosting,
executed October 17, 2000. (Filed with this
Registration Statement).
10.6 Contract with Happy Harry's Discount Drug Stores for
establishment of a referral relationship, executed
June 7, 2000. (Filed with this Registration
Statement).
10.7 Contract with Dover Family Physicians, P.A. for
establishment of a referral relationship, executed
April 14th, 2000. (Filed with this Registration
Statement).
23.1 Consent of Futro & Trauernicht, LLC. (Included in
Exhibit 5.1).
23.3 Consent of Cordovano & Harvey, P.C. (Filed with this
Registration Statement).
24.1 Power of Attorney (included in Part II of this
Registration Statement under the caption
"Signatures")
27 Financial Data Schedule. (Filed with this
Registration Statement).