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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-47924
Prospectus Supplement No. 1
Dated May 30, 2001 (to Prospectus dated January 25, 2001)
IDMEDICAL.COM, INC.
This Prospectus Supplement is part of the Prospectus dated January 25,
2001 related to an offering of up to 4,731,500 shares of our common stock, by
the persons identified as "selling securityholders" in the Prospectus which
includes up to 2,250,000 shares the selling securityholders may acquire upon
exercise of warrants.
A copy of our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2000 and our Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 2001 is attached hereto.
The date of this Prospectus Supplement No. 1 is May 30, 2001.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from: to
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Commission file number:
----------------
IDMEDICAL.COM, INC.
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(Name of small business issuer as specified in its charter)
COLORADO 84-1506325
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4333 N. 30TH STREET, BOULDER, COLORADO 80301
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 303/447-8638
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act: NONE
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [ ] No
[X]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $417.00
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. WHILE 2,542,500 SHARES
OF COMPANY'S COMMON STOCK ARE CURRENTLY HELD BY NON-AFFILIATES, THIS ITEM IS NOT
APPLICABLE, AS THERE IS NO MARKET FOR THE COMPANY'S STOCK.
The number of shares outstanding of the issuer's Common Stock, $.001
par value, as of March 15, 2001 was 9,931,500 shares.
DOCUMENTS INCORPORATED BY REFERENCE: None.
Transitional Small Business Disclosure Format (check one):
Yes [ ]; No [X]
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PART I
CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document and any
document incorporated by reference herein are advised that this document and
documents incorporated by reference into this document contain both statements
of historical facts and forward looking statements. Forward looking statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earning or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance, and (iv)
statements of assumptions underlying other statements and statements about the
Company or its business.
This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ materially
from those indicated by forward looking statements. These risks and
uncertainties include price competition, the decisions of customers, the actions
of competitors, the effects of government regulation, possible delays in the
introduction of new products and services, customer acceptance of products and
services, the Company's ability to secure debt and/or equity financing on
reasonable terms, and other factors which are described herein and/or in
documents incorporated by reference herein.
The cautionary statements made pursuant to the Private Litigation
Securities Reform Act of 1995 above and elsewhere by the Company should not be
construed as exhaustive or as any admission regarding the adequacy of
disclosures made by the Company prior to the effective date of such Act. Forward
looking statements are beyond the ability of the Company to control and in many
cases the Company cannot predict what factors would cause results to differ
materially from those indicated by the forward looking statements.
ITEM 1. DESCRIPTION OF BUSINESS
(a) 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.
(b) Business of the Company
Company Overview
IDMedical.com, a development stage company, has created an Internet application
consisting of a customer database of important medical information. The
Company's 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.
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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 via 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. 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.
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 from the website. 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 throughout 2001. The
initial approach and negotiation with these sites will be performed by our
physician director and consultant. 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. Currently, that fee will be $4.00 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.
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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 or e-check, 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;
associations such as the AARP; and community institutions such as churches.
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 a
commission (currently $4.00) 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.
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.
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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.
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 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 enter information easily and quickly, and help
doctors get the information they need in a moment's notice.
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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 a commission
(currently $4.00) 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, diptheria, 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 web browsers could
promote our competitors or charge us a substantial fee for inclusion.
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 commission (currently
$4.00) 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.
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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 commission (currently
$4.00) 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.
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. Through these alliances, Happy Harry's and Dover Family
will offer their customers the opportunity to enroll in the
IDMedical program by providing IDMedical brochures and Patient
Entry Worksheets at each location and will collect completed
Worksheets. Happy Harry's and Dover Family have no further
responsibilities under the terms of their respective agreements.
In return for the distribution of our materials, IDMedical will
pay Happy Harry's $5.00 for each individual membership which is
maintained for 60 days or more and $8.00 for each family
membership which is maintained for 60 days or more, provided that
the members indicate that they heard about IDMedical's services
through Happy Harry's. Upon renewal of these memberships,
IDMedical will pay Happy Harry's $3.00 for each renewing
individual and $8.00 for each renewing family.
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In return for the distribution of our materials, IDMedical
will pay Dover Family $10.00 for each individual membership
which is maintained for 60 days or more and $15.00 for each
family membership which is maintained for 60 days or more,
provided that the members indicate that they heard about
IDMedical's services through Dover Family. Upon renewal of
these memberships, IDMedical will pay Dover Family $5.00 for
each renewing individual and $15.00 for each renewing
family.
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 a commission, (currently
$4.00) 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 a commission (currently $4.00) for
each person that initially joins our program.
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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.
The rate and order of expansion of our marketing efforts will depend on the
availability of funds, as well as the need for concentration in certain areas.
Therefore, we cannot determine at this time what our future marketing
expenditures will be.
We currently have three employees dedicated to marketing efforts, each of whom
is paid from $500 to $1,000 per month, plus a commission of $1 per entity
enrolled. An entity is defined as an individual member or a family membership of
up to six people. Other individuals may also assist in our future marketing
efforts. We anticipate paying future individuals on a commission-only basis of
$1 per entity enrolled.
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
was completed and implemented in December, 2001. New modules were added in
March, 2001.
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
three servers, one housing our website, one housing our database, and one used
for ongoing development. 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). Neither of these factors
can be anticipated at this time. Costs for this expansion cannot be determined,
as technology costs are rapidly changing.
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.
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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.
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, but
development is scheduled to commence during 2001.
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.
The Health Information Portability and Accountability Act (HIPAA), which is
currently under administrative review, gives 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. Unless it is challenged by the current administration, the privacy
components of HIPAA will become effective in February 2003.
The HIPAA 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 $250,000 and incarceration
for up to ten 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.
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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.
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 two 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.
11
13
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. 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. On March 19,
2001, we received a Notice of Allowance for the "Dr. E-MED" design.
We further intend, on an ongoing and regular basis, 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.
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14
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 our potential liability 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.
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. If such
litigation or reform efforts result in a restructuring of the current system, we
may have to obtain new domain names in addition to or in lieu of our current
domain names.
Jurisdiction
The Internet has a global reach. It is possible that, although our transmissions
over the Internet originate primarily in the State of Pennsylvania, 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 the
future, these laws may be modified or new laws may be enacted. 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.
ITEM 2. 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.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any current or pending legal proceedings..
13
15
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
We did not submit any matter to a vote of the shareholders in 2000.
14
16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
There is currently no market for our stock and there never has been.
(b) Holders
As of March 15, 2001, there were 81 holders of record of our common stock.
(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.
(d) Sales of Unregistered Securities
During the period covered by this report, the following sales of unregistered
securities occurred:
1. 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 Section 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.
2. 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 warrants.
3. 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.
15
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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 warrants.
ITEM 6. PLAN OF OPERATION
Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements. Such risks and uncertainties
include, without limitation: well-established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, ability to compete as a start-up company in a highly competitive
market, and access to sources of capital.
As a development stage company, we had minimal revenues of $417.00 from our
inception in June 1999 through December 31, 2000. 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.
During the next twelve months, the Company's development efforts will focus on
the production of CD-ROM or DVD-based software which will be marketed to
physician's offices and hospitals. Utilizing the data-entry process previously
developed for use on the website, this software will allow offices and hospitals
to convert their existing paper or electronic records into the IDMedical format.
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. Management believes we can satisfy our cash requirements until
approximately July 2001.
After July 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 was implemented after our full production software was put
in place in December 2000. 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.
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18
During the next twelve months, we expect to hire additional employees and
consultants to implement our plan of operation and business strategies. We
anticipate hiring two consultants and two full-time employees, with any
remaining employees being part-time, including professional, technical, and
support personnel. We also plan to hire ten sales representatives, all of whom
will be consultants, in the next twelve months. All sales representatives will
be hired strictly on a commission and expense basis. These expenses are
anticipated to total approximately $500 per representative, per month.
ITEM 7. FINANCIAL STATEMENTS
The information required by Item 7 and an index thereto commences on page F-1,
which pages follow this page.
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IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent auditors' report ........................................................... F-2
Balance sheet, December 31, 2000 ....................................................... F-3
Statements of operations, for the year ended December 31, 2000, for the period
from June 17, 1999 (inception) through December 31, 1999 and for the period
from June 17, 1999 (inception) through December 31, 2000 .......................... F-4
Statement of changes in shareholders' equity from June 17, 1999 (inception)
through December 31, 2000 ......................................................... F-5
Statements of cash flows, for the year ended December 31, 2000, for the period
from June 17, 1999 (inception) through December 31, 1999 and for the period
from June 17, 1999 (inception) through December 31, 2000 .......................... F-6
Notes to financial statements .......................................................... F-7
F-1
20
To the Board of Directors and Shareholders
IDMEDICAL.COM, Inc.
INDEPENDENT AUDITORS' REPORT
We have audited the balance sheet of IDMEDICAL.COM, Inc. (a development stage
company) as of December 31, 2000, and the related statements of operations,
changes in shareholders' equity and cash flows for the year ended December 31,
2000, from June 17, 1999 (inception) through December 31, 1999, and from June
17, 1999 (inception) through December 31, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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
December 31, 2000, and the results of its operations and cash flows for the year
ended December 31, 2000, from June 17, 1999 (inception) through December 31,
1999, and from June 17, 1999 (inception) through December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Cordovano and Harvey, P.C.
Cordovano and Harvey, P.C.
Denver, Colorado
March 16, 2001
F-2
21
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 2000
ASSETS
Current assets:
Cash and cash equivalents (Note 2) ................................................ $ 566,709
Prepaid expenses .................................................................. 2,405
------------
Total current assets ........................................................ 569,114
Property and equipment, net of accumulated depreciation and amortization of
$7,663 (Notes 1 and 2) ............................................................ 41,748
Intangible assets, net of accumulated amortization of $13,461 (Notes 1 and 2) ......... 210,578
Other assets (Notes 1 and 2) .......................................................... 29,260
------------
$ 850,700
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ............................................. $ 91,115
Unearned revenue .................................................................. 1,100
Current maturities on capital lease obligations (Note 2) .......................... 4,829
------------
Total current liabilities ................................................... 97,044
Long-term debt:
Capital lease obligations, less current maturities (Note 2) ....................... 21,605
------------
Total liabilities ........................................................... 118,649
------------
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 shares issued and outstanding ........................................ 9,931
Additional paid-in capital ........................................................ 1,430,025
Outstanding common stock options - 419,000 ........................................ 16,708
Outstanding warrants - 2,250,000 .................................................. 243,250
Deferred compensation ............................................................. (243,250)
Deficit accumulated during the development stage .................................. (724,613)
------------
Total shareholders' equity .................................................. 732,051
------------
$ 850,700
============
See accompanying notes to financial statements
F-3
22
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
June 17, 1999 June 17, 1999
For the (inception) (inception)
Year Ended Through Through
December 31, December 31, December 31,
2000 1999 2000
------------ ------------- -------------
Revenue, net ................................................ $ 417 $ -- $ 417
Selling, general and administrative expenses:
Contributed compensation (Note 5) ...................... 147,300 123,870 271,170
Sales and marketing .................................... 9,251 51 9,302
Stock-based compensation, legal (Note 3) ............... -- 5,000 5,000
Stock-based compensation, consulting (Note 3) .......... 16,330 6,244 22,574
Organization costs ..................................... -- 1,000 1,000
Web site hosting and Internet access ................... 12,784 -- 12,784
Depreciation and amortization .......................... 19,968 -- 19,968
Personnel .............................................. 163,303 -- 163,303
Printing ............................................... 28,915 2,342 31,257
Consulting ............................................. 37,443 -- 37,443
Professional fees ...................................... 73,767 11,083 84,850
Travel and entertainment ............................... 26,019 -- 26,019
Other .................................................. 49,394 1,163 50,557
------------ ------------ ------------
Total selling, general and administrative expenses ... 584,474 150,753 735,227
------------ ------------ ------------
Operating loss ... (584,057) (150,753) (734,810)
Non-operating income (expense):
Interest income ........................................ 12,342 -- 12,342
Interest expense ....................................... (2,145) -- (2,145)
------------ ------------ ------------
Loss before income taxes ... (573,860) (150,753) (724,613)
Income taxes (Note 4) ....................................... -- -- --
------------ ------------ ------------
Net loss ... $ (573,860) $ (150,753) $ (724,613)
============ ============ ============
Basic and diluted loss per common share ..................... $ (0.06) $ (0.02)
============ ============
Basic and diluted weighted average number of common shares
outstanding ............................................ 9,143,833 7,464,286
============ ============
See accompanying notes to financial statements
F-4
23
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Preferred Stock Common Stock Additional
--------------------------- --------------------------- Paid-in
Shares Par Value Shares Par Value Capital
------------ ------------ ------------ ------------ ------------
June 17, 1999 (inception) ............................. -- $ -- -- $ -- $ --
June 17, 1999 (inception) through December 31, 1999,
contributed services (Note 5) ..................... -- -- -- -- 123,870
July 1999, sale of founders stock at
$.0054 per share ................................... -- -- 7,400,000 7,400 32,600
July 1999, stock issued for services valued
at the value of the services (Note 3) .............. -- -- 1,100,000 1,100 9,644
August 1999, sale of common stock at
$.01 per share ..................................... -- -- 250,000 250 2,250
October 1999, options granted to purchase 250,000
shares of common stock (Note 3) .................... -- -- -- -- --
Net loss for the period ended December 31, 1999 ....... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 1999 ... -- -- 8,750,000 8,750 168,364
January 1 through June 30, 2000,
contributed services (Note 5) ...................... -- -- -- -- 147,300
February 2000, capital contributed
by officers ........................................ -- -- -- -- 10,000
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 1,098,200
September 2000, exercise of stock options at
$.10 per share (Note 3) ............................ -- -- 61,000 61 6,161
November 2000, options granted to purchase 120,000
shares of common stock (Note 3) .................... -- -- -- -- --
Net loss for the year ended December 31, 2000 ......... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2000 ... -- $ -- 9,931,500 $ 9,931 $ 1,430,025
============ ============ ============ ============ ============
Deficit
Outstanding Accumulated
Common During the
Stock Outstanding Deferred Development
Options Warrants Compensation Stage Total
------------ ------------ ------------ ------------ ------------
June 17, 1999 (inception) ............................. $ -- $ -- $ -- $ -- $ --
June 17, 1999 (inception) through December 31, 1999,
contributed services (Note 5) ..................... -- -- -- -- 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 -- -- -- 500
Net loss for the period ended December 31, 1999 ....... -- -- -- (150,753) (150,753)
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 1999 ... 500 -- -- (150,753) 26,861
January 1 through June 30, 2000,
contributed services (Note 5) ...................... -- -- -- -- 147,300
February 2000, capital contributed
by officers ........................................ -- -- -- -- 10,000
August 2000, options granted to purchase 110,000
shares of common stock (Note 3) .................... 1,690 -- -- -- 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) .......... -- -- -- -- 1,099,320
September 2000, exercise of stock options at
$.10 per share (Note 3) ............................ (122) -- -- -- 6,100
November 2000, options granted to purchase 120,000
shares of common stock (Note 3) .................... 14,640 -- -- -- 14,640
Net loss for the year ended December 31, 2000 ......... -- -- -- (573,860) (573,860)
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2000 ... $ 16,708 $ 243,250 $ (243,250) $ (724,613) $ 732,051
============ ============ ============ ============ ============
See accompanying notes to financial statements
F-5
24
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
June 17, 1999 June 17, 1999
For the (inception) (inception)
Year Ended Through Through
December 31, December 31, December 31,
2000 1999 2000
------------ ------------- -------------
Cash flows from operating activities:
Net loss ......................................................... $ (573,860) $ (150,753) $ (724,613)
Transactions not requiring cash:
Contributed services .......................................... 147,300 123,870 271,170
Options granted for services .................................. -- 500 500
Stock issued for services ..................................... -- 10,744 10,744
Amortization and depreciation ................................. 19,968 -- 19,968
Changes in current assets and current liabilities:
Prepaid expenses ........................................... (2,405) -- (2,405)
Unearned Revenue ........................................... 1,100 -- 1,100
Accounts payable ........................................... 75,763 15,352 91,115
------------ ------------ ------------
Net cash used in operating activities ... (332,134) (287) (332,421)
------------ ------------ ------------
Cash flows from investing activities:
Cash paid for copyright ....................................... (61) (424) (485)
Cash paid for trademark ....................................... (525) (1,935) (2,460)
Cash paid for website ......................................... (214,886) (7,500) (222,386)
Cash paid for patent .......................................... (26,800) -- (26,800)
Cash paid for leasehold improvements .......................... (2,802) -- (2,802)
Equipment purchases ........................................... (16,654) -- (16,654)
------------ ------------ ------------
Net cash used in investing activities ... (261,728) (9,859) (271,587)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from sale of common stock, net of offering costs ..... 1,132,446 25,704 1,158,150
Proceeds from exercise of stock options ....................... 6,100 -- 6,100
Lease payments ................................................ (3,533) -- (3,533)
Contributed capital (Note 3) .................................. 10,000 -- 10,000
------------ ------------ ------------
Net cash provided by financing activities ... 1,145,013 25,704 1,170,717
------------ ------------ ------------
Net change in cash and cash equivalents .............................. 551,151 15,558 566,709
Cash and cash equivalents at beginning of period ..................... 15,558 -- --
------------ ------------ ------------
Cash and cash equivalents at end of period ... $ 566,709 $ 15,558 $ 566,709
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ...................................................... $ 2,145 $ -- $ 2,145
============ ============ ============
Income taxes .................................................. $ -- $ -- $ --
============ ============ ============
Non-cash investing and financing activities:
Equipment purchased under capital lease (Note 2) .............. $ 29,967 $ -- $ 29,967
============ ============ ============
See accompanying notes to financial statements
F-6
25
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. (the "Company") was incorporated on June 17,
1999 to capitalize on the growing demand for online medical
records systems through the systematic acquisition of paying
members from 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 Standards (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
26
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 include 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 were 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 year ended
December 31, 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 $12,131 and $-0-,
respectively for the year ended December 31, 2000 and for the
period from June 17, 1999 (inception) to December 31, 1999.
Preliminary project stage and post implementation costs were
expensed.
(f) 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 ("SFAS") 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 amounts 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.
(g) 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.
(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
27
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 loss that would have resulted from that risk totaled
$465,318, at December 31, 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 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 SFAS No. 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 December 31, 2000 and 1999, there were 419,000
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 year ended December 31,
2000, all of which do not vest until February 3, 2001 and would
also be antidilutive.
F-9
28
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(2) BALANCE SHEET COMPONENTS
Cash and Cash Equivalents
Cash and cash equivalents consisted of the following at December 31,
2000:
Main Operating Account ................................ $ 255,869
Checking Account ...................................... 2,244
Money Market Account .................................. (15)
Certificate of Deposit ................................ 308,333
Card Services Account ................................. 278
------------
$ 566,709
============
Property and equipment
Property and equipment consisted of the following at December 31, 2000:
Property and equipment under capital lease ............ $ 29,967
Leasehold improvements ................................ 2,802
Furniture and equipment ............................... 16,654
------------
49,423
Less accumulated depreciation and amortization ........ (7,675)
------------
$ 41,748
============
Capital leases
Capital lease obligations consisted of the following at December 31,
2000:
Lease payable, net of imputed interest of $165,
in 12 installments of $445, collateralized by
furniture and equipment ............................... $ 2,062
Lease payable, net of imputed interest of $10,576,
in 48 installments of $777, collateralized by equipment 24,372
------------
26,434
Less current maturities ............................... (4,829)
------------
$ 21,605
============
Interest expense on capital lease obligations totaled $2,145 and $-0- for
the year ended December 31, 2000 and the period from June 17, 1999
(inception) through December 31, 1999, respectively.
F-10
29
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Maturities on the capital lease obligations subsequent to December 31,
2000 are as follows:
December 31,
2001 ............................................. $ 11,545
2002 ............................................. 9,319
2003 ............................................. 9,319
2004 ............................................. 6,992
------------
37,175
Less imputed interest ................................. (10,741)
------------
$ 26,434
============
Intangible Assets
Intangible assets consisted of the following at December 31, 2000:
Web site .............................................. $ 222,386
Copyright ............................................. 485
Less accumulated amortization ......................... (12,293)
------------
$ 210,578
============
Other Assets
Other assets consisted of the following at December 31, 2000:
Patent ................................................ $ 26,800
Trademark ............................................. 2,460
------------
$ 29,260
============
(3) SHAREHOLDERS' EQUITY
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.
F-11
30
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
b) Preferred stock
The Company is authorized to issue 1,000 shares of $.001 par value
preferred stock. The Company 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 419,000 and 250,000 options outstanding under this plan as of
December 31, 2000 and 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 year ended December 31, 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
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 year ended December 31, 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.
F-12
31
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
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.
On November 3, 2000, the Company entered into agreements with four
unrelated third party consultants to provide technical advisory
services, software development services, and graphic services to
the Company. The Company granted the consultants fully vested
options to purchase 120,000 shares of the Company's common stock.
On November 3, 2000 the fair value of the stock was $1.00. The
options are exercisable at $1.10 and expire on November 3, 2003.
The Company determined the fair value of the options in accordance
with SFAS 123 to be $.122 and have recorded stock based
compensation expense of $14,640.
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 loss and net loss per
share would have increased to the pro forma amounts indicated
below:
December 31,
------------------------------
2000 1999
------------ ------------
Net loss, as reported ................................. $ (573,860) $ (150,753)
Decrease due to:
Employee stock options ......................... (16,900) --
------------ ------------
Pro forma net loss .................................... $ (590,760) $ (150,753)
============ ============
As reported:
Net loss per share - basic and diluted ................ $ (0.06) $ (0.02)
============ ============
Pro Forma:
Net loss per share - basic and diluted ............ $ (0.06) $ (0.02)
============ ============
F-13
32
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SUMMARY
Following is a summary of the Company's stock option awards to
purchase shares of common stock as of December 31, 2000 and 1999,
and the changes during the period from June 17, 1999 (inception)
through December 31, 2000:
Fixed Options Number
------------- ------------
Outstanding at June 17, 1999 (inception) .............. --
Granted ............................................... 250,000
Exercised ............................................. --
Canceled .............................................. --
------------
Outstanding at December 31, 1999 ...................... 250,000
Granted ............................................... 230,000
Exercised ............................................. (61,000)
Canceled .............................................. --
------------
Outstanding at December 31, 2000 ...................... 419,000
============
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 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.
F-14
33
IDMEDICAL.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(4) INCOME TAXES
A reconciliation of U.S. statutory federal income tax rate to the
effective rate follows for the year ended December 31, 2000 and
for the period from June 17, 1999 (inception) through December 31,
1999:
June 17, 1999
(inception)
Year Ended through
December 31, December 31,
2000 1999
------------ -------------
U.S. statutory federal rate, graduated ................ 34.00% 26.41%
State income tax rate, net of federal ................. 5.74% 6.40%
Permanent book-to-tax differences ..................... (0.35)% (1.08)%
Net operating loss (NOL) for which
no tax benefit is currently available ............. (39.39)% (31.73)%
------------ ------------
0.00% 0.00%
============ ============
At December 31, 2000, deferred tax assets consisted of a net tax
asset of $269,314, due to operating loss carryforwards of
$713,061, which was fully allowed for, in the valuation allowance
of $269,314. The valuation allowance offsets the net deferred tax
asset for which there is no assurance of recovery. The change in
the valuation allowance for the year ended December 31, 2000 and
for the period from June 17, 1999 (inception) through December 31,
1999 totaled $221,485 and $47,829, respectively. The current tax
benefit also totaled $221,485 and $47,829 for the year ended
December 31, 2000 and for the period from June 17, 1999
(inception) through December 31, 1999, respectively. The net
operating loss carryforward expires through the year 2020.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the
deferred tax 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 assets 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 these losses.
(5) 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
financial statements through a charge to compensation and a
corresponding credit to paid-in capital. The Company recognized
contributed services totaling $147,300 and $123,870, respectively,
for the year ended December 31, 2000 and the period from June 17,
1999 (inception) through December 31, 1999.
F-15
34
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have not engaged new accountants and there have been no disagreements with
our accountants regarding matters of accounting or financial disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company, their ages,
positions in the Company, the dates of their initial election or appointment as
director or executive officer, and the expiration of the terms as directors are,
as follows:
Name Age Position Director Since
- ---- --- -------- --------------
Dr. Richard J. 59 President, Chief Executive Officer and June 1999
Schaller, Sr. Director
Neil A. Cox 51 Vice President, Treasurer, Chief Financial June 1999
Officer, Secretary and Director
Dr. Richard J. 36 Director June 1999
Schaller, Jr.
The Company's directors are elected at the annual meeting of
stockholders and hold office until their successors are elected and qualified.
The Company's officers are appointed annually by the Board of Directors and
serve at the pleasure of the Board.
DR. RICHARD J. SCHALLER, SR. has served as President, Chief Executive Officer
and Director of the Company since June 1999. He 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 has
primarily been 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 has served as Vice President, Secretary, Treasurer, Chief Financial
Officer and Director of the Company since June 1999. He 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. has served as Director of the Company since June
1999. He graduated from Muhlenberg College in 1986 with a B.S. 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.
18
35
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 became 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, CEO and director, is the father of Dr.
Richard J. Schaller Jr., director.
Neil A. Cox, our Vice President, Treasurer, CFO, Secretary and a director, is
the brother-in-law of Richard J. Schaller, Sr.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information about compensation paid to,
or accrued for the benefit of the Company's officers and directors during the
years ended December 31, 2000 and 1999, the only years in which the Company was
in operation. None of the Company's directors or executive officers earned more
than $100,000 during the years ended December 31, 2000 and 1999.
Summary Compensation Table
Annual Compensation
-------------------------------
(a) (b) (e)
Name Year Other
And Ended (c) (d) Annual
Principal December Salary Bonus Compensation
Position 31 ($) ($) ($)
- ---------------------------------- -------- -------- ----- ------------
Richard J. Schaller, Sr., CEO, 2000 39,342 -0- -0-
President & Director 1999 -0- -0- -0-
Neil A. Cox, Vice President, CFO, 2000 39,342 -0- -0-
Treasurer, Secretary & Director 1999 -0- -0- -0-
Richard J. Schaller, Jr., Director 2000 -0- -0- -0-
1999 -0- -0- -0-
19
36
Long Term Compensation
---------------------------------
Awards Payouts
---------------------------------
(a) (b) (f) (g) (h) (i)
Name Year Restricted All
And Ended Stock Shares LTIP Other
Principal December Award(s) Underlying Payouts Compensation
Position 31 ($) Options ($) ($)
- --------------------------- ----------- ---------- ---------- -------- ------------
Richard J. Schaller, 2000 -0- -0- -0- -0-
Sr., CEO, President & 1999 -0- -0- -0- -0-
Director
Neil A. Cox, Vice 2000 -0- -0- -0- -0-
President, CFO, 1999 -0- -0- -0- -0-
Treasurer, Secretary &
Director
Richard J. Schaller, Jr., 2000 -0- -0- -0- -0-
Director 1999 -0- -0- -0- -0-
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 2000.
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 2000.
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 2000.
COMPENSATION OF DIRECTORS
We did not pay any compensation to our directors for service provided as a
director during fiscal year 2000. 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.
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
20
37
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. To date, a total of 250,000 options to purchase common stock at
$0.10 per share and 230,000 options to purchase common stock at $1.10 have been
granted under this plan. 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.
21
38
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 2001, the stock
ownership of each person known to the Company to be the beneficial owner of five
percent (5%) or more of the Company's Common Stock, each executive officer and
director individually and all executive and directors of the Company as a group.
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%
Includes all officers and directors of the 5,539,000 55.77%
Company as a group (3 persons)
Dr. Vincent E. Schaller (3) 1,850,000 18.63%
(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 March 15, 2001, 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.
(4) All of the shares of Common Stock held by officers, directors and principal
shareholders listed above are "restricted securities" and, as such, are
subject to limitations on resale. The shares may be sold pursuant to Rule
144 of the Securities Act of 1933, as amended, under certain circumstances.
22
39
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our founders are Richard J. Schaller Sr., President, CEO and director;
Neil A. Cox, Vice President, Treasurer, CFO, Secretary, and director; Dr.
Richard J. Schaller Jr., director; and Dr. Vincent E. Schaller, a former
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.
During the year 2000, Dr. Vincent E. Schaller was paid $20,000 in
consulting fees for services rendered to the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 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).
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. (Incorporated by reference to Exhibit 10.5 of
the company's Amended Registration Statement on Form SB-2/A-1,
filed December 18, 2000).
10.6 Contract with Happy Harry's Discount Drug Stores for
establishment of a referral relationship, executed June 7, 2000.
(Incorporated by reference to Exhibit 10.6 of the company's
Amended Registration Statement on Form SB-2/A-1, filed December
18, 2000).
10.7 Contract with Dover Family Physicians, P.A. for establishment of
a referral relationship, executed April 14th, 2000. (Incorporated
by reference to Exhibit 10.7 of the company's Amended
Registration Statement on Form SB-2/A-1, filed December 18,
2000).
(b) Reports on Form 8-K
No current reports on Form 8-K were filed during the last quarter of 2000.
23
40
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: March 31, 2001.
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
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By: /s/ Richard J. Schaller, Sr.
------------------------------------------
Richard J. Schaller, Sr., Director
Date: March 31, 2001
By: /s/ Neil A. Cox
------------------------------------------
Neil A. Cox, Director
Date: March 31, 2001
By: /s/ Richard J. Schaller, Jr.
------------------------------------------
Richard J. Schaller, Jr., Director
Date: March 31, 2001
24
41
EXHIBIT INDEX
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).
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. (Incorporated by reference to Exhibit 10.5
of the company's Amended Registration Statement on Form
SB-2/A-1, filed December 18, 2000).
10.6 Contract with Happy Harry's Discount Drug Stores for
establishment of a referral relationship, executed June 7,
2000. (Incorporated by reference to Exhibit 10.6 of the
company's Amended Registration Statement on Form SB-2/A-1,
filed December 18, 2000).
10.7 Contract with Dover Family Physicians, P.A. for establishment
of a referral relationship, executed April 14th, 2000.
(Incorporated by reference to Exhibit 10.7 of the company's
Amended Registration Statement on Form SB-2/A-1, filed
December 18, 2000).
42
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: March 31, 2001 Commission File Number: 0001102358
-------------- ----------
IDMEDICAL.COM, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1506325
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4333 N. 30th Street, Boulder, Colorado 80301
(Address of principal executive offices) (Zip code)
(303) 447-8638
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.0001 par value 9,931,500
Class Number of shares outstanding at May 11, 2001
- --------------------------------------------------------------------------------
43
FORM 10-QSB
1ST QUARTER
INDEX
Page
----
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, March 31, 2001 (unaudited).........................................3
Condensed statements of operations, three months ended March 31,
2001 and 2000 (unaudited), and June 11, 1999 (inception) through
March 31, 2001 (unaudited)...............................................................4
Condensed statements of cash flows, three months ended March 31,
2001 and 2000 (unaudited), and June 11, 1999 (inception) through
March 31, 2001 (unaudited)...............................................................5
Notes to condensed financial statements (unaudited).........................................6
Item 2. Plan of Operation..................................................................7
PART 2 - OTHER INFORMATION
Item 1. Legal Information..................................................................8
Item 2. Changes in Securities..............................................................8
Item 3. Defaults Upon Senior Securities....................................................8
Item 4. Submission of Matters to a Vote of Security Holders................................8
Item 5. Other Information..................................................................8
Item 6. Exhibits and Reports on Form 8-K...................................................9
Signatures.................................................................................11
2
44
PART 1. ITEM 1. FINANCIAL INFORMATION
IDMEDICAL.COM, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2001
ASSETS
Current assets:
Cash and cash equivalents ................................................... $ 219,458
Prepaid expenses ............................................................ 2,405
-----------
Total current assets 221,863
Property and equipment, less accumulated depreciation and
amortization of $12,260 ..................................................... 37,163
Intangible assets, less accumulated amortization of $41,161 ..................... 305,259
Other assets .................................................................... 29,787
-----------
$ 594,072
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ...................................... $ 29,266
Unearned revenue ........................................................... 1,031
Current maturities on capital lease obligations ............................ 5,933
-----------
Total current liabilities 36,230
Long-term debt:
Capital lease obligations, less current maturities ......................... 18,177
-----------
Total liabilities 54,407
-----------
Shareholders' equity:
Preferred stock ............................................................ --
Common stock ............................................................... 9,931
Additional paid-in capital ................................................. 1,430,025
Outstanding common stock options ........................................... 16,708
Outstanding warrants ....................................................... 243,250
Deferred compensation ...................................................... (243,250)
Deficit accumulated during development stage ............................... (916,999)
-----------
Total shareholders' equity 539,665
-----------
$ 594,072
===========
See accompanying notes to condensed financial statements.
3
45
IDMEDICAL.COM, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
June 17,
1999
Three Months Ended (Inception)
March 31, Through
-------------------------- March 31,
2001 2000 2001
----------- ----------- -----------
Revenue, net ............................................ $ 424 $ -- $ 841
Operating expenses:
Stock-based compensation ........................... -- -- 27,574
Selling, general and administrative ................ 159,093 79,107 846,778
Depreciation and amortization ...................... 33,453 -- 53,421
----------- ----------- -----------
Total operating expenses 192,546 79,107 927,773
----------- ----------- -----------
Operating loss (192,122) (79,107) (926,932)
Interest income ......................................... 1,079 -- 13,421
Interest expense ........................................ (1,343) -- (3,488)
----------- ----------- -----------
Net loss before income taxes (192,386) (79,107) (916,999)
Income taxes (Note B) ................................... -- -- --
----------- ----------- -----------
Net loss $ (192,386) $ (79,107) $ (916,999)
=========== =========== ===========
Basic loss per common share ............................. $ (0.02) $ (0.01)
=========== ===========
Basic weighted average common shares outstanding ........ 9,931,500 8,750,000
=========== ===========
See accompanying notes to condensed financial statements.
4
46
IDMEDICAL.COM, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
June 17,
1999
Three Months Ended (Inception)
March 31, Through
--------------------------- March 31,
2001 2000 2001
----------- ----------- -----------
Net cash used in operating activities ....................................... $ (220,851) $ (7,957) $ (553,272)
----------- ----------- -----------
Cash flows from investing activities:
Cash paid for copyright ................................................. -- -- (485)
Cash paid for trademark ................................................. -- -- (2,460)
Cash paid for web site .................................................. (123,549) (8,605) (345,935)
Cash paid for patent .................................................... (527) -- (27,327)
Cash paid for leasehold improvements .................................... -- -- (2,802)
Equipment purchases ..................................................... -- -- (16,654)
----------- ----------- -----------
Net cash used in investing activities (124,076) (8,605) (395,663)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock, net of
offering costs ....................................................... -- -- 1,158,150
Proceeds from exercise of stock options ................................. -- -- 6,100
Lease payments .......................................................... (2,324) -- (5,857)
Contributed capital ..................................................... -- 10,000 10,000
----------- ----------- -----------
Net cash (used in) provided by financing activities (2,324) 10,000 1,168,393
----------- ----------- -----------
Net change in cash (347,251) (6,562) 219,458
Cash, beginning of period ................................................... 566,709 15,558 --
----------- ----------- -----------
Cash, end of period $ 219,458 $ 8,996 $ 219,458
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ............................................................. $ 1,343 $ -- $ 3,488
=========== =========== ===========
Income taxes ......................................................... $ -- $ -- $ --
=========== =========== ===========
See accompanying notes to condensed financial statements.
5
47
IDMEDICAL.COM, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its Form 10-KSB dated December 31,
2000, and should be read in conjunction with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises". As of March 31, 2001, the Company was devoting
substantially all of its efforts to financial planning, raising capital and
developing markets and its web site.
Financial data presented herein are unaudited.
NOTE B: INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the three months ended March 31, 2001 resulting in a
deferred tax asset, which was fully allowed for; therefore, the net benefit and
expense resulted in $-0- income taxes.
6
48
PART I. ITEM 2. PLAN OF OPERATION
IDMEDICAL.COM, INC.
(A Development Stage Company)
PLAN OF OPERATION
During the next twelve months the Company's development efforts will focus on
the production of CD-ROM or DVD-based software, which will be marketed to
physicians' offices and hospitals. Utilizing the data-entry process previously
developed for use on the web site, this software will allow offices and
hospitals to convert their existing paper or electronic records into the
IDMedical format.
Management believes that the Company's current cash balance can satisfy its cash
requirements until approximately July 1, 2001. Until then, the Company will need
to either realize substantial additional revenue from business activities or
raise additional funds to meet future cash requirements. Additional funding may
come from the sale of the Company's common or preferred stock, from governmental
or private investment organizations, or from financial institutions. There is no
guarantee that the Company will be successful in securing additional financing.
Failure to raise additional funds may prevent the Company from expanding
operations or pursuing other aspects of its business plan. Such a failure may
ultimately result in the Company being forced to cease operations, resulting in
a loss to shareholders.
The Company currently has six full-time employees. The Company anticipates
hiring an additional three full-time employees within the next twelve months.
The Company plans to obtain leases, rather than making capital expenditures, to
reduce cash outflows.
FINANCIAL CONDITION
As of March 31, 2001, the Company had total assets of $594,072 as compared to
$850,700 at December 31, 2000. The decrease was related to the Company's use of
cash during the quarter. During the three months ended March 31, 2001, the
Company's cash balance decreased by $347,251. During the three months ended
March 31, 2001, the Company used $220,851 in operating activities consisting of
the net loss and repayment of liabilities. During the first quarter of 2001, the
Company used $124,076 and $2,324 in investing activities and financing
activities, respectively. The Company invested $123,549 in web site development
and $527 in patent costs. In addition, the Company made lease payments totaling
$2,324.
RESULTS OF OPERATIONS
During the three months ended March 31, 2001, the Company recorded revenue
totaling $424 as compared with $-0- for the three months ended March 31, 2000.
The increase in revenues was a result of the Company developing its web site and
selling memberships to customers for use of the site. Operating expenses
increased from $79,107 for the three months ended March 31, 2000 to $169,409 for
the three months ended March 31, 2001. The operating expenses increased due to
an increase in depreciation and amortization. The Company also began paying
salaries following the closing of its common stock offering in September of
2000. Interest income totaled $1,079 and $-0- for the three months ended March
31, 2001 and 2000, respectively. The increase was due to the investment of the
proceeds received from the common stock offering in an interest bearing bank
account. Interest expense totaled $1,343 and $-0- for the three months ended
March 31, 2001 and 2000, respectively. The increase was due to capital leases
obtained by the Company during the fourth quarter of 2000.
7
49
IDMEDICAL.COM, INC.
(A Development Stage Company)
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of federal
securities laws. These statements plan for or anticipate the future.
Forward-looking statements include statements about our future business plans
and strategies, statements about our need for working capital, future revenues,
results of operations and most other statements that are not historical in
nature. In this Report, forward-looking statements are generally identified by
the words "intend", "plan", "believe", "expect", "estimate", and the like.
Investors are cautioned not to put undue reliance on forward-looking statements.
Except as otherwise required by applicable securities statues or regulations,
the Company disclaims any intent or obligation to update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise. Because forward-looking statements involve future risks and
uncertainties, these are factors that could cause actual results to differ
materially from those expressed or implied.
PART 2. OTHER INFORMATION
Items 1 through 4 - No response required.
Item 5 - Other information
On March 19, 2001, Vincent E. Schaller, a director of the registrant,
transferred by gift 500,000 shares of the Registrant's restricted common stock
to Richard Korn. On April 5, 2001, Richard J. Schaller, Jr., a director of the
Registrant, transferred by gift 500,000 shares of the Registrant's common stock
to Mr. Korn. The following table sets forth, as of May 14, 2001, the stock
ownership of each person known by the Registrant to be the beneficial owner of
5% or more of its common stock.
Amount and Nature of
Name and Address of Beneficial Owner(1) Beneficial Ownership(1) Percent of Class(2)
- --------------------------------------- ----------------------- -------------------
Richard J. Schaller, Sr.(3)(4) 1,850,000 18.63%
Neil A. Cox(4) 1,839,000 18.51%
Dr. Richard J. Schaller, Jr.(3)(4) 1,350,000 13.59%
Dr. Vincent E. Schaller(3)(4) 1,350,000 13.59%
Richard Korn(5) 1,000,000 10.06%
Includes all officers and directors of the 6,389,000 64.33%
Company as a group (4 persons)
- ---------
(1) Unless otherwise indicated, all shares are beneficially owned by the
persons named. Unless otherwise indicated, the address of each person is
4333 N. 30th Street, Boulder, Colorado 80301.
8
50
IDMEDICAL.COM, INC.
(A Development Stage Company)
(2) Based upon 9,931,500 shares outstanding at May 14, 2001, 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.
(4) Officer and/or director.
(5) Mr. Korn's address is P.O. Box 1450, Hockessin, Delaware 19707.
Item 6 - Exhibits and reports on Form 8-K
(a) 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, File
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, File 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, File
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, File
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, File
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, File
October 13, 2000).
10.5 Contract with Fastnet Corporation for Web hosting
executed October 17, 2000. (Incorporated by reference
to Exhibit 10.5 of the Company's Amended Registration
Statement on Form SB-2/A-1, File December 18, 2000).
9
51
IDMEDICAL.COM, INC.
(A Development Stage Company)
10.6 Contract with Happy Harry's Discount Drub Stores for
establishment of a referral relationship, executed
June 7, 2000. (Incorporated by reference to
Exhibit 10.6 of the Company's Amended Registration
Statement on Form SB-2/A-1, File December 18, 2000).
10.7 Contract with Dover Family Physicians, P.A. for
establishment of a referral relationship, executed
April 14, 2000. (Incorporated by reference to
Exhibit 10.7 of the Company's Amended Registration
Statement on Form SB-2/A-1, File December 18, 2000).
(b) Reports on Form 8-K
There were no reports on Form 8-K.
10
52
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three months ended March 31, 2001 have been
included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDMEDICAL.COM, INC.
(Registrant)
DATE: May 11, 2001 BY: /s/ Richard J. Schaller, Sr.
------------ -----------------------------
Richard J. Schaller, Sr.
President, CEO and Principal
Executive Officer
11