UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2004
In Vivo Medical Diagnostics, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 0-49972 84-1579760
----------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
The Green House, Beechwood Business Park North, Inverness, Scotland IV2 3BL
---------------------------------------------------------------------------
(Address of principal executive offices)
011-44-1463-667-347
----------------------------------------------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communication pursuant to Rule 425 under the Securities Act
(17CFR230-425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17CFR240.14a-12)
[ ] Pre-commencement communication pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR240.14d-2(b))
[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets
On July 30, 2004, the security holders of Hall Effect Medical Products, Inc.
consummated the transactions contemplated by a share exchange agreement (the
"Share Exchange Agreement"), dated as of June 30, 2004, by and among Sports
Information and Publishing Corp. (the "Company"), Michael D. Tanner, HEMP
Trustees Limited, as the corporate trustee of the HEMP Employment Benefit Trust,
John Fuller, Brian Cameron, Westek Limited, and the security holders of Hall
Effect Medical Products, Inc. As a result of the exchange, Hall Effect Medical
Products, Inc. became our wholly owned subsidiary and changed its name to In
Vivo Medical Diagnostics, Inc. ("In Vivo DE").
Thereafter, the parties to the Share Exchange agreed to amend the terms of the
agreement to correct certain information regarding (i) the number of shares
issued in connection with the transactions contemplated by the agreement, and
(ii) the capitalization of the Company both before and after the transactions
contemplated by the agreement.
Pursuant to the Share Exchange, as amended, the Company:
o Increased its authorized capital stock to 100,000,000 shares of common
stock and 50,000,000 shares of preferred stock;
o issued to the former holders of 8,000,000 shares of In Vivo DE
preferred stock, an aggregate of 34,343,662 shares of our 4% voting
redeemable convertible preferred stock (the "4% Preferred Stock");
o issued to the former holders of shares of In Vivo DE common stock, an
aggregate of 38,636,453 shares of our common stock;
o issued 1,636,233 additional shares of our common stock to holders of
$467,495 of promissory notes, issued by In Vivo DE's wholly owned
subsidiaries, IVMD UK Limited (formerly Hall Effect Technologies
Limited) and Jopejo Ltd., in exchange for the cancellation of such
notes; and
o agreed to cause the resignation of all current members of our board of
directors and appoint new directors as designated by certain
shareholders or affiliates of In Vivo DE.
Each full share of the Company's 4% Preferred Stock is convertible at any time
after October 31, 2005, at the option of the holder, into one full share of our
common stock. The shares of 4% Preferred Stock vote, together with our
outstanding common stock on an "as converted" basis, at any regular or special
meeting of our stockholders called for the purpose of electing directors of our
company or to vote on any other matter requiring shareholder approval under
Colorado corporate law.
2
As a result of the transactions and share issuances completed in connection with
the Share Exchange, the Company's capitalization is as follows:
o 51,376,686 shares of common stock; and
o 34,343,662 shares of 4% Convertible Preferred Stock.
Item 5.03 Amendments to Certificate of Incorporation or Bylaws; Change in Fiscal
Year
In connection with the Share Exchange, the Company's Board of Directors approved
a change in the Company's fiscal year end from December 31 to July 31 (the year
end of In Vivo DE), to be effective beginning July 31, 2004.
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
(1) IVMD UK Limited (formerly Hall Effect Technologies Limited)
(2) Jopejo Limited
(b) Pro forma financial information.
The following are the unaudited pro forma financial statements as of June
30, 2004, for the nine months ended June 30, 2004 and for the year ended
September 30, 2003.
The unaudited pro forma consolidated balance sheet as of June 30, 2004
reflects the following transactions as if such transactions occurred as of June
30, 2004. The unaudited pro forma consolidated statements of operations for the
nine months ended June 30, 2004 and the year ended September 30, 2003 reflect
the following transactions as if such transactions occurred as of October 1,
2002:
o The acquisition by the Company, of In Vivo DE, and its two
wholly-owned subsidiaries, IVMD UK Limited (formerly Hall Effect
Technologies Limited) ("HET") and Jopejo Limited ("Jopejo"), and
o The acquisition by In Vivo DE of IVMD UK Limited (formerly Hall Effect
Technologies Limited) and Jopejo Limited.
Adjustments for these transactions are presented in the notes to the
unaudited pro forma financial statements. The unaudited pro forma financial
statements and accompanying notes should be read in conjunction with the
historical financial statements included in the Company's previous filings with
the Securities and Exchange Commission and the audited IVMD UK Limited (formerly
HET) and Jopejo financial statements included herein.
3
The information presented under the headings In Vivo DE, HET and Jopejo
represents the financial statements of In Vivo Medical Diagnostics, Inc., a
Delaware corporation, IVMD UK Limited (formerly HET) and Jopejo Limited,
respectively. In this case, there were no material items that were excluded from
the acquisition and, accordingly, there are no further adjustments to the
historical results of operations of In Vivo DE, IVMD UK Limited (formerly HET)
and Jopejo.
The pro forma balance sheet and the pro forma statements of operations were
derived by adjusting the historical financial statements of the Company. The
adjustments are based on currently available information and, therefore, the
actual adjustments may differ from the pro forma adjustments. However,
management believes that the adjustments provide a reasonable basis for
presenting the significant effects of the transactions described above. The
unaudtied pro forma financials statements do not purport to present the
financial position or results of operations had the acquisition or the other
transactions actually been completed as of the dates indicated. Moreover, the
statements do not project the financial position or results of operations for
any future date or period.
(c) Exhibits
Exhibit Number Description
- -------------- ------------------------------------------------------------
2.1 Share Exchange Agreement, dated as of June 30, 2004, among
Sports Information and Publishing Corp., Michael D. Tanner,
HEMP Trustees Limited (as the corporate trustee of the HEMP
Employees Benefit Trust), John Fuller, Brian Cameron, Westek
Limited and the other holders of securities of In Vivo
Medical Diagnostics, Inc. (formerly Hall Effect Medical
Products).(1)
2.2 Amendment No. 1 to Share Exchange Agreement, effective as of
July 31, 2004, among Sports Information and Publishing
Corp., Michael D. Tanner, HEMP Trustees Limited (as the
corporate trustee of the HEMP Employees Benefit Trust), John
Fuller, Brian Cameron, Westek Limited and the other holders
of securities of In Vivo Medical Diagnostics, Inc. (formerly
Hall Effect Medical Products).
99.1 Press Release dated July 14, 2004.(1)
______________________
(1) Incorporated by reference to the Form 8-K filed by the Company on
August 10, 2004.
______________________
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it behalf by the
undersigned hereunto duly authorized.
In Vivo Medical Diagnostics, Inc.
---------------------------------
(Registrant)
Date: February 3, 2005 /s/ Jonathan Fuller
- -------------------------- ---------------------------------
Chief Executive Officer
5
Item 9.01 A.1 - IVMD UK Limited
IVMD UK LIMITED
(Formerly Hall Effect Technologies Limited)
(A Development Stage Company)
Financial Statements
September 30, 2003 and 2002
(with Report of Independent Auditors Thereon)
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Index to Financial Statements
Page
----
Report of Independent Auditors ........................................... F-2
Balance Sheet at September 30, 2003 ...................................... F-3
Statements of Operations for the years ended September 30, 2003 and
2002, and for the period from March 26, 1997 (inception) through
September 30, 2003 .................................................. F-4
Statements of Other Comprehensive Loss for the years ended September
30, 2003 and 2002, and for the period from March 26, 1997
(inception) through September 30, 2003 .............................. F-5
Statement of Changes in Shareholders' Deficit
for the period from March 26, 1997 (inception) through
September 30, 2003 ................................................. F-6
Statements of Cash Flows for the years ended September 30, 2003 and
2002, and for the period from March 26, 1997 (inception) through
September 30, 2003 .................................................. F-7
Notes to Financial Statements ............................................ F-8
F-1
Cordovano and Honeck, P.C. Certified Public Accountants
________________________________________________________________________________
201 Steele Street
Suite 300
Denver, Colorado 80206
(303) 329-0220 Phone
(303) 316-7493 Fax
________________________________________________________________________________
Report of Independent Auditors
The Board of Directors
IVMD UK Limited (formerly Hall Effect Technologies Limited):
We have audited the accompanying balance sheets of IVMD UK Limited (formerly
Hall Effect Technologies Limited) (a development stage company) as of September
30, 2003, and the related statements of operations and cash flows for the years
ended September 30, 2003 and 2002, and for the period from March 26, 1997
(inception) through September 30, 2003, and the statement of shareholders'
deficit for the period from March 26, 1997 (inception) through September 30,
2003. 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 of the Public
Companies Accounting Oversight Board. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IVMD UK Limited (formerly Hall
Effect Technologies Limited) as of September 30, 2003, and the results of its
operations and its cash flows for the years ended September 30, 2003 and 2002,
and for the period from March 26, 1997 (inception) through September 30, 2003,
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. As
discussed in Note 2 to the financial statements, the Company is a development
stage enterprise and has not yet established significant revenues from
operations. Therefore, it has suffered a cumulative net loss since inception
that has resulted in a net capital deficit at September 30, 2003. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Cordovano and Honeck, P.C.
- ------------------------------
Cordovano and Honeck, P.C.
Denver, Colorado
December 30, 2004
F-2
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
A Development Stage
Company)
Balance Sheet
September 30, 2003
Assets
Current assets:
Cash ................................................................ $ 9,773
Accounts receivables ................................................ 181,803
Due from affiliate .................................................. 400,941
-----------
Total current assets .................................. 592,517
Property and equipment, net ............................................. 26,287
-----------
$ 618,804
===========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable .................................................... $ 205,155
Accrued liabilities ................................................. 52,392
Notes payable to directors .......................................... 3,478
Payable to affiliates ............................................... 2,963,279
-----------
Total current liabilities ............................. 3,224,304
-----------
Cumulative redeemable preferred stock, (pound)1 par value, 221,091 shares
authorized, 221,091 shares issued and
outstanding, at redemption value .................................... 368,583
Cumulative Class C redeemable preferred stock, (pound)1 par value,
221,091 shares authorized, -0- shares issued and outstanding ........ --
Shareholders' deficit:
Class B preferred stock, (pound)1par value, 7,844 shares authorized,
no shares issued and outstanding ................................. --
Common stock , (pound)1 par value, 19,609 shares authorized,
19,609 shares issued and outstanding ............................. 31,776
Common stock , (pound)1 par value, 10,000 shares authorized,
no shares issued and outstanding ................................. --
Class A common stock , (pound)1 par value, 11,765 shares authorized,
no shares issued and outstanding ................................. --
Deficit accumulated during the development stage .................... (2,737,782)
Accumulated other comprehensive income .............................. (268,077)
-----------
Total shareholders' deficit ........................... (2,974,083)
-----------
$ 618,804
===========
See accompanying notes to financial statements
F-3
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Statements of Operations
March 26,
1997
Years Ended September 30, (Inception) to
-------------------------- September 30,
2003 2002 2003
----------- ----------- -----------
Sales ..................................... $ 286,499 $ 345,806 $ 660,314
Cost of sales ............................. 7,904 200,889 236,694
----------- ----------- -----------
Gross profit ........... 278,595 144,917 423,620
----------- ----------- -----------
Operating expenses:
Research and development .............. 194,203 170,249 548,341
General and administrative ............ 755,654 731,735 2,539,294
Depreciation .......................... 13,691 6,822 73,767
----------- ----------- -----------
Total operating expenses 963,548 908,806 3,161,402
----------- ----------- -----------
Loss before
income taxes ........ (684,953) (763,889) (2,737,782)
Income tax provision .................. -- -- --
----------- ----------- -----------
Net loss ............... $ (684,953) $ (763,889) $(2,737,782)
=========== =========== ===========
See accompanying notes to financial statements
F-4
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Statements of Other Comprehensive Income
March 26,
1997
(Inception) to
Years Ended September 30, September 30,
--------------------------
2003 2002 2003
----------- ----------- -----------
Net loss .......................... $ (684,953) $ (763,889) $(2,737,782)
Other comprehensive income:
Foreign currency translation (171,898) (120,110) (268,077)
----------- ----------- -----------
Comprehensive loss ......... $ (856,851) $ (883,999) $(3,005,859)
=========== =========== ===========
See accompanying notes to financial statements
F-5
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Statement of Shareholders' Equity
Deficit
Accumulated Accumulated
Common Stock During The Other
------------------------- Development Comprehensive
Shares Amount Stage Income Total
----------- ----------- ----------- ----------- -----------
Balance at
March 26, 1997........ -- $ -- $ -- $ -- $ --
Issuance of common stock . 19,609 31,776 -- -- 31,776
Net loss ................. -- -- (1,288,940) -- (1,288,940)
Other comprehensive income -- -- -- 23,931 23,931
----------- ----------- ----------- ----------- -----------
Balance at
September 30, 2001 .. 19,609 31,776 (1,288,940) 23,931 (1,233,233)
Net loss ................. -- -- (763,889) -- (763,889)
Other comprehensive income -- -- -- (120,110) (120,110)
----------- ----------- ----------- ----------- -----------
Balance at
September 30, 2002 .. 19,609 31,776 (2,052,829) (96,179) (2,117,232)
Net loss ................. -- -- (684,953) -- (684,953)
Other comprehensive income -- -- -- (171,898) (171,898)
----------- ----------- ----------- ----------- -----------
Balance at
September 30, 2003 .. 19,609 $ 31,776 $(2,737,782) $ (268,077) $(2,974,083)
=========== =========== =========== =========== ===========
See accompanying notes to financial statements
F-6
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Statements of Cash flows
March 26,
1997
Years Ended September 30, (Inception) to
-------------------------- September 30,
2003 2002 2003
----------- ----------- -----------
Cash flows from operating activities:
Net loss ...................................................... $ (684,953) $ (763,889) $(2,737,782)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization ............................ 13,691 6,822 73,767
Changes in operating assets and liabilities:
Receivables .......................................... (186,246) (256,285) (551,250)
Accounts payable ..................................... 90,349 (59,603) 188,649
Accrued liabilities .................................. (90,297) 101,791 41,586
Payables to directors ................................ -- -- 3,077
Other ................................................ (28,559) (48,055) (52,683)
----------- ----------- -----------
Net cash used in
operating activities ......................... (886,015) (1,019,219) (3,034,636)
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment ......................... (6,431) (33,241) (97,651)
----------- ----------- -----------
Net cash used in
investing activities ......................... (6,431) (33,241) (97,651)
----------- ----------- -----------
Cash flows from financing activities:
Advances from affiliates ...................................... 896,616 1,057,560 2,783,764
Proceeds from issuance of cumulative redeemable preferred stock -- -- 326,155
Proceeds from issuance of common stock ........................ -- -- 31,776
----------- ----------- -----------
Net cash provided by
financing activities ......................... 896,616 1,057,560 3,141,695
----------- ----------- -----------
Effect on cash from foreign currency translation .................. 355 6 365
----------- ----------- -----------
Net change in cash .............................. 4,525 5,106 9,773
Cash:
Beginning of period ........................................... 5,248 142 --
----------- ----------- -----------
End of period ................................................. $ 9,773 $ 5,248 $ 9,773
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes ................................................ $ -- $ -- $ --
=========== =========== ===========
Interest .................................................... $ -- $ -- $ --
=========== =========== ===========
See accompanying notes to financial statements
F-7
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
Note (1) Summary of Significant Accounting Policies
Organization and Basis of Presentation
IVMD UK Limited (formerly Hall Effect Technologies Limited) ("IVMD" "HET" or
"us' or "we") was incorporated on March 26, 1997 as Jackson Technology Limited.
On September 7, 2004, HET changed its name to IVMD UK Limited. We develop
medical diagnostic products for personal and professional use.
Inherent in our business are various risks and uncertainties, including our
limited operating history, historical operating losses and our dependence on key
employees and affiliates. Our future success will be dependent upon our ability
to form capital and bring new products to market on a timely and cost effective
basis. Future revenues are dependent on our dependent on establishing licenses,
joint ventures or distribution arrangements with established companies.
Our source of liquidity has been private debt and equity financing. Westek
Limited, a UK Company, has funded our working capital requirements during our
development stage. Westek is an affiliate. We plan to raise additional equity
financing through a $3.5 million offering of our common stock. However, no
market presently exists for our securities and there are no assurances that such
a market will ever develop.
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.
Cash and Cash Equivalents
We consider all highly liquid securities with original maturities of three
months or less when acquired to be cash equivalents.
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 four years. Leasehold improvements are amortized
using the straight-line method over the shorter of the asset's estimated useful
life or the lease term.
Impairment of Long-Lived Assets
We follow the provisions of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement supercedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, and the accounting and reporting provisions APB Opinion No. 30,
Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. SFAS No. 144 applies to recognized long-lived assets of
an entity to be held and used or to be disposed of. This statement does not
apply to goodwill, intangible assets not being amortized, financial instruments
and deferred tax assets. SFAS No. 144 requires an impairment loss to be recorded
for assets to be held and used when the carrying amount of a long-lived asset is
not recoverable from future estimated cash flows and exceeds its fair value. An
asset that is classified as held-for-sale shall be recorded at the lower of its
carrying amount or fair value less costs to sell. At September 30, 2003,
management believes that there is no impairment of the Company's long-lived
assets.
F-8
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
Income Taxes
The current provision or benefit for income taxes, if any, represents estimated
amounts payable or receivable on a current basis. Deferred tax assets and
liabilities are recorded for the estimate future tax effects of temporary
differences between the tax bases of assets and liabilities and amounts reported
in the accompanying balance sheet, and for operating loss and tax credit
carryforwards. The change in deferred tax assets and liabilities for the period
measures the deferred tax provision or benefit for the period. Effects of
changes in enacted tax laws on deferred tax assets and liabilities are reflected
as adjustments to the tax provision or benefit in the period of enactment. We
reduce our deferred tax assets by a valuation allowance if management does not
believe that realization of the deferred tax asset is sufficiently assured at
the balance sheet date.
Revenue Recognition
We recognize revenue from selling products on the date of delivery to our
customer, net of value added tax. During the year ended September 30, 2003 and
2002, we billed our sole research and development customer for services in
accordance with the terms of our contract.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, accrued liabilities and intercompany payables. The carrying
amounts of financial instruments approximate fair value due to their short
maturities.
Concentration of Credit Risk
Substantially all of our accounts receivable at September 30, 2003 result from
monies to be received from industry partners to fund research and development.
This concentration of customers may impact our overall credit risk, either
positively or negatively, in that these entities may be similarly affected by
industry-wide changes in economic or other conditions. Such receivables are
generally not collateralized. However, we perform credit evaluations on all its
customers to minimize exposure to credit risk. During fiscal 2003 and 2002,
credit losses were not significant.
Stock based Compensation
We account for stock-based compensation arrangements in accordance with
Statement of financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principle Board )"APB") Opinion No. 25 and provide pro
forma net earnings (loss) disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 had been applied. We have
elected to continue to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of SFAS No. 123.
Foreign Currency Translation
Our assets and liabilities, which have the British pound as its functional
currency, are translated into United States dollars at the foreign currency
exchange rate in effect at the applicable reporting date, and the statements of
operations are translated at the average rates in effect during the applicable
period. The resulting cumulative translation adjustment is recorded as a
separate component of other comprehensive income.
Research and Development Costs
Research and development costs are expensed as incurred.
Recently Issued Accounting Pronouncements
In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument this is within its scope
as a liability. Many of those instruments were previously classified as equity.
SFAS No. 150 is effective for financial instruments entered into after May 31,
F-9
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003, except for mandatorily redeemable financial
instruments of nonpublic entities. For nonpublic entities, mandatorily financial
instruments are subject to SFAS No. 150 for the first period beginning after
December 15, 2003. Adoption of SFAS No. 150 will require us to report any
cumulative redeemable preferred stock and any cumulative Class C redeemable
preferred stock outstanding at the time of adoption as a liability.
Note 2: Related party transactions
Westek Limited, a UK company, through its employee benefit trust, is our
principal shareholder. During the years ended September 30, 2003 and 2002,
Westek loaned us $1,182,383 and $1,422,849, respectively for working capital. We
repaid $215,910 and $-0-, respectively, during the same periods. As of September
30, 2003, we are indebted to Westek in the amount of $2,963,279. This amount is
reflected as due to related party in the accompanying financial statements.
These advances are non-interest bearing and unsecured.
Jopejo Limited, a UK company, is an affiliate. During the years ended September
30, 2003 and 2002, we provided certain employees to Jopejo and also billed them
for administrative services such as telephone and office space. We billed Jopejo
$265,113 and $135,828, respectively for such services. Jopejo paid us $-0- and
$-0-, respectively, during the same periods. As of September 30, 2003, Jopejo
was indebted to us in the amount of $400,941. This amount is reflected as due
from related party in the accompanying financial statements.
During the years ended September 30, 2003 and 2002, we paid management fees
totalling $24,000 and $24,000, respectively to affiliates.
Note 3: Property and equipment
Major classes of property and equipment as of September 30, 2003 are listed
below:
Furniture and fixtures ........................... $15,028
Office equipment ................................. 2,778
Computer equipment ............................... 39,184
-------
56,990
Less: accumulated depreciation ................... 30,704
-------
$26,287
=======
Depreciation expense was $13,691, 6,822 for the years ended September 30, 2003
and 2002, respectively.
Note 4: Cumulative, redeemable preferred stock, at redemption value
As of September 30, 2003, our authorized capital included of 442,182 shares of
preferred stock of which 221,091 are outstanding and designated as (pound)1
($1.80 US) cumulative redeemable preferred stock and -0- are outstanding and
designated as (pound)1 ($1.80 US) "C" cumulative redeemable preferred stock.
F-10
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
Cumulative redeemable preferred stock
The outstanding preferred stock was issued on October 1, 2001 at the time we
changed our name from Jackson Technology Limited.
September 30, 2004 ................... 73,697
September 30, 2005 ................... 73,697
September 30, 2006 ................... 73,697
-------
221,091
=======
Under certain circumstances, we may redeem the stock in whole or in part, prior
to the mandatory redemption date. In the absence of any contrary agreement, any
partial redemption shall be deemed to relate to the shares falling due for
redemption in inverse order of maturity.
We must redeem the stock in the event of:
o Bankruptcy;
o Change of control; or
o Listing of our common stock.
Class "C" cumulative redeemable preferred stock
There are no shares of "C" cumulative redeemable preferred stock issued or
outstanding at September 30, 2003.
Note 5: Common stock
We are authorized to issue the following classes of common stock:
Number of shares
-------------------------
Class Par value Authorized Outstanding
--------------- -------------- ------------ -----------
Ordinary (pound)1 10,000 -0-
"A" (pound)1 11,765 -0-
Ordinary (pound)1 19,609 19,609
We are authorized to issue 7,844 shares of Class "B" preferred stock. As of
September 30, 2003, no shares of Class "B" preferred stock is issued or
outstanding.
Note 6: Income taxes
A reconciliation of U.K. statutory income tax rate to the effective rate follows
for the years ended September 30, 2003 and 2002:
F-11
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
Years Ended
September 30,
----------------------
2003 2002
---------- ---------
U.K. statutory federal rate .......................... 19.00% 30.00%
Net operating loss for which no tax ..................
benefit is currently available ............... -19.00% -30.00%
---------- ---------
0.00% 0.00%
========== =========
At September 30, 2003, deferred U. K. income taxes were $751,741. U.K. pretax
income was $(684,753) and $(832,216), respectively, at September 30, 2003 and
2002.
At September 30, 2003, we had a net operating loss carryfoward of approximately
$3,956,534, which was fully allowed for in the valuation allowance of $751,741.
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
September 30, 2003 was $97,176.
At September 30, 2002, we had a net operating loss carryfoward of approximately
$1,959,212, which was fully allowed for in the valuation allowance of $372,250.
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
September 30, 2003 was $285,247.
Note 7: Subsequent Events
Acquisition by In Vivo Medical Diagnostics, Inc., a Delaware Corporation
In July 2004, In Vivo Medical Diagnostics, Inc. ("IMDI-Delaware") acquired our
affiliate, Jopejo Limited and us from our parent company, Westek Limited, in a
tax-free stock exchange.
IMDI-Delaware issued 8,000,000 shares of voting, convertible preferred stock in
exchange for 100 percent of our issued and outstanding ordinary shares, 100
percent of Jopejo's issued and outstanding ordinary and preferred shares and
approximately $3.3 million in debt obligations to Westek. At that time, we had
19,609 ordinary shares and 221,091 cumulative, redeemable preferred shares
issued and Jopejo had 83,353 outstanding ordinary shares. As part of the
acquisition, In Vivo Delaware assumed all of our remaining debt obligations to
Westek and all of Jopejo's remaining debt obligations to Westek totalling
approximately $1,800,000. As part of the acquisition, In Vivo Delaware issued
3,000,000 shares of common stock to HEMP TL.
As a result of this transaction, we, along with our affiliate Jopejo, became a
wholly owned subsidiaries IMDI-Delaware.
Acquisition of In Vivo Medical Diagnostics, Inc., a Delaware Corporation, by In
Vivo Medical Diagnostics, Inc., a Colorado Corporation (formerly known as Sports
Information & Publishing)
On July 30, 2004, IMDI-Delaware acquired a Colorado public shell company, Sports
Information & Publishing Corp. ("SIPC"), in a reverse acquisition. As a result
of the merger with this public shell, IMDI- Delaware became wholly-owned
subsidiary of a public company. Subsequently, SIPC changed its name to In Vivo
Medical Diagnostics, Inc., a Colorado corporation.
SIPC issued 34,343,662 shares of 4% convertible preferred stock in exchange for
the 8,000,000 shares of voting, convertible preferred stock of IMDI-Delaware and
38,636,620 shares of common stock in exchange for all of the issued and
outstanding shares of common stock of IMDI-Delaware.
F-12
IVMD UK LIMITED
(Formerly HALL EFFECT TECHNOLOGIES LIMITED)
(A Development Stage Company)
Notes to Financial Statements
As part of this transaction, certain shareholders of IMDI-Delaware agreed to
provide us with bridge loans totaling approximately $467,000 which loans were
converted into an aggregate of 1,636,233 shares of common stock. In addition,
the shareholders agreed to use their best efforts to provide us with an
aggregate minimum amount of $3,000,000 in debt and/or equity financing. The
financing agreement is subject to a call provision in the event the financing is
not completed.
F-13
Item 9.01A.2 - Jopejo
Jopejo Limited
(A Development Stage Company)
Financial Statements
July 31, 2003 and 2002
(with Report of Independent Auditors Thereon)
JOPEJO LIMITED
(A Development Stage Company)
Index to Financial Statements
Page
----
Report of Independent Auditors ............................................ F-2
Balance Sheet at July 31, 2003 ............................................ F-3
Statements of Operations for the years ended July 31, 2003 and 2002,
and for the period from June 19, 2000 (inception) through
July 31, 2003 ........................................................ F-4
Statements of Other Comprehensive Loss for the years ended July 31, 2003
and 2002, and for the period from June 19, 2000 (inception) through
July 31, 2003 ........................................................ F-5
Statement of Changes in Shareholders' Deficit
for the period from June 19, 2000 (inception) through July 31, 2003 .. F-6
Statements of Cash Flows for the years ended July 31, 2003 and 2002,
and for the period from June 19, 2000 (inception) through
July 31, 2003 ........................................................ F-7
Notes to Financial Statements ............................................. F-8
F-1
Cordovano and Honeck, P.C. Certified Public Accountants
________________________________________________________________________________
201 Steele Street
Suite 300
Denver, Colorado 80206
(303) 329-0220 Phone
(303) 316-7493 Fax
________________________________________________________________________________
Report of Independent Auditors
The Board of Directors
Jopejo Limited:
We have audited the accompanying balance sheet of Jopejo Limited (a development
stage company) as of July 31, 2003, and the related statements of operations and
cash flows for the years ended July 31 2003 and 2002, and for the period from
June 19, 2000 (inception) through July 31, 2003, and the statement of
shareholders' deficit for the period from June 19, 2000 (inception) through July
31, 2003. 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 of the Public
Companies Accounting Oversight Board. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jopejo Limited (a development
stage company) as of July 31, 2003, and the results of its operations and its
cash flows for the years ended July 31, 2003 and 2002, and for the period from
June 19, 2000 (inception) through July 31, 2003, in conformity with accounting
principles generally accepted in the united States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business. As
discussed in Note 2 to the financial statements, the Company is a development
stage enterprise and has not yet established significant revenues from
operations. Therefore, it has suffered a cumulative net loss since inception
that has resulted in a net capital deficit at July 31, 2003. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Cordovano and Honeck, P.C.
- ------------------------------
Cordovano and Honeck, P.C.
Denver, Colorado
December 30, 2004
F-2
JOPEJO LIMITED
(A Development Stage Company)
Balance Sheet
July 31, 2003
Assets
Current assets:
Cash ...................................................... $ 3,859
Other receivables ......................................... 332
Prepaid expenses .......................................... 14,771
---------
Total current assets ........................ 18,962
Property and equipment, net ................................... 9,377
---------
$ 28,339
=========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable .......................................... $ 72,555
Accrued liabilities ....................................... 8,002
Due to related parties .................................... 3,461
Due to affiliates ......................................... 617,481
---------
Total current liabilities ................... 701,499
---------
Shareholders' deficit:
Common stock , 5p par value. Authorized 2,000,020 shares,
issued and outstanding 83,353 shares ................... $ 6,311
Additional paid-in capital ................................ 58,045
Accumulated deficit during the development stage .......... (701,029)
Accumulated other comprehensive income .................... (36,487)
---------
Total shareholders' deficit ................. (673,160)
---------
$ 28,339
=========
See accompanying notes to financial statements
F-3
JOPEJO LIMITED
(A Development Stage Company)
Statements of Operations
June 19,
2000
Years Ended July 31, (Inception)
---------------------- to July 31,
2003 2002 2003
--------- --------- ---------
Cost and expenses:
Research and development .......... $ 189,021 $ 133,716 $ 322,737
Depreciation ...................... 7,438 4,073 13,844
General and administrative expenses 199,207 105,684 364,448
--------- --------- ---------
395,666 243,473 701,029
--------- --------- ---------
Loss before
income taxes ....... (395,666) (243,473) (701,029)
Income tax provision ............ -- -- --
--------- --------- ---------
Net loss ............. $(395,666) $(243,473) $(701,029)
========= ========= =========
See accompanying notes to financial statements
F-4
JOPEJO LIMITED
(A Development Stage Company)
Statements of Other Comprehensive Loss
June 19,
2000
(Inception) to
Years Ended July 31, July 31,
---------------------- ---------
2003 2002 2003
--------- --------- ---------
Net loss ......................... $(395,666) $(243,473) $(701,029)
Other comprehensive income (loss):
Foreign currency translation (13,493) (20,266) (36,487)
--------- --------- ---------
Comprehensive loss .......... $(409,159) $(263,739) $(737,516)
========= ========= =========
See accompanying notes to financial statements
F-5
JOPEJO LIMITED
(A Development Stage Company)
Statement of Shareholders' Equity
Deficit
Accumulated
Common Stock Additional During The Other
--------------------- Paid In Development Comprehensive
Shares Amount Capital Stage Income Total
--------- --------- --------- --------- --------- ---------
Balance at
June 19, 2000 ........ $ -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock . 83,353 6,311 58,045 -- -- 64,356
Net loss ................. -- -- -- (61,890) -- (61,890)
Other Comprehensive Income -- -- -- -- (2,728) (2,728)
--------- --------- --------- --------- --------- ---------
Balance at
July 31, 2001 ........ 83,353 6,311 58,045 (61,890) (2,728) (262)
Net loss ................. -- -- -- (243,473) -- (243,473)
Other Comprehensive Income -- -- -- -- (20,266) (20,266)
--------- --------- --------- --------- --------- ---------
Balance at
July 31, 2002 ........ 83,353 6,311 58,045 (305,363) (22,994) (264,001)
Net income/loss .......... -- -- -- (395,666) -- (395,666)
Other Comprehensive Income -- -- -- -- (13,493) (13,493)
--------- --------- --------- --------- --------- ---------
Balance at
July 31, 2003 ........ 83,353 $ 6,311 $ 58,045 $(701,029) $ (36,487) $(673,160)
========= ========= ========= ========= ========= =========
See accompanying notes to financial statements
F-6
JOPEJO LIMITED
(A Development Stage Company)
Statements of Cash flows
June 19,
2000
Years Ended July 31, (Inception)
----------------------- to July 31,
2003 2002 2003
--------- --------- ---------
Cash flows from operating activities:
Net loss ........................................ $(395,666) $(243,473) $(701,029)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization .............. 7,438 4,073 13,844
Changes in operating assets and liabilities:
Receivables ............................ (6,180) 16,700 (14,771)
Accounts payable ....................... (2,173) (32,840) 72,555
Accrued liabilities .................... 3,395 4,487 8,002
Payable to related parties ............. (17,526) 20,441 3,461
Other .................................. (6,434) (20,240) 27,537
--------- --------- ---------
Net cash used in
operating activities ........... (417,146) (250,852) (590,401)
--------- --------- ---------
Cash flows from investing activities:
Acquisition of property and equipment ........... (8,707) (2,821) (23,221)
--------- --------- ---------
Net cash used in
investing activities ........... (8,707) (2,821) (23,221)
--------- --------- ---------
Cash flows from financing activities:
Advances from affiliates ........................ 416,815 195,441 617,481
--------- --------- ---------
Net cash provided by
financing activities ........... 416,815 195,441 617,481
--------- --------- ---------
Effect on cash from foreign currency translation .... 336 6,632 --
--------- --------- ---------
Net change in cash ................ (8,702) (51,600) 3,859
Cash:
Beginning of period ............................. 12,561 64,161 --
--------- --------- ---------
End of period ................................... $ 3,859 $ 12,561 $ 3,859
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes .................................. $ -- $ -- $ --
========= ========= =========
Interest ...................................... $ -- $ -- $ --
========= ========= =========
See accompanying notes to financial statements
F-7
JOPEJO LIMITED
(A Development Stage Company)
Notes to Financial Statements
Note (1) Summary of Significant Accounting Policies
Organization and Basis of Presentation
Jopejo Limited (formerly known as Jackson Technology Limited) ("us' or "we") was
incorporated in the United Kingdom on June 19, 2000. We develop
pregnancy-monitoring technology. Our principle product under development is a
monitor to predict the onset of labor.
We are a development stage enterprise. As such, inherent in our business are
various risks and uncertainties, including our limited operating history,
historical operating losses and our dependence on key employees and affiliates.
Our future success will be dependent upon our ability to form capital and bring
new products to market on a timely and cost effective basis. Future revenues are
dependent on establishing licenses, joint ventures or distribution arrangements
with established companies.
Our source of liquidity has been private debt and equity financing. Westek
Limited, a UK Company, has funded our working capital requirements during our
development stage and IVMD UK Limited (formerly Hall Effect Technologies
Limited) ("IVMD") has provided us with certain employees, office space and other
support. Both Hall Effect and Westek are affiliates. We plan to raise additional
equity financing through a $3.5 million offering of our common stock. However,
no market presently exists for our securities and there are no assurances that
such a market will ever develop.
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.
Cash and Cash Equivalents
We consider all highly liquid securities with original maturities of three
months or less when acquired to be cash equivalents.
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 four years. Leasehold improvements are amortized
using the straight-line method over the shorter of the asset's estimated useful
life or the lease term.
Impairment of Long-Lived Assets
We follow the provisions of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement supercedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of, and the accounting and reporting provisions APB Opinion No. 30,
Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. SFAS No. 144 applies to recognized long-lived assets of
an entity to be held and used or to be disposed of. This statement does not
apply to goodwill, intangible assets not being amortized, financial instruments
and deferred tax assets. SFAS No. 144 requires an impairment loss to be recorded
for assets to be held and used when the carrying amount of a long-lived asset is
not recoverable from future estimated cash flows and exceeds its fair value. An
asset that is classified as held-for-sale shall be recorded at the lower of its
carrying amount or fair value less costs to sell. At July 31, 2003, management
believes that there is no impairment of the Company's long-lived assets.
F-8
JOPEJO LIMITED
(A Development Stage Company)
Notes to Financial Statements
Income Taxes
The current provision or benefit for income taxes, if any, represents estimated
amounts payable or receivable on a current basis. Deferred tax assets and
liabilities are recorded for the estimate future tax effects of temporary
differences between the tax bases of assets and liabilities and amounts reported
in the accompanying balance sheet, and for operating loss and tax credit
carryforwards. The change in deferred tax assets and liabilities for the period
measures the deferred tax provision or benefit for the period. Effects of
changes in enacted tax laws on deferred tax assets and liabilities are reflected
as adjustments to the tax provision or benefit in the period of enactment. We
reduce our deferred tax assets by a valuation allowance if management does not
believe that realization of the deferred tax asset is sufficiently assured at
the balance sheet date.
Revenue Recognition
We recognize revenue from selling products on the date of delivery to our
customer, net of value added tax. During the year ended July 31, 2003 and 2002,
we billed our sole research and development customer for services in accordance
with the terms of our contract.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, accrued liabilities and intercompany payables. The carrying
amounts of financial instruments approximate fair value due to their short
maturities.
Stock based Compensation
We account for stock-based compensation arrangements in accordance with
Statement of financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principle Board ("APB") Opinion No. 25 and provide pro
forma net earnings (loss) disclosures for employee stock option grants as if the
fair-value-based method defined in SFAS No. 123 had been applied. We have
elected to continue to apply the provisions of APB Opinion No. 25 and provide
the pro forma disclosure provisions of SFAS No. 123.
Foreign Currency Translation
Our assets and liabilities, which have the British pound as its functional
currency, are translated into United States dollars at the foreign currency
exchange rate in effect at the applicable reporting date, and the statements of
operations are translated at the average rates in effect during the applicable
period. The resulting cumulative translation adjustment is recorded as a
separate component of other comprehensive income.
Research and Development Costs
Research and development costs are expensed as incurred.
Note 2: Related party transactions
Westek Limited, a UK company, through its employee benefit trust, is our
principal shareholder. During the years ended July 31, 2003 and 2002, Westek
loaned us $179,060 and $83,190, respectively for working capital. We repaid
$-0-and $-0-, respectively, during the same periods. During the years ended July
31, 2003 and 2002, we purchased goods and services from Westek totalling $1,183
and $1,151. As of July 31, 2003, we are indebted to Westek in the amount of
$262,251 for advances and for goods and services. This amount is reflected as
due to related party in the accompanying financial statements. These advances
are non-interest bearing and unsecured.
F-9
JOPEJO LIMITED
(A Development Stage Company)
Notes to Financial Statements
IVMD, a UK company, is an affiliate. During the years ended July 31, 2003 and
2002, IVMD provided certain employees and administrative services such as
telephone and office space. IVMD billed us $236,259 and $112,952, respectively
for such services. We paid them $-0- and $-0-, respectively, during the same
periods. As of July 31, 2003, we were indebted to IVMD in the amount of
$351,785. This amount is reflected as due to related party in the accompanying
financial statements.
During the years ended July 31, 2003 and 2002, we purchased goods and services
from other related parties totalling $3,620 and $19,122. As of July 31, 2003, we
were indebted to the related parties in the amount of $3,445. This amount is
reflected as due to related party in the accompanying financial statements.
Note 3: Property and equipment
Major classes of property and equipment as of July 31, 2003 are listed below:
Plant and machinery .............................. $15,038
Computer equipment ............................... 12,031
-------
27,069
Less: accumulated depreciation ................... 17,692
-------
$ 9,377
======
Depreciation expense was $7,438 and $4,073 for the years ended July 31, 2003 and
2002, respectively.
Note 4: Common stock
We are authorized to issue the following classes of common stock:
Number of shares
--------------------------
Class Par value Authorized Outstanding
-------------- ----------------- ------------- -----------
Common (pound).01 1,000,000 -0-
Common (pound).05 2,000,020 83,353
------------- -----------
3,000,020 83,353
============= ===========
Note 5: Income taxes
A reconciliation of U.K. statutory income tax rate to the effective rate follows
for the years ended July 31, 2003 and 2002:
Years Ended
July 31,
-------------------
2003 2002
-------- --------
S.A. statutory federal rate ............................ 19.00% 30.00%
Net operating loss for which no tax.....................
benefit is currently available.................. -19.00% -30.00%
-------- --------
0.00% 0.00%
======== ========
At July 31, 2003, deferred U. K. income taxes were $205,114.
F-10
JOPEJO LIMITED
(A Development Stage Company)
Notes to Financial Statements
At July 31, 2003, we had a net operating loss carryforwards of approximately
$1,079,546, which was fully allowed for in the valuation allowance of
$205,114. 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 July 31, 2003 was $111,485.
At July 31, 2002, we had a net operating loss carryforwards of approximately
$490,943, which was fully allowed for in the valuation allowance of $93,269.
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 July 31, 2002 was $93,269.
Note 7: Subsequent Events
Acquisition by In Vivo Medical Diagnostics, Inc., a Delaware Corporation
In May 2004, In Vivo Medical Diagnostics, Inc. ("IMDI-Delaware") acquired our
affiliate, IVMD and us from our parent company, Westek Limited, in a tax-free
stock exchange.
IMDI-Delaware issued 8,000,000 shares of voting, convertible preferred stock in
exchange for 100 percent of our issued and outstanding ordinary shares, 100
percent of IVMD's issued and outstanding ordinary and preferred shares and
approximately $3.3 million in debt obligations to Westek. At that time, we had
83,353 ordinary shares outstanding and IVMD had 19,609 ordinary shares and
221,091 cumulative, redeemable preferred shares issued and outstanding. As part
of the acquisition, In Vivo Delaware assumed all of our remaining debt
obligations to Westek and all of IVMD's remaining debt obligations to Westek
totalling approximately $1,800,000 after Westek released us both from
approximately $1.5 in debt obligations. In addition, IMDI-Delaware issued
3,000,000 shares of common stock to HEMP TL.
As a result of this transaction, we, along with our affiliate IVMD, became a
wholly owned subsidiary of IMDI-Delaware.
Acquisition of In Vivo Medical Diagnostics, Inc., a Delaware Corporation, by In
Vivo Medical Diagnostics, Inc., a Colorado Corporation (formerly known as Sports
Information & Publishing)
On July 30, 2004, IMDI-Delaware acquired a Colorado public shell company, Sports
Information & Publishing Corp. ("SIPC"), in a reverse acquisition. As a result
of the merger with this public shell, IMDI- Delaware became wholly-owned
subsidiary of a public company. Subsequently, SIPC changed its name to In Vivo
Medical Diagnostics, Inc., a Colorado corporation.
SIPC issued 34,343,662 shares of 4% convertible preferred stock in exchange for
the 8,000,000 shares of voting, convertible preferred stock of IMDI-Delaware and
38,636,620 shares of common stock in exchange for all of the issued and
outstanding shares of common stock of IMDI-Delaware.
As part of this transaction, certain shareholders of IMDI-Delaware agreed to
provide IVMD with bridge loans totalling approximately $467,000 which loans were
converted into an aggregate of 1,636,233 shares of common stock. In addition,
the shareholders agreed to use their best efforts to provide IVMD with an
aggregate minimum amount of $3,000,000 in debt and/or equity financing. The
financing agreement is subject to a call provision in the event the financing is
not completed.
F-11
Item 9.01 B
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET
June 30, 2004
**** SPLIT TABLE - SEE BELOW ****
6/30/2004 6/30/2004 4/30/2004
In Vivo DE IVMD UK Jopejo Adjustments
--------- ----------- ----------- -----------
Assets
Current assets:
Cash ......................................................... $ -- $ 2,370 $ -- --
Deferred offering costs ...................................... 6,000 -- -- --
Prepaid expenses ............................................. -- 8,043 2,214 --
--------- ----------- ----------- -----------
Total current assets ................................. 6,000 10,413 2,214 --
Property and equipment, net ..................................... -- 41,779 2,898 --
Investment in subsidiaries ...................................... 510,453 -- -- (510,453) (a,d)
--------- ----------- ----------- -----------
Total assets ......................................... $ 516,453 $ 52,192 $ 5,112 (510,453)
========= =========== =========== ===========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable ............................................. $ -- $ 207,273 $ 135,037 (53,614)
Accrued liabilities .......................................... -- 77,272 78,783 --
Notes payable to directors ................................... -- -- -- --
Due to/from related parties .................................. -- (632,074) 578,460 53,614
Note payable to related party ................................ -- 3,254,586 -- (987,091) (d)
--------- ----------- ----------- -----------
Total current liabilities ............................ -- 2,907,057 792,280 (987,091)
Long-term payables .............................................. -- 406,163 351,331 --
Cumulative redeemable preferred stock, (pound)1 par
value, 221,091 shares authorized, 221,091 shares issued (399,600) (a)
and outstanding, at redemption value ......................... -- 399,600 --
Shareholders' deficit:
4% voting redeemable convertible preferred stock, $.001
par value, 35,000,000 shares authorized, 34,343,662
shares issued and outstanding .............................. -- -- -- --
Series A convertible preferred stock, $.001 par value,
15,000,000 shares authorized, 8,000,000 shares issued and
outstanding ................................................ 8,000 -- -- --
Common stock , $.001 par value, 100,000,000 shares authorized,
51,377,486 shares issued and outstanding ................... -- -- -- --
Common stock , $.001 par value, 50,000,000 shares authorized,
5,020,000 shares issued and outstanding .................... -- -- -- --
Common stock , $.001 par value, 50,000,000 shares authorized,
9,000,000 shares issued and outstanding .................... 9,000 -- -- -- (b)
Common stock , (pound)1 par value, 19,609 shares authorized,
19,609 shares issued and outstanding ....................... -- 35,441 -- (35,441) (a)
Common stock , 5p par value, 2,000,020 shares authorized,
83,353 shares issued and outstanding ....................... -- -- 7,396 (7,396) (a)
Additional paid-in capital ................................... 502,453 -- 68,016 (68,016) (a)
Deficit accumulated during the development stage ............. (3,000) (3,166,156) (1,066,930) 987,091 (d)
Accumulated other comprehensive income (loss) ................ -- (529,913) (146,981) --
--------- ----------- ----------- -----------
Total shareholders' deficit .......................... 516,453 (3,660,628) (1,138,499) 876,238
--------- ----------- ----------- -----------
Total liabilities and shareholders' deficit .......... $ 516,453 $ 52,192 $ 5,112 (510,453)
========= =========== =========== ===========
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET Continued
June 30, 2004
**** SPLIT TABLE - SEE ABOVE ****
Pro Forma 6/30/2004 Pro Forma
Consolidated In Vivo CO Adjustments Consolidated
----------- --------- ----------- -----------
Assets
Current assets:
Cash
Deferred offering costs ...................................... $ 2,370 $ 14 $ -- $ 2,384
Prepaid expenses ............................................. 6,000 -- -- 6,000
10,257 -- -- 10,257
----------- --------- ----------- -----------
Total current assets ................................. 18,627 14 -- 18,641
Property and equipment, net
Investment in subsidiaries ...................................... 44,677 -- -- 44,677
-- -- -- --
----------- --------- ----------- -----------
Total assets $ 63,304 $ 14 $ -- $ 63,318
=========== ========= =========== ===========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable
Accrued liabilities .......................................... $ 288,696 $ 13,741 $ -- $ 302,437
Notes payable to directors ................................... 156,055 -- (64,673) (i) 91,382
Due to/from related parties .................................. -- -- -- --
Note payable to related party ................................ -- 13,690 -- 13,690
2,267,495 -- (467,495) (e) 1,800,000
----------- --------- ----------- -----------
2,712,246 27,431 (532,168) 2,207,509
Long-term payables
757,494 -- -- 757,494
Cumulative redeemable preferred stock, (pound)1 par
value, 221,091 shares authorized, 221,091 shares issued
and outstanding, at redemption value -- -- -- --
Shareholders' deficit:
4% voting redeemable convertible preferred stock, $.001
par value, 35,000,000 shares authorized, 34,343,662
shares issued and outstanding
Series A convertible preferred stock, $.001 par value, ....... -- -- 34,344 (h) 34,344
15,000,000 shares authorized, 8,000,000 shares issued and
outstanding ................................................ 8,000 -- (8,000) (h) --
Common stock , $.001 par value, 100,000,000 shares authorized,
51,377,486 shares issued and outstanding ................... -- -- 51,377 (g,i,j) 51,377
Common stock , $.001 par value, 50,000,000 shares authorized,
5,020,000 shares issued and outstanding .................... -- 5,020 (5,020) (g) --
Common stock , $.001 par value, 50,000,000 shares authorized,
9,000,000 shares issued and outstanding .................... 9,000 -- (9,000) (i) --
Common stock , (pound)1 par value, 19,609 shares authorized,
19,609 shares issued and outstanding ....................... -- -- -- --
Common stock , 5p par value, 2,000,020 shares authorized,
83,353 shares issued and outstanding ....................... -- -- -- --
Additional paid-in capital ................................... 502,453 164,100 271,930 (k,h,e,i) 938,483
Deficit accumulated during the development stage ............. (3,248,995) (196,537) 196,537 (k) (3,248,995)
Accumulated other comprehensive income (loss) ................ (676,894) -- -- (676,894)
----------- --------- ----------- -----------
Total shareholders' deficit .......................... (3,406,436) (27,417) 532,168 (2,901,685)
----------- --------- ----------- -----------
Total liabilities and shareholders' deficit .......... $ 63,304 $ 14 $ 0 $ 63,318
=========== ========= =========== ===========
PF-1
See accompanying notes to unaudited pro forma consolidated financial statements
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2003
**** SPLIT TABLE - SEE BELOW ****
9/30/2003 9/30/2003 7/31/2003 Pro Forma
In Vivo DE IVMD UK Jopejo Adjustments Consolidated
---------- ------------ ------------ ---------- -----------
Sales ................................... $ -- $ 286,499 $ -- $ -- $ 286,499
Cost of sales ........................... -- 7,904 -- -- 7,904
---------- ------------ ------------ ---------- -----------
Gross profit ................... -- 278,595 -- -- 278,595
---------- ------------ ------------ ---------- -----------
Operating expenses:
Research and development ........... -- 194,204 189,021 -- 383,225
Depreciation and amortization ...... -- 13,691 7,438 -- 21,129
Impairment ......................... -- -- -- -- --
General and administrative ......... -- 755,653 199,207 -- 954,860
---------- ------------ ------------ ---------- -----------
Total operating expenses ....... -- 963,548 395,666 -- 1,359,214
---------- ------------ ------------ ---------- -----------
Operating loss .......................... -- (684,953) (395,666) -- (1,080,619)
Interest expense ........................ -- -- -- -- --
---------- ------------ ------------ ---------- -----------
Loss before income taxes ....... -- (684,953) (395,666) -- (1,080,619)
Provision for income taxes (benefit) .... -- -- -- -- --
---------- ------------ ------------ ---------- -----------
Net loss ....................... $ -- $ (684,953) $ (395,666) $ -- $(1,080,619)
========== ============ ============ ========== ===========
Net loss per share:
Basic .............................. $ (0.01)
===========
Weighted average shares outstanding:
Basic .......................... 75,410,437
===========
Diluted ........................ 85,068,791
===========
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS Continued
For the Year Ended September 30, 2003
**** SPLIT TABLE - SEE ABOVE ****
9/30/2003 Pro Forma
In Vivo CO Adjustments Consolidated
------------ ---------- ------------
Sales ................................... $ 422 $ -- $ 286,921
Cost of sales ........................... 2,000 -- 9,904
------------ ---------- ------------
Gross profit ................... (1,578) -- 277,017
------------ ---------- ------------
Operating expenses:
Research and development ........... -- -- 383,225
Depreciation and amortization ...... 2,083 -- 23,212
Impairment ......................... 13,542 -- 13,542
General and administrative ......... 20,546 -- 975,406
------------ ---------- ------------
Total operating expenses ....... 36,171 -- 1,395,385
------------ ---------- ------------
Operating loss .......................... (37,749) -- (1,118,368)
Interest expense ........................ -- -- --
------------ ---------- ------------
Loss before income taxes ....... (37,749) -- (1,118,368)
Provision for income taxes (benefit) .... -- -- --
------------ ---------- ------------
Net loss ....................... $ (37,749) $ -- $ (1,118,368)
============ ========== ============
Net loss per share:
Basic .............................. $ (0.00) $ (0.01)
========== ============
Weighted average shares outstanding:
Basic .......................... 10,550,000 85,960,437
========== ============
Diluted ........................ 10,550,000 95,618,791
========== ============
PF-2
See accompanying notes to unaudited pro forma consolidated financial statements
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
For the Nine Months Ended June 30, 2004
**** SPLIT TABLE - SEE BELOW ****
6/30/2004 6/30/2004 4/30/2004 Pro Forma
In Vivo DE IVMD UK Jopejo Adjustments Consolidated
---------- ------------ ------------ ---------- -----------
Sales ................................... $ -- $ 445,142 $ -- $ -- $ 445,142
Cost of sales ........................... -- 890 -- -- 890
---------- ------------ ------------ ---------- -----------
Gross profit ................... -- 444,252 -- -- 444,252
---------- ------------ ------------ ---------- -----------
Operating expenses:
Research and development ........... -- 224,744 192,405 -- 417,149
Depreciation and amortization ...... -- 10,099 7,243 -- 17,342
General and administrative ......... -- 637,783 166,253 -- 804,036
------------ ------------ ---------- -----------
Total operating expenses ....... -- 872,626 365,901 -- 1,238,527
---------- ------------ ------------ ---------- -----------
Operating loss .......................... -- (428,374) (365,901) -- (794,275)
Interest expense ........................ -- -- -- -- --
---------- ------------ ------------ ---------- -----------
Loss before income taxes ....... -- (428,374) (365,901) -- (794,275)
Provision for income taxes (benefit) .... -- -- -- -- --
---------- ------------ ------------ ---------- -----------
Net loss ....................... $ -- $ (428,374) $ (365,901) $ -- $ (794,275)
========== ============ ============ ========== ===========
Net loss per share:
Basic .............................. $ (0.01)
===========
Weighted average shares outstanding:
Basic .......................... 75,410,437
===========
Diluted ........................ 85,068,791
===========
IN VIVO MEDICAL DIAGNOSTICS, INC.
(A Development Stage Company)
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS Continued
For the Nine Months Ended June 30, 2004
**** SPLIT TABLE - SEE ABOVE ****
6/30/2004 Pro Forma
In Vivo CO Adjustments Consolidated
------------ ----------- ------------
Sales ................................... $ 341 $ -- $ 445,483
Cost of sales ........................... 628 -- 1,518
------------ ----------- ------------
Gross profit ................... (287) -- 443,965
------------ ----------- ------------
Operating expenses:
Research and development ........... -- -- 417,149
Depreciation and amortization ...... -- -- 17,342
General and administrative ......... 16,505 -- 804,036
------------ ----------- ------------
Total operating expenses ....... 16,505 -- 1,238,527
------------ ----------- ------------
Operating loss .......................... (16,792) -- (1,160,176)
Interest expense ........................ -- -- --
------------ ----------- ------------
Loss before income taxes ....... (16,792) -- (1,160,176)
Provision for income taxes (benefit) .... -- -- --
------------ ----------- ------------
Net loss ....................... $ (16,792) $ -- $ (1,160,176)
============ =========== ============
Net loss per share:
Basic .............................. $ (0.00) $ (0.01)
=========== ============
Weighted average shares outstanding:
Basic .......................... 10,550,000 85,960,437
=========== ============
Diluted ........................ 10,550,000 95,618,791
=========== ============
PF-3
IN VIVO MEDICAL DIAGNOSTICS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Capitalization of In Vivo DE:
(a) Conversion of 221,091 shares of IVMD UK cumulative redeemable preferred
stock, 19,609 shares of IVMD UK common stock and 83,353 shares of Jopejo
into 8,000,000 shares of convertible preferred stock
(b) Issuance of 5,500,000 shares of In Vivo DE stock to Robert M. Rubin etal
("Financing Group"), 250,000, 125,000 and 125,000 shares of In Vivo DE
stock to Victor Kaminsky, Stephen A. Weiss and Jay Kaplowitz ("Funding
Group"), and 3,000,000 to the In Vivo DE Employee Benefit Trust.
(c) Shares issued to the Financing Group and Funding Group are subject to a
repurchase agreement and are contingent upon completion of debt and/or
equity financing.
(d) Forgiveness of debt of $1,666,586 resulting in $1,588,000 of In Vivo DE
debt payable to Westek Limited.
Merger of In Vivo CO and In Vivo DE:
(e) Conversion of notes payable of $467,495 into 1,636,233 shares of common
stock of In Vivo CO.
(f) Conversion of payables to related parties of $64,673 into 239,289 shares of
In Vivo CO.
(g) Conversion of 5,020,000 shares of common stock of In Vivo CO into
10,550,000 shares of common stock of In Vivo CO.
(h) Conversion of 8,000,000 shares of In Vivo DE preferred stock into
34,343,662 shares of 4% voting redeemable convertible preferred stock.
(i) Conversion of 9,000,000 shares of In Vivo DE common stock into 38,637,253
shares of In Vivo CO common stock.
(j) Conversion of $64,673 of payables to employees for compensation into
239,289 shares of common stock of In Vivo CO.
(k) Issuance of 554,000 shares of common stock of In Vivo CO in exchange for
legal servies.
PF-4