U.S. 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 the Quarterly Period Ended March 31, 1997
Commission File No. 0-12968
INMEDICA DEVELOPMENT CORPORATION
(Exact name of small business issuer as specified in its charter)
Utah 87-0397815
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation of organization) Number)
60 South 600 East, Suite 150
Salt Lake City, Utah 84102
(Address of principal executive offices)
Registrant's telephone number: (801) 521-9300
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act of 1934 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[X] No[ ]
The number of shares outstanding of the registrant's only class of common stock,
par value $.001 per share, as of May 12, 1997 was 7,999,232 shares.
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PART I - FINANCIAL INFORMATION Page 1 of 2
- ------------------------------
Item 1. Financial Statements
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
March 31,
1997
(Unaudited)
CURRENT ASSETS:
Cash $ 238,573
Prepaid expenses 15,043
----------
Total current assets 253,616
EQUIPMENT AND FURNITURE,
at cost, less accumulated
depreciation of $254,489 4,437
OTHER ASSETS 2,196
----------
Total assets $ 260,249
===========
See notes to condensed consolidated financial statements.
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Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31,
NOTE PAYABLE, less
current portion 355,000
----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value;
20,000,000 shares authorized,
7,999,232 issued and outstanding 7,999
Preferred stock, 10,000,000
shares authorized; Series A
preferred stock, cumulative
and convertible, $4.50 par
value, 1,000,000 shares
designated, 25,356 shares
issued and outstanding 114,102
Additional paid-in capital 6,482,369
Accumulated deficit (6,758,975)
----------
Total stockholders'
deficit (154,505)
----------
Total liabilities and
stockholders' deficit $ 260,249
==========
See notes to condensed consolidated financial statements.
3
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three
Months Ended
March 31,
1997 1996
(Unaudited) (Unaudited)
TOTAL OPERATING REVENUE $ -0- -0-
--------- ---------
OPERATING EXPENSES:
General and
administrative 47,840 36,716
Research and
development 31,683 22,029
--------- ------
Total operating expenses 79,523 58,745
--------- ------
LOSS FROM OPERATIONS (79,523) (58,745)
---------- -------
OTHER INCOME (EXPENSES):
Miscellaneous income 6 -
Interest expense (9,503) (14,954)
--------- ---------
Total other expense (9,497) (14,954)
--------- ---------
NET LOSS (89,020) (73,699)
PREFERRED STOCK DIVIDEND (2,282) (7,550)
------- --------
NET LOSS APPLICABLE TO
COMMON SHARES $ (91,302) $ (81,249)
========== =========
Net loss
per common share $ (.01) $ (.01)
========== =========
Weighted average number
of common shares outstanding 7,997,612 7,485,707
========== =========
See notes to condensed consolidated financial statements.
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Page 1 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
1997 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (89,020) (73,699)
Adjustments to reconcile net
loss to net cash provided by
operating activities-
Depreciation 291 223
Change in assets and liabilities-
Decrease in royalties receivable 209,280 227,520
Decrease in prepaid
expenses 7,297 6,677
Increase (decrease) in accounts
payable 1,003 (3,004)
Decrease in accrued payroll (7,829) (6,607)
(Decrease) increase in interest
payable (1,253) 9,202
Decrease in convertible interest
payable - (3,909)
Decrease in related-party
payable (39,000) (25,500)
--------- -------
Net cash provided by
operating activities 80,769 130,903
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and
furniture - (1,375)
--------- -------
Net cash used in
investing activities - (1,375)
--------- -------
See notes to condensed consolidated financial statements.
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Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
1997 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on
convertible debentures $ - $ (22,768)
Preferred stock dividends (2,282) (7,550)
Principal payments on note payable (17,500) (12,500)
---------- --------
Net cash used in financing activities (19,782) (42,818)
---------- --------
NET INCREASE IN CASH 60,987 86,710
CASH AT BEGINNING OF PERIOD 177,586 113,732
-------- --------
CASH AT END OF PERIOD $238,573 $200,442
======== ========
See notes to condensed consolidated financial statements.
6
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A--Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310b of
Regulation SB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These consolidated statements include the accounts of
InMedica Development Corporation and its wholly owned subsidiary, MicroCor, Inc.
("MicroCor"). All material intercompany accounts and transactions have been
eliminated.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for fair presentation have been included.
Operating results for the three-month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. For further information, refer to the consolidated financial
statements included in the Company's Form 10-KSB for the year ended December 31,
1996.
Note B -- Subsequent Event
Effective May 9, 1997, InMedica Development Corporation (the "Company") employed
Robert Gail Billings to conduct research and development on the Company's
hematocrit project. The Company will pay Dr. Billings $8,333.33 per month for
his services.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the years ended December 31, 1996 and 1995, liquidity was generated
from royalty income received from Johnson and Johnson Medical, Inc. ("JJMI").
This income source may not be sufficient to provide liquidity needs over time
and may be inadequate to retire bank debt when it comes due in August 1998 and
fund continued research and development. InMedica intends to continue to look
for other funding sources as to which it has no commitments. For the three
months ended March 31, 1997, no operating revenues were recognized due to the
revenue recognition policy of the Company which requires sales information to
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have been received from JJMI and that cash receipts are assured.
A principal asset of the Company, the royalty agreement with JJMI, has been
pledged to secure repayment of the $405,000 bank debt. Funds invested in other
potential assets of the Company such as the hematocrit device have been expensed
as incurred as research and development. The ability of the Company to use the
hematocrit device as a means of securing funding for the Company is totally
dependent upon the success of further research and development efforts in
producing a viable device suitable for commercialization.
Results of Operations
InMedica has achieved profitable operations during the last three years,
but has a stockholders' deficit of $154,505 and an accumulated deficit of
$6,758,975 as of March 31, 1997. In order for InMedica to continue research and
development activities, it may require additional financing, for which it has no
commitments. It is impossible to estimate the amount of the JJMI royalties which
may be received in the future. See Liquidity and Capital Resources for an
explanation of why no revenues were recognized in the first quarter of the
current year.
The loss from operations of $79,523 for the quarter ended March 31, 1997
compared to $58,745 for the quarter ended March 31, 1996 was generated from
general and administrative expenses ($47,840) and research and development
($31,683), which expenses had each increased approximately $10,000 for the first
quarter of 1997, compared to the first quarter of 1996, as the Company increased
efforts to develop its technology. Interest expense decreased by approximately
$5,000 for the quarter ended March 31, 1997 when compared to the quarter ended
March 31, 1996 due to the elimination of certain indebtedness during the last
year.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities:
None
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
Effective May 9, 1997, InMedica Development Corporation (the "Company") employed
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Robert Gail Billings, age 63, to conduct research and development on its
hemocratic project. See Note B to the Financial Statements for information as to
the salary of Mr. Billings. From 1992 until 1997 Dr. Billings was employed as
Vice President for Research and Development of Utah Medical Products, Inc.
("Utah Medical"), a Salt Lake City based publicly held company specializing in
medical technology. Prior to that time, he was employed as an engineer for Utah
Medical in research and development. From 1976 until 1990 he was Vice President
of Research and Development for Tenet Information Services of Salt Lake City,
which was engaged in the development of computer systems and software for
pulmonary function test analysis. During the period 1971-1976 he conducted
medical research for Primary Children's Medical Center, Salt Lake City, Utah as
a graduate student and later as a post-doctoral fellow. Prior to that time he
was employed for 15 years in the aerospace industry. He holds a BS in Electrical
Engineering from the University of Utah (1956), an MS in Electrical Engineering
from Utah State University (1965) and a PhD in Biophysics from the University of
Utah (1975).
Item 6. Exhibits and Reports on Form 8-K:
Exhibits: None
Form 8-K: None
9
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INMEDICA DEVELOPMENT CORPORATION
Dated: May 13, 1997
By /s/ Larry E. Clark
------------------------------
Larry E. Clark, CEO
By /s/ Richard Bruggeman
------------------------------
Richard Bruggeman, Treasurer
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EXHIBITS
Exhibits filed with the Form 10-QSB of InMedica Development Corporation, SEC
File No. 0-12968:
Exhibit No. SB Item No. Description
- ----------------------------------------------
1 (27) Financial Data Schedule
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INMEDICA DEVELOPMENT CORPORATION FOR THE PERIOD ENDED
MARCH 31, 1997.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 238573 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 253616 0
<PP&E> 258926 0
<DEPRECIATION> 254489 0
<TOTAL-ASSETS> 260249 0
<CURRENT-LIABILITIES> 59754 0
<BONDS> 0 0
0 0
114102 0
<COMMON> 7999 0
<OTHER-SE> (276606) 0
<TOTAL-LIABILITY-AND-EQUITY> 260249<F1> 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 79523 58745
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 9503 14954
<INCOME-PRETAX> (89020) (73699)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (89020) (73699)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (89020) (73699)
<EPS-PRIMARY> (.01) (.01)
<EPS-DILUTED> (.01) (.01)
<FN>
<F1> Additional paid in capital and retained earnings.
</FN>
</TABLE>
