August 8, 1997
TO THE SHAREHOLDERS:
Enclosed are copies of the most recent 10KSB and 10QSB for InMedica
Development Corporation ("InMedica"), as our Annual Report to Shareholders.
We were very pleased to announce effective May 9, 1997, the employment by
InMedica of Dr. Robert Gail Billings to conduct research and development on
InMedica's hematocrit project. Biographical information on Dr. Billings may be
found in the Form 10QSB which is enclosed. Previously, Dr. Billings was employed
as Vice President for Research and Development of Utah Medical Products, Inc., a
publicly held Salt Lake City based company specializing in medical technology.
He has been employed in the medical research industry for more than 25 years and
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).
We are also pleased to announce that Patent Number 5,642,734 "Method and
Apparatus for Noninvasively Determining Hematocrit" was granted by the US Patent
Office on July 1, 1997 and assigned by inventors Paul Ruben and Allan Kaminsky
to the Company's wholly owned subsidiary, MicroCor, Inc. This patent contains 85
claims which cover a number of enhancements to the original method for
non-invasive hematocrit measurement. At least some of the enhancements will be
useful in additional engineering of a hematocrit measurement product and the
claims in this new patent will provide considerable protection against potential
competitors. This patent is in addition to the prior Patent Number 5,526,808
held by the Company on a non-invasive hematocrit method and apparatus which
issued June 18, 1996.
We are continuing to aggressively pursue research and development of a
commercial device to measure hematocrit non- invasively. We look forward to the
opportunity to meet you at the Annual Shareholders' meeting on August 29.
INMEDICA DEVELOPMENT CORPORATION
LARRY E. CLARK, PRESIDENT
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1996
Commission File No. 0-12968
INMEDICA DEVELOPMENT CORPORATION
Utah 87-0397815
- --------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
60 South 600 East, Suite 150
Salt Lake City Utah 84102
(801) 521-9300
Securities Registered Pursuant to Section 12(g) of the Act:
Name of each Exchange
Title of Each Class on which Registered
- ------------------- ---------------------
Common Stock, $.001 par value None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or Section 15(d) of the Exchange Act during the past 12 months, and (2) has
been subject to such filing requirements for the past 90 days. X yes no
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation SB contained in this form, and no disclosures will be contained, to
the best of registrant's knowledge, in any definitive proxy or information
statement incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $728,800
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of March 17, 1997 was approximately $2,250,0001. The number of
shares outstanding of the issuer's common stock, $.001 par value, as of March
13, 1997 was 7,997,612.
DOCUMENTS INCORPORATED BY REFERENCE: None
- --------
1 - based on 5,113,787 non-affiliate shares at $.44 per share, which was
the average of the bid and asked price on that date
<PAGE>
Item 1. Business General. InMedica Development Corporation ("InMedica") was
incorporated as a Utah corporation on June 16, 1983. During the last three
fiscal years, InMedica's primary business activity has been the operation of the
business of MicroCor, Inc. ("MicroCor"), a wholly owned subsidiary, (see "J & J
Medical Agreement and Principal Products") and the refinancing of its debt (see
"Preferred Stock", "Bank Loan" and "Debentures"). During 1993-1994, the Company
considered, but did not complete, the acquisition of Clinical Innovation
Associates, Inc., a privately held company.
MicroCor was incorporated in 1981 under the name Alta Systems, Inc. as a
Utah corporation for the purpose of designing, manufacturing and marketing
hardware and software for the medical field, particularly relating to monitoring
functions. The Company acquired MicroCor in 1985. MicroCor is presently engaged
in research and development of an experimental device to measure hematocrit
non-invasively (see "Principal Products"). MicroCor has historically been
engaged in the development or sale of certain medical technology products.
Royalty income received by MicroCor from the development and sale of certain
technology pursuant to a contract with Johnson & Johnson Medical, Inc. is
presently InMedica's only material revenue source (see "Principal Products").
Change in Control. Effective April 11, 1995, Larry E. Clark purchased
1,000,000 shares of common stock of the Company from Allan L. Kaminsky for
$100,000. The acquisition of shares gave Mr. Clark a total stock ownership of
1,143,000 shares. (see "Security Ownership of Certain Beneficial Owners and
Management"). Simultaneously with the stock purchase and sale, Dr. Kaminsky
resigned as an officer and director of the Company and Mr. Clark was appointed
by the board of directors as chairman of the board, director, president and
chief executive officer of InMedica.
Grant of Stock Options. During the period October 1995 through April 1996,
the Company granted stock options to officers, directors and consultants
aggregating 1,100,000 shares. At a board meeting held July 31, 1996, the Company
reduced these options by 25% effective August 1, 1996, reducing the total new
options outstanding to 825,000 (See "Legal Proceedings").
Consulting Agreement. Effective September 3, 1996, the Company entered into
a consulting contract with Ruben Engineering, Paul Ruben and Calvin Ruben for
engineering consulting services relating to the development of its hematocrit
technology. The contract grants the Rubens a total of 300,000 options to
purchase the common stock of the Company for $1.16 per share. A block of 200,000
options become exercisable and vest 25,000 per quarter beginning December 1,
1996. An additional 100,000 options become exercisable and non-forfeitable on
the date satisfactory clinical trials have been completed on the hematocrit
technology. All options are immediately exercisable and non-forfeitable if the
2
<PAGE>
FDA approves the Company's hematocrit technology or if InMedica is sold or
acquired or the non-invasive hematocrit technology is sold or acquired. In
connection with the granting of the options the Company has recognized $178,000
of consulting expense which is being amortized over two years. Pursuant to the
agreement, the Rubens agreed to complete the construction of six prototypes for
the Company for the previously agreed upon price of $50,000 and to continue to
consult with InMedica for a period of at least two years, for a minimum of 8
hours per week at $80 per hour. The Rubens are continuing research and
development efforts on the Company's technology.
Preferred Stock. See footnote 5 to the financial statements for information
regarding the Preferred Stock of the Company, including a report of the number
of preferred shares converted to common stock during the year. Effective
September 30, 1996, the Company extended from October 1, 1996 through November
1, 1996, the period during which the preferred stockholders of the Company were
entitled to convert shares of the Series A preferred stock to common stock of
the Company at the rate of six shares of common for each share of preferred. The
Company presently has five remaining preferred stockholders who own an aggregate
of 25,356 shares of the Series A Preferred Stock. Total aggregate dividends
payable on the remaining preferred stock outstanding is $9,128 per year.
Regulation S Offering. During October 1995, the Company prepared a
Regulation S offering to be used in seeking foreign investors for approximately
900,000 shares of its Series A Preferred Stock. There were no offers to purchase
shares pursuant to the Regulation S offering and the offering has now
terminated.
Bank Loan. Effective August 31, 1995, the Board of Directors approved
borrowing funds from a commercial bank. During September 1995, the bank approved
a loan of $500,000 to the Company bearing interest at prime plus 1 1/4%. The
initial interest rate is 10% per annum. Principal and interest payments are due
quarterly, with $12,500 principal plus accrued interest, payable quarterly. The
entire remaining unpaid balance of principal and interest is due and payable on
August 1, 1998. Larry E. Clark, President and Director of the Company, is a
co-obligor on the loan. Payment of the bank loan is secured by an assignment of
the Johnson & Johnson Medical, Inc. Agreement, which is available to the bank as
security in the event of a Company default on the bank loan. The Company
considers the loan to be well secured with over $1,000,000 of additional
collateral supplied by the Company's president, Larry E. Clark. In consideration
of the collateral provided by Mr. Clark, the Board of Directors granted Mr.
Clark, effective October 16, 1995, non-qualified options to purchase 500,000
shares of the Company's common stock at a price of $.30 per share, exercisable
for 10 years. The number of options was reduced to 375,000 as of August 1, 1996.
The Company has also granted Mr. Clark a security interest in the Johnson &
3
<PAGE>
Johnson Medical Agreement to secure him for any liability or loss he may suffer
as a result of placing his collateral and credit at risk.
Debentures. See Note 2 to the financial statements for information
regarding the retirement of the Company's Convertible Debentures.
J & J Medical Agreement. The Company reached an agreement dated June 15,
1995, with Johnson & Johnson Medical, Inc., a New Jersey corporation, ("JJMI").
The Agreement replaced the Company's prior agreement with Critikon, Inc. The new
Agreement commits JJMI to pay a royalty to the Company for each specified PLUS
Vital Signs Monitor (the "Dinamap PLUS Monitor") sold by JJMI to unaffiliated
third parties. In consideration of the royalty, the Company has granted JJMI a
nonexclusive worldwide license to the technology. Under the terms of the new
Agreement, the Company began receiving an increased per unit royalty rate
effective as of January 2, 1995.
Under the new Agreement, JJMI is obligated to retain records for at least
three years after the end of each royalty period. MircoCor has the right to
audit the records upon reasonable notice. Sales are reported and royalties are
paid quarterly to InMedica three months after the end of the quarterly period in
question. In the event the technology licensed by MicroCor should be found to
infringe any valid patent rights of others, pursuant to an opinion of counsel,
then JJMI is authorized to settle with such third parties and deduct the amount
of the settlement from royalties due MicroCor, not to exceed one half of the
royalties owing to MircoCor. In the event JJMI took a license or made a lump sum
settlement to settle any dispute, the amount of abatement of the royalty payable
to MicroCor would be subject to good faith negotiation. The new Agreement
continues so long as JJMI sells Dinamap PLUS Monitors, but may be terminated
upon the dissolution, winding up, bankruptcy or material breach of contract of
either party.
Principal Products. During the years 1986 and 1987, MicroCor developed,
manufactured and marketed a portable electrocardiograph ("ECG") monitor. About
450 units were manufactured and sold. In July 1989, MicroCor signed a research
and development contract with Critikon (predecessor to JJMI), to develop a
medical instrument which would incorporate and enhance the technologies already
developed in the MicroCor portable ECG monitor and combine them with
technologies developed by Critikon. The research and development portion of the
contract was completed in July 1990, and resulted in the design of a new product
line. Critikon manufactures and markets the new product line under the name
Dinamap Plus(TM). MicroCor is the beneficiary of royalty income based upon a
specified amount per unit sold. The Company's income is generated exclusively
from the agreement with Johnson & Johnson Medical, Inc. (See "J & J Medical
Agreement").
4
<PAGE>
For the past seven years, the Company has conducted research on a method
for measuring hematocrit non-invasively (without drawing blood) and has applied
for patents covering this technology. Hematocrit is the percentage of blood
volume made up by red blood cells and is a common laboratory test currently
performed invasively by drawing a blood sample from the patient. In November
1995, the Company purchased for $200,000 a portable prototype for measuring
hematocrit and research information relating to measuring hematocrit
non-invasively from Paul Ruben and Paul Diehl. Dr. Diehl is a principal
shareholder of the Company. Diehl and Ruben agreed not to compete with InMedica
and agreed not to disclose the information they had sold for a period of five
years from the date of the agreement.
During January 1996, the Company began gathering data necessary to provide
calibration for the hematocrit measuring device. Based upon the results of the
first round and a subsequent round of data testing, the Company believes the
accuracy and reliability of the device can be increased. However there is no
guarantee that the instrument's performance will be improved and be reliable for
clinical use. The prototype is not yet suitable for commercialization.
Additional testing and research and development must be completed in order to
establish both the technical and commercial viability of the proposed product.
This will require additional funding as to which the Company has no commitments
and no time frame can consequently be placed on when or if commercialization of
the device will occur. The Company has previously announced its willingness to
consider strategic alliances and partnerships for the design, manufacturing and
marketing of any products which may result from this non-invasive blood testing
and monitoring technology.
During December 1996, Company personnel traveled to Ireland to consult with
a team of six medical device experts at Ulster University in Belfast, Ireland.
The team is part of the Northern Ireland Bio-Engineering Centre ("NIBEC"). The
engineering team is presently evaluating the Company's device.
Government Regulation. Medical products may be subject to regulation by the
Food and Drug Administration (the "FDA") pursuant to the Federal Food, Drug and
Cosmetic Act and other federal and state laws regarding the regulation,
manufacture and marketing of products in which InMedica may be involved. The
laws of foreign nations may also apply to any international marketing of such
products. To the extent InMedica has acquired or developed an interest in
medical products or the companies manufacturing such products, InMedica's
business may be indirectly affected by such regulation. As the manufacturer of
the Dinamap Plus(TM) (see "Principal Products") Critikon was responsible for
obtaining FDA 510(K) approval on that new product line. Testing of the Company's
non-invasive hematocrit technology is subject to prior approval and supervision
5
<PAGE>
of an Internal Review Board of a medical facility overseeing the testing.
Marketing of any new product line which might be developed based on the
Company's non-invasive hematocrit device would be subject to prior approval by
the FDA.
Patents. As of December 12, 1995, the Company's application for a patent
entitled "Method and Apparatus for Non-Invasively Determining Hematocrit," was
allowed by the U.S. Patent Office and the Patent issued on June 18, 1996 and has
a term of 17 years. The Company has filed an application for an additional
patent which claims priority from October 4, 1990, the date of filing of the
Company's "Method and Apparatus for Non-Invasively Determining Hematocrit." The
second patent has been allowed and is expected to issue in due course. The
patent term is expected to run from October 4, 1990 for a period of 17 years.
Raw Materials. Materials and electronic components used in the production
and development of ECG monitors and like products are components readily
available through various suppliers.
Competition. InMedica is not presently a significant factor in the medical
products industry and does not presently compete directly in the medical
products field. The medical products industry is dominated by large and well
established corporations with vastly greater financial and personnel resources
than those of InMedica. There can be no assurance that the companies and
products in which InMedica has an interest will be able to compete profitably in
the marketplace. Further, there is no assurance that the Company will be able to
complete research, development and marketing of its hematocrit technology prior
to any competitors who may be developing competing technologies.
Research and Development Expenses. Research and development expenses for
the two years ended December 31, 1996 and 1995, were $155,885 and $203,417,
respectively. None of the expenses were incurred on customer-sponsored research
activities relating to the development of new products.
Employees. InMedica and MicroCor had three part time employees as of
December 31, 1996.
Item 2. Properties
Office Lease. The Company leases office space located in Salt Lake City,
Utah on a month to month basis. The monthly rental on the space is $456.25. The
office space is expected to be adequate for the Company's needs in the
foreseeable future.
Item 3. Legal Proceedings.
During the third quarter of 1996 a former officer of the Company, Allan L.
Kaminsky, threatened to bring legal proceedings affecting the Company or a proxy
6
<PAGE>
contest to obtain control of the Company. Among other things, Dr. Kaminsky
objected to the number of options issued to officers, directors, employees and
consultants of the Company. At a board meeting held July 31, 1996, the Company
considered Dr. Kaminsky's demands and voluntarily reduced the number of options
by 25% effective August 1, 1996, bringing the total options granted down from
1,100,000 to 825,000. Dr. Kaminsky thereafter offered to continue to be
associated with the Company on terms rejected by the Board of Directors after
due consideration. On September 17, 1996, Dr. Kaminsky advised the Company that
his offer to negotiate had expired, that he had no further association
(employment, consulting, or advisory) with InMedica/MicroCor, other than being a
passive shareholder and that his action was permanent and irreversible. Dr.
Kaminsky continues to be a principal shareholder of the Company (see "Security
Ownership of Certain Beneficial Owners and Management"), however upon his
resignation, his options to purchase 435,000 shares of the Company's common
stock were cancelled.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders.
7
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters.
(a) Price Range of Common Stock.
The Common Stock of InMedica is traded in the over-the-counter market and
is quoted on the "NASD OTC Bulletin Board". The following table sets forth, for
the calendar quarters indicated, the high and low closing bid prices for the
InMedica Common Stock as reported by the NASD OTC Bulletin Board. These
quotations represent prices between dealers without adjustment for retail
markups, markdowns or commissions and may not represent actual transactions.
Bid Price
Quarter Ended High Low
------------- ---- ---
March 31, 1995 .15 .03
June 30, 1995 .40 .03
September 30, 1995 .44 .09
December 31, 1995 .35 .09
March 31, 1996 1.00 .13
June 30, 1996 1.88 1.00
September 30, 1996 1.69 .81
December 31, 1996 1.00 .50
March 31, 1997 .75 .34
As of March 13, 1997, there were approximately 545 record holders of
InMedica Common Stock. Such record holders do not include individual
participants in securities position listings. The Company also has 5 holders of
its Series A Preferred Stock. There is no public market for the Series A
Preferred Stock (See "Preferred Stock").
InMedica has not paid any cash dividends on its Common Stock since
organization. For the foreseeable future, InMedica expects that earnings, if
any, will be retained for use in the business or be used to retire obligations
of the Company. The holders of the Series A Preferred Stock are entitled to
cumulative cash dividends at the annual rate of eight percent (8%) per annum
($.36 per share per annum) or $.09 per share per quarter, payable on or before
the following dates: January 31, April 30, July 31, and October 31 of each year.
The Company is current in all dividend payments to the Preferred Stockholders.
8
<PAGE>
Item 6. 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 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.
A principal asset of the Company, the royalty agreement with JJMI, has been
pledged to secure repayment of the $422,500 bank debt. Funds invested in other
potential assets of the Company such as the hematocrit device have been expensed
as research and development and the ability of the Company to use the 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 $63,203 and an accumulated deficit of
$6,667,673 as of December 31, 1996. 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.
Significant operating revenues have been derived only from royalties during
the two-year period ended December 31, 1996. During the years ended December 31,
1996 and 1995 royalty revenue totaled $728,800 and $693,440, respectively.
Revenues during the year ended December 31, 1996 increased when compared to 1995
as a result of additional royalties paid based on sales by JJMI of the DINAMAP
(TM) PLUS vital signs monitor. InMedica cannot predict how long and how much
royalty revenue it may receive from JJMI. Future royalty revenue is dependent
upon the continued sales of the product line by JJMI which includes MicroCor's
base technology.
The net income of $159,381 for the year ended December 31, 1996 compared to
$133,803 (before extraordinary gain) for 1995, resulted primarily from increased
royalties from JJMI ($35,360), a reduction of interest expense ($87,170) and a
decrease in total research and development expense ($47,532) which more than
offset the increase in general and administrative expense of $145,493.
9
<PAGE>
Although research and development expense decreased during 1996, most of the
research and development expense in 1995 was due to the purchase of a hematocrit
device, while the 1996 expense related to ongoing research and development.
General and administrative expenses were higher during the year ended
December 31, 1996 ($361,757) as compared to the year ended December 31, 1995
($216,264), due primarily to expenses associated with the elimination of debt,
resolving a dispute with a former officer, increased consulting expenses and
stock option expense and other administrative expenses associated with the
expanded activity of the Company.
10
<PAGE>
Item 7. Financial Statements. Page
-------------------- ----
Report of Independent Public Accountants F-1
Consolidated Balance Sheet as of December 31, 1996 F-2
Consolidated Statements of Operations for the
years ended December 31, 1996 and 1995 F-3
Consolidated Statements of Stockholders' Deficit
for the years ended December 31, 1996 and 1995 F-4
Consolidated Statements of Cash Flows for the
years ended December 31, 1996 and 1995 F-5
Notes to Consolidated Financial Statements F-7
11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To InMedica Development Corporation:
We have audited the accompanying consolidated balance sheet of InMedica
Development Corporation (a Utah corporation) and subsidiary as of December 31,
1996, and the related consolidated statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 1996 and 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of InMedica Development
Corporation and subsidiary as of December 31, 1996, and the results of their
operations and their cash flows for the years ended December 31, 1996 and 1995
in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, while the Company generated net income in
1996 and 1995, historically it has not achieved profitability and there can be
no assurance of profitability in the future. The Company's sole source of
revenue is a royalty arrangement which is based upon marketing and sales
activity of a third party and there can be no assurance as to continuing royalty
receipts. As of December 31, 1996, the Company had an accumulated deficit of
$6,667,673 and a total stockholders' deficit of $63,203. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters also are discussed in Note 1. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
March 7, 1997
F-1
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
ASSETS
CURRENT ASSETS:
Cash $ 177,586
Royalties receivable 209,280
Prepaid expenses and other 22,340
----------
Total current assets 409,206
EQUIPMENT AND FURNITURE, at cost, less accumulated
depreciation of $249,761 4,728
OTHER ASSETS 2,196
----------
Total assets $ 416,130
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of notes payable $ 50,000
Consulting fees due to related party 39,000
Accrued interest 9,212
Accrued payroll 8,621
----------
Total current liabilities 106,833
----------
NOTES PAYABLE, less current portion 372,500
----------
COMMITMENTS AND CONTINGENCIES (Notes 1, 2 and 7)
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; 20,000,000 shares
authorized; 7,999,232 shares 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
outstanding 114,102
Additional paid-in capital 6,482,369
Accumulated deficit (6,667,673)
----------
Total stockholders' deficit (63,203)
----------
Total liabilities and stockholders' deficit $ 416,130
==========
The accompanying notes to consolidated financial statements
are an integral part of this consolidated balance sheet.
F-2
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---------- ----------
ROYALTY REVENUES $ 728,800 $ 693,440
---------- ----------
OPERATING EXPENSES:
General and administrative 361,757 216,264
Research and development 155,885 203,417
---------- ----------
Total operating expenses 517,642 419,681
---------- ----------
INCOME FROM OPERATIONS 211,158 273,759
---------- ----------
OTHER EXPENSES:
Interest (50,140) (137,310)
Miscellaneous (1,637) (2,646)
---------- ----------
Total other expenses (51,777) (139,956)
---------- ----------
INCOME BEFORE EXTRAORDINARY GAIN 159,381 133,803
EXTRAORDINARY GAIN FROM EXTINGUISHMENT OF DEBT,
net of applicable income taxes of $0 (Note 9) - 197,901
---------- ----------
NET INCOME 159,381 331,704
PREFERRED STOCK DIVIDENDS 22,005 7,550
---------- ----------
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 137,376 $ 324,154
========== ==========
NET INCOME PER COMMON SHARE:
Income before extraordinary gain from
extinguishment of debt $ .02 $ .02
Extraordinary gain from extinguishment
of debt - .02
---------- ----------
NET INCOME PER COMMON SHARE $ .02 $ .04
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 8,413,270 7,822,194
========== ==========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
F-3
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Additional Total
Series A Paid-in Accumulated Stockholders'
Common Stock Preferred Stock Capital Deficit Deficit
--------------- ----------------- ---------- ----------- -------------
Shares Amount Shares Amount
------ ------ ------ ------
BALANCE,
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994 7,474,403 $7,474 - $ - $6,020,369 $(7,129,203) $(1,101,360)
Stock options 4,500 5 - - 333 - 338
exercised
Issuance of Series A
preferred stock - - 83,884 377,478 - - 377,478
Stock issued as
compensation for
services rendered 5,000 5 - - 1,745 - 1,750
Preferred stock
dividends - - - - - (7,550) (7,550)
Net income - - - - - 331,704 331,704
--------- ------ ------ -------- ---------- ----------- -----------
BALANCE,
December 31, 1995 7,483,903 7,484 83,884 377,478 6,022,447 (6,805,049) (397,640)
Conversion of
preferred 351,168 351 (58,528) (263,376) 263,025 - -
stock to common
stock
Conversion of
convertible
debentures 164,161 164 - - 122,955 - 123,119
to common stock
Issuance of options
to nonemployees - - - - 73,942 - 73,942
Preferred stock
dividends - - - - - (22,005) (22,005)
Net income - - - - - 159,381 159,381
--------- ------ ------ -------- ---------- ----------- -----------
BALANCE,
December 31, 1996 7,999,232 $7,999 25,356 $114,102 $6,482,369 $(6,667,673) $ (63,203)
========= ====== ====== ======== ========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
F-4
<PAGE>
Page 1 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Increase (Decrease) in Cash
1996 1995
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 159,381 $ 331,704
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 716 31,526
Expense related to common stock and stock
options issued as compensation for
services 73,942 1,750
rendered
Gain on sale of equipment and furniture - (5,727)
Extraordinary gain from extinguishment of - (197,901)
debt
Issuance of note payable to related party
in connection with payment for research
and - 102,000
development efforts
Change in assets and liabilities-
Decrease in royalties receivable 18,240 73,855
Decrease (increase) in prepaid expenses
and other 4,376 (1,692)
Decrease in accounts payable (3,652) (52,949)
Increase in accrued payroll 1,222 10,998
Increase (decrease) in accrued interest 552 (134,679)
Increase in consulting fees due to
related party 39,000 -
--------- ---------
Net cash provided by operating 293,777 158,885
activities
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment and furniture - 6,200
Purchase of equipment and furniture (1,374) (4,449)
--------- ---------
Net cash (used in) provided by
investing (1,374) 1,751
activities
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 338
Principal payments on convertible debentures - (454,254)
Principal payments on convertible debentures
due to related parties (18,018) (61,018)
Preferred stock dividends (22,005) (7,550)
Proceeds from issuance of note payable - 485,000
Principal payments on notes payable (50,000) (12,500)
Principal payments on notes payable to related
parties (138,526) -
--------- ---------
Net cash used in financing activities (228,549) (49,984)
--------- ---------
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
F-5
<PAGE>
Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Increase (Decrease) in Cash
1996 1995
---------- -------
NET INCREASE IN CASH $ 63,854 $ 110,652
CASH AT BEGINNING OF THE YEAR 113,732 3,080
--------- ---------
CASH AT END OF THE YEAR $ 177,586 $ 113,732
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 49,588 $ 273,821
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
During 1996, certain holders of convertible debentures converted $123,119 of
principal and accrued interest related to the debentures into 164,161
shares of common stock (see Note 2).
During 1996, certain holders of Series A preferred stock converted 58,528
shares of preferred stock into 351,168 shares of common stock (see Note
5).
During 1995, certain holders of convertible debentures converted $377,478 of
principal and accrued interest related to the debentures into 83,884
shares of Series A preferred stock (see Note 2).
During 1995, the Company paid $98,000 in cash and issued a note payable for
$102,000 to a stockholder and another individual to purchase certain
technology that enhanced the Company's existing development efforts with
respect to its Non-Invasive Hematocrit Technology.
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements
F-6
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
InMedica Development Corporation ("InMedica") and its wholly owned subsidiary,
MicroCor, Inc. ("MicroCor") (collectively, the "Company") historically have
engaged in the research, development and sale of medical technology and fund
raising to support such activity. During the years 1986 and 1987, MicroCor
developed and marketed a portable electrocardiograph ("ECG") monitor and
manufactured and sold about 450 units. In July 1989, MicroCor signed a research
and development contract with a predecessor of Johnson and Johnson Medical, Inc.
("Johnson and Johnson"), for further development of the ECG technology. As a
result of the agreement, Johnson and Johnson now manufactures and markets a
product line under the name of Dinamap Plus (TM) which incorporates the
Company's ECG technology. During 1995, the Company completed what it believes
was a favorable renegotiation of the Johnson and Johnson agreement. As a result
of increased royalty revenues received, the issuance of preferred stock and a
bank loan secured with collateral provided by the Company's president and chief
executive officer, the Company was able to retire or refinance its debt.
Since 1989, the Company has engaged in research and development of a device to
measure hematocrit non-invasively (the "Non-Invasive Hematocrit Technology").
During 1996, the Company was issued patent No. 5526808 related to certain
aspects of its Non-Invasive Hematocrit Technology. Additionally, a patent
application was allowed in November 1996 related to this technology. Hematocrit
is the percentage of red blood cells in a given volume of blood. At the present
time, the test for hematocrit is performed invasively by drawing blood from the
patient and testing the blood sample in the laboratory. Initial testing of the
Company's Non-Invasive Hematocrit Technology on limited samples has been
favorable. However, commercialization of the Non-Invasive Hematocrit Technology
is dependent upon additional testing, Food and Drug Administration approval,
financing of further research and development and, if warranted, financing of
manufacturing and marketing activities.
Royalties received from the Johnson and Johnson agreement are presently the
Company's sole source of revenue and the Company is not able to estimate the
duration or amount of future royalties from the Johnson and Johnson agreement.
Accordingly, there can be no assurance as to continuing royalty receipts. As of
December 31, 1996, the Company had an accumulated deficit of $6,667,673 and a
stockholders' deficit of $63,203. These conditions raise substantial doubt as to
the Company's ability to continue as a going concern. The Company's continued
existence is dependent upon its ability to achieve a viable operating plan.
Management's operating plan includes continuing to search for financing
alternatives, including the formation of strategic alliances or partnerships to
continue research and if warranted, the manufacture and sale of products
developed from the Non-Invasive Hematocrit Technology. However, at present, the
Company has no commitments related to these matters.
F-7
<PAGE>
Principles of Consolidation
The consolidated financial statements include the accounts of InMedica and
MicroCor. All material intercompany accounts and transactions have been
eliminated.
Revenue Recognition
Royalty revenues are recognized as sales information is received from Johnson
and Johnson and cash receipts are assured.
Equipment and Furniture
Equipment and furniture are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets. The asset
cost and accumulated depreciation for property retirements and disposals are
eliminated from the respective accounts, and any resultant gain or loss is
included in the determination of net income. The cost of major additions and
improvements is capitalized while the cost of maintenance and repairs is charged
to expense as incurred.
Equipment and furniture consisted of the following at December 31, 1996.
Equipment $ 242,260
Furniture 12,229
---------
254,489
Less accumulated depreciation (249,761)
---------
$ 4,728
=========
Depreciation has been computed using the straight-line method over the three to
five year useful lives of the related assets.
Included in equipment and furniture is approximately $248,700 of fully
depreciated equipment and furniture.
Net Income Per Common Share
The net income per common share computation is based on the weighted average
number of shares of common stock outstanding during each year after giving
effect to dilutive common stock equivalents. Preferred stock dividends are
deducted from net income in calculating net income per common share.
Income Taxes
The Company accounts for income taxes using the liability method. Deferred taxes
are determined based on the estimated future tax effects of differences between
the financial reporting and tax reporting bases of assets and liabilities given
the provisions of currently enacted tax laws.
F-8
<PAGE>
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The book value of the Company's financial instruments approximates fair value.
The estimated fair values have been determined using appropriate market
information and valuation methodologies.
(2) CONVERTIBLE DEBENTURES
Due to inadequate cash flows, the Company defaulted on its Series A and
Series C debenture agreements. During 1995, the Company satisfied the majority
of the Series A and Series C convertible debenture obligations and related
accrued interest through the issuance of 83,884 shares of Series A preferred
stock and cash payments of $377,485. In addition, one debenture holder agreed to
exchange his debenture instrument for a cash payment of $79,255 (80 percent of
principal and accrued interest owing). Another debenture holder agreed to
exchange his debenture instrument for a promissory note for 80 percent of the
principal and accrued interest owing on the debenture ($36,526) payable nine
months from the date of settlement. During 1995, the Company recorded an
extraordinary gain in the amount of approximately $28,000 related to convertible
debentures that were settled for less than the principal and interest owing.
During 1996, the Company satisfied the remainder of the Series A and Series C
convertible debenture obligations through the conversion of debentures totaling
$123,119 to 164,161 shares of the Company's common stock and a cash payment of
$18,018.
(3) INCOME TAXES
As of December 31, 1996, deferred income tax assets consisted of the following:
Net operating loss carryforwards $ 1,025,399
Future deductible temporary
differences related to
compensation, reserves
and accruals 115,478
Less: valuation allowance (1,140,877)
-----------
Net deferred income tax asset $ -
===========
The Company utilized approximately $159,000 and $338,000 of net operating
loss carryforwards ("NOLs") in 1996 and 1995, respectively, and therefore
recorded no federal or state income tax provisions for the years then ended.
F-9
<PAGE>
At December 31, 1996, the Company has consolidated NOLs for federal income tax
purposes of approximately $2,563,000. These NOLs expire at various dates through
December 31, 2008. An NOL generated in a particular year will expire for federal
tax purposes if not utilized within 15 years. Additionally, the Internal Revenue
Code contains other provisions which could reduce or limit the availability and
utilization of NOLs. For example, limitations are imposed on the utilization of
NOLs if certain ownership changes have taken place or will take place. A
valuation allowance is provided when it is more likely than not that all or some
portion of the deferred income tax asset will not be realized. Due to the
uncertainty with respect to ultimate realization, the Company established a
valuation allowance for the entire deferred income tax asset of $1,140,877.
(4) STOCK OPTIONS
With respect to employees and directors, the Company accounts for its stock
incentive plan, formula stock option plan and certain options granted outside
the plans under APB Opinion 25. Had compensation cost for these plans been
determined consistent with FASB Statement No. 123, the Company's net income and
earnings per share would have been amended to the following pro forma amounts:
1996 1995
-------- --------
Net income As reported $159,381 $331,704
Pro forma 159,381 87,959
Primary EPS As reported .02 .04
Pro forma .02 .01
Because the Statement No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1995: risk-free interest rate of 5.94 percent; no
expected dividend yield; expected life of 8 years; expected volatility of 141
percent.
Stock Incentive Plan
The Company has in place an incentive stock option plan (the "Stock Incentive
Plan") for eligible directors and key employees of the Company, covering
1,350,000 shares of the Company's common stock. Under the terms of the Stock
Incentive Plan, the options granted may be either incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
nonqualified stock options. A committee composed of disinterested members of the
Board of Directors has authority to determine, among other matters, which
eligible key employees and directors are to receive options, the price at which
the nonqualified options will be granted, the period in which the options are
exercisable and the type of options to be granted. The exercise price for the
incentive stock options may not be less than 100 percent of the fair market
value of the common stock on the date of the grant. The Stock Incentive Plan
contains antidilution provisions which provide for adjustments to option prices
or quantities in the event of certain changes in the number of outstanding
shares of common stock or the capitalization of the Company.
F-10
<PAGE>
The following table presents the aggregate options granted and exercised under
the Stock Incentive Plan during the years ended December 31, 1996 and 1995.
1996 1995
-----------------------------------------
Wtd. Avg. Wtd. Avg.
Exercise Exercise
Shares Prices Shares Prices
-------- ------ -------- ------
Shares under option, beginning of
year, at prices ranging from
$.08 to $1.00 per share 587,445 .51 788,445 .59
Options forfeited at prices ranging
from $.60 to $1.00 per share (435,000) .60 (201,000) .80
-------- --------
Shares under option, end of year,
at prices ranging from $.08 to
$.60 per share 152,445 .26 587,445 .51
======== ========
All of the 152,445 options outstanding and exercisable at December 31, 1996 have
exercise prices ranging from $.08 to $.60 with a weighted average exercise price
of $.26 and a weighted average remaining contractual life of one year.
At December 31, 1996, options for the purchase of 961,491 shares were available
for granting under the Stock Incentive Plan.
Formula Stock Option Plan
The Company has in place a formula stock option plan (the "Formula Plan") for
eligible directors of the Company, covering 100,000 shares of common stock. A
committee of the Board of Directors has the authority to determine, among other
matters, the term of the options and the period during which the options are
exercisable. Under the terms of the Formula Plan, each member of the committee
which administers the Stock Incentive Plan is eligible to receive nonqualified
stock options pursuant to a formula set forth in the Formula Plan. The exercise
price for options granted shall be 30 percent of the fair market value of the
common stock on the date of the grant. The Formula Plan contains antidilution
provisions which provide for adjustments to option prices or quantities in the
event of certain changes in the number of outstanding shares of common stock or
the capitalization of the Company.
There were no options granted or exercised under the Formula Plan during the
years ended December 31, 1996 and 1995. At December 31, 1996, there were no
shares under option under the Formula Plan and options for the purchase of
95,500 shares were available for granting.
At December 31, 1996, the Company has reserved 1,209,436 common shares for the
exercise of options under the two stock option plans described above.
Other Stock Options
During 1995, the Company granted nonqualified options for the purchase of
1,050,000 shares of common stock at prices ranging from $.30 to $.39 with a
weighted average exercise price of $.32. The options were granted to officers,
directors, employees and consultants to the Company. A total of 500,000 of these
nonqualified options were issued to the Company's president and chief executive
officer in consideration of collateral provided by him with respect to the
Company's bank loan described in Note 6. All options granted during 1995 vested
F-11
<PAGE>
immediately upon granting and are exercisable through 2005. During 1996, these
option grants were reduced by 25 percent to 787,500 by resolution of the board
of directors of the Company.
All of the 787,500 options outstanding and exercisable at December 31, 1996 have
exercise prices ranging from $.30 to $.39, with a weighted average exercise
price of $.32 and a weighted average remaining contractual life of 8.8 years.
During 1996, the Company granted nonqualified options for the purchase of
338,500 shares of common stock at prices ranging from $1.16 to $1.22 per share
with a weighted average exercise price of $1.17 and a weighted average remaining
contractual life of 5.2 years. The shares were issued to consultants to the
Company. A total of 38,500 of these nonqualified options vested immediately upon
granting and are exercisable through 2006. A total of 300,000 of these
nonqualified options were issued in consideration for engineering work related
to the Company's Non-Invasive Hematocrit Technology. A total of 200,000 of the
300,000 shares vest through September 1, 1998. The remaining 100,000 options
vest upon completion of satisfactory clinical trials related to the Company's
Non-Invasive Hematocrit Technology. At December 31, 1996, 25,000 of the 300,000
options were vested. The Company recorded compensation expense in 1996 of
$73,942 related to the granting of the 338,500 options. Total compensation
expense to be recorded over the vesting period of two years is $222,275.
(5) PREFERRED STOCK
During 1995, the Company amended its articles of incorporation to authorize
10,000,000 shares of preferred stock. The Company's board of directors
designated 1,000,000 shares of this preferred stock as Series A Cumulative
Convertible Preferred Stock ("Series A Preferred") with a par value of $4.50 per
share. Holders of the Series A Preferred receive annual cumulative dividends of
eight percent, payable quarterly, which dividends are required to be fully paid
or set aside before any other dividend on any class or series of stock of the
Company is paid. Holders of the Series A Preferred receive no voting rights but
do receive a liquidation preference of $4.50 per share, plus accrued and unpaid
dividends. Series A Preferred stockholders also have the right to convert each
share of Series A Preferred to the Company's common stock according to the
following schedule: $.75 per common share on or before October 1, 1996; $1.50
per common share on or before October 1, 1997 and $3.00 per common share after
October 1, 1997. During 1995, the Company issued 83,884 shares of Series A
Preferred related to the complete or partial satisfaction of a significant
portion of its convertible debentures (see Note 2). During 1996, certain Series
A Preferred stockholders converted 58,528 shares of preferred stock to 351,168
shares of common stock.
F-12
<PAGE>
(6) NOTES PAYABLE
At December 31, 1996, notes payable consisted of the following:
Loan agreement with a bank, interest at
prime (8.25 percent at December 31, 1996)
plus 1.25 percent (see discussion below) $422,500
Less current portion (50,000)
--------
$372,500
========
During September 1995, the Company entered into a loan agreement with a bank.
The loan agreement provided for the Company to borrow up to a maximum amount of
$500,000 through October 22, 1995. Subsequent to that date, no further advances
were available and repayments are due in quarterly principal installments of
$12,500 plus accrued interest beginning November 22, 1995. The loan agreement is
secured by the Company's royalty stream from Johnson and Johnson and a personal
guarantee from and real estate owned by the Company's chief executive officer
and president. The entire unpaid principal and interest balance is due in full
on August 1, 1998.
As of December 31, 1996, the scheduled principal maturities of notes payable are
as follows:
Year Ending December 31,
1997 $ 50,000
1998 372,500
--------
$422,500
========
(7) COMMITMENTS
Operating Lease
During 1995, the Company entered into a one-year, noncancelable operating lease
for office space. Total rent expense for office space during 1996 and 1995 was
$16,019 and $6,325, respectively. The lease expired in June 1996 and at December
31, 1996 the lease continues on a month-to-month basis.
(8) RELATED-PARTY TRANSACTIONS
On November 6, 1995, the Company purchased certain technology that enhanced the
Company's existing development efforts with respect to its Non-Invasive
Hematocrit Technology from two individuals, one of whom was a principal
stockholder of the Company. The technology acquired was accounted for as
purchased research and development and expensed. Of the $200,000 purchase price,
$98,000 was paid in cash at closing and a promissory note was signed for the
remaining $102,000 payable in four equal installments beginning January 16,
1996. The note was paid in full during 1996.
F-13
<PAGE>
During 1996 and 1995, the Company paid interest on the related-party convertible
debentures in the amounts of $569 and $45,821, respectively.
(9) EXTRAORDINARY GAIN FROM EXTINGUISHMENT OF DEBT
During 1995, the Company settled certain payroll liabilities which had been
accrued in prior years and recognized an extraordinary gain of approximately
$170,000. Additionally, the Company recognized an extraordinary gain of
approximately $28,000 on the settlement of amounts owed under certain
convertible debentures (see Note 2).
F-14
<PAGE>
Item 8. Disagreements With Accountants on Accounting and Financial Disclosures.
There have been no changes in or disagreements with accountants on accounting
and financial disclosure, as provided in Regulation S-B, Item 304.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors and Executive Officers of InMedica. The following table furnishes
information concerning the executive officers and directors of InMedica and
their business backgrounds for at least the last five years.
Name Age Director Since
---- --- --------------
Larry E. Clark 75 1995
John R. Merendino 58 1995
David L. Dingman 60 1995
Richard Bruggeman 42 1995
LARRY E. CLARK - Chairman, Principal Executive Officer and Director of
InMedica. Mr. Clark was president of Clark-Knoll & Associates, Inc., a Denver,
Colorado management consulting firm specializing in mergers and acquisitions
from 1963 to 1969. He served as president of Petro-Silver, Inc., a small public
company based in Salt Lake City, Utah, which engaged in the oil and gas business
from 1970 to 1975. From 1975 to 1981 Mr. Clark was president of Larry Clark &
Associates, a private company which engaged in a corporate mergers and
acquisitions business. In 1981, Mr. Clark formed Hingeline-Overthrust Oil & Gas,
Inc., a Utah public company, which merged with Whiting Petroleum Corporation of
Denver, Colorado in December 1983. Mr. Clark served as a director of Whiting
Petroleum from 1983 until 1992 when Whiting Petroleum merged with IES Industries
and Mr. Clark returned to full time employment as president of Larry Clark &
Associates. He is presently also president, principal shareholder and director
of The Bud Financial Group, Inc., an inactive public company. Mr. Clark
graduated from the U.S. Merchant Marine Academy with a degree in Naval Science
in 1943 and received a degree in Business Administration from the University of
Wyoming in 1948.
JOHN R. MERENDINO, M.D. - Director and Nominee for Director of InMedica.
Dr. Merendino obtained a D.A. in chemistry from Lafayette College, Pennsylvania
in 1960 and an M.D. degree from New Jersey College of Medicine and Dentistry in
12
<PAGE>
1964. He completed his internship and residency at Monmouth Medical Center in
New Jersey. From 1976 to 1984 he was an Associate Clinical Professor at the
University of Utah School of Medicine. He also served as a member of the
residency committee of the University of Utah School of Medicine from 1978 to
1984. He was Chairman of the Division of Orthopedics at Holy Cross Hospital,
Salt Lake City, Utah from 1977 to 1984 and Chairman (or Chairman elect) of the
Department of Surgery, Holy Cross Hospital. Since 1984, he has been engaged in
private practice in Orthopedics and Sports Medicine. He also acts as an
independent consultant to the Honolulu Athletic Club, Alta View Sports Medicine
Clinic and Diversified Tech Inc. He is also a Director of the Snowbird Clinic,
physician to the U.S. Ski Team and a member of the Board of Advisors to Nautilus
Physical Fitness Centers. He previously served as the Team Physician to the Salt
Lake Golden Eagles and the Salt Lake Gulls, professional sports teams.
DAVID L. DINGMAN, M.D. - Director of the Company. Dr. Dingman is a
Professor of Surgery, Emeritus, at the University of Utah Medical Center. He was
Associate Professor and Professor of Surgery from 1989-1993. He was an Attending
Staff Surgeon at the Veterans Administration Medical Center, Salt Lake City,
Utah from 1984-1989. He also served as Chairman of the Department of Surgery at
Holy Cross Hospital in Salt Lake City, Utah from 1986-1989 and as Chairman of
the Department of Plastic Surgery at Holy Cross Hospital from 1982-1985. From
1972-1989 he was a Clinical Associate Professor of Surgery at the University of
Utah Medical Center. He graduated in pre-med from Dartmouth College in 1957 and
received his M.D. degree from the University of Michigan in 1961.
RICHARD BRUGGEMAN - Director and Secretary/Treasurer and Chief Financial
Officer of the Company. Since 1993, he has been employed as Controller of
Kitchen Specialties, Inc., a Salt Lake City firm distributing kitchen appliances
in the United States and Canada. From 1986 until 1993 he was employed by the
Company's subsidiary, MicroCor, Inc. as financial manager. During the period
1983-1985, he was a sole practitioner in accounting and from 1981-1983 he was
employed by the Salt Lake City public accounting firm of Robison Hill & Co. He
graduated from the University of Utah in 1981 with a B.S. degree in accounting.
Each director serves until the next annual meeting of shareholders or
until a successor is elected and qualified. Officers serve at the pleasure of
the board of directors.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of equity securities of the Company. Officers, directors and greater
13
<PAGE>
than ten percent shareholders are required to furnish the Company with copies of
all Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company, during the fiscal
year ended December 31, 1995 all Section 16(a) filing requirements applicable to
officers, directors and greater than ten percent shareholders were complied
with.
Item 10. Executive Compensation.
Executive Compensation. No executive officer of the Company has received
compensation during the three fiscal years ended December 31, 1996, except as
disclosed in the table below:
<TABLE>
<CAPTION>
Annual Compensation
Long Term
Compensation Awards
Name Year Salary Bonus Common Stock underlying Options Other
---- -------- ----- ------------------------------- -----
<S> <C> <C> <C> <C> <C>
Larry E. Clark (CEO) 1996 $ 39,000* - - -
Larry E. Clark (CEO) 1995 $ - - 450,000** -
Allan L. Kaminsky (CEO) 1994 $ - - - -
</TABLE>
*accrued in 1996 and paid in January 1997.
**600,000 options were originally granted, but subsequently were reduced to the
figure shown
Director Compensation. Directors may be compensated at the rate of $100
for attendance at each board meeting, but did not receive compensation for
meetings attended in 1996 and 1995. The Board of Directors granted non-qualified
stock options to Directors Clark, Merendino and Bruggeman to purchase 100,000
shares each of common stock of the Company for $.30 per share exercisable for a
period of 10 years. The options are immediately exercisable and become
non-forfeitable after each director has completed one year of service and
thereafter are not cancelled if the Director leaves the service of the Company.
The Board of Directors also granted a similar option to Director Dingman,
exercisable at $.385 per share. The options were reduced to 75,000 each
effective August 1, 1996.
Compensation Committee Interlocks and Insider Participation. Compensation
of officers and employees is determined by the Board of Directors. Mr. Larry E.
Clark, chief executive officer, is chairman of the Board of Directors.
Other Compensation Plans. See Note 4 to the financial statements for
information regarding the Company's Stock Incentive Plan, Formula Stock Option
Plan and Other Stock Options.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
% of Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted FY 1995 ($/Share) Date
---- ------- ------------ --------- ----
None
14
<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of In-The-Money
Unexercised Options Options at Fiscal
Shares at Fiscal Year End Year End2
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
------------ ------------ ------------------- --------------------
Larry E.
Clark 0 0 450,000/0 $315,000/0
Richard
Bruggeman 0 0 208,167/0 $145,717/0
The Company presently has no plan for the payment of any annuity or
pension retirement benefits to any of its officers or directors, and no other
remuneration payments, contingent or otherwise, are proposed to be paid in the
future to any officer or director, directly or indirectly.
- --------
2 - Fiscal year ended December 31, 1996. The average high and low bid price
of the Company's stock that day on the over the counter market was approximately
$.70. "In the money" options are exercisable at less than the fair market value
of the stock.
15
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table furnishes information concerning the common stock
ownership of directors, officers, and principal shareholders as of March 17,
1997:
Nature of Number of
Name and Position Ownership Shares Owned Percent
----------------- --------- ------------ -------
Larry E. Clark Direct 1,143,000 14.3%
Chairman, CEO Options 450,000
---------
Total 1,593,000 18.9%
=========
Allan L. Kaminsky* Direct 798,875 9.9%
4602 S. Fortuna Way Options 0
---------
S.L.C., Utah 84124 Total 798,875 9.9%
=========
Paul J. Diehl* Direct & Indirect 719,2303 9.0%
2963 E. Fallentine Rd.
Sandy, Utah 84092
John R. Merendino Options 75,000 0.9%
Director
David L. Dingman Options 75,000 0.9%
Director
Richard Bruggeman Direct & Indirect 72,7204 0.9%
Director, Chief Options 208,167
Financial Officer Total 280,887 3.4%
=========
All Executive Officers Direct & Indirect 1,351,167 16.9%
and Directors as a Options 808,167
---------
group (4 persons) Total 2,159,334 24.5%
=========
* Principal Shareholder
Shares shown in the forgoing table as directly owned are owned beneficially
and of record, and such record shareholder has sole voting, investment, and
- --------
3 Includes 639,599 shares held by the Paul J. Diehl, M.D. P.C. profit
sharing plan, one share held by Paul J. Diehl, P.C. and 79,630 shares held by
Dr. Diehl as custodian for his wife's daughter, Shanon.
4 - includes 400 shares held in individual retirement accounts and 4,620
shares held in a family trust of which Mr. Bruggeman is Trustee.
16
<PAGE>
dispositive power. Percentages calculated for totals in the foregoing table
assume the exercise of options included in such totals.
Item 12. Certain Relationships and Related Transactions.
See "Bank Loan" for a description of a transaction between the Company's
President, Larry E. Clark, and the Company.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. S-K No. Description
(3) Articles of Incorporation and Bylaws incorporated by
reference to the exhibits to Form 10-K for the year
ended December 31, 1983
(3) Articles of Amendment to the Articles of Incorporation
of the Company changing the Company's name to "InMedica
Development Corporation" incorporated by reference to
Exhibit 1 to Form 10-K for the year ended December 31,
1984
(4) Articles of Amendment, dated June 16, 1995 to the
Articles of Incorporation of the Company adopting a
class of Preferred Stock, incorporated by reference to
Exhibit 1 to Form 10-QSB for the period ended September
30, 1995
(4) Articles of Amendment, dated September 25, 1995 to the
Articles of Incorporation of the Company adopting a
Series A Preferred Stock, incorporated by reference to
Exhibit 2 to Form 10-QSB for the period ended September
30, 1995
(10) Agreement between MicroCor, Inc. and Johnson & Johnson
Medical, Inc. dated June 15, 1995, incorporated by
reference to Form 8-K dated June 30, 1995
(10) Settlement Agreement between Eric Welling and InMedica
Development Corporation dated September 27, 1995,
incorporated by reference to Exhibit 3 of Form 10-QSB
for the quarter ended September 30, 1995
17
<PAGE>
(10) Settlement Agreement between Clint Newman and InMedica
Development Corporation dated September 25, 1995 and
Addendum, incorporated by reference to Exhibit 4 of Form
10-QSB for the quarter ended September 30, 1995
(10) Settlement Agreement between J. Lynn Smith and InMedica
Development Corporation dated September 25, 1995 and
Addendum, incorporated by reference to Exhibit 5 of Form
10-QSB for the quarter ended September 30, 1995
(10) Commercial Security Agreement of Larry E. Clark and
InMedica Development Corporation, incorporated by
reference to Exhibit 6 of Form 10-QSB for the quarter
ended September 30, 1995
(10) Purchase and Settlement Agreement between InMedica
Development Corporation, Paul J. Diehl, and Paul W.
Ruben dated November 6, 1995, incorporated by reference
to Exhibit 7 of Form 10-QSB for the quarter ended
September 30, 1995
(10) Settlement Agreement and Mutual Release between Paul J.
Diehl and InMedica Development Corporation dated
December 28, 1995, incorporated by reference to Exhibit
1 of Form 10K-SB for the year ended December 31, 1995
(10) Commercial Security Agreement dated September 15, 1995,
of Larry E. Clark and InMedica Development Corporation
as Borrowers and First Interstate Bank of Utah, N.A. as
Lender incorporated by reference to Exhibit 2 of Form
10K-SB for the year ended December 31, 1995
(10) Promissory Note of Larry E. Clark and InMedica
Development Corporation to First Interstate Bank of
Utah, N.A. dated August 22, 1995 incorporated by
reference to Exhibit 3 of Form 10K-SB for the year ended
December 31, 1995
(10) Conversion Agreement of InMedica Development Corporation
and Randall J. Olsen, M.D. dated as of April 1, 1996
incorporated by reference to Exhibit 5 of Form 10K-SB
for the year ended December 31, 1995
(10) Conversion Agreement of InMedica Development Corporation
and Les Berthy dated as of April 1, 1996 incorporated by
18
<PAGE>
reference to Exhibit 6 of Form 10K-SB for the year ended
December 31, 1995
(10) Conversion Agreement of InMedica Development Corporation
and Donald Hodurski dated as of April 10, 1996
incorporated by reference to Exhibit 7 of Form 10K-SB
for the year ended December 31, 1995
(10) Conversion Agreement between InMedica Development
Corporation and Clinton B. Newman dated April 23, 1996,
incorporated by reference to Exhibit 1 of Form 10Q-SB
for the quarter ended March 31, 1996.
(10) Conversion Agreement between InMedica Development
Corporation and J. Lynn Smith dated June 11, 1996,
incorporated by reference to Exhibit 1 of Form 10Q-SB
for the quarter ended June 30, 1996.
(10) Agreement dated September 3, 1996 between InMedica
Development Corporation and Paul Ruben dba Ruben
Engineering and Calvin Ruben, incorporated by reference
to the Exhibits to Form 8-K dated September 20, 1996.
(10) Form of conversion agreement executed by eight Preferred
stockholders (L. Gene Tanner, Barbara M. Coble, Karilyn
R. Moores, Paul Chase, Roger D. Chase, Trustee, Kenneth
J. Wool, C.U. Partners, and Perry Lane) during October
1996 to convert Series A preferred to common stock of
the Company, incorporated by reference to the Exhibits
of Form 10QSB for the Quarter ended September 30, 1996.
(11) Statement regarding Computation of Per Share Loss (see
Consolidated Statements of Operations for the years
ended December 31, 1996 and 1995
(21) Subsidiaries of the Company (MicroCor, Inc., a Utah
corporation)
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 1996.
19
<PAGE>
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.
INMEDICA DEVELOPMENT CORPORATION
By /s/ Larry E. Clark
--------------------------------
LARRY E. CLARK, President
/s/ Richard Bruggeman
--------------------------------
Date: April 11, 1997 RICHARD BRUGGEMAN,
-------- Chief 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.
/s/ Larry E. Clark
-------------------------------
April 11, 1997 LARRY E. CLARK
- -------- Director
President and Principal
Executive Officer
/s/ John R. Merendino
-------------------------------
April 11, 1997 JOHN R. MERENDINO
- -------- Director
/s/ Richard Bruggeman
-------------------------------
April 11, 1997 RICHARD BRUGGEMAN
- -------- Director
/s/ David L. Dingman
-------------------------------
April 11, 1997 DAVID L. DINGMAN
- -------- Director
20
<PAGE>
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.
1
<PAGE>
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.
2
<PAGE>
Page 2 of 2
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31,
1997
-------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of note
payable $ 50,000
Accrued interest 7,959
Accounts payable 1,003
Accrued payroll 792
----------
Total current liabilities 59,754
----------
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
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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
<PAGE>
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
7
<PAGE>
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
8
<PAGE>
Robert Gail Billings, age 63, to conduct research and development on its
hematocrit 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
<PAGE>
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
---------------------------
Larry E. Clark, CEO
By
---------------------------
Richard Bruggeman, Treasurer
10
