U.S. SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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Form 10 - QSB
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Quarterly Report Under Section 13 or 15 (d)
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of the Securities Exchange Act of 1934
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For the Quarterly Period Ended March 31, 1999
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Commission File No. 0-12968
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INMEDICA DEVELOPMENT CORPORATION
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(Exact name of small business issuer as specified in its charter)
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Utah 87-0397815
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation of organization) Number)
825 North 300 West
Salt Lake City, Utah 84103
(Address of principal executive offices)
Registrant's telephone number:
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(801) 521-9300
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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 1, 1999 was 8,660,899 shares.
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
March 31,
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1999
(Unaudited)
CURRENT ASSETS:
Cash $ 28,065
Prepaid expenses 12,037
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Total current assets 40,102
EQUIPMENT AND FURNITURE,
at cost, less accumulated
depreciation of $251,635 1,354
OTHER ASSETS 2,196
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Total assets $ 43,652
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See notes to condensed consolidated financial statements.
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31,
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1999
(Unaudited)
CURRENT LIABILITIES:
Consulting fee payable to
related party $ 64,995
Note payable to
related party 145,000
Accounts payable 87
Accrued payroll 792
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Total current liabilities 210,874
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STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value;
20,000,000 shares authorized,
8,660,899 issued and outstanding 8,661
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 6,835,840
Accumulated deficit (7,125,825)
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Total stockholders'
deficit (167,222)
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Total liabilities and
stockholders' deficit $ 43,652
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See notes to condensed consolidated financial statements.
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three
Months Ended
March 31,
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1999 1998
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(Unaudited)
TOTAL OPERATING REVENUES $ -0- -0-
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OPERATING EXPENSES:
General and
administrative 37,789 70,964
Research and
development 2,002 66,358
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Total operating expenses 39,791 137,322
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LOSS FROM OPERATIONS (39,791) (137,322)
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OTHER INCOME (EXPENSE):
Miscellaneous income 146 595
Interest expense (3,172) (3,214)
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Total other expense (3,026) (2,619)
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NET LOSS (42,817) (139,941)
PREFERRED STOCK DIVIDEND (2,282) (2,282)
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NET LOSS APPLICABLE TO
COMMON SHARES $ (45,099) $ (142,223)
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Net loss per common share
(basic and diluted) $ (.01) $ (.02)
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Weighted average number
of common shares outstanding 8,660,899 8,550,899
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See notes to condensed consolidated financial statements.
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
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1999 1998
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (42,817) $(139,941)
Adjustments to reconcile net
loss to net cash used in
operating activities-
Depreciation 217 216
Expense related to stock options
issued as compensation for
services - 22,250
Change in assets and liabilities-
Decrease in royalties receivable 45,920 67,200
Decrease in prepaid
expenses 4,750 5,000
Increase in consulting fee payable
to related party 12,999 12,999
Decrease (increase)in accounts
payable (29,011) 6,495
Decrease in accrued payroll (276) (6,152)
Decrease in interest payable - (1,538)
Decrease in related-party
payable - (25,000)
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Net cash used in
operating activities (8,218) (58,471)
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See notes to condensed consolidated financial statements.
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INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
INCREASE (DECREASE) IN CASH
For the Three
Months Ended
March 31,
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1999 1998
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(Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred stock dividends paid $ (2,282) $ (2,282)
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Net cash used in financing activities (2,282) (2,282)
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NET DECREASE IN CASH (10,500) (60,753)
CASH AT BEGINNING OF PERIOD 38,565 138,429
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CASH AT END OF PERIOD $ 28,065 $ 77,676
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See notes to condensed consolidated financial statements.
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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 only of normal
recurring adjustments) considered necessary for fair presentation have been
included. Operating results for the three-month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements included in the Company's Form 10-KSB for the year ended
December 31, 1998.
Royalties received from the Johnson and Johnson agreement are presently the
Company's sole source of revenue and the royalty is expected to terminate during
1999. The Company generated a net loss from operations of $39,791 during the
period ended March 31, 1999 and as of March 31, 1999, the Company had an
accumulated deficit of $7,125,825 and negative working capital of $170,772.
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. The Company has presently scheduled
several demonstrations of its technology to potential strategic partners,
although it has no commitments to partner in the development of the technology.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the years ended December 31, 1998 and 1997, liquidity was generated
from royalty income received from Johnson and Johnson Medical, Inc. ("JJMI").
This income is expected to terminate during 1999. InMedica continues to look for
other funding sources but as of the date of this filing, it has no commitments.
For the three months ended March 31, 1999, no operating revenues were
recognized. The Company's revenue recognition policy requires sales information
upon which the royalties are calculated to have been received from JJMI and that
cash receipts are assured prior to recording revenue.
The royalty agreement with JJMI has been pledged to secure repayment of the
$145,000 related party note payable. Funds expended to develop other potential
assets of the Company such as a 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 a stockholders' deficit of $ 167,222 and an accumulated
deficit of $7,125,825 as of March 31, 1999. In order for InMedica to continue
research and development activities, it will require additional financing, for
which it has no commitments. See Liquidity and Capital Resources for an
explanation of why no revenues were recognized in the first quarter of 1999.
The loss from operations of $39,791 for the quarter ended March 31, 1999
compared to $137,322 for the quarter ended March 31, 1998 resulted from general
and administrative expenses ($37,789) and research and development expenses
($2,002) being incurred while at the same time there were no revenues. Research
and development expense was minimal as the decline in royalty income limited
available cash during the quarter. General and administrative expense decreased
by 47% compared to the same period o the prior year, which had included $22,250
of expense related to stock options issued as non-cash compensation.
The Company does not expect that its own operations will be directly
affected by the Year 2000 computer issue ("Y2K"), however the Company is unable
to forecast any indirect adverse effect of computer or other device malfunction
related to Y2K on the medical technology industry and the business of potential
strategic partners. The Company has contacted JJMI and Medical Physics and has
been assured that they are acting responsibly to avoid any adverse impact on
their ability to conduct their operations due to the Y2K issue.
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PART II - OTHER INFORMATION
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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: None
Item 6. Exhibits and Reports on Form 8-K:
Exhibits: 1 Financial Data Schedule
Form 8-K: None
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SIGNATURES
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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, 1999
By /s/Larry E. Clark
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Larry E. Clark, CEO
By /s/Richard Bruggeman
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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
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1 (27) Financial Data Schedule
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 28605
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40102
<PP&E> 252989
<DEPRECIATION> (251635)
<TOTAL-ASSETS> 43652
<CURRENT-LIABILITIES> 210874
<BONDS> 0
0
114102
<COMMON> 8661
<OTHER-SE> (289985) <F1>
<TOTAL-LIABILITY-AND-EQUITY> 43652
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 39791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3172
<INCOME-PRETAX> (42817)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42817)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42817)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<FN>
<F1>
Additional paid in capital and retained earnings.
</FN>
</TABLE>
