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 September 30, 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 N. 300 West, Salt Lake City, Utah 84103
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(Address of principal executive offices)
Registrant's telephone number including area code (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 Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days:
Yes X No
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The number of shares outstanding of the Registrant's only class of common stock,
par value $.001 per share, as of November 8, 1999 was 8,660,899 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
As of
September 30,
1999
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(Unaudited)
CURRENT ASSETS:
Cash $ 6,064
Prepaid expenses 2,537
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Total current assets 8,601
EQUIPMENT AND FURNITURE,
at cost, less accumulated
depreciation of $252,067 922
OTHER ASSETS 2,196
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Total assets $11,719
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See notes to condensed consolidated financial statements.
3
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30,
1999
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(Unaudited)
CURRENT LIABILITIES:
Note payable to related party $ 156,250
Consulting fee payable
to related party 98,993
Accrued payroll 792
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Total current liabilities 256,035
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STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value;
20,000,000 shares authorized,
8,660,899 shares 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 outstanding 114,102
Additional paid-in
capital 6,835,840
Accumulated deficit (7,202,919)
Total stockholders'
deficit (244,316)
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Total liabilities and
stockholders' deficit $ 11,719
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See notes to condensed consolidated financial statements.
4
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
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1999 1998 1999 1998
(Unaudited) (Unaudited)
ROYALTY REVENUES $ 16,800 $ 99,680 $ 44,320 $ 167,040
--------- --------- --------- ----------
OPERATING EXPENSES:
General and administrative 28,046 30,502 103,174 147,634
Research and development 10,689 87,495 50,851 243,137
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Total operating expenses 38,735 117,997 154,025 390,771
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LOSS FROM OPERATIONS (21,935) (18,317) (109,705) (223,731)
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OTHER (EXPENSE) INCOME:
Miscellaneous income 746 - 4,040 -
Interest income 4 167 218 1,150
(3,242) (3,242) (9,899) 9,663)
Interest expense
Total other expense, net (2,492) (3,075) (5,641) (8,513)
NET LOSS (24,427) (21,392) (115,346) (232,244)
PREFERRED STOCK DIVIDENDS (2,283) (2,283) (6,847) (6,846)
--------- --------- --------- ----------
NET LOSS APPLICABLE
TO COMMON SHARES $ (26,710) $ (23,675) $(122,193) $(239,090)
========= ========= ========= ==========
NET LOSS PER
COMMON SHARE (BASIC AND
DILUTED) $ (.00) $ (.00) $ (.01) $ (.03)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 8,660,899 8,550,899 8,660,899 8,550,899
========= ========= ========= =========
See notes to condensed consolidated financial statements.
5
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE)IN CASH
For the Nine Months Ended
September 30,
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1999 1998
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(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(115,346) $(232,244)
Adjustments to reconcile net
loss to net cash provided
by (used in) operating activities-
Depreciation 649 648
Expense related to stock options
issued as compensation for services -- 77,835
Changes in assets and liabilities -
Decrease in royalties receivable 45,920 67,200
Decrease in prepaid expenses 14,250 14,999
Increase in consulting fees payable
to related party 46,997 17,332
(Decrease) increase in
accounts payable (29,098) 19,158
(Decrease) increase in accrued
payroll (276) 15,848
Decrease in interest payable -- (4,752)
Increase (decrease) in related
party payable 11,250 (25,000)
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Net cash used in operating
activities (25,654) (48,976)
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See notes to condensed consolidated financial statements.
6
<PAGE>
INMEDICA DEVELOPMENT CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Nine Months Ended
September 30,
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1999 1998
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(Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred stock dividends paid $ (6,847) $ (6,847)
Net cash used in financing
activities (6,847) (6,846)
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NET DECREASE IN CASH (32,501) (55,822)
CASH AT BEGINNING OF THE PERIOD 38,565 138,429
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CASH AT END OF THE PERIOD $ 6,064 $ 82,607
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See notes to condensed consolidated financial statements.
7
<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 condensed 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 and nine-month periods ended September
30, 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 Medical, Inc. agreement are the
Company's sole source of revenue and the Company has been advised that the
royalty is expected to terminate during the current year. The Company generated
a net loss of $115,346 during the nine-month period ended September 30, 1999 and
as of September 30, 1999, the Company had an accumulated deficit of $7,202,919.
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.
8
<PAGE>
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.
The royalty agreement with JJMI has been pledged to secure repayment of a
$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. The Company intends to rely upon private
sources for loans, if necessary, to meet its obligations as the come due.
Results of Operations
InMedica has a stockholders' deficit of $ 244,316 and an accumulated
deficit of $7,202,919 as of September 30, 1999. In order for InMedica to
continue research and development activities, it will require additional
financing, for which it has no commitments.
The net loss from operations of $109,705 for the nine months ended
September 30, 1999 was about half that experienced in the comparable period of
the prior year. Comparison of the two periods indicates that revenues declined
from $167,040 to $44,320 while total operating expenses declined from $390,771
to 154,025. As revenues have declined, the Company has curtailed general and
administrative expenses by approximately $44,000 and has decreased expenditures
for research and development by about $192,000 when compared to the period ended
September 30, 1998.
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<PAGE>
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.
<PAGE>
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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<PAGE>
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
/s/ Larry E. Clark
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By Larry E. Clark, Chief Executive
Officer
/s/ Richard Bruggeman
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Date: November 11, 1999 By Richard Bruggeman, Chief
Financial Officer
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<PAGE>
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> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 6064
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8601
<PP&E> 252989
<DEPRECIATION> (252067)
<TOTAL-ASSETS> 11719
<CURRENT-LIABILITIES> 256035
<BONDS> 0
0
114102
<COMMON> 8661
<OTHER-SE> (367079)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 11719
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 38735
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3242
<INCOME-PRETAX> (24427)
<INCOME-TAX> 0
<INCOME-CONTINUING> (24427)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24427)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
<FN>
<F1>
Additional paid in capital and retained earnings.
</FN>
</TABLE>
