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| WGEI.OB > SEC Filings for WGEI.OB > Form 10-Q on 15-Aug-2011 | All Recent SEC Filings |
15-Aug-2011
Quarterly Report
Overview
InMedica Development Corporation ("InMedica" or the "Company") was incorporated as a Utah corporation on June 16, 1983. On December 4, 2009, a majority of the Company's shareholders executed a consent resolution to amend the Company's Articles of Incorporation to change the Company's name to WindGen Energy, Inc. ("WindGen" or the "Company") and to increase the number of authorized common stock shares from 40,000,000 to 100,000,000. A Certificate of Amendment for such amendments was filed by the Company with the Secretary of State of Utah effective on December 16, 2009. The name change and the new trading symbol, "WGEI," were approved by FINRA on March 16, 2010.
Plan of Operation
In January 2008, the Company's plan of operation was to continue to work cooperatively with MicroCor and Wescor in the development of the Company's portable Hematocrit device. In late 2008, Wescor ceased all research and development efforts on the Hematocrit technology. During 2008, the Company funded administrative operations with the proceeds of minimum royalty payments from MicroCor and from loans from the Company's officers and Directors. These minimum payments to the Company from MicroCor have ceased. On June 24, 2010, the Company entered into an agreement with MicroCor, Chi Lin and Wescor, whereby the Company transferred 230,000 shares of MicroCor common stock owned by the Company to Wescor, reducing the Company's holdings in MicroCor from 1,700,000 common shares to 1,470,000 common shares. The Company's percentage of ownership of MicroCor was reduced from approximately 57% to 49%. Since the Company's ownership percentage is below 50%, MicroCor's financial statements are no longer consolidated with the Company's financial statements. Development of the Hematocrit device remains dormant but has not been abandoned.
New Company Focus: Wind Energy
With new management, we have refocused the Company on wind energy devices. On April 17, 2009, we entered into a license agreement (the "License") with Wind Sail Receptor, Inc. of Boulder City, Nevada ("WSR"), pursuant to which we were granted the exclusive license to assemble and market WSR's wind sail receptor energy generation devices using blades of 15 feet or less in length in the United States, Canada, the United Kingdom and Ireland, with nonexclusive rights in the rest of the world except Latin America and the Caribbean. Under the License, we must acquire 100 blades from WSR during the first year after WSR is able to manufacture the blades. WSR is currently in the final stages of selecting the electrical generator that it will connect to the WSR wind turbine blade.
During 2010, the Company issued 1,900,000 shares of the Company's restricted common stock to WSR in consideration of amending its License. The proposed amendment to the License Agreement currently in existence between the Company and WSR has not yet been executed. The reasons are various and include, but are not limited to, finalizing details regarding the need for the Company to be involved in assembly of the wind turbines in various license territory outside the US, final pricing that the units will be sold by WSR to the Company, final terms of the product Warranty to be provided by WSR, and possible additional exclusive territory added to the License. Under the terms of the existing License, the Company intended to use its best efforts to obtain Federal, State, Local, or Private Grant Funds and to share these Grant Funds with WSR up to a sum of $1,000,000. To date the Company has not been successful in obtaining Grant Funds. The proposed amendment also could result in altering the various financial dealings between the two companies. No monetary disputes currently exist between the two companies. WSR is hopeful that it will begin production of complete wind turbine systems during the fourth quarter of 2011. WSR is currently in the process of finalizing its supply chain relationships for the production of the wind turbine generator/alternator system with various suppliers in China. The wind turbine blade will be made in Nevada USA. WSR still anticipates that the six foot diameter small wind turbine will be available to WindGen in the fourth quarter of this year. WindGen is currently beginning to finalize its distribution network for the Western US.
We anticipate our first three wind turbine products will have blade diameters of 3, 6 and 12 feet with towers from 25 to 75 feet in height. The first unit to be offered in the market place will be the six foot blade diameter unit. We are currently negotiating terms for the formation of the working capital required to bring our first products to market at some point during the fourth quarter of 2011. The progress of the Company in marketing its new small wind turbine products is dependent on obtaining additional capital.
Assembly and Marketing
To date during 2011, WSR has been developing a well-organized approach to the manufacturing/assembly process to assure high-quality, rapid-development cycles and overall competiveness. The Generator/Alternators will be manufactured by Ginlong Technologies Inc, an experienced wind turbine generator manufacturer located in China. WSR will also be responsible for the manufacture of the critical blade component at its plant near Boulder City, Nevada. At this time suppliers have been located for all of the non-blade components for our products.
To launch into the important rural small wind turbine market in the central wind belt and the western part of the United States (our initial marketing objective), we hope to join forces with some excellent partners and distributorships. We intend to recruit existing well established wind turbine distributors currently representing our competitors. In addition, we are currently in contact with various major name brand farm equipment dealers who have a well-established rural network of dealers throughout America, all with the ability to provide excellent sales, installation, and maintenance services. We also plan to sell distributorships to other existing service-oriented organizations such as cell tower installers.
We are currently in the process of finalizing our six foot diameter wind turbine that should be available during the fourth quarter of 2011. Subject to availability of adequate capital, product roll out could follow quickly in the central wind belt and the western part of the United States.
Results of Operations
The Company had an accumulated deficit of $9,561,305 as of June 30, 2011. No revenues from operations were received during the three and six months ended June 30, 2011 and 2010. The Company had a net loss from continuing operations of $107,521 for the quarter ended June 30, 2011, compared to a net loss from continuing operations of $78,057 for the quarter ended June 30, 2010. The increase in net loss from continuing operations resulted primarily from increased General and Administrative Expenses and Related Party Consulting Fees. These types of expenses will continue to increase, subject to available funding, as we continue with our business plan.
The Company had a net loss from continuing operations for the six months ended June 30, 2011 of $199,541, as compared to a net loss from continuing operations of $161,776 for the six month period ended June 30, 2010. The increase in the net loss from continuing operations resulted primarily from increased General and Administrative Expenses and Related Party Consulting Fees. These types of expenses will continue to increase in the future, subject to available funding, as we continue our business plan.
Liquidity and Capital Resources
During the second quarter of 2011, we sold 477,333 shares of restricted common stock for total gross proceeds of $35,800. See "Part II, Item 2, Unregistered Sale of Equity Securities and Use of Proceeds" below.
On October 21, 2010, the Company borrowed $50,000 from a third party (the "8% Note Holder"). The note is due on July 21, 2011 and carries an interest rate of 8% per annum (the "8% Note"). The 8% Note is convertible after six months at a conversion price of 55% of the market price of the common stock. On April 25, 2011, the note holder converted $10,000 of its note to 227,273 shares of common stock pursuant to the conversion formula of the note. On May 4, 2011, the note holder converted $10,000 of its note to 246,914 shares of common stock pursuant to the conversion formula of the note. On May 11, 2011, the note holder converted $10,000 of its note to 278,552 shares of common stock pursuant to the conversion formula of the note. On June 24, 2011, the note holder converted $12,000 of its note to 476,190 shares of common stock pursuant to the conversion formula of the note. At June 30, 2011, the balance due on this note was $10,000, made up of $8,000 in principal and $2,000 in interest.
On June 30, 2011, the Company borrowed $25,000 from a third party (the "10% Note Holder"). The note is due 120 days from the date of the note and carries an interest rate of 10% per annum (the "10% Note"). In addition to the 10% interest factor, the 10% Note Holder will receive 100,000 shares of the Company's restricted common stock.
The Company's independent registered public accounting firm has issued a going concern opinion on the Company's consolidated financial statements for the year ended December 31, 2010. See Note 1 to the financial statements. The Company's liquidity shortage will continue through the fourth quarter of 2011. The Company is currently negotiating terms for a new equity line of credit to be used in conjunction with the registration of shares of common stock to be issued by the Company in order to form new capital of up to $7,000,000 over twenty-four months from the effective date of an S-1 Registration Statement in order to implement its business plan in 2011 and 2012.
Implementation of our new business to market wind turbines is contingent upon our ability to acquire new capital in 2011. We currently estimate we will need to generate approximately $3,500,000 of new capital during the remainder of 2011 and first half of 2012 in order to fully implement the Company's business plan. We also estimate $2,000,000 of new capital would permit us to implement enough of our plan to commence minimal marketing of our wind turbine units in fourth quarter of 2011 and first quarter of 2012.
We intend to acquire new capital during 2011 through the sale of equity or convertible debt or a combination of both in one or more private placements. Presently, we have no final agreement or understanding with any underwriter, investment banker or investor for any financing. There is no assurance we will be able to complete any substantial financing in the future.
Subsequent Events
The lease for the Company's office premises located at 14550 N. Frank Lloyd Wright Blvd., Suite 100, Scottsdale, Arizona 85260 expired on July 31, 2011. The Company's new office address is 8432 E. Shea Blvd., Suite 101, Scottsdale, Arizona 85260. The Company's phone/fax numbers remain unchanged.
On July 5, 2011, the 8% Note Holder converted the remaining $10,000 balance of its note to 393,701 shares of common stock pursuant to the conversion formula of the note. The remaining balance was made up of $8,000 in principal and $2,000 in interest. The note holder agreed to a flat fee of $2,000 for interest and has declared the note paid in full.
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