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Microcap & Penny Stocks : IMDS nasdaq bulletin board -- Ignore unavailable to you. Want to Upgrade?

To: Dan O who wrote (3470)	8/19/1999 2:03:00 AM
From: Dan O	Read Replies (1) \| Respond to of 4122

Other concerns: On the promotional videotape, Deb Obrien allegedly claimed that "we are successfully examining other soft tissue areas in the body with CT laser techniques, including neonatal imaging and colerectal scanning." During the interview with Skolnick, Grable apparently admitted that they have not imaged such areas. Given that such promotional material is used by investors to make decisions, the statements appear to be damaging and irresponsible. It appears as if overly aggressive statements regarding the timing of FDA approval have been made by the company in the past. In the 1996 annual report, Grable stated "Sometime in 1997 we expect to file a pre-market application based on the test results of 400-600 cases; this application should receive an expedited review. If all goes according to plan, the scanner should have domestic marketing approval by the middle of the calendar year 1997." Similarly on 6/27/96, Deb Obrien posted on the message boards that "Clinical testing will begin shortly. The clinical testing for the Formal Premarket Approval (PMA) application will be completed in less than 90 days." (emphasis mine). On 8/27/96, when questioned about the progress, she stated "Please do not miss quote (sic) me-I never stated that PMA would be September 25-I'm not sure where you got that exact date -an exact date has never been given." It is now 2.5 years later and no approval has been received. In mid-June 1998, IMDS issued a press release bemoaning the precipitous drop in share price. The release stated that the company knew of nothing that would warrant such a share price drop. However, within one month, an S-2 draft was issued stating that the patent license was memorialized in a way that benefited Grable at the expense of the common shareholder. It further admitted that the number of authorized shares were likely to be expanded from 48.000,000 to 100,000,000 due to the conversion of certain preferred securities to common shares. The Company was likely aware of these issues 30 days before the S-2 draft was issued. It would appear that a press release giving false reassurances was made, to the detriment of the common shareholder. The company has had to restate the financial statements on at least two occasions. First, the SEC apparently demanded that the company restate because it had previously capitalized software costs that should have been expensed. Second, one AOL board poster (BOB) alleged that the company was improperly accounting for non-qualified option plans several years ago. Deb Obrien publicly told the investor he was mistaken. I believe that she was incorrect and that the company has now restated. In September, the on-line version of the U.S. News and World Report did an article on IMDS. The article quoted a woman who had been tested praising the IMDS device. It stated that she was part of a nearly completed 400 person clinical trial. No where in the article does it state that she was an employee (Head of Purchasing). Further, a 400 person clinical trial was nowhere near complete (started?). Recall when the generous management of this company GAVE the funds from the sale of their shares to the company out of the goodness of their hearts (but failed to mention in the press release that they were being reimbursed for this)? The reason they gave for doing this was to help cash flow. Some of us recall that we had a $15mm line of credit that was supposed to carry us thru as far as we needed to go. Once again, listen to their own words in the May 1998 press release: "The completion of this financing, which is structured as an equity line of credit, is signficant because it provides the key capital component for our completing FDA clinical trials through PMA submission and subsequently ramping up to full manufacturing capacity. With no future financial concerns facing us, we are now free to focus strictly on bringing the worlds first laser-based mammography system to market." Where did the sudden financial concerns come from since 5/98 that warrant this "charity" by the founders? Was this yet another misleading press release giving false assurances about our financial condition? Note that I have not even addressed the history at Lintronics or the charges of image doctoring by Diane Strait. I have simply focused on publicly availalbe information for the most part. I've said it before - you cannot separate management integrity from stock success, particularly when it comes to penny stocks.

To: Dan O who wrote (3470)	8/19/1999 2:09:00 AM
From: Dan O	Read Replies (2) \| Respond to of 4122

Unfair (to shareholders) compensation practices: Richard and Linda Grable are two of three founders of IMDS. Between the two of them, they control the voting shares (though it is unclear to me if that will continue to be true after preferred convertible securities convert). There is no independent compensation committee governing their behavior. The patent discussion above is an extreme example of how this lack of independence may lead to a disregard for shareholder interest. Below are additional examples. Richard Grable's salary went from $100,000 in 1995 to $286,000 in 1998. Linda's salary went from $65,000 to $119,000 in the same time period. The average person's salary probably increased 3% per year over that same period. During this period the company had such setbacks as the NASDAQ failure and the drop in share price by 90% or more, hardly justifying the rewards. Further, there were large stock options (some at one-third of market), health insurance, car allowances, the patent awards mentioned above, and cost of living adjustments of 7% per year! Once operational, they will be paid bonuses, patent royalties and other compensation. All of this compensation has been negotiated by management with THEMSELVES at shareholder expense. These lucrative benefits are being granted by a company with no revenues to a management team that has failed the shareholder's in some very serious ways. It is difficult to determine how much of the $30mm invested to date has gone to the founders and their family members. I have posed this question to them and have not yet received a response. We now know that several family members are employeed by the company. It is not clear what procedures are in place to ensure that they were employeed because they were the most qualified candidates (vs because they were family). Clearly, the Miami Herald points out that they aren't doing badly. We need to determine if nepotism is occuring here. While not illegal, nepotism is not in the best interests of shareholders. When nepotism exists, it is rarely good for common shareholders as it indicates that a company is not getting the best qualified candidates for the lowest salary dollar in a rigorous competitive interview process. This is unacceptable in any company, particularly one that cannot afford to spend precious corporate resources to enrich family members of the majority owners. The alleged family relationships have been denied for a while until recently. If there are relationships, any denials or half-truthful answers are relevant in that they might be considered attempts to alleviate concerns about nepotism through deliberate deception. Though it is not illegal to employ family or for family to invest in a corporation, it is not unreasonable to ask whether arms length negotiations are occurring, whether shareholder interests are being watched over (given the lack of independent review), whether proper disclosures of related party activity has occurred (only Linda and Richard are mentioned in related party transactions) and whether shareholders have been deceived by denials made by the organization in the past.