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

To: Dan O who wrote (3717)	10/6/1999 10:01:00 PM
From: Dan O	Respond to of 4122

Misleading Statements about Sales: This company has had no sales since inception. The company has issued numerous public statements on international marketing arrangements. The statements give the impression that revenues could be generated soon since foreign sales do not require FDA approval. The company has contributed to that impression with statements such as that found in Item 1 of the 1997 10k: "The laws of certain European and Asian countries may permit the Company to begin marketing the CTLM device in Europe and Asia before marketing would be permitted in the United States." Though the 1997 and 1998 10Ks explain that foreign sales have other hurdles which are not yet overcome, the 1996 10K contained substantially less warnings. Other public statements issued by the company perpetuate the false impression: 1. On 8/21/95 the Company issued a press release regarding Business Asia Consultants which stated that they will market our product outside the U.S. prior to FDA approval. It even stated that a million dollars of such sales had been lined up. No such sales have occurred. 2. On 7/19/96, Deb Obrien posted on AOL responding to an investor's question about why no international sales had been booked. She stated "Machines have been sold; we have actual invoices-no we have not shipped any yet because - once again I have explained how this process works in other postings. The company has 0 sales this year - the year is not yet over. We do project 22 million sale for the international market-It was never stated that this total amount would be for 1996." This misleading and confusing statement is typical of what the IMDS investor has endured. She appears to be implying 1996 sales. 3. On 7/23/96, Deb posted the news of a new contract and stated that "a contract was signed to deliver 3 systems to Syria." No time frame or conditions were mentioned in her post and no sales have occurred to my knowledge. 4. On 3/7/97, Deb Obrien posted on the AOL board that "The company will not generate revenue from sales until later this year." That was almost 2 years ago and nothing has happened. 5. In a 1/21/98 press release, Linda Grable is quoted as saying that a newly formed relationship with Imation "can provide immediate revenues". None have materialized to date. 6. In early 1998, Scott Phillips, a paid representative of IMDS, posted that the company expected foreign sales in the late spring or early summer of 1998. None have occurred. 7. The recent information statement says that the value of the patent was arrived at by looking at company projections of sales and income. The figures used per the Information Statement were nowhere near the quotes for these figures made by Scott Phillips, the paid representative of IMDS just 2 months before. Who do you believe? 8. The company has recently alluded to further delays. These are examples of the misleading statements the company has made on international sales. Given the desperate need for incoming cash at IMDS, and the incredible dilution shareholders are suffering as a result, misleading or unclear statements about international revenues result in improper shareholder decisions and financial harm.

To: Dan O who wrote (3717)	10/7/1999 10:18:00 PM
From: Dan O	Read Replies (1) \| Respond to of 4122

Misleading Technology Statements: The concerns around the technology misrepresentations are as follows: 1. misrepresentation of material facts in prior annual reports regarding who owned the technology, including the 1997 patent 2. omission of material facts in prior annual reports including the fact that the most precious contract we could possibly have was not memorialized; 3. gross negligence in failing to memorialize that contract between the company and a major shareholder (Grable) until now with the resulting terms being substantially different than previously disclosed; 4. potential conflict of interest of management with shareholders (with shareholders losing the conflict); 5. serious risk of reversion of our main asset to Grable under very plausible circumstances. The main asset of the company is its right to use the CTLM technology. Grable's employment contract granted him a "development royalty" for his efforts in developing the technology. This royalty was disclosed in the 1996 and 1997 10ks, but no other obligations were mentioned. The Background sections of the 1996 and 1997 10ks refer to a patent that was applied for in 1995 and eventually granted in 1997. The '96 and '97 reports say that the company (not Grable) filed "its" (not "his") patent application due to advances made by the company (using company funds and company time). Never at any time was it represented that Grable was the owner of the new patent, in fact, the opposite was clearly stated. Never at any time was it disclosed that the company had any other obligations to Grable for the technology other than the development royalty disclosed in the 1996 10K. Now, however, footnote 9 of the 1998 10k states that GRABLE is the owner of the technology including the 1997 patent. Suddenly, the technology that INVESTORS funded through their contributions to IMDS was being represented as the property of GRABLE! Considering that the technology is our ONLY real asset, this sudden change was crushing to the common shareholder! The 1998 10k notes that Grable issued a license to IMDS to use the technology in June 1998 (technology the shareholder had thought already belonged to them). However, paragraph 13 of that license agreement states that the license can be revoked by Grable AT HIS OPTION in certain circumstances including bankruptcy (a legitimate risk for this company) or change of control. Not only was this not disclosed previously, but it actually results in a conflict between Grable and the shareholders. In a perverse way, Grable is better off if the company goes bankrupt, as long as FDA approval is received, since he would have all of the rights to the technology by himself. The 1998 10k and the 14C issued 10/29/98 make the admission that the patent license was not memorialized in writing with Grable until June 1998. According to the 14C, during the delay in memorializing the contract circumstances turned in Grable's favor, allowing him to negotiate more favorable terms, including: 1. Grable was granted an additional 7 million shares 2. The contract included a reversion clause in the event of bankruptcy or change of control 3. The royalty rate in his employment contract was doubled from a maximum of 5% to a maximum of 10% depending on the sale amount 4. Anti-dilution protection was granted to Grable. The company admitted in the public filing that Grable had a "fiduciary duty to the Company and its Shareholders to formalize, in writing, the oral agreement regarding the patent". This can only be interpreted as meaning that Grable was grossly negligent in failing to perform his fiduciary responsibilities by memorializing the contract only after circumstances moved in his favor. All of this pre-supposes that the Company did not own the technology in the first place which is a highly disputable premise based on prior public filings. Considering the fact that there IS NO SHAREHOLDER VALUE without the technology, these misrepresentations were egregious.