IQMC DD Report
Stock Structure:
Authorized Common Stock: 300,000,000
O/S: 50,199,500 (12/31/05)
Authorized Preferred Stock: 25,000,000
O/PS: (12/31/05)
Company Background:
Originally formed as Enclave Product, Ltd., a shareholder group in Florida acquired controlling interests on October 18, 2004, effected a 1-for-200 reverse stock split, changed the name to IQ Medical Corp., and approximately a year later, changed the name to IQ Micro Inc. Through June 9, the company had no real operations.
On June 9, 2005, Osmotex AS and its Florida-based subsidiary, Osmotex USA, Inc., entered into an agreement licensing to Osmotex USA exclusive, worldwide sales and marketing licensing rights, in addition to intellectual property rights of Osmotex. On that same day, IQMC entered into agreement with Osmotex USA, exchanging 42,670,000 shares, or ~85% of the company for licensing rights. As a result, Osmotex USA became the majority owner of 85% of IQMC stock. On January 12, 2006, final agreement was whereby Osmotex licensed full rights to Osmotex USA, and Osmotex USA licensed these rights to IQ Micro, Inc. As a result, the success of IQMC is highly linked with the success of Osmotex.
IQMC also arranged for $500,000 in external debt financing to be arranged by D.P. Martin and Associates, Inc., as well as assistance in the Osmotex-IQMC contract, in exchange for 1,000,000 shares to be placed in an escrow payment until the completion of said arrangement. However, because D.P. Martin never secured $500,000 in external financing, the escrow account was deleted and the shares retired. IQMC also arranged for $500,000 in secured convertible debt financing from Cornell Capital Partners, LP. This debt can be converted into up to 9,800,000 shares of common stock at lesser of price of $0.64, or amount equal to 80% of lowest closing bid price of common stock for the five days preceding the conversion. $300,000 of said debt was then given to Osmotex USA, which was transferred for use in research by Osmotex and by CSEM, with whom Osmotex contracted for said purpose. Additional debt was later secured, and is described by the following table:
Closing Date Gross Proceeds
August 12, 2005 $ 500,000
November 30, 2005 $ 250,000
February 8, 2006 $ 250,000
March 29, 2006 $ 500,000
February 15, 2007 $ 95,000
Additionally, the company entered into agreement with Hawk Associates, Inc., and in consideration for services, granted it five year warrants (expiring July 31, 2010) at an exercise price of $0.51/share. Upon conversion of the $500,000 convertible debt issued by Cornell Capital Partners, LLC, up to 27,000,000 shares may be issued.
Liabilities, as of June 30, 2007, are estimated at $2,902,985. Working capital was $1,101,496 in deficit, and assets stood at $230,550 in net licensed rights and $75,185 in net deferred finance charges. Accounts payable to the company was in value of $395,915. As a result of the illiquidity, the company decided to nullify its status as an SEC-filing company.
Industry:
Microfluidics is a relatively new industry, developed in the late 1990s, with applications in circuits, healthcare diagnostics, manufacturing processes, medication, fuel cells, printing, electronic displays and cooling, as well as security.
In particular, there has been a major issue: a lack of an effective, cheap microactuator; this has acted as a bottleneck for the industry for a number of years. Osmotex has developed a microfabricated low voltage actuator, which can be combined a chip to act as a scalable pump which can be easily altered for function. Osmotex exploits electrokinetic properties of fluids in order to achieve this output.
The company has a competitive advantage in that its technology does not produce electrolysis or gas evolution at the electrodes, and the systems produced can be more complex because of the inherently simple, modular nature of the “invisible pump” technology.
Osmotex also develops technologies using Micro Electro-Mechanical Systems, or “MEMS”, which can allow data-gathering from micro-environments by measuring mechanical, thermal, chemical, optical, and magnetic phenomena.
As of February 8, 2006, the WHO estimated the number of people with diabetes to be approximately 200 million, and growing; the cost of treating the disease was around $132 billion. The company believes that with consistent and accurate glucose monitoring, the amount of health care spending on diabetes complications could be significantly reduced.
