UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2004
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______________to_______________
Commission File Number 001-14297
MW Medical, Inc.
(Exact name of Small Business Issuer as specified in its charter)
Nevada 86-0907471
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
6929 E. Cheney, Paradise Valley, Arizona 85253
(Address of principal executive offices)
(480) 368-5393
Issuer’s telephone number, including area code
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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X ] Yes [ ] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:99,822,434 Shares of Common Stock outstanding as of May 1, 2004.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF PRESENTATION
General
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ deficit in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2004, are not necessarily indicative of the results that can be expected for the year ending December 31, 2004.
MW Medical, Inc.
Balance Sheet
March 31,
| | | 2004 |
| ASSETS | | |
| | | |
| CURRENT ASSETS | | |
| Cash | | 15 |
| |
|
| Total current assets | | 15 |
| | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | |
| | | |
| CURRENT LIABILITIES | | |
| Accounts payable | | 84,875 |
| Accrued expenses | | 280,141 |
| Notes payable - related parties | | 973,034 |
| |
|
Total current liabilities | | 1,338,050 |
| | | |
| STOCKHOLDERS’ DEFICIT | | |
| Common stock $.001 par value; authorized - 100,000,000 shares | | |
| Issued and outstanding, 99,822,434 shares | | 99,822 |
| at 12-31-2003 | | |
| Additional paid-in-capital | | 14,421,633 |
| Accumulated deficit | | (15,859,490) |
| |
|
| Total stockholders’ deficit | | (1,338,035) |
| | | |
| | | 15 |
| |
|
The accompanying notes are an integral part of these statements
MW Medical, Inc.
Statements of Operations
| &n bsp; For the Three Months ended March 31, |
| | | 2004 | | | 2003 |
| | | | | | |
| General and administrative expenses | | 93,671 | | | 99,092 |
| | | | | | |
| Total operating expenses | | 93,671 | | | 99,092 |
| | | | | | |
| |
| |
|
| Net operating loss | | (93,671 | ) | | (99,092) |
| |
| |
|
| Interest expense | | (22,327 | ) | | (395,619) |
| |
| |
|
| | | (22,327 | ) | | (395,619) |
| | | | | | |
| Loss from continuing operations | | | | | |
| before income taxes | | (115,998 | ) | | (494,711) |
| Income tax expense | | | | | |
| |
| |
|
| NET LOSS | | (115,998 | ) | $ | (494,711) |
| |
| |
|
| Net loss per weighted average share | | (0.001 | ) | $ | (0.017) |
| |
| |
|
| Weighted average number of common shares used to | | | | | |
| compute net loss per weighted average share | | 99,822,434 | | | 29,933,554 |
| |
| |
|
The accompanying notes are an integral part of these statements.
MW Medical, Inc.
Statements of Cash Flows
| For the Three Months ended March 31, |
| | | 2004 | | | 2003 |
| |
| |
|
| Cash flows from operating activities | | | | | |
| Net Loss | | (115,998 | ) | $ | (494,711) |
| Adjustments to reconcile net loss to cash used in | | | | | |
| operating activities: | | | | | |
| Depreciation and amortization | | | | | - |
| Deferred salaries | | 83,490 | | | 83,490 |
| Interest expense | | 22,327 | | | 395,619 |
| Changes in assets and liabilities | | | | | |
| Increase in accounts payable and accrued expenses | | 10,148 | | | 15,513 |
| | | | | | |
| |
| |
|
| Net cash used in operating activities | | (33 | ) | | (89) |
| |
| |
|
| Cash flows from financing activities | | | | | |
| Proceeds from line of credit | | | | | |
| Proceeds from loans | | 0 | | | 59 |
| |
| |
|
| Net cash provided by financing activities | | 0 | | | 59 |
| |
| |
|
| (Decrease) increase in cash and cash equivalents | | -33 | | | -30 |
| | | | | | |
| Cash and cash equivalents at beginning of period | | 48 | | | 937 |
| |
| |
|
| Cash and cash equivalents at end of period | | 15 | | | 907 |
| |
| |
|
| Supplemental information | | | | | |
| Cash paid for interest | | | | | |
| Cash paid for income taxes | | | | | |
The accompanying notes are an integral part of these statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
We were incorporated under the laws of the state of Nevada on December 4, 1997 as a subsidiary of Dynamic Associates, Inc. ("Dynamic")
We were in the business of manufacturing and selling our primary product, the MW 2000. We also were in the business of designing and developing microwave technologies for dermatological applications. Due to our financial condition and filing for bankruptcy, we wrote off our entire inventory and currently have no business activities.
Reverse Stock Split
Currently our operations are at a standstill and we wrote off our entire inventory last year. In addition, as of the end of the reporting period we had issued a total of 99,822,434 out of 100,000,000 authorized common shares and were therefore unable to issue additional shares without increasing the authorized shares or reducing the total issued shares through a reverse stock split. After the close of the reported quarter, we filed a Schedule 14A and called a shareholders meeting which was held on May 10, 2004. At this meeting, the shareholders approved a reverse stock split of our common stock on a basis of one new share for every 500 shares presently outstanding.
Need for financing, Name Change and Potential Acquisition
Management has determined that it must seek additional funding or other business relationships such as a merger or reverse acquisition in order to proceed with an active business operation. Recently, after the close of the reported quarter, management has been in negotiations to acquire a skin care company known as Davi Skin, Inc. While no agreement has been signed, management believes that an acquisition such as this under the right terms would be in the best interests of the company and is aggressively pursuing this and similar options. In this regard and in anticipation of being able to reach such an agreement shortly, the Company has processed a name change with the state of Nevada to Davi Skin, Inc.
Plan of Operations
We currently have no business activities. Unless we can secure financing, we will not be able to restart our operations. With the economic downturn, we have been unable to raise additional capital from outside sources and management is unaware of any reasonable prospects for financing. We are in the process of evaluating and negotiating the acquisition of a skin care company and hope to be able to enter into an agreement with this company shortly. Upon entering into the agreement, we expect to announce the terms and conditions in a follow up filing.
Assets
Our total assets as of March 31, 2004 were $15, compared to total assets in the amount of $48 on December 31, 2003. Our only asset is cash in the amount of $15.
Liabilities and Stockholders Equity
Our total liabilities as of March 31, 2004 were $1,338,050, compared to total liabilities in the amount of $1,222,085 as of December 31, 2003. Our total current liabilities consisted of: (a) $84,875 in accounts payable; (b) accrued expenses of $280,141; and (c) notes payable in the amount of $973,034. The notes payable consist of a promissory note issued pursuant to an agreement with Ms. Wallace discussed below, unpaid management fees owed to Ms. Wallace, and unpaid management fees owed to Grace Sim, our Chief Financial Officer.
On March 15, 2003, we entered into a loan agreement with Ms. Wallace. In accordance with this agreement, Ms. Wallace agreed to provide further financial support for a period of 90 days in an amount of no more than $50,000 and to accept a new promissory note for a reduced amount of $945,775.30, which extended the due date for payment to June 15, 2003. The company is continuing to negotiate with Ms. Wallace to extend the due date of the note. The balance owing on this promissory note is currently past due.
On March 31, 2004, we had a working capital deficit of $1,338,035, compared to a working capital deficit of $1,222,037 on December 31, 2003.
Results of Operations
Due to our financial condition and the filing of bankruptcy, we had no business operations in the three month period ended March 31, 2004. Therefore, we had no revenue for the three month period ended March 31, 2004.
Our operating expenses were $93,671 for the three month period ended March 31, 2004, compared to operating expenses of $99,092 for the same three month period in the prior year. Our operating expenses in the three month period ended March 31, 2004 consisted of only general and administrative expenses. We did incur $22,327 in interest expense in the three month period ended March 31, 2004, compared to interest expense of $395,619 for the same three month period of the prior year.
We incurred a net loss of $115,998 for the three month period ended March 31, 2004, compared to a net loss of $494,711 for the same three month period in the prior year.
Liquidity and Capital Resources
On March 31, 2004 we had cash in the amount of $15, compared to $48 in cash on December 31, 2003. We wrote off our inventory and assigned it to Ms. Wallace in 2003 to repay a portion of the secured debt owed to her. Therefore, our only asset is cash at this time.
Unless we can secure financing, we will not be able to restart our operations. With the economic downturn, the Company has been unable to raise additional capital from outside sources and management is unaware of any reasonable prospects for financing.
Forward-Looking Statements
Many statements made in this report are forward-looking statements that are not based on historical facts. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements made in this report relate only to events as of the date on which the statements are made.
ITEM 3. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2004. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Ms. Jan Wallace and Chief Financial Officer, Ms. Grace Sim. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us that is required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
Other than as follows, we are not a party to any material litigation and to our knowledge, no such proceedings are threatened or contemplated.
On February 25, 2003, MW Medical Corporation a/k/a Microwave Medical Corporation ("MW") was named and served as a third-party defendant in an action in New York state court. The original complaint was filed by Arylnn Willis against Steven A. Victor, M.D. and Madison Avenue Dermatology Center ("Third Party Plaintiff").
In May 2003, MW entered into a stipulation with Third Party Plaintiff. Under the terms of the stipulation, the automatic stay has been lifted thereby allowing the Third Party Plaintiff to commence the New York state court action and proceed against the MW's insurer only to the extent coverage exists.
Item 2. Changes in Securities and Use of Proceeds:
We did not complete any sales of our securities in the quarter ended March 31, 2004.
Item 3. Defaults Upon Senior Securities:
Up through the settlement of the secured promissory note held by our President and sole director, Ms. Jan Wallace, we were in default on our obligation to repay her as required under our plan of reorganization in bankruptcy. On March 15, 2003, we entered into a loan agreement with Ms. Wallace. In accordance with this agreement, Ms. Wallace agreed to provide further financial support for a period of 90 days in an amount of no more than $50,000 and to accept a new promissory note for a reduced amount of $945,775.30, which extended the due date for payment to June 15, 2003. At the present time, we have not repaid Ms. Wallace. The company is negotiating with Ms. Wallace to extend the due date of the note.
Item 4. Submission of Matters to a Vote of Security Holders:
No shareholder meetings were held in the reported quarter; however, following the close of the reported quarter, on May 10, 2004, a meeting of the shareholder was held in which the shareholders voted to approve a reverse split of the common stock on the basis of 500 to one and a name change of the company to Davi Skin, Inc.
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K.
EXHIBITS REQUIRED BY ITEM 601 OF REGULATION SB
Exhibit Number | Description of Exhibit |
31.1 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
REPORTS ON FORM 8-K
We did not file any Current Reports on Form 8-K during the fiscal quarter ended March 31, 2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MW Medical, Inc.
DATED: May 25, 2004
/s/ Jan Wallace
Jan Wallace, Chief Executive Officer
