SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2003 Commission File No. 2-82655
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INTERWEST MEDICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Oklahoma 75-1864474
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193
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(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (817)731-2743
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Not Applicable
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(Former name, former address, and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
(Not Applicable)
Yes X No
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Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)
Yes No X
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(APPLICABLE TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report. 15,915,711
shares of Common Stock, $0.001 Par Value.
REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Weaver and Tidwell, L.L.P., Independent Certified Public Accountants, have
performed a review of the condensed consolidated balance sheet as of March 31,
2003 and the condensed consolidated statements of operations for the three
months ended March 31, 2003 and 2002, and cash flows for the three months ended
March 31, 2003 and 2002, in accordance with established professional standards
and procedures for such a review. All adjustments or additional disclosures
proposed by Weaver and Tidwell, L.L.P. have been reflected in the data
presented.
The report of Weaver and Tidwell, L.L.P. commenting upon their review is
included as Part I - Exhibit I.
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
InterWest Medical Corporation
We have reviewed the condensed consolidated balance sheet of InterWest Medical
Corporation as of March 31, 2003, and the related condensed consolidated
statements of operations for the three month periods ended March 31, 2003 and
2002, and cash flows for the three months ended March 31, 2003 and 2002. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim condensed consolidated financial statements
referred to above, for them to be in conformity with accounting principles
generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
InterWest Medical Corporation as of December 31, 2002, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended (not presented herein); and in our report dated February 24,
2003, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 2002, is fairly stated
in all material respects in relation to the consolidated balance sheet from
which it has been derived.
/s/ Weaver and Tidwell, L.L.P.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
May 9, 2003
644
PART I - EXHIBIT I
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2003 2002
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(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 645,552 $ 1,004,795
Accounts receivable - trade 2,882,113 2,783,978
Investments - trading 185,635 186,606
Prepaid expenses and other receivables 888,074 530,505
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Total current assets 4,601,374 4,505,884
PROPERTY AND EQUIPMENT, at cost
Land 294,354 294,354
Buildings and improvements 3,960,924 3,960,924
Equipment and furniture 1,396,644 1,389,927
Oil and gas properties
(successful efforts method of accounting) 170,489 170,489
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5,822,411 5,815,694
Less accumulated depreciation and depletion 2,551,038 2,480,107
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3,271,373 3,335,587
OTHER ASSETS
Cash escrow accounts 44,293 40,025
Deferred financing costs, net 349,320 349,320
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393,613 389,345
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TOTAL ASSETS $ 8,266,360 $ 8,230,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 50,898 $ 50,898
Accounts payable 2,681,450 2,077,100
Accrued expenses 346,081 645,766
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Total current liabilities 3,078,429 2,773,764
LONG-TERM DEBT 4,283,928 4,293,990
STOCKHOLDERS' EQUITY
Common stock, par value $0.001, authorized 50,000,000 shares,
issued 22,000,000 shares 22,000 22,000
Additional paid-in capital 5,096,745 5,096,745
Retained earnings (deficit) (3,162,533) (2,903,474)
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1,956,212 2,215,271
Less cost of shares held in the treasury,
2003 - 6,084,289 shares; 2002 - 6,084,289 shares 892,209 892,209
Notes receivable - officer 160,000 160,000
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904,003 1,163,062
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,266,360 $ 8,230,816
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See Accompanying Notes to Condensed
Consolidated Financial Statements
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
2003 2002
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REVENUES
Patient service revenue $ 3,572,250 $ 3,103,423
Other revenue 9,419 31,457
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Total revenue 3,581,669 3,134,880
COSTS AND EXPENSES
Professional care of patients 2,185,950 1,828,012
General services 668,458 619,400
Administrative services 829,203 450,563
Other costs 5,377 13,579
Depreciation, depletion and amortization 70,931 62,460
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Income (loss) from operations (178,250) 160,866
OTHER INCOME (EXPENSES)
Investment income (loss) (970) (1,131)
Interest income 1,161 5,847
Interest expense (81,000) (79,100)
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Income (loss) before taxes on income (loss) (259,059) 86,482
Provision for income taxes -- --
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Net income (loss) ($ 259,059) $ 86,482
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Weighted averages shares outstanding 15,915,711 15,923,494
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Earnings (loss) per common share - basic and diluted ($ 0.02) $ 0.01
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See Accompanying Notes to Condensed
Consolidated Financial Statements
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
March 31, March 31,
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES ($ 342,464) $ 163,099
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of property (6,717) (55,896)
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Net cash used in investing activities (6,717) (55,896)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock -- (670)
Payments on borrowings (10,062) (10,246)
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Net cash used in financing activities (10,062) (10,916)
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Net increase (decrease) in cash (359,243) 96,287
CASH, beginning of period 1,004,795 1,412,024
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CASH, end of period $ 645,552 $ 1,508,311
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See Accompanying Notes to Condensed
Consolidated Financial Statements
INTERWEST MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of March 31, 2003, and
its results of operations for the three months ended March 31, 2003 and
2002, and cash flows for the three months ended March 31, 2003 and 2002.
The results of operations for the period presented are not necessarily
indicative of the results to be expected for a full year.
2. Income per share was computed by dividing the net income by the weighted
average number of shares outstanding.
3. The Company has adopted a Stock Option Plan which provides for the
granting of options to officers and other key employees for the purchase
of common stock of the Company.
The Plan reserves 1,500,000 shares of common stock for the granting of
such options. Options are subjected to adjustment upon any change in the
capital structure of the Company such as a stock dividend, stock split or
other similar events.
Options may be granted at not less than 100% of the fair market value of
the Company stock at the date of grant, and are exercisable during a term
of ten years from the date of grant at any time in whole or in part, and
are subject to continued employment and other conditions as set forth in
the option agreement.
Options are exercisable only by the participants and are not assignable
during their lifetime and must be exercised within one year of the death
of the participant by his legal representative.
A summary of the status of the Company's stock options for 2003 and 2002
is as follows:
2003 2002
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Weighted Weighted
Average Average
Shares Exercise Shares Exercise
(000) Price (000) Price
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Outstanding, beginning 1,500 .15 1,500 $ .15
Granted -- -- -- --
Exercised -- -- -- --
Forfeited -- -- -- --
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Outstanding, ending 1,500 .15 1,500 $ .15
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Options exercisable
at year end 1,500 $ .15 1,500 $ .15
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Weighted average fair
value of options
granted during the year $ -- $ --
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At March 31, 2003, the 1,500,000 options have an exercise price of $0.15 per
share and a weighted average remaining contractual life of 7 years.
Item 2. Management's Discussion and Analysis of Financial
Position and Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $4,601,374 and total assets were $8,266,360 at March 31,
2003 as compared to $4,505,884 current assets and $8,230,816 total assets at
December 31, 2002. Current liabilities were $3,078,429 at March 31, 2003 as
compared to $2,773,764 at December 31, 2002.
Results of Operations
For the Three Months Ended March 31, 2003, operating revenue was $3,581,669;
costs and expenses were $3,759,919, net loss was ($259,059) and interest income
was $1,161, as compared to the Three Months Ended March 31, 2002, operating
revenue of $3,134,880, costs and expenses of $2,974,014, net income was $86,482
and interest income of $5,847.
Cash Flows
For the Three Months Ended March 31, 2003, cash flows from operating activities
were ($342,464), cash flows from investing activities were ($6,717), cash flows
from financing activities were ($10,062) net decrease in cash was ($359,243),
cash at the beginning of the period was $1,004,795, and cash at the end of the
period was $645,552 as compared to the Three Months Ended March 31, 2002, to
cash flows from operating activities of $163,099, cash flows from investing
activities of ($55,896), cash flows from financing activities of ($10,916), net
increase in cash of $96,287, cash at the beginning of the period of $1,412,024
and cash at the end of the period of $1,508,311.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company has not entered into any derivative financial instruments,
derivative commodity instruments or other similar instruments during the quarter
ended March 31, 2003.
Item 4. Controls and Procedures
As of March 31, 2003, an evaluation was performed under the supervision and with
the participation of the Company's management, including the CEO, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's management, including
the CEO, concluded that the Company's disclosure controls and procedures were
effective as of March 31, 2003. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to March 31, 2003.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 99.1 - Section 906 Certification
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its half by the
undersigned thereunto duly authorized.
INTERWEST MEDICAL CORPORATION
By: /s/ Arch B. Gilbert
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Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: May 13, 2003
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Arch B. Gilbert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of InterWest
Medical Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to me
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on my evaluation as of the Evaluation Date.
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the Audit Committee of the Company's Board
of Directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
I have indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Arch B. Gilbert May 13, 2003
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Arch B. Gilbert
President, Chief Executive Officer
and Chief Financial Officer