10-Q 1 d99056e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ---------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 2002 Commission File No. 2-82655 ------------- ------- INTERWEST MEDICAL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Oklahoma 75-1864474 -------------------------------- ------------------------------------ (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 ----------------------------------------------------- (Address of principal executive offices, zip code) Registrant's telephone number, including area code: (817)731-2743 ------------- Not Applicable -------------------------------------------------------- (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 ----- ----- 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 ----- ----- (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. 15,917,911 shares of Common Stock, $0.001 Par Value. INTERWEST MEDICAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2002 2001 ------------- ------------- (unaudited) ASSETS CURRENT ASSETS Cash $ 952,687 $ 1,412,024 Accounts receivable - trade 2,577,185 2,359,104 Income taxes receivable 4,641 4,641 Investments - trading 1,738,155 1,477,949 Prepaid expenses and other receivables 146,952 86,637 ------------- ------------- Total current assets 5,419,620 5,340,355 PROPERTY AND EQUIPMENT, at cost Land 294,354 294,354 Buildings and improvements 3,960,924 3,960,924 Equipment and furniture 1,404,243 1,236,298 Oil and gas properties (successful efforts method of accounting) 182,636 170,489 ------------- ------------- 5,842,157 5,662,065 Less accumulated depreciation 2,387,082 2,272,882 ------------- ------------- 3,455,075 3,389,183 OTHER ASSETS Cash escrow accounts 34,290 27,888 Deferred financing costs, net 361,995 361,995 ------------- ------------- 396,285 389,883 ------------- ------------- TOTAL ASSETS $ 9,270,980 $ 9,119,421 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 47,290 $ 47,290 Accounts payable 2,605,031 1,736,400 Accrued expenses 372,297 596,627 ------------- ------------- Total current liabilities 3,024,618 2,380,317 LONG-TERM DEBT 4,300,196 4,340,814 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 (2,121,370) (1,669,916) ------------- ------------- 2,997,375 3,448,829 Less Cost of shares held in the treasury 2002 - 6,082,089 shares; 2001 - 6,075,389 shares 891,209 890,539 Notes receivable - officer 160,000 160,000 ------------- ------------- 1,946,166 2,398,290 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,270,980 $ 9,119,421 ============= =============
See Accompanying Notes to Condensed Consolidated Financial Statements. INTERWEST MEDICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, -------------------------------- -------------------------------- 2002 2001 2002 2001 -------------- -------------- -------------- -------------- Net patient service revenue $ 3,346,771 $ 3,474,853 $ 6,450,194 $ 6,704,682 Other revenue 5,934 24,430 37,391 43,541 -------------- -------------- -------------- -------------- Total revenue 3,352,705 3,499,283 6,487,585 6,748,223 COSTS AND EXPENSES Professional care of patients 1,972,499 1,906,990 3,800,511 3,722,232 General services 642,234 609,703 1,261,634 1,180,734 Administrative services 550,360 636,872 1,000,923 1,170,445 Other costs 2,529 3,216 16,108 8,800 Depreciation, depletion and amortization 68,149 64,090 130,609 128,180 -------------- -------------- -------------- -------------- Income from operations 116,934 278,412 277,800 537,832 OTHER INCOME (EXPENSES) Interest income 7,051 4,929 12,898 12,285 Interest expense (69,216) (86,147) (148,316) (185,502) Investment income (loss) (592,705) 184,113 (593,836) (335,773) -------------- -------------- -------------- -------------- Income (loss) before taxes on income (loss) (537,936) 381,307 (451,454) 28,842 Provision (benefit) for income taxes -- -- -- -- -------------- -------------- -------------- -------------- NET INCOME (LOSS) $ (537,936) $ 381,307 $ (451,454) $ 28,842 ============== ============== ============== ============== Weighted average number of shares outstanding 15,917,911 15,930,111 15,920,702 15,930,111 ============== ============== ============== ============== Earnings per common share - basic and diluted $ (0.03) $ 0.02 $ (0.03) $ 0.00 ============== ============== ============== ==============
See Accompanying Notes to Condensed Consolidated Financial Statements. INTERWEST MEDICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, ------------------------------ 2002 2001 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES $ (214,801) $ 25,235 CASH FLOWS FROM INVESTING ACTIVITIES Payments for acquisition of property (210,846) (155,119) Net changes in escrow accounts (6,402) (6,402) Proceeds from sale of property and equipment 14,000 -- ------------- ------------- Net cash provided by (used in) investing activities (203,248) (161,521) CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury stock (670) -- Payments on borrowings (40,618) (21,970) ------------- ------------- Net cash provided by (used in) financing activities (41,288) (21,970) ------------- ------------- Net increase (decrease) in cash (459,337) (158,256) CASH, beginning of period 1,412,024 885,513 ------------- ------------- CASH, end of period $ 952,687 $ 727,257 ============= =============
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 June 30, 2002, and its results of operations for the three and six months ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002 and 2001. 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. 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 June 30, 2002 and the condensed consolidated statements of operations for the three and six months ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002 and 2001, 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 June 30, 2002, and the related condensed consolidated statements of operations for the three and six month periods ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002 and 2001. 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 of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data 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 condensed consolidated statements referred to above, for them to be in conformity with U.S. generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 2001, 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 18, 2002, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2001, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. WEAVER AND TIDWELL, L.L.P. Fort Worth, Texas August 7, 2002 PART I - EXHIBIT I Item 2. Management's Discussion and Analysis of Financial Position and Results of Operations. Changes in Balance Sheet Accounts Current assets were $5,419,620 and total assets were $9,270,980 at June 30, 2002 as compared to current assets $5,340,355 and $9,119,421 total assets at December 31, 2001. Current liabilities were $3,024,618 at June 30, 2002 as compared to $2,380,317 at December 31, 2001. Results of Operations For the Three Months Ended June 30, 2002, operating revenue was $3,552,705; costs and expenses were $3,235,771, net loss was ($537,936) and interest income was $7,051, as compared to the Three Months Ended June 30, 2001, operating revenue of $3,499,283, costs and expenses of $3,220,871, net income of $381,307 and interest income of $4,929. For the Six Months Ended June 30, 2002, operating revenue was $6,487,585; costs and expenses were $6,209,785; net loss was ($451,454) and interest income was $12,898, as compared to the Six Months Ended June 30, 2001, operating revenue of $6,748,223; costs and expenses of $6,210,391; net income of $28,842 and interest income of $12,285. Cash Flows For the Six Months Ended June 30, 2002, cash flows from operating activities were ($214,801), cash flows from investing activities were ($203,248), cash flows from financing activities were ($41,288), net decrease in cash was ($459,337), cash at the beginning of the period was $1,412,024, and cash at the end of the period was $952,687 as compared to the Six Months Ended June 30, 2001, to cash flows from operating activities of $25,235, cash flows from investing activities of ($161,521), cash flows from financing activities of ($21,970), net decrease in cash of ($158,256), cash at the beginning of the period of $885,513, and cash at the end of the period of $727,257. 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) None. (b) None. 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 ----------------------------------------- Arch B. Gilbert, President, Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer Date: August 12, 2002 CERTIFICATION OF OFFICERS OF INTERWEST MEDICAL CORPORATION PURSUANT TO 18 USC SECTION 1350 I hereby certify that the accompanying report on Form 10-Q for the period ended June 30, 2002, and filed with the Securities and Exchange Commission on the date hereof pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the "Report") by InterWest Medical Corporation fully complies with the requirements of that section. I further certify that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company. /s/ ARCH B. GILBERT August 12 -------------------------------------- ---------------------, 2002 Arch B. Gilbert President, Chief Executive Officer and Chief Financial Officer