10-Q/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q/A

Amendment No. 1

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 2004 Commission File No. 0-11881

INTERWEST MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

Oklahoma	75-1864474
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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 o

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

Yes o No x

(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. 15,913,711 shares of Common Stock, $0.001 Par Value.

TABLE OF CONTENTS

PART I — EXHIBIT I
	Item 2. Management’s Discussion and Analysis of Financial Position and Results of Operations.
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings.
	Item 2. Changes in Securities.
	Item 3. Defaults upon Senior Securities.
	Item 4. Submission of Matters to a Vote of Securities Holders.
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
Section 302 Certification
Section 906 Certification

INTERWEST MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2004 and December 31, 2003

	June 30,			December 31,
	2004			2003
	(unaudited)
ASSETS
CURRENT ASSETS
Cash, including interest bearing accounts, June 30, 2004 $773,860; December 31, 2003 $555,443	$	1,082,348		$	796,434
Accounts receivable — trade, net of allowance for doubtful accounts, June 30, 2004 $190,327 and December 31,2003 $452,000		3,505,547			3,655,364
Investments — trading		93,145			355,252
Prepaid expenses and other receivables		224,031			75,933
Total current assets		4,905,071			4,882,983
PROPERTY AND EQUIPMENT, at cost
Land		294,354			294,354
Buildings and improvements		4,149,032			4,147,464
Equipment and furniture		1,248,289			1,240,906
Oil and gas properties (successful efforts method of accounting)		170,489			170,489
		5,862,164			5,853,213
Less accumulated depreciation and depletion		2,855,296			2,723,936
		3,006,868			3,129,277
OTHER ASSETS
Cash escrow accounts		278,202			253,202
Deferred financing costs, net		76,028			78,569
		354,230			331,771
TOTAL ASSETS	$	8,266,169		$	8,344,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	50,539		$	50,539
Accounts payable		1,937,067			2,022,066
Accrued expenses		482,879			708,786
Total current liabilities		2,470,485			2,781,391
LONG-TERM DEBT		4,530,316			4,555,316
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)		(2,800,958	)		(3,059,187	)
		2,317,787			2,059,558
Less cost of shares held in the treasury, 2004 - 6,086,289 shares; 2003 - 6,084,289 shares		892,419			892,234
Notes receivable — officer		160,000			160,000
		1,265,368			1,007,324
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,266,169		$	8,344,031

See Accompanying Notes to Condensed Consolidated Financial Statements

INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and six months
ended June 30, 2004 and 2003
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2004			2003			2004			2003
REVENUES
Patient service revenue	$	4,328,893		$	3,850,486		$	8,566,462		$	7,422,736
Other revenue		7,093			13,213			17,317			22,632
Total revenue		4,335,986			3,863,699			8,583,779			7,445,368
COSTS AND EXPENSES
Professional care of patients		2,358,144			2,353,685			4,826,776			4,539,535
General services		623,035			708,708			1,286,102			1,377,166
Administrative services		639,686			424,207			1,731,109			1,253,410
Other costs		3,557			3,535			5,875			8,912
Depreciation, depletion and amortization		56,586			70,831			131,360			141,862
Income (loss) from operations		654,978			302,733			602,557			124,483
OTHER INCOME (EXPENSES)
Investment income (loss)		(103,900	)		72,696			(45,928	)		71,726
Interest income		861			1,233			1,639			2,394
Interest expense		(69,834	)		(80,200	)		(173,889	)		(161,200	)
Income (loss) before taxes on income (loss)		482,105			296,462			384,379			37,403
Provision for income taxes		126,150			—			126,150			—
Net income (loss)	$	355,955		$	296,462		$	258,229		$	37,403
Weighted averages shares outstanding		15,914,461			15,815,771			15,914,711			15,915,741
Earnings (loss) per common share — basic and diluted	$	0.02		$	0.02		$	0.02		$	0.00

INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2004 and 2003
(unaudited)

	Six Months Ended
	June 30,			June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES	$	342,509			$(334,257	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net Change in escrow accounts		(25,000	)		(7,469	)
Net change in financing costs					2,541
Payments for acquisition of property		(8,951	)		(14,678	)
Net cash (used in) investing activities		(31,410	)		(22,147	)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock		(185	)		—
Payments on borrowings		(25,000	)		(32,517	)
Net cash (used in) financing activities		(25,185	)		(32,517	)
Net increase (decrease) in cash		285,914			(388,921	)
CASH, beginning of period		796,434			1,004,795
CASH, end of period	$	1,082,348		$	615,874

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, 2004, and its results of operations for the three and six months ended June 30, 2004 and 2003, and cash flows for the three months ended June 30, 2004 and 2003. 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 2004 and 2003 is as follows:

	2004				2003
			Weighted				Weighted
			Average				Average
	Shares		Exercise		Shares		Exercise
	(000)		Price		(000)		Price
Outstanding, beginning		1,500		.15		1,500	$	.15
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Outstanding, ending		1,500		.15		1,500	$	.15
Options exercisable at year end		1,500	$	.15		1,500	$	.15
Weighted average fair value of options granted during the year			$	—			$	—

At June 30, 2004, the 1,500,000 options have an exercise price of $0.15 per share and a weighted average remaining contractual life of 6 years.

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, 2004 and the condensed consolidated statements of operations for the three and six months ended June 30, 2004 and 2003, and cash flows for the six months ended June 30, 2004 and 2003, 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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
InterWest Medical Corporation

We have reviewed the condensed consolidated balance sheet of InterWest Medical Corporation as of June 30, 2004, and the related condensed consolidated statements of operations for the three and six month periods ended June 30, 2004 and 2003, and cash flows for the six months ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). 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 the standards of the Public Company Accounting Oversight Board, 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, 2003, 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 March 19, 2004, 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, 2003, 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 12, 2004

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 $4,905,071 and total assets were $8,266,169 at June 30, 2004 as compared to $4,882,983 current assets and $8,344,031 total assets at December 31, 2003. Current liabilities were $2,470,485 at June 30, 2004 as compared to $2,781,391 at December 31, 2003.

Results of Operations

For the three months ended June 30, 2004, operating revenue was $4,335,986 costs and expenses were $3,681,008 net income was $355,955 and interest income was $861, as compared to the Three Months Ended June 30, 2003, operating revenue of $3,863,699 costs and expenses of $3,560,966, net income was $296,462 and interest income of $1,233.

For the six months ended June 30, 2004, operating revenue was $8,583,779, costs and expenses were $7,981,222, net income was $258,229 and interest income was $1,639, as compared to the six months ended June 30, 2003, operating revenue of $7,445,368, costs and expenses of $7,320,885, net income of $37,403 and interest income of $2,394.

Cash Flows

For the six months ended June 30, 2004, cash flows from operating activities were $342,509, cash flows from investing activities were ($31,410), cash flows from financing activities were ($25,185) net increase in cash was $285,914, cash at the beginning of the period was $796,434, and cash at the end of the period was $1,082,348 as compared to the six months ended June 30, 2003, to cash flows from operating activities of ($334,257), cash flows from investing activities of ($22,147), cash flows from financing activities of ($32,517), net decrease in cash of ($388,921), cash at the beginning of the period of $1,004,795 and cash at the end of the period of $615,874.

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 June 30, 2004.

Item 4. Controls and Procedures

As of June 30, 2004, 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 June 30, 2004. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to June 30, 2004.

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 31 — Section 302 Certification

     (b) Exhibit 32 — 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
	Arch B. Gilbert, President,
	Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer

Date: January 6, 2005

EX-31

EXHIBIT 31

CERTIFICATION
Pursuant to 18 U.S. C. Section 1350,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2003

I, Arch B. Gilbert, certify that:

1.	I have reviewed this quarterly report on Form 10-Q/A 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 annual report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the period covered by this report based on such evaluation; and
d.	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the Company’s Board of Directors (or persons performing the equivalent function):

a.	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

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	January 6, 2005
Arch B. Gilbert
President, Chief Executive Officer
and Chief Financial Officer

EX-32

EXHIBIT 32

INTERWEST MEDICAL CORPORATION
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2003 (18 USC 1350)

The undersigned, Arch B. Gilbert, the Chief Executive Officer and Chief Financial Officer of InterWest Medical Corporation (the Company), has executed this Certification in connection with the filing with the Securities and Exchange Commission of the Company’s current report on Form 10-Q/A (the “Report”).

The undersigned hereby certifies that:

• the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

• the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned has executed this Certification as of the 6th day of January 2005.

/s/ ARCH B. GILBERT

Arch B. Gilbert
President, Chief Executive Officer and Chief Financial Officer