SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
MW MEDICAL, INC.
----------------
(Exact name of Company as specified in its charter)
NEVADA 86-0907471
- ------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7373 NORTH SCOTTSDALE ROAD, SUITE B-169, SCOTTSDALE, ARIZONA 85253
- -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 602-483-8700
------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
100,000,000 Shares of Common Stock
----------------------------------
(Title of class)
<PAGE>
TABLE OF CONTENTS
Page
COVER PAGE ..................................................................1
TABLE OF CONTENTS ...........................................................2
PART I ................................................................3
DESCRIPTION OF BUSINESS .............................................3
DESCRIPTION OF PROPERTY .............................................9
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES ..........10
REMUNERATION OF DIRECTORS AND OFFICERS .............................11
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS ................................................11
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS ..................................................12
SECURITIES BEING OFFERED ............................................12
PART II ....................................................................13
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS ...................13
LEGAL PROCEEDINGS .................................................13
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ...................14
RECENT SALES OF UNREGISTERED SECURITIES .............................14
INDEMNIFICATION OF DIRECTORS AND OFFICERS ........................14
PART F/S ....................................................................16
FINANCIAL STATEMENTS ............................................16
PART III ....................................................................17
INDEX TO EXHIBITS .................................................17
SIGNATURES ...............................................................17
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PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
ITEM 6. DESCRIPTION OF BUSINESS
GENERAL
- -------
MW Medical, Inc. (the "Company") is in the business of designing and developing
microwave technologies for dermatological applications through its wholly owned
subsidiary, Microwave Medical Corporation ("MMC"). The Company's products are in
the development stage. The Company plans to market and sell its microwave
technology products upon completion of the development stage.
The Company is a Nevada corporation and was incorporated as a subsidiary of
Dynamic Associates, Inc. ("Dynamic") on December 4, 1997. The Company is the
owner of two wholly owned subsidiaries:
(A) Microwave Medical Corporation, a California corporation ("MMC");
(B) P&H Laboratories, Inc., a California corporation ("P&H").
The Company acquired each of MMC and P&H from Dynamic pursuant to a contribution
agreement dated February 26, 1998 between the Company and Dynamic (the
"Contribution Agreement"). The Company has issued to Dynamic 14,223,929 common
shares of the Company in consideration for the transfer by Dynamic to the
Company of:
(A) all of the issued and outstanding shares of P&H;
(B) all of the issued and outstanding shares of MMC and shareholders loans
to MMC in the amount of $2,169,806; and
(C) the agreement of Dynamic to advance to the Company a total of
$200,000. The obligation of Dynamic to advance the sum of $200,000 is
evidenced by a promissory note dated February 26, 1998 (the
"Promissory Note").
Dynamic has spun-off all shares of the Company issued pursuant to the
Contribution Agreement to the shareholders of Dynamic by a distribution
completed on March 11, 1998 (the "Distribution"). Each shareholder of Dynamic
received one common share of the Company for each common share of Dynamic held
by the shareholder. The shares of the Company distributed by Dynamic constitute
all of the issued and outstanding shares of the Company. Exhibit 3 contains
information distributed to shareholders regarding the spin off.
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As subsidiaries of Dynamic, each of MMC and P&H has been in the microwave
technologies business for approximately two years. MMC commenced its business as
a subsidiary of Dynamic in September, 1995. Dynamic acquired a 50% interest in
P&H in January, 1996. Dynamic acquired the remaining 50% of P&H in September,
1997. The Company sold the microwave technologies business carried on by P&H
effective May 6, 1998 in order to concentrate exclusively on the microwave
technologies business carried on by MMC.
PRINCIPAL SERVICES AND PRODUCTS
- -------------------------------
The Company carries on the business of designing and developing microwave
technologies for dermatological applications through MMC. The Company's products
are in the development stage. The Company plans to market and sell its microwave
technology products upon completion of the development stage.
MMC is engaged in the development of proprietary technology relating to the use
of microwave energy for medical applications. MMC has a patent pending entitled,
"Method and Apparatus for Treating Subcutaneous Histological Features," which
focuses on the application of microwave energy to the treatment of spider veins
and for use in hair removal. The use of microwave for hair removal is based upon
the selective heating of hair follicles while cooling the surface of the skin to
protect the epidermis. MMC has used computer modeling and laboratory studies to
optimize the system for hair removal. Preclinical studies have shown
effectiveness in destroying follicles while maintaining the integrity of the
skin surface. MMC's microwave system for hair removal is now in Phase II
clinical trials.
MMC's objective is to complete development of a microwave therapy system which
incorporates the technology in the patent for the following applications:
(A) The treatment of Telangiectasia, or, spider veins
-------------------------------------------------
Spider veins are thread-like red to purplish veins that stem
from a network of small veins just below the surface of the
skin. Spider veins develop more predominately on the legs and
faces of women. These are usually caused by the female hormone
estrogen. At this time, surgery, laser and injection
(sclerotherapy) are the predominant treatments for the
condition.
(B) The removal of unwanted hair for cosmetic purposes
--------------------------------------------------
Unwanted hair is a common dermatological and cosmetic problem.
There is an increasing demand for hair removal, which thus far
has not been well addressed by current technologies. MMC has
been able to demonstrate that microwave technology is a
feasible solution for hair removal, and is in the process of
completing Phase II clinical trials for safety and
effectiveness.
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RESEARCH AND DEVELOPMENT
- ------------------------
MMC began its research and development program in September, 1995 while a
subsidiary of Dynamic. The research and development program included computer
modeling, laboratory studies and preclinical studies which led to the
development of a prototype microwave system that is now in clinical trials for
hair removal, and will soon be in clinical trials for spider veins. P&H
Laboratories supported the technical development of MMC's prototype system.
MMC plans to launch its microwave system(s) for spider veins and hair removal at
the end of 1998 or the first quarter of 1999. The Company has three working
prototype systems which are being used in clinical trials in the U.S. and
Europe. A unit ready for production is being developed in conjunction with the
clinical testing and is expected to be ready for market launch when the
regulatory approvals are obtained. MMC has Litton Industries, Inc.("Litton") as
a partner in development of the magnetron based microwave source, one of the
components of the integrated system. Litton already has a bench level prototype
of the magnetron planned for the production unit. The same firm which performed
the industrial design of the clinical prototypes will be used for design and
limited production of the final unit. Design of the production unit will require
only 20 percent of MMC's internal resources due to the use of outside
contractors. The estimated cost of development to ready production is
approximately one million dollars. Initially, MMC will be dependent upon Litton
as the supplier of the magnetron. However, Litton is a very substantial company,
making it unlikely that they could not meet MMC's production demands. In
addition, MMC will search out alternate suppliers of magnetrons as a back up
position.
COMPETITION AND MARKETING
- -------------------------
The Company intends to market its proprietary microwave technology in the
cosmetic dermatology market. In recent years, there has been a substantial
upsurge in the demand for non surgical cosmetic procedures such as the treatment
of spider veins and removal of hair. Market interest has been largely fostered
by the introduction of laser technology for use in cosmetic dermatology.
MMC plans to compete primarily with laser devices in North America and the
European Community. MMC's competitive advantage is expected to be based on
price, safety and effectiveness. The unit price is expected to be in the range
of $70,000 to $80,000, which is 25 to 35 percent below the current cost of the
equivalent laser systems. In addition, laser technology cannot be applied well
in individuals with dark skin (for either spider veins or hair removal) and does
not effectively cause hair removal in individuals with light colored hair. These
limitations are the result of absorption of laser energy by specific pigments in
the skin and hair. In addition, the efficacy of laser systems for spider veins
is suboptimal, in most cases requiring 3 to 5 treatments to achieve an
acceptable clinical response. Based upon the Company's clinical studies to date,
microwave technology is not expected to have these limitations.
The principal competitors are Thermolase Corp. and ESC, Inc., both of which are
U.S. companies. Thermolase concentrates entirely on hair removal and has
established clinics and licensing
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agreements in North America and Europe. Thermolase has a market capitalization
of $250 million, compared to a high level of $800 million one year ago. The drop
in valuation has been the result of poor earnings and performance. ESC, Inc.
markets pulsed light systems for spider veins and hair removal, and has a market
capitalization of $800 million.
Thermolase has placed 150 laser systems in 33 states and several international
markets. Both companies are growing very rapidly based upon the market demand.
The annual revenue for Thermolase in 1997 was approximately $40 million, and for
ESC, Inc. was $120 million. Both companies have market concentration in North
America and also have sales in markets abroad.
The market strategy will be specific to the geographic area in which the product
is being introduced. MMC will focus on two marketing strategies: selling or
leasing the product to physicians and other health-care practitioners, and fee
sharing in which MMC will prefinance the product and will take some percentage
of the revenue generated through the use of the product. MMC will use
distributors in each major geographic area who will take over the sales and
service of the product.
The primary customer will be physicians and other healthcare practitioners
specializing in cosmetic dermatology. In the U.S. alone, it is estimated that
there are 17,000 dermatologists. In addition, other physician specialists such
as family practitioners, gynecologist, and surgeons have incorporated cosmetic
dermatology into their practices.
The worldwide market for the treatment of spider veins and hair removal is
estimated to be $5 billion. New technologies will make up 25% of this market up
to the year 2002.
MMC concentrates marketing and sales efforts in the United States, Canada and
the European Community. The Company will apply to the appropriate regulators in
all three markets simultaneously. On the assumption of efficacy, the European
market launch will be prepared either in the fourth quarter of 1998 or the first
quarter of 1999. The commencement of the American launch is conditional on FDA
approval. In both markets, MMC will apply for hair removal and spider veins.
Depending on end user and region, MMC is preparing three kinds of marketing
strategies. The strategy for the market launch is determined by possibility of
rapid growth and cash flow. Sales in MMC will depend on the respective marketing
strategy.
MMC entered into a license agreement with Microthermia Technology, Inc. (of
California), whereby MMC obtained an exclusive license to develop and
manufacture medical device products related to the treatment of spider veins
(telangiectasia). The license is for an initial period of two years with
automatic one year renewals for the next eight years, at no cost (total license
period of 10 years). This potential 10 year licensing arrangement will terminate
in 2006. MMC does not intend to use this technology at the present time.
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EMPLOYEES
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The Company's employees consist of its President and Secretary. MMC employs four
individuals, including its President and a Chief Scientist, as well as an
electrical/microwave engineer and a microwave technician. In the next 12 months,
the research and development division of MMC is expected to grow to eight
full-time employees. Manufacturing and assembly will be conducted by third
parties under the supervision of MMC. None of the employees of the Company or
its subsidiaries are subject to collective bargaining agreements, nor have they
been on strike, or threatened to strike, within the past three years. The
Company and its subsidiaries have no supplemental benefit or incentive
arrangements with their employees. Sales, marketing and administration is
anticipated to add another 15 employees.
PATENTS AND TRADEMARKS
- ----------------------
The success of the Company substantially depends upon its proprietary microwave
technology for use in cosmetic dermatology. MMC has a patent pending entitled,
"Method and Apparatus for Treating Subcutaneous Histological Features," which
focuses on the application of microwave energy to the treatment of spider veins
and for use in hair removal. The Company has no other trademark or trademark
protection.
COMPLIANCE
- ----------
The microwave technology products to be manufactured by MMC must be in
compliance with the FCC regulations on Part 18, Title 47 and with the European
standard EN 55011. MMC has performed internal field strength measurements to
demonstrate compliance with FCC regulations. MMC will contract with an
environmental consulting group to confirm environmental compliance.
SALE OF THE BUSINESS OF P&H
- ---------------------------
The Company sold the business of P&H pursuant to an asset purchase and sale
agreement dated March 9, 1998 (the "P&H Sale Agreement") between P&H and
Microwave Communication Corporation, a California corporation ("Microwave"),
whereby P&H agreed to sell to Microwave all of the assets of the business of P&H
as a going concern (the "P&H Sale Agreement"). The sale of assets by P&H to
Microwave was completed on May 6, 1998. The following consideration was received
by the Company on closing:
(A) cash consideration of $160,534;
(B) a promissory note issued by MCC/Ferro Systems, Inc., a
subsidiary of Microwave, whereby MCC/Ferro has agreed to pay
to P&H the sum of $250,000 on August 1, 1998 and the sum of
$243,125 on March 31, 1999 (the "MCC/Ferro Promissory Note")
(C) the agreement of Microwave to provide to MMC 1200 hours
of microwave related
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services for the period to April 1, 1999, subject to a maximum
of 100 hours per month;
(D) office space for the business of MMC at MCC/Ferro's facility
in Simi Valley, California until February 28, 1999.
The obligations of MCC/Ferro under the MCC/Ferro Promissory Note are secured by
a general security agreement against the assets of MCC/Ferro and the guarantee
of Microwave. The general security agreement is subordinated to bank financing
arranged by MCC/Ferro to pay-out P&H's bank financing and pay the amounts under
the MCC/Ferro Promissory Note.
Prior to disposition of its business, P&H was involved in the business of
manufacturing microwave components and subsystems for the communications and
aerospace industries. The devices included isolators, circulators, power monitor
devices, filters, diplexers, switching diplexers, multi-junction circulators,
microwave subsystems and integrated packages and subsystems. P&H is currently
inactive as a result of the sale of the assets comprising its business.
RESEARCH AND DEVELOPMENT EXPENDITURES
- -------------------------------------
During the past two fiscal years, the following amounts were spent by MMC, as a
subsidiary of Dynamic, on research and development activities:
Year Ended Year Ended
December 31, 1996 December 31, 1997
MMC $ 588,915 $ 1,057,759
Research and Development cost for P&H is incorporated in the Cost of Goods
category in the Financial Statements.
LIQUIDITY
- ---------
As a subsidiary of Dynamic, MMC had net losses equal to $595,318 for the year
ended December 31, 1996 and $1,127,675 for the year ended December 31, 1997. The
losses were funded by Dynamic. The Company is now responsible for financing MMC
independently of Dynamic. The Company does not have any debt owing to Dynamic as
a result of the distribution.
The Company anticipates that its research and development expenditures for the
1998 fiscal year will be approximately $2 million. The Company will apply the
proceeds from the sale of the microwave technologies business owned by P&H to
fund MMC. The Company will also apply funds realized from the promissory note
executed by Dynamic in favor of the Company to fund MMC. Any additional required
funding is intended to be achieved by sales of the Company's equity
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securities. There is no assurance the Company will be able to complete sales of
its securities at such amounts and at such prices as are necessary to fund the
Company's projected research and development expenditures and general and
administrative expenditures.
SUBSIDIARIES
- ------------
Because the Company acts only as a holding company for P&H and MMC, all of the
information for each of these entities is listed throughout this Form 10SB.
Reference to the Company is to MW Medical and its wholly owned subsidiaries, P&H
and MMC. The subsidiaries' financial information is included in the financial
statements attached hereto. The Company did not come into existence until
December 1997, while the subsidiaries were in existence for all of 1997. P&H and
MMC have maintained separate operations and financial reporting both prior to
and subsequent to the spin-off of the shares of the Company by Dynamic.
ITEM 7. DESCRIPTION OF PROPERTY
The Company leases space on a rent-free basis from its former parent, Dynamic
Associates, Inc., within Dynamic's corporate headquarters at 7373 North
Scottsdale Road, Suite B-169, Scottsdale, Arizona, 85253.
MMC's offices are located at 4496 Runway Street, Simi Valley, CA 93063. The
premises occupied by MMC constitute a portion of the premises formerly occupied
by P&H, constituting approximately 18,000 square feet at 4496 Runway Street,
Simi Valley, California, and now occupied by MCC/Ferro. MCC/Ferro has agreed
pursuant to the P&H Sale Agreement to grant to MMC occupancy of the premises at
Simi Valley, California until February 28, 1999 without any additional payment
or obligation of MMC, other than reimbursement of expenses directly attributable
to MMC's occupancy.
<PAGE>
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ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following information sets forth the names of the officers and directors of
the Company, their present positions with the Company and its subsidiaries, and
their biographical information.
MW MEDICAL, INC.
NAME AGE OFFICE(S) HELD
Jan Wallace 42 President, CEO, Director
Grace Sim 37 Secretary, Treasurer, Director
MICROWAVE MEDICAL CORPORATION
NAME AGE OFFICE(S) HELD
Rainer Marquart 42 President, CEO, Director
Robert Spertell 49 Chief Operating Officer
Grace Sim 37 Secretary, Treasurer, Director
Jan Wallace 42 Director
P&H LABORATORIES, INC.
NAME AGE OFFICE(S) HELD
Jan Wallace 42 President, CEO, Director
Grace Sim 37 Secretary, Treasurer
Jan Wallace has been President, CEO and Director of the Company since its
inception in December, 1997. Ms. Wallace has been employed by Dynamic since
April 1995, when she was elected to the Board of Directors and accepted the
position of Chief Operating Officer. Ms. Wallace was previously Vice President
of Active Systems, Inc. a Canadian company specializing in SGML Software an ISO
standard in Ottawa, Ontario for the period from 1993 to 1994. Prior to that she
was President and Owner of Mailhouse Plus, Ltd., an office equipment
distribution company which was sold to Ascom Corporation. She has also been in
management with Pitney Bowes-Canada and Bell Canada where she received its
highest award in Sales and Marketing. Ms. Wallace was educated at Queens
University in Kingston, Ontario and Carleton University, Ottawa, Ontario in
Political Science with a minor in Economics. Ms. Wallace is also an officer and
director of Claire Technologies, Inc.
Grace Sim has been the Secretary/Treasurer of Dynamic since October 10, 1997 and
of the Company since its inception in December 1997. Ms. Sim joined Dynamic in
January 1997. Prior to joining Dynamic, Ms. Sim owned an accounting consulting
company in Ottawa,
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Ontario, Canada. Between 1993 and 1994, she worked as the controller of
Fulline, an office equipment company and with Mailhouse Plus Ltd. between 1990
and 1992. Ms. Sim received her Bachelor of Mathematics with honors from the
University of Waterloo in Waterloo, Ontario. She is also an Officer in Claire
Technologies, Inc., a company which files annual reports pursuant to the
Securities Exchange Act of 1934.
Dr. Rainer Marquart is a director of Dynamic and President of MMC. Dr. Marquart
has been employed by MMC since October 1997. Dr. Marquart was previously Member
of the Board of the second biggest PC Retail company in Europe and was
responsible for $600 million in sales from 1994 to 1996. Prior to that, he ran a
consulting company with offices in Munich, Zurich and Vienna. This company
specialized in reorganization of medium-sized companies and start up management.
Dr. Marquart was also a manager with the Boston Consulting Group for 4 years.
Dr. Marquart obtained a Ph.D. in Chemical Engineering from the Technical
University in Darmstadt, Germany.
Dr. Robert Spertell has been the Chief Scientist of MMC since April 1996. Dr.
Spertell received a Ph.D. in Chemical Engineering from Princeton University, and
a M.D. from the University of California, San Diego. From 1994 until the time
Dr. Spertell joined MMC, he was Chief Scientist at Zapit Technology, Inc., a
company specializing in the development of an electron beam system for
destruction of organic vapor waste. From 1990, Dr. Spertell was Vice President
and Medical Director of Life Support Systems, Inc., a medical company in the
development of hypo- and hyperthermia devices for medical applications. Dr.
Spertell has further consulted in the areas of microwave hyperthermia, stroke
therapies, medical software, and business and strategic planning for various
other medical device companies.
ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth certain information as to the Company's three
highest paid executive officers and directors for the fiscal year which will end
on December 31, 1998. No other compensation was paid or will be paid to any such
officers other than the cash compensation set forth below.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name and principal position | Year | Salary
- ----------------------------------------------------------------------------------------------------------------------
| |
Jan Wallace | 1998 | $200,000
Rainer Marquart | 1998 | $180,000
Robert Spertell | 1998 | $110,000
| |
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation of $2,500 per quarter will be paid to each executive officer and
director for services in fiscal 1998.
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ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
The following table sets forth, as of February 26, 1998, the beneficial
ownership of the Company's Common Stock by (i) each of the three most highly
compensated officers, (ii) the officers and directors as a group and (iii) each
person known by the Company to beneficially own more than 5% of the Company's
Common Stock outstanding as of such date. Except as otherwise indicated, all
shares are owned directly.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
<S> <C> <C>
Common Stock Cede & Co. 7,828,966 55.0%
P.O. Box 222
New York, NY 10274 - 0000
Common Stock Vickie T. Lucky 2,370,000 16.6%
1613 Jimmie Davis Hwy.
Suite #1&2
Bossier City, LA 71112
Common Stock Jan Wallace 500,000 3.5%
(President & Director)
6929 East Cheney
Paradise Valley, AZ 85253
Common Stock Grace Sim 50,000 0.4%
(Secretary/Treasurer)
Scottsdale, AZ 85253
Common Stock All Officers and Directors 550,000 3.9%
as a Group (2 persons)
</TABLE>
Neither of Messrs. Marquart or Spertell own any shares of common stock of the
Company.
There are no options, warrants or rights outstanding to purchase securities of
the Company.
ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Nil.
ITEM 12. SECURITIES BEING OFFERED
The securities being registered are the Company's common shares, par value
$0.001 per share. Under the Company's Articles of Incorporation, the total
number of shares of all classes of stock that the Company shall have authority
to issue is 100,000,000 common shares, par value $.001 per share,
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all of which shall be Company Common Stock. As of the date hereof, 14,223,929
shares of Company Common Stock are issued and outstanding. The number of shares
of Common Stock outstanding is based on the number of shares of Dynamic common
stock outstanding on February 25, 1998. The outstanding shares of Common Stock
were distributed to the shareholders of Dynamic on a one to one basis based on
the shareholders of Dynamic of record as of February 25, 1998. All of the shares
distributed to Dynamic shareholders in the distribution are fully paid and
non-assessable except as provided under applicable Nevada statutory law.
There are no outstanding options to purchase securities of the Company.
COMMON STOCK
Holders of Company Common Stock are entitled to one vote for each share on all
matters voted on by shareholders. Holders of Company Common Stock do not have
cumulative voting rights in the election of directors. The first annual meeting
of shareholders is expected to be held within 12 months of the Distribution
Date.
Holders of Company Common Stock do not have preemptive rights, or any
subscription, redemption or conversion privileges. Holders of Company Common
Stock are entitled to participate ratably in dividends on the Company Common
Stock as declared by the Board of Directors, and are entitled to share ratably
in all assets available for distribution to shareholders in the event of
liquidation or dissolution of the Company.
TRANSFER AGENT
National Stock Transfer, 3098 South Highland Drive, Suite 485, Salt Lake City,
Utah 84106 is the transfer agent for the shares.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER STOCKHOLDER MATTERS
The Company anticipates applying for a listing on the OTC Bulletin Board upon
effectiveness of this registration statement. Currently, there is no public
market for the Company's stock and there is no assurance that a public market
will materialize.
There are no shares of Common Stock subject to outstanding options or warrants
or convertible securities and no outstanding shares of Common Stock that could
be sold pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended.
As of May 31, 1998 there were 409 registered shareholders of the Company. The
Company has never paid any dividends and there are no dividend restrictions on
the Company to do so.
None of the holders of the Company's common shares
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have any right to require the Company to register its common shares
pursuant to the Securities Act of 1933, as amended.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no changes in or disagreements with its accountants since
its inception in December 1997.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company has issued to Dynamic 14,223,929 common shares pursuant to the
Contribution Agreement in consideration for the transfer by Dynamic to the
Company of all shares and shareholder loans of each of MMC and P&H and the
agreement of Dynamic to advance to the Company a total of $200,000. The shares
of the Company issued to Dynamic have subsequently been distributed to the
shareholders of Dynamic on the basis of one common share of the Company for each
common share of Dynamic.
The issue of common shares by the Company to Dynamic was completed pursuant to
the exemption from registration provided by Section 4(2) of the Securities Act
of 1933, as amended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The officers and directors of the Company are indemnified as provided under the
Nevada Revised Statutes and the Bylaws of the Company.
Under the NRS, director immunity from liability to a corporation or its
shareholders for monetary liabilities applies automatically unless it is
specifically limited by a corporation's articles of incorporation (which is not
the case with the Company's Articles of Incorporation). Excepted from that
immunity are: (i) a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a material
conflict of interest; (ii) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful); (iii) a transaction from
which the director derived an improper personal profit; and (iv) willful
misconduct.
The Bylaws provide that the Company shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a Director, Officer, employee or agent of
this corporation, or is or was serving at the request of this corporation as a
Director, Officer, employee,
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or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorneys' fees), judgements, fines, and
amounts paid in settlement actually and reasonably incurred by a director in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of this corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe this conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of this corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
The Company also indemnifies any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of this corporation to procure a judgment in its favor by reason of
the fact that that person is or was a Director, Officer, employee, or agent of
the Company, or is or was serving at the request of the Company as a Director,
Officer, employee, or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of this corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the Company unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper;
To the extent that a Director, Officer, employee, or agent of the Company has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to above, or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith;
Any indemnification shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Director,
Officer, employee, or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in paragraphs (a) and (b)
above. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who where not parties to such
action, suit, or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders;
Expenses incurred in defending a civil or criminal action, suit, or proceeding
may be paid by the Company in advance of the final disposition of such action,
suit, or proceeding as authorized by the board of directors in the manner
provided above under receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay such amount unless it shall ultimately be
<PAGE>
-16-
determined that he or she is entitled to be indemnified by the Company as
authorized in the Bylaws.
The indemnification shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
<PAGE>
-17-
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are attached
hereto.
1. Audited financial statements for the years ended December 31, 1997 and
1996 including:
(a) Balance Sheet;
(b) Consolidated Statement of Operations;
(c) Consolidated Statement of Changes in Stockholders' Equity;
(d) Consolidated Statement of Cash Flows;
(e) Notes to Consolidated Financial Statements.
2. Unaudited financial statements for the three months ended March 31, 1998,
including:
(a) Consolidated Balance Sheet;
(b) Consolidated Statement of Operations;
(c) Consolidated Statement of Cash Flows.
<PAGE>
-18-
PART III
INDEX TO EXHIBITS
Exhibit 2.1: Articles of Incorporation
Exhibit 2.2: Bylaws
Exhibit 6.1: Information Statement. Incorporated by reference to
Exhibit 99 to Registrant's Current Report on Form 8-K
filed on March 2, 1998
Exhibit 6.2: Contribution Agreement. Incorporated by reference to
Exhibit 99 to Registrant's Current Report on Form 8-K
filed on March 2, 1998
Exhibit 27.1: Financial Data Schedule for the period ended
December 31, 1997
Exhibit 27.2: Financial Data Schedule for the period ended
March 31, 1998
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
MW MEDICAL, INC.
Date: June 30, 1998
/s/ Jan Wallace
By: --------------------------------
JAN WALLACE, Director, President
Chief Executive Officer
<PAGE>
SMITH & COMPANY
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS
MEMBERS OF: 10 WEST 100 SOUTH, SUITE 700
AMERICAN INSTITUTE OF SALT LAKE CITY, UTAH 84101
CERTIFIED PUBLIC ACCOUNTANTS TELEPHONE: (801) 575-8297
UTAH ASSOCIATION OF FACSIMILE: (801) 575-8306
CERTIFIED PUBLIC ACCOUNTANTS E-MAIL:[email protected]
INDEPENDENT AUDITOR'S REPORT
Board of Directors
MW Medical, Inc.
We have audited the accompanying consolidated balance sheets of MW Medical, Inc.
and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, changes in stockholders' deficit, and cash flows for
the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MW Medical, Inc. and
Subsidiaries as of December 31, 1997 and 1996, and the results of their
operations, changes in stockholders' deficit, and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the financial
statements at December 31, 1997, the Company has an accumulated deficit of
$233,594. The Company has suffered losses from operations and has a substantial
need for working capital. This raises substantial doubt about its ability to
continue as a going concern. As discussed in Note 14, the Company is also in the
process of selling its subsidiary (P&H) which has operations. This will leave
the Company with no operating revenue in the near future. Management's plans in
regard to these matters are described in Note 13 to the financial statements.
The accompanying financial statements do not include any adjustments that may
result from the outcome of this uncertainty.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
March 30, 1998, except Note 14 which is dated May 11, 1998
F-1
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
----------------- -------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 387,982 $ 874,858
Accounts receivable (less allowance for doubtful accounts of
$20,000 in 1997 and $20,000 in 1996) 559,783 525,174
Loans receivable - related parties (Note 5) 0 30,300
Other receivables 19,824 98,120
Inventories (Note 2) 809,977 717,827
Prepaid expense and other current assets 17,829 11,308
Deferred tax benefit (Note 8) 73,000 67,000
-------------- --------------
TOTAL CURRENT ASSETS 1,868,395 2,324,587
PROPERTY, PLANT, & EQUIPMENT (Note 4) 693,283 260,730
OTHER ASSETS
Deposits 21,705 22,627
Organization Costs (Note 2) 28,440 880
-------------- --------------
50,145 23,507
-------------- --------------
$ 2,611,823 $ 2,608,824
================= =================
LIABILITIES & EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ $227,587 107,364
Accrued expenses 147,667 145,364
Current portion of long-term debt (Note 7) 90,449 48,185
Income taxes payable (Note 8) 0 45,415
-------------- --------------
TOTAL CURRENT LIABILITIES 465,703 346,328
Payable - former parent (Note 6) 1,999,806 1,085,447
Long-term debt (Note 7) 329,808 124,565
Deferred income tax (Notes 2 and 8) 0 56,500
-------------- --------------
2,329,614 1,266,512
============== ===============
TOTAL LIABILITIES 2,795,317 1,612,840
Commitments and contingencies (Note 9) 0 0
STOCKHOLDERS' EQUITY Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 14,223,929 shares 14,224 14,224
Additional paid-in capital 35,876 35,876
Retained earnings (deficit) (233,594) 945,884
--------- ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (183,494) 995,984
-------- -------
$ 2,611,823 $ 2,608,824
================= =================
See Notes to Financial Statements.
</TABLE>
F-2
<PAGE>
<TABLE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Year Ended December 31,
------------------------------------
1997 1996
----------------- -------------
<S> <C> <C>
Net sales $ 3,382,388 $ 3,395,098
Cost of sales 2,659,882 2,496,997
--------- ---------
GROSS PROFIT 722,506 898,101
Selling and General & administrative expenses 779,772 662,076
Depreciation and amortization 139,062 60,897
Research and development (Note 2) 1,057,759 588,915
--------- -------
1,976,593 1,311,888
--------- ---------
NET OPERATING (LOSS) (1,254,087) (413,787)
OTHER INCOME (EXPENSE)
Interest income 28,366 30,004
Interest expense (16,667) (16,988)
Miscellaneous income 6,675 8,162
----- -----
18,374 21,178
------ ------
NET (LOSS) BEFORE INCOME TAXES (1,235,713) (392,609)
INCOME TAX EXPENSE (BENEFIT) (Note 8) (56,235) 74,300
------- ------
NET (LOSS) $ (1,179,478) $ (466,909)
========== ========
Net (loss) per weighted average share $ (.08) $ (.03)
================== ==================
Weighted average number of common shares used to
compute net income (loss) per weighted
average share 14,223,929 14,223,929
================== ==================
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
<TABLE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
Common Stock Additional
-----------------------
Par Value $.001 Paid-in Retained
-----------------------
Shares Amount Capital Earnings
------ ------ ------- --------
<S> <C> <C> <C> <C>
Balances at 12/31/95 0 $ 0 $ 0 $ 0
Issuance of common stock (restricted) at $.1028
per share for subsidiaries * 14,223,929 14,224 35,876 1,412,793
Net loss for year (466,909)
---------- ------ ------ -------
Balances at 12/31/96 14,223,929 14,224 35,876 945,884
Net loss for year (1,179,478)
---------- ------ ------ -------
Balances at 12/31/97 14,223,929 $ 14,224 $ 35,876 $ (233,594)
============= =============== =============== ================
* Transaction actually occurred on March 11, 1998, but is reflected earlier
under pooling-of-interests method of accounting.
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
<TABLE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended December 31,
-----------------------
1997 1996
------------ ---------
OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) $ (1,179,478) $ (466,909)
Adjustments to reconcile net (loss) to cash used by
operating activities:
Depreciation and amortization 139,062 60,897
Book value of assets sold/disposed 47,405 0
Deferred taxes (62,500) (11,500)
Changes in assets and liabilities:
Accounts receivable (34,609) 285,651
Inventories (92,150) (129,024)
Prepaid expenses and other (18,146) (9,196)
Accounts payable and accrued expenses 120,116 21,922
Income taxes payable (45,415) (83,590)
------- -------
NET CASH USED BY OPERATING ACTIVITIES (1,125,715) (331,749)
INVESTING ACTIVITIES
Loan - other 92,330 (98,120)
Loan - related party 30,300 0
Organization costs (27,800) 0
Purchase of equipment (618,780) (150,680)
Deposits 922 (1,312)
--- ------
NET CASH USED BY INVESTING ACTIVITIES (523,028) (250,112)
FINANCING ACTIVITIES
Borrowings - former parent 914,360 548,500
Cash from subsidiaries 0 986,944
Principal payments on debt (99,796) (78,206)
Principal payments on capital lease obligation 0 (519)
Loan proceeds 347,303 0
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,161,867 1,456,719
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (486,876) 874,858
Cash and cash equivalents at beginning of year 874,858 0
------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 387,982 $ 874,858
======= =======
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 14,232 $ 17,356
Cash paid for income taxes 65,715 167,790
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1: BUSINESS ACTIVITY
The Company was incorporated under the laws of the state of Nevada on
December 4, 1997. The Company is now engaged in the acquisition of
microwave technologies for medical purposes through Microwave Medical
Corp. ("MMC"), and the manufacturing of highly technologically advanced
components and subsystems for the communications and aerospace
industries through P & H Laboratories ("P & H").
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
PRINCIPALS OF CONSOLIDATION
---------------------------
The consolidated financial statements for 1997 and 1996 include the
accounts of the Company; its wholly owned subsidiaries, MMC and MMC's
Germany based subsidiary Microwave Medical GmBH ("GmBH"), which was
formed in late 1997, and P & H.
All significant intercompany balances and transactions have been
eliminated in consolidation.
BASIS OF PRESENTATION
---------------------
These financial statements are presented to meet requirements of the
Securities and Exchange Commission and to show the activities of the
entities whose operations are now being continued as subsidiaries of
the Company.
ACCOUNTING METHODS
------------------
The Company recognizes income and expenses based on the accrual method
of accounting.
INVENTORIES
-----------
Inventories are stated at the lower of cost (first-in, first-out) or
market. At December 31, 1997 and 1996, inventories were comprised of
the following:
1997 1996
---- ----
Raw materials $ 344,909 $ 271,669
Work in progress 465,068 446,158
------- -------
$ 809,977 $ 717,827
========== ============
RESEARCH AND DEVELOPMENT COSTS
------------------------------
Research and development costs were $1,057,759 for 1997 and were all
incurred by MMC and GmBH ($588,915 in 1996 and all incurred by MMC).
WARRANTY COSTS
--------------
The Company provides, by a current charge to income, an amount it
estimates will be needed to cover future warranty obligations for
products sold during the year. The accrued liability for warranty costs
is included in accrued expenses in the accompanying balance sheets.
DIVIDEND POLICY
---------------
The Company has not yet adopted any policy regarding payment of
dividends.
STOCK OPTIONS
-------------
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its future employee stock options
rather than adopting the alternative fair value accounting provided for
under Financial Accounting Standards Board ("FASB") FASB Statement No.
123, Accounting for Stock Based Compensation (SFAS 123).
ESTIMATES
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
------------------------------------
The Company provides an allowance for uncollectible accounts based upon
prior experience and management's assessment of the collectability of
existing specific accounts.
F-6
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
CONCENTRATION OF CREDIT RISK
----------------------------
Financial instruments, which potentially subject the Company to
concentration of risk, consist of cash and investments. The Company
places its investments in highly rated commercial paper obligations
which limits the amount of credit exposure. Historically, the Company
has not experienced any losses related to investments.
PROPERTY, PLANT, AND EQUIPMENT
------------------------------
Property, plant, and equipment is recorded at cost and is being
depreciated over a useful life of seventeen months to eight years using
the straight-line and accelerated methods.
CASH AND CASH EQUIVALENTS
-------------------------
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or less
when purchased to be cash equivalents.
ORGANIZATION COSTS
------------------
Organization costs of MMC and GmBH are being amortized over sixty
months.
INCOME TAXES
------------
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences, and
operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than
not that some portion of all of the deferred tax assets will not be
realized. The valuation allowance at December 31, 1997 and 1996 was
zero. Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment. As of
December 31, 1997, temporary differences arose primarily from
differences in the timing of recognizing expenses for financial
reporting and income tax purposes. Such differences include
depreciation, bad debt allowance, and various accrued operating
expenses.
Prior to October 1, 1997, P&H filed separate income tax returns. For
the period of October 1, 1997 to December 31, 1997, P&H filed a
consolidated tax return with Dynamic Associates, Inc. ("Dynamic"), its
parent at that time. MMC filed a consolidated tax return with Dynamic
in 1996 and 1997.
LOSS PER SHARE
--------------
Loss per common share is computed by dividing net loss by the weighted
average shares outstanding during each period.
NOTE 3: CAPITALIZATION
The Company's authorized stock includes 100,000,000 shares of Class "A"
common stock at $.001 par value. On March 11, 1998, the Company issued
14,223,929 shares of its restricted common stock to the shareholders of
Dynamic Associates, Inc. in exchange for the common stock of MMC and
P&H held by those shareholders. The financial statements of MMC and P&H
have been presented herein as if the entities had been together for all
periods presented.
NOTE 4: PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment as of December 31, 1997 and 1996 are
summarized as follows:
<TABLE>
<CAPTION>
Accumulated Net Book Value
----------- --------------
Cost Depreciation 1997 1996
---- ------------ ---- ----
<S> <C> <C> <C> <C>
Machinery & Equipment $ 2,036,681 $ 1,463,473 $ 573,208 $ 187,364
Furniture & Fixtures 240,150 160,872 79,278 73,366
Leasehold Improvements 49,539 8,742 40,797 0
------------ ------------- --------- ---------
$ 2,326,370 $ 1,633,087 $ 693,283 $ 260,730
============= ================== =============== ===============
</TABLE>
Depreciation expense is calculated under straight-line and accelerated
methods based on the estimated service lives of depreciable assets.
Depreciation expense for the year ended December 31, 1997 amounted to
$138,822, ($60,657 in 1996).
Included in machinery and equipment is $59,315 of equipment under a
capital lease at December 31, 1997. The related accumulated
depreciation at December 31, 1997 is $51,397.
F-7
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 5: LOANS RECEIVABLE - RELATED PARTIES
<TABLE>
<CAPTION>
1997 1996
Due From Amount Amount Interest Rate Due Date
-------- ------ ------ ------------- --------
<S> <C> <C> <C> <C>
Officer of P & H $ 0 $30,300 0% June, 1997
======== ======== -- ----------
</TABLE>
NOTE 6: PAYABLE - FORMER PARENT
At December 31, 1997, MMC/GmBH owes $1,999,806 to Dynamic, their former
parent ($1,085,447 at December 31, 1996). The amounts represent
advances from Dynamic, which are non-interest bearing and have no set
repayment terms.
During the quarter ended March 31, 1998, Dynamic charged the advances
to bad debt expense and does not anticipate being repaid.
NOTE 7: LONG-TERM DEBT
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
Notes payable - S.B.A. Payable in monthly installments of
$892, including interest at 4% through June 2003. Debt is
guaranteed by the President of P & H. This note is
subordinated to the bank note below.
$ 0 $ 59,992
Note payable - Bank. Payable in monthly installments of $3,317
plus interest at prime plus 1% per annum and secured by
accounts receivable, other rights to payment, general
intangibles, inventory, and equipment of P & H. Debt
matures in December, 1999. 72,954 112,758
Note payable - bank. Interest payments only until May, 1998 at
which time it is converted to 48 monthly installments of
$7,235 plus interest at prime (8.5% at December 31, 1997)
plus 1% per annum and secured by assets of P&H. Debt
matures in May 2002. The agreement contains certain
financial and restrictive covenants. As of December 31,
1997, P&H was not in compliance with certain financial
covenants. On March 2, 1998, the bank waived such events
of noncompliance as of such date. 347,303 0
------- -------
420,257 172,750
Less current portion (90,449) (48,185)
------- -------
$ 329,808 $ 124,565
========= ===========
</TABLE>
Scheduled maturities of these obligations are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
------------------------
<S> <C> <C>
1998 $ 90,449
1999 119,808
2000 87,000
2001 87,000
2002 36,000
Thereafter 0
-----------------
$ 420,257
=================
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 8: INCOME TAXES
Components of income tax (benefit) are as follows:
<S> <C> <C>
1997 1996
---- ----
Current
Federal $ 4,665 $ 63,500
State 1,600 22,300
----- ------
6,265 85,800
----- ------
Deferred
Federal (46,500) (9,000)
State (16,000) (2,500)
------- ------
(62,500) (11,500)
------- -------
Income tax (benefit) $ (56,235) $ 74,300
=============== ==========
</TABLE>
A reconciliation of the provision for income tax expense with the
expected income tax computed by applying the federal statutory income
tax rate to income before provision for income taxes is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
---- ----
Income tax computed at federal
statutory tax rate $ (420,142) $ (133,487)
Tax due to not being able to file
Consolidated return and other 362,851 193,069
State taxes (net of federal benefit) 1,056 14,718
----- ------
$ (56,235) $ 74,300
=========== ==========
</TABLE>
Significant components of the Company's deferred tax liabilities and
assets for income taxes consist of the following:
<TABLE>
<S> <C> <C>
1997 1996
---- ----
Current deferred tax assets
Net operating loss $ 11,000 $ 0
Allowance for doubtful accounts 8,600 9,000
Capitalized inventory cost for tax 26,000 21,000
Vacation accrual 22,000 22,000
State income tax 1,000 9,000
Other accruals 4,400 6,000
----- -----
Net deferred current tax assets $ 73,000 $ 67,000
=========== ==========
Long-term deferred tax liabilities
Difference in fixed assets $ 0 $ 56,500
============ ==========
</TABLE>
There was no net change in the valuation allowance for the years ended
December 31, 1997 and December 31, 1996.
The deferred tax items relate to P&H. No deferred tax asset has been
recorded for MMC due to the fact it currently has no operations to use
its loss carryforward.
At December 31, 1997, MMC has a federal net operating loss carryover of
approximately $682,000. The Federal loss will expire as follows:
December 31, 2010 $ 31,000
December 31, 2011 651,000
----------------------
$ 682,000
======================
NOTE 9: COMMITMENTS AND CONTINGENCIES
The Company is provided with office space and other management services
at no charge at the present time.
MMC has the following commitments:
One officer will receive $15,000 per month.
Future scheduled payments under these employment related commitments
are as follows:
Year Ending
-------------------
December 31, 1998 $ 180,000
======================
P & H leases its facility from one of its officers under an operating
lease that requires minimum monthly payments of $15,468. The lease
expires February 28, 1999 and requires P & H to pay real property
taxes, insurance, and utility bills.
F-9
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 9: COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease payments are as follows:
Year Ending
------------------------
December 31, 1998 $ 186,000
December 31, 1999 31,000
----------------------
$ 217,000
======================
Rental expense for the year ended December 31, 1997 was $192,466
($189,088 in 1996) which includes $7,298 paid by MMC to P&H ($7,120 in
1996).
NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, loans, other
receivables, accounts payable, and accrued expenses approximate fair
value due to the short maturity periods of these instruments. The fair
value of the Company's long-term debt, based on the present value of
the debt, assuming interest rates as follows at December 31, 1997 was:
Note at 9.5% $ 60,375
Note at 9.5% 230,550
----------------------
$ 290,925
======================
NOTE 11: MAJOR CUSTOMERS
During 1997, P&H had sales to two customers representing 38.5% and
12.6% of total sales. At December 31, 1997, accounts receivable from
the two customers was about $274,000. During 1996, P&H had sales to two
customers which represented 40.6% and 12.2% of total sales. At December
31, 1996, accounts receivable from the two customers totaled $295,000.
NOTE 12: INDUSTRY SEGMENTS
The following narrative is before elimination of certain intercompany
items.
For 1997, all sales, cost of sales, and selling and general and
administrative expenses were incurred by P&H. P&H also had depreciation
and amortization expense of $63,272, interest income of $21,692,
interest expense of $16,667, other income of $6,675, and income tax
benefit of $57,035, for a net loss of $51,803.
MMC had depreciation and amortization expense of $75,790, research and
development expense of $1,057,759, interest income of $6,674, and
income tax expense of $800, for a net loss of $1,127,675.
For 1996, all sales, cost of sales, and selling and general and
administrative expenses were incurred by P&H. P&H also had depreciation
and amortization expense of $44,956, interest income of $19,666,
interest expense of $16,988, other income of $8,162, and income tax
expense of $73,500, for a net income of $128,409.
MMC had depreciation and amortization expense of $15,941, research and
development expense of $588,915, interest income of $10,338, and income
tax expense of $800, for a net loss of $595,318.
Pre-consolidation net income (loss) is as follows:
1997 1996
------------ ---------------
MMC/GmBH $(1,127,675) $ (595,318)
P & H (51,803) 128,409
------------- --------------
Adjusted Net Loss $(1,179,478) $ (466,909)
============ ============
NOTE 13: GOING CONCERN
The financial statements are presented on the basis that the Company is
a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. At December 31, 1997, the Company has a loss
from operations for 1997 of $1,254,087 and an accumulated deficit of
$233,594.
Management feels that loans from related parties and a 1998 public
stock/debt offering will provide sufficient working capital to allow
the Company to continue as a going concern. The $653,659 of cash
discussed in Note 14 will also help fund operations.
F-10
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
NOTE 14: SUBSEQUENT EVENTS
As discussed in Note 3, the Company actually acquired its subsidiaries
in 1998. The Company had no assets, liabilities, or operations of its
own for 1996 and 1997.
Effective April 1, 1998, a management team was brought in to run P&H.
This entity then began negotiations to purchase P&H from the Company
for a total of $653,659 in cash and management services valued at
$240,000, of which $160,534 cash has been received. The $653,659 is due
as follows:
$ 160,534 on April 1, 1998
250,000 on August 1, 1998
243,125 on March 31, 1999
Interest at 8% also accrues on $493,125 and is due March 31, 1999.
If the sale had occurred on December 31, 1997, P&H assets in the amount
of $2,347,732, liabilities in the amount of $720,348 and loss in the
amount of $51,803 would not be included in the financial statements.
The Company would have recorded a receivable in the amount of $653,659
for the sale, prepaid expense of $240,000, and the amount of $733,725
as loss would have been recorded on the statement of operations.
F-11
<PAGE>
<TABLE>
<CAPTION>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<S> <C>
March 31, 1998
-----------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 309,197
Accounts receivable (less allowance for doubtful accounts of $20,000) 547,880
Receivable - former parent 200,000
Other receivables 18,336
Inventories 729,341
Prepaid expense and other current assets 4,776
Deferred tax benefit 73,000
----------------------
TOTAL CURRENT ASSETS 1,882,530
PROPERTY, PLANT, & EQUIPMENT 632,670
OTHER ASSETS
Deposits 23,948
Organization Costs 26,990
----------------------
50,938
----------------------
$ 2,566,138
======================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $ 198,581
Accrued expenses 146,654
Current portion of long-term debt 91,899
Income taxes payable 0
----------------------
TOTAL CURRENT LIABILITIES 437,134
Long-term debt 318,407
Deposits 37,000
----------------------
355,407
----------------------
TOTAL LIABILITIES 792,541
Commitments and contingencies 0
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 100,000,000 shares
Issued and outstanding 14,223,929 shares 14,224
Additional paid-in capital 35,876
Retained earnings 1,723,497
----------------------
TOTAL STOCKHOLDERS' EQUITY 1,773,597
----------------------
$ 2,566,138
======================
</TABLE>
F-12
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
March 31,
---------------------------------
1998 1997
---------------------------------
Net sales $ 780,872 $ 900,233
Cost of sales 753,299 658,147
-------- ---------
GROSS PROFIT 27,573 242,086
Selling and General & administrative expenses 178,506 193,856
Depreciation and amortization 63,859 26,538
Research and development 192,157 198,870
---------- ----------
434,522 419,264
NET OPERATING (LOSS) (406,949) (177,178)
OTHER INCOME (EXPENSE)
Interest income 2,326 8,303
Interest expense (9,824) (2,985)
Debt cancellation - former parent 2,169,806 0
Fee - former parent 200,000 0
Miscellaneous income 3,332 5,742
------------ ----------
2,365,640 11,0606
NET INCOME (LOSS) BEFORE INCOME TAXES 1,958,691 (166,118)
INCOME TAX EXPENSE 1,600 13,950
------------- ----------
NET INCOME LOSS $ 1,957,091 $ (180,068)
============== ==========
Net income (loss) per weighted average $ .14 $ (.01)
share ================= ===========
Weighted average number of common shares
used to compute net income (loss)
per weighted average share 14,223,929 14,223,929
================ ==========
F-13
<PAGE>
MW MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended
March 31,
-------------------
1998 1997
------- -------
OPERATING ACTIVITIES
Net income (loss) $ 1,957,091 $ (180,068)
Adjustments to reconcile net income
(loss) to cash used by
operating activities:
Depreciation and amortization 63,859 26,538
Debt canceled (2,169,806) 0
Deferred taxes 0 11,500
Changes in assets and liabilities:
Accounts receivable (188,097) 50,693
Inventories 80,636 (3,537)
Prepaid expenses and other 13,053 1,599
Accounts payable and accrued expenses (30,019) (15,090)
Income taxes payable 0 (36,922)
------------ -----------
NET CASH USED BY OPERATING ACTIVITIES (273,283) (145,287)
INVESTING ACTIVITIES
Loan - other 1,488 (3,744)
Purchase of equipment (1,796) (137,004)
Deposits (2,243) (400)
----------- ---------
NET CASH USED BY INVESTING ACTIVITIES (2,551) (141,148)
FINANCING ACTIVITIES
Borrowings - former parent 170,000 300,000
Deposits 37,000 0
Principal payments on debt (9,951) (12,101)
--------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 197,049 287,899
---------------- -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (78,785) 1,464
Cash and cash equivalents at beginning of period 387,982 874,858
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 309,197 $ 876,322
============= ============
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 9,824 $ 3,885
Cash paid for income taxes 800 39,372
F-14
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
MW MEDICAL, INC.
That we, the undersigned, have this day associated ourselves for
the purpose of forming a corporation under the laws of the State of Nevada
pursuant to Nevada Revised Statutes Chapter 78, and do hereby adopt the
following Articles of Incorporation.
ARTICLE I
Name of Corporation
The name of this Corporation shall be MW Medical, Inc.
ARTICLE II
Resident Agent
This Corporation hereby appoints Corporate Services Company, 723
So. Casino Center Boulevard, 2nd Floor, Las Vegas, Nevada, 89101-6716, with a
mailing address of P.O. Box 7346, Las Vegas, Nevada 89125-2346 as Resident Agent
of this Corporation. The Board of Directors may, at any time, effect the
revocation of this or any other appointment of such agent.
ARTICLE III
Stock
The authorized capital stock of this Corporation shall be: one
hundred million (100,000,000) shares of Common Stock, having a par value of
$0.001. The board of directors is authorized to fix and determine in a
resolution the classes, series and numbers of each class or series as provided
in NRS 78.195 and 78.196.
ARTICLE IV
Board of Directors
The business and affairs of this Corporation shall be conducted by
a Board of Directors of not less than one (1) nor more than seven (7) members,
as established from time to time by said Board. The following named persons and
their addresses shall constitute the first Board of Directors, the size of which
is set at one (1):
Grace Sim
<PAGE>
-2-
7373 North Scottsdale Road, Suite B-169
Scottsdale, Arizona 85253
ARTICLE V
Incorporators
The incorporator of the Corporation and his address is as follows:
Gary R. Blume, Esq.
11801 North Tatum Boulevard
Suite 108
Phoenix, Arizona 85028
ARTICLE VI
Indemnification
The Corporation shall, to the full extent permitted by Nevada law,
indemnify all persons whom it may indemnify pursuant thereto.
The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible under Nevada law.
The Corporation is authorized to provide indemnification of agents
for breach of duty to the Corporation and its stockholders through bylaw
provisions or through agreements with the agents, or both, in excess of the
indemnification otherwise permitted, subject to the limits on such excess
indemnification set forth in Chapter 78 of the Nevada Revised Statutes.
As provided in N.R.S. Sec. 78.751 (5) the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. The provisions of this article do not affect any
rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
IN WITNESS WHEREOF, the undersigned have caused these Articles to
be executed as of the ________ day of _________________, 1997.
- --------------------------------
Gary R. Blume, Esq.
<PAGE>
-3-
STATE OF ARIZONA )
) ss
County of Maricopa )
On this, the ____________day of __________________, 19___ before
me, the undersigned Notary Public, personally appeared Gary R. Blume, known to
me to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
-------------------------------
Notary Public
My Commission Expires:
- -----------------------
<PAGE>
ACCEPTANCE OF APPOINTMENT BY RESIDENT AGENT
FOR
MW MEDICAL, INC.
_____________________________, having been designated to act as
Resident Agent, hereby consents to act in that capacity for the above named
corporation in accordance with applicable law.
- ------------------------------------------
Signature of Resident Agent
DATED: _____________________
EXHIBIT 2.2
BYLAWS
OF
MW MEDICAL, INC.
<PAGE>
BYLAWS
ARTICLE I - OFFICES....................................................PG. 1
ARTICLE II - MEETING OF STOCKHOLDERS...................................PGS. 1-3
SECTION 1. - ANNUAL MEETINGS.............................PG. 1
SECTION 2. - SPECIAL MEETINGS............................PG. 1
SECTION 3. - PLACE OF MEETINGS...........................PG. 1
SECTION 4. - NOTICE OF MEETINGS..........................PGS. 1-2
SECTION 5. - QUORUM......................................PG. 2
SECTION 6. - VOTING......................................PGS. 2-3
ARTICLE III - BOARD OF DIRECTORS.......................................PGS. 3-7
SECTION 1. - NUMBER ELECTION AND TERM OF OFFICE..........PG. 3
SECTION 2. - DUTIES AND POWERS...........................PG. 4
SECTION 3. - ANNUAL AND REGULAR MEETINGS; NOTICE.........PG. 4
SECTION 4. - SPECIAL MEETING; NOTICE.....................PG. 4
SECTION 5. - CHAIRMAN....................................PG. 5
SECTION 6. - QUORUM AND ADJOURNMENTS.....................PG. 5
SECTION 7. - MANNER OF ACTING............................PG. 5
SECTION 8. - VACANCIES...................................PGS. 5-6
SECTION 9. - RESIGNATION.................................PG. 6
SECTION 10.- REMOVAL.....................................PG. 6
SECTION 11.- SALARY......................................PG. 6
SECTION 12.- CONTRACTS...................................PGS. 6-7
SECTION 13.-COMMITTEES...................................PG. 7
ARTICLE IV - OFFICERS..................................................PGS. 7-8
SECTION 1. -NUMBER, QUALIFICATIONS, ELECTION AND TERM OF
OFFICE............................PG. 7
SECTION 2. - RESIGNATION. ..............PG. 7
SECTION 3. - REMOVAL.....................................PG. 8
SECTION 4. - VACANCIES...................................PG. 8
SECTION 5. - DUTIES OF OFFICERS..........................PG. 8
SECTION 6. - SURETIES AND BONDS..........................PG. 8
SECTION 7 - SHARES OF STOCK OF OTHER CORPORATIONS........PG. 8
ARTICLE V - SHARES OF STOCK............................................PGS. 8-10
SECTION 1. - CERTIFICATE OF STOCK........................PGS. 8-9
SECTION 2. - LOST OR DESTROYED CERTIFICATES..............PG. 9
SECTION 3. - TRANSFER OF SHARES..........................PGS. 9-10
SECTION 4. - RECORD DATE.................................PG. 10
ARTICLE VI - DIVIDENDS.................................................PG.10
<PAGE>
ARTICLE VII - FISCAL YEAR..............................................PG. 10
ARTICLE VIII - CORPORATE SEAL..........................................PG. 10
ARTICLE IX: - INDEMNITY................................................PG. 11
ARTICLE X - AMENDMENTS.................................................PG. 11
SECTION 1. - BY STOCKHOLDERS.............................PG. 11
SECTION 2. - BY DIRECTORS................................PG. 11
CERTIFICATE OF PRESIDENT...............................................PG. 12
<PAGE>
Page -1-
BYLAWS
OF
MW MEDICAL, INC.
ARTICLE I
OFFICES
The principal office of the Corporation shall be located as determined by the
Board of Directors and it may be changed from time to time by the Board of
Directors. The Corporation may also maintain offices at such other places within
or without the United States as the Board of Directors may, from time to time,
determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1 - ANNUAL MEETINGS
- ---------------------------
The annual meeting of the stockholders of the Corporation shall be
held within six (6) months after the close of the fiscal year of the
Corporation, for the purposes of electing directors, and transacting such other
business as may properly come before the meeting.
SECTION 2 - SPECIAL MEETINGS
- ----------------------------
Special meetings of the stockholders may be called at any time by
the Board of Directors or by the President, and shall be called by the President
or the Secretary at the written request of the holders of ten percent (10%) of
the shares then outstanding and entitled to vote thereat, or as otherwise
required by law.
SECTION 3 - PLACE OF MEETINGS
- -----------------------------
All meetings of stockholders shall be held at the principal office
of the Corporation, or at such other places as shall be designated in the
notices or waivers of notice of such meetings.
SECTION 4 - NOTICE OF MEETINGS
- ------------------------------
(a) Except as otherwise provided by statute, written notice of each
meeting of stockholders, whether annual or special, stating the time
when and place where it is to be held, shall be served either
personally or by mail, not less than ten or more than sixty (60) days
before the meeting , upon each stockholder of record entitled to vote
at such meeting, and to any other stockholder to whom the giving of
notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and
shall indicate that it is being issued by, or at the direction of, the
person or persons
<PAGE>
Page -2-
calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for their
shares pursuant to statute, the notice of such meeting shall include a
statement of that purpose and to that effect. If mailed, such notice
shall be directed to each such stockholder at his address, as it
appears on the records of the stockholders of the Corporation, unless
he shall have previously filed with the Secretary of the Corporation a
written request that notices intended for them be mailed to some other
address, in which case, it shall be mailed to the address designated in
such request.
(b) Notice of any meeting need not be given to any person who may
become a stockholder of record after the mailing of such notice and
prior to the meeting, or to any stockholder who attends such meeting,
in person or by proxy, or submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of
stockholders need not be given, unless otherwise required by statute.
SECTION 5 - QUORUM
- ------------------
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporation (such certificate and any amendments
thereof being hereinafter collectively referred to as the Certificate
of Incorporation), at all meetings of stockholders of the Corporation,
the presence at the commencement of such meetings in person or by proxy
of stockholders holding of record 51% of the total number of shares of
the Corporation then issued and outstanding and entitled to vote, shall
be necessary and sufficient to constitute a quorum for the transaction
of any business. The withdrawal of any stockholder after the
commencement of a meeting shall have no effect on the existence of a
quorum after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
stockholders, the stockholders. by a majority of the votes cast by the
holders of shares entitled to vote thereat, may adjourn the meeting. At
any such adjourned meeting at which a quorum is present, any business
may be transacted at the meeting as originally called if a quorum had
been present.
SECTION 6 - VOTING
- ------------------
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of
directors, to be taken by vote of the stockholders, shall be authorized
by a majority of votes cast at a meeting of stockholders by the holders
of shares entitled to vote thereat.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of stockholders, each holder of record
of stock of the Corporation entitled to vote thereat, shall be entitled
to one vote for each share of stock registered in that person's name on
the books of the Corporation.
<PAGE>
Page -3-
(c) Each stockholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy provided, however, that the
instrument authorizing such proxy to act shall have been executed in
writing by the stockholder or by their attorney-in-fact thereunto duly
authorized in writing. No Proxy shall be valid after the expiration of
eleven (11) months from the date of its execution, unless the person
executing it shall have specified therein the length of time it is to
continue in force. Such instrument shall be exhibited to the Secretary
at the meeting and shall be filed with the minutes of the meeting.
(d) Any action except election of directors, which may be taken by a
vote of stockholders at a meeting, may be taken without a meeting if
authorized by a written consent of shareholders holding at least a
majority of the voting power; provided that if a greater proportion of
voting power is required by such action at such meeting, then such
greater proportion of written consents shall be required.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1 - NUMBER, ELECTION AND TERM OF OFFICE
- -----------------------------------------------
(a) The number of the directors of the Corporation shall be not less
than one (1) nor more than seven (7), unless and until otherwise
determined by vote of a majority of the entire Board of Directors.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the
Corporation, who need not be stockholders, shall be elected by a
majority of the votes cast at a meeting of stockholders, by the holders
of shares of stock present in person or by proxy, entitled to vote in
the election. No cumulative voting is provided for.
(c) Each director shall hold office until the annual meeting of the
stockholders next succeeding their election, and until a successor is
elected and qualified, or until the prior death, resignation or removal
of the director.
SECTION 2 - DUTIES AND POWERS
- -----------------------------
The Board of Directors shall be responsible for the control and
management of the affairs, property and interests of the Corporation and may
exercise all powers of the Corporation, except as are in the Certificate of
Incorporation or by statute expressly conferred upon or reserved to the
stockholders.
<PAGE>
Page -4-
SECTION 3 - ANNUAL AND REGULAR MEETINGS; NOTICES
- ------------------------------------------------
(a) Regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the stockholders at the
place of such annual meeting of stockholders.
(b) The Board of Directors, from time to time, may provide by
resolution for the holding of other regular meetings of the Board of
Directors, and may fix the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not
be required to be given and, if given, need not specify the purpose of
the meeting; provided, however, that in case the Board of Directors
shall fix or change the time or place of any regular meeting, notice of
such action shall be given to each director who shall not have been
present at the meeting at which such change was made within the time
limited, and in the manner set forth in Paragraph (b) Section 4 of this
Article III, with respect to special meetings, unless such notice shall
be waived in the manner set forth in Paragraph (c) of such Section 4.
SECTION 4 - SPECIAL MEETING; NOTICE
- -----------------------------------
(a) Special meetings of the Board of Directors shall be held whenever
called by the President or by one of the directors, at such time and
place as may be specified in the respective notices or waivers of
notice thereof.
(b) Except as otherwise required by statute, notice of special meetings
shall be mailed directly to each director, addressed to that director
at their residence or usual place of business, at least four (4) days
before the day on which the meeting is to be held, or shall be sent to
them at such place by telefax or shall be delivered to them personally
or given to them orally, not later than the day before the day on which
the meeting is to be held. A notice, or waiver of notice except as
required by Section 8 or this Article III need not specify the purpose
of the meeting.
(c) Notice of any special meeting shall not be required to be given to
any director who shall attend such meeting without protesting prior
thereto or at its commencement, the lack of notice to them or who
submits a signed waiver of notice, whether before or after the meeting.
Notice of any adjourned meeting shall not be required to be given.
SECTION 5 - CHAIRMAN
- --------------------
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or that Chairman shall
be absent, then the Vice Chairman shall preside, and in their absence, a
Chairman chosen by the directors shall preside.
<PAGE>
Page -5-
SECTION 6 - QUORUM AND ADJOURNMENTS
- -----------------------------------
(a) At all meetings of the Board of Directors, the presence of a
majority of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business, except as
otherwise provided by law, by the Certificate of Incorporation, or by
these Bylaws.
(a) A majority of the directors, present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn
the same from time to time without notice, until a quorum shall be
present.
SECTION 7 - MANNER OF ACTING
- ----------------------------
(a) At all meetings of the Board of Directors, each director present
shall have one vote, irrespective of the number of shares of stock, if
any, which he may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these Bylaws, the action of a majority of the
directors present at any meeting at which a quorum is present shall be
the act of the Board of Directors.
(c) Unless otherwise required by amendment to the Articles of
Incorporation or statute, any action required or permitted to be taken
at any meeting of the Board of Directors or any Committee thereof may
be taken without a meeting if a written consent thereto is signed by
all the members of the Board or Committee. Such written consent shall
be filed with the minutes of the proceedings of the Board or Committee.
(d) Unless otherwise prohibited by Amendments to the Articles of
Incorporation or statute, members of the Board of Directors or of any
Committee of the Board of Directors may participate in a meeting of
such Board or Committee by means of a conference telephone network or a
similar communications method by which all persons participating in the
meeting can hear each other. Such participation is constituted presence
of all of the participating persons at such meetings and each person
participating in the meeting shall sign the minutes thereof, which may
be signed in counterparts.
SECTION 8 - VACANCIES
- ---------------------
Any vacancy in the Board of Directors, occurring by reason of an
increase in the number of directors, or by reason of the death, resignation,
disqualification, removal (unless vacancy created by the removal of a director
by the stockholders shall be filled by the stockholders at the meeting at which
the removal was effected) or inability to act of any director, or otherwise,
shall be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
<PAGE>
Page -6-
SECTION 9 - RESIGNATION
- -----------------------
Any director may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice such resignation shall take effect
upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 10 - REMOVAL
- --------------------
Any director may be removed with or without cause at any time by the
affirmative vote of stockholders holding of record, in the aggregate, at least a
majority of the outstanding shares of stock of the Corporation, at a special
meeting of the stockholders called for that purpose, and may be removed for
cause by action of the Board.
SECTION 11- SALARY
- ------------------
No stated salary shall be paid to directors, as such, for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 12 - CONTRACTS
- ----------------------
(a) No contract or other transaction between this Corporation and any
other corporation shall be impaired, affected or invalidated, nor shall
any director be liable in any way by reason of the fact that one or
more of the directors of this Corporation is or are interested in, or
is a director or officer, or are directors or officers of such other
corporations, provided that such facts are disclosed or made known to
the Board of Directors prior to their authorizing such transaction.
(b) Any director, personally and individually, may be a party to or may
be interested in any contract or transaction of this Corporation, and
no directors shall be liable in any way by reason of such interest,
provided that the fact of such interest be disclosed or made known to
the Board of Directors prior to their authorization of such contract or
transaction, and provided that the Board of Directors shall authorize,
approve or ratify such contract or transaction by the vote (not
counting the vote of any such Director) of a majority of a quorum,
notwithstanding the presence of any such director at the meeting at
which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair, invalidate or in any way affect any
contract or other transaction which would otherwise be valid under the
law (common, statutory or otherwise) applicable thereto.
<PAGE>
Page -7-
SECTION 13 - COMMITTEES
- -----------------------
The Board of Directors, by resolution adopted by a majority of the
entire Board, may from time to time designate from among its members an
executive committee and such other committees, and alternate members thereof, as
they may deem desirable, with such powers and authority (to the extent permitted
by law) as may be provided in such resolution. Each such committee shall serve
at the pleasure of the Board.
ARTICLE IV
OFFICERS
SECTION 1 -NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE
- --------------------------------------------------------------
(a) The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer, or a President and Secretary-Treasurer, and
such other officers, including a chairman of the Board of Directors,
and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman or
Vice Chairman of the Board of Directors may be, but is not required to
be a director of the Corporation. Any two or more offices may be held
by the same person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the
annual meeting of stockholders.
(c) Each officer shall hold office until the annual meeting of the
Board of Directors next succeeding their election, and until a
successor shall have been elected and qualified or until the death,
resignation or removal of the officer.
SECTION 2 - RESIGNATION
- -----------------------
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors or
by such officer and the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 3 - REMOVAL
- -------------------
Any officer may be removed, either with or without cause, and a
successor elected by a majority vote of the Board of Directors at any time.
<PAGE>
Page -8-
SECTION 4 - VACANCIES
- ---------------------
A vacancy in any office by reason of death, resignation, inability to
act, disqualification or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
SECTION 5 - DUTIES OF OFFICERS
- ------------------------------
Officers of the Corporation shall, unless otherwise provided by the
Board of Directors, each have such powers and duties as generally pertain to
their respective offices as well as such powers and duties as may be set forth
in these Bylaws, or may from time to time be specifically conferred or imposed
by the Board of Directors. The President shall be the chief executive officer of
the Corporation.
SECTION 6 - SURETIES AND BONDS
- ------------------------------
If the Board of Directors shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such sum,
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of their duties to the Corporation,
including responsibility for negligence for the accounting for all property,
funds or securities of the Corporation which may come into the Director's hands.
SECTION 7 - SHARES OF STOCK OF OTHER CORPORATIONS
- -------------------------------------------------
Whenever the Corporation is the holder of shares of stock of any other
corporation, any right or power of the Corporation as such stockholder
(including the attendance, acting and voting at stockholders' meetings and
execution of waivers, consents, proxies or other instruments) may be exercised
on behalf of the Corporation by the President, any Vice President or such other
person as the Board of Directors may authorize.
ARTICLE V
SHARES OF STOCK
SECTION 1 - CERTIFICATE OF STOCK
- --------------------------------
(a) The certificates representing shares of the Corporation's stock
shall be in such form as shall be adopted by the Board of Directors,
and shall be numbered and registered in the order issued. The
certificates shall bear the following: the Corporate Seal, the holder's
name, the number of shares of stock and the signatures of: (1) the
Chairman of the Board, the President or a Vice President and (2) the
Secretary, Treasurer, any Assistant Secretary or Assistant Treasurer.
<PAGE>
Page -9-
(b) No certificate representing shares of stock shall be issued until
the full amount of consideration therefore has been paid except as
otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may
authorize the issuance of certificates for fractions of a share of
stock which shall entitle the holder to exercise voting rights, receive
dividends and participate in liquidating distributions, in proportion
to the fractional holdings; or it may authorize the payment in cash of
the fair value of fractions of a share of stock as of the time when
those entitled to receive such fractions are determined; or it may
authorize the issuance subject to such conditions as may be permitted
by law, of scrip in registered or bearer form over the signature of an
officer or agent of the Corporation, exchangeable as therein provided
for full shares of stock, but such scrip shall not entitle the holder
to any rights of a stockholder, except as therein provided.
SECTION 2 - LOST OR DESTROYED CERTIFICATES
- ------------------------------------------
The holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of any loss or destruction
of the certificate representing the same. The Corporation may issue a new
certificate in the place of any certificate theretofore issued by it, alleged to
have been lost or destroyed. On production of such evidence of loss or
destruction as the Board of Directors in its discretion may require the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representatives, to give the Corporation a bond in
such sum as the Board may direct, and with such surety or sureties as may be
satisfactory to the Board, to indemnify the Corporation against any claims,
loss, liability or damage it may suffer on account of the issuance of the new
certificate. A new certificate may be issued without requiring any such evidence
or bond when, in the judgment of the Board of Directors, it is proper to do so.
SECTION 3 - TRANSFER OF SHARES
- ------------------------------
(a) Transfer of shares of stock of the Corporation shall be made on the
stock ledger of the Corporation only by the holder of record thereof,
in person or by his duly authorized attorney, upon surrender for
cancellation of the certificate or certificates representing such
shares of stock with an assignment or power of transfer endorsed
thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of
payment of taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the absolute owner thereof for all
purposes and, accordingly, shall not be bound to recognize any legal,
equitable or other claim to, or interest in, such share or shares of
stock on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise expressly provided
by law.
<PAGE>
Page -10-
SECTION 4 - RECORD DATE
- -----------------------
In lieu of closing the stock ledger of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding sixty (60) days, nor less
than ten (10) days, as the record date for the determination of stockholders
entitled to receive notice of, or to vote at, any meeting of stockholders, or to
consent to any proposal without a meeting, or for the purpose of determining
stockholders entitled to receive payment of any dividends or allotment of any
rights, or for the purpose of any other action. lf no record date is fixed, the
record date for the determination of stockholders entitled to notice of, or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which the notice is given, or, if no notice is given,
the day preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose shall be at the close of business
on the day on which the resolution of the directors relating thereto is adopted.
When a determination of stockholders of record entitled to notice of, or to vote
at, any meeting of stockholders has been made, as provided for herein, such
determination shall apply to any adjournment thereof, unless the directors fix a
new record date for the adjourned meeting.
ARTICLE VI
DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of
any funds available therefor, as often, in such amount, and at such time or
times as the Board of Directors may determine.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be January 1 to December 31
and may be changed by the Board of Directors from time to time subject to
applicable law.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall be in such form as shall be approved from time
to time by the Board of Directors.
<PAGE>
Page -11-
ARTICLE IX
INDEMNITY
(a) That this corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a Director, Officer, employee or agent of
this corporation, or is or was serving at the request of this corporation as a
Director, Officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgements, fines, and amounts paid in settlement actually and reasonably
incurred by a director in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of this corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe this conduct
was unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of this corporation, and with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful;
(b) That this corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of this corporation to procure a
judgement in its favor by reason of the fact that that person is or was a
Director, Officer, employee, or agent of this corporation, or is or was serving
at the request of this corporation as a Director, Officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection with the defense or settlement of such action or suit
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of this corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to this corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper;
(c) To the extent that a Director, Officer, employee, or agent of this
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in paragraphs (a) and (b) above, or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection therewith;
(d) Any indemnification under paragraphs (a) and (b) above (unless
ordered by a court) shall be made by this corporation only as authorized in the
specific case upon a determination that indemnification of the Director,
Officer, employee, or agent is proper in the circumstances because
<PAGE>
Page -12-
he or she has met the applicable standard of conduct set forth in paragraphs (a)
and (b) above. Such determination shall be made (1) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to
such action, suit, or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders;
(e) Expenses incurred in defending a civil or criminal action, suit, or
proceeding may be paid by this corporation in advance of the final disposition
of such action, suit, or proceeding as authorized by the board of directors in
the manner provided above under receipt of an undertaking by or on behalf of the
director, officer, employee, or agent to repay such amount unless it shall
ultimately be determined that he or she is entitled to be indemnified by this
corporation as authorized by this resolution;
(f) The indemnification shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
ARTICLE X
AMENDMENTS
SECTION 1 - BY STOCK HOLDERS
- ----------------------------
All bylaws of the Corporation shall be subject to alteration or repeal,
and new bylaws may be made, by the affirmative vote of stockholders holding of
record in the aggregate at least a majority of the outstanding shares of stock
entitled to vote in the election of directors at any annual or special meeting
of stockholders, provided that the notice or waiver of notice of such meeting
shall have summarized or set forth in full therein, the proposed amendment.
SECTION 2 - BY DIRECTORS
- ------------------------
The Board of Directors shall have power to make, adopt, alter, amend
and repeal, from time to time, bylaws of the Corporation, provided, however,
that the stockholders entitled to vote with respect thereto as in this Article X
above-provided may alter, amend or repeal bylaws made by the Board of Directors,
except that the Board of Directors shall have no power to change the quorum for
meetings of stockholders or of the Board of Directors or to change any
provisions of the bylaws with respect to the removal of directors of the filling
of vacancies in the Board resulting from the removal by the stockholders. In any
bylaw regulating an impending election of directors is adopted, amended or
repealed by the Board of Directors, there shall be set forth in the notice of
the next meeting of
<PAGE>
Page -13-
stockholders for the election of Directors, the bylaws so adopted, amended or
repealed, together with a concise statement of the changes made.
CERTIFICATE OF PRESIDENT
THIS IS TO CERTIFY that I am the duly elected, qualified and acting President of
MW MEDICAL, INC.
and that the above and foregoing bylaws constituting a true original copy were
duly adopted as the bylaws of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand.
DATED: ------------------------------
- -------------------------------------
, PRESIDENT
- --------------------------
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this Form
10SB registration statement (of 100,000,000 shares of common stock, par value
$0.001 per share of MW Medical, Inc.) of our report dated March 30, 1998, except
Note 14 which is dated May 11, 1998 on the financial statements for the years
ended December 31, 1997 and 1996.
/s/ Smith & Company
CERTIFIED PUBLIC ACCOUNTANTS
Salt Lake City, Utah
July 8, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from MW Medical, Inc. December 31, 1997
financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001059577
<NAME> MW Medical, Inc.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 387,982
<SECURITIES> 0
<RECEIVABLES> 579,783
<ALLOWANCES> (20,000)
<INVENTORY> 809,977
<CURRENT-ASSETS> 1,868,395
<PP&E> 2,326,370
<DEPRECIATION> (1,633,087)
<TOTAL-ASSETS> 2,611,823
<CURRENT-LIABILITIES> 465,703
<BONDS> 0
0
0
<COMMON> 14,224
<OTHER-SE> (197,718)
<TOTAL-LIABILITY-AND-EQUITY> 2,611,823
<SALES> 3,382,388
<TOTAL-REVENUES> 3,382,388
<CGS> 2,659,882
<TOTAL-COSTS> 2,659,882
<OTHER-EXPENSES> 1,976,593
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,667
<INCOME-PRETAX> (1,235,713)
<INCOME-TAX> (56,235)
<INCOME-CONTINUING> (1,254,087)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,179,478)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from MW Medical, Inc. March 31, 1998 financial
statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 309,197
<SECURITIES> 0
<RECEIVABLES> 567,880
<ALLOWANCES> (20,000)
<INVENTORY> 729,341
<CURRENT-ASSETS> 1,882,530
<PP&E> 2,328,166
<DEPRECIATION> (1,695,496)
<TOTAL-ASSETS> 2,566,138
<CURRENT-LIABILITIES> 437,134
<BONDS> 0
0
0
<COMMON> 14,224
<OTHER-SE> 1,759,373
<TOTAL-LIABILITY-AND-EQUITY> 2,566,138
<SALES> 780,872
<TOTAL-REVENUES> 780,872
<CGS> 753,299
<TOTAL-COSTS> 753,299
<OTHER-EXPENSES> 434,522
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,824
<INCOME-PRETAX> 1,958,691
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (406,949)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,957,091
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
