SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1998 Commission File No. 2-82655
INTERWEST MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Oklahoma 75-1864474
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organi-
zation)
Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (817)731-2743
Not Applicable
(Former name, former address, and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
(Not Applicable)
Yes X No
(APPLICABLE TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by
this report. 16,429,161 shares of Common Stock, $0.001 Par Value.
<PAGE>
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1998 1997
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 228,368 $1,458,281
Investments available for sale 2,907,466 1,955,961
Accounts receivable - trade 2,165,814 2,225,183
Prepaid expenses 93,575 60,165
Total current assets 5,395,223 5,699,590
REAL ESTATE DEVELOPMENT AND
CONSTRUCTION COSTS 13,433 33,582
PROPERTY AND EQUIPMENT, at cost
Land 191,442 191,442
Buildings and improvements 3,818,319 3,789,419
Equipment and furniture 1,071,832 827,302
Oil and gas properties (successful
Effort method of accounting) 616,974 477,276
5,698,567 5,285,439
Less accumulated depreciation 2,010,294 1,779,239
3,688,273 3,506,200
OTHER ASSETS
Cash escrow accounts 26,896 17,293
Deferred financing costs, net 411,944 265,583
438,840 282,876
TOTAL ASSETS $9,535,769 $9,522,248
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 15,418 $ 15,418
Accounts payable 1,286,013 1,196,289
Accrued liabilities 635,487 775,163
Total current liabilities 1,936,918 1,986,870
LONG-TERM DEBT 4,491,135 4,530,234
STOCKHOLDERS' EQUITY
Common stock, par value $0.001
authorized 50,000,000 shares;
issued 20,000,000 shares 20,000 20,000
Additional paid-in capital 4,798,745 4,798,745
Retained deficit ( 183,308) ( 1,297,316)
Accumulated other
comprehensive income ( 1,071,207) ( 147,190)
3,564,230 3,374,239
Less shares held in the Treasury
1998 3,570,839 shares
1997 3,180,039 shares 456,514 369,095
3,107,716 3,005,144
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $9,535,769 $9,522,248
See Accompanying Notes to Condensed
Consolidated Financial Statements
<PAGE>
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
Net patient service
revenue $2,820,197 $2,615,553 $8,404,461 $7,219,463
Other revenue 36,231 32,429 99,188 444,342
Total revenue 2,856,428 2,647,982 8,503,649 7,663,805
COSTS and EXPENSES
Professional care
of patients 1,635,345 1,424,471 4,567,638 4,066,005
General services 553,644 481,935 1,529,550 1,337,179
Administrative
Services 346,882 315,257 1,168,741 947,130
Other costs 16,090 22,641 39,695 173,195
Depreciation,
depletion and
amortization 83,539 115,954 231,055 371,738
Income from
operations 220,928 287,724 966,970 768,558
OTHER INCOME
(EXPENSES)
Interest income 5,274 27,878 23,802 79,819
Interest expense ( 88,335) ( 125,168) ( 272,737) ( 375,787)
Gain on sale
of investments 27,778 0 395,973 0
Income before
taxes on income 165,645 190,434 1,114,008 472,590
Provision for
Income taxes 0 0 0 0
Net income 165,645 190,434 1,114,008 472,590
OTHER COMPREHENSIVE
INCOME
Unrealized losses
On securities ( 628,525) 0 ( 924,017) 0
Comprehensive
Income ($ 462,880) $ 190,434 $ 189,991 $ 472,590
Per share of common stock
Weighted average
number of shares
outstanding 16,485,411 16,819,961 16,721,487 16,952,373
Net income
Per share $ 0.01 $ 0.01 $ 0.07 $ 0.03
See Accompanying Notes to Condensed
Consolidated Financial Statements
<PAGE>
INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES $ 945,246 $ 856,576
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 1,836,640 0
Purchase of marketable securities ( 3,316,189) ( 361,854)
Payments for acquisition of property ( 413,128) ( 210,491)
Net changes in escrow accounts ( 9,603) ( 9,603)
Advances to employees 0 ( 22,000)
Sale of property 0 289,672
Net cash used
in investing activities ( 1,902,280) ( 314,276)
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs paid ( 146,361) 0
Purchase of treasury stock ( 87,419) ( 36,571)
Payments on borrowings ( 39,099) ( 10,221)
Net cash used
in financing activities ( 272,879) ( 46,792)
Net change in cash ( 1,229,913) 495,508
CASH, beginning of period 1,458,281 2,094,563
CASH, end of period $ 228,368 $2,590,071
See Accompanying Notes to Condensed
Consolidated Financial Statements
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all
adjustments necessary to present fairly the Company's financial
position as of September 30, 1998, and its results of operations
for the three and nine months ended September 30, 1998 and 1997,
and cash flows for the nine months ended September 30, 1998 and
1997. The results of operations for the period presented are not
necessarily indicative of the results to be expected for a full
year.
2. Income per share was computed by dividing the net income by
the weighted average number of shares outstanding.
3. The Company is working to resolve the potential impact of the
year 2000 on the ability of the Company's computerized
information systems to accurately process information that may be
date sensitive. Any of the Company's programs that recognize a
date using "00" as the year 1900 rather than the year 2000 could
result in errors or system failures. The Company utilizes a
number of computer programs across its entire operation. The
Company has not completed its assessment, but currently believes
that costs of addressing this issue will not have a material
adverse impact on the Company's financial position. However, if
the Company and third parties upon which it relies are unable to
address this issue in a timely manner, it could result in a
material financial risk to the Company. In order to assure that
this does not occur, the Company plans to devote all resources
required to resolve any significant year 2000 issues in a timely
manner.
<PAGE>
REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Weaver and Tidwell, L.L.P., Independent Certified Public
Accountants, have performed a review of the condensed
consolidated balance sheet as of September 30, 1998 and the
condensed consolidated statements of operations and
comprehensive income for the three and nine months ended
September 30, 1998 and 1997, and cash flows for the nine months
ended September 30, 1998 and 1997, in accordance with established
professional standards and procedures for such a review. All
adjustments or additional disclosures proposed by Weaver and
Tidwell, L.L.P. have been reflected in the data presented.
The report of Weaver and Tidwell, L.L.P. commenting upon their review is
included as Part I - Exhibit I.
<PAGE>
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Board of Directors
InterWest Medical Corporation
We have reviewed the condensed consolidated balance
sheet of InterWest Medical Corporation as of September
30, 1998, and the related condensed consolidated
statements of operations and comprehensive income for
the three and nine month periods ended September 30,
1998 and 1997, and cash flows for the nine months ended
September 30, 1998 and 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified
Public Accountants. A review of interim financial
information consists of obtaining an understanding of
the system for the preparation of interim financial
information, applying analytical review procedures to
financial data and making inquiries of persons
responsible for financial and accounting matters. It
is substantially less in scope than an audit in
accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
condensed consolidated statements referred to above,
for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with
generally accepted auditing standards, the consolidated
balance sheet as of December 31, 1997, and the related
consolidated statements of operations, stockholders'
equity and cash flows for the year then ended (not
presented herein); and in our report dated March 10,
1998, we expressed an unqualified opinion on those
financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1997, is fairly stated
in all material respects in relation to the
consolidated balance sheet from which it has been
derived.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
November 11, 1998
557
PART I - EXHIBIT I
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Position and Results of Operations.
Changes in Balance Sheet Accounts
Current assets were $5,395,223 and total assets were $9,535,769
at September 30, 1998 as compared to $5,699,590 current assets
and $9,522,248 total assets at December 31, 1997. Current
liabilities were $1,936,918 at September 30, 1998 as compared to
$1,986,870 at December 31, 1997.
Results of Operations
For the Three Months Ended September 30, 1998, operating revenue
was $2,856,428; costs and expenses were $2,635,500, net income
was $165,645 and interest income was $5,274, as compared to the
Three Months Ended September 30, 1997, operating revenue of
$2,647,982, costs and expenses of $2,360,258, net income of
$190,434 and interest income of $27,878.
For the Nine Months Ended September 30, 1998, operating revenue
was $8,503,649; costs and expenses were $7,536,679, net income
was $1,114,008 and interest income was $23,802, as compared to
the Nine Months Ended September 30, 1997, operating revenue of
$7,663,805, costs and expenses of $6,895,247, net income of
$472,590 and interest income of $78,819.
Cash Flows
For the Nine Months Ended September 30, 1998, cash flows from
operating activities were $945,246, cash flows from investing
activities were ($1,902,280), cash flows from financing
activities were ($272,879), net decrease in cash was
($1,229,913), cash at the beginning of the period was $1,458,281,
and cash at the end of the period was $228,368 as compared to the
Nine Months Ended September 30, 1997, to cash flows from
operating activities of $856,576, cash flows from investing
activities of ($314,276), cash flows from financing activities of
($46,792), net increase in cash of $495,508, cash at the
beginning of the period of $2,094,563 and cash at the end of the
period of $2,590,071.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders.
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) None.
(b) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its half by the undersigned thereunto duly authorized.
INTERWEST MEDICAL CORPORATION
By:
Arch B. Gilbert, President,
Chief Executive Officer,
Chief Financial Officer, and
Chief Accounting Officer
Date: November 12,1998
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 228,368
<SECURITIES> 2,907,466
<RECEIVABLES> 2,165,814
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,395,223
<PP&E> 5,698,567
<DEPRECIATION> 2,010,294
<TOTAL ASSETS> 9,535,769
<CURRENT LIABILITIES> 1,936,918
<BONDS> 0
<COMMON> 20,000
0
0
<OTHER-SE> 3,087,716
<TOTAL-LIABILITY-AND-EQUITY> 9,535,769
<SALES> 8,503,649
<TOTAL-REVENUES> 8,503,649
<CGS> 4,567,638
<TOTAL-COSTS> 2,969,041
<OTHER EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE) 272,737
<INCOME-PRETAX> 189,991
<INCOME-TAX> 0
<INCOME-CONTINUING> 189,991
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189,991
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
