UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year
Ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the Transition
Period From to .
Commission file number No. 0-11881
INTERWEST MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Oklahoma 75-1864474
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
3221 Hulen Street, Suite C
Fort Worth, Texas 76107-6193
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 731-2743
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of March 31, 1999, the aggregate market value of the
9,990,661 shares of voting Common Stock held by non-affiliates
of the Company was approximately $2,103,890 based on the average
bid and asked price on that date.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of registrant's
classes of Common Stock, as of the latest practicable date.
Shares Outstanding
Class as of March 31, 1998
Common Stock, 14,195,661
$0.001 Par Value
DOCUMENTS INCORPORATED BY REFERENCE
(a) Prospectus dated June 6, 1983 - incorporated by reference in
Part I.
(b) Exhibits to the Registration Statement No. 2-82655 on Form
S-18 - Part IV.
(c) Form 8-K, dated July 2, 1990.
<PAGE>
INTERWEST MEDICAL CORPORATION
PART I
Item 1. Business.
InterWest Medical Corporation (the "Company") was incorporated
under the laws of the State of Oklahoma on March 3, 1983. The
principal office and place of business of the Company is located
at Suite C, 322l Hulen Street, Fort Worth, Texas 76107-6193. Its
telephone number is (817) 731-2743.
The Company was organized to engage in the business of
developing, operating and owning surgery centers itself and in
association with others. The Company did not, however, develop
any surgery centers.
In April, 1984, the Company commenced efforts to develop nursing
homes in an effort to diversify its efforts. The Company built
and sold to an unrelated purchaser a 187-bed skilled nursing home
in Vista, California. The Company presently owns and operates a
156-bed skilled nursing home in Colton, California. The Company
does not at this time have any plans to develop other nursing
homes.
The Company's business is extremely competitive in all phases.
Many of its competitors, both public and private, possess and
employ financial an personnel resources substantially greater
than those which are currently available to the Company.
Item 2. Properties.
The Company owns and operates a 156-bed skilled nursing home
located on a 9 acre parcel of land in Colton, California. At
December 31, 1998, the Company had an undepreciated cost of
$5,121,181 in such facility. In 1996, the facility had an
operating income of $1,003,417.
Item 3. Legal Proceedings.
In the opinion of management, all litigation pertaining to the
operations is considered to be ordinary routine litigation
incidental to its business and that the disposition of all
outstanding legal actions will not have a material adverse effect
on the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of 1998, except for the election of directors.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholders' Matters
The Company's Common Stock is traded in the national over-the-
counter market and is listed in the pink sheets. The high and
low bid prices quoted for each quarter in the past two calendar
years were as follows:
Period Low Bid High Bid
1st Quarter, 1997 $0.10000 $0.1250
2nd Quarter, 1997 $0.10000 $0.1250
3rd Quarter, 1997 $0.10000 $0.1250
4th Quarter, 1997 $0.10000 $0.1250
1st Quarter, 1998 $0.1500 $0.1700
2nd Quarter, 1998 $0.1600 $0.1800
3rd Quarter, 1998 $0.1500 $0.1800
4th Quarter, 1998 $0.1600 $0.1800
As of March 31, 1999, the approximate number of holders of Common
Stock was 1,991. No cash dividends had been paid as of December
31, 1998, and the Company does not currently anticipate paying
cash dividends in the foreseeable future.
Item 6. Selected Financial Data.
The following table sets forth certain summary financial
information concerning the Company.
Year Ended December 31,
1998 1997 1996 1995 1994
Operating
Revenues $11,316,121 $10,123,168 $9,283,774 $9,102,349 $8,505,792
Net income
(loss) $ 1,305,551 $ 609,112 ($ 49,282) ($ 47,877) ($
53,452)
Total Assets $10,164,646 $ 9,522,248 $8,333,614 $8,580,878 $8,690,373
Long-term debt $ 4,558,274 $4,530,234 $4,545,653 $4,559,472 $4,571,857
Earnings Per
Common Share: $0.08 $0.04 ($-0-) ($-0-) ($-0-)
Cash
dividends
declared $0.00 $0.00 $0.00 $0.00 $0.00
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(a) Liquidity and Capital Resources:
During the year 1996, the Company's cash decreased from
$2,096,886 at the beginning of the period to $2,094,563 at the
end of the period. Accordingly, there was a net decrease in cash
of ($2,323). This was attributable to a decrease in net cash
provided by operating activities.
During the year 1997, the Company's cash decreased from
$2,094,563 at the beginning of the period to $1,458,281 at the
end of the period. Accordingly, there was a net decrease in cash
of ($636,282). This was attributable to an increase in cash provided by
investing activities.
During the year 1998, the Company's cash decreased from
$1,458,281 at the beginning of the period to $460,329 at the end
of the period. Accordingly, there was a net decrease in cash of
($997,952). This was attributable to the purchase of Treasury
stock and an increase in net cash used in investing activities.
The Company is not aware of any known trends or any known
demands, commitments, events or uncertainties that will result in
or that are reasonably likely to result in the registrant's
liquidity increasing or decreasing in any material way.
In the Company's view, its short-term liquidity and short-term
capital resources will be sufficient to cover its cash needs up
to 12 months into the future. The Company does not presently
anticipate material capital expenditures. The Company does not
have any significant balloon payments. The Company's long-term
debt consists of a mortgage loan bearing interest at the rate of
7 3/8% and is payable in monthly installments of $30,778. It
is anticipated that these payments will be made from revenues
received by the operation of the Company's nursing home.
During 1998, the Company purchased as treasury shares a total of
2,624,300 shares of its stock at an aggregate purchase price of
$488,159.
(b) Results of Operations:
Operating profit for 1996 was $360,059, as compared to an
operating profit of $353,246 for 1995. Net loss was ($49,282)
for 1996, as compared to loss of ($47,877) in 1995.
Operating profit for 1997 was $987,934, as compared to an
operating profit of $360,059 for 1996. The increase in profit
<PAGE>
was attributed to larger revenues from the Company's long-term
health care facility. Net income was $609,112 in 1997 as
compared to a net loss of ($49,282) for 1996.
Operating profit for 1998 was $1,060,147, as compared to an
operating profit of $987,934 for 1997. The increase in profit
was attributable to larger revenues from the Company's long-term
health care facility. Net income was $1,305,551 in 1998 as
compared to net income of $609,112 in 1997.
(c) Effects of Inflation:
The Company is of the view that inflation did not affect its
operations in 1998 and should not in 1999.
Item 8. Financial Statements and Supplementary Data.
Page No.
Independent Auditor's Report 7
Consolidated Balance Sheets
December 31, 1998 and 1997 8
Consolidated Statements of
Operations for Years Ended
December 31, 1998, 1997 and
1996 10
Consolidated Statements of
Stockholders Equity for Years
Ended December 31, 1998, 1997
and 1996 11
Consolidated Statements of
Cash Flows for Years Ended
December 31, 1998, 1997 and
1996 12
Notes to Consolidated
Financial Statements 14
Schedule II - Valuation
And Qualifying Accounts 25
Supplemental Information 25
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There have been no disagreements with accountants on any matter
of accounting principles or practices or financial statement
disclosures during the twenty-four (24) month period ended
December 31, 1998.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
InterWest Medical Corporation
We have audited the accompanying consolidated balance
sheets of InterWest Medical Corporation and
subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations and
comprehensive income, stockholders' equity and cash
flows for each of the years in the three year period
ended December 31, 1998. Our audits also included the
financial statement schedule II for each of the years
in the three year period ended December 31, 1998.
These consolidated financial statements and the
financial statement schedule are the responsibility of
the Company's management. Our responsibility is to
express an opinion on these consolidated financial
statements and the financial statement schedule 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 consolidated 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 InterWest Medical
Corporation and subsidiaries as of December 31, 1998
and 1997, and the consolidated results of their
operations and their cash flows for each of the years
in the three year period ended December 31, 1998 in
conformity with generally accepted accounting
principles. Also, in our opinion, the financial
statement schedule II when considered in relation to
the basic financial statements taken as a whole,
presents fairly, in all material respects, the
information set forth therein.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, Texas
March 18, 1999
3218
<PAGE>
INTERWEST MEDICAL CORPORATION (1 of 2)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
1998 1997
ASSETS
CURRENT ASSETS
Cash, including interest bearing accounts,
1998 - $282,940; 1997 - $1,090,686 $ 460,329 $1,458,281
Accounts receivable - trade, net of
allowance for doubtful accounts,
1998 - $58,495; 1997 - $54,844 2,108,315 2,225,183
Investments available for sale 3,230,320 1,955,961
Prepaid expenses and other receivables 116,300 60,165
Deferred tax asset 47,255 -
Total current assets 5,962,519 5,699,590
REAL ESTATE DEVELOPMENT
AND CONSTRUCTION COSTS 7,113 33,582
PROPERTY AND EQUIPMENT, at cost
Land 214,681 191,442
Buildings and improvements 3,789,419 3,789,419
Equipment and furniture 1,117,081 827,302
Oil and gas properties (successful
efforts method of accounting) 532,869 477,276
5,654,050 5,285,439
Less accumulated
depreciation and depletion 1,890,769 1,779,239
3,763,281 3,506,200
OTHER ASSETS
Cash escrow accounts 31,713 17,293
Deferred financing costs, net 400,020 265,583
431,733 282,876
TOTAL ASSETS $10,164,646 $9,522,248
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION (2 of 2)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
1998 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 120,522 $ 15,418
Accounts payable 1,260,371 1,196,289
Accrued salaries 709,294 633,144
Income taxes payable 42,903 -
Other accrued liabilities 108 142,019
Total current liabilities 2,133,198 1,986,870
LONG-TERM DEBT 4,558,274 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 earnings (deficit) 8,235 ( 1,297,316)
Accumulated other comprehensive
income, net of tax effect of
$47,255 in 1998; $-0- in 1997 ( 496,552) ( 147,190)
4,330,428 3,374,239
Less cost of shares held
in the treasury,
1998 - 5,804,339 shares;
1997 - 3,180,039 shares 857,254 369,095
3,473,174 3,005,144
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $10,164,646 $9,522,248
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
REVENUES
Net patient service revenue $11,085,259 $9,773,756 $8,903,359
Other revenue 230,862 349,412 380,415
Total revenue 11,316,121 10,123,168 9,283,774
COSTS AND EXPENSES
Professional care
of patients 6,069,402 5,413,364 4,796,723
General services 2,008,394 1,822,532 1,783,758
Administrative services 1,776,102 1,352,709 1,320,204
Other costs 148,505 220,938 731,981
Depreciation, depletion
and amortization 253,571 325,691 291,049
Income from operations 1,060,147 987,934 360,059
OTHER INCOME (EXPENSES)
Equity in joint
venture operations - - 12,313
Gain on sale of assets 603,753 - -
Interest income 37,696 122,045 80,638
Interest expense ( 344,202) ( 500,867) ( 502,292)
Income (loss) before
taxes on income 1,357,394 609,112 ( 49,282)
Provision for income taxes 51,843 - -
Net income (loss) 1,305,551 609,112 ( 49,282)
Other comprehensive income,
net of tax
Unrealized holding
losses on securities ( 356,597) ( 147,190) -
Reclassification adjustment
for losses included
in net income 7,235 - -
Comprehensive
income (loss) $ 956,189 $ 461,922 ($ 49,282)
Weighted average
shares outstanding 16,205,378 16,954,926 17,385,664
Earnings per common share $ 0.08 $ 0.04 ($ - )
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Accumulated
Other
Comprehensive
Income
(Unrealized
Common Stock Additional Retained Holding Losses
Number of Par Paid-in Earnings on Securities Treasury
Shares Value Capital Deficit Net of Tax) Stock
Balance,
Dec 31, 1995 20,000,000 $20,000 $4,798,745 ($1,857,146) $ -
($178,082)
Net loss ( 49,282)
Purchase of
1,237,000
shares of
common stock
( 154,442)
Balance,
Dec 31, 1996 20,000,000 20,000 4,798,745 ( 1,906,428) - (
332,524)
Net income 609,112
Purchase of
297,075 shares
of common stock ( 36,571)
Other comprehensive
income ( 147,190)
Balance
Dec 31, 1997 20,000,000 20,000 4,798,745 ( 1,297,316) (
147,190) ( 369,095)
Net income 1,305,551
Purchase of
2,624,300 shares
of common stock ( 488,159)
Other comprehensive
Income (
349,362)
Balance,
Dec 31, 1998 20,000,000 $20,000 $4,798,745 $ 8,235 ($
496,552) ($857,254)
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1995
CASH FLOWS FROM
OPERATING ACTIVITIES:
Cash received from
customers/patients $11,332,989 $9,450,649 $9,045,079
Interest received 37,696 122,045 80,638
Cash paid to suppliers
and employees ( 9,846,913) ( 7,916,683) (8,220,967)
Interest paid ( 344,202) ( 500,880) ( 502,292)
Income taxes paid ( 8,940) - -
Net cash provided by
operating activities 1,170,630 1,155,131 402,458
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property
and equipment ( 597,487) ( 315,427) ( 352,675)
Proceeds from sale of assets 3,849,990 659,873 55,595
Purchase of investments ( 4,905,289) ( 2,103,151) -
Mortgage escrow deposits, net ( 14,420) 17,682 854
Receipts from joint ventures - - 58,273
Net cash used
in investing activities ( 1,667,206) ( 1,741,023) ( 237,953)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Financing costs paid ( 146,361) - -
Loan proceeds 168,000 - -
Payments on debt ( 34,856) ( 13,819) ( 12,386)
Purchase of treasury stock ( 488,159) ( 36,571) ( 154,442)
Net cash used
in financing activities ( 501,376) ( 50,390) ( 166,828)
Net decrease in cash ( 997,952) ( 636,282) ( 2,323)
CASH, beginning of period 1,458,281 2,094,563 2,096,886
CASH, end of period $ 460,329 $1,458,281 $2,094,563
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
RECONCILIATION OF NET INCOME
(LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income (loss) $1,305,551 $ 609,112 ($ 49,282)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on sale of assets ( 603,753) ( 78,775) ( 36,034)
Depreciation and amortization 253,571 325,691 291,049
Abandonments 86,835 14,575 332,027
Equity in joint venture operations - - ( 12,313)
Changes in assets and liabilities:
Accounts receivable 116,868 ( 593,744) ( 202,661)
Prepaid expenses and
other receivables ( 56,135) 13,170 5,749
Real estate development costs 26,469 88,000 105,077
Accounts payable 64,082 687,668 ( 109,253)
Accrued liabilities ( 65,761) 89,434 78,099
Income taxes payable 42,903 - -
Net cash provided by
operating activities $1,170,630 $1,155,131 $402,458
NONCASH INVESTING
AND FINANCING ACTIVITIES:
Included in prepaid expenses and other receivables at December 31, 1996 is
$28,750 due from the president of the Company on the sale of common stock
investments.
The Notes to Consolidated Financial Statements
are an integral part of these statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The accounting policy relative to property and equipment is shown on the
accompanying balance sheets. Other significant accounting policies are as
follows:
Basis of Presentation
The consolidated financial statements include the accounts of InterWest Medical
Corporation and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. Investments in joint ventures
are accounted for on the equity basis of accounting.
Reclassifications
Certain reclassifications have been made to 1997 and 1996 captions to conform
to the 1998 presentation.
Depreciation
Depreciation of long-term health care property and equipment is provided
principally on the straight-line method over the estimated useful lives of the
depreciable assets. Estimated useful lives of depreciable assets are as
follows:
Buildings and improvements 31 years
Equipment and furniture 7 years
Investments in Securities
The Company has adopted Statement No. 115, Accounting for Certain Investments
in Debt and Equity Securities, issued by the Financial Accounting Standards
Board. In accordance with Statement No. 115, the Company's investments in
securities are classified as follows:
Trading Securities - Investments in debt and equity securities held principally
for resale in the near term are classified as trading securities and recorded
at their fair values. Unrealized gains and losses on trading securities are
included in other income.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in Securities - continued
Securities to be Held to Maturity - Debt securities for which the Company has
the positive intent and ability to hold to maturity are reported at cost,
adjusted for amortization of premiums and accretion of discounts which are
recognized in interest income using the interest method over the period to
maturity.
Securities Available for Sale - Securities available for sale consist of its
debt and equity securities not classified as trading securities nor as
securities to be held to maturity. All of the Company's investments in
securities are classified as available for sale.
Unrealized holding gains and losses on securities available for sale are
reported as a net amount in accumulated other comprehensive income in
stockholders' equity until realized.
Gains and losses on the sale of securities available for sale are determined
using the specific identification method.
Oil and Gas Property and Equipment
The Company utilizes the "successful efforts" method of accounting for costs
incurred in the exploration and development of oil and gas properties.
Accordingly, costs incurred in the acquisition and exploratory drilling of oil
and gas properties are accumulated and subsequently either expensed, if the
properties are determined not to have proved reserves or capitalized as a
depletable asset if proved reserves are discovered. Costs of drilling
development wells are capitalized. Geological, geophysical and carrying costs
are charged to expenses as incurred. Acquisition costs relating to producing
oil and gas properties are amortized on a prospect by prospect basis using the
units-of-production method based on engineers' estimates of proven oil and gas
reserves. Depletion and depreciation of producing oil and gas properties
(other than acquisition costs) are amortized by prospect using the units-of-
production method based on estimated proved developed reserves.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - continued
Use of 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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Financial Instruments
Financial instruments of the Company consist of cash, accounts receivable,
investments and debt. Recorded values of cash and accounts receivable
approximate fair values due to the short maturities of the instruments. For
information on the fair value of investments, see Note 2.
The fair value of debt is estimated as its carrying value at December 31, 1998
plus refinancing costs paid in February 1998. See Note 6.
Carrying Fair
Amount Value
Long-term debt - 1998 $4,510,796 $4,654,796
Long-term debt - 1997 $4,545,652 $4,689,652
Revenue
Patient service revenue is reported at the estimated net realizable amounts
from patients, third-party payers, and others for service rendered. The
Company derives a significant portion of its revenues from third party payers
(health maintenance organizations, Medicare and Medi-Cal).
Revenue under third-party payer agreements is subject to audit and retroactive
adjustment. Provisions for estimated third-party payer settlements are
provided in the period the related services are rendered. Differences between
the estimated amounts accrued and interim and final settlements are reported in
operations in the year of settlement.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - continued
Income Taxes
The Company provides for deferred taxes resulting from temporary differences
between the basis of assets and liabilities for financial and tax reporting
purposes. Such differences result principally from the use of the direct write-
off method for bad debts for tax reporting purposes and unrealized losses on
investment securities.
Earnings Per Common Share
The Company has adopted Statement No. 128, Earnings Per Share, issued by the
Financial Standards Accounting Board. Adoption of Statement No. 128 had no
effect upon 1998, 1997 or 1996 earnings per share computations.
Basic earnings per common share was computed based on the weighted average
number of common shares outstanding for the period. Diluted earnings per
share have not been presented for 1996 and 1997 since the inclusion of
potential common stock would be antidilutive. The Company had no potential
common shares outstanding in 1998.
Cash Flows Presentation
For purposes of the statement of cash flows, the Company considers cash to
include unrestricted cash and all highly liquid investments with initial
maturities of ninety days or less from the date of purchase.
Amortization
Costs of obtaining financing are amortized over the term of the financing.
Credit Risk
The Company regularly maintains cash in bank deposit and brokerage accounts
which exceed FDIC/SPIC insured limits. The Company has not experienced any
losses in such accounts and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - continued
Stock-based Compensation
The Company recognizes compensation costs for stock-based
compensation plans based on the difference, if any, between
the quoted market price of the stock and the amount an
employee must pay to acquire the stock. Dates that quoted
market prices are determined may vary depending on whether
the terms of an award are fixed or variable.
The Financial Accounting Standards Board has issued Statement
No. 123 establishing a fair value based method of accounting
for stock-based compensation plans. As permitted under
Statement No. 123, the Company does not intend to adopt the
recognition or accounting requirements of the statement. No
awards have been granted in 1998, 1997 or 1996.
Accounting Changes
The Company has adopted the following Statements of Financial
Accounting Standards issued by the Financial Accounting
Standards Board effective January 1, 1998:
No. 130 - Reporting Comprehensive Income
Requires that all items are required to be recognized
under accounting standards as components of comprehensive
income be reported in a financial statement that is
displayed with the same prominence as other financial
statements. Financial statements for 1996 and 1997 have
been reclassified to reflect application of the provisions
of this statement.
No. 131 - Disclosures About Segments of an Enterprise
and Related Information
Requires disclosure of operating segments based upon
information used internally for evaluating segment
performance and allocating resources. Adoption had no
significant effect upon current financial statements.
No. 132 - Employers' Disclosures About Pensions
and Other Post-retirement Benefits
Revises employers' disclosures about pensions and other
post-retirement plans. Adoption had no significant effect
upon current financial statements.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. INVESTMENT SECURITIES
Investment securities consist entirely of equity securities.
The cost and market values of investment securities available
for sale at December 31, 1998 and 1997 were:
1998 1997
Market value $3,230,320 $1,955,961
Amortized cost 3,774,127 2,103,151
Net unrealized loss ($ 543,807) ($ 147,190)
Gross unrealized gains and losses of securities available for
sale at December 31 were:
1998 1997
Gross unrealized gains $ 469,966 $ 36,327
Gross unrealized losses ( 1,013,773) ( 183,517)
Net unrealized loss ($ 543,807) ($ 147,190)
The Company had no sale of securities in 1996 or 1997.
Realized sales of available for sale securities in 1998 are
summarized as follows:
Proceeds from sale $3,789,170
Gross realized gains 634,160
Gross realized losses ( 64,760)
NOTE 3. CAPITAL STOCK
The Company has adopted a Stock Option Plan which provides for
the granting of options to officers and other key employees for
the purchase of common stock of the Company.
The Plan reserves 1,500,000 shares of common stock for the
granting of such options. Options are subjected to adjustment
upon any change in the capital structure of the Company such as
a stock dividend, stock split or other similar events.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. CAPITAL STOCK - continued
Options may be granted at not less than 100% of the fair market
value of the Company stock at the date of grant, and are
exercisable during a term of ten years from the date of grant
at any time in whole or in part, and are subject to continued
employment and other conditions as set forth in the option
agreement.
Options are exercisable only by the participants and are not
assignable during their lifetime and must be exercised within
one year of the death of the participant by his legal
representatives.
Nine hundred, seventy-five thousand (975,000) shares
exercisable at $0.15 per share were granted under the Plan.
All options expired unexercised in 1997.
NOTE 4. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1998, 1997 and 1996, Arch
B. Gilbert, a Professional Corporation, whose sole stockholder
is president of the Company, was paid $61,000, $5,000, and
$9,000, respectively, for legal services rendered.
During the years ended December 31, 1998, 1997 and 1996, the
above corporation was reimbursed $29,400, $37,126 and $47,068,
respectively, for expenses incurred on behalf of the Company.
Included in accounts payable at December 31, 1997 is
approximately $36,000 of advances from the Company's president.
NOTE 5. FEDERAL INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes,"
effective January 1, 1997. Adoption of this standard did not
materially impact the Company's consolidated financial
statements.
The Company had no income tax provision in 1997 or 1996, and no
significant differences between the tax provisions and the
amounts computed using statutory rates.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. FEDERAL INCOME TAXES - continued
The Company's tax provision for 1998 consists of the following:
Current payable $ 51,843
Deferred taxes 411,332
Re-evaluation of valuation
allowance on beginning
temporary differences ( 411,332)
$ 51,843
The 1998 tax provision differs from the amount calculated by
applying statutory tax rates to pre-tax income as follows:
Tax at statutory rates $461,514
Re-evaluation of valuation allowance
on beginning temporary differences ( 411,332)
Other 1,661
$ 51,843
All income (loss) since inception relates to domestic activity.
The tax effects of net operating loss carryforwards and
temporary differences at December 31, 1998 and 1997 that give
rise to significant portions of deferred tax assets and
deferred tax liabilities are as follows:
1998 1997
Deferred tax assets
Net operating
loss carryforwards $ - $377,332
Unrealized loss on
marketable securities 184,894 50,045
Expenses deduction
in future periods - 34,000
Other 19,888 18,646
204,782 480,023
Deferred tax liabilities - -
Valuation allowance ( 157,527) ( 480,023)
Total deferred tax asset, net $ 47,255 $ -
During 1998 and 1997, the valuation allowance decreased
$322,496 and $157,176, respectively.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
1998 1997
Unsecured note payable to a bank
with interest at 10%, due in monthly
installments of $9,244 beginning
March 1999 until paid in full $ 168,000 $ -
Mortgage loan for financing of a
nursing home constructed in Colton,
California. The mortgage loan bears
interest at 7.375%, is due in
monthly installments of $30,778
(principal and interest), matures in
June, 2030 and is secured by real
estate 4,510,796 4,545,652
4,678,796 4,545,652
Less current maturities 120,522 15,418
$4,558,274 $4,530,234
Aggregate maturities of long-term debt for each of the
succeeding five years and thereafter is as follows:
1999 $ 120,522
2000 126,232
2001 43,938
2002 47,291
2003 50,899
Thereafter 4,289,914
NOTE 7. SEGMENTED INFORMATION
In 1998, real estate and oil and gas operations were not
significant. Substantially all of the Company's activities now
consist of the operation of convalescent centers including
skilled nursing care in southern California. Thus, segment
information for 1998 has not been presented.
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. SEGMENTED INFORMATION - continued
The Company's operations prior to 1998 were classified into
three principal industry segments:
Long-term Health Care Operation of convalescent centers
involving skilled nursing care in southern California
Real Estate Development
and Construction - Construction and sale of single
family housing
Oil and Gas - Oil and gas exploration and
development
Following is a summary of segmented information for 1997 and
1996:
1997
Real Estate
Long-term Development
Health and Oil and
Care Construction Gas Consolidated
Sales to unaffiliated customers $9,773,756 $87,606 $261,806
$10,123,168
Operating income (loss) $1,173,269 ($ 394) $ 48,571 $ 1,221,446
Other income 122,045
General corporate expenses ( 233,512)
Interest expenses ( 500,867)
Income before income taxes $ 609,112
Identifiable assets $5,829,421 $49,725 $180,361 $6,059,507
Corporate assets 3,462,741
Total Assets at 12/31/97 $9,522,248
Capital expenditures $ 199,551 $ - $115,876 $ 315,427
Depreciation, depletion
and amortization $ 245,394 $ - $ 80,297 $ 325,691
<PAGE>
INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. SEGMENTED INFORMATION - continued
1996
Real Estate
Long-term Development
Health and Oil and
Care Construction Gas Consolidated
Sales to unaffiliated customers $8,903,359 $ 104,533 $275,882
$9,283,774
Operating income (loss) $1,003,417 ($ 40,375) ($387,787) $ 575,255
Other income 92,951
General corporate expenses ( 215,196)
Interest expenses ( 502,292)
Loss before income taxes ($ 49,282)
Identifiable assets $5,356,666 $ 121,582 $731,961 $6,210,209
Corporate assets 2,123,405
Total Assets at 12/31/96 $8,333,614
Capital expenditures $ 85,867 $ - $266,808 $ 352,675
Depreciation, depletion
and amortization $ 222,625 - $ 68,424 $ 291,049
The Company did not have any intersegment sales. Operating
loss is total revenues less operating expenses for each segment
and excludes general corporate expenses, interest expense and
other income of a corporate nature. Identifiable assets by
segment are those assets that are used in the Company's
operations within that industry. Corporate assets consist
principally of cash.
NOTE 8. CONTINGENCIES
The Company is involved in litigation pertaining to its long-
term health care operations. It is the Company's opinion that
any loss incurred would be adequately covered by insurance and
the ultimate liability, if any, should not have a material
adverse effect on the Company's consolidated financial
position.
NOTE 9. EMPLOYEES RETIREMENT PLAN
The Company has a retirement plan, established in 1997, covering substantially
all of its employees. Contributions to the plan in 1998 and 1997 totaled
$37,515 and $35,440, respectively.
<PAGE>
INTERWEST MEDICAL CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column E Column F
Additions
Charged
Balance at to Costs Charged
Beginning and to Other Balance at End of
of Period Expenses Accounts Deductions Period
Allowance for
doubtful accounts
Year ended
December 31, 1996 $43,638 $14,348 $ - $ 6,808 $51,178
Year ended
December 31, 1997 $51,178 $27,458 $ - $23,792
$54,844
Year ended
December 31, 1998 $54,844 $30,063 $ - $26,412
$58,495
<PAGE>
INTERWEST MEDICAL CORPORATION
SUPPLEMENTAL INFORMATION
(unaudited)
The SEC defines proved oil and gas reserves as those estimated
quantities of crude oil, natural gas, and natural gas liquids
which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Proved
developed oil and gas reserves are reserves that can be expected
to be recovered through existing wells with existing equipment
and operating methods.
Estimates of petroleum reserves have been made by independent
engineers. The valuation of proved reserves may be revised in
the future on the basis of new information as it becomes
available. Estimates of proved reserves are inherently
imprecise.
All of the reserves of the Company represent proved developed
reserves. Estimated quantities of oil and gas reserves of the
Company as of December 31, 1996 and 1997 (all of which are
located in the United States) are as follows:
Petroleum Natural
Liquids Gas
(bbls) (MCF)
December 31, 1996 -
proved developed reserves 3,360 417,010
December 31, 1997 -
proved developed reserves 51,131 612,125
Oil and gas operations and reserves were not significant for
1998.
<PAGE>
INTERWEST MEDICAL CORPORATION
SUPPLEMENTAL INFORMATION
(unaudited)
The changes in proved developed reserves for 1996 and 1997 were
as follows:
Petroleum Natural
Liquids Gas
(bbls) (MCF)
Reserves at December 31, 1995 4,940 640,400
Sales of reserves-in-place ( 30) ( 2,930)
Production ( 1,070) (119,380)
Revision of estimates ( 480) (101,080)
Reserves at December 31, 1996 3,360 417,010
Sales of reserves-in-place ( 10) ( 7,348)
Production ( 1,012) ( 80,016)
Revision of estimates 48,661 209,050
Discoveries 132 73,429
Reserves at December 31, 1997 51,131 612,125
The standardized measure of discounted estimated future net cash
flows, and changes therein, related to proved oil and gas
reserves (thousands of dollars) for 1997 and 1996 are as follows:
1997 1996
Future cash inflows $2,131 $ 975
Future development and production costs 1,255 587
Future income tax expense - -
Future net cash flows 876 388
10% annual discount 275 60
Standardized measure of
discounted future cash flows $ 601 $ 328
<PAGE>
INTERWEST MEDICAL CORPORATION
SUPPLEMENTAL INFORMATION
(unaudited)
Primary changes in standardized measure of discounted future net
cash flow:
1997 1996
Net changes in prices and production costs $ 20 $ 88
Extensions, discoveries
and improved recovery 111 -
Sale of reserves-in-place ( 3) ( 1)
Sales of oil and gas,
net of production costs ( 80) ( 78)
Revision of estimates 305 ( 158)
Accretion of discount 33 39
Other ( 113) ( 33)
$273 ($143)
Estimated future cash inflows are computed by applying year end
prices of oil and gas to year end quantities of proved developed
reserves. Estimated future development and production costs are
determined by estimating the expenditures to be incurred in
developing and producing the proved oil and gas reserves in
future years, based on year end costs and assuming continuation
of existing economic conditions. Estimated future income tax
expenses are calculated by applying year end statutory tax rates
(adjusted for permanent differences, tax credits and tax
carryforwards) to estimated future pretax net cash flows related
to proved oil and gas reserves, less the tax basis of the
properties involved.
These estimates are furnished and calculated in accordance with
requirements of the Financial Accounting Standards Board and the
SEC. Because of unpredictable variances in expenses and capital
forecasts, crude oil and natural gas price changes, and the fact
that the bases for such estimates vary significantly, management
believes the usefulness of these projections is limited.
Estimates of future net cash flows do not necessarily represent
management's assessment of future profitability or future cash
flow to the Company.
<PAGE>
INTERWEST MEDICAL CORPORATION
SUPPLEMENTAL INFORMATION
(unaudited)
The aggregate amounts of capitalized costs relating to oil and
gas producing activities and the related accumulated depletion
and depreciation as of December 31, 1997 and 1996 were as follows
(thousands of dollars):
1997 1996
Proved properties $477 $488
Unproved properties,
including wells in progress - 509
Accumulated depletion and depreciation ( 340) ( 301)
Net capitalized costs $137 $696
The costs, both capitalized and expensed, incurred in oil and gas
producing activities during the three years ended December 31,
1997 and 1996 were as follows (thousands of dollars):
1997 1996
Property acquisition costs $ 83 $240
Exploration costs 32 43
Development costs - -
Results of oil and gas operations in the aggregate for the three
years ended December 31, 1997 and 1996 were as follows:
197 1996
Revenues $261,806 $216,072
Production costs 102,828 138,120
Exploration expense 30,110 332,027
Depreciation and depletion 80,297 68,424
Income taxes - -
Other - 65,288
213,235 603,859
Net oil and gas income (loss) $ 48,571 ($387,787)
<PAGE>
INTERWEST MEDICAL CORPORATION
SUPPLEMENTAL INFORMATION
(unaudited)
Past Production and Average Sales Price:
(a) Net oil and gas production (in barrels and MCF, respectively)
from Registrant's properties in the United States was as follows:
Oil Gas
(Bbls) (MCF)
Year Ended
December 31, 1996 1,823 97,034
December 31, 1997 1,012 80,016
December 31, 1998 648 59,728
(b) Average sales price and production costs:
Average Average
Sales Price Production Costs
(Bbls) (MCF) (Bbls) (MCF)
Year Ended
December 31, 1996 $22.19 $1.80 $12.01 $1.06
December 31, 1997 $16.24 $2.08 $13.42 $1.11
December 31, 1998 $14.28 $2.03 $11.95 $ .85
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
There have been no disagreements with accountants on any matter
of accounting principles or practices or financial statement
disclosures during the twenty-four (24) month period ended
December 31, 1998.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) Identification of Directors:
The directors of the Company are elected annually to serve
until the next Annual Meeting and until their successors are
elected and qualified.
Year First Became
a Director of
Name Age Company Position
Arch B. Gilbert 65 1983 (1) President,
Secretary,
Treasurer &
Director
(1) Date of incorporation
(b) Identification of Executive Officers:
Name Position Age
Arch B. Gilbert President, 65
Secretary,
Treasurer
Officers serve at the discretion of the Board of Directors.
Arch B. Gilbert received his B.A. and LL.B. degrees from the
University of Oklahoma in 1955 and 1957 respectively. He also
received his LL.M. degree from Southern Methodist University in
1963. Since August 1, 1979, Mr. Gilbert has been a member of the
law firm of Arch B. Gilbert, A Professional Corporation. From
February 1, 1962 to August 1, 1979, Mr. Gilbert was a member of
the law firm of Brooks, Tarlton, Gilbert, Douglas & Kressler,
Fort Worth, Texas.
There is no family relationship between any director or executive
officer of the Company.
No personal meetings of the directors took place in 1998. All
resolutions of the directors were taken by written consent.
(c) Compliance With Section 16(a) of The Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more
than 10% of the Company's outstanding Common Stock to file with
the Securities and Exchange Commission reports of changes in
ownership of the Common Stock of the Company held by such
persons. Officers, directors and greater than 10% shareholders
are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge,
based solely on a review of the copies of such reports furnished
to the Company, during the two fiscal years ended December 31,
1998, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% shareholders were
complied with.
Item 11. Executive Compensation.
During the fiscal year ended December 31, 1998, Arch B. Gilbert
received cash compensation of $80,000.
All executive officers as a group (2 persons) received cash
remuneration in fiscal year 1996 of $80,000. This does not
include legal fees paid to the law firm of the President or
reimbursement of expenses paid to it. See Item 13. Directors do
not receive any compensation for their services as directors.
The Company has established an Incentive Stock Option Plan (the
"Plan") which reserved 1,500,000 shares of Common Stock for the
exercise of options which may be granted to directors, officers,
employees and others. No options are presently outstanding.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) The following table sets forth, as of March 19, 1998,
certain information regarding all persons known to the Company to
be the beneficial owners (as determined in accordance with the
Rules under the Securities Exchange Act of 1934) of more than 5%
of the Company's Common Stock:
Name and Address Shares
of Beneficially
Beneficial Owner Owned Percent
Arch B. Gilbert 4,295,000 (1) 30.26%
3221 Hulen Street, Suite C
Fort Worth, Texas 76107
(1) Includes 100,000 shares owned by Arch B. Gilbert,
A Professional Corporation. Includes 6,000 shares
owned by Jo Anne Gilbert, Mr. Gilbert's wife. Does not
include shares owned by Shannon Gilbert, Mr. Gilbert's
adult daughter and shares owned by Devon Gilbert, Mr.
Gilbert's adult daughter, which beneficial ownership
Mr. Gilbert disclaims.
(b) The following table sets forth as of March 31, 1999
certain information concerning shares beneficially owned by
all directors and all directors and officers of the
registrant as a group:
Amount and
Name of Nature of
Beneficial Beneficial Percent
Title of Class Owner Ownership of Class
Common Stock Arch B. Gilbert 4,295,000 30.26%
Common Stock All Officers and 4,295,000 30.26%
$0.001 Par Value Directors as a Group
(2 persons)
<PAGE>
Item 13. Certain Relationships and Related Transactions.
The Registrant shares the offices of Arch B. Gilbert, consisting
of approximately 1,400 square feet, for which it paid total rent
in the year 1998 of $15,600. The Registrant also reimbursed Mr.
Gilbert for 50% of his office and administrative expenses for the
year ending December 31, 1998 and for direct out-of-pocket
expenses incurred on behalf of the Company. The total amount of
such reimbursement was $29,400. For the year 1998, Arch B.
Gilbert, A Professional Corporation, whose sole stockholder is
the President of the Company, was paid $61,000 for legal services
rendered.
In 1999, Mr. Gilbert may perform legal services on behalf of the
Registrant although there are no present plans, agreements or
understandings in regard to any such legal services. If any such
legal services are performed by Mr. Gilbert on behalf of the
Company, he will be compensated at his usual hourly rates.
In 1998, Mr. Gilbert's wife performed consulting services for the
Company for which she received total cash compensation of
$36,000.
The Company is not informed as to whether payments made to Mr.
Gilbert and his wife were on terms as favorable as the Registrant
might have obtained from unaffiliated parties.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) 1. Financial Statements.
The following financial statements of the Company are
included in Part II, Item 8:
Independent Auditor's Report
Consolidated Balance Sheets December 31, 1998
and 1997
Consolidated Statements of Operations for the
Years Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Stockholders'
Equity for the Years Ended December 31, 1998,
1997 and 1996
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1998, 1997, and 1996
Notes to Consolidated Financial Statements
Supporting Schedules
2. Financial Statement Schedules.
Financial Statement Schedule II is included in
Part II, Item 8. All other schedules are omitted
because they are not applicable, not required or
because the required information is included in
the financial statements or the notes thereto.
3. Exhibits.
The exhibits listed in the accompanying index to
exhibits on Page 10 are filed as part of this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last
quarter of the period covered by this report.
<PAGE>
INTERWEST MEDICAL CORPORATION
INDEX TO EXHIBITS
ITEM 14(a)
Exhibit Description Page
3 Articles of Incorporation, Bylaws *
4 Instruments defining the right of
securities holders, including
debentures *
10 Material contracts *
*Pursuant to Rule 12b-32 under the Securities Exchange Act of
1934, the Registrant hereby incorporates by reference its
Registration Statement No. 2-82655 on Form S-18 and Exhibits to
such Registration Statement, and which contains these documents
which are also required to be filed as Exhibits to this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf 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:
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
By:
Arch B. Gilbert, Director
Date:
1
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] DEC-31-1998
[CASH] 460,329
[SECURITIES] 3,230,320
[RECEIVABLES] 2,166,810
[ALLOWANCES] 58,495
[INVENTORY] 0
[CURRENT-ASSETS] 5,962,519
[PP&E] 5,654,050
[DEPRECIATION] 1,890,769
[TOTAL-ASSETS] 10,164,646
[CURRENT-LIABILITIES] 2,133,198
[BONDS] 0
[COMMON] 20000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 3,453,174
[TOTAL-LIABILITY-AND-EQUITY] 10,164,646
[SALES] 11,085,259
[TOTAL-REVENUES] 11,957,570
[CGS] 0
[TOTAL-COSTS] 10,255,974
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 344,202
[INCOME-PRETAX] 1,357,394
[INCOME-TAX] 51,843
[INCOME-CONTINUING] 1,305,551
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 1,305,551
[EPS-PRIMARY] .08
[EPS-DILUTED] .08
</TABLE>
