U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended July 31, 1998
-----------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
--------------- -----------------
Commission file number Securities Act Registration No. 33-75276
----------------------------------------
Creative Medical Development, Inc.
----------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 68-0281098
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification NO.)
975 SE Sandy Blvd. Portland, Oregon 97214
-----------------------------------------
(Address of Principal Executive Offices)
(503)230-8034
-------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 5,109,152 Common Shares and
586,858 Series B Preferred Shares all at $.01 par value were outstanding as of
August 31, 1998
Transitional Small Business Disclosure Format (check one):
Yes No X
------- -------
<PAGE>
CREATIVE MEDICAL DEVELOPMENT, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
INDEX
PART I. FINANCIAL
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets......................1
Unaudited Consolidated Statements of Operations............2
Unaudited Consolidated Statements of Cash Flows............3
Notes to Unaudited Consolidated Financial
Statements.................................................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................8
PART II. OTHER INFORMATION....................................11
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES.................................................................12
<PAGE>
CREATIVE MEDICAL DEVELOPMENT, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
ASSETS
------
July 31, 1998 April 30, 1998
(Unaudited)
------------- --------------
Current Assets:
Cash $ 143,832 $ 393,877
Accounts receivable, net 1,674,208 1,853,280
Inventories, net 1,080,447 1,423,800
Prepaid expenses and deposits 225,055 52,158
----------- -----------
Total current assets 3,123,542 3,723,115
Real estate held for sale 1,822,819 1,618,275
Property, plant and equipment, net 1,927,495 2,272,214
----------- -----------
$ 6,873,856 $ 7,613,604
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current Liabilities:
Accounts Payable $ 1,764,466 $ 1,884,679
Accrued Liabilities 1,169,382 1,459,092
Notes Payable 2,688,473 3,305,283
Current portion of long-term debt 2,057,975 2,136,376
----------- -----------
7,680,296 8,785,430
Long-term debt, less current portion 753,802 522,342
Stockholders' equity:
Common Stock 54,426 55,246
Preferred stock 6,221 6,221
Additional paid in capital 2,328,219 2,413,651
Retained deficit (3,949,108) (4,169,286)
----------- -----------
Total stockholders' deficit (1,560,242) (1,694,168)
----------- -----------
$ 6,873,856 $ 7,613,604
=========== ===========
1
<PAGE>
CREATIVE MEDICAL DEVELOPMENT, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Quarter
Ended Ended
July 31 July 31
1998 1997
----------- -----------
Sales $ 3,642,238 $ 3,826,383
Cost of sales 2,697,852 2,837,363
----------- -----------
Gross profit 944,386 989,020
Selling expenses 319,698 335,801
Administrative expenses 266,630 369,346
Research and development 35,350 26,174
----------- -----------
621,678 731,321
Earnings from operations 322,708 257,699
Other income (expense):
Interest expense (127,289) (167,529)
Miscellaneous income (expense) 24,759 (34,042)
----------- -----------
Total other expense (102,530) (201,571)
Earnings before income taxes 220,178 56,128
Income taxes -- --
----------- -----------
Net earnings $ 220,178 $ 56,128
=========== ===========
Net basic and diluted earnings per share $ 0.04 $ 0.01
=========== ===========
Weighted average common shares outstanding 5,495,043 5,539,865
2
<PAGE>
<TABLE>
<CAPTION>
CREATIVE MEDICAL DEVELOPMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
Quarter Quarter
Ended Ended
July 31 July 31
1998 1997
---------- ----------
Cash Flows from Operating Activities
<S> <C> <C>
Net Income $ 220,178 $ 56,128
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 39,849 66,167
Amortization 29,744
Changes in assets and liabilities:
Accounts receivable 179,072 (266,385)
Inventories 343,353 65,479
Prepaid expenses and deposits (172,897) (237,267)
Accounts payable (120,213) (99,610)
Accrued liabilities (289,710) 9,562
Deferred gain -- 79,084
--------- ---------
Net cash provided by (used in) operating activities 199,632 (297,098)
Cash Flows from Investing Activities
Proceeds from sale of plant, property & equipment 101,276 418,757
Purchase of plant, property & equipment (950) (186,807)
Proceeds from sale of investment securities -- 755,123
--------- ---------
Net cash provided by investing activities 100,326 987,073
Cash Flows from Financing Activities
Common stock redemption (18,752) (25,003)
Net payments on notes payable (531,251) (433,465)
Net payments on long term debt -- (376,103)
--------- ---------
Net cash used in financing activities (550,003) (834,571)
--------- ---------
Net decrease in cash and cash equivalents (250,045) (144,596)
Cash and cash equivalents at beginning of period 393,877 139,636
--------- ---------
Cash and cash equivalents at end of period $ 143,832 $ (4,960)
========= =========
Supplemental schedule of non-cash financing activities
Exchange of 64,192 common shares for debt $ 67,500 --
Conversion of unsecured current debt to long-term 163,960 --
</TABLE>
3
<PAGE>
CREATIVE MEDICAL DEVELOPMENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) INTERIM FINANCIAL INFORMATION
The Company pursuant to the rules and regulations of the Securities and
Exchange Commission has prepared the accompanying Unaudited consolidated
financial statements of Creative Medical Development, Inc.. Certain
information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations. In the opinion of Management, the consolidated financial
statements include all adjustments necessary in order to make the
consolidated financial statements not misleading. Results for the period
ended July 31, 1998 are not necessarily indicative of the results that may
be expected for the fiscal year ending April 30, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto, for the fiscal year ended April 30, 1998, included in the
Company's Form 10-KSB.
(2) DESCRIPTION OF THE COMPANY, BASIS OF PRESENTATION AND CHANGE IN REPORTING
ENTITY
Creative Medical Development, Inc. (CMD), incorporated in California on
July 20, 1992, designed, developed, manufactured and marketed propriety
ambulatory infusion therapy products for alternate site patient care. On
September 13, 1995, CMD sold substantially all of its operating assets and
technology and until May 1, 1997, did not have significant operating
results.
Effective April 30, 1997, CMD and OMNI International Rail Products, Inc.
(OMNI), completed an agreement and plan of merger which provided for the
merger of OMNI with and into a wholly-owned subsidiary of CMD
(collectively, the Company). Upon consummation of the merger, OMNI's name
changed to OMNI Products, Inc. Just prior to the closing of the merger,
OMNI completed a recapitalization in which the Board of Directors
authorized the conversion of:
* Series B preferred stock into Series A preferred stock (new Series A
preferred stock);
* 650,000 shares of new Series A preferred stock into 260,000 shares of
common stock;
* $188,812 in accrued dividends into 75,525 shares of common stock.
Also, at the closing of the merger, CMD completed a recapitalization in
which the Board of Directors authorized the conversion of 810,000 shares of
Series A preferred stock into 270,000 shares of Series B preferred stock.
4
<PAGE>
Under the terms of the merger agreement, the shareholders and stock option
holders of OMNI exchanged all of their common stock and common stock
options for common stock and Series B preferred stock and common and
preferred stock options ("Substitute Options") of the Company. OMNI's
common stock and common stock options were converted into CMD common stock
and common stock options at a ratio of 3.091 to 1.0. In addition, OMNI
shareholders and stock option holders received 352,066 shares of Series B
preferred stock and 187,934 options to purchase Series B preferred stock,
respectively.
Upon completion of the transaction, former OMNI security holders owned
approximately 67% of the total outstanding shares of the Company on a fully
diluted basis. Ten percent of the Company's shares given in the transaction
were placed in escrow ("Escrow Shares") pending final valuation and
settlement. The final ownership ratio was adjusted pursuant to the Merger
Agreement to reflect differences that resulted from changes in assets of
both companies between the date of acquisition and the settlement date of
April 30, 1998. The determination of final asset values was not resolved
until August 1, 1998, at which time the Escrow Shares were canceled to
reflect the final ownership ratio. In addition, the Substitute Options were
adjusted down by 10%.
As a result of the adjustments under the Merger Agreement and reduction of
stock options held by the Company's former CEO, discussed in Note (3)
below, the ratio of the Company's outstanding stock held by the former OMNI
shareholders, assuming exercise of all the Substitute Options and exercise
of all options and warrants of the Company outstanding at the time of the
merger which were exercisable at $1.00 or less, was reduced from
approximately 67% to approximately 61%. As of the first quarter ended July
31, 1998, prior to the adjustments, there were 5,442,596 shares of common
stock and 622,065 shares of Series B Preferred stock outstanding.
The transaction between CMD and OMNI is considered a reverse acquisition
for financial reporting purposes and has been accounted for under the
purchase method of accounting. As a result, for financial statement
purposes, i) the historical values of OMNI's net assets have been retained;
ii) the net assets of CMD immediately prior to the merger have been
recorded at their fair value on the date of the transaction, iii) the
results of the operations of CMD are included in the results of the Company
beginning on the effective date of the transaction, iv) the dollar balance
of OMNI's accumulated deficit has been retained, and the balance of OMNI's
common stock and additional paid-in capital have been reallocated to be
consistent with the ratio of CMD's preferred and common stock. Assets
acquired consisted of investment securities and a building, while
liabilities assumed consisted of the mortgage associated with the building
acquired. The fair value of assets acquired exceeded the fair value of
liabilities assumed by approximately $1,025,000; such excess was attributed
to the shares issued in the merger. OMNI's costs associated with the
transaction, totaling approximately $185,000, were also attributed to the
shares issued in the merger.
5
<PAGE>
(3) COMPANY RESTRUCTURING
During the fourth quarter of fiscal 1998, the Company began a restructuring
plan to reduce the over-capacity in its recycled rubber manufacturing
operations and to increase its concrete production capabilities. The
refocus of business stems from changes in industry demand away from rubber
and more toward concrete crossings. The Company has ceased production of
recycled rubber at its Portland, Oregon, and Lancaster, Pennsylvania,
plants and is liquidating its recycled rubber manufacturing equipment and
real estate at both locations. Some equipment, primarily concrete forms,
were transferred to the Company's remaining facilities. At the same time
the Company has extended an agreement with a pre-cast concrete company to
produce the Company's proprietary concrete and rubber grade crossings.
The Company in conjunction with its restructuring recorded certain charges
in the fourth quarter of the fiscal year ended April 30, 1998. These
include a write down of assets to be liquidated, a write-off of excess and
obsolete recycled rubber inventory and accrual of expected shutdown and
liquidation costs. The asset write-down and inventory write-off did not
have an impact on the Company's liquidity. Other charges were recorded as
liabilities and are being paid out during fiscal year 1999. Approximately
$180,000 has been paid out through the end of the first quarter.
In addition, the Company entered into an agreement with its former CEO,
Michael L. DeBonney, for his resignation as an officer and director of the
Company effective April 30, 1998, and full settlement of any claims against
the Company in connection with his employment as an officer of the Company.
The agreement continues in effect certain provisions of the employment
agreement related to noncompetition restricted use of proprietary
information and confidentiality. Also, pursuant to the terms of the
severance agreement with Mr. DeBonny, he has relinquished additional
options for 556,330 common shares and 56,835 Series B preferred shares.
(4) DEBT
During the first quarter, the Company entered into a Forbearance Agreement
with its Senior lender Finova Capital Corporation, ("Finova") that defers
Finova from taking any action against the Company by reason of any existing
defaults. In addition, under the terms of the Forbearance Agreement, the
Company is permitted an Overadvance of up to $400,000 beyond the normal
terms of the line of credit. The Forbearance Agreement also eliminates the
monthly principal payment requirements on Finova's term debt. As part of
the Forbearance Agreement, the Company is subject to additional covenants
that, among other things, requires the Company raise an additional $250,000
in equity capital or subordinated debt, requires the disposal of certain
assets (proceeds must go to pay down various loans with Finova) and
requires the Company to meet certain projected financial goals.
As part of the Forbearance Agreement, and as part of the Company's
restructuring plan, the Company entered into Modification Agreements and,
6
<PAGE>
in some cases, Subordination and Standstill Agreements with certain
unsecured creditors. These agreements place each creditor into a
subordinate position with Finova and extend payoff of any obligation over a
five-year period. In some cases the Modification Agreements defer payment
of current and future accruals on certain royalty and services fees.
(5) BASIC AND DILUTED NET EARNINGS PER COMMON SHARE
Net earnings per share ("EPS") is computed based on the provisions of
Statement of Financial Accounting Standards No. 128, Earnings per Share
("SFAS 128"). Under SFAS 128, Basic EPS is computed by dividing income
available to common shareholders by the weighted-average number of common
shares outstanding during the period. Contingently issuable shares, that
are issuable for little or no cash consideration are considered outstanding
common shares and included in the computation of basic EPS as of the date
that all necessary conditions have been satisfied. The computation of
diluted EPS is similar to the computation of basic EPS except that the
denominator is increased to include the number of additional common shares
that would have been outstanding if the dilutive potential common shares
had been issued. However, the computation of diluted EPS shall not assume
conversion, exercise, or contingent issuance of securities that would have
antidilutive effect on earnings per share. The calculation of diluted
earnings per share excludes any potentially dilutive shares as such shares
would have an antidilutive effect.
7
<PAGE>
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations Background
------------------------------------------------------------------------
Creative Medical Development, Inc. (the "Company") was incorporated in the
state of California on July 20, 1992, and reincorporated in the state of
Delaware on June 1, 1993. The Company designed, developed, manufactured and
marketed ambulatory infusion therapy products under the "EZ Flow" trade
name.
On September 13, 1995, the Company entered into an Asset Purchase Agreement
with Gish Biomedical, Inc. ("Gish") for sale of the EZ Flow Pump technology
and product line. Under its terms, substantially all of the Company's
manufacturing related assets (with a net book value of $680,957) were sold
for $600,000 cash and $2,000,000 of Gish Stock (240,240 shares). Pursuant
to the terms of the agreement, operation of the EZ Flow business was
transferred to Gish as of September 13, 1995, and the sale closed April 17,
1996.
On April 17, 1997, the Company entered into an agreement for merger and
reorganization with OMNI International Rail Products, Inc., ("OMNI") a
privately held company in the business of manufacturing and distributing
premium rail crossing surface products in the United States and
internationally. The agreement provided for the merger of OMNI with a
wholly owned subsidiary of the Company formed for purposes of the
transaction. The Final ownership ratio, after valuation adjustment
completed on August 1, 1998, gave 61% ownership in the Company to the
former OMNI shareholders.
OMNI was an Oregon corporation formed in 1994 to acquire the OMNI premium
crossing business from Reidel Environmental Technologies, Inc. That
business was operated by OMNI until the merger with the Company and its
operations continue under the Company's wholly owned subsidiary corporation
OMNI Products, Inc. At the time of the merger, the OMNI executive officers
became the executive officers of the Company and the subsidiary and all but
one of the OMNI directors became directors of the Company and the
subsidiary.
The Company's transaction with OMNI closed April 30, 1997. Subsequently,
the Company changed its fiscal year to April 30 consistent with OMNI's
fiscal year to facilitate accounting and reporting financial results.
Results of Operations
---------------------
The following Selected Financial Data for the periods ended July 31, 1998
and 1997 have been derived from the unaudited consolidated financial
statements of the Company. This Selected Financial Data should be read in
conjunction with, and is qualified in its entirety by reference to, the
financial statements and related notes thereto included elsewhere in this
Report.
Except for the historical information contained herein, the matters set
forth in this Report include forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially. These
risks and uncertainties are detailed throughout this Report and are
discussed from time to time in the Company's periodic reports filed with
the Securities and Exchange Commission. The forward-looking statements
included in this Report speak only as of the date hereof.
8
<PAGE>
Results of Operations -- Quarter ended July 31, 1998 compared with the
Quarter ended July 31, 1997
As of and for the Quarters Ended
July 31
------------------------------------
1998 1997
--------- ---------
Revenue 3,642,238 3,826,383
Gross Profit 25.9% 25.8%
Earnings from Operations 8.9% 6.7%
Net earnings 6.0% 1.5%
Net earnings per share $0.04 $0.01
REVENUE
The Company derives its revenues from the sale of premium highway-rail grade
crossings to railroads, general contractors and municipalities. Revenues for the
quarter ended July 31, 1998, decreased from the same quarter last year by
$184,145 or a decrease of 4.8%. Although current quarter sales are slightly
lower than last year's, the mix of sales products has changed significantly.
Total concrete crossing sales were up 36% over the same period last year, and
virgin rubber crossing sales were up 4.3%. At the same time sales of recycled
rubber products declined $890,828 or 90% from last year. This decline reflects
the Company's discontinuance of recycled rubber products and an increase in
sales of concrete and virgin rubber crossing surfaces.
The Company has virtually liquidated all of its recycled rubber product line and
closed two recycled rubber operations. The Company has increased its concrete
production capacity by refocusing its production to this part of the premium
grade crossing market. Virgin rubber products are produced at the Company's
processing facility in McHenry, Illinois, and are also purchased through an out
source provider of virgin rubber product. The Company's year to date order
bookings through August 1998, are about 55% less than the same period last year
and total backorder levels through August are 85% less than last year. This drop
in bookings is a direct result of budget cuts by the major railroad lines.
Management expects cutbacks by the major railroads and slowdowns on large
railroad-, state- and federally-funded projects will continue through the fourth
quarter of this calendar year, and possibly longer.
COST OF SALES
Cost of sales decreased from $2,837,383 in the quarter ended July 31, 1997, to
$2,697,852 in the quarter ended July 31, 1998, or a decrease of 4.9%. The
greatest part of this decrease is directly related to lower sales. At the same
time part of the decrease is due to greater operating efficiencies achieved by
the Company in realigning its operations and products. Increases in efficiency
are expected to continue over the course of fiscal 1999.
9
<PAGE>
SELLING EXPENSES
Selling expenses for the quarter ended July 31, 1998, were $319,698 compared to
$335,801 for the quarter ended July 31, 1997. Lower selling expenses are due to
overall reduced selling costs including, elimination of two sales offices and
several positions within the sales department and a lower commission rate
structure.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter ended July 31, 1998,
decreased to $266,630 representing a 27.8% decrease over the same quarter last
year. General and administrative salaries were dramatically reduced with the
termination of the Company's Vice President of Operations and with the
resignation of the Company's Chief Executive Officer and its Chief Financial
Officer, as well as the elimination of several other positions. Consulting fees
paid for the Company's current interim Chief Executive and Chief Financial
Officers offset some of these savings. In addition, new management has reduced
operating expenses as part of the Company's overall restructuring.
INTEREST EXPENSE
Interest expense for the quarter ended July 31, 1998, was $127,289 as compared
to $167,529 for the quarter ended July 31, 1997. The decrease reflects the
Company's continued repayment of long-term debt and lower borrowing on the
Company's revolving line of credit. Interest rates were also reduced on certain
unsecured borrowings as part of the Company's modification of various debt
agreements (done in conjunction with the Finova Forbearance Agreement).
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1998, the Company had a cash balance of $143,832. The Company's
operating activities generated cash of $199,632 during the first quarter
The net working capital deficit at July 31, 1997, amounted to $4,556,754. The
Company's current debt maturities and other short-term commitments exceed the
Company's liquid assets available to pay such obligations. Two mortgages are due
in December 1998. The Company is actively trying to sell various properties that
secure these mortgages.
During the fiscal first quarter the Company entered into a Forbearance Agreement
with its Senior Lender, Finova, that defers Finova taking any action against the
Company by reason of the existing defaults. In addition, under the terms of the
Forbearance Agreement, the Company is permitted an Overadvance of up to $400,000
beyond the normal terms of the line of credit. The Forbearance Agreement also
eliminates the monthly principal payment requirements on Finova's term debt. As
part of the Forbearance Agreement the Company is subject to additional covenants
that, among other things, requires the Company raise an additional $250,000 in
equity capital or subordinated debt, requires the disposal of certain assets
(proceeds must go to pay down various loans with Finova) and requires the
Company to meet certain projected financial goals.
10
<PAGE>
The Company's capital expenditures for the quarter were $950. The Company
continues to liquidate certain out of production manufacturing assets that were
associated with the Company's recycled rubber operations. Sales of assets
generated $101,276 of proceeds in the first quarter of fiscal 1999. These
proceeds and an estimated $1,600,000 in gross proceeds in fiscal 1999 will be
used to retire much of the Company's term debt and mortgages. Sales of the
Company's Lancaster, Pennsylvania, and McHenry, Illinois, facilities are
expected to raise additional amounts sufficient for payoff of the Company's
obligations that come due during next fiscal year.
The Company's primary source of funds is from its operations. The Company is
restricted as to the amount it can borrow from Finova based on a percent of
eligible accounts receivable and inventory. Additionally, the Company likely
will need replacement debt or equity financing after the end of the Finova
agreement on August 31, 1999. The Company's debt will require restructuring or
additional financing must be found in the event sufficient funds
are not available to payoff certain debt that comes due in fiscal 1999. There
can be no assurance the Company will be able to complete the real estate and
equipment sales noted above prior to the mortgage maturity dates, nor can there
be any assurance that the Company will be able to raise the subordinated funds
required pursuant to the Forbearance Agreement. The Company has extended its
requirement to raise the subordinated investment pursuant to the Forbearance
Agreement until October 14, 1998. The Company must raise the necessary funds by
that time.
The Company's stock is traded on the OTC Electronic Bulletin Board.
OTHER INFORMATION - PART II
Item 1. Legal Proceedings
- -------------------------
Not applicable.
Item 2. Changes in Securities
- -----------------------------
Not applicable
Item 3. Defaults on Senior Securities
- -------------------------------------
As previously disclosed in the Company's Annual Report on Form 10-KSB and
discussed in detail in Note (4) to the Quarterly Financial Statements and in
Part I, Ite!m 2, Management's Discussion and Analysis, above, as a result of the
Company's default in certain covenants of the loan agreements with its Senior
Lender, both parties entered into a Forbearance Agreement on July 15, 1998, and
under its terms, places the Company not in default.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable
11
<PAGE>
Item 5. Other Information
- -------------------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
--------
10.12 Filed with the Company's report on Form 8-K on August
25, 1998, for Separation Agreement and Mutual Release
between the Company and Michael L. DeBonny, the
Company's former Chief Executive Officer.
27 Financial Data Schedule July 31, 1998.
(b) Reports on Form 8-K
-------------------
A report on Form 8-K was filed August 27, 1998, pursuant to
Item 5, Other Events, covering the report of the fiscal year
ended April 30, 1998 operating results, resignation of the
Company's former CEO and announce the completed Forbearance
Agreement between the Company and Finova Financial
Corporation.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Creative Medical Development, Inc.
- ----------------------------------
Registrant
September 18, 1998 /s/ William E. Cook
- ------------------ --------------------------------
Date William E. Cook
Interim Chief Executive Officer
September 18, 1997 /s/ M. Charles Van Rossen
- ------------------ ---------------------------------
Date M. Charles Van Rossen
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JUL-31-1998
<CASH> 143,832
<SECURITIES> 0
<RECEIVABLES> 1,739,557
<ALLOWANCES> 65,349
<INVENTORY> 1,080,447
<CURRENT-ASSETS> 3,123,542
<PP&E> 4,243,884
<DEPRECIATION> 493,569
<TOTAL-ASSETS> 6,873,856
<CURRENT-LIABILITIES> 7,680,296
<BONDS> 0
0
6,221
<COMMON> 54,426
<OTHER-SE> (1,620,889)
<TOTAL-LIABILITY-AND-EQUITY> 6,873,856
<SALES> 3,642,238
<TOTAL-REVENUES> 3,642,238
<CGS> 2,697,852
<TOTAL-COSTS> 621,678
<OTHER-EXPENSES> (24,759)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,289
<INCOME-PRETAX> 220,178
<INCOME-TAX> 0
<INCOME-CONTINUING> 220,178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 220,178
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
