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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   FORM 10-K/A
Amendment No. 1 (Mark One) þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHAGE ACT OF 1934 FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2003.
 OR o
    
    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 
 Oklahoma
    
    75-1864474(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
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   þ     No   o 1




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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. Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2of the Act) o   Yes     þ   No As of June 30, 2003, the aggregate market value of the 9,620,461 shares of voting Common Stock
held by non-affiliates of the Company was approximately $577,777.00 based on the average bid and
ask prices 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. Class
    
    Shares Outstanding
as of April 10, 2004Common Stock,
$0.001 Par Value
    
    15,915,461
 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.      2




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TABLE OF CONTENTS  PART IItem 1. Business.Item 2. Properties.Item 3. Legal Proceedings.Item 4. Submission of Matters to a Vote of Security Holders.PART IIItem 5. Market for Registrants Common Equity and Related Stockholders Matters.Item 6. Selected Financial Data.Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.Item 7a. Qualitative and Quantitative Disclosure About Market RiskItem 8. Financial Statements and Supplementary Data.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.Item 9a. Controls and ProceduresINDEPENDENT AUDITORS REPORTCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTSINTERWEST MEDICAL CORPORATION SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTSPART IIIPART IVINDEX TO EXHIBITSSIGNATURESCode of EthicsCertification of CEO and CFO Pursuant to Section 302Certification Pursuant to 18 U.S.C. Section 1350 Pursuant to 906    Table of Contents  FORM 10-K 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, 3221 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 and 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 nine-acre parcel of
land in Colton, California. At December 31, 2003, the Company had an undepreciated cost of
$3,058,271 in such facility, including equipment and furniture. 
 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. 3




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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 2003,
except for the election of directors at the annual meeting of shareholders. 4




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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 Bid1st Quarter, 2002
    
    $
    0.09
    
    
    $
    0.122nd Quarter, 2002
    
    $
    0.09
    
    
    $
    0.113rd Quarter, 2002
    
    $
    0.09
    
    
    $
    0.114th Quarter, 2002
    
    $
    0.09
    
    
    $
    0.111st Quarter, 2003
    
    $
    0.04
    
    
    $
    0.062nd Quarter, 2003
    
    $
    0.04
    
    
    $
    0.093rd Quarter, 2003
    
    $
    0.06
    
    
    $
    0.104th Quarter, 2003
    
    $
    0.06
    
    
    $
    0.11
 As of March 15, 2003, the approximate number of holders of Common Stock was 1770. No cash
dividends had been paid as of December 31, 2003, 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. 2003
    
    2002
    
    2001
    
    2000
    
    1999Operating
Revenues
    
    $
    15,849,894
    
    
    $
    13,489,084
    
    
    $
    13,347,836
    
    
    $
    12,349,695
    
    
    $
    11,295,408Net income
(loss)
    
    
    (155,713
    )
    
    
    (1,233,558
    )
    
    
    (822,941
    )
    
    
    (2,512,242
    )
    
    
    1,657,032Total Assets
    
    
    8,344,031
    
    
    
    8,230,816
    
    
    
    9,119,421
    
    
    
    9,966,256
    
    
    
    13,247,657Long-term
Debt
    
    
    4,555,316
    
    
    
    4,293,990
    
    
    
    4,340,814
    
    
    
    4,388,104
    
    
    
    4,435,560Earnings
per common
share
    
    
    (0.01
    )
    
    
    (0.08
    )
    
    
    (0.05
    )
    
    
    (0.16
    )
    
    
    0.11Cash
dividends
declared
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
 5




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. (a) Liquidity and Capital Resources: During the year 2001, the Companys cash increased from $885,513 to $1,412,024. Accordingly,
there was an increase in cash of $526,511. Additionally, the Companys trading assets increased
from $1,379,138 to $1,477,949, or a increase of $98,811. These increases were the result of
operations and investment trading activities. During the year 2002, the Companys cash decreased from $1,412,024 to $1,004,795.
Accordingly, there was a decrease in cash of $407,229. This decrease was caused by losses from
operations and purchases of property and equipment. During the year 2003, the Companys cash decreased from $1,004,795 to $796,434. Accordingly,
there was a decrease in cash of $208,361. Additionally, the Companys trading assets increased
from $186,606 to $355,252, or an increase of $168,646. These changes were the result of gains
incurred in investment trading 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
5% and is payable in monthly installments of $23,307. It is anticipated that these payments will
be made from revenues received by the operation of the Companys nursing home. (b) Results of Operations: Operating profit for 2001 was $230,370, as compared to operating profit of $564,770 for 2000.
The net loss decreased from ($2,512,242) to ($822,941) for the year 2001. The decrease was the
result of a reduction in investment trading losses. 6




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Operating profit for 2002 was $284,877, as compared to operating profit of $230,370 for 2001.
The increase in operating income was attributable to an increase in revenues. Net loss in 2002 was
($1,233,558), as compared to ($822,941) in 2001. The increase in loss was attributable to losses
on securities. Operating profit for 2003 was $260,746, as compared to operating profit of $284,877 for 2002.
Net loss decreased from ($1,233,558) for 2002 to ($155,713) for the year 2003. The decrease was
the result of investment trading results. Effects of Inflation: The Company is of the view that inflation did not affect its operations in 2003 and should not
in 2004 
 Item 7a. Qualitative and Quantitative Disclosure About Market Risk The Company did not enter into any derivative financial instruments in 2003 and does not
anticipate any in 2004. The Company has no variable rate debt. The Companys mortgage note carries a 5% fixed rate
and would be unaffected by changes in interest rates. 
 Item 8. Financial Statements and Supplementary Data. Page No.Independent Auditors Report
    
    
    F-1Consolidated Balance Sheets
December 31, 2003 and 2002
    
    
    F-2Consolidated Statements of
Operations and Comprehensive
Income for the Years Ended
December 31, 2003, 2002 and 2001
    
    
    F-4Consolidated Statements of
Stockholders Equity for Years Ended
December 31, 2003, 2002 and 2001
    
    
    F-5Consolidated Statements of
Cash Flows for the Years
Ended December 2003, 2002 and 2001
    
    
    F-6Notes to Consolidated
Financial Statements
    
    
    F-8Schedule II  Valuation
and Qualifying Accounts
    
    
    F-15
 7




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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, 2003. 
 Item 9a. Controls and Procedures Within 90 days of the filing of this 10-K, an evaluation was performed under the supervision
and with the participation of the Companys management, including the CEO, of the effectiveness of
the design and operation of the Companys disclosure controls and procedures (as defined in Rules
13a-14 and 15d-14 under the Securities Act of 1934). Based on that evaluation, the Companys
management, including Mr. Arch Gilbert, who acts as the principal executive and principal financial
officer, concluded that the Companys disclosure controls and procedures were effective as of March
19, 2004. There have been no changes in the Companys internal controls or in other factors that
could significantly affect internal controls subsequent to the date of the evaluation. 8




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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, 2003 and 2002, and the related consolidated statements of
operations, stockholders equity and cash flows for each of the years in the three year period
ended December 31, 2003. Our audits also included the financial statement schedule II for each of
the years in the three year period ended December 31, 2003. These consolidated financial
statements and the financial statement schedules 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 auditing standards generally accepted in the United
States of America. 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, 2003 and 2002, and the consolidated results of their operations and their cash flows
for each of the years in the three year period ended December 31, 2003 in conformity with
accounting principles generally accepted in the United States of America. 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 19, 2004 F-1




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002 2003
    
    2002ASSETSCURRENT ASSETSCash, including interest bearing accounts,
2003 $555,443; 2002 $730,748
    
    $
    796,434
    
    
    $
    1,004,795Accounts receivable  trade, net of allowance for
doubtful accounts, 2003 $452,000; 2002 $110,033
    
    
    3,655,364
    
    
    
    2,783,978Investments  trading
    
    
    355,252
    
    
    
    186,606Prepaid expenses and other receivables
    
    
    75,933
    
    
    
    530,505Total current assets
    
    
    4,882,983
    
    
    
    4,505,884PROPERTY AND EQUIPMENT, at costLand
    
    
    294,354
    
    
    
    294,354Buildings and improvements
    
    
    4,147,464
    
    
    
    3,960,924Equipment and furniture
    
    
    1,240,906
    
    
    
    1,389,927Oil and gas properties(successful efforts method of accounting)
    
    
    170,489
    
    
    
    170,4895,853,213
    
    
    
    5,815,694Less accumulated depreciation and depletion
    
    
    2,723,936
    
    
    
    2,480,1073,129,277
    
    
    
    3,335,587OTHER ASSETSCash escrow accounts
    
    
    253,202
    
    
    
    40,025Deferred financing costs, net
    
    
    78,569
    
    
    
    349,320331,771
    
    
    
    389,345TOTAL ASSETS
    
    $
    8,344,031
    
    
    $
    8,230,816
 The Notes to Consolidated Financial Statements
   are an integral part of these statements F-2




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002 2003
    
    2002LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    50,539
    
    
    $
    50,898Accounts payable
    
    
    2,022,066
    
    
    
    2,077,100Accrued salaries
    
    
    708,786
    
    
    
    645,766Total current liabilities
    
    
    2,781,391
    
    
    
    2,773,764LONG-TERM DEBT
    
    
    4,555,316
    
    
    
    4,293,990Total liabilities
    
    
    7,336,707
    
    
    
    7,067,754COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, par value $0.001,
authorized 50,000,000 shares;
issued 22,000,000 shares
    
    
    22,000
    
    
    
    22,000Additional paid-in capital
    
    
    5,096,745
    
    
    
    5,096,745Retained earnings (deficit)
    
    
    (3,059,187
    )
    
    
    (2,903,474
    )2,059,558
    
    
    
    2,215,271Less cost of shares held in the treasury,
2003 - 6,084,539 shares; 2000 - 6,084,289
shares
    
    
    892,234
    
    
    
    892,209Notes receivable  officer
    
    
    160,000
    
    
    
    160,0001,007,324
    
    
    
    1,163,062TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    8,344,031
    
    
    $
    8,230,816
 The Notes to Consolidated Financial Statements
   are an integral part of these statements F-3




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 2003
    
    2002
    
    2001REVENUESPatient service revenue
    
    $
    15,804,213
    
    
    $
    13,435,829
    
    
    $
    13,284,809Other revenue
    
    
    45,681
    
    
    
    53,255
    
    
    
    63,027Total revenue
    
    
    15,849,894
    
    
    
    13,489,084
    
    
    
    13,347,836COSTS AND EXPENSESProfessional care of patients
    
    
    9,402,039
    
    
    
    8,010,399
    
    
    
    7,775,638General services
    
    
    2,988,107
    
    
    
    2,617,876
    
    
    
    2,436,208Administrative services
    
    
    2,906,192
    
    
    
    2,246,550
    
    
    
    2,621,360Other costs
    
    
    15,791
    
    
    
    37,000
    
    
    
    16,782Depreciation, depletion and amortization
    
    
    277,019
    
    
    
    292,382
    
    
    
    267,478260,746
    
    
    
    284,877
    
    
    
    230,370OTHER INCOME (EXPENSES)Gain (loss) on sale of securities
    
    
    164,669
    
    
    
    (1,233,736
    )
    
    
    (690,316
    )Loss on refinancing
    
    
    (349,320
    )
    
    
    
    
    
    
    Interest income
    
    
    13,747
    
    
    
    34,174
    
    
    
    64,407Interest expense
    
    
    (245,555
    )
    
    
    (329,864
    )
    
    
    (352,209
    )Income (loss) before taxes on income
    
    
    (155,713
    )
    
    
    (1,244,549
    )
    
    
    (747,748
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    (10,991
    )
    
    
    75,193Net income (loss)
    
    $
    (155,713
    )
    
    $
    (1,233,558
    )
    
    $
    (822,941
    )Weighted averages shares outstanding
    
    
    15,914,192
    
    
    
    15,918,773
    
    
    
    15,929,353Earnings per common share  basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.08
    )
    
    $
    (0.05
    )
 The Notes to Consolidated Financial Statements
   are an integral part of these statements F-4




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 Common Stock
    
    Additional
    
    RetainedNumber of
    
    Par
    
    Paid-in
    
    Earnings
    
    Treasury
    
    NoteShares
    
    Value
    
    Capital
    
    (Deficit)
    
    Stock
    
    ReceivableBALANCE,December 31, 2000
    
    
    22,000,000
    
    
    $
    22,000
    
    
    $
    5,096,745
    
    
    $
    (846,975
    )
    
    $
    (889,989
    )
    
    $
    (160,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (822,941
    )
    
    
    Purchase of
5,500 shares
of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (550
    )
    
    
    BALANCE,December 31, 2001
    
    
    22,000,000
    
    
    
    22,000
    
    
    
    5,096,745
    
    
    
    (1,669,916
    )
    
    
    (890,539
    )
    
    
    (160,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,233,558
    )
    
    
    
    
    
    
    Purchase of
8,900 shares
of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,670
    )
    
    
    BALANCE,December 31, 2002
    
    
    22,000,000
    
    
    
    22,000
    
    
    
    5,096,745
    
    
    
    (2,903,474
    )
    
    
    (892,209
    )
    
    
    (160,000
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155,713
    )
    
    
    
    
    
    
    Purchase of
250 shares
of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    BALANCE,December 31, 2003
    
    
    22,000,000
    
    
    $
    22,000
    
    
    $
    5,096,745
    
    
    $
    (3,059,187
    )
    
    $
    (892,234
    )
    
    $
    (160,000
    )
 The Notes to Consolidated Financial Statements
   are an integral part of these statements F-5




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 2003
    
    2002
    
    2001CASH FLOWS FROMOPERATING ACTIVITIESCash received from customers/patients
    
    $
    14,978,508
    
    
    $
    13,064,210
    
    
    $
    13,474,485Interest received
    
    
    13,747
    
    
    
    34,174
    
    
    
    62,955Cash paid to suppliers and employees
    
    
    (14,869,775
    )
    
    
    (12,992,557
    )
    
    
    (12,735,386
    )Investments  net
    
    
    (3,977
    )
    
    
    51,252
    
    
    
    (789,127
    )Interest paid
    
    
    (225,351
    )
    
    
    (303,161
    )
    
    
    (352,209
    )Income taxes paid (refunded)
    
    
    
    
    
    
    15,632
    
    
    
    1,028,429Net cash provided by
(used in) operating activities
    
    
    (106,848
    )
    
    
    (130,450
    )
    
    
    689,147CASH FLOWS FROMINVESTING ACTIVITIESPurchase of property and equipment
    
    
    (69,826
    )
    
    
    (240,457
    )
    
    
    (150,925
    )Proceeds from sale of assets
    
    
    
    
    
    
    20,701
    
    
    
    Mortgage escrow deposits, net
    
    
    (21,477
    )
    
    
    (12,137
    )
    
    
    32,777Net cash used in
investing activities
    
    
    (91,303
    )
    
    
    (231,893
    )
    
    
    (118,148
    )CASH FLOWS FROMFINANCING ACTIVITIESLoan proceeds
    
    
    73,665
    
    
    
    
    
    
    
    Payments on debt
    
    
    (83,850
    )
    
    
    (43,216
    )
    
    
    (43,938
    )Purchase of treasury stock
    
    
    (25
    )
    
    
    (1,670
    )
    
    
    (550
    )Net cash used in financing activities
    
    
    (10,210
    )
    
    
    (44,886
    )
    
    
    (44,488
    )Net increase (decrease) in cash
    
    
    (208,361
    )
    
    
    (407,229
    )
    
    
    526,511CASH, beginning of period
    
    
    1,004,795
    
    
    
    1,412,024
    
    
    
    885,513CASH, end of period
    
    $
    796,434
    
    
    $
    1,004,795
    
    
    $
    1,412,024
 The Notes to Consolidated Financial Statements
   are an integral part of these statements F-6




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INTERWEST MEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 2003
    
    2002
    
    2001RECONCILIATION OF NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIESNet income (loss)
    
    $
    (155,713
    )
    
    $
    (1,233,558
    )
    
    $
    (822,941
    )Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities(Gain) loss
on securities
    
    
    (164,669
    )
    
    
    1,233,736
    
    
    
    690,316Depreciation and amortization
    
    
    277,019
    
    
    
    292,382
    
    
    
    267,478Loss on refinancing
    
    
    349,320
    
    
    
    
    
    
    
    Deferred taxes
    
    
    
    
    
    
    
    
    
    
    209,527Changes in assets and liabilitiesAccounts receivable
    
    
    (871,386
    )
    
    
    (424,874
    )
    
    
    126,649Prepaid expenses
and other receivables
    
    
    454,572
    
    
    
    (443,868
    )
    
    
    (1,542
    )Trading securities
    
    
    (3,977
    )
    
    
    51,252
    
    
    
    (789,127
    )Accounts payable
    
    
    (55,034
    )
    
    
    340,700
    
    
    
    175,016Accrued liabilities
    
    
    63,020
    
    
    
    49,139
    
    
    
    (58,872
    )Income taxes payable (receivable)
    
    
    
    
    
    
    4,641
    
    
    
    894,095Other
    
    
    
    
    
    
    
    
    
    
    (1,452
    )Net cash provided by
(used in) operating activities
    
    $
    (106,848
    )
    
    $
    (130,450
    )
    
    $
    689,147NON-CASH INVESTING AND FINANCING
ACTIVITIES
 In 2003, the Company refinanced its mortgage on its healthcare facility, of which $191,700 of
escrow deposits and $79,452 of loan costs were financed as part of the refinancing. The Notes to Consolidated Financial Statements
   are an integral part of these statements F-7




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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. 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 yearsEquipment and furniture
    
    7 years
 Investments in Securities 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. 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. 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. F-8




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES  continued Investments in Securities  continued 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. The Company is not
pursuing oil and gas exploration activities and the remaining costs in oil and gas
activities are fully depleted. Use of Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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 at its carrying value at December 31, 2003 and
2002, based upon current interest rates of similar debt which approximates the Companys
mortgage interest rate. Revenue The Company operates an acute care facility in Colton, California. Patient service revenue is reported at the estimated net realizable amounts from patients,
third-party payers, and others as services are rendered and net realizable values are
determined based upon preapproved rates or negotiated contracts. The
Company derives a significant portion of its revenues from third party payers (health
maintenance organizations, Medicare and Medi-Cal). Approximately 59% of 2003 revenue and
53% of 2002 revenue was derived from a contract with one health maintenance organization. F-9




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES  continued Revenue  continued 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. For
2002 and 2003, final settlements with third-party providers were immaterial. 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 Dilutive earnings per share have not been presented since the inclusion of potential common
stock would be antidilutive. 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. 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. The dates that quoted market prices are determined may vary
depending on whether the terms of an award are fixed or variable. F-10




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1.    SIGNIFICANT ACCOUNTING POLICIES  continued Stock-based Compensation  continued 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. NOTE 2.    INVESTMENT SECURITIES Investment securities consist entirely of equity securities. Included in gain (loss) on sale of investments for 2003 is $343,839 of unrealized gain on
trading securities held at year end. In 2002 and 2001; $521,182 and $418,728, respectively, of
unrealized loss on trading securities was held at year end. 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. 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. F-11




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3.    CAPITAL STOCK  continued A summary of the status of the Companys stock options for 2003, 2002 and 2001 is as follows: 2003
    
    2002
    
    2001Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageShares
    
    Exercise
    
    Shares
    
    Exercise
    
    Shares
    
    Exercise(000)
    
    Price
    
    (000)
    
    Price
    
    (000)
    
    PriceOutstanding, beginning
    
    
    1,500
    
    
    
    .15
    
    
    
    1,500
    
    
    $
    .15
    
    
    
    1,500
    
    
    $
    .15Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, ending
    
    
    1,500
    
    
    
    .15
    
    
    
    1,500
    
    
    $
    .15
    
    
    
    1,500
    
    
    $
    .15Options exercisable
at year end
    
    
    1,500
    
    
    $
    .15
    
    
    
    1,500
    
    
    $
    .15
    
    
    
    1,500
    
    
    $
    .15Weighted average fair
value of options
granted during the year
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
 At December 31, 2003, the 1,500,000 options have an exercise price of $0.15 per share and a
weighted average remaining contractual life of 6.25 years. NOTE 4.    RELATED PARTY TRANSACTIONS During the years ended December 31, 2003, 2002 and 2001, Arch B. Gilbert, a Professional
Corporation, whose sole stockholder is president of the Company, was paid $82,500, $193,163 and
$225,326, respectively, for legal services rendered. During the years ended December 31, 2003, 2002 and 2001, the above corporation was reimbursed
$34,307, $26,547 and $50,273, respectively, for expenses incurred on behalf of the Company. During 2003, 2002 and 2001, the wife of the Companys president performed consulting services
for the Company for which she received annual compensation of $36,000. The Company has a note receivable from its president. The note bears interest at 6% annually
and principal is due at maturity, April 1, 2004. Interest accrued on the note was $9,600
annually in 2003, 2002 and 2001. F-12




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5.    FEDERAL INCOME TAXES The Companys tax provision (benefit) for 2003, 2002 and 2001 consists of the following: 2003
    
    2002
    
    2001Current expense (benefit)
    
    $
    (  
    )
    
    $
    (10,991
    )
    
    $
    (134,334
    )Deferred taxes
    
    
    
    
    
    
    
    
    
    
    Re-evaluation of valuation allowance
on beginning temporary differences
    
    
    
    
    
    
    
    
    
    
    209,527$
    (  
    )
    
    $
    (10,991
    )
    
    $
    75,193
 The 2003, 2002 and 2001 tax provision (benefit) differs from the amount calculated by applying
statutory tax rates to pre-tax income as follows: 2003
    
    2002
    
    2001Tax at statutory rates
    
    $
    (52,942
    )
    
    $
    (423,147
    )
    
    $
    (254,234
    )Re-evaluation of valuation allowance
on beginning temporary differences
    
    
    
    
    
    
    
    
    
    
    209,527Losses not providing benefits
    
    
    52,908
    
    
    
    412,112
    
    
    
    119,855Other
    
    
    34
    
    
    
    44
    
    
    
    45$
    (   
    )
    
    $
    (10,991
    )
    
    $
    75,193
 All income (loss) since inception relates to domestic activity. The tax effects of temporary differences at December 31, 2003 and 2002 that give rise to
significant portions of deferred tax assets and deferred tax liabilities are as follows: 2003
    
    2002Deferred tax assetsUnrealized loss on marketable securities
    
    $
    60,296
    
    
    $
    177,202Expense deduction in future periods
    
    
    153,680
    
    
    
    37,411Capital loss carryforward
    
    
    875,302
    
    
    
    831,552Other carryforwards
    
    
    31,398
    
    
    
    1,120,676
    
    
    
    1,046,165Deferred tax liabilitiesDepreciation and depletion
    
    
    (79,615
    )
    
    
    (115,476
    )Valuation allowance
    
    
    (1,041,061
    )
    
    
    (930,689
    )Deferred tax asset (liabilities), net
    
    $
    
    
    
    $
    
 During 2003, the valuation allowance increased $110,372. The valuation allowance increased
$399,645 in 2002. The Company has a capital loss carryforward of approximately $2,574,000, ultimately expiring in
2008, and a net operating loss carryforward of approximately $85,000 due to expire in 2021. F-13




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INTERWEST MEDICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6.    LONG-TERM DEBT Long-term debt consisted of the following at December 31: 2003
    
    2002Mortgage loan for financing of a nursing home
constructed in Colton, California. The mortgage loan
bears interest at 5%, is due in monthly installments
of $23,307 (principal and interest), matures in
September, 2038 and is secured by real estate
    
    $
    4,605,855
    
    
    $
    4,344,888Less current maturities
    
    
    50,539
    
    
    
    50,898$
    4,555,316
    
    
    $
    4,293,990
 Aggregate maturities of long-term debt for each of the succeeding five years and thereafter is
as follows: 2004
    
    $
    50,5392005
    
    
    53,1252006
    
    
    55,8422007
    
    
    58,6992008
    
    
    61,703Thereafter
    
    
    4,325,947$
    4,605,855
 NOTE 7.    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 8    EMPLOYEES RETIREMENT PLAN The Company has a retirement plan covering substantially all of its employees. Contributions to
the plan in 2003, 2002 and 2001 totaled $55,301, $61,144, and $79,518, respectively. F-14




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INTERWEST MEDICAL CORPORATION
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS Column A
    
    Column B
    
    Column C
    
    Column E
    
    Column FAdditionsChargedBalance at
    
    to Costs
    
    ChargedBeginning
    
    and
    
    to Other
    
    
    
    
    
    Balance atof Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    End of PeriodAllowance for
doubtful accountsYear ended
December 31, 2001
    
    $
    52,932
    
    
    $
    129,127
    
    
    $
    
    
    
    $
    7,864
    
    
    $
    174,195Year ended
December 31, 2002
    
    $
    174,195
    
    
    $
    88,513
    
    
    $
    
    
    
    $
    152,675
    
    
    $
    110,033Year ended
December 31, 2003
    
    $
    110,033
    
    
    $
    390,360
    
    
    $
    
    
    
    $
    48,393
    
    
    $
    452,000
 F-15




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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 Becamea Director ofName
    
    Age
    
    Company
    
    PositionArch B. Gilbert
    
    
    70
    
    
    1983 (1)
    
    President,
Secretary,
Treasurer &
Director
 (1)    Date of incorporation (b)    Identification of Executive Officers: Name
    
    Position
    
    AgeArch B. Gilbert
    
    President,
Secretary,
Treasurer
    
    
    70
 Officers serve at the discretion of the Board of Directors. Arch B. Gilbert received his B.A. and his LL.B. degrees from the University of Oklahoma in
1955 and 1957 respectively. He also his 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 2003. 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 9




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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, 2003, 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, 2003, Arch B. Gilbert did not receive any direct
remuneration. All executive officers as a group (1 person) received cash remuneration in fiscal year 2003 of
$0. This does not include legal fees paid to the law firm of the President of reimbursement or
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. Mr. Gilbert was granted an option to purchase 1,500,000 shares of stock at
$.15 per share on April 1, 1999. The option is for a period of 10 years. Item 12.    Security Ownership of Certain Beneficial Owners and Management. (a)    The following table sets forth, as of April 1, 2003, 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
    
    
    
    
    
    Sharesof
    
    
    
    
    
    BeneficiallyBeneficial Owner
    
    
    
    
    
    Owned
    
    PercentArch B. Gilbert
    
    
    
    
    
    6,295,000 (1)
    
    
    39.6
    %3221 Hulen StreetSuite CFort Worth, Texas 76107
 10




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(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 Moten or Devon Vrana, Mr. Gilberts adult daughters, which beneficial ownership Mr.
Gilbert disclaims. Does not include options to purchase 1,500,000 shares. (b)    The following table sets forth as of December 31, 2003, certain information concerning
shares beneficially owned by all directors and all directors and officers of the registrant as a
group: Amount andName of
    
    Nature ofBeneficial
    
    Beneficial
    
    PercentTitle of Class
    
    Owner
    
    Ownership
    
    of ClassCommon Stock
    
    Arch B. Gilbert
    
    
    6,295,000
    
    
    
    39.6
    %Common Stock
$0.001 Par Value
    
    All Officer and
Directors as
a Group
(1 person)
    
    
    6,295,000
    
    
    
    39.6
    %
 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 2003 of $15,600. The Registrant also reimbursed Mr.
Gilbert for 50% of his office and administrative expenses for the year ending December 31, 2003 and
for direct out-of-pocket expenses incurred on behalf of the Company. The total amount of such
reimbursement was $18,707. For the year 2003, Arch B. Gilbert, A Professional Corporation, whose
sole stockholder is the President of the Company, was paid $82,500 for legal services rendered. In 2004, Mr. Gilbert may perform legal services on behalf of the Registrant although there are
no present plans, agreement 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 rate. In 2003, Mr. Gilberts wife performed consulting services for the Company for which she
received total cash compensation of $36,000.00. 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. On April 1, 1999, the Company sold Arch B. Gilbert 2,000,000 unregistered shares of Common
Stock at a price of $0.08 per share. Mr. Gilbert gave the Company a five year non-recourse $160,000
note for such shares. The note provides that interest of 6% per annum will be payable annually and the entire balance and any accrued interest will be payable on April 1, 2004. 11




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PART IV Item 14    Principle Accounting Fees and Services The Company has only one director, Arch B. Gilbert. He also serves as the Companys president
and chief executive officer. Mr. Gilbert pre-approves all services of Weaver and Tidwell, L.L.P.,
the Companys principal accountant. Aggregate fees billed by Weaver and Tidwell, L.L.P. for 2003
and 2002 were as follows: 2003
    
    2002Audit fees
    
    $
    41,050
    
    
    $
    35,900Audit related fees
    
    
    
    
    
    
    Tax fees (compliance)
    
    
    10,030
    
    
    
    9,200All other fees (health care consulting)
    
    
    
    
    
    
    3,700$
    51,080
    
    
    $
    48,800
 Item 15     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,
2003 and 2002 Consolidated Statements of Operations for
the Years Ended December 31, 2003, 2002
and 2001 Consolidated Statements of Stockholders
Equity for the Years Ended December 31,
2003, 2002, and 2001 Consolidated Statements of Cash Flows for
the Years Ended December 31, 2003, 2002,
and 2001 Note to Consolidated Financial Statements Supporting Schedule II 12




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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 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. 13




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INTERWEST MEDICAL CORPORATION 
 INDEX TO EXHIBITS ITEM 14(a) Exhibit
    
    Description
    
    Page3
    
    Articles of Incorporation, Bylaws
    
    *4
    
    Instruments defining the right of
securities holders, including
debentures
    
    *10
    
    Material contracts
    
    *14.1
    
    Code of Ethics
    
    *31
    
    Certification of Chief Executive
Officer and Chief Financial Officer
pursuant to Exchange Rule 13a-14(a)
as adopted pursuant to section 302
of the Sarbanes-Oxley Act of 2002
    
    *32
    
    Certification pursuant to 18 U.S.C.
Section 1350 pursuant to 906 of the
Sarbanes-Oxley Act of 2002
    
    *
 *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. 14




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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 CORPORATIONBy:
    /s/ Arch B. GilbertArch B. Gilbert, PresidentDate: December 23, 2004
    
    Chief Executive Officer,
Chief Financial Officer and
Chief Accounting Officer 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:
    /s/ Arch B. GilbertArch B. Gilbert, DirectorDate:
    December 23, 2004 15