<PAGE>

                                  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, 2001.

                                       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 [ ]

         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,



                                       1
<PAGE>

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 December 31, 2001, the aggregate market value of the 9,629,611
shares of voting Common Stock held by non-affiliates of the Company was
approximately $1,227,775 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.

<Table>
<Caption>
                                                                Shares Outstanding
             Class                                            as of December 31, 2001
             -----                                            -----------------------
<S>                                                           <C>
         Common Stock,
         $0.001 Par Value                                           15,924,611
</Table>


                       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
<PAGE>

                                    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, 2001, the
Company had an undepreciated cost of $3,330,279 in such facility, including
equipment and furniture. In 2001, the Company had a net loss of $(1,175,523).

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
<PAGE>

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 2001, except for the election of directors at the annual
meeting of shareholders.



                                       4
<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:

<Table>
<Caption>
     Period                                                Low Bid      High Bid
     ------                                                -------      --------
<S>                                                        <C>          <C>
1st Quarter, 2000                                          $0.1400       $0.2200
2nd Quarter, 2000                                          $0.1400       $0.2001
3rd Quarter, 2000                                          $0.1300       $0.1800
4th Quarter, 2000                                          $0.1200       $0.1600

1st Quarter, 2001                                          $0.1200       $0.1600
2nd Quarter, 2001                                          $0.1100       $0.1500
3rd Quarter, 2001                                          $0.1100       $0.1500
4th Quarter, 2001                                          $0.1000       $0.1300
</Table>

         As of March 12, 2002, the approximate number of holders of Common Stock
was 1,789. No cash dividends had been paid as of December 31, 2001, 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.

<Table>
<Caption>
                          2001            2000            1999           1998           1997
                      ------------    ------------    ------------   ------------   ------------
<S>                   <C>             <C>             <C>            <C>            <C>
Operating Revenues    $ 13,347,836    $ 12,391,483    $ 11,295,408   $ 11,316,121   $ 10,123,168

Net income (loss)         (822,941)     (2,512,242)      1,657,032      1,305,551        609,112

Total Assets             9,119,421       9,966,256      13,247,657     10,137,541      9,522,248

Long-term debt           4,340,814       4,388,104       4,435,560      4,558,274      4,530,234

Earnings per common
   share                     (0.05)          (0.16)           0.11           0.08           0.04

Cash dividends
   declared                   0.00            0.00            0.00           0.00           0.00
</Table>



                                       5
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.

         (a) Liquidity and Capital Resources:

         During the year 1999, the Company's cash increased from $460,329 at the
beginning of the year to $947,420 at the end of the year. Accordingly, there was
an increase in cash of $487,091. This increase was caused by net cash provided
by investing activities.

         During the year 2000, the Company's cash decreased from $947,420 to
$885,513. Accordingly, there was a decrease in cash of $61,907. Additionally,
the Company's trading assets decreased from $5,667,540 to $1,379,138, or a
decrease of $4,288,402. These decreases were the result of losses incurred in
investment trading activities.

         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.

         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.

         (b) Results of Operations:

         Operating profit for 1999 was $704,399, as compared to operating profit
of $1,060,147 for 1998. The decrease in operating income was attributable to an
increase in costs of administrative services and other costs. Net income in 1999
was $1,657,032, as compared to $1,305,551 in 1998. The increase was attributable
to an increase in Other Income.

         Operating profit for 2000 was $564,770, as compared to operating profit
of $704,399 for 1999. Comprehensive income decreased from $2,153,584 for 1999 to
$(2,512,242) for the year 2000. The decrease was the result of investment
trading losses.



                                       6
<PAGE>

         Operating profit for 2001 was $ 230,370, as compared to operating
profit of $564,770 for 2000. Comprehensive income (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.

         (c) Effects of Inflation:

         The Company is of the view that inflation did not affect its operations
in 2001 and should not in 2002.

Item 8. Financial Statements and Supplementary Data.

<Table>
<Caption>
                                                                                   Page No.
                                                                                   -------
<S>                                                                                <C>
Independent Auditor's Report                                                         F-1

Consolidated Balance Sheets
December 31, 2001 and 2000                                                           F-2

Consolidated Statements of
Operations and Comprehensive
Income for the Years Ended
December 31, 2001, 2000 and 1999                                                     F-4

Consolidated Statements of
Stockholders' Equity for Years Ended
December 31, 2001, 2000 and 1999                                                     F-5

Consolidated Statements of
Cash Flows for the Years
Ended December 2001, 2000 and 1999                                                   F-6

Notes to Consolidated
Financial Statements                                                                 F-8

Schedule II - Valuation
and Qualifying Accounts                                                              F-16
</Table>



                                       7
<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, 2001.



                                       8
<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, 2001 and 2000, 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, 2001. Our audits also included the financial statement
schedule II for each of the years in the three year period ended December 31,
2001. 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 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, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
years in the three year period ended December 31, 2001 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
February 18, 2002


                                      F-1

<PAGE>
                                                                        (1 of 2)

                          INTERWEST MEDICAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000



<Table>
<Caption>
                                                             2001         2000
                                                          ----------   ----------
<S>                                                       <C>          <C>
                                     ASSETS

CURRENT ASSETS
     Cash, including interest bearing accounts,
         2001 $1,026,469; 2000 $828,677                   $1,412,024   $  885,513
     Accounts receivable - trade, net of allowance for
         doubtful accounts, 2001 $174,195; 2000 $52,932    2,359,104    2,485,753
     Income tax receivable                                     4,641      898,736
     Investments - trading                                 1,477,949    1,379,138
     Prepaid expenses and other receivables                   86,637       85,095
     Deferred tax asset                                           --      305,077
                                                          ----------   ----------

             Total current assets                          5,340,355    6,039,312


PROPERTY AND EQUIPMENT, at cost
     Land                                                    294,354      294,354
     Buildings and improvements                            3,960,924    3,958,924
     Equipment and furniture                               1,236,298    1,111,681
     Oil and gas properties
         (successful efforts method of accounting)           170,489      166,949
                                                          ----------   ----------

                                                           5,662,065    5,531,908
     Less accumulated depreciation and depletion           2,272,882    2,038,847
                                                          ----------   ----------

                                                           3,389,183    3,493,061
OTHER ASSETS
     Cash escrow accounts                                     27,888       59,213
     Deferred financing costs, net                           361,995      374,670
                                                          ----------   ----------

                                                             389,883      433,883
                                                          ----------   ----------

TOTAL ASSETS                                              $9,119,421   $9,966,256
                                                          ==========   ==========
</Table>



                                      F-2
<PAGE>
                                                                        (2 of 2)

                          INTERWEST MEDICAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000



<Table>
<Caption>
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Current maturities of long-term debt                    $     47,290    $     43,938
     Accounts payable                                           1,736,400       1,561,384
     Accrued salaries                                             596,627         655,499
                                                             ------------    ------------

             Total current liabilities                          2,380,317       2,260,821



DEFERRED TAX LIABILITY                                                 --          95,550



LONG-TERM DEBT                                                  4,340,814       4,388,104


STOCKHOLDERS' EQUITY
     Common stock, par value $0.001,
         authorized 50,000,000 shares;
         issued 22,000,000 shares                                  22,000          22,000
     Additional paid-in capital                                 5,096,745       5,096,745
     Retained earnings (deficit)                               (1,669,916)       (846,975)
                                                             ------------    ------------

                                                                3,448,829       4,271,770
     Less cost of shares held in the treasury,
         2001 - 6,075,389 shares; 2000 - 6,069,889 shares         890,539         889,989
     Notes receivable - officer                                   160,000         160,000
                                                             ------------    ------------

                                                                2,398,290       3,221,781
                                                             ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $  9,119,421    $  9,966,256
                                                             ============    ============
</Table>



                                      F-3

<PAGE>

                          INTERWEST MEDICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<Table>
<Caption>
                                                       2001            2000            1999
                                                   ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
REVENUES
     Patient service revenue                       $ 13,284,809    $ 12,241,496    $ 11,174,046
     Other revenue                                       63,027         149,987         121,362
                                                   ------------    ------------    ------------

            Total revenue                            13,347,836      12,391,483      11,295,408

COSTS AND EXPENSES
     Professional care of patients                    7,775,638       7,038,613       6,159,646
     General services                                 2,436,208       2,449,933       2,154,722
     Administrative services                          2,621,360       1,996,709       1,923,349
     Other costs                                         16,782          70,226          85,593
     Depreciation, depletion and amortization           267,478         271,232         267,699
                                                   ------------    ------------    ------------

                                                        230,370         564,770         704,399

OTHER INCOME (EXPENSES)
     Gain (loss) on sale of securities                 (690,316)     (3,662,353)      2,192,307
     Interest income                                     64,407          90,579          73,239
     Interest expense                                  (352,209)       (500,601)       (408,304)
                                                   ------------    ------------    ------------

            Income (loss) before taxes on income       (747,748)     (3,507,605)      2,561,641

Provision (benefit) for income taxes                     75,193        (995,363)        904,609
                                                   ------------    ------------    ------------

            Net income (loss)                          (822,941)     (2,512,242)      1,657,032

Other comprehensive income, net of tax
     Unrealized holding gains on securities                  --              --         851,352
     Reclassification adjustment for
        gains included in net income                         --              --        (354,800)
                                                   ------------    ------------    ------------

            Comprehensive income (loss)            $   (822,941)   $ (2,512,242)   $  2,153,584
                                                   ============    ============    ============

Weighted averages shares outstanding                 15,929,353      16,192,803      15,689,508
                                                   ============    ============    ============

Earnings per common share - basic and diluted      $      (0.05)   $      (0.16)   $       0.11
                                                   ============    ============    ============
</Table>



                                      F-4

<PAGE>

                          INTERWEST MEDICAL CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<Table>
<Caption>
                                                                                   Accumulated
                                                                                      Other
                                                                                  Comprehensive
                                                                                      Income
                                                                                   (Unrealized
                                                                                     Holding
                                                                                  Gains/Losses
                              Common Stock                                        on Securities
                         -------------------------   Additional     Retained        Available
                          Number of        Par         Paid-in      Earnings        for Sale)        Treasury
                           Shares         Value        Capital      (Deficit)      Net of Tax         Stock
                         -----------   -----------   -----------   -----------    -------------    -----------
<S>                      <C>           <C>           <C>           <C>            <C>              <C>
BALANCE,
   December 31, 1998      20,000,000   $    20,000   $ 4,798,745   $     8,235    $    (496,552)   $  (857,254)
     Net income                   --            --            --     1,657,032               --             --
     Issuance of
       common stock        2,000,000         2,000       298,000            --               --             --
     Purchase of
       11,800 shares
       of common stock            --            --            --            --               --         (2,170)
     Other compre-
       hensive income             --            --            --            --          496,552             --
                         -----------   -----------   -----------   -----------    -------------    -----------

BALANCE,
   December 31, 1999      22,000,000        22,000     5,096,745     1,665,267               --       (859,424)
     Net loss                     --            --            --    (2,512,242)              --             --
     Purchase of
       253,750 shares
       of common stock            --            --            --            --               --        (30,565)
                         -----------   -----------   -----------   -----------    -------------    -----------

BALANCE,
   December 31, 2000      22,000,000        22,000     5,096,745      (846,975)              --       (889,989)
     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)
                         ===========   ===========   ===========   ===========    =============    ===========
</Table>



                                      F-5
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



<Table>
<Caption>
                                                        2001            2000            1999
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
CASH FLOWS FROM
     OPERATING ACTIVITIES
        Cash received from customers/patients       $ 13,474,485    $ 12,300,318    $ 10,944,141
        Interest received                                 62,955          90,579          66,039
        Cash paid to suppliers and employees         (12,735,386)    (11,367,724)    (10,018,761)
        Investments - net                               (789,127)        626,049      (4,708,588)
        Interest paid                                   (352,209)       (500,601)       (408,304)
        Income taxes paid (refunded)                   1,028,429      (1,000,000)        (65,000)
                                                    ------------    ------------    ------------

            Net cash provided by
               (used in) operating activities            689,147         148,621      (4,190,473)

CASH FLOWS FROM
     INVESTING ACTIVITIES
        Purchase of property and equipment              (150,925)       (123,025)       (264,432)
        Proceeds from sale of assets                          --          84,000       9,682,051
        Purchase of investments                               --              --      (4,604,569)
        Mortgage escrow deposits, net                     32,777         (13,876)        (13,624)
                                                    ------------    ------------    ------------

            Net cash provided by
               (used in) investing activities           (118,148)        (52,901)      4,799,426

CASH FLOWS FROM
     FINANCING ACTIVITIES
        Payments on debt                                 (43,938)       (127,062)       (119,692)
        Purchase of treasury stock                          (550)        (30,565)         (2,170)
                                                    ------------    ------------    ------------

            Net cash used in financing activities        (44,488)       (157,627)       (121,862)
                                                    ------------    ------------    ------------

            Net increase (decrease) in cash              526,511         (61,907)        487,091

CASH, beginning of period                                885,513         947,420         460,329
                                                    ------------    ------------    ------------

CASH, end of period                                 $  1,412,024    $    885,513    $    947,420
                                                    ============    ============    ============
</Table>



                                      F-6
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                   (continued)



<Table>
<Caption>
                                                      2001            2000            1999
                                                  ------------    ------------    ------------
<S>                                               <C>             <C>             <C>
RECONCILIATION OF NET INCOME
     (LOSS) TO NET CASH PROVIDED BY
     (USED IN) OPERATING ACTIVITIES

     Net income (loss)                            $   (822,941)   $ (2,512,242)   $  1,657,032

     Adjustments to reconcile net income
        (loss) to net cash provided by
        (used in) operating activities

        (Gain) loss on sale of securities              690,316       3,662,353      (2,192,307)
        Other gains                                         --         (41,788)             --
        Depreciation and amortization                  267,478         271,232         267,699
        Abandonments                                        --          27,828           4,056
        Stock issuance for compensation                     --              --         140,000
        Deferred taxes                                 209,527        (386,324)        149,692
        Changes in assets and liabilities
            Accounts receivable                        126,649         (49,377)       (328,061)
            Prepaid expenses
               and other receivables                    (1,542)        (20,089)         58,407
            Trading securities, net of transfer       (789,127)        626,049      (4,708,588)
            Accounts payable                           175,016         192,571         108,334
            Accrued liabilities                        (58,872)        (17,141)        (36,654)
            Income taxes payable (receivable)          894,095      (1,604,451)        689,917
            Other                                       (1,452)             --              --
                                                  ------------    ------------    ------------

            Net cash provided by
               (used in) operating activities     $    689,147    $    148,621    $ (4,190,473)
                                                  ============    ============    ============
</Table>

NON-CASH INVESTING AND FINANCING ACTIVITIES

         In April 1999, the Company issued 2,000,000 shares of common stock to
         an officer for a note receivable of $160,000. The note bears interest
         at 6% annually, principal is due at maturity, April 1, 2004. Interest
         accrued on the note was $9,600 in 2001 and 2000,and $ 7,200 in 1999.



                                      F-7
<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.

     RECLASSIFICATIONS

          Certain reclassifications have been made to 2000 and 1999 captions to
          conform to the 2001 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:

<Table>
<S>                                                                    <C>
               Buildings and improvements                              31 years
               Equipment and furniture                                  7 years
</Table>

     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
<PAGE>

                          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.

          Prior to October 1, 1999, the Company classified all investment
          securities as available for sale. Effective October 1, 1999, all
          investment securities were transferred to the trading category.

     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.

     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, 2001 and 2000, based upon current interest rates of
          similar debt which approximates the Company's mortgage interest rate.



                                      F-9
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     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 for service
          rendered. The Company derives a significant portion of its revenues
          from third party payers (health maintenance organizations, Medicare
          and Medi-Cal). Approximately 52% of 2001 revenue was derived from a
          contract with one health maintenance organization.

          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.

     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

          In 1999, the effect of dilutive common shares was immaterial. Dilutive
          earnings per share have not been presented for 2001 and 2000 since the
          inclusion of potential common stock would be antidilutive.

     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.



                                      F-10
<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.
          The 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.

NOTE 2. INVESTMENT SECURITIES

     Investment securities consist entirely of equity securities.

     Realized sales of available for sale securities in 1999 are summarized as
     follows:

<Table>
<S>                                                                  <C>
          Proceeds from sale                                         $9,682,051
          Gross realized gains                                        1,103,775
          Gross realized losses                                        (566,200)
</Table>

     Included in gain (loss) on sale of investments for 2001 and 2000 is $
     418,728 and $488,228, respectively, of unrealized loss on trading
     securities still held at December 31, 2001 and 2000. Included in gain
     (loss) on sale of investments for 1999 is $279,158 of unrealized gain on
     trading securities still held at December 31, 1999. Effective October 1,
     1999, the Company's investment securities, previously classified as
     available for sale were transferred to the trading category. Unrealized
     losses at that date of $223,376 have been recognized in the accompanying
     1999 financial statements.

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.



                                      F-11
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3. CAPITAL STOCK

     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.

     A summary of the status of the Company's stock options for 2001 and 2000 is
     as follows:

<Table>
<Caption>
                                     2001                2000
                               -----------------   -----------------
                                        Weighted            Weighted
                                        Average             Average
                               Shares   Exercise   Shares   Exercise
                                (000)    Price      (000)    Price
                               ------   --------   ------   --------
<S>                            <C>      <C>        <C>      <C>
Outstanding, beginning          1,500   $    .15    1,500   $    .15
     Granted                       --         --       --
     Exercised                     --         --       --         --
     Forfeited                     --         --       --         --
                               ------   --------   ------   --------

Outstanding, ending             1,500   $    .15    1,500   $    .15
                               ======   ========   ======   ========

Options exercisable
     at year end                1,500   $    .15    1,500   $    .15
                               ======   ========   ======   ========

Weighted average fair
     value of options
     granted during the year            $     --            $     --
                                        ========            ========
</Table>

     At December 31, 2001, the 1,500,000 options have an exercise price of $0.15
     per share and a weighted average remaining contractual life of 7.25 years.

     Had compensation cost for the Company's stock options been determined based
     on the fair value at the grant date, the Company's net income and income
     per share for 1999 would have been $ 1,528,332 and $ 0.10, respectively.

     Compensation cost under the fair value method was estimated using the
     Black-Scholes model with the following assumptions: dividend yield of 0%;
     expected life of 5 years; expected volatility of 138.25% and a risk-free
     interest rate of 6.0%.

NOTE 4. RELATED PARTY TRANSACTIONS

     During the years ended December 31, 2001, 2000 and 1999, Arch B. Gilbert, a
     Professional Corporation, whose sole stockholder is president of the
     Company, was paid $225,326, $330,000 and $141,700, respectively, for legal
     services rendered.



                                      F-12
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4. RELATED PARTY TRANSACTIONS - CONTINUED

     During the years ended December 31, 2001, 2000 and 1999, the above
     corporation was reimbursed $50,273, $35,352 and $35,352, respectively, for
     expenses incurred on behalf of the Company.

     During 2001 and 2000, the wife of the Company's president performed
     consulting services for the Company for which she received annual cash
     compensation of $36,000.

NOTE 5. FEDERAL INCOME TAXES

     The Company's tax provision (benefit) for 2001, 2000 and 1999 consists of
     the following:

<Table>
<Caption>
                                            2001          2000          1999
                                         ----------    ----------    ----------
<S>                                      <C>           <C>           <C>
Current payable (receivable)             $ (134,334)   $ (609,039)   $  754,917
Deferred taxes                                   --      (386,324)      149,692
Re-evaluation of valuation allowance
    on beginning temporary differences      209,527            --            --
                                         ----------    ----------    ----------

                                         $   75,193    $ (995,363)   $  904,609
                                         ==========    ==========    ==========
</Table>

The 2001, 2000 and 1999 tax provision (benefit) differs from the amount
calculated by applying statutory tax rates to pre-tax income as follows:

<Table>
<Caption>
                                             2001            2000            1999
                                         ------------    ------------    ------------
<S>                                      <C>             <C>             <C>
Tax at statutory rates                   $   (254,234)   $ (1,192,586)   $    870,958
Re-evaluation of valuation allowance
    on beginning temporary differences        209,527              --              --
Losses not providing benefits                 119,855         222,249              --
Other                                              45         (25,026)         33,651
                                         ------------    ------------    ------------

                                         $     75,193    $   (995,363)   $    904,609
                                         ============    ============    ============
</Table>

     All income (loss) since inception relates to domestic activity.



                                      F-13
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5. FEDERAL INCOME TAXES - CONTINUED

     The tax effects of temporary differences at December 31, 2001 and 2000 that
     give rise to significant portions of deferred tax assets and deferred tax
     liabilities are as follows:

<Table>
<Caption>
                                                   2001          2000
                                                ----------    ----------
<S>                                             <C>           <C>
Deferred tax assets
     Unrealized loss on marketable securities   $  142,367    $  165,998
     Expenses deduction in future periods           59,226        17,997
     Capital loss carryforward                     429,720       343,331
                                                ----------    ----------

                                                   631,313       527,326
Deferred tax liabilities
     Depreciation and depletion                   (100,269)      (95,550)
     Unrealized gain on marketable securities           --            --
     Valuation allowance                          (531,044)     (222,249)
                                                ----------    ----------

Total deferred tax asset (liabilities), net     $       --    $  209,527
                                                ==========    ==========
</Table>

     During 2001, the valuation allowance increased $308,795. The valuation
     allowance increased $222,249 in 2000.

     The Company has a capital loss carryforward of approximately $1,264,000
     expiring in 2006.

NOTE 6. LONG-TERM DEBT

     Long-term debt consisted of the following at December 31:

<Table>
<Caption>
                                                       2001         2000
                                                    ----------   ----------
<S>                                                 <C>          <C>
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                                              $4,388,104   $4,432,042

Less current maturities                                 47,290       43,938
                                                    ----------   ----------

                                                    $4,340,814   $4,388,104
                                                    ==========   ==========
</Table>

     Aggregate maturities of long-term debt for each of the succeeding five
     years and thereafter is as follows:

<Table>
<S>                                             <C>
                2002                            $   47,290
                2003                                50,898
                2004                                54,782
                2005                                58,961
                2006                                63,460
                Thereafter                       4,112,713
</Table>



                                      F-14
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 2001, 2000 and 1999 totaled
     $79,518, $53,579 and $32,279, respectively.



                                      F-15
<PAGE>

                          INTERWEST MEDICAL CORPORATION
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



<Table>
<Caption>
       Column A            Column B         Column C         Column E      Column F
                          ----------   ------------------   ----------   -------------
                                           Additions
                                       ------------------
                                       Charged
                          Balance at   to Costs   Charged
                          Beginning      and      to Other                  Balance at
                          of Period    Expenses   Accounts   Deductions   End of Period
                          ----------   --------   --------   ----------   -------------
<S>                       <C>          <C>        <C>        <C>          <C>
Allowance for
doubtful accounts

   Year ended
      December 31, 1999   $   58,495   $128,924   $     --   $  115,731   $      71,688
                          ==========   ========   ========   ==========   =============

   Year ended
      December 31, 2000   $   71,688   $  9,696   $     --   $   24,480   $      52,932
                          ==========   ========   ========   ==========   =============

   Year ended
      December 31, 2001   $   52,932   $129,127   $     --   $    7,864   $     174,195
                          ==========   ========   ========   ==========   =============
</Table>



                                      F-16
<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.

<Table>
<Caption>
                                   Year First Became
                                     a Director of
Name                    Age             Company           Position
----                    ---        -----------------      --------
<S>                     <C>        <C>                    <C>
Arch B. Gilbert         68               1983(1)          President,
                                                          Secretary,
                                                          Treasurer &
                                                          Director
</Table>

(1) Date of incorporation

         (b) Identification of Executive Officers:

<Table>
<Caption>
Name                               Position                  Age
----                               --------                  ---
<S>                                <C>                       <C>
Arch B. Gilbert                    President,                68
                                   Secretary,
                                   Treasurer
</Table>

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 2001. 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%



                                       9
<PAGE>

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, 2000, 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, 2001, Arch B. Gilbert did not
receive any direct remuneration.

         All executive officers as a group (1 person) received cash remuneration
in fiscal year 2001 of $0. 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. 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 March 23, 2001,
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:

<Table>
<Caption>
Name and Address                              Shares
      of                                    Beneficially
Beneficial Owner                               Owned                   Percent
----------------                            ------------               -------
<S>                                         <C>                        <C>
Arch B. Gilbert                             6,295,000(1)               38.9%
3221 Hulen Street
Suite C
Fort Worth, Texas 76107
</Table>



                                       10
<PAGE>

         (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, 2001, certain
information concerning shares beneficially owned by all directors and all
directors and officers of the registrant as a group:

<Table>
<Caption>
                                                       Amount and
                            Name of                    Nature of
                           Beneficial                  Beneficial         Percent
Title of Class               Owner                     Ownership          of Class
--------------             ----------                  ----------         --------
<S>                        <C>                          <C>               <C>
Common Stock               Arch B. Gilbert              6,295,000           39.5%

Common Stock               All Officer and              6,295,000           39.5%
$0.001 Par Value           Directors as a Group
                           (1 person)
</Table>

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 2001
of $24,000. The Registrant also reimbursed Mr. Gilbert for 50% of his office and
administrative expenses for the year ending December 31, 2001 and for direct
out-of-pocket expenses incurred on behalf of the Company. The total amount of
such reimbursement was $26,273.60. For the year 2001, Arch B. Gilbert, A
Professional Corporation, whose sole stockholder is the President of the
Company, was paid $225,326 for legal services rendered.

         In 2002, 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 2001, 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.

         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



                                       11
<PAGE>

of 6% per annum will be payable annually and the entire balance and any accrued
interest will be payable on April 1, 2004.


                                     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, 2001
             and 1999

             Consolidated Statements of Operations and
             Comprehensive Income for the Years Ended
             December 31, 2001, 1999 and 1998

             Consolidated Statements of Stockholders' Equity
             for the Years Ended December 31, 2001, 1999,
             and 1998

             Consolidated Statements of Cash Flows for the
             Years Ended December 31, 2001, 1999, and 1998

             Note to Consolidated Financial Statements

             Supporting Schedule


             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.



                                       12
<PAGE>

                  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
<PAGE>

                          INTERWEST MEDICAL CORPORATION

                                INDEX TO EXHIBITS

                                   ITEM 14(a)

<Table>
<Caption>
Exhibit
number                              Description                            Page
-------                             -----------                            ----
<S>                        <C>                                             <C>
3                          Articles of Incorporation, Bylaws                 *

4                          Instruments defining the right of
                             securities holders, including
                             debentures                                      *

10                         Material contracts                                *
</Table>

                  *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
<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: /s/ ARCH B. GILBERT
                                          --------------------------------------
                                          Arch B. Gilbert, President
                                          Chief Executive Officer,
                                          Chief Financial Officer and
                                          Chief Accounting Officer



Date: March 22, 2002
     -----------------------------


         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. GILBERT
   -------------------------------
   Arch B. Gilbert, Director


Date: March 22, 2002
     -----------------------------



                                       15