SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended March 31, 2004 Commission File No. 2-82655

INTERWEST MEDICAL CORPORATION

Arlington Heights Professional Office Building
3221 Hulen Street, Suite C, Fort Worth, TX 76107-6193

Registrant’s telephone number, including area code: (817)731-2743

Not Applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

(Not Applicable)

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

Yes o No x

(APPLICABLE TO CORPORATE ISSUERS)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the period covered by this report. 15,915,211 shares of Common Stock, $0.001 Par Value.

Table of Contents

INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

See Accompanying Notes to Condensed
Consolidated Financial Statements

INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

See Accompanying Notes to Condensed
Consolidated Financial Statements

INTERWEST MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

See Accompanying Notes to Condensed
Consolidated Financial Statements

INTERWEST MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.		In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the Company’s financial position as of March 31, 2004, and its results of operations for the three months ended March 31, 2004 and 2003, and cash flows for the three months ended March 31, 2004 and 2003. The results of operations for the period presented are not necessarily indicative of the results to be expected for a full year.
2.		Income per share was computed by dividing the net income by the weighted average number of shares outstanding.
3.		The Company 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 representative.
		A summary of the status of the Company’s stock options for 2004 and 2003 is as follows:

At March 31, 2004, the 1,500,000 options have an exercise price of $0.15 per share and a weighted average remaining contractual life of 6 years.

REVIEW BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Weaver and Tidwell, L.L.P., Independent Certified Public Accountants, have performed a review of the condensed consolidated balance sheet as of March 31, 2004 and the condensed consolidated statements of operations for the three months ended March 31, 2004 and 2003, and cash flows for the three months ended March 31, 2004 and 2003, in accordance with established professional standards and procedures for such a review. All adjustments or additional disclosures proposed by Weaver and Tidwell, L.L.P. have been reflected in the data presented.

The report of Weaver and Tidwell, L.L.P. commenting upon their review is included as Part I — Exhibit I.

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To the Board of Directors
InterWest Medical Corporation

We have reviewed the condensed consolidated balance sheet of InterWest Medical Corporation as of March 31, 2004, and the related condensed consolidated statements of operations for the three month periods ended March 31, 2004 and 2003, and cash flows for the three months ended March 31, 2004 and 2003. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements referred to above, for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of InterWest Medical Corporation as of December 31, 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 19, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

WEAVER AND TIDWELL, L.L.P.

Fort Worth, Texas
May 12, 2004

674

PART I — EXHIBIT I

Item 2. Management’s Discussion and Analysis of Financial Position and Results of Operations.

Changes in Balance Sheet Accounts

Current assets were $4,652,952 and total assets were $8,055,698 at March 31, 2004 as compared to $4,882,983 current assets and $8,344,031 total assets at December 31, 2003. Current liabilities were $2,540,339 at March 31, 2004 as compared to $2,781,391 at December 31, 2003.

Results of Operations

For the Three Months Ended March 31, 2004, operating revenue was $4,247,793; costs and expenses were $4,300,214, net loss was ($97,726) and interest income was $778, as compared to the Three Months Ended March 31, 2003, operating revenue of $3,581,669, costs and expenses of $3,759,919, net income was ($259,059) and interest income of $1,161.

Cash Flows

For the Three Months Ended March 31, 2004, cash flows from operating activities were ($156,674), cash flows from investing activities were ($7,287), cash flows from financing activities were ($50,589) net decrease in cash was ($214,550), cash at the beginning of the period was $796,434, and cash at the end of the period was $581,884 as compared to the Three Months Ended March 31, 2003, to cash flows from operating activities of ($342,464), cash flows from investing activities of ($6,717), cash flows from financing activities of ($10,062), net decrease in cash of ($359,243), cash at the beginning of the period of $1,004,795 and cash at the end of the period of $645,552.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has not entered into any derivative financial instruments, derivative commodity instruments or other similar instruments during the quarter ended March 31, 2004.

Item 4. Controls and Procedures

As of March 31, 2004, 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. Based on that evaluation, the Company’s management, including the CEO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2004. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to March 31, 2004.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

     Not applicable.

Item 2. Changes in Securities.

     Not applicable.

Item 3. Defaults upon Senior Securities.

     Not applicable.

Item 4. Submission of Matters to a Vote of Securities Holders.

     Not applicable.

Item 5. Other Information

     Not applicable.

Item 6. Exhibits and Reports on Form 8-K.

     (a) Exhibit 31 — Section 302 Certification

     (b) Exhibit 32 — Section 906 Certification

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its half by the undersigned thereunto duly authorized.

	INTERWEST MEDICAL CORPORATION
	By:	/s/ Arch B. Gilbert
		Arch B. Gilbert, President,
		Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer

Date: May 19, 2004