Attached files
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-Q/A
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE
ACT
OF 1934
For the
quarterly period ended March 31, 2009
OR
[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE
ACT
OF 1934
Commission
File Number: 0-28629
| REVOLUTIONS MEDICAL CORPORATION | ||
| (Name of Registrant in its charter) |
| NEVADA | 73-1526138 | |
|
(State or other
jurisdiction of
incorporation or
organization)
|
(IRS Employer I.D. No.) |
670
MARINA DRIVE, 3 RD
FLOOR
CHARLESTON,
SC 29492
(Address
of principal executive offices and Zip Code)
(843)
971-4848
(Registrant's
telephone number, including area code)
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
past 12 months, and (2) has been subject to such filing requirements for the
past 90 days.
Yes þ No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller reporting company | þ |
Indicate
by check mark whether the registrant is a shell company (as defined
in
Rule
12b-2 of the Exchange Act).
Yes o No þ
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
There
were 30,431,813 shares of common stock, $0.001 par value, outstanding and
1,000,000 shares of Series 2007 preferred stock, $0.001 par value outstanding as
of April 15, 2009.
EXPLANATORY
NOTE:
The
Company is filing this amended Form 10-Q for the period ended March 31, 2009 for
the following reasons:
|
1.
|
To
revise Item 4. Controls and Procedures to maintain consistency with the
disclosure provided in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2008.
|
|
2.
|
To
amend the certifications required by Item 601(b)(31) to be in the exact
form prescribed by Item 601(b)(31) of Regulation
S-K.
|
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | |
| ITEM 1. | FINANCIAL STATEMENTS | |
| Consolidated Balance Sheet at March 31, 2009 (Unaudited) | 1 | |
| Consolidated Statements of Operations For The Period From Inception (August 16, 1996) to March 31, 2009 and For The Three Months Ended March 31, 2009 and 2008 (Unaudited) | 2 | |
| Consolidated Statements of Cash Flows For The Period From Inception (August 16, 1996) to March 31, 2009 and For The Three months Ended March 31, 2009 and 2008 (Unaudited) | 3 | |
| Notes to Consolidated Financial Statements (Unaudited) | 5 | |
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 11 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 |
| ITEM 4T. | CONTROLS AND PROCEDURES | 21 |
| PART II. | OTHER INFORMATION | |
| ITEM 1. | LEGAL PROCEEDINGS | 22 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 22 |
| ITEM 6. | EXHIBITS | 22 |
i
REVOLUTIONS MEDICAL CORPORATION
(A
Development Stage Company)
BALANCE
SHEET
March
31, 2009
(Unaudited)
ASSETS
| 3/31/09 | 12/31/08 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 44,988 | $ | 4,796 | ||||
| Other assets | 4,395 | -- | ||||||
| Goodwill | 23,276 | 23,276 | ||||||
| TOTAL ASSETS | $ | 72,659 | $ | 28,072 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 228,785 | $ | 466,683 | ||||
| Accrued Salaries | 709,449 | 1,158,103 | ||||||
| Notes Payable and Accrued Interest | 143,429 | 143,429 | ||||||
| Total current liabilities | 1,081,663 | 1,768,215 | ||||||
| Total liabilities | 1,081,663 | 1,768,215 | ||||||
| SHAREHOLDERS' DEFICIENCY | ||||||||
| Preferred stock, $0.001 par value, | ||||||||
| 5,000,000 shares authorized; 1,000,000 shares issued and outstanding | 1,000 | 1,000 | ||||||
| Common stock, $0.001 par value, | ||||||||
| 250,000,000 shares authorized; 30,081,813 and 26,883,195 | 30,082 | 26,883 | ||||||
| shares issued and outstanding at 3/31/09 and 12/31/08, respectively | ||||||||
| Paid in capital | 19,800,309 | 18,769,691 | ||||||
| Deficit accumulated during the development stage | (20,840,395 | ) | (20,537,717 | ) | ||||
| Total shareholders' deficiency | (1,009,004 | ) | (1,740,143 | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY | $ | 72,659 | $ | 28,072 | ||||
The accompanying notes are an integral part of
the interim financial statements
1
REVOLUTIONS MEDICAL CORPORATION
(A
Development Stage Company)
STATEMENTS OF OPERATIONS
From
Inception (August 16, 1996) Through March 31, 2009 and
For
The Three Months Ended March 31, 2009 and 2008
(Unaudited)
|
FROM INCEPTION (AUGUST
16, 1996)
THROUGH
MAR
31, 2009
|
THREE
MONTHS
ENDED
MAR
31, 2009
|
THREE
MONTHS
ENDED
MAR
31, 2008
|
||||||||||
| Investment Income | $ | 170,753 | $ | -- | $ | -- | ||||||
| Other Income | 596,554 | 592,697 | -- | |||||||||
| 767,307 | 592,697 | -- | ||||||||||
| EXPENSES | ||||||||||||
| Research and development | 2,379,056 | 96,000 | 8,000 | |||||||||
| Purchased R&D | 3,309,515 | -- | -- | |||||||||
| General and administrative | 14,913,257 | 345,493 | 132,856 | |||||||||
| Total operating expenses | 20,601,828 | 441,493 | 140,856 | |||||||||
| Operating income (loss) | (19,834,521 | ) | 151,204 | (140,856 | ) | |||||||
| Interest income | 17,276 | -- | -- | |||||||||
| Interest expense | 122,297 | -- | -- | |||||||||
| Gain on disposal of assets | 794 | -- | -- | |||||||||
| Gain on extinguishment of debt | 10,398 | -- | -- | |||||||||
| Depreciation and amortization | 75,536 | -- | -- | |||||||||
| Compensation cost for options | 1,019,931 | 453,882 | -- | |||||||||
| Net loss before minority interest | (21,023,817 | ) | (302,678 | ) | (140,856 | ) | ||||||
| Minority Interest in Subsidiary Loss | (183,422 | ) | -- | (17,120 | ) | |||||||
| Net loss from operations | $ | (20,840,395 | ) | $ | (302,678 | ) | $ | (123,736 | ) | |||
| Weighted average shares outstanding | 38,253,426 | 28,035,224 | 18,362,324 | |||||||||
| Net loss per share (Note 1) | $ | (0.54 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
The
accompanying notes are an integral part of the interim financial
statements
2
REVOLUTIONS MEDICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
From
Inception (August 16, 1996) Through March 31, 2009 and
For
The Three Months Ended March 31, 2009 and 2008
(Unaudited)
|
FROM
INCEPTION (AUGUST 16, 1996) THROUGH
MARCH 31, 2009
|
THREE
MONTHS ENDED
|
|||||||||||
| MARCH 31, 2009 | MARCH 31,2008 | |||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Loss from operations before minority interest | $ | (20,840,395 | ) | $ | (302,678 | ) | $ | (123,736 | ) | |||
| Plus non-cash charges to earnings | ||||||||||||
| Stock compensation expense | 1,019,931 | 453,882 | -- | |||||||||
| Depreciation and amortization | 75,525 | -- | -- | |||||||||
| Purchase R&D - Clear Image | 3,309,515 | -- | -- | |||||||||
| Common stock issued for services | 3,846,628 | 229,300 | 390,000 | |||||||||
| Preferred stock issued for services | 20,000 | -- | -- | |||||||||
| Expenses paid by third parties | 57,134 | -- | -- | |||||||||
| Contribution of services by officer and employees | 799,154 | -- | -- | |||||||||
| Services by officer and employees paid for with non-cash consideration | 167,500 | -- | -- | |||||||||
| Compensation cost for option price reduction | 50,000 | -- | -- | |||||||||
| Amortization of compensation cost
for options granted to non-employees and common stock issued for services |
1,775,577 | -- | -- | |||||||||
| Allowance for doubtful accounts | 50,900 | -- | -- | |||||||||
| Gain on extinguishment of debt | (10,398 | ) | -- | -- | ||||||||
| Write-off of Notes Receivable | 14,636 | -- | -- | |||||||||
| Write-off of Notes Payable | (8,239 | ) | -- | (8,239 | ) | |||||||
| Write-off of organizational costs | 3,196 | -- | -- | |||||||||
| Write-off of zero value investments | 785,418 | -- | -- | |||||||||
| Write-off of leasehold improvements and computer equipment | 2,006 | -- | -- | |||||||||
| Compensation costs for stock options and warrants granted to non-employees | 1,205,015 | -- | -- | |||||||||
| Change in working capital accounts: | ||||||||||||
| (Increase) decrease in receivables from related parties | (68,900 | ) | -- | -- | ||||||||
| Increase in other assets | (4,395 | ) | (4,395 | ) | -- | |||||||
| (Increase) decrease in goodwill | (23,276 | ) | -- | -- | ||||||||
| (Increase) decrease in other receivables | (176,577 | ) | -- | -- | ||||||||
| Increase (decrease) in accrued salaries and consulting | 484,397 | (448,654 | ) | 49,000 | ||||||||
| Increase (decrease) in accrued interest | 91,177 | -- | -- | |||||||||
| Increase (decrease) in accounts payable and accrued liabilities | 1,320,331 | (237,898 | ) | 251 | ||||||||
| Total operating activities | (6,054,140 | ) | (310,443 | ) | (82,724 | ) | ||||||
| INVESTING ACTIVITIES | ||||||||||||
| Purchase of equipment | (67,042 | ) | -- | -- | ||||||||
| Investment in syringe patent development | (10,000 | ) | -- | -- | ||||||||
| Investment in Ives Health Company | (251,997 | ) | -- | -- | ||||||||
| Investment in The Health Club | (10,000 | ) | -- | -- | ||||||||
| Total investing activities | (339,039 | ) | -- | -- | ||||||||
| FINANCING ACTIVITIES | ||||||||||||
| Loans from shareholders | 13,907 | -- | -- | |||||||||
| Repayment of loans from shareholders | (8,005 | ) | -- | -- | ||||||||
| Repayments of Promissory Notes | 190,754 | -- | -- | |||||||||
| Common stock subscribed | 34,000 | -- | -- | |||||||||
| Sale of preferred stock for cash: | (1,000 | ) | -- | -- | ||||||||
| Sale of common stock for cash: | ||||||||||||
| To third-party investors (prior to merger) | 574,477 | -- | -- | |||||||||
| To third-party investors | 4,016,001 | 10,134 | 100,000 | |||||||||
| From exercise of stock options | 1,662,918 | 340,501 | -- | |||||||||
| Less: Issue Costs | (102,318 | ) | -- | -- | ||||||||
| Convertible debentures issued for cash | 355,000 | -- | -- | |||||||||
| Payment of exclusive license note payable | (100,000 | ) | -- | -- | ||||||||
| Total financing activities | 6,635,734 | 350,635 | 100,000 | |||||||||
| Minority interest | (197,567 | ) | -- | (17,120 | ) | |||||||
| Change in cash | 44,988 | 40,192 | 156 | |||||||||
| Cash at beginning of period | -- | 4,796 | 2,398 | |||||||||
| Cash at end of period | $ | 44,988 | $ | 44,988 | $ | 2,554 | ||||||
| Continued | ||||||||||||
3
REVOLUTIONS MEDICAL
CORPORATION
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
From
Inception (August 16, 1996) Through March 31, 2009 and
For
The Three Months Ended March 31, 2009 and 2008
(Unaudited)
|
FROM INCEPTION (AUGUST 16,
1996) THROUGH
MARCH 31, 2009
|
THREE MONTHS
ENDED
|
|||||||||||
| MARCH 31, 2009 | MARCH 31, 2008 | |||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest and taxes during the period | 57,571 | -- | -- | |||||||||
| Non-cash financing and investing activities: | ||||||||||||
| Acquisition of Color MRI Technology | 3,309,515 | -- | -- | |||||||||
| Investment in Globe Joint Venture | (637,566 | ) | -- | -- | ||||||||
| Common stock issued to founders | 7,000 | -- | -- | |||||||||
| Common stock issued in connection with merger with Cerro Mining Corporation | 300 | -- | -- | |||||||||
| 20 to 1 reverse stock split | 138,188 | -- | -- | |||||||||
| Common stock issued in Ives merger | 346,262 | -- | -- | |||||||||
| Common stock subscriptions | 69,800 | -- | -- | |||||||||
| Capitalized compensation cost for options granted | 1,487,700 | -- | -- | |||||||||
| Common stock issued in exchange for promissory note | 676,500 | -- | -- | |||||||||
| Common stock issued for payment of debt | 152,553 | -- | -- | |||||||||
| Common stock issued for convertible debentures | 190,660 | -- | -- | |||||||||
| Common stock issued for services | 706,663 | -- | -- | |||||||||
| Common stock issued to pay Ives debt | 27,000 | -- | -- | |||||||||
| Common stock issued to Clear Image shareholders under short form merger | 12,208 | -- | -- | |||||||||
The accompanying notes are an integral part of
the interim financial statements
4
REVOLUTIONS
MEDICAL CORPORATION AND SUBSIDIARY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2009
(UNAUDITED)
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The
accompanying interim consolidated financial statements of Revolutions Medical
Corporation ("RevMed") and its partially-owned subsidiary Clear Image, Inc.
("Clear Image"), together referred to as the "Company" are unaudited; however,
in the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for the interim periods. All
intercompany balances and transactions have been eliminated in consolidation.
The results of operations for the three months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2009. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes for the year
ended December 31, 2008 appearing in the Company's Annual Report on Form 10-K
for the year ended December 31, 2008, as filed with the Securities and Exchange
Commission.
Organization and Nature of
Operations
Revolutions
Medical Corporation, a Nevada corporation, ("RevMed" or "the Company") is
principally engaged in the design and development of retractable safety needle
devices intended to reduce the risk of accidental needle stick injuries among
health care workers. During 2008, RevMed acquired 100% of the common stock of
Clear Image, Inc., which was developing a color MRI technology. The Company now
owns this technology as well. The Company has no products for sale at this
time.
Development Stage
Company
Since its
inception in 1996, the Company has been considered a development stage
enterprise for financial reporting purposes as significant efforts have been
devoted to raising capital and to research and development of various safety
needle devices.
Cash and Cash
Equivalents
The
Company considers highly liquid investments (those readily convertible to cash)
purchased with original maturity dates of three months or less to be cash
equivalents.
Stock-based
Compensation
The
Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 123
(revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires the
recognition of the cost of employee services received in exchange for an award
of equity instruments in the financial statements and is measured based on the
grant date fair value of the award. SFAS 123R also requires the stock option
compensation expense to be recognized over the period during which an employee
is required to provide service in exchange for the award (the vesting
period).
Income
Taxes
The
Company uses the liability method of accounting for income taxes as set forth in
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under the liability method, deferred taxes are determined based on the
differences between the financial statement and tax basis of assets and
liabilities at enacted tax rates in effect in the years in which the differences
are expected to reverse.
5
Segment
Information
Effective
January 1, 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information". The
Company identifies its operating segments based on business activities,
management responsibility and geographical location. During the period covered
by these financial statements, the Company operated in a single business segment
engaged in developing selected healthcare products.
Loss per
Share
The
Company computes net loss per share in accordance with SFAS No. 128, "Earnings
per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the
provision of SFAS No. 128 and SAB 98 basic net loss per share is calculated by
dividing net loss available to common stockholders for the period by the
weighted average shares of common stock of the Company outstanding during the
period. Diluted net loss per share is computed by dividing the net loss for the
period by the weighted average number of common and common equivalent shares
outstanding during the period. The calculation of fully diluted loss per share
of common stock assumes the dilutive effect of stock options outstanding. During
a loss period, the assumed exercise of outstanding stock options has an
anti-dilutive effect. Therefore, the outstanding stock options were not included
in the March 31, 2009 and 2008 calculations of loss per share.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principals
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 revenues and expenses during the
reporting period. Actual results could differ significantly from those
estimates.
Reclassifications
Certain
reclassifications may have been made to the prior year financial statements to
conform to the current period presentation.
Long-Lived
Assets
Property,
plant and equipment, including significant improvements, are stated at cost.
Expenditures for maintenance and repairs are charged to operating expenses as
incurred. When properties are retired or otherwise disposed of, the cost of the
asset and the related accumulated depreciation are removed from the accounts
with the resulting gain or loss being reflected in results of
operations.
Management
assesses the recoverability of property and equipment, goodwill, trademarks and
other intangible assets whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable from its future
undiscounted cash flows. If it is determined impairment has occurred, an
impairment loss is recognized for the amount by which the carrying amount of the
asset exceeds its estimated fair value.
New Accounting
Standards
The
Financial Accounting Standards Board ("FASB") periodically issues new accounting
standards in a continuing effort to improve standards of financial accounting
and reporting. Management has reviewed the recently issued pronouncements and
concluded that the following new accounting standards are potentially applicable
to the Company.
6
In April
2009, the FASB issued Staff Position No. 141(R)-1, "Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination that Arise from
Contingencies." The Staff Position amends SFAS No. 141(R), "Business
Combinations" to require an acquirer to recognize at fair value at acquisition
date an asset acquired or liability assumed in a business combination that
arises from a contingency if the acquisition date fair value of that asset or
liability can be determined during the measurement period. The Staff Position is
effective for business combinations with an acquisition date on or after
December 15, 2008. The adoption of this standard did not have a material impact
on the Company's financial position, results of operations or cash
flows.
In April
2009, the FASB issued Staff Position No. 157-4, "Determining Fair Value when the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Indentifying Transactions that are not Orderly." The Staff
Position provides guidance for making fair value measurements more consistent
with the principles presented in SFAS No. 157, "Fair Value Measurements." The
Staff Position relates to determining fair values when there is no active market
or where the inputs being used represent distressed sales. The Staff Position is
effective for interim and annual periods ending after June 15, 2009, but
entities may early adopt the Staff Position for the interim and annual periods
ending after March 15, 2009. The Company does not expect the adoption of this
standard to have a material impact on its financial position, results of
operations or its cash flows.
In April
2009, the FASB issued Staff Position No. 107-1 and APB 28-1, "Interim
Disclosures about Fair Value of Financial Instruments." The purpose of this
Staff Position is to enhance consistency in financial reporting by increasing
the frequency of fair value disclosures. The Staff Position relates to assets
and liabilities that are not currently disclosed on the statement of financial
position at fair value. These financial instruments are currently disclosed at
fair value in the notes to the financial statements on an annual basis only.
This Staff Position provides for these fair value footnote disclosures to be
made at interim periods, also. The Staff Position is effective for interim and
annual periods ending after June 15, 2009, but entities may early adopt the
Staff Position for the interim and annual periods ending after March 15, 2009.
The Company does not expect the adoption of this standard to have a material
impact on its financial position, results of operations or its cash flows
.
In April
2009, the FASB issued Staff Position No. 115-2 and 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairment." The purpose of this Staff
Position is to bring greater consistency to the timing of impairment recognition
and greater clarity regarding disclosures to investors regarding the cash flows,
credit losses and aging of securities with unrealized losses. The Staff Position
is effective for interim and annual periods ending after June 15, 2009, but
entities may early adopt the Staff Position for the interim and annual periods
ending after March 15, 2009. The Company does not expect the adoption of this
standard to have a material impact on its financial position, results of
operations or its cash flows.
Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies are not expected to have a material impact on the
Company's financial position, results of operations or cash flows.
NOTE
2 - UNCERTAINTIES
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company is in the development stage and has not
established sources of revenues to fund the development of business and pay
operating expenses, resulting in a cumulative net loss of$(20,840,395) for the
period from inception (August 16, 1996) to March 31, 2009. The ability of the
Company to continue as a going concern during the next year depends on the
successful completion of the Company's capital raising efforts to fund the
development of its retractable safety syringe and its color MRI technology. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
7
NOTE
3 - MAXXON/GLOBE JOINT VENTURE AGREEMENT
On
November 3, 2005, Maxxon and Globe Med Tech, Inc. entered into a definitive
joint venture agreement to patent, develop, manufacture, market and distribute
safety needle products throughout the world. Maxxon and Globe each own 50% of
the joint venture. Maxxon contributed its safety syringe technology and patent
rights related thereto and Globe contributed its safety syringe IV catheter and
patent rights related thereto. In connection with the agreement, Maxxon issued
restricted shares of its common stock, valued at $625,066, to Globe. Subsequent
to December 31, 2006, the Company ended the joint venture and cancelled the
shares of common stock and options that were issued to Globe pursuant to the
agreement. On March 1, 2007, the Company filed a lawsuit in the District Court
of Tulsa County, Oklahoma against Globe Med Tech, Inc. to rescind, terminate and
seek monetary damages for the non-fulfillment and breach of a joint venture
agreement entered into November 3, 2005 and other related agreements, in
addition to an accounting of expenditures of funds under the terms and
provisions of the agreements. On May 11, 2007, a partial default judgment
against Globe was granted by the District Court of Harris County, Texas. The
partial default judgment as to liability only was granted with respect to the
Company's causes of action against Globe for breach of contract, conversion and
common law fraud with respect to the Company's Original Petition and Application
for Temporary and Permanent Injunctions against Globe on January 30, 2007. On
August 13, 2007, the Company was granted a final default judgment for permanent
injunctive relief and for damages in the amount of $14,029,000 against Globe.
Globe has appealed the judgment. On November 23, 2007, the Court signed an order
granting Globe's Motion for New Trial and setting aside the Final Default
Judgment entered in favor of the Company on August 13, 2007.
On
October 29, 2008, the Company filed a lawsuit in the district court of Harris
county Texas, a lawsuit for fraud and contempt of court for Globe Med Tech and
Andy Hu individually. In response, Globe filed a motion to stay the lawsuit
based upon the forum selection clause in the joint venture agreement between RMC
and Globe which provides that the exclusive forum for all disputes relating to
the Joint Venture Agreement shall be Oklahoma state court/Tulsa County. Due to
the Texas state district's court's backlog of cases and the withdrawal of Globe
and Andy Hu's counsel, the motion to stay was not heard until May 1, 2009. The
motion was granted as to Globe; however, Hu did not join in the motion and,
after the May 1st hearing, filed a separate motion to stay, based upon the same
grounds as Globe's motion. Hu's motion to stay was denied at a May 8th hearing.
Accordingly, the Company intends to proceed post haste with discovery with
respect to its claims against Hu, including without limitation obtaining the
deposition of a key witness.
NOTE
4 - OTHER COMMITMENTS AND CONTINGENCIES
Employment Agreement with
Rondald Wheet, CEO
Effective
March 31, 2008, the Company and Mr. Wheet, our CEO, entered into a three year
employment agreement. The agreement provides for an annual salary of $225,000.As
of March 31, 2009, the Company owed Mr. Wheet $55,724 pursuant to his prior
employment agreement. He is responsible for the Company's substantive and
financial reporting requirements of the Securities Exchange Act of 1934, as
amended, and is specifically allowed to hire any and all professionals necessary
to assist that process. The Company will provide him with all reasonable and
customary fringe benefits, including, but not limited to, participation in
pension plans, profit sharing plans, employee stock ownership plans, stock
option plans (whether statutory or not), stock appreciation rights plans,
hospitalization, medical dental disability and life insurance, car allowance,
vacation and sick leave. The Company will reimburse all of his reasonable and
necessary travel, entertainment or other related expenses incurred by him in
carrying out his duties and responsibilities under the agreement. The Company
will also provide him with a cell phone, suitable office space, and membership
dues in professional organizations and for any seminars and conferences related
to Company business.
Mr. Wheet
may elect, by written notice to the Company, to terminate his employment with
continued pay through the employment agreement term if (i) the Company sells all
of its assets, (ii) the Company merges with another business entity with a
change in control, (iii) more than 50% of the outstanding stock is acquired by a
third party, (iv) the Company requires Mr. Wheet to relocate or assigns duties
not commensurate with his position as CEO, (v) Mr. Wheet is removed from the
Board of Directors and (vi) the Company defaults in making payments required to
Mr. Wheet under this agreement. For two years following his resignation or
termination, Mr. Wheet will not work for or provide any services in any capacity
to any competitor and will not solicit any of the Company's customers or
accounts.
8
Mutual Release and
Settlement Agreement With Former CEO
On April
14, 2006, the Company and its former CEO entered into a mutual release and
settlement agreement, pursuant to which the Company issued to the former CEO a
promissory note for $203,920 (amount outstanding at December 31, 2007) and a
warrant to purchase up to 12,913,239 shares of common stock at $0.001 per share
on or before April 14, 2010. In addition, the mutual release and settlement
provides for continued indemnification of the former CEO and mutual releases.
The note, which is unsecured and is presently in default, bears interest at 18%
per year as the note was due April 14, 2007. As of December 31, 2007, the
Company had accrued interest payable of $91,176. The warrant is exercisable only
to the extent that the number of shares of common stock exercised plus the
number of shares presently owned by the warrant holder does not exceed 4.99% of
the outstanding shares of Common Stock of the Company on such date. The exercise
limit is revocable by the warrant holder upon 75 days prior notice to the
Company. During the three months ended March 31, 2006, the former CEO exercised
warrants to purchase 6,000,000 shares of common stock. The exercise price of
$6,000 was paid by reducing the principal balance of the promissory note by
$6,000. During 2007, the Company issued 345,662 shares of common stock upon the
exercise of a warrant. The exercise price of $6,913 was paid by reducing the
principal balance of the promissory note payable by the Company.
On April
8, 2008, the Company entered into a Memorandum of Understanding with its former
CEO to settle this outstanding obligation through the issuance of its common
stock on a quarterly basis commencing May 8, 2008 for one year. The value of the
issuance of the common stock will be determined by the market value of the ten
day average price following May 8, 2008 through May 18, 2008. During 2008, the
Company issued 271,491 shares at a total value of $133,030 to partially repay
this debt. On May 6, 2009, the Company issued 666,828 shares with a value of
$306,741 to completely pay off this debt.
Amounts Due Pursuant to
Employment and Consulting Agreements
The
Company has accrued $709,449 pursuant to employment and consulting agreements
which are in default. Although the Company plans to settle these amounts, there
is no assurance that its efforts to settle will be successful. No litigation
related to these agreements has been initiated or threatened. There is no
assurance, however, that such litigation will not be initiated in the
future.
Patent Applications for the
Company's RevVac Safety Syringe
The
Company owns a patent published January 2005 and a patent application was filed
by the Globe/RevMed Joint Venture in September 2005 for the RevVac safety
syringe. In January 2009, this second patent for the RevVac safety syringe was
issued by the U.S. patent office and published in April 2009. During the quarter
ended September 30, 2008, the Company filed international patent protection
rights regarding the RevVac Safety Syringe in the following countries:
Australia, China, Japan, Taiwan, Mexico, Canada and Europe.
Revolutions Medical Patent
Applications and License to Color MRI Technology
The
Company owns four (4) separate patent applications, filed September 15, 2006.
There is no assurance that any patent protections will be secured. The lack of
patent protection, whether foreign or domestic, could allow competitors to copy
and sell products based on our designs without paying us a royalty, which could
have a material adverse effect on the Company's business.
In 1996,
a former subsidiary of the Company, Clear Image, Inc., acquired an exclusive
license to a color MRI technology from the University of South Florida Research
Foundation ("USFRF").In 2002, USFRF notified Clear Image that the license was
terminated because Clear Image had not used its "best efforts", an assertion
which Clear Image disputed. Although the current stage of the Company's
technology uses color MRI technology, the Company believes that it is
sufficiently separate from the technology licensed to it by USFRF to permit it
to proceed regardless of the status of the license from USFRF. The Company
believes that its color MRI technology does not rely on the license; however,
the legal implications are uncertain. There is no assurance that this 2002
dispute with USFRF will not recur.
9
AMOUNTS DUE TO
CONSULTANTS
During
the year ended December 31, 2008, the Company entered into a commitment with a
third party who would obtain the breast biopsy and needle localization
technology. The Company has paid $30,000 as of March 31, 2009, and expects to
pay another $210,000 by the end of the second quarter.
NOTE
5 - PREFERRED STOCK AND COMMON STOCK TRANSACTIONS
SERIES
2006 PREFERRED STOCK
The
Company has authorized 5,000,000 shares of its Series 2006 preferred stock, of
which 1,000,000 shares are outstanding. All 1,000,000 outstanding shares of
Series 2006 preferred stock are owned by Rondald L. Wheet, our Chairman,
President and CEO. Because each share of Series 2006 preferred stock is entitled
to 125 votes per share, Mr. Wheet has voting control of the Company with votes
representing 125,000,000 common shares.
Voting
Rights: A Series 2006 preferred stock holder is entitled to 125 votes for each
share of common stock into which his Series 2006 Preferred Stock is then
convertible (presently on a one for one basis), voting together with our common
stock as a single class. Cumulative voting is not permitted. Upon conversion of
each Series 2006 preferred share, each share of common stock issued will be
entitled to only one (1) vote per common share.
A Series
2006 preferred stock holder is entitled to receive, ratably, dividends when, as
and if declared by the board of directors out of legally available funds to pay
dividends. If any dividend or other distributions are declared on our common
stock, then a dividend or other distribution must also be declared on the
outstanding Series 2006 preferred stock at the same time and on the same terms
and conditions, so that each holder of Series 2006 preferred stock will receive
the same dividend or distribution such holder would have received if the holder
had converted his Series 2006 Preferred stock as of the record date for
determining stockholders entitled to receive such dividend or
distribution.
Liquidation
Preference: In the event of the liquidation, dissolution or winding up, a Series
2006 preferred stock is entitled to receive a liquidation preference of $0.001
for each share of Series 2006 preferred stock held prior to payment being made
to any junior stock.
Conversion:
A Series 2006 preferred stock holder may convert one (1) share of preferred
stock into one (1) share of common stock.
Preemption:
A Series 2006 Preferred stock holder has no preemptive rights and is not subject
to further calls or assessments.
Redemption:
There are no redemption or sinking fund provisions applicable to the Series 2006
Preferred stock.
BLANK
CHECK PREFERRED STOCK
The
Company's Articles of Incorporation authorize its board of directors to
establish one or more additional series of preferred stock and to determine,
with respect to any such series of preferred stock, its terms and rights,
including: the designation of each series; the voting powers, if any, associated
with each such series whether dividends, if any, will be cumulative or
noncumulative and the dividend rate of each series; the redemption rights and
price or prices, if any, for shares of each series; and preferences and other
special rights, if any, of shares of each series in the event of any
liquidation, dissolution, or distribution of the Company's assets.
COMMON
STOCK TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2009
During
the three months ended March 31, 2009, 2,637,500 shares of common stock were
issued as option holders exercised their options to purchase common stock and
181,118 shares were issued to third party investors. The Company received
proceeds of $350,635 in connection with these share issuances.
During
the three months ended March 31, 2009, the Company issued an additional 380,000
shares of common stock with a total value of $229,300 in lieu of cash as payment
for consulting services.
10
NOTE
6 - STOCK OPTIONS AND WARRANTS OUTSTANDING
The
following tables summarize information about the stock options outstanding at
March 31, 2009:
| OPTIONS | WEIGHTED AVERAGE EXERCISE PRICE | |||||||
| Balance at December 31, 2008 | 10,360,000 | $ | 0.157 | |||||
| Granted | 1,350,000 | 0.176 | ||||||
| Exercised | (2,637,500 | ) | 0.129 | |||||
| Expired/Forfeited | -- | |||||||
| BALANCE AT MARCH 31, 2009 | 9,072,500 | 0.146 | ||||||
NOTE
7 - FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
The
Company entered into a financial advisory and investment banking agreement with
Spartan Securities Group, LTD. The agreement engaged Spartan on a non-exclusive
basis for two years to provide services to include, but not limited to,
arranging meetings with investment banking firms, rendering advice on internal
operations, rendering advice on corporate finance matters, rendering advice or
assistance on merger or acquisition activities and rendering advice on capital
raising activities. Spartan will be compensated with commissions based on
specified percentages in the contract related to the aggregate consideration
received in the underlying merger or acquisition, equity placement, third party
debt placement transaction. In certain transactions Spartan may be eligible to
receive warrants to purchase common stock of the Company. This contract was
terminated in December 2008 and 60,000 shares at a value of $12,600 were issued
for services rendered.
NOTE
8- MANAGEMENT CONSULTING, BUSINESS ADVISORY, SHAREHOLDER AND PUBLIC RELATIONS
AGREEMENT
On March
25, 2009, the Company signed a six-month agreement with a Japanese firm to serve
as an institutional public relations consultant as well as an investment banking
liaison to attempt to arrange financing for the purpose of working capital as an
intermediary. This is a non-exclusive contract for which the consultant was paid
250,000 shares of common stock at a value of $150,000 and will be paid 7% of any
financing raised going forward. This common stock is restricted as to resell for
six months.
ITEM
2. MANAGEMET'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
following discussion should be read in conjunction with our financial statements
and the notes thereto included elsewhere in this Form 10-Q. This Form 10-Q
contains forward-looking statements regarding the plans and objectives of
management for future operations. This information may involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from future results,
performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology. These forward-looking
statements are based on assumptions that may be incorrect, and we cannot assure
you that these projections included in these forward-looking statements will
come to pass. Our actual results could differ materially from those
expressed or implied by the forward-looking statements as a result of various
factors. See "QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK."
11
Since
1997, we have been working to design, develop and commercialize retractable
safety needle devices. Our present product development effort is focused on the
RevVac retractable safety syringe, which is designed specifically to reduce
accidental needle stick injuries. On February 6, 2007, the Company announced an
agreement with Strategic Product Development, Inc. ("SPD") to provide FDA
regulatory compliance, manufacturing management capabilities and ongoing product
development services. On March 5, 2007, the Company announced that SON Medical,
a privately held contract regulatory and testing consulting firm located in the
Boston area, was chosen to conduct lab testing for the Company's RevVac
retractable safety syringe. See "STATUS OF PLANNED PRODUCTS" below.
On March
26, 2007, the Company completed the acquisition of the sole asset of Clear Image
Acquisition Corporation ("Acquisition Corp") pursuant to the Plan and Agreement
of Reorganization of January 26, 2007. See Note 9 "Acquisition of Clear Image
Acquisition Corp" to the consolidated financial statements for the year ended
December 31, 2008 appearing in the Company's Annual Report on Form 10-K for the
year ended December 31, 2008, as filed with the Securities and Exchange
Commission on March 31, 2009.
Because
our planned products are in various stages of development, we have no revenue.
Our efforts to date have been funded almost entirely through sales of our common
stock. We require substantial additional capital to complete the development of,
to obtain approvals for and to begin commercializing the RevVac retractable
safety syringe and the Clear Image color MRI software. There is no assurance
that such capital will be available to us when needed, on acceptable terms, or
at all. There is no assurance that our planned products will be commercially
viable. Our present and future collaborative partners may require significant
amounts of time to complete product design, develop manufacturing processes
and/or to obtain specialized equipment, if any is required. Our planned products
will also require FDA approval before they can be sold in the United States and
similar approvals from foreign countries where our products may be marketed.
Obtaining government approval, whether in the U.S. or elsewhere, is a
time-consuming and costly process with no guarantee of approval.
It could
be months, if ever, before our planned products are sold in the United States or
anywhere else in the world. Our business is subject to numerous risks and
uncertainties that are more fully described in "QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK."
STATUS
OF PLANNED PRODUCTS
On April
23, 2009, the Company announced that it had acquired the exclusive rights to
license an FDA-approved breast biopsy localization system. The Company recently
signed a worldwide exclusive license agreement with Strategic Product
Development for an image-guided navigation system that incorporates high
accuracy breast biopsies systems ("BSS") to conventional mammography systems,
which number more than 50,000 globally. This technology has already received
510K market clearance by the FDA. BSS facilitates accurate and fast non-palpable
lesions and micro calcification localization in the treatment of breast cancer.
It is a low-cost, standalone stereotactic image-based system which uses data
from a pair of mammograms to enable radiologists to accurately position a
localization needle or biopsy tool at the location of suspicious abnormalities.
The system can also be modified to leverage existing popular biopsy tools. The
technology can be used to provide a technology platform for future development,
including multi-modal breast imaging for the image fusion of MRI and X-Ray
images. The BSS will be modified to use Rev Med's proprietary safety syringe
technology as well. The Company believes that this technology has the potential
to be deployed in the vast majority of more than 50,000 mammography machines
that are currently in use worldwide, including more than 15,000 in the United
States.
On
February 22, 2009, the Company announced that it had received notification from
the FDA that the 510K application for the Rev Vac Safety Syringe has been
approved. Furthermore, FDA approval is not needed for educational and research
use of our Rev Color and Rev 3D MRI software products. The Company plans on
marketing these products for such use very soon. In December 2008, the Company
filed for patent protection in Europe on its Rev Color and Rev 3D
software.
12
The Rev
Vac Safety Syringe uses vacuum technology to suck the needle into the plunger
after use. The syringe cannot be reused once the vacuum is activated. Rev Med
believes its safety syringe has many advantages over its competition including
price, ease of use, and safety. It should help reduce accidental needle stick
injuries and also aid in reducing the spread of contagious diseases. You may
view a video of the syringe in use on our website at www.revolutionsmedical.com.
The Company also believes that with the help of government regulation
initiatives, individual state laws, and the importance of world health concerns,
the safety syringe market will continue to have substantial growth into the
foreseeable future.
When an
MRI is taken, the images are sent to a pictorial archival computer systems
("PACS"), which displays the images for a radiologist to view. RevMed has hired
and announced Strategic Product Development ("SPD") to be its project design
consultant for the purpose of implementing the RevColor MRI software (including
3-D and automatic segmentation) on a PACS delivery platform and has given
approval for SPD to enter into a binding letter of intent with Cambridge Medical
Information Corporation ("CMIC") to use their PACS delivery platform, known as
zPACS, which is an advanced fully functional PACS system currently in operation
at several major international hospitals. The estimated cost of this project is
$400,000, which RevMed is working to raise. A video of the MRI software can be
found on the Company's website.
LIQUIDITY, CAPITAL RESOURCES
AND CASH REQUIREMENTS
The
following discussion of our cash requirements and liquidity and resources
contains forward-looking statements that are based upon current expectations.
These forward-looking statements fall within the meaning of the federal
securities laws that relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "expect," "plan," "anticipate," "believe,"
"estimate," "intend," "potential" or "continue" or the negative of these terms
or other comparable terminology. Forward-looking statements involve risks and
uncertainties. Our actual results and the timing of events could differ
materially from those anticipated in our forward-looking statements as a result
of many factors; including, our ability to obtain financing when needed. A
discussion of these risks and uncertainties can be found under the heading
"RISKFACTORS" and elsewhere in this report. We cannot guarantee future results,
levels of activity, performance or achievements. We assume no obligation to
update any of the forward-looking statements after the date of this report or to
conform these forward-looking statements to actual results.
LIQUIDITY AND CAPITAL
RESOURCES AND CASH REQUIREMENTS
As of
March 31, 2009, the Company did not have and continues to not have sufficient
cash to pay present obligations as they become due. We are searching for
additional financing to generate the liquidity necessary to continue our
operations. Due to current economic conditions and the Company's risks and
uncertainties, there is no assurance that we will be able to raise any
additional capital on acceptable terms, if at all. Because of these
uncertainties, the auditors have expressed substantial doubt about our ability
to continue as a going concern. We do not presently have any investment banking
or advisory agreements in place and due to the Company's risks and
uncertainties, there is no assurance that we will be successful in establishing
any such agreements. Even if such agreements are established, there is no
assurance that they will result in any funding. If we obtain additional funds by
selling any of our equity securities or by issuing common stock to pay current
or future obligations, the percentage ownership of our stockholders will be
reduced, stockholders may experience additional dilution, or the equity
securities may have rights preferences or privileges senior to the common stock.
If adequate funds are not available to us on satisfactory terms, we may be
required to cease operating or otherwise modify our business strategy. See "RISK
FACTORS."
Because
we do not currently generate any cash from operations and have no credit
facilities available, our only means of funding is through the sale of our
common stock. We presently have 250,000,000 shares of common stock authorized,
of which 30,081,813 shares were issued and outstanding as of March 31, 2009. If
we obtain additional funds by selling any of our equity securities or by issuing
common stock to pay current or future obligations, the percentage ownership of
our stockholders will be reduced, stockholders may experience additional
dilution, or the equity securities may have rights preferences or privileges
senior to the common stock. If adequate funds are not available to us when
needed on satisfactory terms, we may be required to cease operating or otherwise
modify our business strategy.
13
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
You
should carefully consider the risks described below, together with all of the
other information included in this report, in considering our business and
prospects. The risks and uncertainties described below are not the only ones
facing the Company. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial also may impair our business operations.
The occurrence of any of the following risks could harm our business, financial
condition or results of operations.
BECAUSE
WE HAVE NO PRODUCTS FOR SALE, WE DO NOT GENERATE REVENUE AND DO NOT HAVEOTHER
RESOURCES TO FUND OPERATIONS; THESE CONDITIONS RAISE SUBSTANTIAL DOUBT ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN
Because
the Company's planned products are in the development stage, the Company has no
revenue, earnings or cash flow to be self-sustaining. It could be several more
years before the Company can expect to have sales. The Company's independent
accountants have stated, in their opinion to the audited financial statements
for the period ended December 31, 2008, "the Company is a development stage
company with insufficient revenues to fund development and operating expenses.
The Company also has insufficient cash to fund obligations as they become due.
These conditions raise substantial doubt about its ability to continue as a
going concern." Our failure to obtain the funding necessary to continue our
activities will have a material adverse effect on our business, financial
condition, and on the price of our common stock.
WE
REQUIRE SUBSTANTIAL ADDITIONAL CAPITAL TO CONTINUE DEVELOPING OUR PLANNED
PRODUCTS. WE MAY HAVE DIFFICULTY RAISING CAPITAL WHEN WE NEED IT, OR AT
ALL.RAISING SUCH CAPITAL MAY DILUTE STOCKHOLDER VALUE. IF WE ARE UNABLE TO
RAISECAPITAL, WE MAY BE REQUIRED TO LIMIT OR CEASE OUR OPERATIONS, OR OTHERWISE
MODIFY OUR BUSINESS STRATEGY.
The
Company requires an estimated $4.8 million in capital over the next twelve
months; $1.0 million of which is for costs to finalize product development and
to begin beta testing for the color MRI technology; $1.25 million to setup
syringe manufacturing; $0.75 million for breast biopsy system manufacturing
setup; $0.5 million for distribution and sales for all three products and $0.5
million for working capital to cover expenses, such as rent, telephone,
auditing, financial reporting requirements, and administrative expenses,
including salaries; and $800,000 for outstanding liabilities. There is no
assurance, however, that we will be successful in raising the funds when needed,
on acceptable terms, or at all. There is no assurance that development of our
planned products will not require a significant amount of time to commence or to
complete and there is no assurance that the costs will not be significantly
greater than current estimates.
We will
require substantial additional capital thereafter to commercialize our planned
products. Our commercialization efforts will include, but are not limited to,
entering into agreements with third parties for manufacturing (including
building molds, designing manufacturing processes and obtaining specialized
equipment for our retractable safety syringe), marketing and distribution, and
obtaining FDA and/or other regulatory approvals, all of which are necessary
before our planned products can be sold and which may take a significant amount
of time, if not years, to complete.
Due to
the current economic conditions and the risks and uncertainties surrounding our
Company, we may not be able to secure additional financing on acceptable terms,
if at all. If we obtain additional funds by selling any of our equity
securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience substantial dilution, the price of our common stock
may decline, or the equity securities issued may have rights, preferences or
Privileges senior to the common stock. To the extent that services are paid for
with common stock or stock options that are exercised and sold into the market,
the market price of our common stock could decline and your ownership interest
will be diluted. If adequate funds are not available to us on satisfactory
terms, we will be required to limit or cease our operations, or otherwise modify
our business strategy, which could materially harm our future business
prospects.
IF
WE DO NOT OBTAIN FDA APPROVAL FOR OUR OTHER PLANNED PRODUCTS THEN OUR FUTURE
PROSPECTS WILL BE HARMED.
Our other
planned products will require FDA approval before they can be sold in the United
States. There is no assurance that all of our planned products will qualify for
the FDA's 510(k) pre-market notification approval process, which is less
rigorous than a PMA.
14
The FDA
approval process can take years and be expensive, especially if a PMA is
required. A PMA is much more rigorous and expensive to complete than a
510(k).
In addition, the Medical Device User Fee and Modernization Act, enacted in 2002,
now allows the FDA to assess and collect user fees for 510(k) and for PMA
applications. There is no assurance that we will have the funds necessary to
apply for or obtain FDA approval for our other planned products.
The FDA
approval process could take a significant amount of time, if not years, to
complete and there is no assurance that FDA approval will ever be obtained. If
FDA approval is not obtained, then we will not be able to sell our products in
the United States, which would have a material adverse effect on our future
business prospects.
OUR
PLANNED PRODUCTS MAY PROVE TO BE TOO EXPENSIVE TO MANUFACTURE AND
MARKETSUCCESSFULLY, WHICH WOULD HARM OUR FUTURE PROSPECTS.
Our
planned products may prove to be too expensive to manufacture and market
successfully. Market acceptance of our products will depend in large part upon
our ability to demonstrate the operational and safety advantages of our product
as well as the cost effectiveness of our product compared to both standard and
other safety needle products. If we are unable to produce products that are
competitive with standard products, we will not be able to sell our products.
This could have a material adverse effect on our operations.
IF
WE ARE NOT ABLE TO ENTER INTO MANUFACTURING ARRANGEMENTS FOR OUR PLANNEDPRODUCTS
THEN OUR FUTURE PROSPECTS WILL BE HARMED.
We have
no experience in establishing, supervising or conducting commercial
manufacturing. We plan to rely on third party contractors to manufacture our
planned products. We may never be successful in establishing manufacturing
capabilities for our planned products. Relying on third parties may expose us to
the risk of not being able to directly oversee the manufacturing process, which
may adversely affect the production and quality of our planned products.
Furthermore, these third-party contractors, whether foreign or domestic, may
experience regulatory compliance difficulty, mechanical shutdowns, employee
strikes, or other unforeseeable acts that may delay or prevent production. We
may not be able to manufacture our retractable safety needle in sufficient
quantities at an acceptable cost, or at all, which could materially adversely
affect our future prospects.
IF
WE ARE NOT ABLE TO ESTABLISH MARKETING, SALES AND DISTRIBUTION ARRANGEMENTS FOR
OUR SAFETY NEEDLE DEVICES THEN OUR FUTURE PROSPECTS WILL BE HARMED.
We must
establish marketing, sales and distribution capabilities before our planned
products can be sold. We have no experience in establishing such capabilities.
Until we have established manufacturing arrangements, we do not plan to devote
any meaningful time or resources to establishing marketing sales or distribution
capabilities. We intend to enter into agreements with third parties in the
future to market, sell and distribute our planned products. However, we may be
unable to establish or maintain third-party relationships on a commercially
reasonable basis, if at all. In addition, these third parties may have similar
or more established relationships with our competitors.
If we do
not enter into relationships with third parties to market, sell and distribute
our planned products, we will need to develop our own such capabilities. We have
no experience in developing, training or managing a sales force. If we choose to
establish a direct sales force, we will incur substantial additional expenses in
developing, training and managing such an organization. We may not be able to
build a sales force on a cost effective basis or at all. Any such direct
marketing and sales efforts may prove to be unsuccessful. In addition, we will
compete with many other companies that currently have extensive and well-funded
marketing and sales operations. Our marketing and sales efforts may be unable to
compete against these other companies. We may be unable to establish a
sufficient sales and marketing organization on a timely basis, if at all. We may
be unable to engage qualified distributors. Even if engaged, they may fail to
satisfy financial or contractual obligations to us. They may fail to adequately
market our products. They may cease operations with little or no notice to us or
they may offer, design, manufacture or promote competing products.
15
IF
WE ARE UNABLE TO PROTECT OUR PLANNED PRODUCTS, OR TO AVOID INFRINGING ON
THERIGHTS OF OTHERS, OUR ABILITY TO COMPETE WILL BE IMPAIRED.
General Risks Related to
Intellectual Property
The
Company does not yet have patent protection for some of its planned products and
there is no assurance that such patent protections will be sought or secured. We
do not have foreign patent protection for any of our planned products. There is
no assurance that we will have the financial resources to apply for U.S. or
foreign patent protections, that such U.S. or foreign patent protections will be
available to us or if available, that they will result in any meaningful
protection for our planned products. Even if we are successful in obtaining
patent protection, whether in the U.S. or abroad, it may not afford protection
against competitors with similar technology. Furthermore, others may
independently develop similar technologies or duplicate our
technology.
Our
commercial success depends in part on our avoiding the infringement of patents
and proprietary rights of other parties and developing and maintaining a
proprietary position with regard to our own technologies and products. We cannot
predict with certainty whether we will be able to enforce our patents. We may
lose part or all of patents we may receive in the future as a result of
challenges by competitors. Patents that may be issued, or publications or other
actions could block our ability to obtain patents or to operate as we would
like. Others may develop similar technologies or duplicate technologies that we
have developed or claim that we are infringing their patents.
Although
we rely on trade secrets to protect our technology and require certain parties
to execute nondisclosure and non-competition agreements, these agreements could
be breached, and our remedies for breach may be inadequate. In addition, our
trade secrets may otherwise become known or independently discovered by our
competitors. If we lose any of our trade secrets, our business and ability to
compete could be harmed.
Despite
our efforts to protect our proprietary rights, we face the risks that pending
patent applications may not be issued, that patents issued to us may be
challenged, invalidated or circumvented; that unauthorized parties may obtain
and use information that we regard as proprietary; that intellectual property
laws may not protect our intellectual property; and effective protection of
intellectual property rights may be limited or unavailable in China, where we
plan to manufacture our retractable safety syringe, or in other foreign
countries where we may manufacture and/or sell our retractable safety needle
devices. The lack of adequate remedies and impartiality under any foreign legal
system may adversely impact our ability to protect our intellectual
property.
We may
become involved in litigation or interference proceedings declared by the U.S.
Patent and Trademark Office, or oppositions or other intellectual property
proceedings outside of the United States. If any of our competitors have filed
patent applications or obtained patents that claim inventions that we also
claim, we may have to participate in an interference proceeding to determine who
has the right to a patent for these inventions in the United States. If a
litigation or interference proceeding is initiated, we may have to spend
significant amounts of time and money to defend our intellectual property rights
or to defend against infringement claims of others. Litigation or interference
proceedings could divert our management's time and effort. Even unsuccessful
claims against us could result in significant legal fees and other expenses,
diversion of management time and disruption in our business. Any of these events
could harm our ability to compete and adversely affect our
business.
An
adverse ruling arising out of any intellectual property dispute could invalidate
or diminish our intellectual property position. An adverse ruling could also
subject us to significant liability for damages, prevent us from using processes
or products, or require us to license intellectual property from third parties.
Costs associated with licensing arrangements entered into to resolve litigation
or an interference proceeding may be substantial and could include ongoing
royalties. We may not be able to obtain any necessary licenses on satisfactory
terms or at all.
16
WE
MUST OBTAIN REGULATORY APPROVALS IN FOREIGN JURISDICTIONS TO MARKET OUR PRODUCTS
ABROAD
Whether
or not FDA approval has been obtained, we must secure approval for our planned
products by the comparable non-U.S. regulatory authorities prior to the
commencement of marketing of the product in a foreign country. The process of
obtaining these approvals will be time consuming and costly. The approval
process varies from country to country and the time needed to secure additional
approvals may be longer than that required for FDA approval. These applications
may require the completion of pre-clinical and clinical studies and disclosure
of information relating to manufacturing and controls. Unanticipated changes in
existing regulations or the adoption of new regulations could affect the
manufacture and marketing of our products.
IF
WE ARE NOT ABLE TO COMPETE SUCCESSFULLY, THEN OUR BUSINESS PROSPECTS WILL BE
MATERIALLY ADVERSELY AFFECTED.
Our
retractable safety syringe, if developed and commercialized, will compete in the
United States and abroad with the safety needle devices and standard non-safety
needle devices manufactured and distributed by companies such as Becton
Dickinson, Tyco International, Inc. (Kendall Healthcare Products Company), B.
Braun, Terumo Medical Corporation of Japan, Med-Hut, Inc. and Johnson &
Johnson. Developers of safety needle devices against which we could compete
include Med-Design Corp., New Medical Technologies, Retractable Technologies,
Inc., Univec, Inc. and Specialized Health Products International, Inc. Our Color
MRI technology, if developed, approved and commercialized, will compete in the
United States and abroad against technologies manufactured and distributed by
companies such as GE and Siemens. Most of our competitors are substantially
larger and better financed than we are and have more experience in developing
medical devices and/or software than we do. These competitors may use their
substantial resources to improve their current products or to develop additional
products that may compete more effectively with our planned products, or may
render our planned products obsolete. In addition, new competitors may develop
products that compete with our planned products, or new technologies may arise
that could significantly affect the demand for our planned products. Even if we
are successful in bringing our planned products to market, there is no assurance
that we can successfully compete. We cannot predict the development of future
competitive products or companies.
In the
U.S., the vast majority of decisions relating to the contracting for and
purchasing of medical supplies are made by the representatives of group
purchasing organizations ("GPOs") rather than the end-users of the product
(nurses, doctors, and testing personnel). GPOs and manufacturers often enter
into long-term exclusive contracts which can prohibit entry in the marketplace
by competitors. In the needle and syringe market, the market share leader, BD,
has utilized, among other things, long-term exclusive contracts which have
restricted entry into the market by most of our competitors. We may not be
successful in obtaining any contracts with GPO's, which would severely limit our
product's marketability in the U.S. We will be materially adversely affected if
we are unable to compete successfully.
BECAUSE
WE DEPEND ON A SINGLE TECHNOLOGY, WE ARE VULNERABLE TO SUPERIOR COMPETING
PRODUCTS OR NEW TECHNOLOGIES THAT COULD MAKE OUR RETRACTABLE SAFETY NEEDLE
DEVICES OR OUR COLOR MRI TECHNOLOGY OBSOLETE
Because
we have a narrow focus on a particular product and technology (e.g. retractable
safety syringe and color MRI technology), we are vulnerable to the development
of superior competing products and to changes in technology which could
eliminate or reduce the need for our products. If a superior technology is
created, the demand for our product could greatly diminish causing our
commercialization efforts and future prospects to be materially adversely
affected.
BECAUSE
WE RELY ON THIRD PARTIES FOR RESEARCH AND DEVELOPMENT ACTIVITIES NECESSARY TO
COMMERCIALIZE OUR PRODUCT, WE HAVE LESS DIRECT CONTROL OVER THOSE ACTIVITIES.
THIS COULD HAVE A MATERIALLY ADVERSE EFFECT ON OUR FUTURE
PROSPECTS.
We do not
maintain our own laboratory and we do not employ our own researchers. We have
contracted with third parties in the past to conduct research, development and
testing activities and we expect to continue to do so in the future. Because we
rely on such third parties, we have less direct control over those activities
and cannot assure you that the research will be done properly or in a timely
manner, or that the results will be reproducible. Our inability to conduct
research and development may delay or impair our ability to develop, obtain
approval for and commercialize our retractable safety syringe. The cost and time
to establish or locate an alternative research and development facility to
develop our technology could have a materially adverse effect on our future
prospects.
17
YOUR
OWNERSHIP INTEREST MAY BE DILUTED AND THE VALUE OF THE SHARES OF OUR COMMONSTOCK
MAY DECLINE BY THE EXERCISE OF STOCK OPTIONS AND WARRANTS WE HAVE GRANTEDOR MAY
GRANT IN THE FUTURE AND BY THE COMMON STOCK WE HAVE ISSUED OR WILL ISSUEIN THE
FUTURE.
On April
24, 2007, the Company registered 20,000,000 shares of its common stock reserved
under its 2007 Stock Option Plan. The Company plans to grant substantial portion
of these reserved shares to its officers and directors. If and when, and to the
extent that, those shares are sold into the market, they could cause the market
price of our common stock to decline.
As of the
date of this report, we had a total of 7,722,500 options outstanding to purchase
shares of common stock at exercise prices ranging from $0.08 to $10.00 per share
(of which all were exercisable). To the extent that the outstanding options to
purchase our common stock are exercised, your ownership interest may be diluted.
If the options are exercised and sold into the market, they could cause the
market price of our common stock to decline.
From time
to time the Company has issued and plans to continue to issue shares of its
common stock to pay current and future obligations. If and when, and to the
extent that, those shares are sold into the market, they could cause the market
price of our common stock to decline.
As of
March 31, 2009, the Company had 250,000,000 shares authorized and 30,081,813
shares outstanding. The authorized but unissued shares have the same rights and
privileges as the common stock presently outstanding. The unissued authorized
shares can be issued without further action of the shareholders. If and when,
and to the extent that, the unissued authorized shares are issued and sold into
the market, they could cause the market price of our common stock to
decline.
THE
LOSS OF THE SERVICES OF CERTAIN THIRD PARTIES AND OUR OFFICER AND DIRECTORCOULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
We are
dependent upon the services of third parties related to development and
commercialization of our planned products. The loss of their services and the
inability to retain acceptable substitutes could have a material adverse effect
on our future prospects. We are also dependent upon the services of Ron Wheet,
our officer and director. The loss of his services or our inability to retain
suitable replacements could have a material adverse effect on our ability to
continue operating.
BECAUSE
WE HAVE LIMITED EXPERIENCE IN THE MEDICAL DEVICE INDUSTRY AND OUR OFFICER AND
DIRECTORS HAVE OTHER BUSINESS INTERESTS, OUR BUSINESS MAY TAKE LONGER TO
DEVELOP, WHICH COULD ADVERSELY AFFECT OUR FUTURE PROSPECTS.
We have
had limited experience in the medical device industry. In addition, our officer
and directors may be involved in a range of business activities that are not
related to our business. Consequently, there are potential conflicts in the
amount of time he can devote to our business. Not more than 50% of his time will
be devoted to RMCP's activities. Consequently, our business may take longer to
develop, which could adversely affect our future prospects.
IF
WE CANNOT GENERATE ADEQUATE, PROFITABLE SALES OF OUR PLANNED PRODUCTS, WE WILL
NOT BE SUCCESSFUL
In order
to succeed as a company, we must develop commercially viable products and sell
adequate quantities at a high enough price to generate a profit. We may not
accomplish these objectives. Even if we succeed in developing a commercially
viable product, a number of factors may affect future sales of our product.
These factors include:
- Whether
we will be successful in obtaining FDA approval in the future;
- Whether
physicians, patients and clinicians accept our product as a viable, safe
alternative to the standard medical syringe;
- Whether
the cost of our product is competitive in the medical marketplace;
and
- Whether
we successfully contract the manufacture and marketing of the syringe to third
parties or develop such capabilities ourselves
18
OUR
PLANNED PRODUCTS, IF SUCCESSFULLY COMMERCIALIZED, COULD BE EXPOSED TOSIGNIFICANT
PRODUCT LIABILITY CLAIMS WHICH COULD BE TIME CONSUMING AND COSTLY TODEFEND,
DIVERT MANAGEMENT ATTENTION AND ADVERSELY IMPACT OUR ABILITY TO OBTAINAND
MAINTAIN INSURANCE COVERAGE, WHICH COULD JEOPARDIZE OUR LICENSE.
The
testing, manufacture, marketing and sale of our planned products will involve an
inherent risk that product liability claims will be asserted against us. We
currently do not have insurance which relates to product liability, but will
seek to obtain coverage at such time as we have a product ready to sell,
although there is no assurance we will be able to obtain or to pay for such
coverage. Even if we obtain product liability insurance, it may prove inadequate
to cover claims and/or costs related to potential litigation. The costs and
availability of product liability insurance are unknown. Product liability
claims or other claims related to our planned product, regardless of their
outcome, could require us to spend significant time and money in litigation onto
pay significant settlement amounts or judgments. Any successful product
liability or other claim may prevent us from obtaining adequate liability
insurance in the future on commercially desirable or reasonable terms. In
addition, product liability coverage may cease to be available in sufficient
amounts or at an acceptable cost. Any inability to obtain sufficient insurance
coverage at an acceptable cost or otherwise to protect against potential product
liability claims could prevent or inhibit the commercialization of our planned
product. A product liability claim could also significantly harm our reputation
and delay market acceptance of our planned products.
STRINGENT,
ONGOING GOVERNMENT REGULATION AND INSPECTION OF OUR PLANNED PRODUCTSCOULD LEAD
TO DELAYS IN MANUFACTURE, MARKETING AND SALES
The FDA
continues to review products even after they receive FDA approval. If and when
the FDA approves our planned products, manufacturing and marketing will be
subject to ongoing regulation, including compliance with current Good
Manufacturing Practices, adverse reporting requirements and the FDA's general
prohibitions against promoting products for unapproved or "off-label" uses. We
and any third party manufacturers we may use are also subject to inspection and
market surveillance by the FDA for compliance with these and other requirements.
Any enforcement action resulting from failure to comply with these requirements
could affect the manufacture and marketing of our planned products. In addition,
the FDA can withdraw a previously approved product from the market at any time,
upon receipt of newly discovered information.
HEALTHCARE
REFORM AND CONTROLS ON HEALTHCARE SPENDING MAY LIMIT THE PRICE WE CANCHARGE FOR
OUR PLANNED PRODUCTS AND THE AMOUNT WE CAN SELL
The
federal government and private insurers have considered ways to change, and have
changed, the manner in which healthcare services are provided in the United
States. Potential approaches and changes in recent years include controls on
healthcare spending and the creation of large purchasing groups. In the future,
it is possible that the government may institute price controls and limits on
Medicare and Medicaid spending. These controls and limits might affect the
payments we collect from sales of our product, if and when it is commercially
available. Assuming we succeed in bringing our product to market, uncertainties
regarding future healthcare reform and private practices could impact our
ability to sell our product in large quantities at profitable
pricing.
It is
quite possible that new regulations could be proposed and adopted which could
restrict marketing of our products. Although we are not presently aware of any
such pending or proposed regulations, there is no assurance that they will not
be enacted or imposed.
UNCERTAINTY
OF THIRD-PARTY REIMBURSEMENT COULD AFFECT OUR ABILITY TO SELL OURPLANNED
PRODUCTS AT A PROFIT
Sales of
medical products largely depend on the reimbursement of patients' medical
expenses by governmental healthcare programs and private health insurers. There
is no guarantee that governmental healthcare programs or private health insurers
will cover the cost of our product, if and when it is commercially available, or
permit us to sell our product at a high enough price to generate a
profit.
OUR
LIMITED OPERATING HISTORY MAKES EVALUATING OUR STOCK MORE DIFFICULT
Since
inception in 1996, we have engaged primarily in research and development,
technology licensing, and raising capital. This limited history may not be
adequate to enable you to fully assess our ability to develop and commercialize
our planned products and to achieve market acceptance of our planned products
and to respond to competition.
19
WE
HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES
We have
had annual losses since our inception in 1996. We expect to continue to incur
losses until we can sell enough products at prices high enough to generate a
profit. As of March 31, 2009, we had accumulated a deficit of approximately
$(20,840,395). There is no assurance that our planned products will be
commercially viable. There is no assurance that we will generate revenue from
the sale of our planned products or that we will achieve or maintain profitable
operations.
OUR
STOCK PRICE IS VOLATILE AND YOUR INVESTMENT IN OUR SECURITIES COULD DECLINEIN
VALUE, RESULTING IN SUBSTANTIAL LOSSES TO YOU
The
market price of our common stock, which is over the counter bulletin board under
the symbol "OTCBB:RMCP," has been, and may continue to be, highly volatile.
Factors such as announcements of product development progress, financings,
technological innovations or new products, either by us or by our competitors or
third parties, as well as market conditions within the medical devices industry
may have a significant impact on the market price of our common stock. In
general, medical device stocks tend to be volatile even during periods of
relative market stability because of the high rates of failure and substantial
funding requirements associated with medical device companies. Market conditions
and conditions of the medical device sector could also negatively impact the
price of our common stock.
BECAUSE
OUR STOCK IS CONSIDERED TO BE A "PENNY STOCK", YOUR ABILITY TO SELL YOUR STOCK
MAY BE LIMITED
The Penny
Stock Act of 1990 requires specific disclosure to be made available in
connection with trades in the stock of companies defined as "penny stocks". The
Securities and Exchange Commission (SEC) has adopted regulations that generally
define a penny stock to be any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. If an exception is
unavailable, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risk associated therewith as well as the written consent of the
purchaser of such security prior to engaging in a penny stock transaction. The
regulations on penny stock may limit the ability of the purchasers of our
securities to sell their securities in the secondary marketplace.
ALTHOUGH
WE BELIEVE THAT OUR SYSTEM OF DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER
FINANCIAL REPORTING ARE ADEQUATE, SUCH CONTROLS ARE SUBJECT TO INHERENT
LIMITATIONS.
Although
we believe that our system of disclosure controls and internal controls over
financial reporting are adequate, we cannot assure you that such controls will
prevent all errors or all instances of fraud. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within our company will be detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Controls can also be circumvented
by the individual acts of some persons, by collusion of two or more people, or
by management override of the controls. The design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and any design may not succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with policies or
procedures. Because of the inherent limitation of a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
20
MR.
WHEET, OUR CEO AND A DIRECTOR, HAS VOTING CONTROL OF THE COMPANY AND CAN
UNILATERALLY MAKE BUSINESS DECISIONS FOR US. ALTHOUGH WE HAVE TWO OUTSIDE
DIRECTORS, THERE ARE NO PROCEDURES IN PLACE TO RESOLVE POTENTIAL CONFLICTS ANDTO
EVALUATE RELATED PARTY TRANSACTIONS THAT ARE TYPICALLY REVIEWED BY INDEPENDENT
DIRECTORS.
Because
Mr. Wheet owns 1,000,000 Series 2006 Preferred shares, which gives him the right
to vote 125,000,000 shares in addition to the shares of common stock he already
owns, voting together as a single class with the Company's common stock, he
controls a majority of the Company's common stock and can unilaterally make
business decisions on our behalf. Although we recently appointed two outside
directors, there are no procedures in place to resolve potential conflicts and
evaluate related party transactions that are typically reviewed by independent
directors.
WE
DO NOT EXPECT TO PAY DIVIDENDS
We have
not declared or paid, and for the foreseeable future we do not anticipate
declaring or paying, dividends on our common stock.
ITEM
4. CONTROLS AND PROCEDURES
Pursuant
to rules adopted by the SEC as directed by Section 302 of the Sarbanes-Oxley Act
of 2002, the Company's management, with the participation of the CEO/CFO,
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in the Securities Exchange Act of 1934 Rules13a-15(e)) as of March
31, 2009. Based on that evaluation, the Company's CEO/CFO concluded that, as of
that date, the Company's disclosure controls and procedures required by
paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were not effective based
on identified material weaknesses. Management's assessment identified
the following material weaknesses:
|
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|
As
of March 31, 2009, there was a lack of accounting personnel with the
requisite knowledge of Generally Accepted Accounting Principles (“GAAP”)
in the US and the financial reporting requirements of the Securities and
Exchange Commission.
|
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|
As
of March 31, 2009, there were insufficient written policies and procedures
to insure the correct application of accounting and financial reporting
with respect to the current requirements of GAAP and SEC disclosure
requirements.
|
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|
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As
of March 31, 2009, there was a lack of segregation of duties, in that we
limited resources performing all accounting-related
duties.
|
Notwithstanding
the existence of these material weaknesses in our internal control over
financial reporting, our management believes that the consolidated financial
statements included in its reports fairly present in all material respects the
Company's financial condition, results of operations and cash flows for the
periods presented.
The
Company also disclosed these weaknesses in our Form 10-K filed on March 31,
2009. The Company will continue its assessment on a quarterly basis and as soon
as we start operations we plan to hire personnel and resources to address these
material weaknesses. We believe these issues can be solved with hiring in-house
accounting support and plan to do so as soon as we have funds available for
this. There has been no change in its internal control over
financial reporting that occurred during the Company's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
21
ITEM
1. LEGAL PROCEEDINGS
On March
1, 2007, the Company filed a lawsuit in the District Court of Tulsa County,
Oklahoma against Globe Med Tech, Inc. ("Globe") to rescind, terminate and seek
monetary damages for the non-fulfillment and breach of a joint venture agreement
entered into November 3, 2005 and other related agreements, in addition to an
accounting of expenditures of funds under the terms and provisions of the
agreements. On May 11, 2007, a partial default judgment against Globe was
granted by the District Court of Harris County, Texas. The partial default
judgment as to liability only was granted with respect to the Company's causes
of action against Globe for breach of contract, conversion and common law fraud
with respect to the Company's Original Petition and Application for Temporary
and Permanent Injunctions against Globe on January30, 2007. On August 13, 2007,
the Company was granted a final default judgment for permanent injunctive relief
and for damages in the amount of $14,029,000 against Globe. Globe has appealed
the judgment. On November 23, 2007, the Court signed an order granting Globe's
Motion for New Trial and setting aside the Final Default Judgment entered in
favor of the Company on August 13, 2007.
On
October 29, 2008, the Company filed a lawsuit in the district court of Harris
county Texas, a lawsuit for fraud and contempt of court for Globe Med Tech and
Andy Hu individually. In response, Globe filed a motion to stay the lawsuit
based upon the forum selection clause in the joint venture agreement between RMC
and Globe which provides that the exclusive forum for all disputes relating to
the Joint Venture Agreement shall be Oklahoma state court/Tulsa County. Due to
the Texas state district's court's backlog of cases and the withdrawal of Globe
and Hu's counsel, the motion to stay was not heard until May 1, 2009. The motion
was granted as to Globe; however, Hu did not join in the motion and, after the
May 1st hearing, filed a separate motion to stay, based upon the same grounds as
Globe's motion. Hu's motion to stay was denied at a May 8th hearing.
Accordingly, RMC intends to proceed post haste with discovery with respect to
its claims against Hu, including without limitation obtaining the deposition of
a key witness.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Equity
transactions for the three months ended March 31, 2009 are incorporated herein
by reference to Part I- Financial Information- Notes to Financial Statements-
Note 5. "Preferred Stock and Common Stock Transactions."
ITEM
6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits
31.1 Certification Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 302 of 2002
31.2 Certification Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 302 of 2002
32.1 Certification Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
32.2 Certification Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
b)
Reports on Form 8-K
None.
22
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
REVOLUTIONS
MEDICAL CORPORATION
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|||
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|
/s/ Rondald L. Wheet | |
| Rondald L. Wheet | |||
| Chief Executive Officer | |||
| Date: March 10, 2010 | |||
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.
| /s/ Rondald L. Wheet | Chief Executive Officer and Director | March 10, 2010 | ||
| Rondald L. Wheet | (Principal Executive Officer and Principal Accounting Officer) | |||
| /s/ Dr. Thomas Beahm | Director | March 10, 2010 | ||
| Dr. Thomas Beahm | ||||
| /s/ THOMAS O'BRIEN | Director | March 10, 2010 | ||
| Thomas O'Brien |
23