Attached files
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EX-31.1 - CERTIFICATION - Revolutions Medical CORP | rmcp_ex311.htm |
EX-31.2 - CERTIFICATION - Revolutions Medical CORP | rmcp_ex312.htm |
EX-32.2 - CERTIFICATION - Revolutions Medical CORP | rmcp_ex322.htm |
EX-32.1 - CERTIFICATION - Revolutions Medical CORP | rmcp_ex321.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2009 | |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Transition Period from ___________ to____________
Commission
File Number: 0-28629
REVOLUTIONS MEDICAL CORPORATION |
(Exact Name of Registrant in its Charter) |
NEVADA
|
73-1526138
|
|
(State
or other jurisdiction of
|
(IRS
Employer I.D. No.)
|
|
incorporation)
|
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 ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files. Yes o 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:
Large accelerated filer ¨ |
Non-accelerated
filer ¨
(Do
not check if a smaller reporting
company)
|
Accelerated filer ¨ | 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 ¨ No þ
As of
November 13, 2009, there were 33,147,891 shares outstanding of the registrant’s
common stock
EXPLANATORY
NOTE:
The
Company is filing this amended Form 10-Q for the period ended September 30, 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.
|
EXPLANATORY
NOTE:
The
Company is filing this amended Form 10-Q for the period ended September 30, 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
Page | |||
PART I -FINANCIAL INFORMATION | |||
ITEM 1.
|
FINANCIAL
STATEMENTS
|
1
|
|
Consolidated Balance
Sheets
|
1
|
||
Consolidated Statements of
Operations
|
2
|
||
Consolidated Statements of Cash
Flows
|
3
|
||
Notes to Consolidated Financial
Statements
|
5
|
||
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
10
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
|
11
|
|
ITEM 4.
|
CONTROLS AND
PROCEDURES
|
11
|
|
PART II - OTHER INFORMATION | |||
ITEM 1.
|
LEGAL
PROCEEDINGS
|
12
|
|
ITEM 1A.
|
RISK
FACTORS
|
12
|
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
|
12
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
12
|
|
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
|
12
|
|
ITEM 5.
|
OTHER
INFORMATION
|
12
|
|
ITEM 6.
|
EXHIBITS
|
12
|
i
ITEM 1. FINANCIAL
STATEMENTS
BALANCE
SHEET
(Unaudited)
September
30, 2009
|
December
31, 2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 23,549 | $ | 4,796 | ||||
NON-CURRENT
ASSETS
|
||||||||
Fixed
Assets
|
15,000 | — | ||||||
Goodwill
|
52,671 | 23,276 | ||||||
TOTAL
ASSETS
|
$ | 91,220 | $ | 28,072 | ||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 168,389 | $ | 466,683 | ||||
Accrued
Salaries
|
731,599 | 1,158,103 | ||||||
Notes
Payable and Accrued Interest
|
10,000 | 143,429 | ||||||
Total
current liabilities
|
909,988 | 1,768,215 | ||||||
Total
liabilities
|
909,988 | 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;
33,147,891 and 26,883,195 shares issued and outstanding at 9/30/08 and 12/31/08, respectively |
33,148 | 26,883 | ||||||
Paid
in capital
|
21,756,033 | 18,769,691 | ||||||
Deficit
accumulated during the development stage
|
(22,608,949 | ) | (20,537,717 | ) | ||||
Total
shareholders' deficiency
|
(818,768 | ) | (1,740,143 | ) | ||||
TOTAL
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
|
$ | 91,220 | $ | 28,072 |
The
accompanying notes are an integral part of the interim financial
statements
1
STATEMENTS
OF OPERATIONS
(Unaudited)
From
Inception
(August
16,
1996)
Through
September
30,
2009
|
Nine
Months Ended
September
30,
|
|||||||||||
2009
|
2008
|
|||||||||||
Investment
Income
|
$ | 170,753 | $ | — | $ | 170,753 | ||||||
Other
Income
|
3,857 | — | 3,857 | |||||||||
174,610 | — | 174,610 | ||||||||||
EXPENSES
|
||||||||||||
Research
and development
|
2,586,056 | 303,000 | 146,040 | |||||||||
Purchased
R&D
|
3,309,515 | — | — | |||||||||
General
and administrative
|
14,720,453 | 152,689 | 543,094 | |||||||||
Total
operating expenses
|
20,616,024 | 455,689 | 689,134 | |||||||||
Operating
income (loss)
|
(20,441,414 | ) | (455,689 | ) | (689,134 | ) | ||||||
Interest
income
|
17,276 | — | — | |||||||||
Interest
expense
|
122,297 | — | — | |||||||||
Gain
on disposal of assets
|
794 | — | — | |||||||||
Gain
on extinguishment of debt
|
(152,914 | ) | (163,312 | ) | 10,398 | |||||||
Depreciation
and amortization
|
75,536 | — | — | |||||||||
Compensation
cost for options
|
2,018,280 | 1,452,231 | 251,261 | |||||||||
Net
loss before minority interest
|
(22,792,371 | ) | (2,071,232 | ) | (929,997 | ) | ||||||
Minority
Interest in Subsidiary Loss
|
(183,422 | ) | — | (57,744 | ) | |||||||
Net
loss from operations
|
$ | (22,608,949 | ) | $ | (2,071,232 | ) | $ | (872,253 | ) | |||
Weighted
average shares outstanding
|
36,896,713 | 31,432,872 | 19,376,862 | |||||||||
Net
loss per share (Note 1)
|
$ | (0.61 | ) | $ | (0.07 | ) | $ | (0.04 | ) |
The
accompanying notes are an integral part of the interim financial
statements
2
STATEMENTS
OF CASH FLOWS
(Unaudited)
From
Inception
(August
16, 1996) Through
September 30,
2009
|
Nine
Months Ended
September
30,
|
|||||||||||
2009
|
2008
|
|||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Loss
from operations before minority interest
|
$ | (22,608,949 | ) | $ | (2,071,232 | ) | $ | (929,997 | ) | |||
Plus
non-cash charges to earnings
|
||||||||||||
Stock
compensation expense
|
2,018,280 | 1,452,231 | 251,261 | |||||||||
Depreciation
and amortization
|
75,525 | — | — | |||||||||
Purchase
R&D - Clear Image
|
3,309,514 | — | — | |||||||||
Common
stock issued for services
|
4,253,369 | 636,041 | 27,500 | |||||||||
Preferred
stock issued for services
|
20,000 | — | — | |||||||||
Expenses
paid by third parties
|
57,134 | — | — | |||||||||
Contribution
of services by officer and employees
|
499,154 | — | — | |||||||||
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 | ) | — | (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
|
506,546 | (426,505 | ) | (63,050 | ) | |||||||
Increase
(decrease) in accrued interest
|
91,177 | — | — | |||||||||
Increase
(decrease) in accounts payable and accrued liabilities
|
1,259,936 | (298,294 | ) | 137,396 | ||||||||
Total
operating activities
|
(6,455,850 | ) | (712,153 | ) | (595,527 | ) | ||||||
INVESTING
ACTIVITIES
|
||||||||||||
Purchase
of equipment
|
(67,042 | ) | — | — | ||||||||
Purchase
of furniture
|
(15,000 | ) | (15,000 | ) | — | |||||||
Investment
in patent development
|
(25,000 | ) | (25,000 | ) | — | |||||||
Investment
in syringe patent development
|
(10,000 | ) | — | — | ||||||||
Investment
in Ives Health Company
|
(251,997 | ) | — | — | ||||||||
Investment
in The Health Club
|
(10,000 | ) | — | — | ||||||||
Total
investing activities
|
(379,039 | ) | (40,000 | ) | — | |||||||
FINANCING
ACTIVITIES
|
||||||||||||
Loans
from shareholders
|
13,907 | — | — | |||||||||
Repayment
of loans from shareholders
|
(8,005 | ) | — | — | ||||||||
Repayments
of Promissory Notes
|
57,325 | (133,429 | ) | — | ||||||||
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 4,351,501 345,634 288,064
|
||||||||||||
From
exercise of stock options
|
1,881,118 | 558,701 | 371,416 | |||||||||
Less:
Issue Costs
|
(102,318 | ) | — | — | ||||||||
Convertible
debentures issued for cash
|
355,000 | — | — | |||||||||
Payment
of exclusive license note payable
|
(100,000 | ) | — | — | ||||||||
Total
financing activities
|
7,056,005 | 770,906 | 659,480 | |||||||||
Minority
interest
|
(197,567 | ) | — | (57,744 | ) | |||||||
Change
in cash
|
23,549 | 18,753 | 6,209 | |||||||||
Cash
at beginning of period
|
— | 4,796 | 2,398 | |||||||||
Cash
at end of period
|
$ | 23,549 | $ | 23,549 | $ | 8,607 |
(
Continued )
The
accompanying notes are an integral part of the interim financial
statements
3
REVOLUTIONS
MEDICAL CORPORATION
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS, Continued
(Unaudited)
From Inception
(August
16,
1996)
Through
September 30,
2009
|
Nine
Months Ended
September
30,
|
|||||||||||
2009
|
2008
|
|||||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid for interest and taxes during the period
|
$ | 57,571 | $ | — | $ | — | ||||||
Non-cash
financing and investing activities:
|
||||||||||||
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 | — | — | |||||||||
Common
stock issued to extinguish debt
|
— | — | ||||||||||
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 | — | 70,281 | |||||||||
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
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
September 30,
2009
(UNAUDITED)
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying interim consolidated financial statements of Revolutions Medical
Corporation (“RevMed”) 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 nine months ended September 30, 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. Subsequent events have been considered
through the filing date of this report.
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 3D 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.
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.
5
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 September 30, 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.
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
September 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.
6
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 September 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 September 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 $(22,625,949) for the
period from inception (August 16, 1996) to September 30, 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 manufacturing 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.
NOTE
3 – REV MED / GLOBE JOINT VENTURE AGREEMENT
On
November 3, 2005, Rev Med (formerly known as 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.
Rev Med and Globe each own 50% of the joint venture. Rev Med contributed its
retractable safety syringe technology and Globe contributed its safety scalpel
technology. In connection with the agreement, Rev Med 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 key
witnesses.
7
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 September 30, 2009, the Company owed Mr. Wheet $76,474
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.
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 shares of common stock on or
before April 14, 2010. On May 6, 2009, the Company issued
666,828 shares with a value of $306,741 to completely extinguish this
debt.
Amounts
Due Pursuant to Employment and Consulting Agreements
The
Company has accrued $761,599 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 three (3) published patents on the vacuum technology on its RevVac
safety syringe. In January 2009, a fourth patent for the RevVac safety
syringe was issued by the U.S. patent office and published in April 2009
related to the Globe/Rev Med Joint Venture. The Company also filed
international patent protection rights regarding the RevVac Safety Syringe in
the following countries: Australia, China, Japan, Taiwan, Mexico, Canada and
several countries in Europe.
Revolutions
Medical Patent Applications and License to Color MRI Technology
The
Company owns four (4) separate patent applications, filed June 2007. 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 1999,
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”) based on patents issued in the early 1990’s. 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.
Amounts
Due to Consultants
In April
2009, the Company entered into a commitment with a third party who would obtain
the breast biopsy and needle localization technology. The Company has paid
$135,000 as of September 30, 2009 on expenses related to this
technology.
8
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 Nine Months Ended September 30, 2009
During
the nine months ended September 30, 2009, 4,451,250 shares of common stock
were issued as option holders exercised their options to purchase common stock
and 1,523,118 shares were issued to third party investors. The Company received
proceeds of $349,700 in connection with these share issuances.
During
the nine months ended September 30, 2009, the Company issued an additional
630,000 shares of common stock with a total value of $329,300 in lieu of cash as
payment for outside services.
During
the nine months ended September 30, 2009, the Company offered 2,982,000
shares at twenty-five cents per share under a stock subscription agreement and
had raised $335,500 as of September 30, 2009. The offering was concluded
during the fourth quarter and an additional total of $410,000 was during that
time period representing a total of 1,640,000 shares.
NOTE
6 - STOCK OPTIONS AND WARRANTS OUTSTANDING
The
following tables summarize information about the stock options outstanding at
September 30, 2009:
Options
|
Weighted Average
Exercise Price |
|||||||
Balance
at June 30, 2009
|
10,072,500 | $ | 0.139 | |||||
Granted
|
— | — | ||||||
Exercised
|
(1,383,750 | ) | 0.080 | |||||
Expired/Forfeited
|
— | — | ||||||
BALANCE
AT SEPTEMBER 30, 2009
|
8,688,750 | $ | 0.127 |
9
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.”
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 September 30,
2009.
Because
our planned products are in various stages of development and/or manufacturing,
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 and manufacturing of the RevVac retractable safety syringe and
the Clear Image color MRI software. It could be months, if ever, before our
planned products are sold in the United States or anywhere else in the
world.
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.
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.
10
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 “
Risk Factors ” 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
September 30, 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. 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.
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 33,147,891 shares were issued and outstanding as of September 30,
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.
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not
hold any derivative instruments and do not engage in any hedging
activities.
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 June
30, 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:
-
|
As
of September 30, 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.
|
|
-
|
As
of September 30, 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.
|
|
-
|
As
of September 30, 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.
11
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 with discovery with respect to its claims against Hu, including
without limitation obtaining the deposition of key witnesses.
ITEM
1A. RISK
FACTORS
We
believe there are no changes that constitute material changes from the risk
factors previously disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2008, filed with the Securities and Exchange Commission on
March 31, 2009.
ITEM
2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
Equity
transactions for the six months ended September 30, 2009 are incorporated
herein by reference to Part I- Financial Information - Notes to Financial
Statements - Note 5. “Preferred Stock and Common Stock
Transactions.”
ITEM
3. DEFAULT UPON SENIOR
SECURITIES
There
were no defaults upon senior securities during the period ended September 30,
2009.
ITEM
4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
There
were no matters submitted for a vote of our security holders during the period
ended September 30, 2009.
ITEM
5. OTHER
INFORMATION
There is
no other information required to be disclosed under this item which was not
previously disclosed.
Exhibits No. | |
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 |
12
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
|
||
/s/
Rondald
L. Wheet
|
||
Rondald
L. Wheet
|
||
Chief
Executive Officer
|
Date:
March 10, 2010
13