SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: August 19, 2003
INNOVATIVE MEDICAL SERVICES
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(Exact name of registrant as specified in its charter)
California 33-0530289
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1725 Gillespie Way, El Cajon, California 92020
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(Address of principal executive offices)(Zip Code)
(619) 596 8600
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(Registrant's telephone number, including area code)
Item 9. Regulation FD
The following information updates our April 1, 2003 Form 8-K.
As previously stated, we require additional capital to accelerate our business
plan. We anticipate needing approximately $1.5 to $2 million to properly
capitalize our operation. To date, we have completed a $300,000 bridge, and we
expect to complete transactions on the remaining funds by September 30, 2003.
We have adjusted our revenue projection to reflect current business progress,
including our new financing timetable and the removal of revenues associated
with Nickel Ltd. Assuming we are successful in acquiring funding, we are
projecting approximately $10,000,000 in revenues and approximately $200,000 in
net income for our fiscal year 2004, the 12 month period beginning August 1,
2003. In addition, we expect to achieve profitability in our third quarter.
We expect this revenue growth and resulting profitability from revenues
generated by our Water Treatment Division and our Bioscience Division based upon
the following assumptions:
1. We expect approximately 75% of the projected revenue from the
Water Treatment Division.
2. We assume, based upon historic results, approximately $3.5 million
in revenues will result from our Fillmaster product line to
continue.
3. We assume approximately $4 million in revenues will result from a
roll out of our Nutripure 2000 consumer water filtration product
to more than 2,000 stores of a U.S. mass merchandiser. The
administrative preparation required prior to the roll out has been
completed, and we believe that we will begin receiving roll out
purchase orders and shipping product this quarter. This assumption
carries a significant risk that retail placement of Nutripure 2000
may be delayed or may not occur.
4. We expect approximately 25% of the projected revenue from the
Bioscience Division.
5. We assume sales of Axen-30(TM) to accelerate quickly based on our
current marketing efforts and sales negotiations with potential
customers and their estimated consumption. In March 2003, we
received EPA approval on Axen-30(TM) hard surface disinfectant
which allows us to enter the hard surface disinfectant market with
EPA approved claims of 30 second kill and a 24 hour residual - new
standards in the industry - while maintaining EPA Category IV
toxicity, the "least toxic" rating for a disinfectant. We believe
that we will begin to see this revenue ramp up this quarter.
6. At this time, we assume limited sales of our Innovex(TM) pesticide
products in our projection. Although exposure for this product has
been limited by our ability to fund marketing and sales programs,
based on current agreements with a potential customer we assume
modest sales of Innovex product will occur beginning in this
quarter.
We have taken the projected revenue streams referenced in the above planned
projects, considered their probability of completion, and then forecasted
reasonable market penetration to arrive at our projections on a month-to-month
basis. The $200,000 net income projection is based upon gross profit projections
of the above existing and planned projects less administrative, overhead and
planned reinvestment expenditures.
We have removed further business with Nickel Ltd. from our assumptions and
projections because of Nickel's failure to pay for product and failure to
fulfill key material obligations under the contract. In January 2003, we entered
into an agreement with Nickel Ltd., a New Jersey corporation operating in Paris,
France. The agreement called for Nickel to provide regulatory testing and
European regulatory approval for Axen-30 and for the commercial launch in Europe
of a line of Axen-30 based products called "Bac'Out." On January 21, 2003, we
shipped to Nickel thirty-two 55-gallon barrels of certified Axen-30, ex-factory,
for Nickel's initial launch of Bac'Out. To date, Nickel has not paid for the 32
barrel shipment; therefore, we have placed Nickel on credit hold and will
require prepaid funds for any and all orders placed for future shipments. In
addition, although we executed a warrant agreement to issue 651,000 warrants to
Nickel and expensed those warrants during the 2003 fiscal year, we have not
issued any shares to Nickel because Nickel has not fulfilled its key material
obligations under the contract. We consider these warrants non-exercisable at
this time. We recognize the potential for a beneficial relationship with Nickel
and may choose to work with Nickel to mitigate these issues in the best interest
of our shareholders.
This 8-K filing includes statements that may constitute "forward-looking"
statements, usually containing the words "believe", "estimate", "project",
"expect" or similar expressions. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include, but are not
limited to, the ability of the Company to properly fund its business plan,
acceptance of the Company's current and future products and services in the
marketplace, the ability of the Company to develop effective new products and
receive regulatory approvals of such products, competitive factors, dependence
upon third-party vendors, and other risks detailed in the Company's periodic
report filings with the Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
INNOVATIVE MEDICAL SERVICES
(Registrant)
By /s/ Michael L. Krall
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Michael L. Krall, President
August 19, 2003