SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-16752
MEDSTONE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 66-0439440
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Columbia, Suite 100, Aliso Viejo, California 92656
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (949) 448-7700
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Not Applicable
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(Former name, former address and former fiscal year, if changed,
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares of the Common Stock of the registrant outstanding as of May
4, 2001 was 4,198,220.
MEDSTONE INTERNATIONAL, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
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Page No.
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Item 1. Financial Statements:
Consolidated Balance Sheets
March 31, 2001 (Unaudited) and
December 31, 2000 3
Consolidated Statements of Income
Three Months Ended March 31, 2001 and 2000 (Unaudited) 4
Consolidated Statement of Stockholders' Equity
Three Months Ended March 31, 2001 (Unaudited) 5
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2001 and 2000 (Unaudited) 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
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MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2001 2000
------------ ------------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,041,671 $ 945,610
Short-term investments held to maturity 4,405,917 5,223,659
Accounts receivable, less allowance for doubtful accounts
of $507,181 at March 31, 2001 and $477,180 at
December 31, 2000, respectively 4,195,059 4,165,563
Inventories, less allowance for inventory obsolescence
of $414,417 at March 31, 2001 and $457,088 at
December 31, 2000, respectively 6,181,633 6,103,051
Deferred tax assets 1,005,814 1,005,814
Prepaid expenses and other current assets 372,627 526,825
------------ ------------
Total current assets 18,202,721 17,970,522
Buildings, property and equipment, at cost:
Building 359,324 359,324
Lithotripters 12,831,112 12,316,739
Equipment, furniture and fixtures 2,911,857 2,784,217
Leasehold improvements 157,083 157,083
------------ ------------
16,259,376 15,617,363
Less accumulated depreciation and amortization (10,963,341) (10,440,172)
------------ ------------
Net property and equipment 5,296,035 5,177,191
------------ ------------
Goodwill, net 3,282,410 3,306,622
Investment in unconsolidated subsidiaries 1,293,107 1,263,598
Long-term receivable from unconsolidated subsidiary 2,000,000 2,000,000
Other assets, net 135,464 158,914
------------ ------------
$ 30,209,737 $ 29,876,847
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 848,078 $ 657,878
Accrued expenses 559,596 580,232
Accrued income taxes 245,004 73,314
Accrued payroll expenses 293,063 347,034
Customer deposits 343,708 58,441
Deferred revenue 598,339 656,332
------------ ------------
Total current liabilities 2,887,788 2,373,231
Deferred tax liabilities 562,313 562,313
Minority interest 529,687 554,292
Deferred rent 81,402 78,697
Stockholders' equity:
Common stock - $.004 par value, 20,000,000 shares authorized,
5,742,670 shares issued and outstanding at both March 31,
2001 and December 31, 2000, respectively 22,971 22,971
Additional paid-in capital 19,646,388 19,646,388
Accumulated earnings 17,058,936 16,708,143
Accumulated other comprehensive income 50,872 55,395
Treasury stock, at cost, 1,519,450 and 1,434,450 shares at
March 31, 2001 and December 31, 2000, respectively (10,630,620) (10,124,583)
------------ ------------
Total stockholders' equity 26,148,547 26,308,314
------------ ------------
$ 30,209,737 $ 29,876,847
============ ============
See accompanying notes
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MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, 2001 and 2000
(Unaudited)
2001 2000
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Revenues:
Procedures, maintenance fees and fee-for-service... $4,510,773 $4,650,318
Net equipment sales................................ 353,181 1,329,044
Interest income.................................... 141,886 129,997
---------- ----------
Total revenues.................................... 5,005,840 6,109,359
Costs and operating expenses:
Cost of equipment sales............................ 350,288 926,414
Cost of procedures and maintenance fees............ 2,833,030 2,695,744
Research and development........................... 260,957 257,053
Selling............................................ 530,622 534,670
General and administrative......................... 664,029 724,189
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Total costs and operating expenses................ 4,638,926 5,138,070
---------- ----------
Operating income.................................... 366,914 971,289
Other expense (income):
Gain on sale of investments........................ (358,108) (782,557
Other expense...................................... 33,343 10,111
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Total other expenses (income)...................... (324,765) (772,446)
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Minority interests:
Minority interest in subsidiaries income........... 155,395 191,459
Equity in income from unconsolidated subsidiary.... (29,509) ---
---------- ----------
Total minority interest........................... 125,886 191,459
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Income before provision for income taxes............ 565,793 1,552,276
Provision for income taxes.......................... 215,000 630,000
---------- ----------
Net income.......................................... $ 350,793 $ 922,276
========== ==========
Net income per share:
Basic............................................. $ .08 $ .20
========== ==========
Diluted........................................... $ .08 $ .20
========== ==========
Number of shares used in the computation of
earnings per share:
Basic............................................. 4,273,220 4,622,692
========== ==========
Diluted........................................... 4,281,932 4,649,818
========== ==========
See accompanying notes.
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MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock
--------------------------------------- Additional Accumulated Other
Number of paid-in Accumulated Comprehensive Treasury
shares Amount capital earnings income (loss) Stock Total
------------ ---------- ----------- ------------- ------------- ----------- ----------
Balance at December 31, 2000 4,308,220 $22,971 $19,646,388 $16,708,143 $55,395 $(10,124,583) $26,308,314
=========== ========== =========== ============= ========== ============ ===========
Net income --- --- --- 350,793 --- --- 350,793
Other comprehensive income:
Unrealized loss on foreign
currency translation, net --- --- --- --- (4,523) --- (4,523)
-----------
Total comprehensive income 346,270
-----------
Treasury stock repurchased (85,000) --- --- --- --- (506,037) (506,037)
----------- ---------- ----------- ------------- ---------- ------------ -----------
Balance at March 31, 2001
(Unaudited) 4,223,220 $22,971 $19,646,388 $17,058,936 $50,872 $(10,630,620) $26,148,547
=========== ========== =========== ============= ========== ============ ===========
See accompanying notes.
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MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2001 and 2000
(Unaudited)
2001 2000
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Cash flows from operating activities:
Net income...................................... $ 350,793 $ 922,276
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.................. 554,900 595,872
Provision for doubtful accounts................ 30,000 ---
Provision for inventory obsolescence........... 42,000 10,000
Gain on sale of long-term investments.......... (358,108) (782,557)
Minority interest in partnerships.............. 155,395 191,459
Minority equity in unconsolidated subsidiary... (29,509) ---
Changes in assets and liabilities:
Accounts receivable........................... (59,496) (692,324)
Inventories................................... (120,582) 48,490
Prepaid expenses and other current assets..... 154,198 (60,235)
Accounts payable and accrued expenses......... 176,290 (91,351)
Accrued payroll expenses...................... (53,971) 130,333
Accrued income taxes.......................... 168,674 534,586
Deferred revenue.............................. (57,993) 36,148
Customer deposits............................. 285,267 6,000
Other, net.................................... 18,602 37,113
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Net cash provided by operating activities..... 1,256,460 885,810
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Cash flows from investing activities:
Purchase of short-term investments.............. (3,333,231) (2,479,122)
Proceeds from sales of short-term investments... 4,150,973 5,557,862
Proceeds from sale of long-term investments..... 358,108 782,557
Distribution of minority interest............... (180,000) (112,000)
Purchase of property and equipment, net......... (646,191) (402,628)
----------- -----------
Net cash provided by investing activities..... 349,659 3,346,669
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Cash flows from financing activities:
Purchase of treasury stock...................... (506,037) (391,675)
Deferral of rent payments....................... 2,705 ---
Loan payments................................... (6,726) (6,783)
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Net cash used in financing activities......... (510,058) (398,458)
----------- -----------
Net increase in cash and cash equivalents......... 1,096,061 3,834,021
Cash and equivalents at beginning of period....... 945,610 1,061,422
----------- -----------
Cash and equivalents at end of period............. $ 2,041,671 $ 4,895,443
=========== ===========
Supplemental cash flow disclosures:
Cash paid during the period for:
Income taxes.................................. $ 59,847 $ 115,604
=========== ===========
See accompanying notes.
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MEDSTONE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
1. Basis of presentation
The accompanying condensed consolidated financial statements include the
accounts of Medstone International, Inc. and its subsidiaries (the Company).
All significant intercompany transactions and accounts have been eliminated.
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements include all adjustments (which
consist only of normal recurring adjustments) necessary for a fair presentation
of its consolidated financial position at March 31, 2001 and consolidated
results of operations and cash flows for the periods presented. Although the
Company believes that the disclosures in these financial statements are adequate
to make the information presented not misleading, certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These financial statements should be read in conjunction with the Company's
audited financial statements included in the Company's 2000 Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 30, 2001.
Results of operations for the three months ended March 31, 2001 are not
necessarily indicative of results to be expected for the full year.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
2. Recently Issued Accounting Pronouncements
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative and Hedging
Activities," as amended.
SFAS 133 established a new model for accounting for derivatives and hedging
activities. Under SFAS 133, all derivatives must be recognized as assets and
liabilities and measured at fair value. The Company currently does not have any
derivative instruments which require fair value measurement under SFAS 133 and,
accordingly, the effect of the adoption will not have a material impact on the
Company's consolidated financial position or results of operations.
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3. Accumulated Other Comprehensive (Loss)/Income:
The components of accumulated other comprehensive (loss)/income are as follows:
Currency
Translation
Adjustment
-------------
Balance at December 31, 2000 $ 55,395
Foreign currency translation adjustments (4,523)
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Balance at March 31, 2001 $ 50,872
========
The functional currency of the investment in foreign subsidiary is
considered to be the United States dollar.
The earnings associated with the Company's investment in its foreign
subsidiary are considered to be permanently invested and no provision for U.S.
federal and state income taxes on those earnings or translation adjustments has
been provided.
For the three months ended March 31, 2001, total comprehensive income was
$346,270. For the three months ended March 31, 2000, total comprehensive income
was $982,469.
4. Business Segments
The Company operates in two business segments, equipment sales and fees for
procedures, maintenance and management.
Three Months Ended
March 31, 2001 March 31, 2000
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Revenue:
Equipment sales $ 353,181 $1,329,044
Fees for procedures,
maintenance fees and
fee-for-service 4,510,773 4,650,318
---------- ----------
$4,863,954 $5,979,362
========== ==========
Operating income (loss):
Equipment sales $ 9,366 $ 109,181
Fees for procedures,
maintenance fees and
fee-for-service 357,548 862,108
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$ 366,914 $ 971,289
========== ==========
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5. Per share infromation
The Company has adopted SFAS No. 128 "Earnings Per Share," and applied this
pronouncement to all periods presented. This statement requires the presentation
of both basic and diluted net income per share for financial statement purposes.
Basic net income per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted net income per share includes the effect of the potential shares
outstanding, including dilutive stock options and warrants using the treasury
stock method.
The following table sets forth the computation of earnings per share:
Three Months Ended
March 31, March 31,
2001 2000
-----------------------
Numerator: Net income....................... $ 350,793 $ 922,276
========== ==========
Denominator for weighted
average shares outstanding............... 4,273,220 4,622,692
========== ==========
Basic earnings per share.................... $ .08 $ .20
========== ==========
Effect of dilutive securities:
Weighted average shares
outstanding.............................. 4,273,220 4,622,692
Stock options............................... 8,712 27,126
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Denominator for diluted earnings
per share.................................. 4,281,932 4,649,818
========== ==========
Diluted earnings per share.................. $ .08 $ .20
========== ==========
Common equivalent shares result from the assumed exercise of outstanding
dilutive securities when applying the treasury stock method. Fully diluted per
share information is not presented for periods in which the effect is
antidilutive.
F. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
March 31, December 31,
2001 2000
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Raw materials $4,294,473 $3,888,640
Work in process 182,732 231,175
Finished goods 1,704,428 1,983,236
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$6,181,633 $6,103,051
========== ===========
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G. Contingencies
From time to time, the Company is subject to legal actions and claims for
personal injuries or property damage related to patients who use its products.
The Company has obtained a liability insurance policy providing coverage for
product liability and other claims. Management does not believe that the
resolution of any current proceedings will have a material financial impact on
the Company or the consolidated financial statements.
H. Stock Repurchase Plan
In the first quarter of 2001 the Company purchased a total of 85,000 shares
at an aggregate cost of $506,038 under the Company's current Stock Repurchase
Plan. To date under all of the Company's stock repurchase plans a total of
1,519,450 shares have been repurchased at a total cost of $10,630,620.
I. Subsequent Events
On April 2, 2001, the Company repurchased a total of 25,000 shares of its
common stock for a cost of approximately $144,000, which completes its existing
Stock Repurchase Program.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis should be read in conjunction with
the Company's audited financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's 2000 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 30, 2001.
Results of Consolidated Operations
----------------------------------
General
Medstone manufactures, markets and maintains lithotripters, and continues
to expand its Fee-for-Service Program to supply lithotripsy equipment to
providers on a per procedure basis. The lithotripters manufactured by Medstone
is approved to treat both kidney stones and gallstones. The Company is also
marketing a urology imaging and treatment table, used for various urological
functions, mobile urology and pain management table to serve the mobile
treatment market and various radiology room equipment, capitalizing on the
relationships that the Company has with radiology equipment manufacturers. To
date, the Company's consolidated revenues have come primarily from Medstone's
lithotripsy business.
As a manufacturer of medical devices, the Company has been vertically
integrating by offering its medical devices directly to providers. It currently
offers lithotripsy procedures using 15 mobile systems, two fixed sites and 22
transmobile lithotripters located throughout the United States on a per
procedure basis. With the ability to offer quality equipment at reasonable
prices, Medstone intends to continue the growth of this manufacturer direct
business.
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000
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The Company recorded total revenue of $5.0 million in the first quarter of
2001, an 18% decrease compared to the first quarter of 2000. Equipment revenues
decreased to $353,181 in the quarter ending March 31, 2001 from $1,329,044 in
the comparable quarter of the prior year, or a 73% decrease, as the Company
shipped 16 imaging tables in 2001 versus four lithotripsy systems and two Pro
2000T urology tables in 2000. Revenues from procedures, maintenance fees and
fee-for-service decreased from $4.7 million in the three months ended March 31,
2000 to $4.5 million in the same period of the current year due to lower average
per patient reimbursement and expiration of maintenance service contracts on
third party-owned equipment.
Interest income increased by 9% in the first quarter of 2001 when compared
to the same period of the prior year due to higher investment yields even though
the average invested balance has decreased.
Cost of sales on equipment sales increased to 99% of sales in the three
months ended March 31,
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2001 compared to 70% of sales in the same period of 2000. This increase is due
to a higher cost of sales of imaging table equipment and the corresponding
manufacturing overhead costs for producing equipment. Recurring revenue cost of
sales increased to 63% of sales in the quarter ended March 31, 2001 compared to
58% in the same quarter of the prior year due to the additional equipment in
service to provide fee-for-service lithotripsy in the mobile and transmobile
environments. Overall cost of sales, as a percentage of revenue (excluding
interest), increased to 65% in the first quarter of 2001 compared to 61% in the
first quarter of 2000.
Research and development costs increased by 2%, in the first quarter of
2001 when compared to the same quarter of 2000 as the Company incurred
development costs for the UroPro-2000 urology imaging table in both periods.
Selling costs decreased to $531,000 in the first quarter of 2001 compared
to $535,000 in the same period of the prior year due to higher tradeshow,
advertising and travel expenses for the introduction of the UroPro 2000 and
gallstone applications offset by lower commission costs on lower equipment
shipments.
General and administrative expenses decreased by $60,000 or 8% in the three
months ended March 31, 2001 compared to the same period in the prior year. This
is due to lower consulting expenses in the U.K. operations, lower audit fees due
to the prior year's acquisition of Medicredit.com, Inc. and lower spending on
the gallstone application.
Gain on sale of investments was approximately $358,000 in the quarter
ending March 31, 2001 compared to $783,000 in the same period of 2000 as the
Company's sold 73,000 shares of Cardiac Science, Inc. common stock, in the
current year, whereas the Company sold 140,167 shares of Cardiac Science and
5,000 shares of Genstar Therapeutics Corp. in the same period of 2000. The net
book value of all shares was $0.
Minority interests decreased to $126,000 in the three months ended March
31, 2001 compared to $191,000 in the same period of the prior year due to lower
profits in the Northern Nevada and Southern Idaho operations and recognition of
equity income of $29,000 from the Medicredit.com, Inc. operations in 2001.
Provision for income taxes for the first quarter of 2001 decreased by
$415,000 as a result of lower taxable income in the current year when compared
to the same period of 2000.
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
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The Company recognized revenues of approximately $6.1 million in the first
quarter of 2000, a 25% increase compared to $4.9 million in the corresponding
period of 1999. Equipment revenues increased in the first quarter of 2000 as
four lithotripsy units were shipped in that period compared to no unit
shipments in the first three months of 1999 as customers were waiting for the
introduction of the Company's STS-T transportable lithotripsy product. The
revenue from the Company's procedures,
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maintenance fees and fee-for-service activities decreased by 2%, or $117,000 in
the first three months of 2000 when compared to the same period of 1999. The
decrease is due to a 9% decrease in fee-for-service revenue in the first three
months of 2000 when compared to the same period in the prior year due to
conversions of several sites from fee-for-service to unit purchases. Offsetting
most of the decrease in fee-for-service revenue is an increase in revenues from
the new imaging product lines introduced in 1999 or added through acquisitions
during 1999. Competitive pressures for fee-for-service continues to negatively
impact revenue growth.
Cost of sales on equipment sales were 70% in the three months ended March
31, 2000. The current year's cost of sales as a percentage of sales compares
favorably with recent shipments of the STS lithotripters due to cost reductions
built into the new system.
Recurring revenue costs of sales increased to 58% in the first quarter of
2000, compared to 52% in the same period in the prior year due to placement of a
large number of new fee-for-service lithotripters as the lithotripsy delivery
system continues to evolve. Overall cost of sales, as a percentage of revenue
(excluding interest), increased to 61% in the first quarter of 2000 compared to
52% in the same period in the prior year due to lower margins in the equipment
sales segment.
Research and development costs decreased by 21%, or $67,000 in the first
quarter of 2000 compared to the same quarter of 1999 due to the prior year's
expenses connected with the completion of the Medstone STS-T transportable
lithotripter.
Sales expenses increased by $183,000 or 52% in the first quarter of 2000
when compared to the same period of 1999 due to higher commission expenses,
travel expenses and advertising expenses associated with the expanded sales and
marketing efforts on a wider range of products.
General and administrative expenses decreased by 1%, or $9,000, in the
first quarter of 2000 when compared to the first quarter of 1999 due to lower
legal expenses in the current year due to 1999's evaluation of the Company's
strategic plan mostly offset by higher costs for operations in the U.K. and
consultants for the Company's efforts in seeking approval from the FDA for
lithotripsy treatment of gallstones.
Gain on sale of investments was approximately $783,000 in the three months
ended March 31, 2000 with no comparable activity in the same period of the prior
year due to the Company's sale of 140,167 shares of Cardiac Science, Inc. common
stock and 5,000 shares of Genstar Therapeutics Corp. (formerly Urogen Corp.),
both of which had a net book value of $0.
Other expense remained consistent in the three months ended March 31, 2000
when compared to the same period of 1999 as the Company amortizes the goodwill
from acquisitions over lives ranging from 15 to 40 years.
Minority interest in subsidiaries' income increased to $191,000 in the
three months ended March 31, 2000, compared to $133,000 in the three months
ended March 31, 1999 due to higher activity in the
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Northern Nevada and Southern Idaho operations.
Provision for income taxes for the first quarter of 2000 increased by
$280,600, or 80%, as a result of higher taxable income in the current year
compared to the same period in the prior year.
Liquidity and Capital Resources
-------------------------------
At March 31, 2001, the Company had cash and short-term investments of
approximately $6.4 million. These funds were generated from continuing
operating activities.
As of March 31, 2001, the Company held 114,000 shares of Cardiac Science,
Inc. common stock and 95,000 shares of Genstar Therapeutics Corp. common stock.
The Company will continue to liquidate its holdings in these companies as
markets allow.
As of May 4, 2001, the Company's holdings of Cardiac Science, Inc. common
stock (114,000 shares) has an approximate market value of $442,000. Its
holdings of Genstar Therapeutics Corp. (95,000 shares) has an approximate market
value of $475,000.
The Company's long-term capital expenditure requirements will depend on
numerous factors, including the progress of the Company's research and
development programs, the time required to obtain regulatory approvals, the
resources that the Company devotes to the development of self-funded products,
proprietary manufacturing methods and advanced technologies, the costs of
acquisitions and/or new revenue opportunities, the ability of the Company to
obtain additional licensing arrangements and to manufacture products under those
arrangements, and the demand for its products if and when approved and possible
acquisitions of products, technologies and companies.
The Company believes that its existing working capital and funds
anticipated to be generated from operations will be sufficient to meet the cash
needs for continuation of its present operations during 2000.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objections, expectations and intentions are subject to change
at any time at the discretion of the Company, (ii) the Company's plans and
results of operations will be affected by the Company's ability to manage its
growth; (iii) the Company's businesses are highly competitive and the entrance
of new competitors into or the expansion of the operations by existing
competitors in the Company's markets and other changes could adversely affect
the Company's plans and results of operations; and (iv) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.
-14-
MEDSTONE INTERNATIONAL, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Previously reported.
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following exhibits are included herein:
None.
(b) Reports on Form 8-K.
None.
-15-
SIGNATURES
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 hereunto duly authorized.
MEDSTONE INTERNATIONAL, INC.
----------------------------
A Delaware corporation
Date: May 14, 2001
/s/ Mark Selawski
----------------------------
Mark Selawski
Chief Financial Officer
(Principal financial and
accounting officer)
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