SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K / A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 4, 2001
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
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)
Explanatory Note on Amendment
This amendment revises the disclosure regarding the NVID Settlement and adds
Addendum # 1 to the Core Agreement as an Exhibit.
Item 5. Other Information
On November 30, 2001, we settled the dispute with NVID and acquired the Axenohl
patent. Under the terms of the agreement, NVID dismissed its case against us and
assigned the Axenohl patent to us. In return, NVID receives 700,000 shares of
our common stock and 5% of our gross Axenohl sales until March 2018, the end of
the life of the patent. There are minimum royalties of $1,000,000 for the period
of November 2001 to July 31, 2004 and for each fiscal year thereafter. If the
minimum royalty for any period is not met, we have the right, in our sole and
absolute discretion to pay NVID the deficiency in cash, in our common stock at
prevailing market prices or transfer the patent back to NVID with out further
royalty obligation. Pursuant to the terms of the agreement, NVID assigned
17,5000 shares to Andrew Arata, 17,500 shares to George Duren and 14,000 shares
to Dr. Charles Lewis in settlement of claims by these individuals against NVID.
Mr. Arata and Mr. Duren are executive officers of ETI-H2O, our wholly owned
subsidiary, which remains the sole manufacturer of Axenohl. As part of the
settlement agreement, we entered into non-exclusive marketing agreements for
Axenohl with Watertronics, Ltd., for the United Kingdom and Aqua Biotech S.A. de
C.V. for the Republic of Mexico. In addition, Innovative Medical Services
reaffirmed the exclusive right of Sistecam, S.A. to manufacture and market
Axenohl for sale in Costa Rica for the duration of the patent.
All documents required by the agreement have been executed and delivered except
for the personal guaranty of one of the NVID directors to indemnify us and our
successors and assigns in respect of any and all claims, losses, damages and
expenses which may be incurred by us as a result of or arising out of any claims
of ownership or interest in the Patent, including but not limited to claims of
license, assignment or security interest by any party. As a result of the
failure to deliver this personal guaranty, the 651,000 shares issued to NVID are
to be held by the Arbitrator until such time the time period in which adverse
claims may be filed against the assignment of the patent with the U.S. Patent
Office has expired. This time period is five months from the date of the filing
of the assignment of the patent with the U.S. Patent Office.
Item 7. Financial Statements and Exhibits.
(C) Exhibits: NVID Core Settlement Agreement Addendum # 1
dated December 6, 2001
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
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(Registrant)
By /s/ Michael L. Krall
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Michael L. Krall, President
December 7, 2001
CORE SETTLEMENT AGREEMENT ADDENDUM # 1
This addendum to the Core Settlement Agreement, effective as of
December 6, 2001, is by and among Innovative Medical Services, a California
corporation ("IMS"), NVID International, Inc. a Delaware corporation ("NVID"),
and Steven Gordon, individually ("Gordon").
WHEREAS, IMS, NVID and Gordon are party participants in the Core Settlement
Agreement dated effectively November 15, 2001;
WHEREAS, as part of the consideration therein, IMS agreed to convey to NVID or
its identified assignees 700,000 shares of its common stock (PURE on NASDAQ);
WHEREAS, IMS would only agree to transfer said stock on the expedited schedule
allowed for in the Core Settlement Agreement upon the receipt from Gordon of a
personal guarantee in the form appended to the Core Settlement Agreement as
Exhibit "G";
WHEREAS, Gordon is now unwilling to provide said personal guarantee;
WHEREAS, NVID in light thereof is willing to postpone receipt by it or its
assignees of IMS stock until a proper and professional patent record check can
be accomplished by Attorney Robert F. Frihoff such that a representation and/or
warranty can be made that the NVID Patent transfer to IMS is free and clear of
competing liens or encumbrances;
Accordingly, the Parties hereto amend the Core Settlement Agreement in
the following particulars:
1. Gordon need not execute a personal guarantee in conjunction with this
transaction, and Exhibit "G," is hereby amended by this addendum to
delete any requirement that Gordon sign same.
2. IMS shall forthwith transmit 700,000 of its PURE stock to the
identified transfer agent with instructions that said stock shall be
transmitted to NVID and/or its identified assignees only at such time
as Attorney Robert F. Frihoff has confirmed to IMS and the Arbitrator
in writing that the Patent transfer accomplished hereunder is free of
unidentified and/or conflicting liens and encumbrances, including but
not limited to unauthorized assignments. The Parties acknowledge that
this Patent review (because of a statutory 90-day provision, and a
60-day backlog for filing in the United States Patent Office) will
take in excess of 150 days.
3. It is understood by the Parties that the declination of Gordon re
personal guarantee will not be considered a breach of the Core
Settlement Agreement, nor will such declination to execute the
personal guarantee give rise to a claim for damages by IMS.
4. The Parties agree to continue in good faith to work out a guarantee
arrangement acceptable to Gordon and IMS that could, if implemented,
expedite the release of the above-referenced stock.
IN WITNESS WHEREOF, the corporate Parties hereto have caused this
Agreement to be executed by their respective Officers, hereunto duly authorized,
as of the date first above written.
NVID INTERNATIONAL, INC., and Aqua INNOVATIVE MEDICAL SERVICES
Bio Technologies Inc.,
its wholly owned subsidiary
By: /s/ Steven Gordon By: /s/ Michael L. Krall
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Steven Gordon, CEO Michael L. Krall, President
STEVEN GORDON
By: /s/ Steven Gordon
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Steven Gordon, an individual