PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS <TABLE> <CAPTION> Consolidated Balance Sheet at March 31, 2008 (Unaudited) 3 <S> <C> Consolidated Statements of Operations For The Period From Inception (August 16, 1996) to March 31, 2008 and For The Three Months Ended March 31, 2008 and 2007 (Unaudited) 4 Consolidated Statements of Cash Flows For The Period From Inception (August 16, 1996) to March 31, 2008 and For The Three months Ended March 31, 2008 and 2007 (Unaudited) 5 Notes to Consolidated Financial Statements (Unaudited) 7 </TABLE> 4 <TABLE> <CAPTION> REVOLUTIONS MEDICAL CORPORATION (FORMERLY MAXXON, INC.) (A Development Stage Company) BALANCE SHEET March 31, 2008 (Unaudited) ASSETS CURRENT ASSETS Cash $2,554 <S> <C> Goodwill 23,276 ------------- TOTAL ASSETS $ 25,830 ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 284,537 Accrued Salaries 1,263,653 Notes Payable and Accrued Interest 286,858 ------------- Total current liabilities 1,835,048 ------------- Total liabilities 1,835,048 ------------- Minority Interest (139,871) ------------- SHAREHOLDERS' DEFICIENCY Preferred stock, $0.001 par value, 5,000,000 shares authorized; 1,000,000 shares issued and outstanding 1,000 Common stock, $0.001 par value, 250,000,000 shares authorized; 19,127,422 shares issued and outstanding 19,127 Paid in capital 17,636,824 Deficit accumulated during the development stage (19,326,298) ------------- Total shareholders' deficiency (1,669,347) ------------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 25,830 ============= </TABLE> The accompanying notes are an integral part of the interim financial statements 5 <TABLE> <CAPTION> REVOLUTIONS MEDICAL CORPORATION (FORMERLY MAXXON, INC.) (A Development Stage Company) STATEMENTS OF OPERATIONS From Inception (August 16, 1996) Through March 31, 2008 and For The Three Months Ended March 31, 2008 and 2007 FROM INCEPTION (AUGUST 16, 1996) THROUGH THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 2008 MARCH 31, 2008 MARCH 31, 2007 ------------------------------------------------------------ <S> <C> <C> <C> Investment Income $ 170,753 $ - $ - Other Income 3,857 - - ------------------------------------------------------------ 174,610 - - ------------------------------------------------------------ EXPENSES Research and development 2,045,016 8,000 10,000 Purchased R&D- Clear Image Transaction (See Note 3) 3,309,515 - 3,309,515 General and administrative 13,869,092 132,856 306,331 ------------------------------------------------------------ Total operating expenses 19,223,623 140,856 3,625,846 ------------------------------------------------------------ Operating loss (19,049,013) (140,856) (3,625,846) ------------------------------------------------------------ Interest income 17,276 - - ------------------------------------------------------------ Interest expense 122,297 - 9,487 ------------------------------------------------------------ Loss on disposal of assets (794) - - ------------------------------------------------------------ Depreciation and amortization 75,536 - - ------------------------------------------------------------ Compensation cost for options 223,248 - - ------------------------------------------------------------ Minority Interest in Subsidiary Loss (125,725) (17,120) - ------------------------------------------------------------ Net loss from operations $ (19,326,299) $ (123,736) $ 3,635,333) Weighted average shares outstanding 43,010,545 18,362,324 7,450,750 ------------------------------------------------------------ Net loss per share (Note 1) $ (0.45) $ (0.01) $ (0.49) ============================================================ </TABLE> The accompanying notes are an integral part of the interim financial statements 6 <TABLE> <CAPTION> REVOLUTIONS MEDICAL CORPORATION (FORMERLY MAXXON, INC.) (A Development Stage Company) STATEMENTS OF CASH FLOWS From Inception (August 16, 1996) Through March 31, 2008 and For The Three Months Ended March 31, 2008 and 2007 FROM INCEPTION (AUGUST 16, 1996) THROUGH THREE MONTHS ENDED MARCH 31, 2008 MARCH 31, 2008 MARCH 31, 2007 ---------------------------------------------------- <S> <C> <C> <C> OPERATING ACTIVITIES Net loss $ (19,326,298) $ (123,736) $ (3,635,333) Plus non-cash charges to earnings: Stock compensation expense 223,248 - - Depreciation and amortization 75,525 - - Purchase R&D - Clear Image 3,309,514 3,309,315 Common stock issued for services 3,357,408 - 212,500 Preferred stock issued for services 20,000 - - Expenses paid by third parties 57,134 - - Contribution of services by officer and employees 799,154 - - Services by officer and employees paid for with non-cash consideration 167,500 - - Compensation cost for option price reduction 50,000 - - Amortization of compensation cost for options granted to non-employees and common stock issued for services 1,775,577 - - Allowance for doubtful accounts 50,900 - - Write-off of Notes Receivable (8,239) (8,239) - Write-off of Notes Receivable 14,636 - - 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) decrease in goodwill (23,276) - - (Increase) decrease in other receivables (176,577) - - Increase (decrease) in accrued salaries and consulting 1,038,601 49,000 66,251 Increase (decrease) in accrued interest 91,177 - 9,487 Increase (decrease) in accounts payable and accrued liabilities 1,376,085 251 17,323 ---------------------------------------------------- Total operating activities (5,201,196) (82,724) - ---------------------------------------------------- INVESTING ACTIVITIES Purchase of equipment (67,042) - - Investment in syringe patent development (10,000) - - Investment in Ives Health Company (251,997) - - Investment in The Health Club (10,000) - - ---------------------------------------------------- Total investing activities (339,039) - - ---------------------------------------------------- FINANCING ACTIVITIES Loans from shareholders 13,907 - - Repayment of loans from shareholders (8,005) - - Repayments of Promissory Notes 190,754 - - Common stock subscribed 34,000 - Sale of preferred stock for cash: (1,000) - - Sale of common stock for cash: To third-party investors (prior to merger) 574,477 - - To third-party investors 3,801,044 100,000 58,500 From exercise of stock options 924,800 - - Less: Issue Costs (102,318) - - Convertible debentures issued for cash 355,000 - - Payment of exclusive license note payable (100,000) - - ---------------------------------------------------- Total financing activities 5,682,659 100,000 58,500 ---------------------------------------------------- Minority interest (156,880) (17,120) (14,145) ---------------------------------------------------- Change in cash 2,554 156 823 Cash at beginning of period - 2,398 4,256 ---------------------------------------------------- Cash at end of period $ 2,554 $ 2,554 $ 5,079 ==================================================== 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 - - 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 89,802 - - Common stock issued for convertible debentures 190,660 - - Common stock issued for services 706,663 - - Common stock issued to pay Ives debt 27,000 - - </TABLE> 7 REVOLUTIONS MEDICAL CORPORATION AND SUBSIDIARY (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008 (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation ----------------------- The accompanying interim consolidated financial statements of Revolutions Medical Corporation ("RevMed") and its partially-owned subsidiary Clear Image, Inc. ("Clear Image"), together referred to as the "Company" are unaudited; however, in the opinion of management, the interim consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results to be expected for the year ending December 31, 2007. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes fort he year ended December 31, 2007 appearing in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2007, as filed with the Securities and Exchange Commission. Organization and Nature of Operations ----------------------------------------- Revolutions Medical Corporation, a Nevada corporation, ("RevMed" or "the Company") is principally engaged in the design and development of retractable safety needle devices intended to reduce the risk of accidental needle stick injuries among health care workers. RevMed owns 62.2% of the common stock of Clear Image, Inc., which is developing a color MRI technology. 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. Earnings (Loss) per Share ---------------------------- The Company computes net income 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 income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average shares of common 8 stock of the Company outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. The calculation of fully diluted income (loss) per share of common stock assumes the dilutive effect of stock options and warrants outstanding. During a loss period, the assumed exercise of outstanding stock options and warrants has an anti-dilutive effect. Therefore, the outstanding stock options were not included in the March 31, 2008 and 2007 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 December 2007, the FASB issued SFAS No. 141(R), "Business Combinations," ("SFAS 141(R)") which replaces SFAS 141. SFAS 141(R) establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; recognizes and measures goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141(R) is effective for acquisitions by the Company taking place on or after January 1, 2009. Early adoption is prohibited. Accordingly, a calendar year-end company is required to record and disclose business combinations following existing accounting guidance until January 1, 2009. The Company will assess the impact of SFAS 141(R) if and when a future acquisition occurs. In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51" ("SFAS 160"). SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Before this statement, limited guidance existed for reporting noncontrolling interests (minority interest). As a result, diversity in practice exists. In some cases minority interest is reported as a liability and in others it is reported in the mezzanine section between liabilities and equity. Specifically, SFAS 160 requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financials statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interests. SFAS 160 is effective for the Company on January 1, 2009. Earlier adoption is prohibited. The Company is currently evaluating the impact, if any, the adoption of SFAS 160 will have on its financial position, results of operations and cash flows. 9 In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS 161"). SFAS 161 requires enhanced disclosures about an entity's derivative and hedging activities and thereby improving the transparency of financial reporting. It is intended to enhance the current disclosure framework in SFAS 133 by requiring that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms of the risks that the entity is intending to manage. SFAS 161 is effective for the Company on January 1, 2009. This pronouncement does not impact accounting measurements but will result in additional disclosures if the Company is involved in material derivative and hedging activities at that time. In February 2008, the FASB issued FASB Staff Position No. 140-3, "Accounting for Transfers of Financial Assets and Repurchase Financing Transactions" ("FSP 140-3"). This FSP provides guidance on accounting for a transfer of a financial asset and the transferor's repurchase financing of the asset. This FSP presumes that an initial transfer of a financial asset and a repurchase financing are considered part of the same arrangement (linked transaction) under SFAS No. 140. However, if certain criteria are met, the initial transfer and repurchase financing are not evaluated as a linked transaction and are evaluated separately under Statement 140. FSP 140-3 will be effective for financial statements issued for fiscal years beginning after November 15, 2008, and interim periods within those fiscal years and earlier application is not permitted. Accordingly, this FSP is effective for the Company on January 1, 2009. The Company is currently evaluating the impact, if any, the adoption of FSP 140-3 will have on its financial position, results of operations and cash flows. In April 2008, the FASB issued FASB Staff Position No. 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP 142-3"). This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets". The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R), "Business Combinations," and other U.S. generally accepted accounting principles. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years and early adoption is prohibited. Accordingly, this FSP is effective for the Company on January 1, 2009. The Company does not believe the adoption of FSP 142-3 will have a material impact on its financial position, results of operations or cash flows. In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements "(SFAS 157). This statement defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting SFAS 157 on our financial condition and results of operations. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment to FASB Statement No. 115 ("SFAS 159"). SFAS 159 allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment for eligible assets and liabilities may be elected either prospectively upon initial recognition, or if an event triggers anew basis of accounting for an existing asset or liability. SFAS 159 is effective in the first quarter of 2008 and the Company is currently evaluating the impact of adoption on its financial position and results of operations. The Company did not elect fair value treatment for any of its eligible assets or liabilities. 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$(19,326,298) for the period from inception (August 16, 1996) to March 31,2008. The ability of the Company to continue as a going concern during the next year depends on the successful completion of the Company's capital raising efforts to fund the development of its retractable safety syringe and its color MRI technology. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 3 - ACQUISITION OF CLEAR IMAGE ACQUISITION CORP On March 26, 2007, RevMed completed the acquisition of Clear Image Acquisition Corporation ("Acquisition Corp.") in exchange for 8,273,788 shares of RevMed common stock. Acquisition Corp is a company that was formed by certain shareholders of Clear Image, Inc. 10 ("Clear Image"), an place State Oklahoma corporation, in order to assemble a control block of the shares of Clear Image for the purposes of such a transaction. The sole asset of Acquisition Corp was a block of 9,824,139 shares of the Common Stock of Clear Image, a development stage company which is developing certain proprietary and patent pending technology related to color MRI scans. The block of Clear Image shares owned by Acquisition Corp represented 62.2% of Clear Image's outstanding common stock. By acquiring Acquisition Corp, RevMed has acquired control of Clear Image, Inc. as a partially-owned subsidiary. In determining the number of shares to be exchanged by RevMed for the shares of Clear Image shares held by Acquisition Corp., the Board based the transaction value on the funds expended by Clear Image for the color MRI technology in its then current state, using a value of Forty Cents ($.40) per share, which was the average market value when the acquisition agreement was signed in January, 2007. During the third quarter of 2007, it was determined that the accounting treatment for the transaction should be accounted for in accordance with FASB Interpretation No. 4. "Applicability of FASB Statement No.2 to Business Combinations Accounted for by the Purchase Method" and Statement of Financial Accounting Standards No.2 "Accounting for Research and Development Costs." which require research and development costs to be expensed if there are no alternative uses. Accordingly, the Company recorded goodwill of $23,276 and an expense of $3,309,515. The shareholders of Acquisition Corp. did not receive a larger portion of the voting rights in RevMed, the surviving company, because of RevMed's outstanding preferred stock (See Note 5. "Preferred Stock and Common Stock Transactions"), so the transaction did not require the use of recapitalization or reverse merger accounting. RevMed plans to pay the minimal costs of Acquisition Corp's liquidation and dissolution. Prior to RevMed's acquisition of Acquisition Corp., RevMed's officer and directors were directors and shareholders of Clear Image, Inc. and, along with other shareholders, contributed their Clear Image shares to Acquisition Corp. In connection with RevMed's acquisition of Acquisition Corp., Ron Wheet, RevMed's CEO and a Director, received 2,286,000 shares of RevMed restricted common stock; Dr. Beahm, a Director, received 1,599,125 shares of RevMed restricted common stock; and Mr. O'Brien, a Director, received 1,645,625 shares of RevMed restricted common stock. 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 December 31, 2007, the Company owed Mr. Wheet $211,024 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 of all 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 up to 12,913,239 shares of common stock at $0.001 per share on or before April 14, 2010. In addition, the mutual release and settlement provides for continued indemnification of the former CEO and mutual releases. The note, which is unsecured and is presently in default, bears interest at 18% per year as the note was due April 14, 2007. As of December 31, 2007, the Company had accrued interest payable of $91,176. The warrant is exercisable only to the extent that the number of shares of common stock exercised plus the number of shares presently owned by the warrant holder does not exceed 4.99% of the outstanding shares of Common Stock of the Company on such date. The exercise limit is revocable by the warrant holder upon 75 days prior 11 notice to the Company. During the three months ended March 31, 2006, the former CEO exercised warrants to purchase 6,000,000 shares of common stock. The exercise price of $6,000 was paid by reducing the principal balance of the promissory note by $6,000During 2007, the Company issued 345,662 shares of common stock upon the exercise of a warrant. The exercise price of $6,913 was paid by reducing the principal balance of the promissory note payable by the Company. On April 8, 2008, the Company entered into a Memorandum of Understanding with its former CEO to settle this outstanding obligation through the issuance of its common stock on a quarterly basis commencing May 8, 2008 for one year. The value of the issuance of the common stock will be determined by the market value of the ten day average price following May 8, 2008 through May 18, 2008. Amounts Due Pursuant to Employment and Consulting Agreements ------------------------------------------------------------------- The Company has accrued $984,128 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 ------------------------------------------------------------------ Although the Company owns a patent published January 2006 and a patent application was filed by the Globe/RevMed Joint Venture in September 2005 for the RevVac safety syringe, there is no assurance that a patent will issue, that further patent protections will be sought or secured, or that any present patents will provide the Company with protections. 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. Clear Image Patent Applications and License to Color MRI Technology ------------------------------------------------------------------------ Clear Image owns four (4) separate patent applications, filed June 15, 2006, which were assigned to Clear Image by its consultant, Richard Theriault. There is no assurance that any patent protections will be secured. The lack of patent protection, whether foreign or domestic, could allow competitors to copy and sell products based on our designs without paying us a royalty, which could have a material adverse effect on the Company's business. In 1996, Clear Image, Inc. acquired an exclusive license to a color MRI technology from the University of South Florida Research Foundation ("USFRF").In 2002, USFRF notified Clear Image that the license was terminated because Clear Image had not used its "best efforts", an assertion which Clear Image disputed. Although the current stage of the Company's technology uses color MRI technology, the Company believes that it is sufficiently separate from the technology licensed to it by USFRF to permit it to proceed regardless of the status of the license from USFRF. Clear Image believes that its color MRI technology does not rely on the license; however, the legal implications are uncertain. There is no assurance that this 2002 dispute with USFRF will not recur. Legal Action Against Former Joint Venture Partner ------------------------------------------------------- On November 3, 2005, the Company 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. In connection with the agreement, the Company 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 common stock and options that were issued to Globe pursuant to the agreement. On March 1, 2007, the Company filed a law suit 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 the 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. 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 12 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 125votes for each share of common stock into which his Series 2006 Preferred Stock is then convertible (presently on a one for one basis), voting together with our common stock as a single class. Cumulative voting is not permitted. Upon conversion of each Series 2006 preferred share, each share of common stock issued will be entitled to only one (1) vote per common share. A Series 2006 preferred stock holder is entitled to receive, ratably, dividends when, as and if declared by the board of directors out of legally available funds to pay dividends. If any dividend or other distributions are declared on our common stock, then a dividend or other distribution must also be declared on the outstanding Series 2006 preferred stock at the same time and on the same terms and conditions, so that each holder of Series 2006 preferred stock will receive the same dividend or distribution such holder would have received if the holder had converted his Series 2006 Preferred stock as of the record date for determining stockholders entitled to receive such dividend or distribution. Liquidation Preference: In the event of the liquidation, dissolution or winding up, a Series 2006 preferred stock is entitled to receive a liquidation preference of $0.001 for each share of Series 2006 preferred stock held prior to payment being made to any junior stock. Conversion: A Series 2006 preferred stock holder may convert one (1) share of preferred stock into one (1) share of common stock. Preemption: A Series 2006 Preferred stock holder has no preemptive rights and is not subject to further calls or assessments. Redemption: There are no redemption or sinking fund provisions applicable to the Series 2006 Preferred stock. BLANK CHECK PREFERRED STOCK The Company's Articles of Incorporation authorize its board of directors to establish one or more additional series of preferred stock and to determine, with respect to any such series of preferred stock, its terms and rights, including: the designation of each series; the voting powers, if any, associated with each such series whether dividends, if any, will be cumulative or noncumulative and the dividend rate of each series; the redemption rights and price or prices, if any, for shares of each series; and preferences and other special rights, if any, of shares of each series in the event of any liquidation, dissolution, or distribution of the Company's assets. COMMON STOCK TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008 During the three months ended March 31, 2007, the Company issued 1,000,000 stock options to an individual in conjunction with a consulting agreement. These options were valued at $0.10 per share and were exercised during the first quarter. The Company received $100,000 in proceeds related to the exercise of these options. NOTE 6 - STOCK OPTIONS AND WARRANTS OUTSTANDING The following tables summarize information about the stock options and warrants outstanding at December 31, 2007: <TABLE> <CAPTION> WEIGHTED AVERAGE OPTIONS WARRANTS TOTAL EXERCISE PRICE ----------------------------------------------------- <S> <C> <C> <C> <C> Balance at December 31, 2007 10,985,000 9,063,239 11,263,239 $ 0.090 Granted 1,000,000 1,000,000 0.100 Exercised (1,000,000) (1,000,000) 0.100 Expired/Forfeited 0 0 0 ------------------------------------ BALANCE AT MARCH 31, 2008 10,985,000 107,500 $11,092,500 0.090 ==================================== </TABLE> 13 <TABLE> <CAPTION> OPTIONS & WARRANTS OUTSTANDING EXERCISABLE ----------------------------------------------------------------- Weighted Number Average Number Weighted Outstanding at Remaining Weighted Exercisable at Average March 31, Contractual Exercise March 31, Exercise Range of Exercise Price 2008 Average Life Price 2008 Price ------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> OPTIONS 0.08 10,875,000 3.00 0.08 10,875,000 0.08 1.00 55,000 5.34 $ 1.00 55,000 $ 1.00 10.00 55,000 2.00 $ 10.00 55,000 $ 10.00 -------------- ----------- 10,985,000 10,985, -------------- ----------- WARRANTS 5.00 107,500 0.10 years $ 5.00 107,500 $ 5.00 -------------- ----------- 11,092,500 11,092,500 -------------- ----------- </TABLE> NOTE 7 - RELATED PARTY TRANSACTIONS In connection with the acquisition of Clear Image Acquisition Corp. by Rev Med, Ron Wheet, CEO and Director, received 2,286,000 shares of restricted Rev Med common stock, Dr. Beahm, a Director, received 1,599,125 shares of restricted RevMed common stock, and Mr. O'Brien, a Director, received 1,645,625shares of restricted RevMed common stock. Mr. Wheet and Mr. O'Brien were directors and shareholders and Dr. Beahm was a shareholder of Clear Image Acquisition Corp. Prior to its acquisition by the Company. During the three months ended March 31, 2008, the Company accrued$45,000 of salary payments due to Tom O'Brien, a director, for his service as president of Clear Image, Inc. Mr. O'Brien's monthly salary is $15,000. NOTE 8 - FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT The Company entered into a financial advisory and investment banking agreement with Spartan Securities Group, LTD. The agreement engaged Spartan on a non-exclusive basis for two years to provide services to include, but not limited to, arranging meetings with investment banking firms, rendering advice on internal operations, rendering advice on corporate finance matters, rendering advice or assistance on merger or acquisition activities and rendering advice on capital raising activities. Spartan will be compensated with commissions based on specified percentages in the contract related to the aggregate consideration received in the underlying merger or acquisition, equity placement, third party debt placement transaction. In certain transactions Spartan may be eligible to receive warrants to purchase common stock of the Company. ITEM 2. PLAN OF OPERATION 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-QSB. This Form 10-QSB 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 "RISK FACTORS." 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. The Company is presently seeking the funds necessary to commence and complete 14 the lab testing, the results of which will then be used as part of the Company's planned 510K submission to the FDA. There is no assurance that sufficient funds will be raised on a timely basis or at all or that the planned 510K submission to the FDA will be completed or approved by the FDA. See "RISK FACTORS." 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 3. "Acquisition of Clear Image Acquisition Corp" to the interim consolidated financial statements. Clear Image, Inc. was organized as an Oklahoma corporation under the name "Image Analysis, Inc." on October 6, 1998. On May 15, 2003 it changed its name to Clear Image, Inc. Clear Image is a development stage company which has developed certain proprietary technology and patent pending for (i) differential coloring, by series, of MRI scans and (ii) auto-registration of the scan images. As a private company, however, faced with the substantial competition of the leaders in the field of MRI technology, Clear Image has had difficulty obtaining the necessary working capital to complete the development of commercial components of its technology. The Company, in acquiring control of Clear Image, believes that it can provide sufficient working capital to complete commercialization of certain aspects of Clear Image's technology to the point of supporting some licensing or joint venture relationship financially adequate to permit Clear Image to complete the development of the remaining aspects of its technology. There is no assurance that the Company will be successful in raising the working capital necessary to complete the technology, that the technology will be commercially viable, approved by the FDA, or that the Color MRI technology will be accepted in the marketplace. See "RISK FACTORS". Since its formation, Clear Image's principal business has been to develop and commercialize color MRI technology - "MRI" referring to "Magnetic Resonance Imaging" equipment. Magnetic Resonance Imaging is a widely used imaging system that safely creates many different and detailed views of selected portions of the internal anatomy. A MRI scanner is a large tunnel- shaped machine that will accommodate an adult lying down. Within the MRI scanner is a large magnet which directs harmless radio signals around sections of the body. When these signals pass through the body, they resonate; that is, release a signal. The released signals are picked up by a receiver inside the MRI scanner and then sent to a computer. The computer analyzes the signals and converts them to a visual image that is displayed on a viewing monitor and then printed on special film. The images produced by the scanner are gray-scale images similar to an x-ray. These gray-scale images can be difficult and time consuming to "read". A radiologist "reads" these images on film by comparing the different scans of each tissue slice, sometimes evaluating one hundred to three hundred individual gray images to obtain a diagnosis. The successful diagnosis of a condition, using MRI, depends not only on the ability of the radiologist to detect the subtle differences in shades of gray, but also the radiologist's ability to compare visually the vast number of images. Clear Image is engaged in the development of technology which can segmentate and reference MRI images. By "segmenting" an image, the Company's technology will let the user select a part of the image (bone, fluid, tissue)and render that selection in 3 dimensions. Essentially, different components of an image are given different colors and the user can choose the color or colors to be studied, thus eliminating those portions colored with the colors being discarded. By "referencing" the image to a data base, the user can obtain similar, identified images to aid the user in interpretation of the image being studied. 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 (see "RISK FACTORS" RISKS RELATED TO CLEARIMAGE AND THE COLOR MRI TECHNOLOGY.). In addition, Clear Image owns four (4)separate patent applications, filed June 15, 2006 which were assigned over by Clear Image's consultant, Richard Theriault. Clear Image, Inc.'s President is Thomas O'Brien, who is also a director of the Company. Mr. O'Brien, age 60, has more than twenty years of general management experience in the medical device field. He has special expertise in domestic and international sales, marketing and distribution of high technology medical systems and services, having held executive positions with companies such as Pfizer, Toshiba and Johnson &Johnson-owned Technicare Corporation. Mr. O'Brien also serves as a director of Clear Image. Rondald Wheet, President and a director of the Company, age 42, is Vice-President and Secretary of Clear Image and serves as a director. Because our planned products are in various stages of development, we have no revenue. Our efforts to date have been funded almost entirely through sales of our common stock. We require substantial additional capital to complete the development of, to obtain approvals for and to begin commercializing the RevVacretractable safety syringe and the Clear Image color MRI software. There is no assurance that such capital will be available to us when needed, on acceptable terms, or at all. There is no assurance that our planned products will be commercially viable. Our present and future collaborative partners may require significant amounts of time to complete product design, develop manufacturing processes and/or to obtain specialized equipment, if any is required. Our planned products will also require FDA approval before they can be sold in the United States and similar approvals from foreign countries where our products may be marketed. Obtaining government approval, whether in the U.S. or elsewhere, is a time-consuming and costly process with no guarantee of approval. 15 It could be years, if ever, before our planned products are sold in the United States or anywhere else in the world. Our business is subject to numerous risks and uncertainties that are more fully described in "RISK FACTORS." On May 1, 2008 the Financial Industry Regulatory Authority (FINRA) approved the Company's common stock to begin trading on the Over the Counter Bulletin Board. STATUS OF PLANNED PRODUCTS The Company has been working towards raising the $160,000 necessary to complete the 510(k) FDA submission for its RevVac safety syringe. Rev Med hired and announced that Strategic Product Development ("SPD") will handle the 510(k)submittal. SPD plans to use Son Medical for the outside lab testing. This planned 510(k) submission will include 3cc, 5cc, and 10cc sizes of the RevVac safety syringe. This 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 are website at www.revolutionsmedical.com. The Company also believes that with the help of government regulation initiatives, individual state laws, and the importance of world health concerns, the safety syringe market will continue to have substantial growth into the foreseeable future. When an MRI is taken, the images are sent to a pictural 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 color MRI software(including 3-D and automatic segmentation) on a PACS delivery platform and has given approval for SPD to enter into a binding letter of intent with Cambridge Medical Information Corporation ("CMIC") to use their PACS delivery platform, known as zPACS, which is an advanced fully functional PACS system currently in operation at several major international hospitals. The estimated cost of this project is $400,000, which RevMed is working to raise. A video of the MRI software can be found on the Company's website. LIQUIDITY, CAPITAL RESOURCES AND CASH REQUIREMENTS ------------------------------------------------------- The following discussion of our cash requirements and liquidity and resources contains forward-looking statements that are based upon current expectations. These forward-looking statements fall within the meaning of the federal securities laws that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "expect," "plan," "anticipate," "believe," "estimate," "intend," "potential" or "continue" or the negative of these terms or other comparable terminology. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in our forward-looking statements as a result of many factors; including, our ability to obtain financing when needed. A discussion of these risks and uncertainties can be found under the heading "RISKFACTORS" and elsewhere in this report. We cannot guarantee future results, levels of activity, performance or achievements. We assume no obligation to update any of the forward-looking statements after the date of this report or to conform these forward-looking statements to actual results. LIQUIDITY AND CAPITAL RESOURCES AND CASH REQUIREMENTS ----------------------------------------------------- As of March 31, 2008, 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. The company needs $1 million in the next six months. This will cover $160,000 to complete outside lab testing and FDA application costs for our RevVac safety syringe. Also this will cover the $400,000 to completely install our proprietary MRI software in an existing PACS system. The rest will cover general working capital expense. The company will seek additional capital of $3 million in six months if a strategic partner is not found to fund both projects. This money will be used as follows: $1.0 million of which is for costs to finalize product development and to begin beta testing for the color MRI technology, $1.0 million of which is for safety syringe product development, $1.0 of which is for manufacturing of safety syringes if FDA approval is obtained, and $1.0 for working capital to cover expenses, such as rent, telephone, auditing, financial reporting requirements, and administrative expenses, including salaries. Due to current economic conditions and the Company's risks and uncertainties, there is no assurance that we will be able to raise any additional capital on acceptable terms, if at all. Because of these uncertainties, the auditors have expressed substantial doubt about our ability to continue as a going concern. We do not presently have any investment banking or advisory agreements in place and due to the Company's risks and uncertainties, there is no assurance that we will be successful in establishing any such agreements. Even if such agreements are established, there is no assurance that they will result in any funding. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or 16 privileges senior to the common stock. If adequate funds are not available to us on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy. See "RISK FACTORS." Because we do not currently generate any cash from operations and have no credit facilities available, our only means of funding is through the sale of our common stock. We presently have 250,000,000 shares of common stock authorized, of which 19,638,422 shares were issued and outstanding as of March 31, 2008. 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. RISK FACTORS You should carefully consider the risks described below, together with all of the other information included in this report, in considering our business and prospects. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. The occurrence of any of the following risks could harm our business, financial condition or results of operations. BECAUSE WE HAVE NO PRODUCTS FOR SALE, WE DO NOT GENERATE REVENUE AND DO NOT HAVEOTHER RESOURCES TO FUND OPERATIONS; THESE CONDITIONS RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN Because the Company's planned products are in the development stage, the Company has no revenue, earnings or cash flow to be self-sustaining. It could be several more years before the Company can expect to have sales. The Company's independent accountants have stated, in their opinion to the audited financial statements for the period ended December 31, 2006, "the Company is a development stage company with insufficient revenues to fund development and operating expenses. The Company also has insufficient cash to fund obligations as they become due. These conditions raise substantial doubt about its ability to continue as a going concern." Our failure to obtain the funding necessary to continue our activities will have a material adverse effect on our business, financial condition, and on the price of our common stock. WE REQUIRE SUBSTANTIAL ADDITIONAL CAPITAL TO CONTINUE DEVELOPING OUR PLANNEDPRODUCTS. WE MAY HAVE DIFFICULTY RAISING CAPITAL WHEN WE NEED IT, OR AT ALL.RAISING SUCH CAPITAL MAY DILUTESTOCKHOLDER VALUE. IF WE ARE UNABLE TO RAISECAPITAL, WE MAY BE REQUIRED TO LIMIT OR CEASE OUR OPERATIONS, OR OTHERWISE MODIFY OUR BUSINESS STRATEGY. The Company requires an estimated $3.8 million in capital over the next twelve months; $1.0 million of which is for costs to finalize product development and to begin beta testing for the color MRI technology, $1.0 million of which is for safety syringe FDA approval and if approval is obtained, to setup manufacturing, and $1.0 million for working capital to cover expenses, such as rent, telephone, auditing, financial reporting requirements, and administrative expenses, including salaries; and $800,000 for outstanding liabilities. There is no assurance, however, that we will be successful in raising the funds when needed, on acceptable terms, or at all. There is no assurance that development of our planned products will not require a significant amount of time to commence or to complete and there is no assurance that the costs will not be significantly greater than current estimates. We will require substantial additional capital thereafter to commercialize our planned products. Our commercialization efforts will include, but are not limited to, entering into agreements with third parties for manufacturing(including building molds, designing manufacturing processes and obtaining specialized equipment for our retractable safety syringe), marketing and distribution, and obtaining FDA and/or other regulatory approvals, all of which are necessary before our planned products can be sold and which may take a significant amount of time, if not years, to complete. Due to the current economic conditions and the risks and uncertainties surrounding our Company, we may not be able to secure additional financing on acceptable terms, if at all. If we obtain additional funds by selling any of our equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience substantial dilution, the price of our common stock may decline, or the equity securities issued may have rights, preferences or Privileges senior to the common stock. To the extent that services are paid for with common stock or stock options that are exercised and sold into the market, the market price of our common stock could decline and your ownership interest will be diluted. If adequate funds are not available to us on satisfactory terms, we will be required to limit or cease our operations, or otherwise modify our business strategy, which could materially harm our future business prospects. 17 IF WE DO NOT OBTAIN FDA APPROVAL FOR OUR PLANNED PRODUCTS THEN OUR FUTURE PROSPECTS WILL BE HARMED. Our planned products will require FDA approval before they can be sold in the United States. We have not yet applied for or received FDA approval for these planned products. There is no assurance that our planned products will qualify for the FDA's 510(k) pre-market notification approval process, which is less rigorous than a PMA. The FDA approval process can take years and be expensive, especially if a PMA is required. A PMA is much more rigorous and expensive to complete than a 510(k). In addition, the Medical Device User Fee and Modernization Act, enacted in 2002, now allows the FDA to assess and collect user fees for 510(k) and for PMA applications. Fees for fiscal year 2007 for small businesses (companies with less than $100 million in sales) range from $3,326 for Section 510(k) pre-market notifications to $107,008 for PMAs, although fee reductions and waivers are available for companies qualifying as small businesses. There is no assurance that we will qualify for fee reductions or waivers or that we will have the funds necessary to apply for or obtain FDA approval for our planned products. The FDA approval process could take a significant amount of time, if not years, to complete and there is no assurance that FDA approval will ever be obtained. If FDA approval is not obtained, then we will not be able to sell our products in the United States, which would have a material adverse effect on our future business prospects. RISKS RELATED TO CLEAR IMAGE AND THE COLOR MRI TECHNOLOGY. There are numerous risks surrounding Clear Image, including but not limited to the following. Although Clear Image was organized in October, 1998 and has been in existence for approximately eight years, it has a limited operating history and remains a development stage company. Clear Image has suffered due to under-capitalization and lack of working capital and its auditors have stated in their opinions that, since the corporation is a development stage company within sufficient revenues to fund development and operating expenses, there is" substantial doubt about its ability to continue as a going concern". Clear Image has had annual losses since its inception and will continue to incur losses until it completes product development, of which there is no assurance. Clear Image acquired an exclusive license relating to the color MRI technology from the University of South Florida Research Foundation ("USFRF"). The license required that the licensee use its "best efforts" to develop the technology, although that term is undefined. On August 1, 2002 USFRF notified Clear Image that the license was terminated because Clear Image had not used its "best efforts". Clear Image disputes that and believes that USFRF cannot terminate the license. The dispute is unresolved; Clear Image has withheld the royalty payments due, although they have been accrued as liabilities. At this point in time, Clear Image believes that its products do not rely on the license; however, the legal implications are uncertain and termination of the license could materially adversely affect the business and revenues of Clear Image. Other companies are working on similar technologies. How such technologies, if completed, will compare to the Company's, what the comparative pricing and terms of use will be, and what the relative market acceptances will be, is uncertain. It is highly probable that Clear Image will need to enter into one or more joint ventures or similar arrangement with a company in the MRI field which can offer both financial and marketing support. Whether such an arrangement can be developed is uncertain. It is most likely that Clear Image will need to enter into licensing arrangements, for sub- portions of its technology as those are ready for commercialization, but whether such licenses will be taken, and the terms of them, are uncertainties. Other risks related to Clear Image may be discussed in "RISK FACTORS" contained elsewhere in this report. OUR PLANNED PRODUCTS MAY PROVE TO BE TOO EXPENSIVE TO MANUFACTURE AND MARKETSUCCESSFULLY, WHICH WOULD HARM OUR FUTURE PROSPECTS. Our planned products may prove to be too expensive to manufacture and market successfully. Market acceptance of our products will depend in large part upon our ability to demonstrate the operational and safety advantages of our product as well as the cost effectiveness of our product compared to both standard and other safety needle products. If we are unable to produce products that are competitive with standard products, we will not be able to sell our products. This could have a material adverse effect on our operations. IF WE ARE NOT ABLE TO ENTER INTO MANUFACTURING ARRANGEMENTS FOR OUR PLANNEDPRODUCTS THEN OUR FUTURE PROSPECTS WILL BE HARMED. We have no experience in establishing, supervising or conducting commercial manufacturing. We plan to rely on third party contractors to manufacture our planned products. We may never be successful in establishing manufacturing capabilities for our planned products. Relying on third parties may expose us to the risk of not being able to directly oversee the manufacturing process, which may adversely affect the production and quality of our planned products. Furthermore, these third-party contractors, whether foreign or domestic, may experience regulatory compliance difficulty, mechanical shutdowns, employee strikes, or other unforeseeable acts that may delay or prevent production. We may not be able to manufacture our retractable safety needle in sufficient quantities at an acceptable cost, or at all, which could materially adversely affect our future prospects. IF WE ARE NOT ABLE TO ESTABLISH MARKETING, SALES AND DISTRIBUTION ARRANGEMENTS FOR OUR SAFETY NEEDLE DEVICES THEN OUR FUTURE PROSPECTS WILL BE HARMED. We must establish marketing, sales and distribution capabilities before our planned products can be sold. We have no experience in establishing such capabilities. Until we have established manufacturing arrangements, we do not plan to devote any meaningful time or resources to 18 establishing marketing sales or distribution capabilities. We intend to enter into agreements with third parties in the future to market, sell and distribute our planned products. However, we may be unable to establish or maintain third-party relationships on a commercially reasonable basis, if at all. In addition, these third parties may have similar or more established relationships with our competitors. If we do not enter into relationships with third parties to market, sell and distribute our planned products, we will need to develop our own such capabilities. We have no experience in developing, training or managing a sales force. If we choose to establish a direct sales force, we will incur substantial additional expenses in developing, training and managing such an organization. We may not be able to build a sales force on a cost effective basis or at all. Any such direct marketing and sales efforts may prove to be unsuccessful. In addition, we will compete with many other companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete against these other companies. We may be unable to establish a sufficient sales and marketing organization on a timely basis, if at all. We may be unable to engage qualified distributors. Even if engaged, they may fail to satisfy financial or contractual obligations to us. They may fail to adequately market our products. They may cease operations with little or no notice to us or they may offer, design, manufacture or promote competing products. IF WE ARE UNABLE TO PROTECT OUR PLANNED PRODUCTS, OR TO AVOID INFRINGING ON THERIGHTS OF OTHERS, OUR ABILITY TO COMPETE WILL BE IMPAIRED. Patent Applications for the Company's Retractable Safety Needle Devices ------------------------------------------------------------------------------- Although the Company owns a patent published January 2006 and a patent application was filed by the Globe/RevMed Joint Venture in September 2005 for the RevVac safety syringe, there is no assurance that a patent will issue, that further patent protections will be sought or secured, or that any present patents will provide the Company with protections. 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. Clear Image Patent Applications ---------------------------------- Clear Image owns four (4) separate patent applications, filed June 15, 2006, which were assigned over by Clear Image's consultant, Richard Theriault. 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. See also "RISKS RELATED TO CLEAR IMAGE AND COLOR MRI TECHNOLOGY." It is most likely that Clear Image will need to enter into licensing arrangements, for sub- portions of its technology as those are ready for commercialization, but whether such licenses will be taken, and the terms of them, are uncertainties. General Risks Related to Intellectual Property --------------------------------------------------- The Company does not yet have patent protection for some of its planned products and there is no assurance that such patent protections will be sought or secured. We do not have foreign patent protection for any of our planned products. There is no assurance that we will have the financial resources to apply for U.S. or foreign patent protections, that such U.S. or foreign patent protections will be available to us or if available, that they will result in any meaningful protection for our planned products. Even if we are successful in obtaining patent protection, whether in the U.S. or abroad, it may not afford protection against competitors with similar technology. Furthermore, others may independently develop similar technologies or duplicate our technology. Our commercial success depends in part on our avoiding the infringement of patents and proprietary rights of other parties and developing and maintaining a proprietary position with regard to our own technologies and products. We cannot predict with certainty whether we will be able to enforce our patents. We may lose part or all of patents we may receive in the future as a result of challenges by competitors. Patents that may be issued, or publications or other actions could block our ability to obtain patents or to operate as we would like. Others may develop similar technologies or duplicate technologies that we have developed or claim that we are infringing their patents. Although we rely on trade secrets to protect our technology and require certain parties to execute nondisclosure and non-competition agreements, these agreements could be breached, and our remedies for breach may be inadequate. In addition, our trade secrets may otherwise become known or independently discovered by our competitors. If we lose any of our trade secrets, our business and ability to compete could be harmed. Despite our efforts to protect our proprietary rights, we face the risks that pending patent applications may not be issued, that patents issued to us may be challenged, invalidated or circumvented; that unauthorized parties may obtain and use information that we regard as 19 proprietary; that intellectual property laws may not protect our intellectual property; and effective protection of intellectual property rights may be limited or unavailable in China, where we plan to manufacture our retractable safety syringe, or in other foreign countries where we may manufacture and/or sell our retractable safety needle devices. The lack of adequate remedies and impartiality under any foreign legal system may adversely impact our ability to protect our intellectual property. We may become involved in litigation or interference proceedings declared by the U.S. Patent and Trademark Office, or oppositions or other intellectual property proceedings outside of the United States. If any of our competitors have filed patent applications or obtained patents that claim inventions that we also claim, we may have to participate in an interference proceeding to determine who has the right to a patent for these inventions in the United States. If a litigation or interference proceeding is initiated, we may have to spend significant amounts of time and money to defend our intellectual property rights or to defend against infringement claims of others. Litigation or interference proceedings could divert our management's time and effort. Even unsuccessful claims against us could result in significant legal fees and other expenses, diversion of management time and disruption in our business. Any of these events could harm our ability to compete and adversely affect our business. An adverse ruling arising out of any intellectual property dispute could invalidate or diminish our intellectual property position. An adverse ruling could also subject us to significant liability for damages, prevent us from using processes or products, or require us to license intellectual property from third parties. Costs associated with licensing arrangements entered into to resolve litigation or an interference proceeding may be substantial and could include ongoing royalties. We may not be able to obtain any necessary licenses on satisfactory terms or at all. WE MUST OBTAIN REGULATORY APPROVALS IN FOREIGN JURISDICTIONS TO MARKET OUR PRODUCTS ABROAD Whether or not FDA approval has been obtained, we must secure approval for our planned products by the comparable non-U.S. regulatory authorities prior to the commencement of marketing of the product in a foreign country. The process of obtaining these approvals will be time consuming and costly. The approval process varies from country to country and the time needed to secure additional approvals may be longer than that required for FDA approval. These applications may require the completion of pre-clinical and clinical studies and disclosure of information relating to manufacturing and controls. Unanticipated changes in existing regulations or the adoption of new regulations could affect the manufacture and marketing of our products. IF WE ARE NOT ABLE TO COMPETE SUCCESSFULLY, THEN OUR BUSINESS PROSPECTS WILL BE MATERIALLY ADVERSELY AFFECTED. Our retractable safety syringe, if developed, approved and commercialized, will compete in the United States and abroad with the safety needle devices and standard non-safety needle devices manufactured and distributed by companies such as Becton Dickinson, Tyco International, Inc. (Kendall Healthcare Products Company), B. Braun, Terumo Medical Corporation of Japan, Med-Hut, Inc. and Johnson & Johnson. Developers of safety needle devices against which we could compete include Med-Design Corp., New Medical Technologies, Retractable Technologies, Inc., Univec, Inc. and Specialized Health Products International, Inc. Our Color MRI technology, if developed, approved and commercialized, will compete in the United States and abroad against technologies manufactured and distributed by companies such as GE and Siemens. Most of our competitors are substantially larger and better financed than we are and have more experience in developing medical devices and/or software than we do. These competitors may use their substantial resources to improve their current products or to develop additional products that may compete more effectively with our planned products, or may render our planned products obsolete. In addition, new competitors may develop products that compete with our planned products, or new technologies may arise that could significantly affect the demand for our planned products. Even if we are successful in bringing our planned products to market, there is no assurance that we can successfully compete. We cannot predict the development of future competitive products or companies. In the U.S., the vast majority of decisions relating to the contracting for and purchasing of medical supplies are made by the representatives of group purchasing organizations ("GPOs") rather than the end-users of the product(nurses, doctors, and testing personnel). GPOs and manufacturers often enter into long-term exclusive contracts which can prohibit entry in the marketplace by competitors. In the needle and syringe market, the market share leader, BD,has utilized, among other things, long-term exclusive contracts which have restricted entry into the market by most of our competitors. We may not be successful in obtaining any contracts with GPO's, which would severely limit our product's marketability in the U.S. We will be materially adversely affected if we are unable to compete successfully. BECAUSE WE DEPEND ON A SINGLE TECHNOLOGY, WE ARE VULNERABLE TO SUPERIOR COMPETING PRODUCTS OR NEW TECHNOLOGIES THAT COULD MAKE OUR RETRACTABLE SAFETY NEEDLE DEVICES OR OUR COLOR MRI TECHNOLOGY OBSOLETE Because we have a narrow focus on a particular product and technology (e.g. retractable safety syringe and color MRI technology), we are vulnerable to the development of superior competing products and to changes in technology which could eliminate or reduce the need for 20 our products. If a superior technology is created, the demand for our product could greatly diminish causing our commercialization efforts and future prospects to be materially adversely affected. BECAUSE WE RELY ON THIRD PARTIES FOR RESEARCH AND DEVELOPMENT ACTIVITIES NECESSARY TO COMMERCIALIZE OUR PRODUCT, WE HAVE LESS DIRECT CONTROL OVER THOSE ACTIVITIES. THIS COULD HAVE A MATERIALLY ADVERSE EFFECT ON OUR FUTURE PROSPECTS. We do not maintain our own laboratory and we do not employ our own researchers. We have contracted with third parties in the past to conduct research, development and testing activities and we expect to continue to do so in the future. Because we rely on such third parties, we have less direct control over those activities and cannot assure you that the research will be done properly or in a timely manner, or that the results will be reproducible. Our inability to conduct research and development may delay or impair our ability to develop, obtain approval for and commercialize our retractable safety syringe. The cost and time to establish or locate an alternative research and development facility to develop our technology could have a materially adverse effect on our future prospects. YOUR OWNERSHIP INTEREST MAY BE DILUTED AND THE VALUE OF THE SHARES OF OUR COMMONSTOCK MAY DECLINE BY THE EXERCISE OF STOCK OPTIONS AND WARRANTS WE HAVE GRANTEDOR MAY GRANT IN THE FUTURE AND BY THE COMMON STOCK WE HAVE ISSUED OR WILL ISSUEIN THE FUTURE. On April 24, 2007, the Company registered 20,000,000 shares of its common stock reserved under its 2007 Stock Option Plan. The Company plans to grant substantial portion of these reserved shares to its officers and directors. If and when, and to the extent that, those shares are sold into the market, they could cause the market price of our common stock to decline. As of the date of this report, we had a total of 217,500 options and warrants outstanding, which consisted of options to purchase up to 110,000shares of common stock at exercise prices ranging from $1.00 to $10.00 per share(of which 94,000 were exercisable) and warrants to purchase up to 107,500 shares of common stock at an exercise price of $5.00 per share (all of which were exercisable). All of the options and warrants outstanding are presently "out of the money", meaning that the exercise price in greater than the current market price of our common stock. We may decide, however, to modify the terms and/or exercise price of these "out of the money" options and warrants. To the extent that the outstanding options and warrants to purchase our common stock are exercised, your ownership interest may be diluted. If the warrants and options are exercised and sold into the market, they could cause the market price of our common stock to decline. From time to time the Company has issued and plans to continue to issue shares of its common stock to pay current and future obligations. If and when, and to the extent that, those shares are sold into the market, they could cause the market price of our common stock to decline. As of March 31, 2008, the Company had 250,000,000 shares authorized and19,127,422 shares outstanding. The authorized but unissued shares have the same rights and privileges as the common stock presently outstanding. The unissued authorized shares can be issued without further action of the shareholders. If and when, and to the extent that, the unissued authorized shares are issued and sold into the market, they could cause the market price of our common stock to decline. THE LOSS OF THE SERVICES OF CERTAIN THIRD PARTIES AND OUR OFFICER AND DIRECTORCOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. We are dependent upon the services of third parties related to development and commercialization of our planned products. The loss of their services and the inability to retain acceptable substitutes could have a material adverse effect on our future prospects. We are also dependent upon the services of Ron Wheet, our officer and director. The loss of his services or our inability to retain suitable replacements could have a material adverse effect on our ability to continue operating. BECAUSE WE HAVE LIMITED EXPERIENCE IN THE MEDICAL DEVICE INDUSTRY AND OUR OFFICER AND DIRECTORS HAVE OTHER BUSINESS INTERESTS, OUR BUSINESS MAY TAKE LONGER TO DEVELOP, WHICH COULD ADVERSELY AFFECT OUR FUTURE PROSPECTS. We have had limited experience in the medical device industry. In addition, our officer and directors may be involved in a range of business activities that are not related to our business. Consequently, there are potential conflicts in the amount of time he can devote to our business. Not more than 50% of his time will be devoted to RMCP's activities. Consequently, our business may take longer to develop, which could adversely affect our future prospects. IF WE CANNOT GENERATE ADEQUATE, PROFITABLE SALES OF OUR PLANNED PRODUCTS, WE WILL NOT BE SUCCESSFUL In order to succeed as a company, we must develop commercially viable products and sell adequate quantities at a high enough price to generate a profit. We may not accomplish these objectives. Even if we succeed in developing a commercially viable product, a number of factors may affect future sales of our product. These factors include: - Whether we will be successful in obtaining FDA approval in the future; - Whether physicians, patients and clinicians accept our product as a viable, safe alternative to the standard medical syringe; 21 - Whether the cost of our product is competitive in the medical marketplace; and - Whether we successfully contract the manufacture and marketing of the syringe to third parties or develop such capabilities ourselves OUR PLANNED PRODUCTS, IF SUCCESSFULLY COMMERCIALIZED, COULD BE EXPOSED TOSIGNIFICANT PRODUCT LIABILITY CLAIMS WHICH COULD BE TIME CONSUMING AND COSTLY TODEFEND, DIVERT MANAGEMENT ATTENTION AND ADVERSELY IMPACT OUR ABILITY TO OBTAINAND MAINTAIN INSURANCE COVERAGE, WHICH COULD JEOPARDIZE OUR LICENSE. The testing, manufacture, marketing and sale of our planned products will involve an inherent risk that product liability claims will be asserted against us. We currently do not have insurance which relates to product liability, but will seek to obtain coverage at such time as we have a product ready to sell, although there is no assurance we will be able to obtain or to pay for such coverage. Even if we obtain product liability insurance, it may prove inadequate to cover claims and/or costs related to potential litigation. The costs and availability of product liability insurance are unknown. Product liability claims or other claims related to our planned product, regardless of their outcome, could require us to spend significant time and money in litigation onto pay significant settlement amounts or judgments. Any successful product liability or other claim may prevent us from obtaining adequate liability insurance in the future on commercially desirable or reasonable terms. In addition, product liability coverage may cease to be available in sufficient amounts or at an acceptable cost. Any inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the commercialization of our planned product. A product liability claim could also significantly harm our reputation and delay market acceptance of our planned products. STRINGENT, ONGOING GOVERNMENT REGULATION AND INSPECTION OF OUR PLANNED PRODUCTSCOULD LEAD TO DELAYS IN MANUFACTURE, MARKETING AND SALES The FDA continues to review products even after they receive FDA approval. If and when the FDA approves our planned products, manufacturing and marketing will be subject to ongoing regulation, including compliance with current Good Manufacturing Practices, adverse reporting requirements and the FDA's general prohibitions against promoting products for unapproved or "off-label" uses. We and any third party manufacturers we may use are also subject to inspection and market surveillance by the FDA for compliance with these and other requirements. Any enforcement action resulting from failure to comply with these requirements could affect the manufacture and marketing of our planned products. In addition, the FDA can withdraw a previously approved product from the market at any time, upon receipt of newly discovered information. HEALTHCARE REFORM AND CONTROLS ON HEALTHCARE SPENDING MAY LIMIT THE PRICE WE CANCHARGE FOR OUR PLANNED PRODUCTS AND THE AMOUNT WE CAN SELL The federal government and private insurers have considered ways to change, and have changed, the manner in which healthcare services are provided in the United States. Potential approaches and changes in recent years include controls on healthcare spending and the creation of large purchasing groups. In the future, it is possible that the government may institute price controls and limits on Medicare and Medicaid spending. These controls and limits might affect the payments we collect from sales of our product, if and when it is commercially available. Assuming we succeed in bringing our product to market, uncertainties regarding future healthcare reform and private practices could impact our ability to sell our product in large quantities at profitable pricing. It is quite possible that new regulations could be proposed and adopted which could restrict marketing of our products. Although we are not presently aware of any such pending or proposed regulations, there is no assurance that they will not be enacted or imposed. UNCERTAINTY OF THIRD-PARTY REIMBURSEMENT COULD AFFECT OUR ABILITY TO SELL OURPLANNED PRODUCTS AT A PROFIT Sales of medical products largely depend on the reimbursement of patients' medical expenses by governmental healthcare programs and private health insurers. There is no guarantee that governmental healthcare programs or private health insurers will cover the cost of our product, if and when it is commercially available, or permit us to sell our product at a high enough price to generate a profit. OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR STOCK MORE DIFFICULT Since inception in 1996, we have engaged primarily in research and development, technology licensing, and raising capital. This limited history may not be adequate to enable you to fully assess our ability to develop and commercialize our planned products and to achieve market acceptance of our planned products and to respond to competition. WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES We have had annual losses since our inception in 1996. We expect to continue to incur losses until we can sell enough products at prices high enough to generate a profit. As of March 31, 2008, we had accumulated a deficit of approximately $(19,327,000). There is no assurance that our planned products will be commercially viable. There is no assurance that we will generate revenue from the sale of our planned products or that we will achieve or maintain profitable operations. 22 OUR STOCK PRICE IS VOLATILE AND YOUR INVESTMENT IN OUR SECURITIES COULD DECLINEIN VALUE, RESULTING IN SUBSTANTIAL LOSSES TO YOU The market price of our common stock, which is over the counter (National Quotation Bureau "Pink Sheets") under the symbol "RMCP", has been, and may continue to be, highly volatile. Factors such as announcements of product development progress, financings, technological innovations or new products, either by us or by our competitors or third parties, as well as market conditions within the medical devices industry may have a significant impact on the market price of our common stock. In general, medical device stocks tend to be volatile even during periods of relative market stability because of the high rates of failure and substantial funding requirements associated with medical device companies. Market conditions and conditions of the medical device sector could also negatively impact the price of our common stock. BECAUSE OUR STOCK IS CONSIDERED TO BE A "PENNY STOCK", YOUR ABILITY TO SELL YOUR STOCK MAY BE LIMITED The Penny Stock Act of 1990 requires specific disclosure to be made available in connection with trades in the stock of companies defined as "penny stocks". The Securities and Exchange Commission (SEC) has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. If an exception is unavailable, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risk associated therewith as well as the written consent of the purchaser of such security prior to engaging in a penny stock transaction. The regulations on penny stock may limit the ability of the purchasers of our securities to sell their securities in the secondary marketplace. ALTHOUGH WE BELIEVE THAT OUR SYSTEM OF DISCLOSURE CONTROLS AND INTERNAL CONTROLSOVER FINANCIAL REPORTING ARE ADEQUATE, SUCH CONTROLS ARE SUBJECT TO INHERENTLIMITATIONS. Although we believe that our system of disclosure controls and internal controls over financial reporting are adequate, we can not assure you that such controls will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected. MR. WHEET, OUR CEO AND A DIRECTOR, HAS VOTING CONTROL OF THE COMPANY AND CANUNILATERALLY MAKE BUSINESS DECISIONS FOR US. ALTHOUGH WE HAVE TWO OUTSIDEDIRECTORS, THERE ARE NO PROCEDURES IN PLACE TO RESOLVE POTENTIAL CONFLICTS ANDTO EVALUATE RELATED PARTY TRANSACTIONS THAT ARE TYPICALLY REVIEWED BY INDEPENDENT DIRECTORS. Because Mr. Wheet owns 1,000,000 Series 2006 Preferred shares, which gives him the right to vote 125,000,000 shares in addition to the shares of common stock he already owns, voting together as a single class with the Company's common stock., he controls a majority of the Company's common stock and can unilaterally make business decisions on our behalf. Although we recently appointed two outside directors, there are no procedures in place to resolve potential conflicts and evaluate related party transactions that are typically reviewed by independent directors. WE DO NOT EXPECT TO PAY DIVIDENDS We have not declared or paid, and for the foreseeable future we do not anticipate declaring or paying, dividends on our common stock. ITEM 3. CONTROLS AND PROCEDURES As of the end of the period covered by this report, being March 31,2008, the Company carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, our chief executive officer (who is also our principal financial officer) concluded that our disclosure controls and procedures are effective to cause the material information required to be disclosed by us in the reports that we file or submit under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Subsequent to the date of this evaluation, there have been no changes in the Company's internal controls or in other factors 23 that could significantly affect these controls, and no discoveries of any significant deficiencies or material weaknesses in such controls that would require the Company to take corrective action. See "RISK FACTORS" for a discussion of the inherent limitations of any system of controls and procedures. PART II-OTHER INFORMATION 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. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Equity transactions for the three months ended March 31, 2008 are incorporated herein by reference to Part I- Financial Information- Notes to Financial Statements- Note 5. "Preferred Stock and Common Stock Transactions." ITEM 3. CONTROLS AND PROCEDURES. The Company's disclosure controls and procedures are designed to ensure (i) that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms; and(ii) that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. 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 four CEO/CFO, evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules13a-15(e)) as of March 31, 2008. 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 effective at the reasonable assurance level. However, management's assessment identified the following material weaknesses : - As of March 31, 2008 there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles in the US ("GAAP") and the financial reporting requirements of the Securities and Exchange Commission. - As of March 31, 2008 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 March 31, 2008 there was a lack of segregation of duties, in that we only had one person 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 reason for the amendment of the interim financial reports was due to a later decision that the technology acquired did not have viable alternative uses, although it had originally been thought that it might have, and had it been determined that there were viable alternative uses the interim financial reports would have been correct. The Company also disclosed these weaknesses in our Form 10-KSB filed on April 24, 2008. We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis. We plan to further address these issues once we commence operations and are able to hire additional personnel in financial reporting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 24 31.1 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 b) Reports on Form 8-K None. 25 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: May 14, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ RONDALD L. WHEET Chief Executive Officer and Director May 14, 2008 -------------------- Rondald L. Wheet (Principal Executive Officer and Principal Accounting Officer) /s/ DR. THOMAS BEAHM Director May 14, 2008 --------------------- Dr. Thomas Beahm /s/ THOMAS O'BRIEN Director May 14, 2008 --------------------- Thomas O'Brien 26 </TEXT> </DOCUMENT>