U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Fiscal Year Ended: December 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Transition Period From To
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COMMISSION FILE NUMBER: 0 - 22083
GLOBAL MED TECHNOLOGIES, INC.
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(Name of small business issuer in its charter)
Colorado 84-1116894
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12600 West Colfax Suite C-420 Lakewood, Colorado 80215
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 238-2000
Securities to be registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.01 par value
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Class A Common Stock Purchase Warrants
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the Company was required to file such reports),
and (2) has been subject to such filing requirements for at least the past 90
days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and will not be contained, to the best of
Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $5,390,000
Aggregate market value of voting stock held by non-affiliates as of April 26,
2000: $10,816,562. Shares of common stock, $.01 par value, outstanding as of
April 26, 2000: 12,347,786.
Documents incorporated by reference: See Part IV, Item 13(a), and "EXHIBIT
INDEX" on page 37 for a listing of documents incorporated by reference into this
Annual Report on form 10-KSB.
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GLOBAL MED TECHNOLOGIES, INC.
FORM 10-KSB
DECEMBER 31, 1999
TABLE OF CONTENTS
PART I
Item Page
- ---- ----
1. Description of Business 3
2. Description of Property 10
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 11
PART II
5. Market for Common Equity and Related Stockholder Matters 11
6. Management's Discussion and Analysis 12
7. Financial Statements 18
8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure 18
PART III
9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16 (a) of the Exchange Act 19
10. Executive Compensation 22
11. Security Ownership of Certain Beneficial Owners and Management 27
12. Certain Relationships and Related Transactions 33
PART IV
13. Exhibits and Reports on Form 8-K 33
14. Signatures 34
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Global Med Technologies, Inc. was organized under the laws of the State of
Colorado in December 1989. The Company completed its initial public offering of
securities in the first quarter of 1997, from which it received net proceeds of
approximately $8,200,000 from the sale of 1,456,988 Units, each of which
consisted of two shares of common stock and one Class A Common Stock Purchase
Warrant (the Class A Warrants).
Formerly known as National MRO, Inc., which was founded in 1989, the Company
changed its name to Global Data Technologies, Inc. in 1995, in connection with
the merger of National MRO, Inc. and The Wyndgate Group, Ltd. (Wyndgate) in May
1995. Global Data Technologies, Inc changed its name again in May 1996 to Global
Med Technologies, Inc.
Wyndgate operates as a division of Global Med Technologies, Inc. and designs,
develops, markets and supports information management software products for
blood banks, hospitals, centralized transfusion centers and other healthcare
related facilities.
PeopleMed.com, Inc.
During 1999, Global Med Technologies, Inc. formed a majority-owned subsidiary,
PeopleMed.com, Inc., a Colorado corporation, to develop a software application
designed to give HMO providers and other third party payers access to clinical
information for chronic disease patients. This application will allow doctors
and other medical employees access to a patient's history.
PeopleMed.com will offer chronic disease management as an Application Service
Provider (ASP). PeopleMed.com's system uses the Internet to coordinate sources
and users of a patient's clinical information, including laboratory, pharmacy,
primary and specialty care providers, claims, and medical records. In addition
to the system's Internet capabilities, PeopleMed.com's information
infrastructure will also include interfaces to hand-held devices, fax machines,
alphanumeric pagers, interactive voice response, and many types of
patient-monitoring devices.
PeopleMed.com is owned 85% by Global Med Technologies, Inc. and 15% by third
parties including certain executive officers and directors of Global Med
Technologies, Inc. Global Med Technologies, Inc. and PeopleMed.com are referred
to collectively herein as the Company or Global Med.
Asia Markets
On March 20, 2000, the Company announced plans to expand into Asia, secure a
listing on the Hong Kong Growth Enterprise Market (GEM), and establish a
headquarters in Hong Kong by the end of the year. The Company would be one of
the first American technology companies to be listed on the GEM.
Global Med will introduce to the market two internet-based software applications
designed to improve patient care while promoting savings and efficiency.
PeopleMed.com incorporates, on a single real-time database, a range of crucial
information that providers and other medical professionals require to
successfully care for and manage the complex needs of chronic disease patients.
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SAFETRACE Tx.com (TM) provides hospitals and blood centers with a coordinated
system that fully integrates blood inventory, testing and management-improving
blood safety, reducing waste and improving patient care.
Related Parties
Global Med is effectively controlled by Online Credit International Limited
(Online International), formerly Heng Fung Holdings Company Limited, and its
subsidiary Online Credit Limited, formerly Heng Fung Finance Company Limited
(Online Credit) per the terms of the 1998 Financing Agreements described below.
In addition, Online International is a significant shareholder of Global Med.
Online International also is a majority shareholder of eVision USA.Com, Inc.
(eVision) and of a subsidiary of eVision, eBanker USA.com, Inc. (eBanker).
eVision holds warrants to purchase 1,000,000 shares of common stock of Global
Med at $0.25 per share. Global Med has outstanding balances on various financing
agreements with eBanker. eBanker owns a significant number of shares of common
stock of Global Med and holds warrants to purchase 9,000,000 shares of common
stock of Global Med at $0.25 per share. eVision has a wholly owned subsidiary,
American Fronteer Financial Corporation (American Fronteer or AFFC) which is a
broker dealer. Online International, Online Credit, eVision, eBanker and AFFC
are related parties to Global Med.
Debt Extensions
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loans and accrued interest
are not repaid in 270 days, ten-year warrants, convertible into common stock of
Global Med at an exercise price of $0.50 per share, will be issued to eBanker.
The number of common shares to be included in the warrant to be issued will be
equal to the entire principal and interest amount divided by the exercise price
of $0.50.
The bridge loan with eBanker of $750,000 matures on September 30, 2000. In April
2000, eBanker agreed to extend the due date to January 1, 2001. Payment of
interest was also extended to January 1, 2001. Global Med agreed to pay a fee of
22,222 shares of its common stock. Based on the market price of the stock on the
date of the agreements, the shares have a value of $37,500, which will be
recorded as deferred financing costs and amortized over the extension period.
Global Med is in the process of negotiating possible alternative financing
arrangements.
Financing Agreements - 1999
In March 1999, the Company entered into agreements for a comprehensive financing
package (March 1999 Financing Agreements) that included: (1) an $8,000,000
preferred stock private placement through American Fronteer; (2) exercise of
2,000,000 warrants at $0.25 per warrant; (3) an extension of the balance of
$2,650,000 on the line of credit with eBanker, until April 15, 2000, with a
change in the default conversion rate from $0.05 per share contained in the
original loan agreement to $0.25 per share; and (4) a $750,000 bridge loan,
which bears interest at 12% per annum. The agreement with AFFC for the proposed
$8,000,000 preferred stock private placement was withdrawn and terminated
effective September 20, 1999.
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Online Credit surrendered a promissory note in the amount of $500,000 in
exercise of the warrants to acquire 2,000,000 shares of common stock of the
Company. This transaction was completed on April 29, 1999.
The $2,650,000 loan from eBanker was extended until April 15, 2000, with the
previous conversion price of $0.05 per share increased to $0.25 per share. In
consideration for the extension, the Company paid a 2% fee to eBanker of
$53,000, payable in 42,400 shares of the Company's common stock. As discussed
above, the principal and interest on this loan have been extended to January
2001.
The $750,000 bridge loan, as revised on May 7, 1999, bears interest at 12% and
is convertible into shares of common stock of the Company at the 15-day average
closing bid price prior to the date of conversion. The loan was due and payable
December 31, 1999. In consideration of the original commitment for the bridge
loan, the Company paid a fee of 2% or $15,000 payable in 13,275 shares of common
stock of the Company. The maturity date has been extended from December 31, 1999
to September 30, 2000 in consideration of a fee of an additional 13,275 shares
of common stock of Global Med and a change in the conversion rate to $0.50 per
share. As discussed above, the principal and interest on this loan have been
extended to January 2001.
In April 1999, the Company entered into an agreement with Online Credit for a
bridge loan in the amount of $2,000,000 (April 1999 Financing Agreement). The
agreement provides for a line of credit, with interest at 12% per annum payable
monthly, due April 12, 2000. As consideration for the line of credit, the
Company agreed to pay a fee equal to 5% of the total line of credit in 86,957
shares of common stock of the Company, payable as of April 13, 1999. The line of
credit will be convertible, at Online Credit's option, into shares of the
Company's common stock at a price $1.15 per share.
In September 1999, the Board of Directors voted to replace the $2,000,000 bridge
loan with Online Credit, at the request of Online Credit, with a line of credit
with similar terms with eBanker. The eBanker line of credit will be convertible
into shares of common stock of the Company at a price based on the average
closing bid price of the common stock for a period of fifteen business days
prior to conversion. In exchange for assuming the commitment, the 86,957 shares
of common stock of Global Med were transferred to eBanker. As of April 6, 2000,
the Company had drawn $1,700,000 on this line of credit. eBanker has committed
to allow Global Med to draw the remaining $300,000 available on the line of
credit. As discussed above, the principal and interest on this loan have been
extended to January 2001.
Lockup Agreement
On October 25, 1999, Company entered into a Lockup Agreement with eBanker and a
Lockup Agreement with eVision. The agreements provide that eBanker and eVision
will not, between October 25, 1999 and October 28, 2000, without the Company's
prior written consent, publicly offer, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, (i) Warrants
to purchase 9,000,000 shares of the Company's common stock at $0.25 per share
held by eBanker or the Warrants to purchase 1,000,000 shares of the Company's
common stock at $0.25 per share held by eVision and (ii) any shares (the
"Shares," and, together with the Warrants, the "Securities") of common stock
issuable upon the exercise of the Warrants; provided, however, that eBanker or
eVision may offer, sell, contract to sell, grant
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an option for the sale of, or otherwise dispose of all or any part of the
Securities or other such security or instrument of the Company during such
period if such transaction is private in nature and the transferee of such
Securities or other securities or instruments agrees, prior to such transaction,
to be bound by all of the provisions of the lockup agreements. In exchange for
entering into the agreements, eBanker and eVision were issued 450,000 shares and
50,000 shares of common stock of the Company, respectively. The shares had a
value of $296,875 on October 25, 1999, which is being amortized over the term of
the agreement.
In addition, the agreements provide that (i) eBanker and eVision will not be
restricted from disposing of the Securities in the event that an unaffiliated
third party commences a tender offer for the outstanding common stock, and (ii)
eBanker and eVision will not be restricted from disposing of 450,000 and 50,000
shares, respectively, of the Securities in the aggregate if the closing sale
price for the common stock on the principal market on which it then trades
equals or exceeds $5.00 per share for any ten consecutive trading day period
preceding the date of such sale, and (iii) that there will be no restrictions
upon the ability of eBanker or eVision to exercise the Warrants.
Extensions of Other Warrants
On June 2, 1999, the Board of Directors authorized the extension of certain
warrants. These warrants to purchase 187,800 shares of common stock of Global
Med at $3.75 per share were originally granted on June 26, 1996 and were
exercisable for a period of three years, through June 26, 1999. The expiration
date was extended to June 26, 2004 by the Board of Directors. All other terms
remained the same. Using the Black Scholes model for estimating fair value, the
Company recognized $238,000 of financing costs expense on this transaction in
1999.
On December 22, 1999, the Board of Directors extended the exercise period of its
previously issued 1,456,988 Class A Warrants from February 11, 2000 to February
11, 2003. The Company also reduced the exercise price of these warrants from
$4.55 to $3.00 per share. Using the Black Scholes model for estimating fair
value, this resulted in expense to the Company of $899,800, which was recognized
in 1999.
AFFC, the Company's original underwriter, was issued warrants to acquire 46,100
units exercisable at $11.55 per Unit until January 14, 2002. Each Unit consists
of two shares of common stock and a warrant to purchase one share of common
stock at $7.51 per share. The Company extended the underwriter's warrants until
February 11, 2003, but did not reduce the exercise price of the underwriter's
warrants. Using the Black Scholes model for estimating fair value, this resulted
in an expense of $78,000, which was recognized in 1999.
Consulting Agreement
The Company entered into a Consultancy Agreement, effective as of February 24,
2000, for a period of twenty-four (24) months, with National Financial
Communications Corporation, dba OTC Financial Network (OTC Financial). OTC
Financial will provide consulting services, with the expressed intent and goal
of getting the Company, or its successor or assigns, listed on the Nasdaq Stock
Market which include providing financial community and investor relations for
the Company; and advising the Company, as requested, regarding financial
community and investor relations.
Upon execution of this agreement, the Company agreed to: (a) issue to OTC
Financial 250,000 shares of restricted common stock of the Company, 125,000 of
which are to be included in a registration statement intended to be filed upon
the completion of the Company's financial statements as of and for the year
ended December 31, 1999; and (b) deposit into an escrow account, in the name of
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OTC Financial, an additional 250,000 shares of restricted common stock of the
Company, 125,000 of which are to be included in the registration statement
intended to be filed upon the completion of the Company's financial statements
as of and for the year ended December 31, 1999. Upon the Company's listing on
the Nasdaq Stock Market, the stock held by the escrow will be released to OTC
Financial.
The shares of common stock held in the escrow account may be returned to Company
in the event of: (a) the term of the consultancy agreement should expire before
the Company is listed on the Nasdaq Stock Market; or (b) the agreement is
terminated before the Company is listed on the Nasdaq Stock Market; or (c) the
Company gives notice to OTC Financial of OTC Financial's breach of the
agreement.
BUSINESS OF Company
Principal Products and Their Markets
The Company designs, develops, markets and supports information management
software products for blood banks, hospitals, centralized transfusion centers
and other health care related facilities. Revenues are derived from the
licensing of software, the provision of consulting and other value added support
services and the resale of hardware and software obtained from vendors. On
December 15, 1997, the Company sold its DataMed International division (DataMed)
which was in the business of substance abuse testing management services.
The Company has completed the development of SAFETRACE(R) and SAFETRACE TX(TM),
a transfusion management information system that is designed to be used by
hospitals and centralized transfusion centers to help insure the quality of
blood transfused into patient-recipients. SAFETRACE TX(TM) provides electronic
cross-matching capabilities to help insure blood compatibility with
patient-recipients and will track, inventory, bill and document all activities
with blood products from the time blood products are received in inventory to
the time the blood products are used or returned to blood centers. Management
expects SAFETRACE TX(TM) will complement SAFETRACE(R) as the combined SAFETRACE
TX(TM) and SAFETRACE(R) software system will be able to integrate hospitals with
blood centers and provide a "vein-to-vein"(TM) tracking of the blood supply.
SAFETRACE TX(TM) entered beta testing on April 6, 1998. Upon completion of beta
testing, a 510(k) submission of SAFETRACE TX(TM) was made to the FDA. FDA
clearance was received January 29, 1999.
Founded in 1984, Wyndgate initially developed a Student Information System
(SIS), an integrated software package for colleges and universities to track
student information. Pursuant to an agreement with eight California blood
centers (the Royalty Group), Wyndgate began development of a blood tracking
system called SAFETRACE(R) to assist community blood centers, hospitals, plasma
centers and outpatient clinics in the U.S. in complying with the quality and
safety standards of the FDA for the collection and management of blood and blood
products.
The Company continues to concentrate its development efforts on enhancements to
its existing SAFETRACE(R) blood bank product and SAFETRACE TX(TM), Wyndgate's
transfusion management information system software product was completed in
1998. The Food and Drug Administration (FDA) cleared both products for sale in
the United States. The Company's development of SAFETRACE TX(TM) began in 1996.
In 1999, the Company introduced PeopleMed.com which will provide chronic disease
management services as an Application Service Provider (ASP). PeopleMed.com's
system uses the Internet to coordinate sources and users of a patient's clinical
information, including laboratory, pharmacy, primary and specialty care
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providers, claims, and medical records. In addition to the system's Internet
capabilities, PeopleMed.com's information infrastructure will also include
interfaces to hand-held devices, fax machines, alphanumeric pagers, interactive
voice response, and many types of patient-monitoring devices.
Competition
Currently, Wyndgate is aware of four primary competitors to its SAFETRACE(R)
software product, includinG MAK-SYSTEM Corp. from France, Information Data
Management, Inc., Blood Bank Computer Systems, Inc., and Systec Computer
Associates from the United States. There are two primary competitors in the
United States to its SAFETRACE TX(TM) product, MEDIWARE Information Systems,
Inc. and Cerner Corp. Some of these competitors are larger and have greater
resources than the Company. The Company believes it is able to compete on the
basis of the capabilities of the technology currently available in SAFETRACE(R)
and SAFETRACE TX(TM).
Dependence on Major Customers
The Company, through its Wyndgate division, currently has 30 SAFETRACE(R)
customers (including the Royalty Group) and 10 SAFETRACE TX(TM) customers with
over 130 sites in the United States. It intends TO continue to target domestic
and international blood centers, plasma centers and hospital donor and
transfusion centers.
In April 1999, the Company entered into a termination agreement with a former
customer who had previously licensed multiple sites for SAFETRACE(R). The
agreement resolved all outstanding contractuaL issues and resulted in payments
to the Company during 1999 of approximately $919,000, or approximately 17% of
revenue.
During the year ended December 31, 1998, three customers, The Institute for
Transfusion Medicine, Pittsburgh, Pennsylvania, Gulf Coast Regional Blood
Center, Houston, Texas, and Haemonetics Corporation, Braintree, Massachusetts,
each accounted for 19%, 12%, and 12%, respectively, of the Company's total
revenues from continuing operations. Accounts receivable from the above
customers as of December 31, 1998 was approximately $198,000. There were no
accrued revenues from the above
customers as of December 31, 1998.
ROYALTY AGREEMENTS
The Royalty Group. Pursuant to a development agreement between Wyndgate and the
Royalty Group, Wyndgate developed SAFETRACE(R) and must make royalty payments to
the Royalty Group based on a percentage of Wyndgate's SAFETRACE(R) license fees
collected, measured by cash received from SAFETRACE(R) licensees, net of certain
fees and charges. The time period under the royalty schedule is based upon the
first date of SAFETRACE(R) license invoicing, which was September 14, 1995. The
royalty amounts are computed as a percentage of software license fees collected.
Institute For Transfusion Medicine. Pursuant to a Development Agreement
(Development Agreement) dated July 1996, between the Company and The Institute
for Transfusion Medicine (ITxM), the Company agreed to develop and has completed
the development of Commercial Centralized Transfusion System Software
(Commercial CTS Software), which is Wyndgate's SAFETRACE TX(TM) software
product. The Development Agreement provided for a royalty payment to ITxM for
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revenues received from the sale of the Commercial CTS Software, net of certain
fees and charges. The royalty period started with the first commercial transfer
for value of the Commercial CTS Software which was on March 31, 1999.
The Development Agreement further granted ITxM a non-exclusive, perpetual and
fully-paid license to operate SAFETRACE TX (TM) for internal use, which includes
companies which ITxM controls as defined in the Development Agreement and
companies which ITxM has the ability to cause the direction of management,
whether through ownership of voting securities, by contract or otherwise.
In January 1998, the Company and ITxM agreed (the January 1998 Agreement) that
the Company would not be required to pay monetary penalties, accrued in 1997, in
the approximate amount of $485,000, to ITxM, which were incurred as a result of
delays in development of SAFETRACE TX(TM), in consideration of the Company
providing to ITxM additional maintenance services and product upgrades and
substitute liquidated damage provisions for delays.
With receipt of FDA clearance, the Development Agreement with ITxM expired and
is survived by certain provisions regarding royalty payments, operating license,
indemnification and confidentiality.
Ortho-Clinical Diagnostics, Inc. In 1996, the Company entered into an
Exclusivity and Software Development agreement (the Exclusivity Agreement) with
Ortho-Clinical Diagnostics, Inc. (OCD), successor to Ortho Diagnostic Systems
Inc., a wholly owned subsidiary of Johnson & Johnson. The Exclusivity Agreement
provided OCD the exclusive right to negotiate with the Company with respect to
the Company's activities and developments in information technology and
intellectual property relating to donor and transfusion medicine. In connection
with this agreement, the Company received $500,000 in 1996.
In May 1997, the Company received a request from OCD to continue its evaluation
of the Company's technology, on a non-exclusive basis, with the intent of
responding to the Company by July 14, 1997 regarding whether or not OCD would
propose some form of transaction with the Company. The Company received an
additional $500,000 from OCD during 1997. The Company and OCD agreed to further
extensions of this non-exclusive agreement through December 31, 1998 to enable
OCD to complete its strategic evaluation. The Company also agreed to perform
certain software development services. In connection with the extension to
December 31, 1998, the parties agreed that OCD had until June 30, 1999, to elect
to require the Company to provide the software development services as defined
in the Exclusivity Agreement. The Company finalized the Manufacturer's
Representative and Software Development Agreement (OCD Agreement) during June
1999 making OCD the exclusive in-vitro diagnostics manufacturer's representative
for the SAFETRACE TX (TM) product in defined territories around the world. The
total of $1,000,000 which was included in deferred revenue as of December 31,
1998 is being recognized as follows: $500,000 is being recognized ratably over
the term of the two year contract and $500,000 will be recognized upon
completion of development work in the future as mutually agreed.
GOVERNMENT APPROVAL AND REGULATION
The FDA requires all blood tracking application software vendors to submit a
510(k) application for review. The application process for FDA review and
compliance with FDA guidelines relates to computer software products regulated
as medical devices. The FDA considers software products intended for the
following to be medical devices: (i) use in the manufacture of blood and blood
components; or (ii) maintenance of data used to evaluate the suitability of
donors and the release of blood or blood components for transfusion or further
manufacturing. As medical device manufacturers, the Company and its competitors
are required to register with the Center for Biologics Evaluation and Research
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("CBER"), list their medical devices, and submit a pre-market notification or
application for pre-market review. In April 1997, the Company's Wyndgate
division received notification from the FDA of its finding of "substantial
equivalence" of SAFETRACE(R). This determination provides a 510(k) clearance and
permits the Company to continue to market SAFETRACE(R). On January 29, 1999, the
510(k) clearance was received for SAFETRACE TX(TM).
The Company's products and services are subject to regulations adopted by
governmental authorities, including the FDA, which governs blood center computer
software products regulated as medical devices. The Company is also required to
follow applicable Quality System Regulations (QSR) of the FDA, which include
testing, control and documentation requirements, as well as similar requirements
in other countries, including International Standards Organization (ISO) 9001
standards.
RESEARCH AND DEVELOPMENT
During the years ended December 31, 1999 and 1998, the Company incurred
approximately $334 thousand and $1.973 million, respectively, for research and
development expenses associated with the Company's software products. Research
and development expenses are anticipated to continue to be a substantial portion
of the Company's operating expenses. The Company's SAFETRACE TX(TM) product
achieved technological feasibility in April 1998, and accordingly, the Company
capitalized $1.049 million and $1.104 million associated with this product in
1999 and 1998, respectively.
EMPLOYEES
As of December 31, 1999, the Company had 34 full-time employees, consisting of 2
employees in the corporate offices in Denver, Colorado and 32 at Wyndgate's
offices near Sacramento, California. The Company has employment agreements with
certain personnel. The Company's employees are not represented by a labor union
or subject to collective bargaining agreements. The Company has never
experienced a work stoppage and believes that its employee relations are
satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
At January 1, 1999, the Company occupied two primary locations. The Company
occupied approximately 3,439 square feet of office space in Lakewood, Colorado
pursuant to a lease that expires on December 31, 2000. The Company also leased
approximately 22,000 square feet of office space in Rancho Cordova, California
for its Wyndgate division pursuant to a lease that would have expired on
September 7, 2002. In February 1999, the Company terminated its lease of office
space in Rancho Cordova, California.
In January 1999, the Company re-negotiated its lease in Lakewood, Colorado. The
new lease is for approximately 1,252 square feet of office space and the lease
expires on February 14, 2002. The former office space has been subleased. The
Company leased approximately 15,000 square feet of office space in El Dorado
Hills, California, at a lower rate for a term of 86 months, ending May 31, 2006.
Neither of these transactions resulted in significant lease termination
penalties or costs.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings that management believes to
be material, and there are no such proceedings that are known to be
contemplated.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Units sold by the Company in its initial public offering, each of which
consisted of two shares of common stock and one warrant, commenced trading on
the Nasdaq Small-Cap Market on February 12, 1997. On March 13, 1997, the common
stock and warrants included in the Units began to trade separately and the Units
ceased to trade. On February 9, 1998, the Company's common stock and warrants
were delisted from the Nasdaq Small-Cap Market, and commenced trading on the
Bulletin Board.
The following table sets forth the quarterly high and low bid prices for the
Company's common stock for the two years ended December 31, 1999. The quotations
reflect inter-dealer prices, with retail markup, markdown or commissions, and
may not represent actual transactions.
COMMON STOCK
Fiscal Quarter Ended: High Low
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December 31, 1999 ........................... $ 0.8438 0.4375
September 30, 1999 .......................... 1.2813 0.6562
June 30, 1999 ............................... 1.8750 0.9063
March 31, 1999 .............................. 2.6250 0.7812
December 31, 1998 ........................... 1.0630 0.5313
September 30, 1998 .......................... 1.3130 0.6562
June 30, 1998 ............................... 1.7810 1.0000
March 31, 1998 .............................. 2.0000 0.7812
Holders
As of December 31, 1999, the Company had approximately 105 holders of record of
the Company's common stock, excluding those held in street name.
Dividends
The payment of dividends by the Company is within the discretion of its Board of
Directors and depends in part upon the Company's earnings, capital requirements
and financial condition. Since its inception, the Company has not paid any
dividends on its common stock and does not anticipate paying such dividends in
the foreseeable future. The Company intends to retain earnings, if any, to
finance its operations.
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Recent Sales of Unregistered Securities
During the year ended December 31, 1999, Global Med issued 655,907 shares of
common stock in payment of financing fees. The issuance of shares for payment of
financing fees were made in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (1933 Act).
The purchaser had access to full information concerning the Company. The
certificates for the shares contain a restrictive legend advising that the
shares may not be offered for sale, sold or otherwise transferred without having
first been registered under the 1933 Act or pursuant to an exemption from
registration under the 1933 Act. No underwriters were involved in the
transaction.
In August 1999 and October 1999, Global Med issued a total of 100,000 shares of
its common stock to a director in exchange for services. The issuances of shares
in exchange for services were made in reliance upon the exemption from
registration provided by Section 4(2) of the 1933 Act. The purchaser had access
to full information concerning the Company. The certificates for the shares
contain a restrictive legend advising that the shares may not be offered for
sale, sold or otherwise transferred without having first been registered under
the 1933 Act or pursuant to an exemption from registration under the 1933 Act.
No underwriters were involved in the transaction.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
The Company designs, develops, markets and supports information management
software products for blood banks, hospitals, centralized transfusion centers
and other healthcare related facilities. Revenues for Wyndgate are derived from
the licensing of software, the provision of consulting and other value-added
support services and the re-sale of hardware and software obtained from vendors.
Debt Extensions
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loans and accrued interest
are not repaid in 270 days, ten-year warrants, convertible into common stock of
Global Med at an exercise price of $0.50 per share, will be issued to eBanker.
The number of common shares to be included in the warrant to be issued will be
equal to the entire principal and interest amount divided by the exercise price
of $0.50.
The bridge loan with eBanker of $750,000 matures on September 30, 2000. In April
2000, eBanker agreed to extend the due date to January 1, 2001. Payment of
interest was also extended to January 1, 2001. Global Med agreed to pay a fee of
22,222 shares of its common stock. Based on the market price of the stock on the
date of the agreements, the shares have a value of $37,500, which will be
recorded as deferred financing costs and amortized over the extension period.
Global Med is in the process of negotiating possible alternative financing
arrangements.
In March 1999, the Company entered into agreements for a comprehensive financing
package that included: (1) an $8,000,000 preferred stock private placement
through AFFC, (2) exercise of 2,000,000 warrants at $0.25 per warrant; (3) an
extension of the balance on the line of credit with eBanker, until April 15,
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2000, with a change in the default conversion rate from $0.05 per share
contained in the original loan agreement to $0.25 per share; and (4) a $750,000
bridge loan which bears interest at 12% per annum. The agreement with AFFC for
the proposed $8,000,000 preferred stock private placement was withdrawn and
terminated effective September 20, 1999. Online Credit surrendered a promissory
note in the amount of $500,000 in exercise of the warrants to acquire 2,000,000
shares of common stock of the Company. This transaction was completed in April
1999.
The $2,650,000 loan from eBanker was extended until April 15, 2000, with the
previous conversion price of $0.05 per share increased to $0.25 per share. In
consideration for the extension until April 15, 2000, the Company paid a 2% fee
to AFFC of $53,000, payable in shares of the Company's common stock. eBanker has
agreed to extend the due date until April 2001. As discussed above, the
principal and interest on this loan have been extended to January 2001.
The $750,000 bridge loan, as revised on May 7, 1999, bears interest at 12% and
is convertible into shares of common stock of the Company at the 15-day average
closing bid price prior to the date of conversion. The loan was due and payable
December 31, 1999. In consideration of the original commitment for the bridge
loan, the Company paid a fee of 2%, or $15,000, payable in 13,275 shares of
common stock of the Company. The maturity date has been extended from December
31, 1999 to September 30, 2000 in consideration of a fee of an additional 13,275
shares of common stock of Global Med and a change in the conversion rate to
$0.50 per share. As discussed above, the principal and interest on this loan
have been extended to January 2001.
In April 1999, the Company entered into an agreement with Online Credit for a
bridge loan in the amount of $2,000,000 (April 1999 Financing Agreement). The
agreement provides a line of credit, with interest at 12% per annum payable
monthly, due April 12, 2000. As consideration for the line of credit, the
Company paid a fee equal to 5% of the total line of credit in shares of common
stock of the Company. The line of credit was convertible, at Online Credit's
option, into shares of the Company's common stock at a price of $1.15 per share.
In September 1999, the Board of Directors voted to replace the $2,000,000 bridge
loan with Online Credit, at the request of Online Credit, with a line of credit
with similar terms with eBanker. The eBanker line of credit will be convertible
into shares of common stock of the Company at a price based on the average
closing bid price of the common stock for a period of fifteen business days
prior to conversion. In exchange for assuming the commitment, the 86,957 shares
of common stock of Global Med were transferred to eBanker. At December 31, 1999,
$1,000,000 was outstanding on this line of credit. As of April 6, 2000, the
Company had drawn a total of $1,700,000. eBanker has committed to allow Global
Med to draw the remaining $300,000 available on the line of credit. As discussed
above, the principal and interest on this loan have been extended to January
2001.
On June 2, 1999, the Board of Directors authorized the extension of certain
warrants. These warrants to purchase 187,800 shares of common stock of Global
Med at $3.75 per share were originally granted on June 26, 1996 and were
exercisable for a period of three years, through June 26, 1999. The expiration
date was extended to June 26, 2004 by the Board of Directors. All other terms
remained the same. Using the Black Scholes model for estimating fair value, the
Company recognized $238,000 of financing costs expense on this transaction in
1999.
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On December 22, 1999, the Board of Directors extended the exercise period of its
previously issued 1,456,988 Class A Warrants from February 11, 2000 to February
11, 2003. The Company has also reduced the exercise price of these warrants from
$4.55 to $3.00 per share. Using the Black Scholes model for estimating fair
value, this resulted in expense to the Company of $899,800, which was recognized
in 1999.
AFFC, the original underwriter, has warrants to acquire 46,100 units exercisable
at $11.55 per unit until February 11, 2002. Each Unit consists of two shares of
common stock and a warrant to purchase one share of common stock at $7.51 per
share. The Company will extend the underwriter's warrants until February 11,
2003, but will not reduce the exercise price of the underwriter's warrants.
Using the Black Scholes model for estimating fair value, this resulted in an
expense of $78,000, which was recognized in 1999.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
RESULTS OF OPERATIONS
Revenues. Revenues are comprised of software sales and consulting revenues, and
the re-sale of hardware and software obtained from vendors.
Revenues from software sales and consulting increased in total by $716 thousand,
or 16%, to $5.155 million for the year ended December 31, 1999 compared to
$4.439 million for the year ended December 31, 1998. The Company received $919
thousand of accelerated software license fee payments in connection with the
termination of a multiple site customer agreement that was replaced by two
separate agreements. Also, during 1999, the Company began to recognize $500,000
of revenues from OCD, which is being amortized over a two year period ending
June 2001. These increases in revenues were partially offset by decreases in
sales resulting from the delays in purchasing decisions by potential customers
in 1999 due to Year 2000 considerations. SAFETRACE TX(TM) achieved FDA clearance
in 1999 and was first marketed mid-year. The Company's sales efforts shifted
focus to this product, as there is a larger market and more opportunity for
sales of SAFETRACE TX(TM).
Cost of Revenues. Cost of revenues as a percentage of total revenues was 55% and
47% for the year ended December 31, 1999 and 1998, respectively. The increased
cost of revenues experienced in 1999 was due to the increased levels of
personnel re-assigned to direct contract service from other departments.
Resulting gross profit as a percentage of total revenue was 45% and 53% for 1999
and 1998, respectively.
General and Administrative. General and administrative expenses increased
$662,000, or 37.4%, to $2.431 million for 1999 compared to $1.769 million for
1998. The increase in general and administrative expenses was attributable
primarily to increases in labor costs, legal fees, and professional services.
Legal fees and other professional services increased $377,000 due to costs
associated with the finalization of the OCD Agreement, the contract termination
described above, the collection of a past due note receivable, drafting of
standard license agreements for SAFETRACE TX(TM), among others, which was
partially offset by a decrease in bank fees and charges of $125,000.
In March 1998, the Company reduced its number of employees by approximately 28%.
When SAFETRACETX(TM) received FDA clearance in January 1999, the Company began
increasing its employee base to prepare to provide sales, customer service, and
product enhancements to purchasers of SAFETRACETX(TM). The Company had not
reached its previous employment levels when, during 1999, the software industry
experienced delays in customer purchasing decisions due to the Year 2000
concerns. As a result, the Company reduced its work force again by approximately
52% in October 1999. The increase in labor costs from 1999 to 1998 was
approximately $710,000 which was partially offset by a decrease in employee
benefits of $109,000 and a decrease in other contracted services of $196,000.
Sales and Marketing. Sales and marketing expenses were $972,000 and $975,000 for
1999 and 1998, respectively. SAFETRACE TX(TM) has a larger market and more
opportunity for sales than SAFETRACE. Consequently, the Company utilized
existing resources with a shift in emphasis towards the new SAFETRACE TX(TM)
product.
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Research and Development. Research and development expenses decreased $1.639
million, or 83.1%, from 1999 to 1998. The decrease in research and development
expenses was primarily due to SAFETRACE TX(TM) achieving technological
feasibility and the resulting capitalization of software development costs until
such time as the product is released to the general public. Capitalized software
development costs increased to $1.566 million, net of accumulated amortization,
from $920 thousand, net of accumulated amortization, as of December 31, 1999 and
1998, respectively. Management anticipates research and development costs will
continue to be substantial. Management's plans for the Company's future software
products and services require continual research and development expenditures in
order to continue to capitalize on the Company's existing technological base and
its existing software development capabilities.
Restructuring Charges. In March 1998, the Company underwent a restructuring and
reorganization which was implemented to reduce general and administrative
expenses in such areas as payroll, outside contract services, various health
related items, leased office space and others as well. Restructuring expenses
were incurred in the amount of $132,000 for the year ended December 31, 1998.
All of these expenses had been paid as of December 31, 1998.
Interest Income. Interest income increased $99,000 from 1998 to 1999. This
increase was primarily due to interest income recognized on the collection of a
past due note receivable which had been but was totally reserved.
Interest Expense. Interest expense increased $365,000 from 1998 to 1999. This
increase was primarily due to the increase in debt from the 1999 and 1998
Financing Agreements.
Financing Costs. On April 14, 1998, the Company entered into two financing
agreements that provided for the issuance of warrants to purchase a total of
12,000,000 shares of the Company's common stock at $0.25 per share, for a period
of ten years. The issuance of the warrants resulted in deferred financing costs
of $10.680 million which were amortized to financing costs over the term of the
agreements, which both expired on April 15, 1999. For the years ended December
31, 1999 and 1998, the Company recognized $ 4.822 million and $6.031 million,
respectively, in financing costs expense associated with these financings.
During 1999, the Company incurred additional financing costs expense of $1.217
million related to the extensions of exercise periods of warrants and the
extensions of due dates for loans and lines of credit.
Other. Other income (expense) decreased to $256,000 from $355,000 from 1999 to
1998. In 1999, other income was primarily due to collection of a past due note
receivable in the amount of $250,000. The note receivable had been fully
reserved for in prior years. Other income in 1998 was primarily due to an
adjustment in 1998 for potential estimated losses accrued in prior years in
connection with the discontinued operations of DataMed. During 1998, the
provision for estimated losses of $421,000 was reversed and recorded in other
income.
Loss from Operations. The Company's loss from operations during 1999 as compared
to 1998 decreased $692 thousand. The loss from operations includes the
recognition of a total of $6.039 million and $6.031 million of financing costs
as of December 31, 1999 and 1998, respectively. Loss from operations before
other income (expense) decreased $1.065 million to $1.814 million from the
$2.879 million loss for 1998 due to increased sales and significantly reduced
expenses. During the first quarter of 1998, management began the implementation
of a cost reduction program which, as it was anticipated, assisted in
management's efforts to reduce the Company's operating expenses and operating
losses. Management implemented further reductions in October 1999.
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LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $330,000 as of December 31, 1999
compared to $821,000 at December 31, 1998, none of which was restricted. In
light of the Company's current cash position, financing activities, and
projected cash flow, management believes the Company has the financial
resources, or can obtain the financial resources, to maintain its planned level
of operations for the next twelve months, although the Company anticipates that
it will continue to incur operating losses, negative cash flows and capital
expenditures during that period.
It is expected that the net proceeds generated by the financing agreements and
the commitments are sufficient to fund the Company's liquidity and capital
requirements in the short term excluding acquisitions or major new product
development initiatives. Management anticipates that the net proceeds from the
financing agreements, proceeds from the exercise of warrants, and any future
financing activities will be used to fund the Company's anticipated research and
development costs, sales and marketing efforts, and negative cash flows during
the remainder of 2000 and for general working capital purposes.
The Company had a net working capital deficit of $2.127 million as of December
31, 1999 and $2.528 million at December 31, 1998.
The Company used $1.285 million in net cash for operating activities during
1999, compared to $3.228 million of net cash used during 1998. The cash used in
operations of $1.285 million during 1999 consisted primarily of the net loss of
$7.945 million, offset by the amortization of noncash deferred financing costs
of $4.822 million, noncash issuances of common stock, options and warrants of
$1.328 million, and depreciation and amortization.
Net cash used by investing activities was $1.261 million during 1999 compared to
net cash used by investing activities during 1998 of $1.101 million. The Company
invested $1.049 million in software development during 1999.
Net cash provided by financing activities was $2.055 million and $2.780 million
during 1999 and 1998, respectively. These amounts primarily include proceeds
from the 1999 Financing Agreements.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement was effective for all fiscal
quarters beginning after June 15, 1999. In July 1999, the FASB issued Statement
No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133. This Statement defers the
effective date of Statement No. 133 to all fiscal quarters of all fiscal years
beginning after June 15, 2000. The Company has not completed its evaluation of
the impact of this Statement.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-KSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and the Company
intends that such forward-looking statements be subject to the safe harbors for
such statements under such sections. The Company's forward-looking statements
include the plans and objectives of management for future operations, including
plans and objectives relating to the Company's planned marketing efforts and
future economic performance of the Company. The forward-looking statements and
associated risks set forth in this Annual Report on Form 10-KSB include or
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relate to: (i) the ability of the Company to obtain a meaningful degree of
consumer acceptance for its software products and proposed software products,
(ii) the ability of the Company to market its software products and proposed
software products on a national and international basis at competitive prices,
(iii) the ability of the Company's software products and proposed software
products to meet government regulations and standards, (iv) the ability of the
Company to develop and maintain an effective national and international sales
network, (v) success of the Company in forecasting demand for its software
products and proposed software products, (vi) the ability of the Company to
maintain pricing and thereby maintain adequate profit margins, (vii) the ability
of the Company to achieve adequate intellectual property protection for the
Company's software products and proposed software products, (viii) the ability
of the Company and its customers to successfully and timely implement the
Company's software products, and (ix) possible changes in customer software
buying patterns due to Year 2000 issues.
The forward-looking statements herein are based on current expectations that
involve a number of risk and uncertainties. Such forward-looking statements are
based on assumptions that the Company will market and provide software products
on a timely basis, that there will be no material adverse competitive or
technological change in condition of the Company's business, that demand for the
Company's software products will significantly increase, that the Company's
Chief Executive Officer will remain employed as such by the Company, that the
Company's forecasts accurately anticipate market demand and that there will be
no material adverse change in the Company's operations, business or governmental
regulation affecting the Company or its suppliers. The foregoing assumptions are
based on judgments with respect to, among other things, future economic,
competitive and market conditions, and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the Company's control. Accordingly, although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any such
assumption could prove to be inaccurate and therefore there can be no assurance
that the results contemplated in forward-looking statements will be realized. In
addition, as disclosed elsewhere in this Annual Report on Form 10-KSB, there are
a number of other risks inherent in the Company's business and operations which
could cause the Company's operating results to vary markedly and adversely from
prior results or the results contemplated by the forward-looking statements.
Growth in absolute and relative amounts of cost of sales, research and
development, sales and marketing and other operating expenses or the occurrence
of other events could cause actual results to vary materially from the results
contemplated by the forward-looking statements. Management decisions, including
budgeting, are subjective in many respects and periodic revisions must be made
to reflect actual conditions and business developments, the impact of which may
cause the Company to alter its marketing, capital investment and other
expenditures, may also materially and adversely affect the Company's liquidity,
financial position and results of operations. In light of significant
uncertainties inherent in the forward-looking information included in this
Annual Report on Form 10-KSB, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
Company's objectives or plans will be achieved.
ITEM 7. FINANCIAL STATEMENTS.
The Financial Statements that constitute Item 7 are attached at the end of this
Annual Report on Form 10- KSB.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report -Deloitte & Touche LLP F-1
Independent Auditor's Report - KPMG LLP F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-3
Consolidated Statements of Operations for the years ended
December 31, 1999 and 1998 F-5
Consolidated Statements of Stockholders' Equity (Deficit) for
the years ended December 31, 1999 and 1998 F-6
Consolidated Statements of Cash Flows for the years ended December 31,
1999 and 1998 F-7
Notes to Consolidated Financial Statements F-9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On September 3, 1999, KPMG LLP was dismissed as the independent accountants for
Global Med . KPMG LLP acted as the independent accountants for the Company for
the year ended December 31, 1998. KPMG LLP was appointed on October 2, 1998 as
independent accountants for the Company as reported in the Current Report on
Form 8-K dated October 5, 1998. For the year ended December 31, 1997, the
independent accountants for the Company were Ernst & Young LLP. Ernst & Young
LLP declined to stand for re-election for the year ended December 31, 1998, as
reported in the Current Report on Form 8-K dated June 19, 1998, as filed on June
25, 1998.
Neither of the reports on the Company's financial statements for the two years
in the period ended December 31, 1998 contained an adverse opinion or disclaimer
of opinion, and neither was modified as to uncertainty, audit scope or
accounting principles.
The decision to change accountants was approved by the Company's Board of
Directors.
During the Company's two most recent fiscal years and subsequent interim period
up to the date of the change in independent accountants, there were no
disagreements with the independent accountants on any matter of accounting
principle or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement(s), if any, not resolved to the satisfaction of
the independent accountants, would have caused the independent accountants to
make a reference to the subject matter of the disagreement(s) in connection with
their reports.
On September 13, 1999, the Company engaged the accounting firm of Deloitte &
Touche LLP as the Company's independent accountants for the year ending December
31, 1999. Deloitte & Touche LLP are independent accountants for Online Credit
International Limited, the Company's majority shareholder and for eVision
USA.Com, Inc., holder of warrants to purchase 10,000,000 shares of common stock
of Global Med for $0.25 per share.
During the Company's two most recent fiscal years and subsequent interim period
up to the date of the engagement of Deloitte & Touche LLP, the Company did not
consult with Deloitte & Touche LLP with regard to any matter concerning the
application of accounting principles to any specific transactions, either
completed or proposed, or the type of audit opinion that might be rendered with
respect to the Company's financial statements.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Identification Of Directors and Executive Officers
The following sets forth certain information with respect to the officers and
directors of the Company.
Officer or
Name Age Position Director Since
- ---------------------- --- ------------------------- --------------
Michael I. Ruxin, M.D. 54 Chairman of the Board and 1989
Chief Executive Officer
Fai H. Chan 55 Director 1998
Robert H. Trapp 44 Director 1998
Kwok Jen Fong 50 Director 1998
Jeffrey M. Busch 42 Director 1998
Gary L. Cook 42 Director 1998
Gordon E. Segal, M.D. 48 Director 1997
Gerald F. Willman, Jr. 42 Director and Wyndgate Vice 1995
President-Product Management
Tony Chan (1) 25 Director 1999
Thomas F. Marcinek 46 President and Chief Operating 1998
Officer
Alan K. Geddes 50 Vice President Finance, Chief 1998
Financial Officer and Treasurer
- --------------
(1) Mr. Tony Chan is the son of Mr. Fai H. Chan.
The directors of the Company are elected to hold office until the next annual
meeting of shareholders and until their respective successors have been elected
and qualified. Officers of the Company are elected by the Board of Directors and
hold office until their successors are elected and qualified.
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The following sets forth biographical information concerning the Company's
directors and executive officers for at least the past five years. All of the
following persons who are executive officers of the Company are full time
employees of the Company.
Michael I. Ruxin, M.D., the founder of the Company, has been an officer and
director of the Company since its incorporation in 1989 and is currently the
Chairman and Chief Executive Officer of the Company. Dr. Ruxin received a B.A.
degree from the University of Pittsburgh and a M.D. degree from the University
of Southern California. Dr. Ruxin is a licensed physician in California and
Colorado.
Fai H. Chan, has been a Director of the Company since May 1998. He has been a
Director of eVision since December 26, 1997, and Chairman of the Board of
Directors and President since February 1998. Mr. Chan is the Chairman and
Managing Director of Online International and has been a Director of Online
International since September 2, 1992. Mr. Chan was elected Managing Director of
Online International on May 1, 1995 and Chairman on June 3, 1995. Online
International's primary business activities include real estate investment and
development, merchant banking, the manufacturing of building material machinery,
pharmaceutical products and retail fashion. Mr. Chan has been the President and
a Director of Asia SuperNet Corporation, (formerly Powersoft Technologies Inc),
which owns various industrial companies, since June 1994 and Chief Executive
Officer thereof since June 1995; a Director of Intra-Asia Equities, Inc., a
merchant banking company, since June 1993; Executive Director of Hua Jian
International Finance Co., Ltd. from December 1994 until December 1996; and
Chairman of the Board of Directors of American Pacific Bank since March 1988 and
Chief Executive Officer thereof between April 1991 and April 1993.
Robert H. Trapp has been a Director of the Company since May 1998. He has been a
Director of eVision since December 1997 and the Managing Director since February
1998. Mr. Trapp has been a director of Online International since May 1995; a
Director of Inter-Asia Equities, Inc., a merchant banking company, since
February 1995 and the Secretary thereof since April 1994; Director, Secretary
and Treasurer of Asia SuperNet Corporation, (formerly, Powersoft Technologies
Inc.), which owns various industrial companies; and the Canadian operational
manager of Pacific Concord Holding (Canada) Ltd. of Hong Kong, which operates in
the consumer products industry, from July 1991 until November 1997.
Kwok Jen Fong has been a Director of the Company since May 1998. Mr. Fong has
been a Director of eVision since February 1998 and a Director of Online
International since May 1995. Mr. Fong has been a practicing solicitor in
Singapore for at least the last five years.
Jeffrey M. Busch has been a Director of the Company since May 1998. Mr. Busch
has been a practicing attorney for over five years. Mr. Busch has also been a
Director of eVision since February 1998.
Gary L. Cook has been a Director of the Company since 1998. Since 1996, he has
been Secretary, Treasurer and Chief Financial Officer of eVision and oversees
all accounting, internal and external reporting, treasury and cash management
functions. Mr. Cook also is Treasurer of eBanker USA.Com, Inc., Vice-President
and Chief Financial Officer of American Fronteer Financial Corporation and a
Director of Secutron Corporation. From 1994 to 1996, Mr. Cook was self-employed
as the principal of All Tune and Lube, LLC where he researched, directed and
managed the successful start up and development of a small business. From 1982
to 1994, he was a Senior Manager at KPMG Peat Marwick and was responsible for
all auditing services for several clients in various financial and other
industries. Mr. Cook also directed the training, management and evaluation of
staff developed and implemented accounting, financial reporting and SEC
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reporting systems for major growth companies. Mr. Cook received a B.A. in
Accounting from Bringham Young University in 1982 and is a member of the
Colorado Society of Certified Public Accountants and the American Institute of
Certified Public Accountants.
Gordon E. Segal, M.D., has been a director of the Company since April 1997.
Since December 1995, he has been co-founder and principal of M & S Ventures, a
privately held investment venture capital firm specializing in biotechnology and
health care companies. From January 1992 to December 1995, Dr. Segal was a
private venture capitalist. Dr. Segal received a B.A. degree in 1973 from
Southern Methodist University and a M.D. degree in 1978 from the University of
Tennessee. Dr. Segal is a licensed physician in New York and is a board
certified anesthesiologist.
Tony Chan has been a director of the Company since December 1999. In March 2000,
Mr. Chan became the Chief Operating Officer of eVision. In 1999, Mr. Chan became
the President of OLBroker.Com, Inc., a wholly owned subsidiary of eVision. Prior
to April 1999, Mr. Chan worked as an Investment Banker for Fronteer Securities
(H.K.) Limited, a Hong Kong company in which Online International indirectly
holds a minority interest. From 1998 to April 1999, Mr. Chan worked as an
Investment Banker for Commerzbank, Global Equities, Hong Kong. From 1996 to
1998, Mr. Chan worked in equity derivatives for Peregrine Derivatives. Mr. Chan
received a Bachelor of Commerce degree in Finance with honors from the
University of British Columbia. Mr. Chan is also a member of the Board of
Directors of eVision.
Gerald F. Willman, Jr. has been a director of the Company and a Vice President
of the Wyndgate division since May 1995 and Chief Financial Officer from April
through August 1998. Mr. Willman was director and then a Vice President of The
Wyndgate Group, Ltd., from 1984 to 1995 and was responsible for the overall
design and development of the products developed by The Wyndgate Group, Ltd.,
including research of new technologies. Prior to his employment at The Wyndgate
Group, Ltd., he was employed as a development team leader at Systems Research,
Inc. Mr. Willman received a B.S. degree from Hampden Sydney College and M.B.A.
degree from National University.
Thomas F. Marcinek was elected as President and Chief Operating Officer in March
1998. From 1994 until joining the Company, he was the President and owner of
Prax Information Systems, Wantagh, New York, a practice management software
consulting company. From 1990-1994, he was the President of the Data
Technologies Group, a division of Henry Schein, Inc., Melville, New York. From
1985-1990, he was the Vice President of MIS for that same company.
Alan K. Geddes was elected as Vice President - Finance, Chief Financial Officer
and Treasurer of the Company in August 1998. He was also a financial consultant
to the Company. Mr. Geddes was Vice President and Chief Financial Officer of
EDnet, Inc., a publicly held company based in San Francisco, California, from
1996 to 1997. From 1986 to 1996, Mr. Geddes was the Chief Financial Officer of
Oncogenetics, Inc., Phoenix, Arizona and IMAR Corporation, San Rafael,
California, both emerging companies in medical technology, in addition to
founding his own company, California Pacific Leasing, Inc., San Rafael,
California. Previously, he served as Corporate Controller at Fiberplastics,
Inc., Corte Madera, California, in corporate management at Bio-Rad Laboratories,
Richmond, California, as Plant Controller with Abbott Laboratories, Pasadena,
California and as Financial Analyst with Litton Industries, Woodland Hills,
California. Mr. Geddes received a B.A. degree from the University of California
and a M.B.A. degree in finance from Utah State University.
Family Relationships
Mr. Tony Chan is the son of Mr. Fai H. Chan. Both are directors of the Company.
21
<PAGE>
Involvement In Certain Legal Proceedings
No officer, director, significant employee, promoter or control person of the
Company has been involved in any event of the type described in Item 401(d) of
Regulation S-B during the past five years.
Compliance With Section 16(A) Of The Exchange Act
Based upon the Company's review of its records, the following individuals filed
a Form 3 and/or Form 4 on an untimely basis during 1999: Thomas F. Marcinek (one
Form 4 reporting one transaction); Fai H. Chan (one Form 4 reporting one
transaction); Online Credit International Limited, formerly Heng Fung Holdings
Company Limited (one Form 4 reporting one transaction); Heng Fung Capital [S]
Private Limited (one Form 4 reporting one transaction); Online Credit Ltd.,
formerly Heng Fung Finance Company Limited (one Form 4 reporting one
transaction); and Gary L. Cook (one Form 4 reporting two transactions). No Form
5s were filed by any of the officers, directors or 10% or more beneficial owners
of the Company's common stock. However, to the best of the Company's knowledge
all transactions by such persons otherwise required to be filed on a Form 5 were
previously reported on a Form 3 or Form 4 and, therefore, no Form 5 was required
to be filed.
22
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation paid to the
Company's CEO and the other executive officers of the Company who received in
excess of $100,000 of salary and bonus from the Company during the year ended
December 31, 1999:
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------------------------
Annual Compensation Restricted
Name and Principal ---------------------------------------- Stock Options All Other
Position Year Salary Bonuses ($) Awards & SARs Compensation
- --------------------- ---- ------ ---------- ---------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Michael I. Ruxin, 1999 $ 190,000 -- -- 1,000,000 $ 16,736 (1)
Chairman and CEO 1998 190,000 -- -- 1,250,000 131,736 (2)
1997 190,000 -- -- -- 17,936 (3)
Thomas F. Marcinek, 1999 125,000 -- -- 500,000 5,400 (4)
President and COO 1998 125,000 -- -- 500,000 5,400 (4)
1997 22,000 -- -- -- --
Gerald F. Willman, Jr. 1999 100,000 -- -- -- --
Director and 1998 95,000 -- -- 150,000 --
Vice President, 1997 95,000 -- -- -- 25,000 (5)
Product Management
Alan K. Geddes, 1999 125,000 -- -- 200,000 4,800 (6)
Vice President - 1998 52,083 -- -- 350,000 2,000 (6)
Finance, Chief 1997 -- -- -- 10,000 --
Financial Officer
and Treasurer
William J. Collard, 1999 -- -- -- -- --
Wyndgate President 1998 100,000 -- -- -- 5,400 (7)
and Director (through 1997 100,000 -- -- -- 16,400 (7)
February 4, 1999)
</TABLE>
(1) Dr. Ruxin received $3,800 per annum in life insurance premiums and a $1,078
per month car allowance.
(2) Dr. Ruxin received $3,800 per annum in life insurance premiums, a $1,078
per month car allowance and $115,000 under his non-compete agreement.
(3) Dr. Ruxin received $5,000 per annum in life insurance premiums and a $1,078
per month car allowance.
(4) Mr. Marcinek received a $450 per month car allowance.
(5) In 1997, Mr. Willman received $25,000 for tax expenses related to the 1995
Wyndgate merger.
23
<PAGE>
(6) Mr. Geddes received a $400 per month car allowance.
(7) Mr. Collard received a $450 per month car allowance in 1997 and 1998.
Stock Option Plans and Other Issuances
The Second Amended and Restated Stock Option Plan provides for the issuance of
options to purchase up to 2,200,000 shares of common stock to employees,
officers, directors and consultants of the Company. Options may be granted as
incentive stock or as nonqualified stock options. Only employees of the Company
are eligible to receive Incentive Options. Unless sooner terminated, the Plan
will expire on May 31, 2000. As of December 31, 1999, options to purchase
1,947,716 shares of the Company's common stock at a weighted average exercise
price of $1.32 per share through 2009 were outstanding, of which 947,216 options
to purchase shares were exercisable.
The Company also grants options to purchase shares of restricted common stock of
Global Med . The shares underlying theses options have not been registered under
the 1993 Act. There were options to purchase 5,067,500 shares of common stock at
a weighted average exercise price of $0.74 outstanding, of which 1,134,966 were
exercisable at December 31, 1999.
In the fourth quarter of 1997, the Company adopted a stock compensation plan
(the Stock Compensation Plan). The Stock Compensation Plan, as amended in 1998,
provides for the issuance of up to 200,000 shares of common stock to employees,
consultants and others involved in the Company's business. A total of 135,000
shares of common stock of Global Med have been issued under the stock
compensation plan.
Effective August 1, 1999, a director was issued 50,000 shares of common stock of
Global Med for the approximate value of $54,000 in exchange for legal consulting
services. This issuance was in accordance with terms of the Consulting Agreement
dated August 1, 1998. On October 12, 1999, the Board of Directors approved the
issuance of 50,000 shares of common stock of Global Med to the same director,
with an approximate value of $28,000 in exchange for legal consulting services.
24
<PAGE>
Option Grants Table
The following table sets forth certain information regarding options to purchase
shares of the Company's common stock issued to Executive Officers of the Company
during the year ended December 31, 1999:
<TABLE>
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise Expiration
Name Granted in 1999 Price Date
---- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Michael I. Ruxin 1,000,000 (1)(3) 37% $ .5625 10/12/09
Thomas F. Marcinek 500,000 (1)(3) 19% .5625 10/12/09
Alan K. Geddes 200,000 (1)(2)(3) 8% .5625 10/12/09
</TABLE>
(1) On October 12, 1999, the above named individuals received options to
purchase the stated number of shares of common stock of the Company; such
options vest when the company's earnings are $.01 per share, upon change of
ownership of the company, or in 5 years, exercisable for ten years. The
exercise price of the options is $0.5625 per share, which was equal to the
market value of the share on the date of the grant.
(2) Option is cancelable by the Chief Executive Officer of the Company and
exercisable solely at the discretion of the Chief Executive Officer.
(3) These options to purchase shares of the Company's common stock are not
registered in the Company's effective Form S-8 registering authorized
shares under the Second Amended and Restated Stock Option Plan.
25
<PAGE>
Aggregated Option Exercises In 1999 And Year-End Option Values/Table
<TABLE>
<CAPTION>
Value of
Unexercised
Number of In-the-Money
Unexercised Options at
Options at year-end
Shares Year-end ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael I. Ruxin -- -- 100,000 / 2,150,000 $ 0 / 656,300
Thomas F. Marcinek -- -- 240,000 / 760,000 0 / 328,150
Alan K. Geddes -- -- 176,667/ 383,333 0 / 131,260
Gerald F. Willman -- -- 60,000 / 90,000 0 / 0
</TABLE>
No options were exercised during 1999 by the Company's executive officers.
Long-Term Incentive Plan ("LTIP") Awards Table
No long term incentive plan awards were granted by the Company to any of the
executive officers or directors of the Company during the year ended December
31, 1999.
Compensation Of Directors
Standard Arrangements. Members of the Company's Board of Directors are not
compensated in their capacities as board members. However, the Company
reimburses all of its officers, directors and employees for accountable expenses
incurred on behalf of the Company. Currently, the Company does not pay any
directors fees for attendance at board meetings.
Other Arrangements. The Company has no other arrangements pursuant to which any
director of the Company was compensated during the year ended December 31, 1999,
for services as a director.
On August 1, 1998, the Company entered into an employment agreement with Dr.
Ruxin for a period of three years commencing August 1, 1998. The initial term of
this agreement can be extended at the close of the second year for an additional
two years beyond the initial term (creating a term of five years from August 1,
1998). Under the agreement, Dr. Ruxin receives a salary of $190,000 per year and
certain other fringe benefits. Dr. Ruxin's employment agreement includes a
cost-of-living increase, plus any other increase which may be determined from
time to time at the discretion of the Company's Board of Directors. Dr. Ruxin's
employment under the employment agreement may be terminated by Dr. Ruxin upon
the sale by the Company of substantially all of its assets, a decision by merger
or consolidation of the Company to terminate its business and liquidate its
assets, the Company with another entity or an agreement to such a merger or
consolidation or any other type of reorganization, or if the Company makes a
general assignment for the benefit of creditors, files for voluntary bankruptcy
or if a petition for the involuntary bankruptcy of the Company is filed in which
26
<PAGE>
an order for relief is entered and remains in effect for a period of thirty days
or more, or if the Company seeks, consents to, or acquiesces in the appointment
of a trustee, receiver or liquidator of the Company or any material part of its
assets. Dr. Ruxin's employment under the employment agreement also may be
terminated by reason of Dr. Ruxin's death or disability or for cause as set
forth in the employment agreement. If the Company for any reason other than
cause or permanent disability terminates the agreement, the Company must pay Dr.
Ruxin compensation, benefits and incentives at the rate in effect at termination
for twenty-four months following the date of termination. Pursuant to Dr.
Ruxin's Employment Agreement, the Company authorized the issuance to Dr. Ruxin
of a nonqualified stock option to purchase 1,000,000 shares of the Company's
common stock at $0.75 per share, exercisable when the Corporation's annual
audited financial statements reflect earnings of $0.01 per share, or after a
vesting period of sixty months, whichever occurs first and for ten years.
On August 1, 1998, the Company also entered into an employment agreement with
Thomas F. Marcinek for a period of three years commencing August 1, 1998. The
initial term of this agreement can be extended at the close of the second year
for an additional two years beyond the initial term (creating a term of five
years from August 1, 1998). Under the agreement, Mr. Marcinek receives a salary
of $125,000 per year and certain other fringe benefits. Mr. Marcinek employment
agreement includes an annual cost-of-living increase, plus any other increase
which may be determined from time to time at the discretion of the Company's
Board of Directors. The agreement also contains non-solicitation and annual
incentive compensation provisions, which are similar to those, set forth in Mr.
Geddes' employment agreement.
Pursuant to the agreement in 1998, Mr. Marcinek received incentive stock options
under the Company's Stock Option Plan, as amended, to purchase an aggregate of
350,000 shares of the Company's common stock. The options vest at the rate of
20% per year over a period of five years. If the Company (i) sells substantially
all its assets, or (ii) merges or consolidates with another entity or otherwise
reorganizes or (iii) terminates Mr. Marcinek for any reason other than for cause
prior to the expiration of the agreement, then the entire 350,000 in options
shall become 100% vested and immediately exercisable.
Mr. Marcinek may terminate his employment under the employment agreement under
the same circumstance as set forth in Dr. Ruxin and Mr. Geddes' employment
agreements. If the Company for any reason other than cause or permanent
disability terminates Mr. Marcinek's employment agreement, the Company must pay
Mr. Marcinek compensation, benefits and incentives at the rate in effect at
termination for twelve months following the date of termination.
On August 1, 1998, the Company also entered into an employment agreement with
Alan K. Geddes for a period of three years commencing August 1, 1998. The
initial term of this agreement can be extended at the close of the second year
for an additional two years beyond the initial term (creating a term of five
years from August 1, 1998). Under the agreement, Mr. Geddes receives a salary of
$125,000 per year and certain other fringe benefits. Mr. Geddes employment
agreement includes an annual cost-of-living increase, plus any other increase
which may be determined from time to time at the discretion of the Company's
Board of Directors. The agreement also contains a non-solicitation provision
which prohibits Mr. Geddes from soliciting employees and/or customers of the
Company to enter the employ or to do business with any business entity in
competition with the Company during Mr. Geddes' employment and for a period of
twelve months after the cessation thereof. The agreement also provides that
annually, while the employment agreement is in effect, at the sole option of the
Company, Mr. Geddes may receive incentive compensation of up to 50% of his then
current annual base salary. The incentive compensation will be based on
objectives established by the Company and Mr. Geddes on December 31 of each
year.
27
<PAGE>
Pursuant to the agreement, in 1998 Mr. Geddes received incentive stock options
under the Company's Stock Option Plan, as amended, to purchase an aggregate of
250,000 shares of the Company's common stock. The options vest at the rate of
20% per year over a period of five years. If the Company (i) sells substantially
all its assets, or (ii) mergers or consolidates with another entity or otherwise
reorganizes whereby the total value of the Company's common stock exceeds
$100,000,000 as a result of such transaction or (iii) terminates Mr. Geddes for
any reason other than for cause prior to the expiration of the agreement, then
the entire 250,000 in options shall become 100% vested and immediately
exercisable.
Mr. Geddes' employment under the employment agreement may be terminated by Mr.
Geddes under the same circumstance as set forth in Dr. Ruxin's and Mr.
Marcinek's employment agreements. If the Company for any reason other than cause
or permanent disability terminates Mr. Geddes' employment agreement, the Company
must pay Mr. Geddes compensation, benefits and incentives at the rate in effect
at termination for twelve months following the date of termination. The Company
also paid Mr. Geddes' temporary living expenses associated with his relocation
to Sacramento, California.
During 1999, the Board of Directors approved salary increases for Messrs, Ruxin,
Marcinek, and Geddes. The increases range from 10% to 20% and are payable,
effective August 1, 1999, when the Company has achieved positive cash flow from
operations. The Board of Directors also approved bonuses in amounts of $50,000,
$25,000, and $10,000 for Messrs, Ruxin, Marcinek, and Geddes, payable when the
Company has achieved positive cash flow from operations.
On May 24, 1995, the Company had entered into a five-year employment agreement
with William J. Collard. Mr. Collard and the Company reached an agreement
whereby Mr. Collard's employment agreement would be terminated and Mr. Collard
would retire effective February 4, 1999. The Company agreed to pay Mr. Collard
$64,000, in monthly installments of $3,000 per month for approximately 22 months
commencing December 30, 1998. In addition, the Company agreed to pay Mr. Collard
approximately $237,500, in 42 monthly installments, also commencing December 30,
1998. During the year ended December 31, 1999, the Company paid Mr. Collard
$67,917 and as of December 31, 1999, the Company owed Mr. Collard a balance of
$163,333.
Reporting On Repricing Of Options
Effective February 20, 1998, the Board of Directors granted an incentive option
to purchase 350,000 shares of the Company's common stock to Mr. Thomas F.
Marcinek at $0.92 per share. On August 27, 1998, the Board of Directors amended
the price of the incentive option to $0.75 per share, the market price of the
Company's common stock on that date. During the period from the original grant
to the amendment, the Company experienced a change in control. The new Board of
Directors believes it was in the best interest of the Company to reprice the
option as a further incentive to Mr. Marcinek.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Online Credit and its principals, Fai H. Chan, Kwok Jen Fong, Robert H. Trapp
and Jeffrey M. Busch, currently control the Company. Online International and
its principals have appointed six of nine members of the Board of Directors of
the Company, i.e., Messrs. F. Chan, T. Chan, Fong, Trapp, Busch, and Cook. In
addition, Online International owns 98.6% of Heng Fung Capital (S) Limited,
which, in turn, owns 100% of Online Credit. In connection with an April 14,
1998, $1,500,000 million loan to the Company, Online Credit was issued a warrant
to purchase 6,000,000 shares of the Company's common stock, exercisable at $0.25
per share until April 14, 2008. Online International also owns approximately 38%
28
<PAGE>
(beneficially approximately 67%) of the outstanding common stock of eVision.
eVision owns 100% of the outstanding common stock of AFFC. AFFC owns warrants to
purchase 46,100 units at $11.55 per unit, exercisable until February 11, 2003,
each unit consisting of two shares of common stock and a warrant to purchase one
share of common stock at $7.51, exercisable until February 11, 2003. eVision
also is a majority holder of shares of the outstanding common stock of eBanker.
In connection with an April 14, 1998, $1,650,000 line of credit extended to the
Company, a then wholly owned subsidiary of eVision was issued a warrant to
purchase 1,000,000 shares of the Company's common stock, exercisable at $0.25
per share until April 14, 2008, and the right to receive a warrant to purchase
an additional 5,000,000 shares of the Company's common stock, exercisable at
$0.25 per share until April 14, 2008, when the line of credit was drawn upon by
the Company. In September 1998, pursuant to an Assignment, Assumption, and
Consent Agreement, eVision assigned all its rights duties and obligations under
the $1,650,000 line of credit to eBanker. In October 1998, the Company borrowed
on the $1,650,000 line of credit and issued eBanker a warrant to purchase
5,000,000 shares of the Company's common stock, exercisable at $0.25 per share
until April 14, 2008.
Also, in October 1998, pursuant to a Loan and Warrant Purchase and Sale
Agreement, Online Credit sold eBanker $1,000,000 of the April 14, 1998 loan and
warrants to purchase 4,000,000 shares of the Company's common stock, exercisable
at $0.25 per share until April 14, 2008. Therefore, through its subsidiaries,
Online International and its principals beneficially own warrants to purchase
12,000,000 shares of the Company's common stock, exercisable at $0.25 per share
until April 14, 2008, and warrants to purchase 46,100 units at $11.55 per unit,
exercisable until February 11, 2003, each unit consisting of two shares of
common stock and a warrant to purchase one share of common stock at $7.51,
exercisable until February 11, 2003.
During 1999, the Company issued eBanker a total of 155,907 shares of common
stock of the Company in payment of financing fees. In exchange for the Lockup
Agreement described above in Part I, eBanker and eVision were issued 450,000
shares and 50,000 shares of common stock of Global Med , respectively.
Security Ownership of Beneficial Owners
The Company is currently controlled by Online International and its principals,
Fai H. Chan, Kwok Jen Fong, Robert H. Trapp and Jeffrey M. Busch, which have
appointed six of the nine members of the Board of Directors of the Company,
i.e., Messrs. Chan, Fong, Trapp, Busch, Gary L. Cook and Tony Chan. In addition,
through its subsidiaries, Online International currently owns 2,655,907 shares
of the Company's common stock and derivative securities which may be exercised
and/or converted into 12,507,865 shares of the Company's common stock.(1)
29
<PAGE>
The following table sets forth, as of December 31, 1999, the ownership of the
Company's common stock, based upon 11,637,786 shares of common stock
outstanding, by (i) each director and executive officer of the Company, (ii) all
directors and executive officers of the Company as a group, and (iii) all
persons known by the Company to beneficially own more than 5% of the Company's
common stock.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(2)
-------------------------------------------
Combined
Shares of
Common
Stock and
Percent of Shares Shares Combined
Shares of Common Underlying Underlying Percent of
Position With Common Stock Out- Derivative Derivative Common
Name and Address Company Stock Standing Securities Securities Stock
---------------- ------- ----- -------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Michael I. Ruxin, M.D. Chairman of the 677,800 5.8% 256,250(3) 934,050 7.9%
12600 W. Colfax Board and Chief
Suite C-420 Executive
Lakewood, CO 80215 Officer
Fai H. Chan Director 2,655,907(4) 22.8% 12,757,865(5) 15,413,772 63.2%
Bank of Communications
Tower, 10th Floor
231-235 Gloucester Road
Wanchai, Hong Kong
Jeffrey M. Busch Director 156,000 1.3% 1,000,000(6) 1,156,000 9.1%
Suite 204 B,
Oxford Plaza
University Plaza
Newark, DE 19702
Gerald F. Willman Director and 882,514(7) 7.6% 92,000(8) 974,514 8.3%
4925 Robert J. Mathews Vice President-
Parkway, Suite 100 Product
El Dorado Hills, CA 95762 Management
(Wyndgate
Technologies)
Gordon E. Segal, M.D. Director 250,000 2.1% 64,250(9) 314,250 2.7%
3850 Kim Lane
Encino, CA 91436
Thomas F. Marcinek President and 20,500 0.2% 240,000(10) 260,500 2.2%
4925 Robert J. Mathews Chief Operating
Parkway, Suite 100 Officer
El Dorado Hills, CA 95762
30
<PAGE>
<CAPTION>
Combined
Shares of
Common
Stock and
Percent of Shares Shares Combined
Shares of Common Underlying Underlying Percent of
Position With Common Stock Out- Derivative Derivative Common
Name and Address Company Stock Standing Securities Securities Stock
---------------- ------- ----- -------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Alan K. Geddes Vice President 20,500 0.2% 166,666(11) 187,166 1.6%
4925 Robert J. Mathews Finance, Chief
Parkway, Suite 100 Financial
El Dorado Hills, CA 95762 Officer and
Treasurer
Kwok Jen Fong Director -0- 0.0% 150,000(12) 150,000 1.3%
7 Tamasek Blvd.
#43-03 Suntec
Tower One
Singapore 038987
Gary L. Cook Director -0- 0.0% 20,000(13) 20,000 0.2%
1700 Lincoln Street
32nd Floor
Denver, CO 80203
Robert H. Trapp Director -0- 0.0% 20,000(14) 20,000 0.2%
1700 Lincoln Street
32nd Floor
Denver, CO 80202
Kim Geist Secretary -0- 0.0% 4,000(15) 4,000 0.03%
12600 W. Colfax
Suite C-420
Lakewood, CO 80215
Tony Chan Director -0- 0.0% -0-(16) -0- 0.0%
1700 Lincoln Street
32nd Floor
Denver, CO 80203
All Directors and 4,663,221 40.1% 14,771,031 19,434,252 73.6%
Executive Officers as a
group (12 persons)
Online Credit International None 2,655,907(1) 22.8% 12,507,865(18) 15,163,772 62.8%
Bank of Communications
Tower, 10th Floor
231-235 Gloucester Road
Wanchai, Hong Kong
William J. Collard None(19) 598,006 5.1% 15,000(20) 613,006 5.3%
4925 Robert J. Mathews
Parkway, Suite 100
El Dorado Hills, CA 95762
</TABLE>
(1) Fai H. Chan is an officer, director and 11.8% shareholder of Online
International and, therefore, is a beneficial owner of the shares
beneficially owned by Online International and its subsidiaries. Messrs.
Fong, Trapp, Busch, Cook and Tony T. W. Chan are also officers, directors
and/or shareholders of Online International and/or certain of its
subsidiaries; however, they disclaim beneficial ownership the shares
beneficially owned by Online International and its subsidiaries. Online
International owns 98.6% of the outstanding common stock of Heng Fung
Capital (S) Limited (Heng Fung Capital). Heng Fung Capital owns 100% of the
outstanding common stock of Online Credit and approximately 31%
(beneficially approximately 76%) of the outstanding common stock of
eVision. eVision owns a majority of the outstanding common stock of
eBanker, and 100% of the outstanding common stock of American Fronteer the
31
<PAGE>
underwriter of the Company's initial public offering. Online Credit owns
2,000,000 shares of the Company's common stock. eBanker owns: (i) 605,907
shares of the Company's common stock; (ii) warrants to purchase 9,000,000
shares of the Company's common stock, exercisable at $0.25 per share until
April 14, 2008; (iii) $1,000,000 in promissory notes which are convertible
into shares of common stock at $1.15 per share; and, (iv) $750,000 in
promissory notes which are convertible into shares of common stock at $1.13
per share. eVision owns: (i) 50,000 shares of the Company's common stock;
and, (ii) warrants to purchase 1,000,000 shares of the Company's common
stock, exercisable at $0.25 per share until April 14, 2008. AFFC owns
warrants to purchase 46,100 units at $11.55 per unit, exercisable until
February 11, 2003, each unit consisting of 2 shares of the Company's common
stock and a warrant to purchase 1 share of common stock at $7.51,
exercisable until February 11, 2003. eBanker also owns $2,650,000 in
promissory notes which are convertible only in the event of default thereon
into shares of common stock at $0.25 per share.
(2) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares and, under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
(3) Includes 6,250 shares underlying warrants issued in connection with the
purchase of 10% Notes and 250,000 shares underlying options. Does not
include 2,000,000 shares underlying options which are not exercisable
within 60 days of the date hereof.
(4) Includes the following shares owned by subsidiaries of Online
International, of which he is an officer, director and 11.8% shareholder:
(i) 2,000,000 shares owned by Online Credit; (ii) 605,907 shares owned by
eBanker; and, (iii) 50,000 shares owned by eVision.
(5) Includes the following shares underlying derivative securities owned by
subsidiaries of Online International, of which he is an officer, director
and 11.8% shareholder: (i) 9,000,000 shares underlying warrants owned by
eBanker; (ii) 1,000,000 shares underlying warrants owned by eVision; (iii)
138,300 shares underlying warrants to purchase 46,100 units, each unit
consisting of 2 shares of common stock and one warrant, owned by AFFC; (iv)
869,565 shares underlying $1,000,000 in promissory notes owned by eBanker
which are convertible into common stock at $1.15 per share; (v) 500,000
shares underlying $750,000 in promissory notes owned by eBanker which are
convertible into common stock at $0.50 per share. Also includes 250,000
shares underlying options issued to him for services as a director of the
Company. Does not include 10,600,000 shares underlying $2,650,000 in
promissory notes owned by eBanker which are convertible only in the event
of default thereon into common stock at $0.25 per share.
(6) Includes 400,000 shares underlying options and 600,000 shares underlying
warrants.
(7) Includes 346,481 shares owned by Lori J. Willman, the spouse of Mr.
Willman.
(8) Includes 90,000 shares underlying options owned by Mr. Willman and 2,000
shares underlying options owned by Lori J. Willman, the spouse of Mr.
Willman. Does not include 60,000 shares underlying options owned by Mr.
Willman and 8,000 shares underlying options owned by Mrs. Willman which are
not exercisable within 60 days of the date hereof. Mr. Willman has granted
individual options to certain employees of Wyndgate Technologies to
purchase all or any part of 109,434 of his shares of the Company,
exercisable until September 21, 2005.
32
<PAGE>
(9) Includes 6,250 shares underlying warrants issued in connection with 10%
Notes and 58,000 shares underlying options. Does not include 22,000 shares
underlying options which are not exercisable within 60 days of the date
hereof.
(10) Includes 240,000 shares underlying options. Does not include 760,000
options which are not exercisable within 60 days of the date hereof.
(11) Includes 166,666 shares underlying options. Does not include 383,334 shares
underlying options which are not exercisable within 60 days of the date
hereof.
(12) Includes 150,000 shares underlying options.
(13) Includes 20,000 shares underlying options. Does not include (i) 30,000
shares underlying options which are not exercisable within 60 days of the
date hereof; and, (ii) 1,650 shares owned by Mr. Cook's sons held in joint
accounts with Mr. Cook, which accounts are solely for the benefit of Mr.
Cook's sons, of which shares Mr. Cook disclaims beneficial ownership.
(14) Includes 20,000 shares underlying options. Does not include 30,000 shares
underlying options which are not exercisable within 60 days of the date
hereof.
(15) Includes 4,000 shares underlying options. Does not include 11,000 shares
underlying options which are not exercisable within 60 days of the date
hereof.
(16) Does not include 50,000 shares underlying options which are not exercisable
within 60 days of the date hereof.
(17) Includes the following shares owned by subsidiaries of Online
International: (i) 2,000,000 shares owned by Online Credit; (ii) 605,907
shares owned by eBanker; and (iii) 50,000 shares owned by eVision.
(18) Includes the following shares underlying derivative securities owned by
subsidiaries of Online International: (i) 9,000,000 shares underlying
warrants owned by eBanker; (ii) 1,000,000 shares underlying warrants owned
by eVision; (iii) 138,300 shares underlying warrants to purchase 46,100
units, each unit consisting of 2 shares of common stock and one warrant,
owned by AFFC; (iv) 868,565 shares underlying $1,000,000 in promissory
notes owned by eBanker which are convertible into common stock at $1.15 per
share; and, (v) 500,000 shares underlying $750,000 in promissory notes
owned by eBanker which are convertible into common stock at $0.50 per
share. Does not include 10,600,000 shares underlying $2,650,000 in
promissory notes owned by eBanker which are convertible only in the event
of default thereon into common stock at $0.25 per share.
(19) William J. Collard retired as President of Wyndgate Technologies effective
February 4, 1999.
(20) Includes 15,000 shares underlying warrants issued in connection with the
purchase of 10% Notes. Mr. Collard has granted individual options to an
employee of Wyndgate Technologies to purchase all or any part of 1,633 of
his shares of the Company, exercisable until September 21, 2005.
33
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Ruxin has personally guaranteed the Company's $1,650,000 line of credit with
eBanker.
The Board of Directors of the Company has adopted resolutions that no business
transaction, loan or advance will be made by the Company to any officer,
director or holder of more than 5% of the Company's common stock, or any
affiliate thereof, unless it has been established that a bona fide business
purpose exists, that all future transactions between the Company and its
officers, directors, or principal shareholders, or any affiliate of any of such
person, must be approved or ratified by a majority of the disinterested
directors of the Company, and the terms of such transaction must be no less
favorable to the Company than could have been realized by the Company in an
arms-length transaction with an unaffiliated person. The Company believes that
all ongoing transactions with the Company's affiliates are on terms no less
favorable than could be obtained from unaffiliated third parties.
The Board of Directors of the Company adopted a resolution in July 1996 that
provides that the areas of business in which the Company shall be interested for
the purpose of the doctrine of corporate opportunities shall be the business of
information management software products and services. Any business opportunity
which falls within such areas of interest must be brought to the attention of
the Company for acceptance or rejection prior to any officer or director of the
Company taking advantage of such opportunity. Any business opportunity outside
such areas of interest may be entered into by any officer or director of the
Company without the officer or director first offering the business opportunity
to the Company.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
See "EXHIBIT INDEX" on page 37
(b) Current Reports on Form 8-K:
There were no Current Reports on Form 8-K filed during the fourth quarter of the
fiscal year ended December 31, 1999.
34
<PAGE>
Independent Auditors' Report
Board of Directors
Global Med Technologies, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of Global Med
Technologies, Inc. and Subsidiary as of December 31, 1999, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Global Med Technologies, Inc. and
Subsidiary as of December 31, 1999, and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 26, 2000
F-1
<PAGE>
Independent Auditors' Report
Board of Directors
Global Med Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Global Med
Technologies, Inc. and subsidiary as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Med
Technologies, Inc. and subsidiary as of December 31, 1998, and the results of
its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
April 9, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share information)
December 31,
-----------------------
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................................................... $ 330 821
Accounts receivable-trade, net of allowance for uncollectible accounts
of $50 at December 31, 1999 and 1998 .......................................... 445 413
Accrued revenues, net of allowance for uncollectible accounts of
$15 at December 31, 1999 and 1998 .............................................. 324 43
Prepaid expenses and other assets .................................................. 66 118
Total current assets .................................................................. 1,165 1,395
EQUIPMENT, FURNITURE AND FIXTURES, AT COST:
Furniture and fixtures ............................................................. 167 229
Machinery and equipment ............................................................ 306 308
Computer hardware and software ..................................................... 1,583 1,145
------- -------
2,056 1,682
Less accumulated depreciation and amortization ..................................... (1,564) (1,117)
------- -------
Net equipment, furniture and fixtures ................................................. 492 565
DEFERRED FINANCING COSTS,
net of accumulated amortization of $10,853 and $6,031 at
December 31,1999 and 1998 respectively ............................................. 300 4,649
CAPITALIZED SOFTWARE DEVELOPMENT COSTS,
net of accumulated amortization of $1,126 and $723 at
December 31, 1999 and 1998, respectively ........................................... 1,566 920
OTHER ASSETS .......................................................................... 65 60
------- -------
Total assets .......................................................................... $ 3,588 7,589
======= =======
See accompanying notes to the consolidated financial statements.
F-3
<PAGE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands, except per share information)
December 31,
-----------------------
1999 1998
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable ................................................................ $ 303 234
Accrued expenses ................................................................ 808 637
Accrued payroll ................................................................. 87 53
Accrued compensated absences .................................................... 412 438
Noncompete accrual .............................................................. 35 35
Deferred revenue ................................................................ 1,502 1,935
Current portion of financing agreements, related party .......................... -- 500
Current portion of capital lease obligations .................................... 145 91
-------- --------
Total current liabilities .......................................................... 3,292 3,923
CAPITAL LEASE OBLIGATIONS, less current portion .................................... 179 105
FINANCING AGREEMENTS, RELATED PARTY, less current portion .......................... 4,400 2,200
-------- --------
Total liabilities .................................................................. 7,871 6,228
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 5, 9 and 11)
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value: Authorized shares - 10,000;
none issued or outstanding ................................................... -- --
Common stock, $.01 par value: Authorized shares - 40,000;
issued and outstanding shares-11,638 and 8,882 at December 31,
1999 and 1998, respectively .................................................. 116 89
Additional paid-in capital ...................................................... 27,158 24,884
Accumulated deficit ............................................................. (31,557) (23,612)
-------- --------
Total stockholders' equity (deficit) ............................................... (4,283) 1,361
-------- --------
Total liabilities and stockholders' equity (deficit) ............................... $ 3,588 7,589
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
Year Ended December 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
REVENUES:
License fee and maintenance revenues ................................... $ 3,675 2,457
Implementation and consulting services revenues ........................ 1,480 1,982
Hardware sales, obtained from vendors .................................. 235 348
-------- --------
5,390 4,787
-------- --------
COST OF REVENUES:
Software sales and consulting .......................................... 2,700 1,950
Hardware sales, obtained from vendors .................................. 247 300
-------- --------
2,947 2,250
-------- --------
Gross profit .............................................................. 2,443 2,537
OPERATING EXPENSES:
General and administrative ............................................. 2,431 1,769
Sales and marketing .................................................... 972 975
Research and development ............................................... 334 1,973
Depreciation and amortization .......................................... 520 567
Restructuring charges .................................................. -- 132
-------- --------
Loss from operations ...................................................... (1,814) (2,879)
OTHER INCOME (EXPENSE):
Interest income ........................................................ 117 18
Interest expense ....................................................... (465) (100)
Financing costs ........................................................ (6,039) (6,031)
Other .................................................................. 256 355
-------- --------
Net loss .................................................................. $ (7,945) (8,637)
======== ========
Basic and diluted loss per common share ................................... $ (0.75) (1.05)
======== ========
Weighted average number of common shares outstanding ...................... 10,554 8,228
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands)
Common Stock Additional
------------------ paid-in Accumulated
Shares Amount capital Deficit Total
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1997 .......................................... 8,148 $ 82 13,420 (14,975) (1,473)
Issuance of common stock from exercise of warrants
related to January 1997 12% notes .............................. 564 5 410 -- 415
Issuance of common stock for services ................................ 170 2 123 -- 125
Fair value of warrants associated with financing agreements .......... -- 10,680 -- 10,680
Warrants issued for consulting services .............................. -- -- 210 -- 210
Fair value of options issued to former officer ....................... -- -- 41 -- 41
Net loss ............................................................. -- -- -- (8,637) (8,637)
------- ------- ------- ------- -------
Balances, December 31, 1998 .......................................... 8,882 89 24,884 (23,612) 1,361
Exercise of warrants in relation to financing agreement .............. 2,000 20 480 -- 500
Issuance of common stock in consideration ............................ 156 1 175 -- 176
of debt financings
Issuance of common stock for services ................................ 100 1 81 -- 82
Issuance of common stock for Lockup Agreement ........................ 500 5 292 -- 297
Fair value of options issued to consultants .......................... -- -- 26 -- 26
Fair value of amendments to warrants ................................. -- -- 1,217 -- 1,217
Employee stock based compensation .................................... -- -- 3 -- 3
Net loss ............................................................. -- -- -- (7,945) (7,945)
------- ------- ------- ------- -------
Balances, December 31, 1999 .......................................... 11,638 $ 116 27,158 (31,557) (4,283)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
---------------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................... $(7,945) (8,637)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization ..................................... 520 567
Amortization of software development costs ........................ 403 320
Amortization of financing costs ................................... 4,822 6,031
Changes in allowances for uncollectible amounts ................... -- (235)
Loss on disposal of assets ........................................ 38 35
Issuance of common stock, options and warrants
for services and other .......................................... 1,328 419
Other ............................................................. (5) (61)
Changes in operating assets and liabilities:
Accounts receivable-trade ...................................... (32) (113)
Accrued revenues ............................................... (281) 225
Prepaid expenses and other assets .............................. 52 201
Accounts payable ............................................... 69 (90)
Accrued expenses ............................................... 171 38
Accrued payroll ................................................ 34 (345)
Accrued compensated absences ................................... (26) (11)
Noncompete accrual ............................................. -- (115)
Deferred revenue ............................................... (433) (826)
------- -------
Net cash used in continuing operations ................................. (1,285) (2,597)
Net cash used in discontinued operations ............................... -- (631)
------- -------
Net cash used in operating activities .................................. (1,285) (3,228)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and fixtures .................................... (218) (77)
Proceeds from sales of property and equipment .......................... 6 80
Increase in software development costs ................................. (1,049) (1,104)
------- -------
Net cash used in investing activities .................................. (1,261) (1,101)
------- -------
See accompanying notes to the consolidated financial statements.
F-7
<PAGE>
<CAPTION>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
Year Ended December 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on financing agreements ................................. $ 1,450 2,700
Principal payments on bridge loan .................................. (200) --
Borrowings on bridge loan .......................................... 950 --
Principal payments under capital lease obligations ................. (145) (231)
Issuance of common stock, net offering costs ....................... -- 311
------- -------
Net cash provided by financing activities .......................... 2,055 2,780
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS .......................... (491) (1,549)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..................... 821 2,370
------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR ........................... $ 330 821
======= =======
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NONCASH TRANSACTIONS:
Cash paid for interest in 1999 and 1998 was $314 and $100, respectively.
During 1999, the Company entered into the following noncash transactions:
o The Company issued 2,000 shares of common stock upon exercise of
warrants in exchange for the retirement of $500 of outstanding
indebtedness.
o The Company acquired assets under capital lease obligations of $273.
o The Company issued 156 shares of its common stock for payment of
financing costs of $176.
o In exchange for the Lockup Agreement, the Company issued 500 shares of
its common stock with a fair value of $297.
o In exchange for services, the Company issued 100 shares of common
stock with a fair value of $82, options to consultants for 40 shares
of common stock with a fair value of $26, and options to employees,
with an exercise price less than market value, of $3.
o The fair value of amendments to the terms of outstanding warrants
resulted in a noncash expense recognition of $1,217.
See accompanying notes to the consolidated financials statements.
F-8
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND LIQUIDITY
On May 23, 1995, The Wyndgate Group, Limited (Wyndgate) merged with National
MRO, Inc. (National MRO) in accordance with the terms and provisions of an
Agreement of Merger and National MRO changed its name to Global Data
Technologies, Inc., which subsequently changed its name to Global Med
Technologies, Inc. Global Med Technologies, Inc. provides information management
software products and services to the health care industry and operates in one
business segment.
During 1999, Global Med Technologies, Inc. formed a subsidiary, PeopleMed.com,
Inc., a Colorado corporation, which is approximately 85% owned by the Company to
develop a software application designed to give HMO providers and other third
party payers access to clinical information for chronic disease patients. This
application will allow doctors and other medical employees access to a patient's
history. The remaining 15% of PeopleMed is owned by certain officers and
directors of Global Med Technologies, Inc. There is no minority interest
reflected in the December 31, 1999 balance sheet because PeopleMed had a
stockholders' deficit at that date. PeopleMed.com had immaterial operations
during 1999.
RELATED PARTIES
Global Med is effectively controlled by Online Credit International Limited
(Online International), formerly Heng Fung Holdings Company Limited, and its
subsidiary Online Credit Limited, formerly Heng Fung Finance Company Limited
(Online Credit) per the terms of the 1998 Financing Agreements described below.
In addition, Online International is a significant shareholder of Global Med.
Online International also is a majority shareholder of eVision USA.Com, Inc.
(eVision) and of a subsidiary of eVision, eBanker USA.com, Inc. (eBanker).
eVision holds warrants to purchase 1,000,000 shares of common stock of Global
Med at $0.25 per share. Global Med has outstanding balances on various financing
agreements with eBanker. (See Note 2). eBanker owns a significant number of
shares of common stock of Global Med and holds warrants to purchase 9,000,000
shares of common stock of Global Med at $0.25 per share. eVision has a wholly
owned subsidiary, American Fronteer Financial Corporation (American Fronteer or
AFFC) which is a broker dealer. Online International, Online Credit, eVision,
eBanker and AFFC are related parties to Global Med.
During 1999 and 1998, the Company incurred losses and used significant amounts
of cash in operations. For the year ended December 31, 1999, the Company used
cash of $1,285,000 in operating activities compared to $3,228,000 for the year
ended December 31, 1998. As described in Note 2, the Company has $300,000
available to draw on the line of credit with eBanker. The financing agreements
with eBanker were due April 2000 and September 2000. In April 2000, eBanker
agreed to extend the due dates for the principal and interest on each of the
financing agreements until January 2001. (See Note 11). Management of the
Company believes the available line of credit and debt extensions will be
sufficient to fund the Company's operations through December 31, 2000.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Global Med
Technologies, Inc. and its subsidiary. Intercompany accounts and transactions
are eliminated in consolidation.
F-9
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Company's 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 amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the accompanying statements of cash flows, the Company considers
all highly liquid investments with original maturities of three months or less
when purchased to be cash equivalents.
CREDIT RISK AND MARKET RISK
Accounts receivable at December 31, 1999 and 1998 are derived from SAFETRACE(R)
and from SAFETRACETx TM sales and related services and re-sales of hardware and
software to blood centers and blood center service providers located in the
United States. Historically, the Company has not required collateral or other
security to support customer receivables. In order to reduce credit risk, the
Company requires substantial down payments and progress payments during the
course of an installation of its software products. The Company establishes
allowances for doubtful accounts based upon factors surrounding the credit risk
specific to customers.
The Company has customers located in numerous locations across the United States
and sales are not concentrated in any geographic or economic region.
ACCRUED REVENUES
Accrued revenues at December 31, 1999 and 1998 are billable and collectible
within one year.
EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures are stated at cost. Depreciation and
amortization, which includes amortization of assets under capital leases, is
based on the straight-line method over estimated useful lives ranging from three
to five years.
LONG-LIVED ASSETS
Long-lived assets, including deferred financing costs and capitalized software
development costs, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. An impairment loss is recognized when estimated undiscounted future
cash flows expected to be generated by the asset are less than its carrying
value. Measurement of the impairment loss is based on the fair value of the
asset, which is generally determined using valuation techniques such as
discounted present value of expected future cash flows. Management does not
believe current events or circumstances indicate that the Company's long-lived
assets are impaired at December 31, 1999.
F-10
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SOFTWARE DEVELOPMENT COSTS
In accordance with the provisions of Statement of Financial Accounting Standard
(SFAS) No. 86, Accounting for the Costs of Computer Software to be Sold, Leased
or Otherwise Marketed, the Company capitalizes software development and
production costs once technological feasibility has been achieved. Software
development costs incurred prior to achieving technological feasibility are
included in research and development expense in the accompanying statement of
operations.
Capitalized software development costs are reported at the lower of unamortized
cost or net realizable value. Commencing upon the initial product release or
when software development revenue has begun to be recognized, these costs are
amortized, based on current and future revenue for each product with an annual
minimum equal to the straight-line amortization over the remaining estimated
economic life of the product, generally two to five years. For the years ended
December 31, 1999 and 1998, the Company recorded approximately $403,000 and
$320,000 of amortization, respectively. Amortization of capitalized software
costs is included in cost of revenues in the accompanying statements of
operations.
NONCOMPETE AGREEMENTS
The Company has entered into noncompete agreements with three key employees, two
of which also served on the Company's Board of Directors, for $350,000. The
terms of the agreements are for the greater of five years or the term of the
related employee's employment contract. At December 31, 1999 and 1998, $35,000
remains payable whenever sufficient cash flow is available as determined by the
Company's Board of Directors.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
required to the extent any deferred tax assets may not be realizable.
FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures of Fair Value of Financial Instruments requires the
fair value of financial instruments be estimated at a point in time and
disclosed in the financial statements.
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amount of financial instruments that are
recognized at historical cost amounts. The fair value of the Company's debt
instruments approximates fair value based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. Also, the carrying
amounts of the Company's financial instruments approximate fair value due to the
short-term maturities of these items.
F-11
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
REVENUE RECOGNITION
The Company recognizes revenue in accordance with Statement of Position 97-2,
Software Revenue Recognition (SOP 97-2). Revenue from products or services is
recognized based upon shipment of products or performance of services. License
fee revenue is recognized upon completion of signed contract and shipment of the
software over a term of less than one year. Revenue from royalties is recognized
upon receipt of payment or according to the payment terms specified in the
contract. Revenue from maintenance contracts is deferred and recognized ratably
over the period of the agreement. Implementation, training and consulting
revenue is recognized upon completion of the training and course or performance
of services, respectively.
Revenue from software development contracts, included in software sales and
consulting revenue, is recognized on a percentage-of-completion method with
progress to completion measured based upon labor costs incurred or achievement
of contract milestones.
Revenue from the re-sale of hardware and software, obtained from vendors, is
recognized at the time the hardware and software are delivered to customers.
SIGNIFICANT CUSTOMERS
Software sales and consulting revenues for the year ended December 31, 1999,
includes $919,000 (approximately 17% of revenue), of accelerated software
license fee payments in connection with a multiple site customer agreement that
was terminated and replaced by two separate agreements. During 1998, three
customers, The Institute for Transfusion Medicine, Gulf Coast Regional Blood
Center and Haemonetics Corporation, accounted for approximately 19%, 12%, and
12%, respectively, of the Company's total revenue from continuing operations.
LOSS PER COMMON SHARE
Basic earnings per share excludes the effects of all potentially dilutive
securities including options, warrants and convertible securities, or other
common stock instruments, as the effect of such securities would be antidilutive
to 1999 and 1998.
STOCK BASED COMPENSATION
The Company has adopted the "disclosure method" provisions of SFAS No. 123,
Accounting for Stock- Based Compensation. As permitted under SFAS No. 123, the
Company continues to account for stock- based compensation costs under the
intrinsic value based method of accounting as prescribed by Accounting
Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to
Employees. Stock based compensation paid to consultants and other nonemployees
is accounted for using the Black Scholes model under the provisions of SFAS No.
123.
F-12
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
COMPREHENSIVE INCOME
The Company reports comprehensive income in accordance with SFAS No. 130,
Reporting Comprehensive Income. SFAS No. 130 requires that charges in equity
during a reporting period, except for transactions with owners in their capacity
as owners (for example, the issuance of common stock and dividends paid on
common stock) be reported as a component of comprehensive income. The Company
had no items of other comprehensive income during 1999 and 1998.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In June 1998, SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued which was effective for all fiscal years beginning after
June 15, 1999. In July 1999, SFAS No. 137, Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133 was issued. This statement defers the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000. The Company
has not completed its evaluation of the impact of this statement, and is
therefore unable to disclose the impact that adoption of SFAS No. 133 will have
on its consolidated financial statements.
RESTRUCTURING CHARGES
In March 1998, the Company underwent a restructuring and reorganization which
was implemented to reduce general and administrative expenses in such areas as
payroll, outside contract services, various health related items, leased office
space and others as well. Restructuring expenses were incurred in the amount of
$132,000 for the year ended December 31, 1998. All of these expenses had been
paid as of December 31, 1998. In October 1999, the Company further reduced its
general and administrative expenses in such areas as payroll and contact
services. No restructuring charges were incurred in 1999.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 financial statements to
conform to 1999 presentation.
F-13
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. FINANCING AGREEMENTS, RELATED PARTY
Summary of Financing Agreements
At December 31, 1999, and 1998, the Company had the following amounts
outstanding under financing agreements (in thousands):
1999 1998
---- ----
Promissory notes on initial lines of credit with eBanker .. $ 2,650 $ 2,200
Promissory notes on $2,000 line of credit with eBanker .... 1,000 --
Bridge loan with eBanker .................................. 750 --
Promissory note on line of credit with Online Credit ...... -- 500
------- -------
4,400 2,700
Less current portion ...................................... -- (500)
------- -------
Long term financing agreements ............................ $ 4,400 $ 2,200
======= =======
In connection with these financing agreements, the Company issued warrants to
purchase 12 million shares of common stock of Global Med at $0.25 per share. In
April 1999, warrants for 2 million shares of common stock of Global Med were
exercised in full payment of a $500,000 promissory note from Online Credit. At
December 31, 1999, warrants to purchase 10 million shares were outstanding.
1999 Agreements
In April 2000, all financing agreements were extended to January 2001. (See Note
11).
In March 1999, the Company entered into agreements for a comprehensive financing
package (March 1999 Financing Agreements) that included: (1) an $8,000,000
preferred stock private placement through American Fronteer; (2) exercise of
2,000,000 warrants at $0.25 per warrant; (3) an extension of the balance of
$2,650,000 on the line of credit with eBanker until April 15, 2000, with a
change in the default conversion rate from $0.05 per share contained in the
original loan agreement to $0.25 per share; and (4) a $750,000 bridge loan,
which bears interest at 12% per annum. The agreement with AFFC for the proposed
$8,000,000 preferred stock private placement was withdrawn and terminated
effective September 20, 1999.
Online Credit surrendered a promissory note in the amount of $500,000 in
exercise of the warrants to acquire 2,000,000 shares of common stock of the
Company. This transaction was completed on April 29, 1999.
The $2,650,000 loan from eBanker was extended until April 15, 2000, with the
previous conversion price of $0.05 per share increased to $0.25 per share. In
consideration for the extension, the Company paid a 2% fee to eBanker of
$53,000, payable in 42,400 shares of the Company's common stock.
F-14
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The $750,000 bridge loan, as revised on May 7, 1999, bears interest at 12% and
is convertible into shares of common stock of the Company at the 15-day average
closing bid price prior to the date of conversion. The loan was due and payable
December 31, 1999. In consideration of the original commitment for the bridge
loan, the Company paid a fee of 2%, or $15,000, paid with 13,275 shares of
common stock of the Company. The maturity date has been extended from December
31, 1999 to September 30, 2000 in consideration of a fee of an additional 13,275
shares of common stock of Global Med and a change in the conversion rate to
$0.50 per share.
In April 1999, the Company entered into an agreement with Online Credit for a
bridge loan in the amount of $2,000,000 (April 1999 Financing Agreement). The
agreement provided for a line of credit, with interest at 12% per annum payable
monthly, due April 12, 2000. As consideration for the line of credit, the
Company agreed to pay a fee equal to 5% of the total line of credit, or
$100,000, paid with 86,957 shares of common stock of the Company as of April 13,
1999. The line of credit will be convertible, at Online Credit's option, into
shares of the Company's common stock at a price $1.15 per share.
In September 1999, the Board of Directors voted to replace the $2,000,000 bridge
loan with Online Credit, at the request of Online Credit, with a line of credit
with similar terms with eBanker. The eBanker line of credit will be convertible
into shares of common stock of the Company at a price based on the average
closing bid price of the common stock for a period of fifteen business days
prior to conversion. In exchange for assuming the commitment, the 86,957 shares
of common stock of Global Med were transferred to eBanker. At December 31, 1999,
the Company had drawn $1,000,000 on this line of credit and in March 2000, drew
an additional $700,000. eBanker has committed to allow Global Med to draw the
remaining $300,000 available on the line of credit.
1998 Agreements
On April 14, 1998, Fronteer Capital, Inc. (Fronteer Capital), a wholly owned
subsidiary of eVision, and Online Credit committed to provide to the Company
lines of credit for up to $1,650,000 and $1,500,000, respectively, for a total
combined loan commitment of $3,150,000 over the following twelve months. The
loans bore interest calculated at a rate of 12% per annum and originally matured
April 15, 1999. At December 31, 1998, the combined loan amount outstanding was
$2,200,000.
Pursuant to the loan commitment provided by Online Credit, the Company agreed
that the Company's Board of Directors would not exceed nine and Online Credit
had the option to cancel all the Company's then existing management and employee
contracts. Online Credit appointed six members to the Board of Directors of the
Company. Since completion of the April 1998 Financing Agreements and the
appointment of the additional directors by Online Credit, new employment
contracts, approved by the Board, have been entered into with the Chairman of
the Board and Chief Executive Officer; the President and Chief Operating
Officer; and the Chief Financial Officer, Vice President, Finance and Treasurer.
For issuing the commitment, Online Credit received warrants to purchase
6,000,000 shares of the Company's common stock. The warrants are exercisable at
$0.25 per share for up to 10 years and the Company registered the warrants and
the underlying shares for resale under the Securities Act of 1933 (1933 Act.)
Using the Black-Scholes model for estimating the fair value of the warrants to
purchase 6,000,000 shares of the Company's common stock, the Company recorded
$5,340,000 as deferred financing costs as of April 14, 1998, which was amortized
straight-line over the term of the loan.
F-15
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The loan commitment provided by Fronteer Capital has substantially the same
terms and conditions as the loan commitment provided by Online Credit except
that, if Online Credit had not appointed directors to the Company's Board of
Directors, Fronteer Capital had the right to appoint a maximum of three members
to the Board of Directors of the Company. Dr. Michael I. Ruxin, the Chief
Executive Officer of the Company, has agreed to personally guarantee the
repayment of $1,650,000 of the Fronteer Capital line of credit. The guarantee is
limited to certain of Dr. Ruxin's assets.
If the Company defaults on the repayment of any amount borrowed by the Company
pursuant to the Online Credit commitment, all original existing members of the
Board of Directors of the Company would have to resign and Online Credit would
have the right to appoint all new members to the Board of Directors; Online
Credit would also have the right to convert the outstanding amount of the loan
into shares of the Company's common stock at a conversion price of $0.05 per
share which was subsequently increased to $0.25 per share in the 1999 Financing
Agreement described above, all employment contracts of the management and
officers of the Company existing at the time of the financing will be invalid
immediately, and their employment will be subject to reconfirmation by Online
Credit. If there is no default on the repayment to Online Credit, or if there is
default and Online Credit does not exercise its rights on default, Fronteer
Capital will have the same rights on default.
On September 11, 1998, Fronteer Capital entered into an agreement with eBanker
USA.com, Inc. (eBanker), a majority owned subsidiary of eVision, whereby
Fronteer Capital agreed to assign to eBanker its rights to and obligations under
the loan commitment to the Company. On September 28, 1998, the Company approved
the Assignment, Assumption and Consent Agreement by and between the Company, Dr.
Ruxin, Fronteer Capital and eBanker whereby the Company consented to the
assignment by Fronteer Capital to eBanker of all of the rights, duties and
obligations under the Fronteer Capital line of credit agreement described above.
For issuing the commitment, Fronteer Capital received warrants to purchase
1,000,000 shares of the Company's common stock. When the line of credit was
drawn upon, in October 1998, eBanker received additional warrants to purchase
5,000,000 shares of the Company's common stock. The warrants are exercisable at
$0.25 per share for up to 10 years and the Company registered the warrants and
the underlying shares for resale under the 1933 Act. Using the Black-Scholes
model for estimating the fair value of the warrants, the Company recorded
$890,000 as deferred financing costs as of April 14, 1998, which was amortized
straight-line over the term of the loan and $4,450,000 as deferred financing
costs as of October 30, 1998, which was amortized straight-line over the
remaining term of the loan.
In October 1998, the Company, Online Credit and eBanker entered into a Loan and
Warrant Purchase and Sale Agreement whereby Online Credit sold, and eBanker
purchased, $1,000,000 of the Online Credit loan and warrants to purchase
4,000,000 shares of the Company's common stock. Online Credit has returned the
original notes and its warrant to purchase 6,000,000 shares of the Company's
common stock to the Company, and the Company has issued a $500,000 promissory
note and a warrant to purchase 2,000,000 shares of the Company's common stock to
Online Credit and a $1,000,000 promissory note and a warrant to purchase
4,000,000 shares of the Company's common stock to eBanker.
The Company agreed to pay a cash finder's fee of 9% of the original eVision line
of credit to American Fronteer payable as the eBanker line of credit was drawn.
As of December 31, 1998, the Company had paid AFFC $108,000 under the agreement.
F-16
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. DEFERRED REVENUE
Deferred revenue consists of the following: (in thousands)
December 31,
1999 1998
---- ----
Ortho-Clinical Diagnostics .................. $ 896 $1,000
Institute for Transfusion Medicine .......... 452 485
Other ....................................... 154 450
------ ------
$1,502 $1,935
====== ======
Ortho-Clinical Diagnostics, Inc. In 1996, the Company entered into an
Exclusivity and Software Development agreement (the Exclusivity Agreement) with
Ortho-Clinical Diagnostics, Inc. (OCD), a wholly owned subsidiary of Johnson &
Johnson. The Exclusivity Agreement provided OCD the exclusive right to negotiate
with the Company with respect to the Company's activities and developments in
information technology and intellectual property relating to donor and
transfusion medicine. In connection with this agreement, the Company received
$500,000 in 1996.
In May 1997, the Company received a request from OCD to continue its evaluation
of the Company's technology, on a non-exclusive basis, with the intent of
responding to the Company by July 14, 1997 regarding whether or not OCD would
propose some form of transaction with the Company. The Company received an
additional $500,000 from OCD during 1997. The Company and OCD agreed to further
extensions of this non-exclusive agreement through December 31, 1998 to enable
OCD to complete its strategic evaluation. The Company also agreed to perform
certain software development services. In connection with the extension to
December 31, 1998, the parties agreed that OCD had until June 30, 1999, to elect
to require the Company to provide the software development services as defined
in the Exclusivity Agreement. The Company finalized the Manufacturer's
Representative and Software Development Agreement (OCD Agreement) during June
1999 making OCD the exclusive in-vitro diagnostics manufacturer's representative
for the SAFETRACE TX(TM) product in defined territories around the world. The
total of $1,000,000 was included in deferred revenue as of December 31, 1998.
Per the final agreement, $500,000 of the $1,000,000 was released as of August
15, 1999 in consideration of the exclusivity agreement. This non-refundable
$500,000 is being amortized to income over the remaining term of the OCD
Agreement which expires, at the Company's discretion, and is subject to renewal
on June 15, 2001. The remaining $500,000 will be recognized when the Company
performs software development services for OCD.
F-17
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Institute for Transfusion Medicine. Pursuant to a Development Agreement (the
Development Agreement) dated July 1996, between the Company and The Institute
for Transfusion Medicine (ITxM), the Company agreed to develop and has completed
the development of Commercial Centralized Transfusion System Software
(Commercial CTS Software), which is the SAFETRACE TX(TM) software product. The
Development Agreement provided for a royalty payment to ITxM for revenues
received from the sale of the Commercial CTS Software, net of certain fees and
charges. The royalty period started with the first commercial transfer for value
of the Commercial CTS Software, which was March 31, 1999. The Development
Agreement further granted ITxM a non-exclusive, perpetual and fully-paid license
to operate SAFETRACE TX(TM) for internal use, which includes companies which
ITxM controls as defined in the Development Agreement and companies which ITxM
has the ability to cause the direction of management whether through ownership
of voting securities, by contract or otherwise.
In January 1998, the Company and ITxM agreed (the January 1998 Agreement) that
the Company would not be required to pay monetary penalties, accrued in 1997, in
the approximate amount of $485,000 to ITxM, which were incurred as a result of
delays in development of SAFETRACE TX(TM), in consideration of the Company
providing to ITxM additional maintenance services and product upgrades and
substitute liquidated damage provisions for delays. At December 31, 1999, the
balance remaining of deferred revenue was $452,000. Of this balance, $142,000 is
being recognized monthly under a maintenance agreement. The remaining balance
will be recognized upon delivery of SAFETRACE TX(TM) upgrades.
Other deferred revenue primarily consists of unearned maintenance revenue, sales
of software licenses and related postcontract customer support, and re-sales of
hardware and software which were not yet recognizable as revenue pursuant to the
Company's revenue recognition accounting policies.
NOTE 4. INCOME TAXES
The Company has net operating loss carryforwards of approximately $19,573,000,
which expire in the years 2006 to 2014. Net operating loss carryforwards of
$4,820,000 are subject to limitation under Section 382 of the Internal Revenue
Code due to the change in ownership resulting from the February 1997 initial
public offering.
Actual income tax benefit differs from the amount calculated using the Federal
statutory tax rate as follows (in thousands):
1999 1998
---- ----
Expected tax benefit ..................................... $(2,702) (2,937)
Effect of permanent differences .......................... 1,640 2,061
Change in valuation allowance for deferred tax assets .... 1,234 1,401
State tax benefit, net of federal benefit ................ (139) (136)
Other .................................................... (33) (389)
------- -------
$ -- --
======= =======
F-18
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The components of the deferred tax assets and liabilities as of December 31,
1999 and 1998 are as follows (in thousands):
1999 1998
---- ----
Deferred tax assets:
Net operating loss carryforward ......................... $ 7,732 6,070
Allowance for uncollectible accounts and notes receivable 125 125
Unearned revenue and accrued expenses ................... 977 1,161
Gross deferred tax assets ............................ 8,834 7,356
Valuation allowance .................................. (8,211) (6,977)
------- -------
Net deferred tax assets .............................. 623 379
------- -------
Deferred tax liabilities:
Capitalized software development costs .................. 619 363
Accelerated depreciation for tax purposes ............... 4 16
------- -------
Gross deferred tax liabilities ....................... 623 379
------- -------
Deferred tax assets, net .................................. $ -- --
======= =======
In assessing the realizability of deferred tax assets, management considered
whether it is more likely than not that the deferred tax assets would be
realized. The ultimate realization of the deferred tax assets is dependent on
the generation of future taxable income in the period in which the temporary
differences become deductible. The Company has established a valuation allowance
for deferred taxes due to the uncertainty that the deferred tax assets will be
utilized.
NOTE 5. LEASES
The Company leases equipment and office space. Rental expense under operating
leases was approximately $119,000 and $343,000, net of sublease income of
$94,000 and $35,000, for the years ended December 31, 1999 and 1998,
respectively. Certain leases of equipment and fixtures are classified as capital
leases. A principal stockholder of the Company has personally guaranteed
repayment of certain capital lease obligations.
F-19
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Included in equipment, furniture and fixtures in the accompanying balance sheets
are the following assets held under capital leases (in thousands):
December 31,
---------------
1999 1998
---- ----
Furniture and fixtures .................. $ 127 127
Machinery and equipment ................. 167 179
Computer hardware and software .......... 803 518
------- -------
Assets under capital lease .............. 1,097 824
Less accumulated amortization ........... (897) (669)
------- -------
Assets under capital lease, net ......... $ 200 155
======= =======
The following represents the minimum lease payments remaining under capital
leases and the future minimum lease payments for all noncancelable operating
leases at December 31, 1999 (in thousands):
Capital Operating
Leases Leases
------- ---------
2000 ............................................. $ 158 $ 153
2001 ............................................. 143 176
2002 ............................................. 42 157
2003 ............................................. 26 158
2004 and thereafter .............................. -- 396
------ ------
Total minimum lease payments .............................. 369 $1,040
======
Less amount representing interest ..................... (45)
------
Present value of minimum lease payments ................... 324
Less current portion of obligations under capital lease (145)
------
Obligations under capital lease, less current portion ..... $ 179
======
During 1999, the Company relocated its Rancho Cordova, California office to
another location in El Dorado Hills, California with a lower lease payment. The
Company terminated its previous lease. Also during 1999, the Company relocated
its Lakewood, Colorado office to a smaller, less expensive location. The
previous location has been sublet for an amount that approximates the lease
obligation. These transactions are reflected in the minimum lease payments for
operating leases above.
F-20
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. STOCKHOLDERS' EQUITY
In 1999 and 1998, the Company issued 100,000 and 50,000 shares of common stock
that have not been registered under the 1933 Act, respectively, to a director
for legal services issued. The market value of these shares based on quoted
market prices of $82,000 and $33,000, is included in the statements of
operations for the years ended December 31, 1999 and 1998, respectively.
The Company has a stock compensation plan covering issuances of up to 200,000
shares of common stock to employees, consultants and other service providers to
the Company. In 1998, the Company issued 120,000 shares of common stock to a
third party for services under this plan. The market value of these shares was
$93,750, based on quoted market prices. During the years ended December 31, 1999
and 1998, $62,500 and $31,250, respectively, was recognized in the Company's
statements of operations as the services were performed. At December 31, 1999,
65,000 shares remain available for grant under this plan.
In 1998, the Company issued a total of 563,624 shares of common stock in
connection with the exercise of warrants at $0.55 per share, which was 75% of
the market value of the shares on the date of grant of the warrants. The Company
received $311,000 in cash proceeds and recognized expense in the amount of
$104,000.
NOTE 7. STOCK OPTION PLANS AND WARRANTS
The Company's Amended and Restated Stock Option Plan (the Plan) provides for the
issuance of options to purchase up to 2,200,000 shares of common stock to
employees, officers, directors and consultants of the Company. Options may be
granted as incentive or nonqualified stock options. Only employees of the
Company are eligible to receive incentive options. Unless terminated sooner, the
Plan will expire on May 31, 2000. Options granted under the Plan vest on a
straight-line basis based on schedules as determined by the Board of Directors
upon grant and generally expire 10 years after grant.
In 1999, two consultants were granted nonqualified options to purchase 40,000
shares of the Company's common stock at $0.66 per share. The fair value of these
grants was $26,300 and is being charged to the statement of operations over the
vesting period of five years.
In 1998, the Board of Directors granted a nonqualified option to purchase 55,248
shares of the Company's common stock to a former officer of the Company. The
exercise price is $0.92 per share; the option was vested immediately and is
exercisable for ten years. The fair value of this warrant was $41,000 and was
charged to the 1998 statement of operations.
The Company may grant nonqualified options that are outside of the Plan. The
terms of certain of these grants are consistent with the terms of the options
issued under the Plan such as straight-line vesting, and ten year
exercisability. However, other non-plan stock option grants may have certain
other conditions to their terms. The following describes the significant grants
of such a nature, made in 1998 and 1999, that are included in the total non-plan
stock option grants outstanding of 5,067,500 as of December 31, 1999:
F-21
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In 1999, the Board of Directors approved a grant of nonqualified options, to
purchase 1,500,000 shares of the Company's common stock to two officers of the
Company, which options shall be exercisable only at the earlier of (i) such time
as the earnings of the Company are at least $.01 per share, as determined by the
Company's independent public accountants; (ii) such time as the Company is sold
or merged, or there is a change in control of the Company; or (iii) 5 years from
the effective date, and are exercisable at $0.5625 per share for a period of ten
years. In addition, the Board of Directors approved a grant of nonqualified
options to purchase 200,000 shares of the Company's common stock to an officer
of the Company, which options shall be cancelable at any time by the Chief
Executive Officer of the Company, and exercisable solely at the discretion of
the Chief Executive Officer and only at the earlier of (i) such time as the
earnings of the Company are at least $.01 per share, as determined by the
Company's independent public accountants; (ii) such time as the Company is sold
or merged, or there is a change in control of the Company; or (iii) 5 years from
the effective date and are exercisable at $0.5625 per share for a period of ten
years.
Pursuant to Dr. Ruxin's Employment Agreement, in 1998, the Company authorized
the issuance to Dr. Ruxin of a nonqualified stock option to purchase 1,000,000
shares of the Company's common stock at $0.75 per share, exercisable for ten
years. The option may be exercisable only when the Company's annual audited
financial statements reflect earnings of at least $0.01 per share or after a
vesting period of sixty months, whichever occurs first.
As of December 31, 1999, approximately 2,082,183 options are exercisable. During
the years ending December 31, 2000, 2001, 2002, 2003 and 2004, 694,133; 602,800;
600,100; 1,206,000, and 1,830,000 additional options become exercisable.
F-22
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following represents additional information relative to stock option
activity:
<TABLE>
<CAPTION>
Non-plan
Incentive Nonqualified Nonqualified
Options Options Options Total
--------- ------------ ------------ -----
<S> <C> <C> <C> <C>
Outstanding as of
January 1, 1998 ...................... 442,998 420,220 185,000 1,048,218
Granted ........................... 1,647,000 55,248 2,382,000 4,084,248
Canceled .......................... (615,498) (125,752) -- (741,250)
---------- ---------- ---------- ----------
Outstanding as of
December 31, 1998 .................... 1,474,500 349,716 2,567,000 4,391,216
Granted ........................... 480,000 40,000 2,500,500 3,020,500
Canceled .......................... (396,500) -- -- (396,500)
---------- ---------- ---------- ----------
Outstanding as of
December 31, 1999 ................... 1,558,000 389,716 5,067,500 7,015,216
========== ========== ========== ==========
Expiration dates:
December 31, 2001 ................... -- 25,000 -- 25,000
December 31, 2002 ................... -- 1,029 -- 1,029
December 31, 2003 ................... -- -- -- --
December 31, 2004 ................... -- -- -- --
December 31, 2005 ................... 34,000 6,000 -- 40,000
December 31, 2006 ................... 8,000 5,500 -- 13,500
December 31, 2007 ................... 126,500 256,939 185,000 568,439
December 31, 2008 ................... 949,500 55,248 2,382,000 3,386,748
December 31, 2009 ................... 440,000 40,000 2,500,500 2,980,500
---------- ---------- ---------- ----------
Outstanding as of
December 31, 1999 .................... 1,558,000 389,716 5,067,500 7,015,216
========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1999, 3,020,500 options were granted with a
weighted average exercise price of $0.62 per share and 396,500 options were
canceled with a weighted average exercise price of $0.94 per share. As of
December 31, 1999, the outstanding options had a range of exercise prices of $
0.56 to $3.75 and a weighted average exercise price of $0.90. As of December 31,
1999, 2,082,183 options were exercisable with a weighted average exercise price
of $0.84 and a weighted average remaining contractual life of 9.5 years.
At December 31, 1998, the weighted average exercise price of the outstanding
options was $0.98. During the year ended December 31, 1998, 4,084,248 options
were granted with a weighted average exercise price of $0.79 per share and
741,250 options were canceled with a weighted average exercise price of $1.41
per share.
F-23
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pro forma disclosures
The fair value of options granted during 1999 and 1998 were determined using the
following weighted average assumptions:
A risk-free rate of approximately 6.14% and 4.59%; an average expected life
of 5 years and 5 years; a dividend yield of 0% and 0%; and volatility of
244% and 208% for the years ended December 31, 1999 and 1998, respectively.
For the purposes of pro forma disclosures, the estimated fair value of the
employee options is amortized to expense over the options' vesting period. Pro
forma information is as follows: (in thousands, except per share amounts)
1999 1998
---- ----
Pro forma net loss ...................... $ (8,865) $ (8,985)
Pro forma net loss per share ............ (0.84) (1.09)
The estimated fair value of the total options granted during the year ended
December 31, 1999 was $1,787,000. The estimated fair value compensation expense
associated with the options granted in 1999 and their respective portions
vesting in 1999 were $183,000 for the year ended December 31, 1999.
Warrants
The following summarizes the outstanding warrants to purchase shares of common
stock of Global Med for the years ended December 31, 1998 and 1999:
Weighted
Average
Number of Exercise
Warrants Price
--------- --------
Balance at December 31, 1997 ......... 2,195,888 $4.703
Issued ............................... 13,163,624 0.286
Exercised ............................ (563,624) 0.660
Canceled ............................. (150,000) 2.975
---------- -------
Balance at December, 31, 1998 ........ 14,645,888 0.906
Issued ............................... 2,045,588 3.613
Exercised ............................ 2,000,000 0.25
Canceled ............................. (2,045,588) 3.613
---------- -------
Balance at December 31, 1999 ......... 12,645,888 $1.010
=========== ======
F-24
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On December 22, 1999, the Board of Directors extended the exercise time of its
previously issued 1,456,988 Class A Warrants from February 11, 2002 to February
11, 2003. The Company has also reduced the exercise price of these warrants from
$4.55 to $3.00 per share. This resulted in expense to the Company of $899,800.
AFFC, the original underwriter, was issued warrants to acquire 46,100 units
exercisable at $11.55 per unit until January 14, 2002. Each unit consists of two
shares of common stock and a warrant to purchase one share of common stock at
$7.51 per share. The Company extended the underwriter's warrants until February
11, 2003, but did not reduce the exercise price of the underwriter's warrants.
Using the Black Scholes model for estimating fair value, the Company recognized
$78,000 of financing costs expense on this transaction.
On June 2, 1999, the Board of Directors authorized the extension of the 10% Note
Warrants. These warrants to purchase 187,800 shares of common stock of Global
Med at $3.75 per share were originally granted on June 26, 1996 and were
exercisable for a period of three years, through June 26, 1999. The expiration
date was extended to June 26, 2004 by the Board of Directors. All other terms
remained the same. Using the Black Scholes model for estimating fair value, the
Company recognized $238,000 of financing costs expense on this transaction.
On August 27, 1998, pursuant to the provisions of an agreement for consulting
services with a director of the Company, the Company authorized the issuance of
warrants to purchase 600,000 shares of the Company's common stock, at $0.75 per
share, exercisable for ten years. Using the Black-Scholes model for estimating
the fair value, the Company recorded $247,000 as consulting expense as of August
27, 1998.
Lockup Agreements
On October 25, 1999, the Company entered into a Lockup Agreement with eBanker
and a Lockup Agreement with eVision. The agreements provide that eBanker and
eVision will not, between October 25, 1999 and October 28, 2000, without the
Company's prior written consent, publicly offer, sell, contract to sell, grant
any option for the sale of, or otherwise dispose of, directly or indirectly, (i)
warrants to purchase 9,000,000 shares of the Company's common stock at $0.25 per
share held by eBanker or the warrants to purchase 1,000,000 shares of the
Company's common stock at $0.25 per share held by eVision and (ii) any shares
(the "Shares," and, together with the warrants, the "Securities") of common
stock issuable upon the exercise of the warrants; provided, however, that
eBanker or eVision may offer, sell, contract to sell, grant an option for the
sale of, or otherwise dispose of all or any part of the Securities or other such
security or instrument of the Company during such period if such transaction is
private in nature and the transferee of such Securities or other securities or
instruments agrees, prior to such transaction, to be bound by all of the
provisions of the lockup agreements. In exchange for entering into the
agreements, eBanker and eVision were issued 450,000 shares and 50,000 shares of
common stock of the Company, respectively. The shares had a value of $296,875 on
October 25, 1999, based on the quoted market price of the stock, which will be
amortized over the term of the agreement.
F-25
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition, the agreements provide (i) eBanker and eVision will not be
restricted from disposing of the Securities in the event that an unaffiliated
third party commences a tender offer for the outstanding common stock, and (ii)
eBanker and eVision will not be restricted from disposing of 450,000 and 50,000
shares, respectively, of the Securities in the aggregate if the closing sale
price for the common stock on the principal market on which it then trades
equals or exceeds $5.00 per share for any ten consecutive trading day period
preceding the date of such sale, and (iii) that there will be no restrictions
upon the ability of eBanker or eVision to exercise the warrants.
NOTE 8. CONTRIBUTIONS TO RETIREMENT PLAN
The Company has a 401(k) retirement plan which covers eligible employees, as
defined, of the Company (the 401(k) Plan). Employees may defer up to fifteen
percent of their annual compensation up to the maximum amount as determined by
the Internal Revenue Service. Under the 401(k) Plan, the Company, at its
discretion, may make contributions to the plan. No Company contributions were
made to the 401(k) Plan in 1999 or 1998. The Company paid 401(k) Plan
administrative expenses of approximately $1,175 and $500 for the years ended
December 31, 1999 and 1998 respectively. Such 401(k) Plan expenses are included
in general and administrative expenses in the accompanying statements of
operations.
NOTE 9. COMMITMENTS AND CONTINGENCIES
As part of the consideration for the Royalty Group, eight California blood
centers, funding approximately $1,100,000 of the development of SAFETRACE(R),
the Company agreed to pay the Royalty Group certain royalty payments on future
software license fees. Royalties were charged in 1999 and 1998 based on
applicable revenues of 3% and 6%, respectively. Royalty expenses related to this
agreement were approximately $21,000 and $60,000 for the years ended December
31, 1999 and 1998, respectively, and are included in cost of revenues in the
accompanying statements of operations. Future royalties will be 3% of applicable
revenues. The agreement may be terminated per certain provisions of the
agreement.
NOTE 10. DISCONTINUED OPERATIONS
On August 18, 1997, the Company entered into an asset purchase agreement with
National Medical Review Offices, Inc. (NMRO) to sell its DataMed division to
NMRO. In conjunction with the sale, the Company and NMRO also entered into a
management agreement where NMRO agreed effective July 1, 1997 to assume the
direction and control of the business and operations of DataMed. Accordingly,
NMRO managed the business and assumed ownership responsibilities for the
operational results from July 1, 1997 through the date of final close. On
December 15, 1997, upon stockholders' approval, the Company finalized the sale
of the assets and operations of DataMed to NMRO for approximately $1 million in
proceeds net of various closing costs and the assumption of certain liabilities.
The net liabilities of the discontinued operations as of December 31, 1997
consisted solely of net current liabilities of $631,000, which were paid during
1998.
F-26
<PAGE>
GLOBAL MED TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. SUBSEQUENT EVENTS
Debt Extensions
In April 2000, the loan agreements with eBanker for $2,650,000 and $2,000,000
that were due in April 2000 were extended to January 9 and January 7, 2001,
respectively. Payment of interest was also extended to the respective dates in
January 2001. The conversion rate of the $2,650,000 loan agreement was increased
to $1.6875 per share. Other terms of the loans remain the same. In consideration
of the extension, Global Med agreed to pay a fee of 137,778 shares of its common
stock. Based on the market price of the stock on the date of the agreements, the
shares have a value of $262,130, which will be recorded as deferred financing
costs and amortized over the extension period. If the loans and accrued interest
are not repaid in 270 days, ten-year warrants, convertible into common stock of
Global Med at an exercise price of $0.50 per share, will be issued to eBanker.
The number of common shares to be included in the warrant to be issued will be
equal to the entire principal and interest amount divided by the exercise price
of $0.50.
The bridge loan with eBanker of $750,000 matures on September 30, 2000. In April
2000, eBanker agreed to extend the due date to January 1, 2001. Payment of
interest was also extended to January 1, 2001. Global Med agreed to pay a fee of
22,222 shares of its common stock. Based on the market price of the stock on the
date of the agreements, the shares have a value of $37,500, which will be
recorded as deferred financing costs and amortized over the extension period.
Consultancy Agreement
The Company entered into a consultancy agreement, effective as of February 24,
2000, for a period of twenty-four (24) months, with National Financial
Communications Corporation, dba OTC Financial Network (OTC Financial). OTC
Financial will provide consulting services, with the expressed intent and goal
of getting the Company, or its successor or assigns, listed on the Nasdaq Stock
Market which include providing financial community and investor relations for
the Company; and advising the Company, as requested, regarding financial
community and investor relations.
Upon execution of this agreement, the Company agreed to: (a) issue to OTC
Financial 250,000 shares of restricted common stock; and (b) deposit into an
escrow account, in the name of OTC Financial, an additional 250,000 shares of
restricted common stock. Upon the Company's listing on the Nasdaq Stock Market,
the stock held by the escrow will be released to the consultant. The shares of
common stock held in the escrow account may be returned to Company in the event
of: (a) the term of the consultancy agreement should expire before the Company
is listed on the Nasdaq Stock Market; or (b) the agreement is terminated before
the Company is listed on the Nasdaq Stock Market; or (c) the Company gives
notice to OTC Financial of OTC Financial's breach of the agreement.
F-27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GLOBAL MED TECHNOLOGIES, INC.
A Colorado Corporation
Date: April 26, 2000 By /s/ Michael I. Ruxin
-----------------------------------------
Michael I. Ruxin, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the Company and in the capacities and on the
dates indicated have signed this report below.
Dated: April 26, 2000 /s/ Michael I. Ruxin
--------------------------------------------
Michael I. Ruxin, Chairman of the Board
and Chief Executive Officer and Director
Dated: April 26, 2000 /s/ Thomas F. Marcinek
--------------------------------------------
Thomas F. Marcinek, President and Chief
Operating Officer
Dated: April 26, 2000 /s/ Gerald F. Willman, Jr.
--------------------------------------------
Gerald F. Willman, Jr., Director and Wyndgate
Vice President - Product Management
Dated: April 26, 2000 /s/ Alan K. Geddes
--------------------------------------------
Alan K. Geddes, Chief Financial Officer,
Vice President, Finance and Treasurer
Dated: April 26, 2000 /s/ Fai H. Chan
--------------------------------------------
Fai H. Chan, Director
Dated: April 26, 2000 /s/ Robert H. Trapp
--------------------------------------------
Robert H. Trapp, Director
Dated: April 26, 2000 /s/ Kwok Jen Fong
--------------------------------------------
Kwok Jen Fong, Director
Dated: April 26, 2000 /s/ Jeffrey M. Busch
--------------------------------------------
Jeffrey M. Busch, Director
Dated: April 26, 2000 /s/ Gary L. Cook
--------------------------------------------
Gary L. Cook, Director
Dated: April 26, 2000 /s/ Gordon E. Segal
--------------------------------------------
Gordon E. Segal, Director
Dated: April 26, 2000 /s/ Tony Chan
--------------------------------------------
Tony Chan, Director
35
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM 10-KSB
GLOBAL MED TECHNOLOGIES, INC.
and SUBSIDIARY
36
<PAGE>
EXHIBIT INDEX
Exhibit
Number DESCRIPTION
- ------- -----------
3.1 Amended and Restated Articles of Incorporation, filed June 2, 1995 (1)
3.2 Articles of Amendment to the Articles of Incorporation, filed March 5,
1996 (1)
3.3 Articles of Amendment to the Articles of Incorporation, filed May 30,
1996 (1)
3.4 Bylaws, as amended (1)
4.1 Form of Representative's Warrants to Purchase Units (1)
4.2 Form of Class A Common stock Purchase Warrant Certificate (1)
4.3 Specimen copy of stock certificate for Common stock, $.01 par value
(1)
10.1 Lease Agreement, dated April 15, 1992, and Lease Addendums, dated
April 8, 1992 and October 21, 1994 (1)
10.2 Lease Agreement, dated July 19, 1995, and Lease Addendum (1)
10.3 Employment Agreement, dated May 24, 1995, between the Company and
Michael I. Ruxin, as amended July 8, 1995, August 1, 1995, September
21, 1995 and July 15, 1996 (1)
10.4 Employment Agreement, dated May 24, 1995, between the Company and
William J. Collard, as amended July 22, 1996 (1)
10.5 Employment Agreement, dated June 28, 1995, between the Company and
Joseph F. Dudziak (1)
10.6 Employment Agreement, dated February 8, 1996, between the Company
and L.E. "Gene" Mundt (1)
10.7 Amended and Restated Stock Option Plan, as amended on May 5, 1995, May
29, 1996 and December 11, 1996 (1)
10.7(A) Amendment dated March 31, 1997, to the Amended and Restated Stock
Option Plan. (2)
10.8 Voting Agreement, dated May 23, 1995 (1)
10.9 Shareholders' Agreement dated August 16, 1991, as amended on May 5,
1995 September 1996, June 24, 1996, July 25, 1996, Consent and Waiver,
dated July 12, 1996, and Rescission of Shareholder's Agreement, dated
June 22, 1996 (1)
10.10 Agreement dated April 8, 1996, between the Company and LMU & Company,
and Stock Purchase Option, dated April 8, 1996 (1)
37
<PAGE>
10.11 Form of Drug Testing Service Contract (1)
10.12 Form of License Agreements (1)
10.13 Warrant Agreement, dated February 11, 1997, between Global Med
Technologies, Inc. and American Securities Transfer & Trust, Inc. (1)
10.14 Exclusivity and Software Development Agreement, dated November 14,
1996, between and among Global Med Technologies, Inc. and Ortho
Diagnostic Systems Inc. (1)
10.15 Amendment, dated November 14, 1996, to Agreement dated April 8, 1996,
between the Company and LMU & Company, and Stock Purchase Option,
dated April 8, 1996 (1)
10.16 Amendment, dated January 14, 1997, to Agreement dated April 8, 1996,
between the Company and LMU & Company, and Stock Purchase Option,
dated April 8, 1996 (1)
10.17 Interim Management Agreement, dated July 7, 1997, between the
Company and National Medical Review Offices, Inc. (1)
10.18 Asset Purchase Agreement, dated August 18, 1997, between the
Company and National Medical Review Offices, Inc. (1)
10.19 Third Amendment to Exclusivity and Software Development Agreement,
dated September 17, 1997 between Global Med Technologies, Inc. and
Ortho Diagnostic Systems, Inc. (1)
10.20 Second Amended and Restated Stock Option Plan, as amended October 3,
1997 and December 2, 1997 (3)
10.21 Fourth Amendment to Exclusivity and Software Development Agreement,
dated December 22, 1997 between Global Med Technologies, Inc. and
Ortho Diagnostic Systems, Inc. (4)
10.22 Development Agreement, dated July 12, 1996 between Global Med
Technologies, Inc. and The Institute for Transfusion Medicine, dated
July 12, 1996, as amended January 12, 1998 (4)
10.23 Loan Commitment, dated April 14, 1998, between Heng Fung Finance
Company Limited and the Company, as amended on April 16, 1998 (4)
10.24 Loan Commitment, dated April 14, 1998, between Fronteer Capital, Inc.
and the Company, as amended on April 16, 1998 (4)
10.25 Amendment to Loan Commitment, dated April 16, 1998, between Heng Fung
Finance Company Limited and the Company (4)
10.26 Amendment to Loan Commitment, dated April 16, 1998, between Fronteer
Capital, Inc. and the Company (4)
10.27 Second Amendment to Loan Commitments, dated April 20, 1998 between the
Company, Heng Fung Finance Company Limited and Fronteer Capital, Inc.
(4)
38
<PAGE>
10.28 Employment Agreement, dated August 1 , 1998, between the Company and
Michael I. Ruxin (5)
10.29 Employment Agreement, dated August 1, 1998, between the Company and
Alan K. Geddes (5)
10.30 Employment Agreement, dated August 1, 1998, between the Company and
Thomas F. Marcinek (5)
10.31 Consultancy Agreement, dated August 1, 1998, between the Company
and Jeffrey M. Busch, Esq. (5)
10.32 Warrant to Purchase Common Shares dated April 20, 1998, issued by the
Company to Heng Fung Finance Company Limited (5)
10.33 Warrant to Purchase Common Shares dated April 20, 1998, issued by the
Company to Fronteer Capital, Inc. (5)
10.34 Loan Agreement, dated August 12, 1998, between the Company and Heng
Fung Finance Company Limited (5)
10.35 Loan Agreement, dated August 12, 1998, between the Company and
Fronteer Capital, Inc. (5)
10.36 Personal Guaranty, dated August 12, 1998, by Michael I. Ruxin, M.D. as
Guarantor, the Company as Debtor and Fronteer Capital, Inc. as
Beneficiary (5)
10.37 Assignment, Assumption and Consent Agreement, dated September 28,
1998, by the Company, Michael I. Ruxin, M.D., Fronteer Capital Inc.
and Fronteer Development Finance, Inc. (5)
10.38 Loan and Warrant Purchase and Sale Agreement, dated October 7, 1998,
between the Company, Heng Fung Finance Company Limited and Fronteer
Development Finance (5)
10.39 Promissory Note, dated October 30, 1998, by the Company as Maker
and Fronteer Development Finance as the Holder (5)
10.40 Warrant to Purchase Common Shares, dated October 30, 1998, issued by
the Company to Fronteer Development Finance Inc. (5)
10.41 Promissory Note, dated October 26, 1998, by the Company as Maker
and Fronteer Development Finance, Inc. as the Holder (5)
10.42 Promissory Note, dated October 26, 1998, by the Company as the
Maker and Heng Fung Finance Company Limited as the Holder (5)
10.43 Warrant to Purchase Common Shares, dated October 26, 1998, issued by
the Company to Fronteer Development Finance, Inc. (5)
10.44 Warrant to Purchase Common Shares, dated October 26, 1998, issued by
the Company to Heng Fung Finance Company Limited (5)
39
<PAGE>
10.45 Employment Agreement, dated February 1, 1999, between the Company
and James Flynt (6)
10.46 Bridge Loan Agreement, dated March 18, 1999, between the Company
and eBanker USA.Com, Inc. (6)
10.47 First Amendment to Loan Agreement among the Company, Michael I.
Ruxin, M.D., eBanker USA.Com, Inc. and Heng Fung Finance Company
Limited, dated March 18, 1999 (6)
10.48 Office Lease between the Company and Golden Hill Partnership, dated
January 11, 1999 (6)
10.49 Standard Industrial/Commercial Multi-Tenant Lease between the
Company and James W. Cameron, Jr., dated February 8, 1999 (6)
10.50 Settlement Agreement and Release of All Claims between the Company
and William J. Collard and Hollis Gailey, dated December 22, 1998 (6)
10.51 Bridge Loan Agreement, dated April 13, 1999, between the Company and
Heng Fung Finance Company Limited (7)
10.52 Revised Bridge Loan Agreement, dated May 7, 1999, between the Company
and eBanker USA.com, Inc. (7)
21 Subsidiaries of the Company
23 Consent of Independent Auditors - Deloitte & Touche LLP
23.1 Consent of Independent Auditors - KPMG LLP
27 Financial Data Schedule
99 Proxy and Right of First Refusal Agreement, dated November 14, 1996,
between and among Ortho Diagnostic Systems Inc. and Michael I. Ruxin,
William J. Collard, Gerald F. Willman, Jr., Lori J. Willman, Timothy
Pellegrini and Gordon Segal (1)
- -------------------
(1) The documents identified are incorporated by reference from the
Company's Registration Statement on Form SB-2 (No. 333-11723).
(2) Incorporated by reference from the Company's Registration Statement on
Form S-8 (No. 333-28155).
(3) Incorporated by reference from the Company's Registration Statement on
Form S-8 (No. 333-45031).
(4) Incorporated by reference from the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997.
(5) Incorporated by reference from the Company's Registration Statement on
Form SB-2 (No. 333-52761).
(6) Incorporated by reference from the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998.
(7) Incorporated by reference from the Company's Form 10-QSB for the
quarterly period ended March 31, 1999.
40
EXHIBIT 21
LIST OF SUBSIDIARIES
OF
GLOBAL MED TECHNOLOGIES, INC.
PeopleMed.Com, Inc., a Colorado corporation
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
Board of Directors
Global Med Technologies, Inc. and Subsidiary:
We consent to the incorporation by reference in Registration Statements (No.
333-28155, No. 333-39193, No. 333-45031 and No. 333-69851) on Form S-8 of Global
Med Technologies, Inc. and Subsidiary, of our report dated April 26, 2000,
appearing in the Annual Report on Form 10-KSB of Global Med Technologies, Inc.
and Subsidiary for the year ended December 31, 1999.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
April 26, 2000
EXHIBIT 23.1
Consent of Independent Auditors
Board of Directors
Global Med Technologies, Inc.:
We consent to incorporation by reference in the Registration Statements (No.
333-28155, No. 333-39193, No. 333-45031 and No. 333-69851) on Form S-8 of Global
Med Technologies, Inc. and subsidiary of our report dated April 9, 1999,
relating to the consolidated balance sheet of Global Med Technologies, Inc. and
subsidiary as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the year then
ended, which report appears in the December 31, 1999, annual report on Form
10-KSB of Global Med Technologies, Inc. and subsidiary.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
April 27, 2000
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