<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER SECTION 12(b) OR 12(g) OF
THE SECURITIES ACT OF 1934
GROUPMED INTERNATIONAL, INC.
----------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 88-022698
- ------ ---------
(State or Other (I.R.S. Employer
Jurisdiction of Incorporation Identification No.)
or Organization)
3095 South Grade Road, Suite B, Alpine, CA 91901
------------------------------------------------
(Address of Principal Executive Offices)
(619) 445-0977
--------------
(Issuer's Telephone No., Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of Each class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
None None
------------------- ------------------------------
------------------- ------------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001
------------------------------
(Title of Class)
1
<PAGE>
ITEM 1. BUSINESS
(a) BUSINESS DEVELOPMENT. GROUPMED INTERNATIONAL, INC. (the "Company")
was originally incorporated in the State of Nevada on March 27, 1991 as FIRST
MANHATTAN, INC. On June 8, 1995, the Company changed its name to GROUPMED
INTERNATIONAL, INC.
(b) BUSINESS OF ISSUER. Prior to July 1, 1995, the Company was in the
development stage. Subsequent to that date, the Company is functioning in the
development and operations of medical facilities and health care products,
operated by its subsidiary, GroupMed International de Mexico, S.A. de C.V.
(GMIX), which owns and operates a hospital in Ensenada, Mexico. Principal
products and services of GMIX include medical services and health care plans.
The Company distributes its medical services through its facility Hospital Las
Americas and safe of health care plans through network of sales people in
Ensenada, Rosarito and Tijuana areas. The Company has not publicly announced
any new product or service. The Company's business competition comes from
medical services in Ensenada in the form of two small private hospitals, and
Mexican state and federal run hospitals.
The Mexican government has licensed the Company to operate as a
hospital. The Mexican government has approved a medical specialty program
implemented at the hospital in the area of heroin detoxification. The Company
has approximately 130 full time employees at the hospital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(a) PLAN OF OPERATION. The Company unites professionals from Mexico and
the U.S. with the purpose of establishing an international healthcare delivery
system. Through its associated divisions, the Company plans to maintain its
standard of excellence by continuing education and remaining on the cutting edge
of technology and communication.
(1) GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. ("GMIX")
(a) HOSPITAL LAS AMERICAS ("HLA")
The Company's Mexican owned subsidiary GMIX purchased HLA, a state-of-
the-art medical facility located in Ensenada, Baja California Norte, Mexico, to
assist in the marketing and
2
<PAGE>
management of the Company's Mexican operations. A Center of Excellence, HLA
expands more than 65,000 square feet and brings an asset value in excess of U.S.
$12,000,000. In addition to its internationally recognized tertiary and
ancillary services, HLA will act as a conduit through which GMIX will operate
its sales of medical equipment, pharmaceuticals, and bio-tech clinical testing.
As of February 1, 1996, HLA will implement a Department of Orthopedic Medicine,
headed by one of Europe's finest physicians, who specializes in the cure of
back, neck and various joint pain. Further, and through a licensing agreement
and shared research program with the Company, HLA will begin testing in the
second quarter of 1996, one of the world's first liver dialysis machines, whose
test results and eminent usage are designed to be tied to U.S. hospitals and
research facilities.
(b) GROUPMED TOTAL HEALTH ("GTH")
The first product developed by GTH was designed to effect the
thousands of U.S. citizens that live in Mexico, whose number one problem has
been the issue of healthcare. GTH has written a supplemental health management
program to take care of the U.S. citizen primary healthcare while in Mexico.
GTH will also have relationships with the top health providers in the U.S.,
should the patient need to be returned to his/her primary insurance carrier
area. The primary marketed target of GTH will be those privatized companies in
Mexico, of which the banking industry is one, and U.S. maquiladoras are two, who
are not covered by Mexico's socialized healthcare system. This product has been
developed using the financial institution groups' specific needs as the criteria
for its development.
(2) GROUPMED MSO (A MANAGEMENT SERVICES ORGANIZATION)
GroupMed MSO is a Nevada owned corporation subsidiary of the Company,
and will organize and manage a primary care physicians network through
California Physicians Connection, a California corporation, that will be the
first statewide Independent Physician Associations ["IPA"]. to assist GroupMed
MSO in the implementation of these goals, the Company has retained McDermott,
Will Emery, a leading healthcare law firm in the U.S. with offices worldwide,
and has contracted with Beach International, Inc., a 20 year experienced
marketing and communication consultant in the healthcare industry.
Effective January 1, 1996, the Company initiated a Private Placement
Offering with the goal of raising a net total of $810,000 of capital required
for implementation of the IPA, legal, accounting, and working capital.
3
<PAGE>
The Company is not undertaking any product research and development during
the next twelve (12) months. Further, the Company does not expect to purchase
or sell any facilities or significant equipment as part of its plan of
operation. The Company does project a reduction of approximately twenty percent
(20%) of its employees at Hospital Las Americas by the end of the second quarter
of 1996.
ITEM 3. DESCRIPTION OF PROPERTY
(a) PROPERTY LOCATION AND OWNERSHIP. Through the Company's 99% owned
subsidiary, effective July 1, 1995 GroupMed International de Mexico, S.A. de
C.V. (GMIX), entered into a purchase agreement with Farvel Arrendamientos S.A.
de C.V. (Seller), whereby GMIX purchased all of the operational assets of a
hospital (Hospital Las America), land, equipment, inventory and an adjacent
office building, located at Arenas #151, Ensenada, Baja California Norte,
Mexico. Both the hospital and office building completed their construction in
1992; as a result, all facilities and equipment are in very good condition.
The purchase price was $5,556,930, payable by several promissory notes
with various due dates extending through January 1, 1997. In connection with
the acquisition of GMIX by the Company, the assets were restated in their
appraised market values, aggregating $12,778,203. On December 27, 1995, the
Company, GMIX, and Seller agreed to that amount of the purchase and will be
satisfied by the issuance of 2,000,000 unregistered shares of the Company's
common stock to the Seller. The stock is to be held in escrow and distributed
to Seller in installments during 1996 contingent upon the market value of the
stock reaching $2.75 per share by April 1, 1996. The agreement also stipulates
that in the event the market value does not reach $2.75 per share and Seller
does not choose to accept an alternate form of payment, the Company may, at its
discretion, offer cash in satisfaction of the debt.
(b) INVESTMENT POLICIES. The Company may be in a position to purchase
medically related property and/or buildings in Southern California as part of
its development and management of a California IPA, through its wholly owned
Subsidiary GroupMed MSO. Depending on the Seller's position and requirements,
the Company will be able to proceed negotiations on a purchase without
limitation to either a simple cash purchase through financing, transfer of
Company common stock for equity, joint venture, and/or any combination thereof.
4
<PAGE>
The Company may be in a position to purchase undeveloped and/or semi-
developed real estate in various locations throughout Mexico as part of its
overall program to develop medical campuses in strategic locations. In addition
to the potential purchase and subsequent building of medical campuses, these
same locations may be the focal point from which the Company's Total Health
plans will be sold.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The following table sets forth information relating to the beneficial
ownership of the Company's common stock by those persons beneficially holding
more than five percent (5%) of the Company's capital stock. The Company had
9,973,795 shares of common stock issued and outstanding as of May 17, 1996.
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
(1) (2) (3) (4)
TITLE OF NAME/ADDRESS AMOUNT/NATURE PERCENT
CLASS OF BENEFICIAL OF BENEFICIAL OF CLASS
- ----- OWNER OWNER --------
----- -----
Common La Calafia, 3,628,750* 36.4%
Inc.
*La Calafia, Inc. was issued a total of 5,200,000 common stock for its asset of
Hospital Las Americas. La Calafia, Inc. in turn, distributed a portion of its
shares to its shareholders of which the following entity received in excess of
5%:
Common Solymar, Inc. 1,022,500 10.3%
(b) SECURITY OWNERSHIP OF MANAGEMENT
(1) (2) (3) (4)
TITLE OF NAME/ADDRESS AMOUNT/NATURE PERCENT
CLASS OF BENEFICIAL OF BENEFICIAL OF CLASS
- ----- OWNER OWNER --------
----- -----
Common Daniel N. Lomax 178,000 1.78%
2390 Willits Rd.
Alpine, California
92901
5
<PAGE>
Common Fernando Torres 35,000 0.35%
Boulevard Las Dunas
#529
Ensenada, B.C., Mexico
22880
Common Eugene Yahn 15,000 0.15%
2007 7th Avenue
Yuma, Arizona 85364
Common Charles R. Cook 15,000 0.15%
1265 Avocado
Suite 104-509
El Cajon, California
92020
(c) CHANGES IN CONTROL. The Company has no arrangements which may result
in a change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
(a) DIRECTORS AND EXECUTIVE OFFICERS.
NAME AGE POSITION TERM
---- --- -------- ----
Daniel N. Lomax 58 President/Director 6/95-1 year
Fernando Torres 38 Vice President/Director 6/95-1 year
Eugene Yahn 66 Director 6/95-1 year
Charles R. Cook 71 Director 6/95-1 year
BUSINESS EXPERIENCE:
DANIEL N. LOMAX - Mr. Lomax is President, Director and Chairman of the
Board of the Company. The overall direction of the Company and its organization
has been largely developed from his original concept. Mr. Lomax has had
extensive general business development experience spanning over 30 years in both
the U.S. and Mexico. He has been responsible for the development of the medical
facilities, subdivisions, residential housing, condominiums, town houses,
apartment houses, commercial strip centers and mini-malls, and has worked with
the U.S. Department of Housing and Urban Development as well as the U.S.
Department of Navy. The aforementioned developments cover the full spectrum of
development and construction, both private and public, and in all cases, Mr.
6
<PAGE>
Lomax acted as prime contractor in the development, financing, construction, and
where applicable, sales and marketing.
FERNANDO TORRES - Mr. Torres specializes in Finance and Productivity
Analysis, with a background in Economics and Computer Science. He graduated
from Mexico's Metropolitan University and received a Master's Degree from the
University of London in 1980. He served under President De La Madrid as
Director of Financial Analysis and Productivity at the Secretary of Energy,
Mining and State Industry. Mr. Torres developed a computer based Financial
Simulation and Analysis System used in 350 state owned manufacturing enterprises
for which he won the 1986 National Award for Public Administration in Mexico.
Since 1988 he remained involved in academic projects for the U.S.'s F.A.O. and
the World Bank, and founded a computer consulting firm in Mexico City. In 1990
he served as a consultant for Hospital Las Americas and other clients. He
became the hospital's CEO in 1994.
EUGENE YAHN - Mr. Yahn brings over 40 years of accounting experience to the
Company. He has been the controller for major construction control groups in
California and Arizona. He was voted a seat on the Board of Directors of First
National Bank of Southern Arizona and has been a licensed CPA in both California
and Arizona. Throughout an extensive professional career, Mr. Yahn has been a
Vice President and Managing Director for several major companies in the U.S.
CHARLES R. COOK - Mr. Cook is currently President of C.B.M.I. and Director
of Operations. He has over 30 years of experience in the area of major medical
projects, covering all aspects of a medical campus. In this capacity, Mr. Cook
has developed and implemented comprehensive schedules on projects with equipment
values up to $32,000,000. Mr. Cook was Director of Facilities' Planning, Inc.,
a division of Berger Brunswig, Inc. in Los Angeles for four years. Prior to
that time, he held the position of Director of Facilities' Planning for Daylin
Medical, Inc. for six years. He received his B.S. in Pharmacy from Butler
University in Indiana.
(b) SIGNIFICANT EMPLOYEES. The Company has no significant employees other
than the above-named executive officers.
(c) FAMILY RELATIONSHIPS. There are no family relationships among the
directors, executive officers or persons nominated or chosen by the Company to
become directors or executive officers.
7
<PAGE>
(d) INVOLVEMENT IN LEGAL PROCEEDINGS. There are no events that occurred
during the past five (5) years that are material to the evaluation of the
ability of any director, person nominated or chosen to become a director,
executive officer, promoters or control persons of the Company.
ITEM 6. EXECUTIVE COMPENSATION
(a) EXECUTIVE OFFICER AND DIRECTOR COMPENSATION.
1. Daniel N. Lomax receives a monthly compensation of $8,250 and is
furnished with a Company leased vehicle. He was the Chief Executive Officer at
the end of the last completed fiscal year.
2. Fernando Torres receives a monthly compensation of $5,000 and is
furnished with a Company month-to-month leased vehicle. He was also the most
highly compensated executive officer who served as executive officer at the end
of the last completed fiscal year. Fernando Torres is an executive officer of
the subsidiary, GroupMed International de Mexico, S.A. de C.V.
3. COMPENSATION TO CEO FOR FULL FISCAL YEAR.
Daniel Lomax served as CEO from June 5, 1995 through December 31,
1995 of the 1995 fiscal year. Through GroupMed International, Inc.'s Management
Agreement with Solymar, Inc. and/or its nominee, total remuneration during that
period was $39,375 plus monthly payment of a vehicle lease contract. Fernando
Torres served as a corporate officer from June 5, 1995 through December 31, 1995
of the 1995 fiscal year. Through the Company's subsidiary, GroupMed
International de Mexico, S.A. de C.V., total remuneration during that period was
$25,650 plus monthly payment of a vehicle month-to-month rental.
(b) SUMMARY OF COMPENSATION. Other than the compensation set forth above
in paragraph (a) of this item, the parties named therein received no additional
compensation from the Company. There are no annuity, pension or retirement
benefits proposed to be paid to officers, directors or employees of the Company
in the event of retirement at the normal retirement date pursuant to any
presently existing plan provided or contributed to by the Company or any of its
subsidiaries.
8
<PAGE>
No remuneration other than that reported in paragraph (a) of this item
is proposed to be in the future directly or indirectly by the Company to any
officer or director under any plan which is presently existing.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has had no transactions during the last two (2) years or
proposed transactions, to which the Company was or is to be a party, in which
any of its directors or executive officers, or any nominee for election as a
director, or any security holder or any member of the immediate family of any of
these persons, had or is to have a direct or indirect material interest.
The Company has not provided any compensation or anything of value to any
promoters either directly or indirectly.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings nor is its
property the subject of a pending legal proceeding.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a) MARKET INFORMATION. The principal market where the Company's common
stock is traded is the NASDAQ Electronic Bulletin Board under the symbol "GMII."
The following represents the high and low bid prices by quarter as reported by
the National Quotations Bureau, Inc. since the common stock began trading:
YEAR QUARTER HIGH LOW
---- ------- ---- ---
1995 Third $ 4.25 $ 3.00
1995 Fourth $ 3.25 $ 0.12
1996 First $ 1.50 $ 0.25
(b) NUMBER OF SHAREHOLDERS. The Company has approximately 140 holders of
its common stock.
9
<PAGE>
(c) DIVIDENDS. The Company has paid no dividends in its common stock for
the last two (2) fiscal years or any subsequent period. There are no plans to
pay dividends in the foreseeable future. Payment of dividends is dependent on
earnings and the policies adopted by the Company's Board of Directors.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The following represents all of the securities sold by the Company within
the past three (3) years without registering the securities under the Securities
Act with all such securities being common stock:
DATE OF NAME OF
ISSUANCE SHAREHOLDER NO. SHARES CONSIDERATION
-------- ----------- ---------- -------------
1. March 4, 1995 Lorita 2,000 Services
Chittenden
2. March 4, 1995 Judy Ann 2,000 Services
Hamilton
3. March 4, 1995 Cardav 5,000 Services
Finance, S.A.
4. March 4, 1995 White Star, 5,000 Services
Inc.
5. March 4, 1995 U.S. Recorp 4,000 Services
One E.
6. March 4, 1995 Recorp America 4,250 Services
One E.
7. June 8, 1995 La Calafia, 5,200,000 Acquisition of
Inc. 99% of GMIX
S.A. de C.V.
per
Reorganization
Plan
8. June 29, 1995 Fernando 35,000 Services
Torres
9. June 29, 1995 Eugene Yahn 15,000 Services
10. June 29, 1995 Charles Cook 15,000 Services
10
<PAGE>
11. June 29, 1995 David Yeager 15,000 Services
12. June 29, 1995 Dennis Swets 12,000 Services
13. June 29, 1995 John Seelig, 25,000 Services
M.D.
14. June 29, 1995 Ellen 30,000 Services
Harbeston
15. June 29, 1995 Trans 196,000 Services
Pacific Group,
Inc.
16. June 29, 1995 Ventana 450,000 Cash
Consultants $9,000
17. June 29, 1995 Allied 450,000 Cash
Management $9,000
Corporation
18. June 29, 1995 Pembridge 450,000 Cash
Securities, Inc. $9,000
19. December 22, Fernando 2,000,000* Asset Purchase
1995 Ariza -HLA
*Shares are held in escrow subject to debt cancelation in exchange for common
stock.
20. February 28, Marc Lee 24,000 Cash
1996 $15,000
21. March 1, 1996 James Palecek 14,545 Cash
$10,000
22. May 1, 1996 Promar S.A. 110,000 Cash
de C.V. $33,845
23. May 1, 1996 Grezelda 20,000 Cash
Martinez V. $6,155
All of the transactions referred to above are exempt from the registration
requirements of the Securities Act of 1933, as amended, by virtue of Section
4(2) thereof covering transactions not involving any public offering or
involving no public "offer" or "sale." As a condition precedent to each sale,
the respective purchaser was required to execute an investment letter and
consent to the imprinting of a
11
<PAGE>
restrictive legend on each stock certificate received from the Company.
The Company did not engage any underwriters or salespersons with respect to
the sale of its securities.
ITEM 11. DESCRIPTION OF SECURITIES
(a) COMMON STOCK. As of May 17, 1996, the Company had 9,973,795 shares of
the Company's common stock (par value $0.001) outstanding.
The Company's Articles of Incorporation, filed on March 27, 1991,
authorize the issuance of up to 25,000,000 shares of the Company's common stock
with a par value of $0.001. Holders of shares of the common stock are entitled
to one vote for each share on all matters to be voted on by the stockholders.
Holders of common stock have no cumulative voting rights. Holders of shares of
common stock are entitled to share ratably in dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion, from
funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the
Company, the holders of shares of common stock are entitled to share pro rata
all assets remaining after payment in full of all liabilities. Holders of
common stock have no preemptive rights to purchase the Company's common stock.
All of the outstanding shares of common stock are fully paid and non-assessable.
(b) DEBT SECURITIES. The Company pursuant to a Private Placement Offering
is attempting to raise a net total of $810,000 of capital in the form of
Convertible Notes, bearing simple interest at the rate of twelve percent (12.0%)
per annum, paid quarterly, at a cost of $1,000 per Note, with a minimum purchase
of ten (10) Notes, or an aggregate investment of ten thousand dollars($10,000),
with a convertible price of one dollar ($1.00) per share for restricted common
stock. A minimum purchase is required of 10 Notes at $1,000 per Note, or a ten
thousand dollar ($10,000) investment. One or more additional Notes may be
purchased after the initial minimum purchase of ten thousand dollars ($10,000).
At the option of the Note Holder, the Notes are subject to conversion
in whole or in part, into common stock of the Company at any time prior to the
maturity date of one (1) year or, if the Notes are prepaid by the Company, at
any time
12
<PAGE>
prior to the prepayment date. Upon the proper exercise of a Note Holder's right
to convert, the Company is unconditionally obligated to issue and exchange for
the Note common stock at a conversion price of $1.00 per share, adjusted to
account for any stock splits, dividends or other financial transactions
undertaken by the Company after the issuance of the Notes.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation and Bylaws of the Company provide for
indemnification of the Company's officers and directors for liabilities arising
due to certain acts performed on behalf of the Company. Insofar as
indemnification for liabilities arising under the Securities Act may be imputed
to the directors, officers or persons controlling the Company, the Company
understands that it is the position of the Securities and Exchange Commission,
that such indemnification is against public policy as expressed in the Act and
is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS
(a) ANNUAL FINANCIAL STATEMENTS.
See Item 15(a).
(b) INTERIM FINANCIAL STATEMENTS.
See Item 15(a).
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
(a) The accounting firm of Kafoury Armstrong & Co. that prepared the 1993
and 1994 audited financial statements for First Manhattan, Inc. was not retained
after the reorganization of the Company in June 1995. The Company decided that
it needed an auditing firm with international expertise and experience because
of the location of its major assets and its operations in Mexico. To that end,
the Company engaged the accounting firm of Hoffman McBride & Co. to prepare the
1995 audited financial statements for the Company.
There have been no adverse opinions or disclaimers of opinion, nor
were the financial statements modified as to uncertainty, audit scope or
accounting principles.
13
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS. The following financial statements are included
herein:
1. GroupMed International, Inc. Audited Financial
Statements for Years Ended December 31, 1994 and
1995.
2. GroupMed International, Inc. Financial Statements
for First Quarter, 1996 - Unaudited.
3. First Manhattan, Inc. Audited Financial Statements
- December 31, 1994, 1993, 1992 and 1991.
(b) EXHIBITS. The following exhibits required by Item 601 of Regulation S-
B are included herein:
Exhibit No. Document Description
----------- --------------------
3 Articles of Incorporation and Bylaws
3.1 Articles of Amendment
3.2 Articles of Incorporation
3.3 ByLaws
10 Material Contracts
10.1 Acquisition Agreement and Plan
Reorganization
14
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
GROUPMED INTERNATIONAL, INC.
DATE: MAY 17, 1996 BY: /s/ DANIEL N. LOMAX
-------------------------
DANIEL N. LOMAX
President
15
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
FINANCIAL STATEMENTS
THE YEARS ENDED DECEMBER 31, 1994 AND 1995
WITH REPORT OF
INDEPENDENT AUDITORS
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
GroupMed International, Inc.
We have audited the accompanying consolidated balance sheet of GroupMed
International, Inc. (a Nevada corporation) (the Company) as of December 31,
1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years ended December 31, 1994 and 1995. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of GroupMed
International, Inc. as of December 31, 1995 and the consolidated results of
its operations and its cash flows for the years ended December 31, 1994 and
1995 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Hoffman, McBryde & Co., P.C.
----------------------------------
March 29, 1996
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
BALANCE SHEET
DECEMBER 31, 1995
Assets
------
Current assets:
Cash in bank $ 11,204
Marketable securities 2,000
Accounts receivable 53,478
Inventories 165,101
Recoverable value added tax 279,241
Other 979
----------
Total current assets 512,003
Property, plant and equipment
Land $ 397,800
Building 7,458,394
Furniture and equipment 4,750,530
Computer equipment 73,850
-----------
12,680,574
Accumulated depreciation (472,580) 12,207,994
-----------
Other assets:
Deferred income taxes, net of valuation
allowance of $356,417 -
Recoverable value added tax 194,049
Organization costs, net of accumulated
amortization of $30,572 170,000
License agreement, net of accumulated
amortization of $4,848 337,652
----------
701,701
----------
$13,421,698
----------
----------
(Continued)
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
BALANCE SHEET (CONTINUED)
DECEMBER 31, 1995
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 225,642
Accrued expenses 202,918
Value added tax payable 279,241
Current portion of long-term debt 3,266,405
----------
Total current liabilities 3,974,206
Long-term liabilities:
Notes payable $ 2,494,814
Value added tax payable 194,049 2,688,863
----------
Minority interest 65,163
Stockholders' equity:
Common stock, $0.001 par value; authorized
25,000,000 shares; 7,480,250 shares issued
and outstanding 7,480
Additional paid-in capital 7,773,886
Unrealized loss on marketable securities (1,600)
Accumulated deficit (1,086,300)
----------
Total stockholders' equity 6,693,466
----------
$13,421,698
----------
----------
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
STATEMENTS OF OPERATIONS
THE YEARS ENDED DECEMBER 31, 1994 AND 1995
1994 1995
---- ----
Net patient service revenues $ - $ 740,133
Costs and expenses:
Professional care of patients - 542,908
Depreciation and amortization 114 507,607
General and administrative expenses 2,397 681,425
-------- ---------
(2,511) 1,731,940
-------- ---------
Operating loss (2,511) (991,807)
-------- ---------
Other income (expense):
Interest expense - (6,242)
Interest income 180 -
Miscellaneous (net) - 16,668
Reorganization expense - (50,000)
Exchange gain - 18,715
-------- ---------
180 (20,859)
-------- ---------
Loss before minority interest (2,331) (1,012,666)
Minority interest - 7,109
-------- ---------
Net loss $(2,331) $(1,005,557)
-------- ---------
-------- ---------
Net loss per share $ (0.05) $ (0.25)
-------- ---------
-------- ---------
Weighted average common shares outstanding 44,438 4,048,181
-------- ---------
-------- ---------
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
STATEMENTS OF STOCKHOLDERS' EQUITY
THE YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
Additional Accumu-
Common stock paid-in lated Unrealized
Shares Amount capital deficit loss Total
------ ------ ------- ------- ---- -----
<S> <C> <C> <C> <C>
Balance, January 1, 1994 44,438 $ 44 $ 87,797 $ (78,412) $ - $ 9,429
Net loss for 1994 - - - (2,331) - (2,331)
--------- ----- --------- ---------- ------ ---------
Balance, December 31, 1994 44,438 44 87,797 (80,743) - 7,098
Net loss for 1995 - - - (1,005,557) - (1,005,557)
Unrealized loss on marketable securities - - - - (1,600) (1,600)
Issuance of shares in exchange for services 526,562 527 49,495 - - 50,022
Acquisition of license agreement 250,000 250 342,250 - - 342,500
Issuance of shares for cash 1,459,250 1,459 144,561 - - 146,020
Acquisition of subsidiary 5,200,000 5,200 7,149,783 - - 7,154,983
--------- ----- --------- ---------- ------ ---------
Balance, December 31, 1995 7,480,250 $7,480 $7,773,886 $(1,086,300) $(1,600) $ 6,693,466
--------- ----- --------- ---------- ------ ---------
--------- ----- --------- ---------- ------ ---------
</TABLE>
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
STATEMENTS OF CASH FLOWS
THE YEARS ENDED DECEMBER 31, 1994 AND 1995
1994 1995
---- ----
Cash flows from operating activities:
Net loss $(2,331) $ (1,005,557)
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization 114 35,030
Depreciation - 472,577
Expenses paid by issuance of common stock - 50,022
Minority interest in subsidiary loss - (7,109)
Loss on sale of securities - 1,019
Changes in:
Accounts receivable - (53,478)
Inventories - (78,603)
Notes receivable - 3,000
Other current assets (179) (685)
Accounts payable - 225,642
Accrued expenses - 202,918
----- --------
Net cash used by operating activities (2,396) (155,224)
----- --------
Cash flows from investing activities:
Purchase of marketable securities - (9,000)
Proceeds from sale of marketable securities - 5,221
----- --------
Net cash used by investing activities - (3,779)
----- --------
Cash flows from financing activities:
Proceeds from issuance of notes payable - 21,405
Proceeds from issuance of common stock - 146,020
----- --------
Net cash provided by financing activities - 167,425
----- --------
Net increase (decrease) in cash (2,396) 8,422
Cash at beginning of period 5,178 2,782
----- --------
Cash at end of period $ 2,782 $ 11,204
----- --------
----- --------
(Continued)
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
STATEMENTS OF CASH FLOWS (CONTINUED)
THE YEARS ENDED DECEMBER 31, 1994 AND 1995
1994 1995
---- ----
Supplemental information:
Interest paid $ - $ -
Taxes paid - -
Noncash investing and financing transactions:
Acquistion of license agreement in
exchange for common stock:
License agreement - 342,500
Common stock - (342,500)
Acquisition of subsidiary and its operational
assets of Mexican hospital in exchange for note
payable and common stock:
Inventory - 86,498
Land - 397,800
Building - 7,458,394
Furniture and equipment - 4,784,563
Recoverable value added tax - 473,290
Note payable - (5,500,000)
Value added tax payable - (473,290)
Minority interest - (72,272)
Common stock - (7,154,983)
Funding of organization costs in
exchange for note payable to stockholder:
Organization costs - 200,000
Note payable - (200,000)
Acquisition of equipment in exchange
for note payable to stockholder:
Equipment - 39,814
Note payable - (39,814)
See accompanying notes.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
NOTES TO FINANCIAL STATEMENTS
THE YEARS ENDED DECEMBER 31, 1994, AND 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
This summary of significant accounting policies of GroupMed International,
Inc. (the Company) is presented to assist in understanding the Company's
financial statements.
CONSOLIDATION
The consolidated financial statements for the year ended December 31, 1995,
include the accounts of the Company and its 99 percent-owned subsidiary.
Significant intercompany accounts and transactions have been eliminated.
BUSINESS ACTIVITY
The Company was incorporated in Nevada on March 27, 1991, as First
Manhattan, Inc. Shares of its common stock are traded over the counter.
On June 8, 1995, the Company changed its name to GroupMed International,
Inc. Prior to July 1, 1995, the Company was in the development stage.
Subsequent to that date, the Company is functioning in the development and
operations of medical facilities, operated by its subsidiary, GroupMed
International de Mexico S.A. de C.V. (GMIX), which owns and operates a
hospital in Ensenada, Mexico. (See Note 9)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statements of cash flows. The Company held no cash equivalents at December
31, 1995.
MARKETABLE SECURITIES
Marketable securities consist of equity securities and are stated at fair
market value. During 1994, the Company changed its method of accounting
for investments in securities to conform with the requirements of Statement
of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities.
INVENTORIES
Inventories are stated at lower of cost or market. Cost is determined by
the first-in, first-out method.
<PAGE>
PROPERTY AND EQUIPMENT
Land, buildings, machinery and equipment are stated at cost less
accumulated depreciation which is computed using the straight-line method
over estimated useful lives ranging from five to thirty years.
Major expenditures for property and equipment and those which substantially
increase useful lives are capitalized. Maintenance, repairs and minor
renewals are expensed as incurred. When assets are retired or otherwise
disposed of, their costs and related accumulated amortization and
depreciation are removed from the respective accounts and resulting gains
or losses are included in income.
ORGANIZATION COSTS
Organization costs are being amortized by the straight-line method over a
60-month period, commencing in the month following the month in which the
costs were incurred.
DEFERRED INCOME TAX ACCOUNTS
Deferred tax provision/benefits are calculated for certain transactions and
events because of differing treatments under generally accepted accounting
principles and the currently enacted tax laws of the federal government.
The results of these differences on a cumulative basis, known as temporary
differences, result in the recognition and measurement of deferred tax
assets and liabilities in the accompanying balance sheets.
LOSS PER SHARE
Net loss per share of common stock is based on the weighted average number
of shares of common stock outstanding during the period, giving full
retroactive effect to the reverse split described in Note 9.
LICENSE AGREEMENT
The cost of the license agreement is being amortized over its estimated
beneficial life of 17 years eight months, commencing one month after the
date of the agreement.
MANAGEMENT USE OF ESTIMATES AND CERTAIN SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates used in preparing these
financial statements include those assumed in the valuation and estimated
beneficial life of the license agreement and the valuation and estimated
useful lives of the operational assets of the Mexican hospital. It is at
least reasonably possible that the significant estimates used will change
within the next year and that the effect of such changes on the financial
statements will be severe.
<PAGE>
NOTE 2 - BASIS OF PRESENTATION AND UNCERTAINTIES RELATED TO CONTINUED EXISTENCE
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred net losses of $2,331 and $1,005,557 for the years ended December
31, 1994 and 1995, respectively. In 1995, the Company began operation of a
private-care hospital in Mexico, where health care is provided by the
government to all citizens. These factors, among others, indicate the
Company's ability to continue in existence is dependent upon its ability to
obtain additional long-term debt and/or equity financing and to achieve
profitable operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence.
NOTE 3 - FOREIGN OPERATIONS
Due to cumulative inflation rates in excess of 100 percent over the past 3
years in Mexico, the US dollar is considered to be the functional currency
for financial reporting by GMIX. Accordingly, its financial statements
have been remeasured in US dollars, and the resulting exchange gain is
reported as a separate component of other income (expenses). Property and
equipment, and capital are remeasured at historical rates. Other asset and
liability accounts are remeasured at the closing rate in effect at the
balance sheet date, as published in the Wall Street Journal, and revenues
and expenses are remeasured at weighted average rates.
Substantially all of the Company's operations are presently conducted in
Mexico, whose economy has been characterized by recent currency
devaluation, recessionary and inflationary conditions, and rising
unemployment. As a result, uncertainties exist with respect to economic
stability in Mexico.
NOTE 4 - INCOME TAXES
Because the Company has not generated taxable income since its inception,
no provision for income taxes has been made.
The Company can carry forward its net operating losses for deduction
against future profits until expiration in the following years:
YEARS ENDED DECEMBER 31,
2000 (loss of Mexican subsidiary in 1995) $ 710,880
2006 33,037
2007 43,945
<PAGE>
2008 1,430
2009 2,331
2010 (loss of Company in 1995) 301,786
-------
$1,093,409
---------
---------
NOTE 5 - DEFERRED INCOME TAXES
The Company has adopted SFAS No. 109, "Accounting for Income Taxes," which
requires a liability approach to financial accounting and reporting for
income taxes.
The difference between the financial statement and tax bases of assets and
liabilities is determined annually. Deferred income tax assets and
liabilities are computed for those differences that have future tax
consequences using the currently enacted tax laws and rates that apply to
the periods in which they are expected to affect taxable income. Valuation
allowances are established, if necessary, to reduce deferred tax asset
accounts to the amounts that will more likely than not be realized. Income
tax expense is the current tax payable or refundable for the period, plus
or minus the net change in the deferred tax asset and liability accounts.
As described in Note 2, there is substantial doubt as to the continued
existence of the Company, resulting in substantial doubt that the Company
will be able to utilize its net operating loss carryforwards. The Company
has therefore recorded a valuation allowance equal to the amount of the
deferred tax asset created by the net operating losses that can be carried
forward to future periods.
NOTE 6 - MARKETABLE SECURITIES
Corporate Securities available-for-sale at December 31, 1995 consist of the
following:
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
-------- ------- -------- -------
$ 3,600 $ - $ 1,600 $ 2,000
-------- ------- -------- -------
-------- ------- -------- -------
Unrealized losses on available-for-sale securities amounting to $1,600 in
1995 were recognized as a decrease to stockholders' equity. During 1995,
sales proceeds and gross realized gains and losses on securities classified
as available for sale were:
Sale proceeds $5,221
-----
Gross realized losses $1,019
-----
Gross realized gains $ -
-----
<PAGE>
NOTE 7 - WARRANTS
On August 9, 1991, the Company issued shares of common stock with warrants
attached. Each unit of common stock is comprised of one share of common
stock and one "A" warrant (90,000 units) and one "B" warrant (10,000
units). The "A" warrant is convertible into one share of common stock at
$7.50 per share. The "B" warrant is convertible into one share of common
stock at $10.00 per share.
The "A" and "B" warrants are exercisable for one year and two years,
respectively, commencing on the effective date of the registration of the
warrants with the Securities and Exchange Commission. As of the date of
these financial statements, the warrants are not registered with the
Securities and Exchange Commission.
The warrants have not been included in the computation of loss per share
since they are anti-dilutive and since there is substantial doubt that the
Company will continue in existence (Note 2) and, therefore, the warrants
will not be registered.
NOTE 8 - RELATED PARTY TRANSACTIONS
On July 1, 1995, the Company entered into various consulting and management
agreements for a period of one year with three individual stockholders.
The agreements provide for the Company to pay compensation in the aggregate
amount of $17,250 per month for the services provided by the stockholders.
NOTE 9 - REORGANIZATION AND BUSINESS COMBINATION
On June 7, 1995, the Company instituted a reverse split of 1 for 4 shares
previously outstanding. The reverse split has been retroactively applied
to all periods presented in the accompanying financial statements.
The Company entered into an acquisition agreement and plan of
reorganization on June 8, 1995, whereby the Company changed its name from
First Manhattan, Inc. to GroupMed International, Inc. and acquired 99
percent of the stock of GMIX in exchange for 5,200,000 unregistered shares
of the Company's common stock. The transaction was valued at the appraised
market values of the net assets acquired by GMIX as described below.
Effective July 1, 1995, GMIX entered into a purchase agreement with Farvel
Arrendamientos S.A. de C.V. (Seller) whereby GMIX purchased all of the
operational assets of a hospital located in Ensenada, Mexico. The assets
are comprised of land, buildings, equipment, and inventory. The purchase
price was $5,500,000, payable by several promissory notes with various due
dates extending through January 1, 1997. The acquisition was accounted for
by the purchase method. In connection with the acquisition of GMIX by the
Company, the assets were restated to their appraised market values,
aggregating $12,727,255.
<PAGE>
The consolidated financial statements include amounts for the foreign
subsidiary, GMIX, for the period from July 1, 1995 (acquisition) to
December 31, 1995, as follows:
Net revenue $740,133
Net loss (710,880)
Total assets 13,056,085
Net assets 6,518,867
Total assets and net assets of GMIX include intercompany accounts with the
Company that have been eliminated and minority interest that has been
reclassified from equity in the consolidated balance sheet.
NOTE 10 - LICENSE AGREEMENT
On August 31, 1995, the Company entered into a license agreement with Exten
Industries, Inc. (Exten) for the Company's use , manufacture, distribution,
marketing and sales of clinical devices and other technologies utilizing
the Synthetic Bio-Liver ("Sybiol") for a period ending upon expiration of
Exten's patent rights. The patent application is pending, and Exten has
announced that it expects the patent to be granted in May 1996. The
agreement provides for payment of royalties equal to 10 percent of net
sales, paid quarterly, plus an annual license maintenance fee of $10,000.
In exchange for this license agreement, the Company issued to Exten 250,000
unregistered shares of its common stock. The transaction was valued at the
fair market value of the Company's common shares as evidenced by the
appraised value of tangible assets received in the acquisition of the
Mexican subsidiary and hospital described above.
NOTE 11 - LONG TERM DEBT
Long term debt as of December 31, 1995, consist of the following:
Date Amount
---- ------
Note payable to Farvel, non-interest bearing,
due in various installment payments from
April 1, 1996 to January 1, 1997;
secured by operational assets of hospital 7-1-95 $5,500,000
Note payable to stockholder due on demand,
unsecured with no interest 7-13-95 11,870
Note payable to stockholder due on demand,
unsecured with no interest 11-1-95 4,535
Note payable to stockholder principal and interest
due and payable on March 17, 2000; interest at
varying rates ranging from 2% to 7%, beginning on
<PAGE>
March 17, 1996; unsecured 3-17-95 200,000
Note payable to stockholder due and payable
May 30, 1996, with interest at 12 %, unsecured 11-1-95 5,000
Note payable to stockholder due and payable
in full on June 1, 1997, with interest at 6%
payable quarterly, unsecured 6-1-95 39,814
---------
5,761,219
Less current portion 3,266,405
---------
$2,494,814
---------
---------
Maturities of long term debt are as follows:
Years ended December 31,
------------------------
1996 $3,266,405
1997 2,294,814
1998 -
1999 -
2000 200,000
---------
$5,761,219
---------
---------
On December 27, 1995, the Company, GMIX, and Seller (Farvel) agreed that
the amount of the purchase price of the hospital (see Note 9) will be
satisfied by the issuance of 2,000,000 unregistered shares of the Company's
common stock to Farvel. The stock is to be held in escrow and distributed
to Farvel in installments during 1996 contingent upon the market value of
the stock reaching $2.75 per share by April 1, 1996. The agreement also
stipulates that in the event the market value does not reach $2.75 per
share and Farvel does not choose to accept an alternate form of payment,
the Company may, at its discretion, offer cash in satisfaction of the debt.
Due to the contingent nature of this transaction, no recognition of the
issuance of these shares has been made in the accompanying financial
statements.
NOTE 12 - VALUE ADDED TAX
In connection with the acquisition of the operational assets of the
hospital located in Ensenada, Mexico, the Company is liable for a value
added tax (VAT) payable to the seller in installments as the installments
of the note payable to Farvel, described in Note 9, are paid. Once paid,
the VAT is recoverable by offset against VAT collected from patients, or by
claim for refund filed with the Mexican government. The recoverable VAT is
reported as an asset in the accompanying balance sheet, and the portion
associated with the long-term portion of the related note payable is
classified as non-current.
<PAGE>
NOTE 13 - PROFORMA INFORMATION
The following proforma information reflects the operations of the business
acquired by GMIX for the years ended December 31, 1994 and 1995 (including
the six months ended June 30, 1995, when the business was operated by
Seller):
1994 1995
---- ----
Revenues $ 2,177,553 $ 1,114,485
Costs and expenses 4,016,852 2,355,611
---------- ----------
Operating loss (1,839,299) (1,241,126)
Other expense (109,787) (9,411)
---------- ----------
Net loss $ (1,949,086) $ (1,250,537)
---------- ----------
---------- ----------
The operations of the Company are not reflected above as the amounts are
immaterial to this proforma presentation.
NOTE 14 - COMMITMENT
The Company conducts its business from corporate offices in Alpine,
California. The office facilities are leased on a month to month basis for
$750 per month.
NOTE 15 - FINANCIAL INSTRUMENTS
The fair values of financial instruments, other than long-term debt,
closely approximate their carrying value. As of December 31, 1995, the
estimated fair value of long-term debt based on discounted future cash
flows of fixed rate obligations was lower than the carrying value by
approximately $300,000.
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
FINANCIAL STATEMENTS
FIRST QUARTER, 1996
UNAUDITED
Prepared by Management of GroupMed International, Inc.
and GroupMed International de Mexico, S.A. de C.V.
3095 South Grade Road, Suite B
Alpine, California 91901
(619) 445-0977 Fax: (619) 445-8805
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
BALANCE SHEET
3--MONTH PERIOD ENDING MARCH 31, 1996
ASSETS
Current Assets: Dollars Dollars
Cash in Bank 22,112
Marketable securities 2,000
Accounts Receivable 166,485
Inventories 212,465
Recoverable value added tax 355,655
Other 16,737
------
Total Current Assets 775,454
-------
Property, plant and equipment:
Land 397,800
Building 7,458,394
Furniture and equipment 4,751,474
Computer equipment 73,850
------
12,681,518
Accumulated depreciation (672,837)
-------
12,008,681
----------
Other assets:
Deferred income taxes, net of
valuation allowance of $
Recoverable value added tax 244,450
Organization costs, net of accumulated
amortization of $40,572 160,000
License agreement, net of accumulated
amortization of $4,848 337,652
742,102
-------
13,526,237
----------
----------
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
3--Month Period Ending March 31, 1996
Liabilities & Stockholders' Equity
Current Liabilities: Dollars Dollars
Accounts Payable 204,138
Accrued expenses 222,690
Value added tax payable 424,173
Current portion of long-term debt 3,250,000
---------
Total current liabilities 4,101,001
---------
Long-term liabilities:
Notes payable 2,603,857
Value added tax payable 267,740
-------
2,871,597
---------
Minority interest 68,964
------
Stockholder's equity:
Common stock, $0.001 par value,
authorized 25,000,000 shares;
7,748,795 shares issued and
outstanding 7,658
Additional paid--in capital 7,882,408
Unrealized loss on marketable securities (1,600)
Accumulated deficit (1,403,791)
---------
Total stockholders' equity 6,484,675
---------
13,526,237
----------
----------
<PAGE>
GROUPMED INTERNATIONAL, INC.
(FORMERLY FIRST MANHATTAN, INC.)
3-Month Period Ending March 31, 1996
Income and Loss Statement
Dollars Dollars
Net patient service revenues 319,798
Cost and Expenses
Professional care of patients (216,269)
Depreciation and amortization (232,653)
General & Administration (153,949)
--------
(602,871)
Operating Profit (Loss) (283,073)
Other Income (expense)
Interest expense (3,962)
Miscellaneous income 14,606
Exchange Loss (350,813)
Consulting & professional fees (55,893)
Shareholder expense (1,006)
General & Office Administration (14,567)
Advertising & Marketing (44,685)
Depreciation & amortization (11,992)
-------
(468,312)
Net Loss (751,385)
--------
--------
<PAGE>
First Quarter 1996 Financial Statements
Page 1
<TABLE>
<CAPTION>
Conversion Analysis
Balance Sheet End Diff:
As of March 31, 1996 Quarter End/
PESOS RATE DOLLARS 7.53 Actual Sources
-------
<S> <C> <C> <C> <C> <C> <C>
Assets
Monetary Assets 6,900,171 7.53 916,357 916,357 0 NM assets are
Nonmonetary Assets 73,918,619 6.17 11,975,504 9,816,550 2,158,954 worth more PESOS
------------ ------------------------------------------- and they keep
Total Assets 80,818,790 12,891,861 10,732,907 2,158,954 their dollar value
adding: 2,158,954
Liabilities
Monetary Liabilities 49,898,936 7.53 6,626,685 6,626,685 O
Uses
----------
Exposure = Working Capital (42,998,765) (5,710,327) (5,710,327) 0 Equity must keep
its DOLLAR value
being NM: 2,551,642
Equity
Common Stock 50,000 6.35 7,874 6,640 1,234 Net Income is less
Additional Paid-In Capital 45,482,100 6.00 7,580,350 6,040,120 1,540,230 because
Accumulated deficit (Pesos) (13,604,131) (1,806,658) 1,806,658 depreciation must
Accumulated deficit (Dollars) (703,352) (703,352) keep the same
31,927,969 6,884,872 4,240,102 2,644,770 replacement dollar
Income value: (41,943)
All sources (except Rate
fluct.) 2,541,069 7.54 336,833 337,459 (626) But also more because
Gross Operating
Expenses profit is higher
All (except depreciation & ER 2,814,390 7.54 373,063 373,757 (694) because of
Depreciation 1,436,045 6.17 232,653 190,710 41,943 fluctuations
within the
------------ ------------------------------------------- quarter:
Net Profit (Loss) before Fluct. (1,709,366) (268,883) (227,007) (41,875) 67
-------------
Ex. Rate Fluctuations 701,251 93,128 (93,128) Total uses 2,509,767
Translation Result (350,813) (350,813) -------------
------------ ------------------------------------------- Difference (350,813)
Net Profit (Loss) after Fluct. (1,008,116) (619,696) (133,880) (485,816)
------------ -------------------------------------------
Total Liabilities & Equity 80,818,790 12,891,861 10,732,907 2,158,954
</TABLE>
GroupMed International de Mexico, S.A. de C.V. 25-Apr-96 Prepared by: FTM
<PAGE>
GroupMed
INTERNATIONAL
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
- --------------------------------------------------------------------------------
QUATERLY FINANCIAL STATEMENTS
(UNAUDITED)
JANUARY - MARCH, 1996
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
1. OPERATIONS AND MAIN ACCOUNTING POLICIES
a. The company was incorporated on April 18, 1995 and began
operating the GroupMed Hospital Las Americas on July 1st of that
same year. Its main activities are providing medical and hospital
care as well as ancillary services.
b. The financial statements have been prepared on the basis of
historical-cost accounting in pesos, and remesasured in U.S.
dollars following FASB Statement No. 52 guidelines using the U.S.
dollar as the company's functional currency.
c. Temporary investments are valued at their true value which is
similar to their market value.
d. Inventories are valued at current market value, which does not
exceed their true value. The cost of sales is brought up to date
using the last purchase method.
e. Fixed assets are valued at their historical cost. Depreciation is
calculated using the straight-line method based on the following
rates:
Buildings 30 years
Fixtures & Equipment 7 years
Computer equipment 4 years
f. Assets and liabilities in foreign currency (US dollars) are
valued at the exchange rate of the day the transaction took place
and registered in mexican pesos. A compensating account is kept
to register the changes in the pesos-value of these assets or
liabilities in response to exchange rate fluctuations.
g. Employee severence benefits are charged to operations when the
liability is determined to be due.
- --------------------------------------------------------------------------------
ARENAS # 151. ENSENADA 22XXO. B.C. Mexico Tel. (617) 6-03-01 FAX (617) 7-15-JI
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
- --------------------------------------------------------------------------------
h. Income and Assets taxes, as well as employees profit-share are
expensed in the year in which they become payable. They are adjusted,
as the case may be, bi any effects resulting from certain temporary
entries that are fiscally acknowledged in years different from that in
which it was acknowledged in the accounts. Asset taxes exceeding
Income taxes are expensed in the year in which they become payable.
2. The composition of Inventories at the balance sheet date was the
following:
a. General Warehouse US$ 195,434
b. Pharmacy US$ 17,031
--- -------
TOTAL US$ 212,465
3. Operations with related parties
GroupMed International, Inc., a Nevada corporation, has the following
relationship witth the Company:
i. Holder of 99% of the common stock
ii. Main financial source
iii. Significant administrative influence.
4. Translation procedure from Pesos to Dollars
a. Monetary Assets and liabilities are converted at the current rate of
exchange of 7.53 pesos/dollar.
b. Non-monetary assets are converted at the historical exchange rate at
the time of purchase, which is 6.00 pesos per dollar.
c. Common stock and other equity items are translated at the historical
excahnge rate of 6.00 pesos per dollar.
d. Income and expense items are converted at the average exchange rate
for the quarter, which was 7.544 pesos per dollar, except for
depreciation, which is converted at the same rate as the nonmonetary
assets from which it is derived.
e. The resulting exchange gain (loss) reflects both the magnitude and
direction of the fluctuation of the value of the mexican peso with
respect to the US dollar, and the proportions of monetary assets and
liabilities in each currency.
5. The MANAGEMENT'S DISCUSSION AND ANALYSIS which follows these notes
contains additional information on the results of operations and the
financial position of the company. Those comments should be read in
conjunction with these notes. The company's Audited Financial
Statements for the year ended December 31, 1995 include additional
information about the company, its operations, and its financial
position and should be read in conjuction with this quarterly report.
- --------------------------------------------------------------------------------
ARENAS # 151. ENSENADA 22880, B.C.. Mexico TEL. (617) 6-03-01 FAX (617) 7-154J
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
- --------------------------------------------------------------------------------
6. The results for the January-March quarterly period are not necessarily
indicative of the results to be expected for the full year of 1996 due
to the seasonal nature of the company's business and the continuing
restructuring undertaken.
7. In the opinion of the management, all adjustments necessary for a fair
statement of the results of operations of the quarter have been
included.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. REVENUES AND VOLUME
a. Revenues are derived principally from health care services
provided through the GROUPMED HOSPITAL LAS AMERICAS and
marginally from the rental of medical office space in the
adjoining GROUPMED MEDICAL CENTER.
b. The greatest share of the company's health care revenues,
approximately 75%, are private-pay in- and out-patients. Most of
these are billed and collected upon the patient's discharge and,
thus, receivables are less than 9% of the accumulated sales since
July, 1 995.
c. Compared with the staffed capacities of the Hospital, 11 patients
for general hospitalization, 3 in the nursery and two in the
Intensive Care Unit, the occupancy rates were: 90.7%, 34.5% and
63% respectively. The total number of patient-days for the
quarter was 971, 0.6% more than the previous quarter and 10.5%
less than the first quarter of operations.
2. BUSINESS EVOLUTION
a. The first quarter of 1996 saw several changes and additions to
Company operations. First of all, on February 2nd, the new
Department of Orthopedic Medicine began admitting patients,
mainly from the U.S.A. This department's activities have provided
a new and strong source of revenue for the Company.
b. On February 16, the Clinical Laboratory at the Hospital began
operations under the concessioned management of Pathology
Medical Laboratories, Inc. During the following three months the
lab staff will be under review to determine the staff that will
contracted by P.M.L. from May 15 onwards. The Pathologist
formerly heading the lab was terminated in February, and his
severance pay distributed over 3 months.
c. Staff changes, including promotions, new hires and attrition,
were implemented to control costs more closely than before,
resulting in important savings from the second half of the
quarter.
- --------------------------------------------------------------------------------
Arenas ISI. Ensenada 22880. B.C. Mexico Tel. (617) 6-03-01 Fax ((617)) 7-15-11
<PAGE>
FIRST MANHATTAN, INC.
December 31, 1994, 1993, 1992 and 1991
<PAGE>
FIRST MANHATTAN, INC.
DECEMBER 31, 1994, 1993, 1992 AND 1991
TABLE OF CONTENTS
PAGE NO.
-------
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statements of Stockholders' Equity 4
Statements of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6-9
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
First Manhattan, Inc.
We have audited the balance sheets of First Manhattan, Inc. (a Nevada
corporation) (a development stage company) as of December 31, 1994, 1993, 1992,
and 1991, and the related statements of operations, stockholders' equity, and
cash flows for the years ended December 31, 1994, 1993, 1992, and the nine
months ended December 31, 1991. 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 audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Manhattan, Inc. as of
December 31, 1994, 1993, 1992, and 1991, and the results of its operations and
its cash flows for the years ended December 31, 1994, 1993, 1992 and the nine
months ended December 31, 1991 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ [ILLEGIBLE]
Reno, Nevada
February 16, 1995
<PAGE>
This page intentionally left blank.
<PAGE>
DECEMBER 31,
- ----------------------------
1992 1991
- ---------- --------
$ 6,609 $ 9,198
- 42,955
840 2,000
- -
3,000 -
- -------- --------
10,449 54,153
- -------- --------
- 226
- -
410 524
- -------- --------
410 750
- -------- --------
$ 10,859 $ 54,903
- -------- --------
- -------- --------
- 99
- -------- --------
- 99
- -------- --------
- 99
- -------- --------
178 178
87,663 87,663
(76,982) (33,037)
- -------- --------
10,859 54,804
- -------- --------
$ 10,859 $ 54,903
- -------- --------
- -------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
BALANCE SHEETS
DECEMBER 31, 1994, 1993, 1992, AND 1991
ASSETS
DECEMBER 31,
-----------------------
1994 1993
-------- --------
Current Assets:
Cash in bank $ 2,782 $ 5,178
Certificates of deposit - -
Marketable securities, at lower of cost
or market, allowance for unrealized
losses of $2,660 for 1994, $2,660 for 1993,
$2,660 for 1992, and $0 for 1991 - Note 6 840 840
Accrued interest receivable 294 115
Notes receivable - Note 7 3,000 3,000
-------- --------
Total Current Assets 6,916 9,133
-------- --------
Other assets:
Deposits - -
Deferred income taxes, net of valuation
allowance of 512,111 for 1994, $11,762
for 1993, $11,547 for 1992, and $5,106
for 1991 - Note 5 - -
Organization costs, net of accumulated
amortization of $390 for 1994, $276 for
1993, $162 for 1992, and $48 for 1991 182 296
-------- --------
Total Other Assets 182 296
-------- --------
$ 7,098 $ 9,429
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - -
-------- --------
Total Current Liabilities - -
-------- --------
Total Liabilities - -
-------- --------
Stockholders' Equity:
Common stock, $0.001 par value; authorized
25,000,000 shares; issued and outstanding
177,750 shares at December 31, 1994,
1993, 1992, and 1991 178 178
Additional paid-in capital 87,663 87,663
Deficit accumulated during the
development stage (80,743) (78,412)
-------- --------
Total Stockholders' Equity 7,098 9,429
-------- --------
$ 7,098 $ 9,429
-------- --------
-------- --------
2
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993,
1992,
AND THE NINE MONTHS ENDED DECEMBER 31, 1991
DECEMBER 31,
-----------------------
1994 1993
-------- --------
Revenues $ - $ -
General costs and expenses:
Amortization 114 114
General and administrative expenses 2,397 1,432
-------- --------
Operating Loss (2,511) (1,546)
-------- --------
Other income (expense):
Interest income 180 116
Bad debts - Note 10 - -
Unrealized losses on securities - -
Gain/(loss) on sale of securities - -
-------- --------
180 116
-------- --------
Loss before income taxes (2,331) (1,430)
Income taxes - Notes 4 and 5 - -
-------- --------
Net Loss $ (2,331) $ (1,430)
-------- --------
-------- --------
Net loss per share $ (0.01) $ (0.01)
-------- --------
-------- --------
Weighted average common
shares outstanding 177,750 177,750
-------- --------
-------- --------
3
<PAGE>
DECEMBER 31, INCEPTION TO
- --------------------- -----------------
1992 1991 DECEMBER 31, 1994
- -------- -------- -----------------
$ - $ - $ -
114 48 390
3,581 2,990 10,400
- -------- -------- --------
(3,695) (3,038) (10,790)
- -------- -------- --------
480 1,001 1,777
(40,000) (30,000) (70,000)
(2,660) - (2,660)
1,930 (1,000) 930
- -------- -------- --------
(40,250) (29,999) (69,953)
- -------- -------- --------
(43,945) (33,037) (80,743)
- - -
- -------- -------- --------
$(43,945) $(33,037) $(80,743)
- -------- -------- --------
- -------- -------- --------
$ (0.25) $ (0.36) $ (0.45)
- -------- -------- --------
- -------- -------- --------
177,750 91,414 177,750
- -------- -------- --------
- -------- -------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
FROM MARCH 27, 1991 (INCEPTION) TO DECEMBER 31, 1994
COMMON STOCK ADDITIONAL
--------------------- PAID-IN
SHARES AMOUNT CAPITAL
------ ------ ----------
Issuance of shares for cash,
August 9, 1991 86,750 $ 87 $86,664
Issuance of shares in exchange for
marketable securities, August 9, 1991 1,000 1 999
Issuance of shares in exchange for - - -
services, August 9, 1991 90,000 90 -
Net loss for the nine months ended
December 31, 1991 - - -
------- ---- -------
Balance, December 31, 1991 177,750 178 87,663
Net loss for the year ended
December 31, 1992 - - -
------- ---- -------
Balance, December 31, 1992 177,750 178 87,663
Net loss for tile year ended
December 31, 1993 - - -
------- ---- -------
Balance, December 31, 1993 177,750 178 87,663
Net loss for the year ended
December 31, 1994 - _ -
------- ---- -------
Balance, December 31, 1994 177,750 $178 $87,663
------- ---- -------
------- ---- -------
4
<PAGE>
DEFICIT
ACCUMULATED
DURING THE
DEVELOPMENT
STAGE TOTAL
- ----------- -----------
$ - $ 86,751
- 1,000
- 90
(33,037) (33,037)
--------- --------
(33,037) 54,804
(43,945) (43,945)
--------- --------
(76,982) 10,859
(1,430) (1,430)
--------- --------
(78,412) 9,429
(2,331) (2,331)
--------- --------
$ (80,743) $ 7,098
--------- --------
--------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, 1992,
AND THE NINE MONTHS ENDED DECEMBER 31, 1991
DECEMBER 31,
-----------------------
1994 1993
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,331) $ (1,430)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Amortization 114 114
Unrealized losses on securities - -
(Gain)/loss on sale of securities - -
Bad debts - -
Changes in current assets and liabilities:
Accrued interest receivable (179) (115)
Accounts payable - -
-------- --------
Net cash provided (used) by
operating activities (2,396) (1,431)
-------- --------
Cash flows from investing activities:
Purchase of marketable securities - -
Sale of marketable securities
Deposits and other assets - -
Organization costs - -
Loans and notes receivable - -
-------- --------
Net cash provided (used) by
investing activities - -
-------- --------
Cash flows from financing activities:
Proceeds from sale of common stock - -
-------- --------
Net cash provided (used) by
financing activities - -
-------- --------
Net increase (decrease) in cash (2,396) (1,431)
Cash and cash equivalents, beginning of period 5,178 6,609
-------- --------
Cash and cash equivalents, end of period $ 2,782 $ 5,178
-------- --------
-------- --------
5
<PAGE>
DECEMBER 31, INCEPTION TO
- --------------------- -----------------
1992 1991 DECEMBER 31. 1994
- -------- -------- -----------------
$(43,945) $(33,037) $(80,743)
114 48 390
2,660 - 2,660
(1,930) 1,000 (930)
40,000 30,000 70,000
- - (294)
(99) 99 -
- -------- --------- --------
(3,200) (1,890) (8,917)
- -------- --------- --------
(8,500) (2,000) (10,500)
8,930 - 8,930
226 (226) -
- (572) (572)
(43,000) (30,000) (73,000)
- -------- --------- --------
(42,344) (32,798) (75,142)
- -------- --------- --------
- 86,841 86,841
- -------- --------- --------
-... 86,841 86,841
- -------- --------- --------
(45,544) 52,153 2,782
52,153 - -
- -------- --------- --------
$ 6,609 $ 52,153 $ 2,782
- -------- --------- --------
- -------- --------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
This page intentionally left blank.
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FROM MARCH 27, 1991 (INCEPTION) TO DECEMBER 31, 1994
NOTE 1 - Summary of Significant Accounting Policies and Business Activity:
This summary of significant accounting policies of First Manhattan,
Inc. (the Company) is presented to assist in understanding the Company's
financial statements.
BUSINESS ACTIVITY:
The Company, a Nevada corporation, was incorporated on March 27, 1991,
and is in the development stage. The planned operation of the Company was
to establish a broker/dealer in securities.
ORGANIZATION COSTS:
Organization costs are being amortized over a 60-month period, using
the straight-line method.
ACCOUNTING METHOD:
The Company's financial statements are prepared using the accrual
basis of accounting.
LOSS PER SHARE:
Loss per share of common stock is based on the weighted average number
of common shares and common stock equivalents outstanding during the
period.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents for purposes
of the statements of cash flows.
DEFERRED INCOME TAX ACCOUNTS:
Deferred tax provision/benefits are calculated for certain
transactions and events because of differing treatments under generally
accepted accounting principles and the currently enacted tax laws of the
federal government. The results of these differences on a cumulative basis,
known as temporary differences, result in the recognition and measurement
of deferred tax assets and liabilities in the accompanying balance sheets.
6
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FROM MARCH 27, 1991 (INCEPTION) TO DECEMBER 31, 1994
Note 2 - Development Stage Company:
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating
substantially all of its efforts to establishing a business engaging in the
retail marketing of various products.
Operating losses have been incurred from inception through December
31, 1994, and the Company continues to use, rather than to provide, working
capital in this operation. Realization of a significant portion of the
assets in the accompanying balance sheets is dependent upon the Company's
ability to continue its planned principal operations which in turn is
dependent upon its ability to develop and complete the planned operations
of the Company. Although management believes that it is pursuing a course
of action that will provide successful future operations, the outcome of
these matters is uncertain.
NOTE 3 - Basis of Presentation and Considerations Related to Continued
Existence:
The Company's financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $2,331, $1,430, $43,945, and $33,037 for the
periods ended December 31, 1994, 1993, 1992 and 1991, and $80,743 for the
period from inception to December 31, 1994. These factors, among others,
indicate the Company's ability to continue in existence is dependent upon
its ability to obtain additional long-term debt and/or equity financing and
achieve profitable operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence.
NOTE 4 - Income Taxes:
Because the Company has not generated taxable income since its
inception, no provision for income taxes has been made.
The Company can carry forward its net operating losses as follows:
Years Ended December 31,
------------------------
2006 $33,037
2007 43,945
2008 1,430
2009 2,331
-------
$80,743
-------
-------
7
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FROM MARCH 27, 1991 (INCEPTION) TO DECEMBER 31, 1994
NOTE 5 - Adoption of SFAS No. 109:
Effective March 27, 1991, First Manhattan, Inc. adopted Statement of
Financial Accounting Standards ((SFAS)) No. 109, "Accounting for Income
Taxes., which requires a liability approach to financial accounting and
reporting for income taxes.
The difference between the financial statement and tax bases of assets
and liabilities is determined annually. Deferred income tax assets and
liabilities are computed for those differences that have future tax
consequences using the currently enacted tax laws and rates that apply to
the periods in which they are expected to affect taxable income. Valuation
allowances are established, if necessary, to reduce deferred tax asset
accounts to the amounts that will more likely than not be realized. Income
tax expense is the current tax payable or refundable for the period, plus
or minus the net change in the deferred tax asset and liability accounts.
SFAS No. 109 requires that the cumulative effect of adopting the
Standard be reported in the year of adoption. As described in Note 3, there
is substantial doubt as to the continued existence of the Company,
resulting in substantial doubt that the Company would be able to utilize
its net operating loss carryforwards. The Company has therefore recorded a
valuation allowance equal to the amount of the deferred tax asset created
by the net operating losses that can be carried forward to future periods.
The cumulative effect of the adoption of SFAS No. 109 is zero for the
periods ended December 31, 1994, 1993, 1992, and 1991.
NOTE 6 - Marketable Securities:
Carrying amounts and approximate market values of investment
securities are summarized as follows:
DECEMBER 31, 1994, 1993, AND 1992
----------------------------------
GROSS
CARRYING UNREALIZED MARKET
AMOUNT LOSSES VALUE
-------- ---------- ------
EVT International Corp. $3,500 $2,660 $840
-------- ------ ----
$3,500 $2 660 $840
-------- ------ ----
-------- ------ ----
NOTE 7 - Notes Receivable:
Notes receivable of 33,000 consist of a demand note receivable from
Bellgate, Ltd. which bears an interest rate of 6.00% per annum, principal
and accrued interest payable on demand. The note is uncollateralized.
8
<PAGE>
FIRST MANHATTAN, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FROM MARCH 27, 1991 (INCEPTION) TO DECEMBER 31, 1994
NOTE 8 - Supplemental Schedule of Noncash Investing and Financing Activities:
During the nine months ended December 31, 1991, the Company engaged in
the following noncash transactions:
Acquisition of marketable securities $1,000
------
------
Issuance of common stock in exchange
for marketable securities $1,000
------
------
NOTE 9 - Warrants:
On August 9, 1991, the Company issued shares of common stock with
warrants attached. Each unit of common stock is comprised of one share of
common stock and one "A" warrant (90,000 units) and one "B" warrant (10,000
units). The "A" warrant is convertible into one share of common stock at
$7.50 per share. The "B" warrant is convertible into one share of common
stock at $10.00 per share.
The warrants are exercisable for one year and two years (for the "A"
and "B" warrants, respectively) commencing on the effective date of the
registration of the warrants with the Securities and Exchange Commission.
As of the date of these financial statements the warrants have yet to be
registered with the Securities and Exchange Commission.
The warrants have not been included in the computation of loss per
share since there is substantial doubt that the Company will continue in
existence (Note 3) and therefore the warrants will not be registered.
NOTE 10 - Related Parties:
For the periods ended December 31, 1992 and 1991, the Company loaned
$40,000 and $30,000, respectively, to First Manhattan, Inc. (incorporated
on the island of Nevis)) for the purpose of establishing a broker/dealer in
securities in Germany. First Manhattan, Inc. ((Nevis)) is controlled by the
President of the Company.
Subsequently, the management of the Company determined that the German
brokerage operation was not going to be successful and wrote-off the
amounts loaned as a bad debt as of December 31, 1992 and 1991.
9
<PAGE>
EXHIBIT NO. 3.1
ARTICLES OF AMENDMENT
<PAGE>
[LOGO]
JUN 14 1995
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
FIRST MANHATTAN, INC.
Pursuant to the provisions of Section 16e-10a-1006 of the Nevada Revised
Business Corporation Act, First Manhattan, Inc. hereby adopts the following
amendment to its Articles of Incorporation.
AMENDMENT
A. ARTICLE I - Name
Article I of the Company's Articles of Incorporation was amended to read as
follows:
ARTICLE I - NAME. The name of the corporation is GroupMed International,
Inc.
RECEIVED
JUN 14 1995
SECRETARY OF STATE
<PAGE>
ADOPTION OF AMENDMENT
The above amendment to the Articles of Incorporation of First Manhattan,
Inc. was duly adopted by the shareholders of the corporation at a meeting held
June 7, 1995 in the manner prescribed by the Nevada Revised Corporation Act as
follows:
- --------------------------------------------------------------------------------
Voting Group Shares Number of Undisputed No.
Designation Outstanding votes allowed of votes re-
presented
- --------------------------------------------------------------------------------
Common Stock 200,000 200,000 200,000
- --------------------------------------------------------------------------------
The shareholders voted as follows on such amendment:
- --------------------------------------------------------------------------------
Voting Group Votes for Amendment Votes against
Designation Amendment
- --------------------------------------------------------------------------------
Common Stock 112,250 -0-
- --------------------------------------------------------------------------------
The number of shares cast for the amendment by the voting group was
sufficient for approval of the amendments by the group.
In witness whereof, the undersigned president and secretary, having been
thereto duly authorized, have executed the foregoing Articles of Amendment for
the corporation this 7th day of June 1995.
First Manhattan, Inc.
/s/ Daniel N. Lomax
-------------------------
President
/s/ [illegible]
--------------------------
Secretary
NOTARY
See attached
<PAGE>
EXHIBIT NO. 3.2
ARTICLES OF INCORPORATION
<PAGE>
ARTICLES OF INCORPORATION
OF
FIRST MANHATTAN INC.
* * *
The undersigned, acting as incorporator, pursuant to the provisions of the laws
of the State of Nevada relating to private corporations, hereby adopts the
following Articles of Incorporation:
ARTICLE ONE. (NAME). The name of the corporation is:
FIRST MANHATTAN INC.
ARTICLE TWO. (LOCATION). The address of the corporation's principal office
in the State of Nevada is 5025 South Eastern Avenue, Suite 24, in the city of
Las Vegas, County of Clark, State of Nevada 89119. The initial agent for service
of process at that address is PACIFIC NATIONAL VENTURE, INC.
ARTICLE THREE. (PURPOSES). The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America.
ARTICLE FOUR. (CAPITAL STOCK). The corporation shall have authority to
issue an aggregate of TWENTY-FIVE MILLION (25,000,000) shares, par value ONE MIL
($0.001) per share, for a total capitalization of $25,000.
The holders of shares of capital stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock of any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's capital stock may be issued and sold from time to time
for such consideration as may be fixed by the Board of Directors, provided that
the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
<PAGE>
ARTICLE FIVE. (DIRECTORS). The affairs of the corporation shall be governed
by a Board of Directors of not less than three (3) persons. The name and
addresses of the first Board of Directors are:
NAME ADDRESS
---- -------
Hugo Winkler 665 Finchley Road
London, NW2 2HN
United Kingdom
Curtis M. Jamison P.O. Box 71602
Reno, Nevada 89570
Suzy Frost 5025 S. Eastern Avenue, #24
Las Vegas, Nevada 89119
ARTICLE SIX. (ASSESSMENT OF STOCK). The capital stock of the corporation,
after the amount of the subscription price or par value has been paid in, shall
not be subject to pay debts of the corporation, and no paid up stock and no
stock issued as fully paid up shall ever be assessable or assessed.
ARTICLE SEVEN. (INCORPORATOR). The name and address of the incorporator of
the corporation is as follows:
NAME ADDRESS
---- -------
Suzy Frost 5025 S. Eastern Avenue, #24
Las Vegas, Nevada 89119
ARTICLE EIGHT. (PERIOD OF EXISTENCE). The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. (BY-LAWS). The initial By-Laws of the corporation shall be
adopted by its Board of Directors. The power to alter, amend, or repeal the
By-Laws, or to adopt new By-Laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-Laws.
ARTICLE TEN. (STOCKHOLDERS' MEETINGS). Meetings of stockholders shall be
held at such place within or without the State of Nevada as may be provided by
the By-Laws of the corporation. Special meetings of the stockholders may be
called by the President or any other executive officer of the corporation, the
Board of Directors, or any member thereof, or by the record holder or holders of
at least ten percent (10%) of all shares
<PAGE>
entitled to vote at the meeting. Any action otherwise required to be taken at a
meeting of the stockholders, except election of directors, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by stockholders having at least a majority of the voting power.
ARTICLE ELEVEN. (CONTRACTS OF CORPORATION). No contract or other
transaction between the corporation and any other corporation, whether or not a
majority of the shares of the capital stock of such other corporation is owned
by this corporation, and no act of this corporation shall in any way be affected
or invalidated by the fact that any of the directors of this corporation are
pecuniarily or otherwise interested in, or are directors or officers of such
other corporation. Any Director of this corporation, individually, or any firm
of which such director may be a member, may be a part to, or may be pecuniarily
or otherwise interested in any contract or transaction of the corporation;
provided, however, that the fact that he or such firm is so interested shall be
disclosed or shall have been known to the Board of Directors of this
corporation, or a majority thereof; and any director of this corporation who is
also a director or officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of this corporation that shall authorize such contract or
transaction, and may vote thereat to authorize such contract or transaction,
with like force and effect as if he were not such director or officer of such
other corporation or not so interested.
IN WITNESS WHEREOF, the undersigned incorporator has hereunto fixed her
signature in Las Vegas, Nevada this 21st day of March, 1991.
/s/ Suzy Frost
-----------------------------------
Suzy Frost
<PAGE>
STATE OF NEVADA )
: ss.
CLARK COUNTY )
On this 21st day of March, 1991 before me, the undersigned, a Notary Public,
personally appeared Suzy Frost, known to me to be the person described in and
who executed the foregoing instrument, and who acknowledged to me that she
executed the same freely and voluntarily and for the uses and purposes therein
mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
/s/ Carole A. Malugan
------------------------------
NOTARY PUBLIC
RESIDING IN CLARK COUNTY
MY COMMISSION EXPIRES:
Aug. 9, 1993
- ---------------------
STATE OF NEVADA
Department of
State
I hereby certify that this is a true and complete copy of the document
filed in this office.
DATED: MAR 27 1991
------------
/s/
CHERYL A. LAU
Secretary of State
By: /s/
----------------------
<PAGE>
EXHIBIT 3.3
BY LAWS
<PAGE>
BY-LAWS
OF
FIRST MANHATTAN INC.
ARTICLE I
NAME OF CORPORATION
SECTION 1: This corporation shall be known as:
FIRST MANHATTAN INC.
ARTICLE II
OFFICES
SECTION 1: The principal office of the corporation in Nevada will be located at
the office of its Resident Agent at 5025 South Eastern Avenue, Suite 24, Las
Vegas, Nevada 89119. The corporation may maintain such other offices within the
State of Nevada; within the United States or within Europe, as the Board of
Directors may designate from time to time.
ARTICLE III
STOCKHOLDERS
SECTION l: The annual meeting of the stockholders shall be held in December of
each year, at a date and time to be specified by the Board of Directors. Said
meeting shall be for the purpose of electing directors for the ensuing year and
for the transaction of such other business as may come before the meeting. If
the election of directors shall not be held on the day designated for the annual
meeting of the stockholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as possible.
SECTION 2: Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by Statute, may be called by the President or by
the Board of Directors and shall be called by the President at the request of
the holders of not less than one-tenth of all the outstanding shares of the
corporation entitled to vote at the meeting.
SECTION 3: The Board of Directors may designate any place within or without the
State of Nevada as the site for any annual or special stockholders meeting. A
waiver of notice signed by all stockholders entitled to vote at a meeting may
designate any place, either within or without the State of Nevada, as the site
for any
<PAGE>
meeting hereinabove authorized. If no designation is made, the place of the
meeting shall be at the principal office of the corporation in the State of
Nevada.
SECTION 4: Written or printed notice stating the site, date and time of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by the
mail, by or at the direction and over the signature of the President, or the
Secretary, or the officer or person calling the meeting, to each stockholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
SECTION 5: For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders, or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books shall be
closed for a stated period, not to exceed twenty (20) days. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of stockholders, such date in any
case to be not more than sixty (60) days and, in case of a meeting of
stockholders, not less than fifteen (15) days prior to the date on which the
particular action requiring such determination of stockholders to be taken. If
the stock transfer books are not closed and no record dates fixed for the
determination of stockholders entitled to notice of or to vote, or entitled to
receive payment of a dividend, the date on which notice of the meeting is mailed
or the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of stockholders entitled to
vote at any meeting of stockholders has been made as provided in thereof, except
where the determination has been made through the closing of the stock transfer
books and the stated period of closing has expired.
SECTION 6: The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of, and the number of shares held by, each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the principal
office of the corporation and shall be subject to the inspection of any
stockholder during the meeting.
SECTION 7: A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of stockholders. If less than a
<PAGE>
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 8: At all meetings of stockholders, a stockholder may vote by proxy
which shall be executed in writing by the stockholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy or coupled with an interest.
SECTION 9: Each outstanding share otherwise entitled to vote shall be entitled
to one (1) vote upon each matter submitted to a vote at a meeting of
stockholders. A majority vote of those shares present and voting at a duly
organized meeting shall suffice to defeat or enact any proposal unless the
Statutes of the State of Nevada require a greater-than-majority vote, in which
event such greater-than-majority vote shall be required for the action to
constitute the action of the corporation.
SECTION 10: Shares held by an administrator, executor, guardian or conservator
may be voted by him, either in person or by proxy, without the transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so be contained in
an appropriate order of the Court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such shares
until the shares are transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
SECTION 11: An action required to be taken at a meeting of the stockholders, or
any other action which may be taken at a meeting of the stockholders, may be
taken without a meeting, if a consent in writing, setting forth the action so
taken, shall be signed by a majority of the stockholders entitled to vote with
respect to the
<PAGE>
subject matter thereof, unless a greater-than-majority vote would be required at
a duly organized meeting, in which event said greater-than majority stockholder
approval must be obtained. Such consent shall be filed with the minutes of the
meeting.
SECTION 12: The following order of business shall be observed at all meetings of
the stockholders, so far as practicable:
(a) calling the roll;
(b) Reading, correcting and approving of minutes or previous meeting;
(c) Reports of Officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1: The business and affairs of the corporation shall be managed by its
Board of Directors.
SECTION 2: As provided in the Articles of Incorporation, the Board of Directors
shall consist of at least three (3) persons, and may be increased by resolution
of the Board of Directors. The directors shall hold office until the next annual
meeting of stockholders and until their successor shall have been elected and
qualified. Directors need not be residents of the State of Nevada or
stockholders of the corporation.
SECTION 3: Directors shall be elected at an annual or special stockholders'
meeting by secret ballot of those stockholders present and entitled to vote, a
plurality of the vote being cast being required to elect. Each stockholder shall
be entitled to one (1) vote for each share of stock owned. If there is but one
(1) nominee for any office, it shall be in order to move that the Secretary cast
the elective ballot to elect the nominee.
SECTION 4: A regular meeting of the Board of Directors shall be held without
notice, other than this By-Law, immediately after, and at the same place as, the
annual meeting of stockholders. The Board of Directors may provide, by
resolution, the day, time and place for the holding of additional regular
meetings without other notice than such resolution. The Secretary of the
corporation shall serve as Secretary for the Board of Directors and shall issue
<PAGE>
notices for all meetings as required by the By-Laws; shall keep a record of the
minutes of the proceedings of the meetings of directors; and shall perform such
other duties as may be properly required of him by the Board of Directors.
SECTION 5: Special meetings of the Board of Directors may be called by or at the
request of the President or any director. The person or persons authorized to
call special meetings of the Board of Directors may fix any place, within or
without the State of Nevada, as the place for holding any special meeting of the
Board of Directors so called.
SECTION 6: Notice of any special meeting shall be given at least two (2) days
prior thereto by written notice delivered personally or mailed to each director
at his business address, or by telegram. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage prepaid thereon. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
Any director may waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business to be transacted at such meeting. The purpose of any regular or special
meeting of the Board of Directors need not be specified in the notice or waiver
of such meeting.
SECTION 7: A majority of the number of directors established according to
Section 2 of this Article IV shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice. Once a quorum has
been established at a duly organized meeting, the Board of Directors may
continue to transact corporate business until adjournment, notwithstanding the
withdrawal of enough members to leave less than a quorum.
SECTION 8: The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors unless the
Statutes of the State of Nevada require a greater-than-majority vote, in which
case, such greater-than-majority vote shall be required for the act to be that
of the Board of Directors.
SECTION 9: Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors, through less than a
quorum of the Board of Directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. Any directorship to
be filled by reason of an increase in the number of directors shall be filled by
election at an annual meeting or at a special meeting of the stockholders called
for that purpose.
<PAGE>
SECTION 10: By resolution of the Board of Directors, the directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors,
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
SECTION 11: A director of the corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the Secretary of the meeting before the adjournment
thereof or shall express such dissent by written notice sent by registered mail
to the Secretary of the corporation within one (1) day after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
SECTION 12: Any action required to be taken at a meeting of the Board of
Directors, or any other action which may be taken at a meeting if a written
consent thereto is signed by all the members of the Board. Such written consent
shall be filed with the minutes of the meetings of the Board of Directors. Any
meeting of the Board of Directors may be held by conference telephone call, with
minutes thereof duly prepared and entered into the Minute Book.
ARTICLE V
OFFICERS
SECTION 1: The officers of the corporation shall be a President, a Vice-
President, a Secretary, a Treasurer, and a Resident Agent, each of whom shall be
elected by the Board of Directors. Other officers and assistant officers may be
authorized and elected or appointed by the Board of Directors. Any two (2) or
more offices may be held by the same person.
SECTION 2: The officers of the corporation shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the stockholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall be removed in the manner hereinafter provided. Each officer
shall serve for a term of one (1) year, or until his successor is elected and
qualified.
SECTION 3: Any officer of agent elected or appointed by the Board of Directors
may be removed by the Board of Directors whenever, in its sole judgment, the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
<PAGE>
SECTION 4: A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by majority vote of the Board of
Directors for the unexpired portion of the term of such office.
SECTION 5: The President shall preside at all meetings of the directors and the
stockholders and shall have general charge and control over the affairs of the
corporation, subject to control by the Board of Directors. The President shall
sign or countersign all certificates, contracts and other instruments of the
corporation as authorized by the Board of Directors and shall perform such other
duties as are incident to his office or are required of him/her by the Board of
Directors.
SECTION 6: The Vice-President shall exercise the functions of the President, in
the President's absence, and shall have such powers and duties as may be
assigned to him from time to time by the Board of Directors.
SECTION 7: The Secretary shall issue notices for all meetings, as required by
the By-Laws; shall keep a record of the minutes of the proceedings of the
meetings of stockholders and directors; shall have charge of the Seal and of
the corporate books; and shall make such reports and perform such other duties
as are incident to his office, or properly required of him by the Board of
Directors.
SECTION 8: The Treasurer shall have the custody of all monies and
securities of the corporation and shall keep regular books of account. He shall
disburse the funds of the corporation, or as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, from time to time, as may be required of him, an account
of all his transactions as Treasurer and of the financial condition of the
corporation. He shall perform all duties incident to his office or which are
properly required of him by the Board of Directors.
SECTION 9: The Resident Agent shall be in charge of the corporation's registered
office, upon whom process against the corporation may be served, and shall
perform all duties required of him by statute.
SECTION 10: The salaries of all officers shall be fixed by the Board of
Directors, and may be changed from time to time by a majority vote of the Board
of Directors.
ARTICLE VI
AGREEMENTS AND FINANCES
SECTION 1: The Board of Directors may authorize any officer or officers, or
agent of agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
<PAGE>
SECTION 2: No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or confined
to specific instances.
SECTION 3: All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation shall be
signed by such duly authorized officer or officers, or agent of agents of the
corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 4: All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLES VII
CERTIFICATE OF SHARES
SECTION 1: Certificates representing shares of the corporation shall be in such
form as shall be determined by the Board of Directors. Such certificates shall
be signed by the President and by the Secretary. All certificates for shares
shall be consecutively numbered or otherwise indentified. The name and address
of the person to whom the shares represented thereby are issued, with the number
of shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer shall
be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except in case of a lost, destroyed or mutilated certificate, a new
one may be issued therefor upon such terms and indemnity to the corporation as
the Board of Directors may prescribe.
SECTION 2: Transfer of shares of the corporation shall be made only on the stock
transfer books of the corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney authorized by power of attorney duly executed and
filed with the Secretary of the corporation, and only on full surrender for
cancellation of the certificate for such shares. The person in whose name shares
stand on the books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes, unless otherwise notified by such person in
writing.
ARTICLE VIII
FISCAL YEAR
SECTION 1: The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
<PAGE>
ARTICLE IX
SEAL
SECTION 1: The corporation may or may not have a corporate seal, as may from
time to time be determined by resolution of the Board of Directors. If a
corporate seal is adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Nevada". the seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
ARTICLE X
AMENDMENTS
SECTION 1: These By-Laws may be amended by a majority vote of all the stock
issued and outstanding and entitled to vote at any annual or special meeting of
the stockholders, provided notice of intention to amend shall have been
contained in the notice of the meeting.
SECTION 2: The Board of Directors, by a majority vote of the entire Board of
Directors, present at any meeting, may amend these By-Laws, including By-Laws
adopted by the stockholders.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1: Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any action, suit or proceedings, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer of
the corporation or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless, to the fullest extent legally permissible under the laws of the
State of Nevada, against all expenses, liability and loss, including attorneys'
fees, judgements, fines and amounts paid or to be paid in settlement, reasonably
incurred or suffered by him in connection therewith, all pursuant to NFS 78.151.
Such right of indemnification shall be a contract right which may be enforced in
any manner desired by such person.
SECTION 2: This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Nevada and the corporation
may purchase and maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
against any liability asserted against such person
<PAGE>
and incurred in any such capacity or arising out of such status, whether or not
the corporation would have the power to indemnify such person.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of FIRST MANHATTAN INC., and that
the foregoing By-Laws, consisting of ten (10) pages, constitutes the Code of
FIRST MANHATTAN INC. as duly adopted by the Board of Directors of the
Corporation, effective this 27th day of March, 1991.
/s/ Suzy Frost
-----------------------------------
Suzy Frost, Secretary
<PAGE>
EXHIBIT NO. 10.1
ACQUISITION AGREEMENT AND
PLAN OF REORGANIZATION
<PAGE>
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION (hereinafter the
"Agreement") is made and entered into as of the ___ day of ______, 1995, by and
between FIRST MANHATTAN, INC., a Nevada corporation (hereinafter "FIRST
MANHATTAN") and GROUPMED, INC., a Nevada corporation, (hereinafter "GMI").
RECITALS
WHEREAS, FIRST MANHATTAN desires to acquire from GMI the stock of GroupMed
International of Mexico, SADECV, in exchange solely for 5,200,000 shares of
common stock of FIRST MANHATTAN, post split, par value $0.001 and
WHEREAS, the parties hereto desire to reorganize the management and
operations of FIRST MANHATTAN and to change the corporation name to GROUPMED
INTERNATIONAL, INC.
NOW, THEREFORE, in consideration of the premises and mutual representation,
warranties and covenants herein contained, the parties hereby agree as
follows:
ARTICLE I
ACQUISITION AND EXCHANGE OF SHARES
SECTION 1.1 ACQUISITION. The parties hereto agree that this Agreement shall
replace and supersede the Letter of Intent executed by the parties on ________.
The parties hereby agree that FIRST MANHATTAN shall acquire from GMI and GMI
shall assign and transfer to FIRST MANHATTAN 100% of the Common Stock of
GROUPMED INTERNATIONAL INC., SADECV more completely described in Exhibit 1.1
annexed hereto and by this reference made a part hereof. GMI further agrees to
assume and become obligated to those specified liabilities, debts, obligations
and encumbrances of FIRST MANHATTAN that are specifically set forth and more
specifically described in Exhibit 4.3, annexed hereto and by this reference made
a part hereof and which liabilities, debts, obligations and encumbrances GMI
agrees to fully assume become obligated to. In exchange for the acquisition of
the stock of GroupMed International of Mexico, SADECV from GMI, FIRST MANHATTAN
agrees to issue to GMI, five million two hundred thousand shares (5,200,000) of
authorized but previously unissued shares of GMI common stock, par value $0.001
per share, said shares to be issued directly to GMI and pursuant to the terms
and conditions set forth herein. The parties hereto further agree that the
business and management of FIRST MANHATTAN shall be reorganized and that FIRST
MANHATTAN shall hereinafter become engaged in the business of developing the GMI
assets.
SECTION 1.2 ISSUANCE OF SHARES.
(a) Upon the Closing of this Agreement, FIRST MANHATTAN shall cause to be
issued and delivered to GMI, stock certificates representing 5,200 000
shares of common stock of FIRST MANHATTAN, par value $0.001 per share.
<PAGE>
(b) The shares of FIRST MANHATTAN Common Stock to be issued hereunder shall
be authorized but previously unissued shares of FIRST MANHATTAN Common
Stock and shall be issued directly to and in the name of GROUPMED, INC.
(c) All shares of FIRST MANHATTAN Common Stock to be issued hereunder are
deemed "restricted securities" as defined by Rule 144 of the Securities Act
of 1933, as amended ("the 1933 Act"), and GMI shall represent that they
are acquiring said shares for investment purposes only and without the
intent to make a further distribution of the shares until such time as
appropriate regulatory approval for any such distribution has been
properly obtained. All shares of FIRST MANHATTAN Common Stock to be issued
under the terms of this Agreement shall be issued pursuant to an exemption
from the registration requirements of the 1933 Act, under Section 4(2) of
the 1933 Act and the rules and regulations promulgated thereunder.
(d) GMI agrees that in the event it decides to distribute to its
shareholders the FIRST MANHATTAN shares to be acquired hereby, either in
part or in whole, GMI will make all necessary and requisite filing with the
appropriate state and federal agencies to register such distribution under
the applicable securities laws.
SECTION 1.3 CLOSING. The closing of this Agreement and the transactions
contemplated hereby (the "Closing") shall take place on the ___ day of ______
(the "Closing Date"), at a time and place to be mutually agreed upon by the
parties hereto, and shall be subject to the provisions of ARTICLE X of this
Agreement. At the Closing:
(a) GMI shall cause to be delivered to FIRST MANHATTAN fully executed
instruments of conveyance which when executed and delivered to FIRST
MANHATTAN, shall immediately convey and transfer to FIRST MANHATTAN, all of
GMI's interest in the assets set forth in Exhibit 1.1;
(b) FIRST MANHATTAN shall take all necessary and appropriate actions and
execute all necessary and appropriate documents to assume completely and
become obligated to all liabilities, debts, obligations and/or other
encumbrances of GMI and otherwise set forth n Exhibit 4.3 annexed hereto;
(c) FIRST MANHATTAN shall deliver to GMI, certificates representing an
aggregate of 5,200,000 shares of FIRST MANHATTAN Common Stock and which
certificates shall bear a standard restrictive legend in the form
customarily used with restricted securities:
(d) FIRST MANHATTAN shall deliver an Officer s Certificate as described in
Sections 9.1 and 9.2 hereof, dated the Closing Date, that all
representations, warranties covenants and conditions set forth herein by
FIRST MANHATTAN are true and correct as of, or have been fully performed
and complied with by the Closing Date; and
(e) GMI shall deliver an Officer's Certificate as described in Sections 8.1
and 8.2 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth herein by GMI are true and
correct as of, or have been fully performed and complied with by, the
Closing Date.
<PAGE>
SECTION 1.4 FIRST MANHATTAN SPECIAL MEETING OF SHAREHOLDERS. In anticipation
of this Agreement, FIRST MANHATTAN shall hold a Special Meeting of Shareholders
on June 7, 1995 in order to transact certain business related to the
ratification of this Agreement including, but not limited to (i) the current
authorized number of shares of FIRST MANHATTAN Common Stock is 25,000,000
shares, par value $.001 per share; (ii) electing a new Board of Directors
consisting of Daniel N. Lomax, Lic. Fernando Torres Moreno, Robert C. Cocione,
Charles R. Cook and Eugene Yahn; (ii) changing the corporate name to GroupMed
International, Inc. and (iii) to ratification of this Agreement; (iv)
ratification of this Agreement and the transactions contemplated hereby.
SECTION 1.5 CONSUMMATION OF TRANSACTION If, at the Closing, no condition
exists which would permit any of the parties to terminate this Agreement, or a
condition then exists and the party entitled to terminate because of that
condition elects not to do so, then the transactions herein contemplated shall
be consummated upon such date, and then and thereupon FIRST MANHATTAN will file
the necessary documents that may be required by the State of Nevada and Nevada.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FIRST MANHATTAN
FIRST MANHATTAN hereby represents, warrants and agrees that:
SECTION 2.1 ORGANIZATION OF FIRST MANHATTAN. FIRST MANHATTAN is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada, is duly qualified and in good standing as a foreign corporation
in every jurisdiction in which such qualification is necessary, and has the
corporate power and authority to own its properties and assets and to transact
the business in which it is engaged. There are no corporations or other
entities with respect to which (i) FIRST MANHATTAN owns any of the outstanding
stock or other interest, or (ii) FIRST MANHATTAN may be deemed to be in control
because of factors or relationships other that the quantity of stock or other
interest owned. FIRST MANHATTAN has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of FIRST MANHATTAN, enforceable against FIRST MANHATTAN in accordance with its
respective terms except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors
rights generally.
SECTION 2.2 CAPITALIZATION OF FIRST MANHATTAN. The authorized capital stock of
FIRST MANHATTAN currently consists of 25,000,000 shares of Common Stock, par
value $.001 per share, of which 50,000 shares are presently issued and
outstanding following a 1 for 4 reverse split of the currently outstanding
common shares. All of the issued and outstanding shares of FIRST MANHATTAN have
been duly authorized and validly issued and are fully paid and non assessable.
There are Class A & B warrants outstanding that allow for the issuance of
177,730 shares at $7.50 per share for the Class A warrants and 177.750 shares
at $10.00 per share for the Class B warrants. Shares of FIRST MANHATTAN common
stock to be issued pursuant to this agreement, when so issued, will be duly
authorized, validly issued, fully paid and non-assessable.
3
<PAGE>
SECTION 2.3 CHARTER DOCUMENTS. Complete and correct copies of the Articles of
Incorporation and By-Laws of FIRST MANHATTAN and all amendments thereto, have
been or will be delivered to GMI prior to the Closing, and certified copies of
the FIRST MANHATTAN Articles of Incorporation and By-Laws are annexes hereto as
Exhibit 2.3 and by this reference made a part hereof.
SECTION 2.4 FINANCIAL STATEMENTS. FIRST MANHATTAN's financial statements for
the period ending December 31, 1994, a copy of which is annexed hereto as
Exhibit 2.4 and by this reference made a part hereof, are true and complete in
all material respects, having been prepared in accordance with generally
accepted accounting principles applied on a consistent basis for the periods
covered by such statements, and fairly present, in accordance with generally
accepted accounting principles, the financial condition of FIRST MANHATTAN, and
results of its operations for the periods covered thereby. Except as otherwise
disclosed to GMI in writing and as set forth herein, there has been no material
adverse change in the business operations, assets, properties, prospects or
condition (financial or otherwise) of FIRST MANHATTAN taken as a whole from that
reflected in the financial statements referred to in this Section 2.4, of which
GMI based its decision to enter into this Agreement.
SECTION 2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the FIRST
MANHATTAN financial report for the period ending December 31, 1994 and except as
disclosed otherwise herein, FIRST MANHATTAN has not (i) issued or sold any
promissory note, stock, bond, option or other corporate security of which it was
an issuer or other obligor, (ii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability, absolute or contingent, direct
or indirect, (iii) incurred or suffered to be incurred any liability or
obligation whatsoever, (iv) caused or permitted any lien, encumbrance or
security interest to be created or arise on or in any of its properties or
assets, (v) declared or made any dividend, payment or distribution to stock
holders or purchased or redeemed or agreed to purchase or redeem any shares of
its capital stock, (vi) reclassified its shares of capital stock, or (vii)
entered into any agreement or transaction except in connection with the
execution and performance of this Agreement.
SECTION 2.6 ASSETS AND LIABILITIES. FIRST MANHATTAN has good and marketable
title to all of its assets and property, free and clear of any and all liens,
claims and encumbrances, except as may be otherwise explicitly set forth herein.
As of date hereon, FIRST MANHATTAN does not have any debts, liabilities or
obligations of any nature, whether accrued, absolute, contingent, or otherwise,
whether due or to become due, that are not fully reflected in the FIRST
MANHATTAN Balance Sheet dated December 31, 1994 except as may be explicitly set
forth herein.
SECTION 2.7 TAX RETURNS and PAYMENTS. All of FIRST MANHATTAN's tax returns
(federal, state, city, county or foreign) which are required by law to be filed
on or before the date of this Agreement, have been duly filed or extended with
the appropriate governmental authority. FIRST MANHATTAN has paid all taxes to
be due on said returns, any assessments made against FIRST MANHATTAN and all
other taxes, fees and similar charges imposed on FIRST MANHATTAN by any
governmental authority (other than those, the amount or validity of which is
being contested in good faith by appropriate proceedings). No tax liens have
been filed and no claims are being assessed with respect to any such taxes, fees
or other similar charges.
4
<PAGE>
SECTION 2.8 REQUIRED AUTHORIZATIONS. There have been or will be timely filed,
given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications, waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by FIRST
MANHATTAN or the consummation by it of the transactions contemplated hereby.
SECTION 2.9 COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS. FIRST MANHATTAN is
in compliance with and is not in violation of, applicable federal, state, local
or foreign statutes, laws and regulations (including without limitation, any
applicable building) zoning or other law, ordinance or regulation) affecting
its properties or the operation of its business.
SECTION 2.10 LITIGATION. There is no litigation, arbitration, proceeding or
investigation pending or threatened to which FIRST MANHATTAN is a party or which
may result in any material change in the business or condition, financial or
otherwise, of FIRST MANHATTAN or in any of its properties or assets, or which
might result in any liability on the part of FIRST MANHATTAN or which questions
the validity of this Agreement or of any action taken or to be taken pursuant to
or in connection with the provisions of this Agreement, and to the best
knowledge of FIRST MANHATTAN, there is no basis for any such litigation,
arbitration, proceeding or investigation.
SECTION 2.11 INVESTIGATION OF FINANCIAL CONDITION. In addition to making
available for review by GMI all financial statements, books and records of
FIRST MANHATTAN, and without in any manner reducing or otherwise mitigating the
representations contained herein, GMI shall have the opportunity to meet with
FIRST MANHATTAN's accountants and attorneys to discuss the financial condition
of FIRST MANHATTAN and to make whatever further independent investigation deemed
necessary and prudent.
SECTION 2.12 GOVERNMENTAL CONSENT. No consent, approval, authorization or order
of, or registration, qualification, designation, declaration or filing with, any
governmental authority on the part of FIRST MANHATTAN is required in connection
with the execution and delivery of this Agreement or the carrying out of any
transactions contemplated hereby.
SECTION 2.13 AUTHORITY. FIRST MANHATTAN and its shareholders shall have approved
this Agreement and the transactions contemplated hereby prior to the Closing and
duly authorized the execution and delivery hereof. FIRST MANHATTAN has full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby, and all corporate action necessary to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby has been duly and validly taken.
SECTION 2.14 FULL DISCLOSURE. None of the representations and warranties made
by FIRST MANHATTAN herein, or in any exhibit, certificate or memorandum
furnished or to be furnished by FIRST MANHATTAN on its behalf pursuant hereto,
contains or will contain any untrue statement of material fact, or omits any
material fact, the omission of which would be misleading
5
<PAGE>
ARTICLE III
COVENANTS OF FIRST MANHATTAN
SECTION 3.1 CONDUCT PRIOR TO THE CLOSING. Between the date hereof and the
Closing:
(a) FIRST MANHATTAN will not enter into any agreement, contract or
commitment, whether written or oral, or engage in any transaction, without
the knowledge and prior written consent of GMI;
(b) FIRST MANHATTAN will not declare any dividends or distributions with
respect to its capital stock or amend its Articles of Incorporation or
By-Laws, without the prior written consent of GMI;
(c) FIRST MANHATTAN will not authorize, issue, sell, purchase or redeem
any shares of its capital stock without the prior written consent of GMI;
(d) FIRST MANHATTAN will comply with all requirements which federal or
state law may impose on it with respect to this Agreement and the
transactions contemplated hereby, and will promptly cooperate with and
furnish information to GMI in connection with any such requirements imposed
upon the parties hereto in connection therewith;
(e) FIRST MANHATTAN will not incur any indebtedness for money borrowed, or
issue or sell any debt securities, incur or suffer to be incurred any
liability or obligation of any nature whatsoever, or cause or permit any
lien, encumbrance or security interest to be created or arise on or in any
of its properties or assets, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less than its stated amount or enter into any other
transaction other than in the regular course of business, except to comply
with the terms of this Agreement, without the consent of GMI;
(f) FIRST MANHATTAN shall grant to GMI and its counsel, accountants and
other representatives, full access during normal business hours during the
period prior to the Closing to all its respective properties, books,
contracts, commitments and records and, during such period, furnish
promptly to GMI and such representatives all information relating to FIRST
MANHATTAN as GMI may reasonably request; and
(g) Except for the transactions contemplated by this Agreement, FIRST
MANHATTAN will conduct its business in the normal course, and shall not
sell, pledge or assign its assets without the prior written consent of GMI.
SECTION 3.2 AFFIRMATIVE COVENANTS. Prior to Closing, FIRST MANHATTAN will do
the following
(a) Use its best efforts to accomplish all actions necessary to consummate
this Agreement, including satisfaction of all the conditions contained in
this Agreement;
6
<PAGE>
(b) Call for and properly hold a meeting of its shareholders for the
purpose of conducting the business and ratifying those proposals as set
forth in Section 1.4 above.
(c) Promptly notify GMI in writing of any material adverse change in the
financial condition, business, operations or key personnel of FIRST
MANHATTAN, any breach of its representations or warranties contained
herein, and any material contract agreement license or other agreement
which, if in effect on the date of this Agreement, should have been
included in this Agreement or in an exhibit annexed hereto ant made a part
hereof; and
(d) Reserve, and promptly after the Closing, issue and deliver to GMI or
its designees the number of shares of FIRST MANHATTAN Common Stock required
hereunder; and
ARTICLE IV
REPRESENTATION AND WARRANTIES OF GMI
GMI hereby represents, warrants and agrees that:
SECTION 4.1 ORGANIZATION OF GMI. GMI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
is duly qualified and in good standing in every jurisdiction in which such
qualification is necessary. Unless otherwise set forth in GMI's financial
statements and except for those businesses and entities set forth in Exhibit 4.1
annexed hereto and by this reference made a part hereof, there are no
corporations or other entities with respect to which (i) GMI owns any of the
outstanding stock or other interest, or (ii) GMI may be deemed to be in control
because of factors or relationships other than the percentage of outstanding
stock or other interest owned in such entity. GMI has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
SECTION 4.2 CHARTER DOCUMENTS. Complete and correct copies of the Articles of
Incorporation and By-Laws of GMI and all amendments thereto, have been or will
be delivered to FIRST MANHATTAN prior to the Closing.
SECTION 4.3 FINANCIAL STATEMENTS/ASSETS AND LIABILITIES. GMI has good and
marketable title to all of the assets to be transferred and delivered to FIRST
MANHATTAN hereunder, free and clear of any and all liens, claims and
encumbrances, except as may be otherwise set forth herein and in its financial
statements and further set forth in Exhibit 4.3 annexed hereto and by this
reference made a part hereof.
SECTION 4.4 TAX RETURNS AND PAYMENTS. All of GMI's tax returns (federal,
state, city, county or foreign) which are required by law to be filed on or
before the date of this Agreement' have been duly filed or extended with the
appropriate governmental authority. GMI has paid all taxes to be due on said
returns, any, assessments made against GMI and all other taxes, fees and similar
charges imposed on GMI by any governmental authority (other than those, the
amount
7
<PAGE>
or validity of which is being contested in good faith by appropriate
proceedings). No tax liens have been filed and no claims are being assessed
untie respect to any such taxes, fees or other similar charges.
SECTION 4.5 REQUIRED AUTHORIZATIONS. There have been or will be timely filed,
given, obtained or taken, all applications, notices, consents, approvals,
orders, registrations, qualifications waivers or other actions of any kind
required by virtue of execution and delivery of this Agreement by GMI or the
consummation by it of the transactions contemplated hereby.
SECTION 4.6 COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS. GMI is in
compliance with all applicable statutes, regulations, decrees, orders,
restrictions, guidelines and standards, whether mandatory or voluntary,
affecting its properties and operations, imposed by the United States of America
and any state or foreign country or government to which GMI is subject.
SECTION 4.7 LITIGATION. There is no litigation, arbitration, proceeding or
investigation pending or threatened to which GMI is a party or which may result
in any material change in the business or condition, financial or otherwise, of
GMI or in any of its properties or assets, or which might result in any
liability on the pan of GMI or which questions the validity of this Agreement or
of any action taken or to be taken pursuant to or in connection with the
provisions of this Agreement, and to the best knowledge of GMI, there is no
basis for any such litigation, arbitration, proceeding or investigation.
SECTION 4.8 INVESTIGATION OF FINANCIAL CONDITION. In addition to making
available for review by FIRST MANHATTAN all financial statements, books and
records of FIRST MANHATTAN, and without in any manner reducing or otherwise
mitigating the representations contained herein, FIRST MANHATTAN shall have the
opportunity to meet with GMI'S accountants and attorneys to discuss the
financial condition of GMI and to make whatever further independent
investigation deemed necessary and prudent.
SECTION 4.9 GOVERNMENTAL CONSENT. No consent, approval, authorization or
order of, or registration, qualification, designation, declaration or filing
with any governmental authority on the part of GMI is required in connection
with the execution and delivery of this Agreement or the carrying out of any
transactions contemplated hereby.
SECTION 4.10 AUTHORITY. GMI and its shareholders shall have approved this
Agreement and the transactions contemplated hereby prior to the Closing and duly
authorized the execution and delivery hereof. GMI has full power, authority and
legal right to enter into this Agreement and to consummate the transactions
contemplated hereby, and all corporate action necessary to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby has been duly and validly taken. Those persons
executing this Agreement represent that they have received the authority to act
on behalf of and for the shareholders of GMI and that in the event additional
shareholder approvals are required, such approvals will be obtained at the next
scheduled annual meeting of GMI shareholders.
SECTION 4.11 INVESTMENT PURPOSE. GMI hereby represents that it is acquiring
the shares of FIRST MANHATTAN Common Stock to be issued hereunder for investment
purposes only and not with a view for further distribution or resale. GMI
further represents and acknowledges
8
<PAGE>
that the FIRST MANHATTAN shares issued hereunder are "restricted securities" and
may not be sold, traded or otherwise transferred without registration under the
1933 Act or exemption therefrom. GMI further represents that in the event it
decides to distribute to its shareholders the FIRST MANHATTAN shares to be
acquired hereby, either in part or in whole, GMI will make all necessary and
requisite filing with the appropriate state and federal agencies to register
such distribution under the applicable securities laws.
SECTION 4.12 FULL DISCLOSURE. None of the representations and warranties made
by GMI herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by FIRST MANHATTAN, on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact, the omission of which
would be misleading.
ARTICLE V
COVENANTS OF GMI
SECTION 5.1 CONDUCT PRIOR TO CLOSING. Between the date hereof and the
Closing:
(a) GMI will not enter into any material agreement, contract or
commitment, whether written or oral, or engage in any transaction, without
the prior written consent of GMI;
(b) GMI will not declare any dividends or distributions with respect to
its capital stock or amend its Articles of Incorporation or By-Laws,
without the prior written consent of GMI;
(c) Except within the regular course of business, GMI will not incur any
indebtedness for money borrowed or issue to sell any debt securities, or
incur or suffer to be incurred any liability or obligation of any nature
whatsoever, or cause or permit any lien, encumbrance or security interest
to be created or arise on or in any of its properties or assets, with the
prior written consent of GMI;
(d) GMI will comply with all requirements which federal or state law may
impose on it with respect to this Agreement and the transactions
contemplated hereby, and will promptly cooperate with and furnish
information to GMI in connection with any such requirements imposed upon
the parties hereto in connection therewith; and
(e) GMI shall grant to GMI and its counsel, accountants and other
representatives, full access during normal business hours during the period
prior to the Closing to all its respective properties, books, contracts,
commitments and records and, during such period, furnish promptly to GMI
and such representatives all information relating to GMI as GMI may
reasonably request.
SECTION 5.2 AFFIRMATIVE COVENANTS. Prior to Closing, GMI will do the
following:
(a) Obtained the approval of its Board of Directors and shareholders to
proceed with this agreement and obtain any further shareholder approvals,
which may be required, at the next scheduled annual meeting of GMI
shareholders.
9
<PAGE>
(b) Use its best efforts to accomplish all actions necessary to consummate
this Agreement, including satisfaction of all the conditions contained in
the Agreement; and
(c) Promptly notify FIRST MANHATTAN in writing of any materially adverse
change in the financial condition, business, operations or key personnel of
GMI, any breach of its representations or warranties contained herein, and
any material contract, agreement, license or other agreement which, if in
effect on the date of this Agreement, should have been included in this
Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby snail be paid by the
party incurring such expense or as otherwise agreed to herein.
SECTION 6.2 BROKERS AND FINDERS. Each of the parties hereto represents, as
to itself, that with the exception of the consideration and additional shares of
FIRST MANHATTAN Common Stock to be paid and issued pursuant to the Due Diligence
& Consulting Agreement, dated ________ annexed hereto as Exhibit 6.2 and by this
reference made a part hereof, and to which FIRST MANHATTAN acknowledges and
agrees fulfill the terms thereof, no other agent, broker, investment banker or
other firm or person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement.
SECTION 6.3 NECESSARY ACTIONS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In the event at any time after the Closing, any further action is necessary or
desirable to carry, out the purposes of this Agreement, the proper officers
and/or directors of FIRST MANHATTAN or GMI, as the case may be, shall take all
such necessary action.
SECTION 6.4 INDEMNIFICATION. Each party to this Agreement hereby agrees to
defend and hold the other party harmless against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties, and reasonable
attorney fees, that they shall incur or suffer, which arise out of result from
or relate to any material breach of or failure by the party to perform any of
its respective representations, warranties, covenants and agreements in this
Agreement or in any exhibit or other instrument furnished or to be furnished by
he party under this Agreement.
10
<PAGE>
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Agreement arc subject to the
fulfillment and satisfaction of each of the following conditions:
SECTION 7.1 LEGAL ACTION. No preliminary or permanent injunction or other
order by any federal or state court which prevents the consummation of this
Agreement or any of the transactions contemplated by this Agreement shall have
been issued and remain in effect.
SECTION 7.2 ABSENCE OF TERMINATION. The obligations to consummate the
transactions contemplated hereby shall not have been canceled pursuant to
Article X hereof.
SECTION 7.3 REQUIRED APPROVALS. FIRST MANHATTAN and GMI shall have received
all such approvals, consents, authorizations or modifications as may be required
to permit the performance by FIRST MANHATTAN and GMI of the respective
obligations under this Agreement, and the consummation of the transactions
herein contemplated, whether from governmental authorities or other persons
and FIRST MANHATTAN and GMI shall each have received any and all permits and
approvals from any regulatory authority having jurisdiction required for the
lawful consummation of this Agreement.
SECTION 7.4 BLUE SKY COMPLIANCE. There shall have been obtained any and all
permits, approvals and consents of the Securities or "Blue-Sky" Commissions of
any jurisdictions, and of any other governmental body or agency, which
respective counsel for FIRST MANHATTAN and GMI may reasonably deem necessary or
appropriate so that consummation of the transactions contemplated by this
Agreement may be in compliance with all applicable laws.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF GMI
All obligations of FIRST MANHATTAN under this Agreement are subject to the
fulfillment and satisfaction by GMI prior to or at the time of the Closing, of
each of the following conditions, any one or more of which may be waived by
FIRST MANHATTAN.
SECTION 8.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE CLOSING. All
representations and warranties of GMI contained in this Agreement will be true
and correct at and as of the time of the Closing, and GMI shall have delivered
to FIRST MANHATTAN a certificate, dated the date of the Closing, to such effect
and in the form and substance satisfactory to FIRST MANHATTAN, and signed, in
the case of GMI, by its president and secretary.
SECT10N 8.2 PERFORMANCE. The obligations of GMI to be performed on or before
the Closing pursuant to the terms of this Agreement shall have been duly
performed at such time, and GMI shall have delivered to FIRST MANHATTAN a
certificate, dated the date of the Closing, to such effect and in form and
substance satisfactory to FIRST MANHATTAN.
11
<PAGE>
SECTION 8.3 AUTHORITY. All action required to be taken by, or on the part of
GMI and its shareholders, if required, to authorize the execution delivery and
performance of this Agreement by GMI and the consummation of the transactions
contemplated hereby, shall have been duly and validly taken.
SECTION 8.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. There shall not have
occurred, since the date hereof, any adverse change in the business, condition,
(financial or otherwise), assets or liabilities of GMI or any event or condition
of any character adversely affecting GMI, and it shall have delivered to FIRST
MANHATTAN, certificates, dated the date of the Closing, to such effect and in
form and substance satisfactory to FIRST MANHATTAN and signed, in the case of
GMI, by its president and secretary.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF GMI
All obligations of GMI under this Agreement are subject to the fulfillment
and satisfaction by FIRST MANHATTAN prior to or at the time of the Closing, of
each of the following conditions, any one or more of which may be waived by GMI.
SECTION 9.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE CLOSING. All
representations and warranties of FIRST MANHATTAN contained in this Agreement
will be true and correct at and as of the time of the Closing, and FIRST
MANHATTAN shall have delivered to GMI a certificate, dated the date of the
Closing, to such effect and in the form and substance satisfactory to GMI, and
signed, in the case of FIRST MANHATTAN, by its president and secretary.
SECTION 9.2 PERFORMANCE. The obligations of FIRST MANHATTAN to be performed
on or before the Closing pursuant to the terms of this Agreement shall have been
duly performed at such time, and FIRST MANHATTAN shall have delivered to GMI a
certificate, dated the date of the Closing, to such effect and in form and
substance satisfactory to GMI and signed, in the case of FIRST MANHATTAN by its
president and secretary.
SECTION 9.3 AUTHORITY. All action required to be taken by, or on the part of
FIRST MANHATTAN to authorize the execution, delivery and performance of this
Agreement by FIRST MANHATTAN and the consummation of the transactions
contemplated hereby, shall have been duly and validly taken.
SECTION 9.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. There shall not have
occurred, since the date hereof, any adverse change in the business, condition,
(financial or otherwise), assets or liabilities of FIRST MANHATTAN or any
event or condition of any character adversely affecting FIRST MANHATTAN, and it
shall have delivered to GMI, certificates, dated the date of the Closing, to
such effect and in form and substance satisfactory to GMI and signed, in the
case of FIRST MANHATTAN, by its president and secretary.
12
<PAGE>
ARTICLE X
TERMINATION
SECTION 10.1 TERMINATION. Notwithstanding anything herein or elsewhere to the
contrary, this Agreement may be terminated:
(a) By mutual agreement of the parties hereto at any time prior to
Closing;
(b) By the board of directors of FIRST MANHATTAN at any time prior to the
closing in the event:
(i) a condition to performance by FIRST MANHATTAN under this
Agreement or a covenant of GMI contained herein shall not be fulfilled
on or before the time of the Closing or at such other time and date
specified for the fulfillment for such covenant or condition; or
(ii) a material default or breach of this Agreement shall be made by
GMI; or
(iii) the Closing shall not have taken place on or prior to ______.
(c) By the board of directors of GMI at any time prior to the closing in
the event:
(i) a condition to GMI's performance under this Agreement or a
covenant of FIRST MANHATTAN contained in this Agreement shall not be
fulfilled on or before the Closing or at such other time and date
specified for the fulfillment of such covenant or conditions;
(ii) a material default or breach of this Agreement shall be made by
FIRST MANHATTAN; or
(iii) the Closing shall not have taken place on or prior to _______.
SECTION 10.2 EFFECT OF TERMINATION. If this Agreement is terminated, this
Agreement, except as to Sections 11.1, 11.2, shall no longer be of any force or
effect and there shall be no liability on the part of any party or its
respective directors, officers or stockholders; provided however, that in the
case of a Termination without cause by a party or a termination pursuant to
Sections 10.1(b) (i) or 10.1 (c) (i) hereof because of a prior material default
under or a material breach of this Agreement by another party, the damages which
the aggrieved party or parties may recover from the defaulting party or parties
shall in no event exceed the amount of out-of-pocket costs and expenses incurred
by such aggravated party or parties in connection with this Agreement.
SECTION 10.3 RECISION. In the event that prior to _________________, 199_,
GMI fails to obtain any and all consents and/or approvals that may be required
from the GMI shareholders or any regulatory authority for the approval and
ratification of this Agreement, then this Agreement
13
<PAGE>
shall be rescinded and become null and void with the result that all shares of
FIRST MANHATTAN Common Stock issued to GMI hereunder are to be deemed canceled
and no longer outstanding on the transfer records of FIRST MANHATTAN and that
those assets set forth in Exhibit 1.1 hereto shall be returned to GMI.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 COST AND EXPENSES. All costs and expenses incurred in connection
with this Agreement will be paid by the party incurring such expenses. In the
event of any termination of this Agreement pursuant to Section 10.1 or 10.3,
subject to the provisions of Section 11.2, GMI and FIRST MANHATTAN will each
bear their own respective expenses.
SECTION 11.2 EXTENSION OF TIME WAIVERS. At any time prior to the Closing
Date:
(a) FIRST MANHATTAN may (i) extend the time for the performance of any of
the obligations or other acts of GMI, (ii) waive any inaccuracies in the
representations and warranties of GMI contained herein or in any document
delivered pursuant hereto by GMI and (iii) waive compliance until all of
the agreements or conditions contained herein to be performed by GMI. Any
agreement on the part of FIRST MANHATTAN to any such extension or waiver
shall be valid only if set forth in an instrument, in writing signed on
behalf of GMI;
(b) GMI may (i) extend the time for the performance of any of the
obligations or other acts of FIRST MANHATTAN, (ii) waive any inaccuracies
in the representations and warranties of GMI contained herein or in any
document delivered pursuant hereto by FIRST MANHATTAN and (iii) waive
compliance with any of the agreements or conditions contained herein to be
performed by FIRST MANHATTAN. Any agreement on the part of GMI to any such
extension or waiver shall be valid only if set forth in an instrument, in
writing, signed on behalf of GMI;
SECTION 11.3 NOTICES. Any notice to any party hereto pursuant to this
Agreement shall be given by Certified or Registered Mail, addressed as follows:
GROUPMED, INC.
3095 South Grade Rd., Suite B
Alpine, CA 91901
FIRST MANHATTAN, INC.
One Camelback Rd., #680
Phoenix, AZ 85012
Additional notices are to be given to each party, at such other address
should be designated in writing comply as to delivery with the terms of this
Section 11.3. All such notices shall be effective when sent, addressed as
aforesaid.
14
<PAGE>
SECTION 11.4 PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and the respective successors and
designees. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any) other person any rights or remedies under or by reason of
this Agreement.
SECTION 11.5 COUNTERPARTS. This agreement may be executed in one or more
counterparts each of which shall be deemed an original and together shall
constitute one document. The delivery by facsimile of an executed counterpart of
this Agreement shall be deemed to be as original and shall have the full force
and effect of an original executed copy.
SECTION 11.6 SEVERABILITY. The parties hereto agree and affirm that none of
the provisions herein is dependent upon the validity of any other provision, and
if any part of this Agreement is deemed to be unenforceable, the remainder of
the Agreement shall remain in full force and effect.
SECTION 11.7 HEADINGS. The Article and Section headings are provided herein
for convenience of reference only and do not constitute a part of this
Agreement.
SECTION 11.8 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Nevada. Any action to enforce the provisions of this Agreement
shall be brought in a court of competent jurisdiction in the State of Nevada and
in no other place.
SECTION 11.9 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All terms,
conditions, representations and warranties set forth in this Agreement or in any
instrument, certificate, opinion, or other writing providing for in it, shall
survive the Closing and the delivery of the shares of FIRST MANHATTAN Common
Stock transferred hereunder at the Closing regardless of an investigation made
by or on behalf of any of the parties hereto.
SECTION 11.10 ASSIGNABILITY. This Agreement shall not be assignable by any of
the parties hereto without the prior written consent of the other parties.
SECTION 11.11 AMENDMENT. This Agreement may be amended with the approval of
the boards of directors of FIRST MANHATTAN and GMI at any time before or after
approval thereof: by stockholders of FIRST MANHATTAN, if required, and GMI but
after such approval by the FIRST MANHATTAN shareholders no amendment shall be
made which substantially and adversely, changes the terms hereof. This Agreement
may not be amended except by an instrument, in writing, signed on behalf of each
of the parties hereto.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Acquisition Agreement in a manner legally binding upon them as of the date first
above written.
"GMI"
GROUPMED, INC. ATTEST:
By: /s/
------------------------------- -------------------------
Its: Secretary
FIRST MANHATTAN, INC. ATTEST:
By: /s/ /s/ Suzy Frost
------------------------------- -------------------------
Its: Vice - President Secretary
16
<PAGE>
CERTIFICATE
OF
GROUPMED, INC.
The undersigned, __________________ and ______________________ hereby
certify that they are the President and Secretary respectively, of GMI, a Nevada
corporation ("GMI") and further certify as follows:
1. That the representations and warranties OF GMI contained in the
Acquisition Agreement and Plan of Reorganization (the "Agreement") by and
between GMI and FIRST MANHATTAN, a Nevada corporation are true and correct at
and as of the date hereof.
2. The obligations and covenants of GMI to be performed and observed on
or before the Closing as defined in the Agreement have been duly performed and
observed.
3. Except as otherwise disclosed in the Agreement, there has not occurred
since the date thereof, any adverse change in the business, condition
(financial or otherwise), assets or liabilities of GMI or any event or
condition of any character adversely affecting GMI.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of this _
day of __________, 199_.
GROUPMED, INC.
By: /s/ Illegible
------------------------------------
President
By:
------------------------------------
Secretary
17
<PAGE>
CERTIFICATE
OF
FIRST MANHATTAN INC.
The undersigned ___________________ and ____________________ hereby
certify that they are the President and Secretary respectively, of FIRST
MANHATTAN, INC a Nevada corporation ("FIRST MANHATTAN") and further certify as
follows:
1. That the representations and warranties of FIRST MANHATTAN contained
in the Acquisition Agreement and Plan of Reorganization (the "Agreement") by
and between GMI and FIRST MANHATTAN, a Nevada corporation are true and correct
at and as of the date hereof.
2. The obligations and covenants of FIRST MANHATTAN to be performed and
observed on or before the Closing as defined in the Agreement have been duly
performed and observed.
3. Except as otherwise disclosed in the Agreement, there has not occurred
since the date thereof, any adverse change in the business, condition (financial
or otherwise), assets or liabilities of FIRST MANHATTAN or any event
or condition of any character adversely affecting FIRST MANHATTAN.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
this __ day of _________, 199_.
FIRST MANHATTAN, INC.
By: /s/ Illegible
-------------------------------------
Vice-President
By: /s/ Suzy Frost
-------------------------------------
Secretary
18
