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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A-1
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.
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(Name of Small Business Issuer in Its Charter)
Nevada 88-022698
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(State of Other (I.R.S. Employer
Jurisdiction of Incorporation Identification No.)
or Organization)
3095 South Grade Road, Suite B, Alpine, CA 91901
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(Address of Principal Executive Offices)
(619) 445-0977
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(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
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None None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001
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(Title of Class)
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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 a
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 sale of health care plans through a network
of salespeople in the Ensenada, Rosarito and Tijuana areas. This will act as
a model for the Company's planned national health care products. Since July
1, 1995, the Company has publicly announced new medical services available at
the hospital and has announced the sale of its health care products in the
Ensenada area. 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's subsidiary, GMIX,
to operate as a hospital. The Mexican government has approved a medical
specialty program implemented at the hospital in the area of heroin
detoxification, and approved an orthopedic technician to practice orthopedic
techniques in the hospital's Department of Orthopedic Medicine. The Company
has approximately 111 non-physician employees plus 9 physician employees at
the hospital.
Under the "open private hospital" model of operation for any
hospital in Mexico, Hospital Las Americas did not provide out-patient medical
services other than laboratory, radiology and elective services such as
weight control or physical check-ups. Physicians in Mexico admit their
private patients and the hospital does not have physicians on staff as
treating or admitting physicians, except for the hospital's Medical Director.
In cases of emergency, a hospital physician is on duty in the emergency room
at all times, and a specialist can be called upon from a roster who in turn
becomes the admitting physician. In Mexico, the relationship of the hospital
with its patients are separate from the physician/patient relationship.
Although the hospital is obliged to care for any life-threatening emergency
in its vicinity, any patient that cannot guarantee payment upon
stabilization, the hospital can refuse admission and offer to the patient a
transfer to a public hospital.
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(c) BUSINESS HISTORY OF HOSPITAL LAS AMERICAS. The hospital was built
by Farvel Arrendamientos, S.A. de C.V., a privately held Mexican corporation,
and opened its doors on July 27, 1992. Initially, the hospital had 48
private patient rooms. Of these, 41 were general patient rooms, spread
through three floors, 4 were intermediate patient rooms, and 3 consisted on
the Intensive Care Unit. Additionally, the hospital's nursery had provisions
to hold up to six new born infants in either bassinets or incubators; the
pediatric ward had cribs for three infants, and the emergency room has three
gurneys for out-patient care. The surgical department consisted of three
major surgical suites, two delivery rooms and a central supply and
sterilization unit. Since inception, the surgical department has been
equipped for on-site radiology, microsurgery, laparoscopy, specialized
orthopedic surgery and neurosurgery. Ancillary services of the hospital
consisted of (i) a complete clinical laboratory utilized for microbiology and
general clinical examinations, (ii) a radiology and imaging unit with
ultrasound, conventional and fluoroscopic radiology, angiography and
computerized tomography (CT scan) as well as a gamma-ray camera for nuclear
medicine; (iii) a diagnostic clinic consisting of systematic physical
check-up services and cardiology clinic, (iv) a weight control clinic, and
(v) a physical therapy department. The hospital was and is equipped with a
diesel back-up plant capable of supplying 100% of the hospital's electrical
needs in case of emergency, a storeroom for supplies and a fully equipped
kitchen service. The hospital subcontracted its laundry services to a local
company in the Ensenada area.
Occupancy rate during 1992 averaged 6.5 patient per day, while the
nursing staff of 75 nurses was calculated on the basis of an average census
of 25 beds. This contrast alone was identified from the onset of the
hospital's operations as the main source of the cash flow deficits
experienced; namely, too high an employee-to-patient ratio. This fact along
with a 14% occupancy rate, and coupled with high fixed costs, including
depreciation, resulted in the hospital experiencing an operational loss. The
hospital staff totalled 156 non-physician employees plus 14 physicians under
contract to staff the emergency, intensive care unit, radiology, diagnostic,
weight control and systems departments. During 1993, hospital operations
continued at about the same average daily census of 6 to 7 patients, while
the level of staffing remained constant. A significant change in room
availability was effected in 1993 as the 9 patient rooms on the top floor
were re-assigned to other uses: 5 as rented medical offices, 1 for a rented
ophthalmic clinic, and 3 for a cardiology clinic. In addition, one of the
rooms on another floor was converted to provide additional storage space for
the central supply unit and another for surgical equipment storage made
available to the physicians for their own laparoscopy, and other
sophisticated equipment. Thus, the number of rooms available for patients
was reduced to 37; 30 for general patients 4 in intermediate care and 3 in
the intensive care unit. Through this period, the market for the hospital
was only the local private medicine market, despite marketing efforts in the
United States.
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During 1994, operations at Hospital Las Americas in general remained
unchanged. However, one significant change occurred in the radiology
department; namely, the dismantling of the angiography equipment with the
intention of replacing it with more sophisticated equipment. The replacement
of that equipment was never completed. No significant staffing change
occurred doing 1994, except for the dismissal and replacement of the hospital
administrator. At the end of this year, a heroin detoxification program,
operated from Spain and the United States by CITA, Inc., a privately held
corporation, began using the hospital, thereby increasing the occupancy in
the intensive care unit.
Throughout the first half of 1995, in the wake of the final negotiations
of the sale of the hospital to La Calafia, Inc., 25 nurses were terminated as
well as 3 positions in the laboratory and housekeeping departments. An
excessive number of staff remained; however, GMIX dealt with further
reduction of staff after 7/1/95. The average patient occupancy rate increased
for the first half of 1995 to 9.7 patients per day; simultaneously, between
March and June of 1995, the staff was reduced to reflect projected occupancy
rate of 12. Thus, overall occupancy reached approximately 26% of the number
of beds available, or 81% of the staffed beds. During the first half of 1995,
cash flow deficits remained at an approximate monthly rate of US$50,000. On
July 1, 1995, GMIX, a subsidiary of the Company took over operating the
hospital, hence known as the GroupMed-Las Americas Hospital. Initially, there
were 124 non-physician employees. Immediately, significant hospital cutbacks
included supervisory positions for the housekeeping department, the Weight
Control clinic and the Nuclear Medicine Imaging Department. These changes
reduced the monthly payroll by 5% while affecting revenues with a 0.1%
reduction. On the other hand, a new department, a fully licensed Blood Bank,
which began operations during June, 1995, began having a positive impact in
cash flow during July, 1995. The housekeeping and nursing departments, by
far the largest staffed areas in the hospital, were not allowed to replace
staff and experienced reductions due to attrition. Concurrently, the
Admissions department was centralized and this allowed for a 30% reduction in
the number of positions in that department. By the end of 1995, the total
number of non-physician employees was 117. Hospital occupancy averaged 10.4
patients, which compared to the nursing staff calculated for 12 patients,
results in an 87% occupancy rate, with a 28% rate compared to the number of
available rooms.
The Company has reduced approximately twenty-eight percent (28%) of its
employees at Hospital Las Americas by the end of the second quarter of 1996.
During the first quarter of 1996, there occurred a reorganization of the
Company's hospital laboratory services, namely entering into a joint venture
operations contract with P.M.L. de Mexico, S.A. de C.V. (PML), the Mexican
subsidiary of Pathology Medical Labs, Inc., (a California corporation
specializing in operating hospital laboratory services in San Diego,
California, and recently
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in Mexicali, Mexico) to operate the hospital laboratory facilities. On this
basis, effective February 15, 1996, PML is responsible for the employees and
operation of the laboratory for both in-patients and out-patients, paying
GMIX monthly rent plus a percentage of gross sales. This allowed a further
reduction of the number of employees, bringing the total number of
non-physician employees to 111. The Company's hospital organizational
structure is as follows:
Non-Physician Employees
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Department Number
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Radiology & Imaging 3
Blood Bank 1
Pharmacy 4
Check-up Clinic 2
Orthopedic Medicine 1
Nursing Services 41
Secretary 1
Accounting & Business 5
Computer Systems 1
Purchasing 1
Hospital Services 30
Storeroom & Supplies 1
Maintenance 5
Admissions & Switchboard 9
Cost Control 4
Personnel 2
--
TOTAL 111
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During the same first quarter of 1996, and mainly due to the economic
conditions in Ensenada, the average patient census was lower than before, 9.9
patients per day, which brings the staffed occupancy rate to 83% and to 27%
based on available beds. Occupancy peaks typically reach anywhere from 15 to
20 patients. The gap in peak periods is filled with temporary nurses hired
during those periods. The Department of Orthopedic Medicine, which began
operating in February, 1996, has had a steady flow of out-patients for its
specialized treatments and has produced a significant increase in the
Company's revenue stream. During its first two months of operations, the
Department of Orthopedic Medicine accounted for 15% of hospital billing.
In April, 1996, the Radiology Service was restructured by entering into
an agreement with an established Radiology group based in Tijuana, Mexico,
which was already operating a small facility in Ensenada. The contract
called for the Radiology group, Dr. J. Saldafia and Associates, to cease
operations in its own facility, and provide 24 hour radiologist services at
Hospital Las Americas. In addition, the contract called for this Radiology
group to manage and promote the
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Radiology and Imaging unit in and around Ensenada. The hospital provides
three technicians and now receives a rental income from the Radiology group
and a share of the gross sales generated.
(d) ITEMIZED REVENUE COMPONENTS Revenues from the Company's hospital
operations during the period beginning July 1, 1995 through March, 1996 are
the only significant source of revenue for the Company, accounting for an
average of 98% of such revenue, which is broken down by category in the table
below:
Description July-Dec., 1995 Jan.-Mar., 1996
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(Thousands of U.S. Dollars)
Hospital 702.2 303.8
Office Rentals 9.1 4.8
Health Plans .3 0.0
Clinical Trials 0.0 11.1
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TOTAL REVENUE: 711.6 319.8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
(a) PLAN OF OPERATION. The Company unites professionals and companies
from Mexico and the U.S. with the purpose of establishing an international
health care delivery system. Through its associated divisions, the Company
plans to maintain its standard of medical excellence in Mexico by continuing
cross-border education, and introducing U.S. technology and communication.
During 1995, the Company posted a net loss of $1,005,557. This period
included 6 months of hospital operations; the acquisition had been completed
July 1, 1995. As of March 31, 1996 the Company recorded a net loss of
$751,385, including a currency exchange loss of $350,813. (The recognition
of the exchange loss is required by FASB52, though it is a direct result of a
relatively small currency fluctuation on the $5.5 million in notes payable to
Farvel.) The seemingly apparent deterioration in net loss before exchange is
misleading due to seasonality factors. The hospital has historically
experienced significant increases to volume and revenue during the summer
months (June - September). Cost containment initiatives enacted during recent
months, coupled with the projection for strong patient census, will reduce
significantly the 1996 net loss.
Projected operations in 1996 will include all material components
of the business which are represented in the financials for 1995 and the
first quarter of 1996.
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As a result of the Company's financial results, internal cash uses
have outweighed internal cash sources. This shortfall has been met with
external sources including Private Placement Memorandum sales and the sale of
stock. Future projections show a reduction in the cash uses of the Company
as the hospital and health care products near a cash basis break
even-from-operations result forecasted for June, 1996.
The Company has a $5.5 million note payable on its books. This
obligation may be required to be funded by 1/1/97 under the terms of the
hospital acquisition agreement with Farvel. The source of such funds has
been identified. Pursuant to a signed Addendum, the Seller will accept shares
of the Company's stock in satisfaction of the original note.
(1) GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V., ("GMIX")
(a) HOSPITAL LAS AMERICAS ("HLA")
The Company's 99% Mexican owned subsidiary GMIX purchased HLA, a
state-of-the-art medical facility located in Ensenada, Baja California Norte,
Mexico. Additionally, GMIX was formed to assist in the marketing and
management of the Company's Mexican operations that currently include the
hospital and two health plan products. As a Center of Excellence, HLA
expands more than 65,000 square feet and brings an asset value in excess of
US$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 health care products and promotion of bio-tech clinical testing.
In January, 1996, the hospital conducted such a test for Wilshire
Technologies, Inc. As a future endeavor, HLA will also act as the conduit
through which the sale of medical equipment and Mexican approved
pharmaceuticals will be promoted. Effective February, 1996, HLA expanded its
Department of Orthopedic Medicine to include a pain treatment clinic
specializing in the treatment of back, neck and various joint pain.
Effective February, 1996, GMIX entered into a 5-year joint venture contract
with PML, a Mexican subsidiary of Pathology Medical Labs, Inc. In general,
the contract permits PML to operate the hospital's laboratory while
simultaneously developing an out-patient laboratory service; thus, generating
additional revenue to GMIX in the form of space and equipment rental.
Similarily, GMIX entered into a contract with a Mexican radiologist group to
manage and operate HLA's radiology department.
As a result of Exten Industries' inability to obtain legal and
clear ownership of the liver dialysis technology, the relationship between
Exten and GroupMed International, Inc. was terminated at the beginning of the
2nd quarter, 1996. The 250,000 shares of the Company's stock issued to Exten
Industries, Inc. was returned to the Company's treasury on June 11, 1996.
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The seasonality of the hospital's business refers to the fact that
over time, there has been larger proportion of admissions during January and
June through September, and a markedly lower rate of admission the rest of
the year. For instance, pediatric patients are significantly more frequent
during January and February, while maternity cases are significantly higher
during June, July and August. The low census level at the hospital makes it
overly sensitive to these kinds of variations.
The restructuring of the hospital refers mainly to such staff
reductions as those implemented in the centralization of the admissions
department between December, 1995 and January, 1996, which eliminated 30% of
the positions in that department. Also, the contract with PML beginning in
February, 1996 eliminated 100% of the positions in the laboratory department.
The contract for radiology operations which started in April, 1996 eliminated
2 professional positions from that department.
The Company has the ability to generate sufficient cash to support
its hospital operations, despite the "going concern opinion" received from
the accounting firm of Hoffman, McBryde & Co. for the audited period ending
December 31, 1995. Hospital operations have improved steadily since
acquisition, and the monthly cash shortfall has decreased to US$12,000 as of
May 31, 1996 financial statement. This figure will continue to decrease as
further reductions in staffing and other cost containment initiatives are
undertaken.
The hospital payors are comprised as follows: (based on revenue)
Insurance companies 17.0%
Employers 25.5%
Government .5%
Private patients 57.5%
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Total 100.0%
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"Insurance companies" include various Mexican insurers. Payment
terms generally call for full payment within 15 days of discharge. In
general, U.S. insurance carriers cover only emergency treatment. Payment
terms are usually negotiated for each case, and do not represent a
significant discount from billed charges.
"Employers" often self-insure or pay for the health care of some or
all of their workforce. These employers include the banks, large industrial
companies like PEMEX and other local employers. Payment terms generally
provide a discount of approximately 10% on billed services and call for full
payment within 15 days of discharge.
"Private patients" consist of the bulk of the hospital's patient
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population. These patients have elected to bypass the government sponsored
health care services which are available to all Mexican citizens at little or
no cost. These patients seeks a higher quality of health care and improved
access to health care services. Payment terms call for payment at time of
service or discharge. Frequently payment arrangements are made to extend
credit to patients for short periods of time.
"Government" services are immaterial. These services represent
only those purchased by the government for their patients when
services/technology is absent from the government facility, as is the case in
Ensenada where HLA owns the only CAT scanner in the city.
The expansion of the hospital's Department of Orthopedic Medicine
to include a pain treatment clinic opened in February, 1996, resulting in
revenues to the hospital from its operation in the amount of US$48,100 in the
first quarter of 1996, and US$52,900 in the second quarter of 1996. These
procedures are primarily out-patient procedures. Despite limited marketing,
this program has been successful in attracting patients from the U.S., South
America and Canada. In lieu of the success of this program, the Company
intends to expand its marketing efforts in this area.
(b) GROUPMED TOTAL HEALTH ("GTH")
The primary focus of GTH is to design and develop various health
care plans to be sold in Mexico. Health care in Mexico is provided to
different sectors of the population in various ways. In the formal private
sector, these services are provided through the Social Security Institute of
Mexico which is funded by private sector employers through payroll taxes,
private sector employees through contributions withheld through payroll, and
the federal government. The largest state-owned industries (oil utility and
banking) manage their own health care systems throughout the country.
Federal government employees have their own Social Security Institute
(ISSSTE), as do employees of each State Government (ISSSTECALI in Baja
California, for example). The population at large, the poor, the unemployed,
most farm workers and most of the rural population rely on the Federal
Ministry of Health's free clinics and hospitals, as well as some
IMSS-Coplamar special rural clinics in the poorest regions. Top management
in the private sector, self employed small and large business owners,
professionals, and in general, people in the top 10% income bracket in
Mexico, regardless of their employment, all use private medicine, where
independent physicians, clinics and hospitals such Hospital Las Americas
compete. In this regard, roughly 75% of the hospital billing is paid
out-of-pocket by the patients, around 15% is billed to insurance companies
that offer Major Medical coverage, and 10% is made up by the banks and some
companies that generally self-insure to provide private care to at least
their white collar employees. These employers still have to pay into the
Social Security System
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regardless of expenditures made outside of the Federal system.
GTH has developed and designed two health care plans. The first
product targets U.S. citizens that live in Mexico, whose number one concern
has been the availability of adequate health care. GTH has written a
supplemental health management program to address this target audience. GTH
will also have relationships with providers in the U.S. should the patient
need to be returned to the U.S. for continued care. The second health care
product developed and sold by GTH is primarily targeted at privatized
companies in Mexico. These companies include the banking industry and U.S.
maquiladoras (meaning a U.S. owned Mexican subsidiary or "twin plant").
These companies are not covered by Mexico's socialized health care system.
The Company has sold supplemental health care plans to U.S.
citizens. Contracts have been signed with PEMEX, Banamex, S.A. and Baja
Oriente, S.A. de C.V. (a U.S. subsidiary company) to exclusively manage their
employees' and families' health care through Hospital Las Americas. All the
aforementioned health care plans sold are applicable to the Ensenada, Baja
California Norte, Mexico area. To date, there is no contractual agreement
between a U.S. health care provider and the Company.
(2) GROUPMED MSO (A MANAGEMENT SERVICES ORGANIZATION)
GroupMed MSO is a wholly owned subsidiary of the Company. The
subsidiary was formed to (i) oversee the daily operations of Hospital Las
Americas, (ii) oversee the sales of the Company's health care plans sold in
Mexico, (iii) develop revenue producing business for Hospital Las Americas
both in Mexico and the United States, and in general, (iv) assist the Company
in its marketing efforts. Currently, the aforementioned is being done by
GroupMed International, Inc.
GroupMed MSO had targeted the development of a primary care
physicians' network (IPA) through California Physicians Connection. However,
it was determined that a commensurate financial return would not be realized
by the Company. There are currently no plans to pursue an agreement with
California Physicians Connection.
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.
Through this vehicle, the Company offered to persons who met the suitability
standards set forth in the Private Placement Memorandum, up to a net total of
$810,000 in face value of convertible promissory notes, bearing simple
interest at the rate of twelve percent (12%) per annum, payable quarterly.
The Notes can be converted into restricted common stock of the Company at a
conversion rate of $1.00 per
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share. As of May 31, 1996, the Company sold 9 Promissory Notes, of which 2
exercised their ability to convert to restricted common stock. The Company
had originally planned to utilize the aforementioned IPA to market and
generate referrals for health care service in the Company's owned Mexican
medical facility and the Company's associated health care network. In lieu
of using the California IPA for this referral source, the Company, will work
directly with targeted health insurance carriers to generate this same source
of business, as well as establish a Mexican IPA.
The Company will continue to undertake product research and development
during the next twelve (12) months. Further, The Company may purchase or
sell facilities along with significant equipment as part of its plan of
operation.
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 the hospital (Hospital Las Americas), land, equipment, inventory and an
adjacent office building, located at Arenas #151, Ensenada, Baja California
Norte, Mexico. The construction of both the hospital and office building were
completed in 1992; and as a result, all facilities and equipment remain in
excellent condition.
The purchase price for the hospital, medical building, land,
equipment and the Mexican legal title holder, GMIX, was 200,000 shares of La
Calafia, Inc. (a Nevada privately held corporation) plus $5,500,000, payable
by several promissory notes with various due dates extending through January
1, 1997. In connection with the acquisition of GMIX and its assets by the
Company, the assets were restated to reflect the historical costs and the
appraised market value of US$12,778,203. On December 27, 1995, the Company,
GMIX and the Seller modified the original purchase agreement with an Addendum
to stipulate that the purchase price would be satisfied by the issuance of
2,000,000 unregistered shares of the Company's common stock to the Seller.
The stock would be held in escrow and distributed to the Seller in
installments during 1996 and 1997, contingent upon the market value of the
stock being $2.75 per share by April 1, 1996 and through January 1, 1997.
The purchase agreement also stipulated that in the event the market value did
not reach $2.75 per share, and the Seller chose to accept an alternate form
of payment, the Company may, at its discretion, offer cash in satisfaction of
the debt.
On April 1, 1996, Farvel Arrendamientos, S.A. de C.V. (Seller)
accepted the Company's shares in accordance with the specifics of the
purchase Addendum, representing payment in full of the first installment,
even though the
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value of the Company shares were less than $2.75 per share. The acceptance
by the Seller's legal representative, Fernando Ariza, was based on his
decision on the future value of the Company's stock. The December 27, 1995
agreement among the Company, GMIX and the Seller is attached herein. In
addition, an Addendum dated December 27, 1995 if also attached, clearly
outlining the terms and conditions of the escrow of the 2,000,000 shares of
the Company's unregistered stock to Farvel Arrendamientos, S.A. de C.V., "as
a deposit representing the complete payment of the debt derived from the
original contract between FARVEL and GROUPMED-MEXICO to which reference has
been made."
(b) INVESTMENT POLICIES. The Company may be in a position to purchase
medically related property and/or buildings in the United States as part of
its development and management of a cross-border health care program.
Depending on a seller's position and requirements, the Company will be able
to proceed with negotiations on a purchase without limitations to either a
simple cash purchase through financing, transfer of Company common stock for
equity, joint venture, and/or any combination thereof.
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 GroupMed Total Health (GTH) 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 and corporations
beneficially holding more than five percent (5%) of the Company's capital
stock. The Company has 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 --------
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Common Solymar, Inc. 3,740,624 37.5%
Common Farvel Arrendamientos, 2,000,000 20.1%
S.A. de C.V.
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Common Seramex, Inc. 1,268,438 12.7%
Common Antonio Velasco 522,524 5.2%
On May 20, 1995, La Calafia, Inc. (formerly GroupMed, Inc., a private
corporation) issued 200,000 shares of its stock to the Seller of Hospital Las
Americas as payment for the additional equity in the hospital's equipment and
improvements, over and above the $5.5 million note assumed by the Company.
This additional equity, added to the acquisition price, aggregated a total of
US$12,778,203 of asset to the Company's 99% owned subsidiary, GMIX.
Subsequent to the Company's reorganization on June 7, 1995, the Company
negotiated with the Seller on December 27, 1995, that the Seller would accept
a total of 2,000,000 shares of the Company's restricted stock as payment in
full of all indebtedness, relying on the stock price being at $2.75. As
stated previously, the Seller accepted the first installment on April 1, 1996
and the stock was valued less than $2.75, and this acceptance was based on
the Seller's decision on the future value of the Company stock.
The 5,200,000 shares of the Company's stock was issued to La Calafia, Inc. on
July 26, 1995. These shares were in no way related to the later negotiated
terms and conditions by and between the Company and the Seller of Hospital
Las Americas; therefore, the 5,200,000 shares issued to La Calafia, Inc. were
not retained in an escrow account. As of May 17, 1996, La Calafia, Inc.
distributed amongst its shareholders a total of 5,018,562 of the original
5,200,000 shares of the Company as follows:
Name # of Shares
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Solymar, Inc. 3,562,624
Seramex, Inc. 1,268,438
Dr. John Seelig 44,000
Lisa Fugate 40,000
Charles R. Cook 20,000
Dennis Swets 10,000
Trans Pacific Group, Inc. 44,000
Robert & Juanita Bryson 4,000
Sue Carol Lomax 5,000
Paul R. Harbeston 11,500
David Yeager 6,000
Georgis Family Trust 2,000
Ludwig C. Zelt 1,000
La Calafia, Inc. Treasury 181,438
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TOTAL 5,200,000
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(b) SECURITY OWNERSHIP OF MANAGEMENT
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(1) (2) (3) (4)
Title of Name/Address Amount/Nature Percent
Class of Beneficial of Beneficial of Class
----- Owner Owner --------
------------- -------------
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, #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 CEO/Director 6/96 -1 year
Peter Klune 38 President/COO 4/96-1 year
Fernando Torres 38 Vice President/Director 6/95-1 year *
Eugene Yahn 66 Director 6/96-1 year
Charles R. Cook 71 Director 6/95-1 year *
* Renewal of contract and term extended through July 31, 1996.
BUSINESS EXPERIENCE:
DANIEL N. LOMAX - Mr. Lomax was employed by Cortez I & D from 1989 up
through June, 1994 as Management representative responsible for business
-14-
<PAGE>
development and construction projects. From June, 1994 through the present,
Mr. Lomax is employed by Solymar, Inc. as Management representative under
contractual service agreement with the Company to oversee the day-to-day
operations. 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 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 covers the full spectrum of development and
construction, both private and public, and in all cases, Mr. Lomax acted as
prime contractor in the development, financing, construction, and where
applicable, sales and marketing.
PETER KLUNE - Mr. Klune was employed from 2/92 through 2/96 by Alvarado
Hospital Medical Center in San Diego, California in the capacity of Chief
Financial Officer. From 12/88 through 2/92, he was employed at Sharp
Cabrillo Hospital in San Diego as Associate Administrator and Director of
Finance. He is a C.P.A. with strong technical, managerial and analytical
skills; has a variety of experience in multiple hospital/health care setting;
has had significant operating and support department responsibilities, and
has had an increasing responsibility in strategic planning business planning
and new program development. Mr. Klune is employed by the Company to control
and manage daily operations of Hospital Las Americas and the GroupMed Total
Health division, and works at the hospital on a weekly basis.
FERNANDO TORRES - Mr. Torres was an independent consultant from
February, 1991 through June, 1992 for Farvel Arrendamientos, S.A. de C.V.,
responsible for the computer systems planning and purchasing for Hospital Las
Americas. He was an independent contractor from July, 1992 to December, 1992
for Operadora de Hospitales, S.A. de C.V., a Mexican corporation responsible
for operating Hospital Las Americas, accountable for the software development
and user training of personnel at the hospital. Mr. Torres became General
Manager of Operadora de Hospitales, S.A. de C.V., from January 1, 1993
through June 30, 1995. Beginning July 1, 1995 through the present, Mr.
Torres oversees the day-to-day operations of Hospital Las Americas under a
Management agreement with GroupMed International, Inc.
EUGENE YAHN - Mr. Yahn has not been employed for the past five years as
a result of his earlier retirement status. He had been controller for major
constructions 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.
-15-
<PAGE>
CHARLES R. COOK - Mr. Cook has been owner, Director of Operations and
President of CBMI, a medical equipment lease company, for the past five
years. He has had 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 million. Mr. Cook was Director of Facilities'
Planning, Inc., a division of Berger Brunswig, Inc. in Los Angeles for four
years. He also 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) DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY'S PREDECESSOR.
Name Age Position Term
---- --- -------- ----
Hugo Winkler Unknown President/Director 3/91-6/95
Curtis M. Jamison Unknown Vice President/Director 3/91-6/95
Suzy Frost Unknown Secretary/Director 3/91-6/95
(c) SIGNIFICANT EMPLOYEES. The Company has no significant employees
other than the above-named executive officers who are responsible for
managing the Company's largest asset, Hospital Las Americas. Mr. Lomax
averages weekly visits to Hospital Las Americas; otherwise, he remains on a
daily communication with Mr. Klune and Mr. Torres. Mr. Klune is at the
hospital on a weekly basis and oversees its operations on a daily basis. Mr.
Torres has been responsible for the administration and business of Hospital
Las Americas since 1994, and continues in that capacity. Mr. Torres spends
commensurate amounts of time on a daily basis at the hospital.
(d) 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.
(e) 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 serves as the Chief Executive Officer through
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<PAGE>
a Management Agreement between Solymar, Inc. and the Company. Mr. Lomax is
an employee of Solymar, Inc. and does not receive any compensation from the
Company for his service. Mr. Lomax is furnished with a Company paid leased
vehicle for business use, and in addition, is reimbursed on a monthly basis
for all business related expenses that he incurs. He was the Chief Executive
Officer at the end of the last completed fiscal year. There does not exist
any other compensation plan between Mr. Lomax and the Company.
2. Peter Klune was employed as President/COO of the Company on
April 22, 1996. Mr. Klune receives a monthly remuneration of $8,000 and is
reimbursed on a monthly basis for all business related expenses that he
incurs. Mr. Klune is eligible to receive 500,000 shares of the Company's
unregistered stock upon achievement of certain performance levels tied
directly to the improvement of the hospital's operating cash flow. Mr. Klune
did not receive any remuneration from the Company during the fiscal year 1995.
3. Fernando Torres receives a monthly compensation, through a
Management Agreement between the Company and himself as an individual, in the
amount of $5,000 and is furnished with a Company paid month-to-month leased
vehicle. In addition, Mr. Torres is reimbursed on a monthly basis for all
business related expenses that he incurs. Fernando Torres is an executive
officer of the Company and an executive officer of the Company's subsidiary,
GMIX. Mr. 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. There does not exist any other compensation plan for Mr. Torres.
4. COMPENSATION TO CEO FOR FULL FISCAL YEAR
As an employee of Solymar, Inc. pursuant to contract and a
Management Agreement between the Company and Solymar, Inc., Daniel Lomax
served as CEO from June 5, 1995 through December 31, 1995 of the 1995 fiscal
year. No compensation was paid to Daniel N. Lomax personally. Total
remuneration paid to Solymar, Inc. (pursuant to Management Agreement) during
that period was $39,375.
(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.
-17-
<PAGE>
No remuneration other than 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 certain transactions during the last two (2) years
to which the Company is to be a party, including two (2) of its executive
officers/directors/shareholders and one other Company shareholder. A total
of three (3) Management Agreements beginning July 1, 1995 through June 30,
1996 existed between the Company and Solymar, Inc., between the Company and
Fernando Torres, and between the Company and Seramex, Inc. Copies of these
Management Agreement are submitted as Exhibits to this Form 10-SB document.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings nor 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 Company's belief that a market exists is based on the
following:
- NAFTA has positively changed the overall format in how business
is done between the U.S., Canada and Mexico.
- Mexican government changes in laws allowing for ownership in
Mexico, thereby stimulating foreign investment.
- Added foreign companies now doing business in Mexico.
- Lack of U.S. style health care in Mexico.
- Lack of a HMO system to control quality and costs of services in the
health care arena.
- Growing population of foreigners who choose to work and retire in
Mexico.
- A growing number of private pay health care enrolles.
-18-
<PAGE>
- U.S. bio-tech companies doing developmental work offshore.
Currently in excess of 60% of the bio-tech development business
done by U.S. companies is done outside of the United States.
- The Company's San Diego location is ideal as a conduit between
companies looking to do medically related business offshore.
- Ability to attract and provide relationships throughout the Americas.
This can be done using current Company facilities and established
health care network.
As the Company establishes the above relationships and provides the
services for these relationships, the Company has a strong potential for
success and international growth. These factors should reflect a strong
demand and trading market for the Company's stock.
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 approximately September, 1995. The high and low bid prices reflect
inter-dealer prices; without retail mark-up, mark-down or commission and may
not represent actual transactions:
Year Quarter High Low
---- ------- ---- ---
1995 Third $ 4.25 $ 3.00
1995 Fourth $ 3.25 $ 0.12
1996 First $ 1.50 $ 0.25
(b) UPDATED MARKET INFORMATION. The following represents the high and
low bid prices for the period beginning April 1, 1996 through June 27, 1996.
The Company's current market maker for its stock is J. Alexander Securities,
523 West Sixth Street, Los Angeles, California 90014, (213) 687-8400.
Year Month High Low
---- ----- ---- ---
1996 April $ 1.25 $ 1.06
1996 May $ 1.03 $ 0.94
1996 June 27 $ 0.88 $ 0.75
(1) POSSIBLE CLASSIFICATION OF COMPANY'S SECURITIES AS A "PENNY STOCK":
If the Company's common stock has a price of less than $5.00 per share it
may be classified as a "penny stock" pursuant to the Securities Exchange Act
-19-
<PAGE>
of 1934 (the "Act") Rule 3a51-1. The prerequisites required of
broker-dealers engaging in transactions involving "penny stocks" have
discouraged, or even barred, many brokerage firms from soliciting orders for
certain low priced stocks.
However, regardless of the price of the Company's stock, in the event
the Company has net tangible assets in excess of $2,000,000 and if the
Company has been in continuous operation for at least three (3) years, or
$5,000,000, if the Company has been in continuous operation for at least
three (3) years, Rule 3a51-1(g) of the Act will preclude the Company's common
stock from being classified as a "penny stock."
(c) NUMBER OF SHAREHOLDERS. The Company has approximately 140 holders
of its common stock.
(d) 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 Secretarial
Chittenden Services
2. March 4, 1995 Judy Ann 2,000 Secretarial
Hamilton Services
3. March 4, 1995 Cardav 5,000 Financial
Finance, S.A. Services
4. March 4, 1995 White Star, 5,000 Consulting
Inc. Service to
locate
Merger
Candidate
5. March 4, 1995 U.S. Recorp 4,000 Legal Services
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<PAGE>
6. March 5, 1995 Recorp America 4,250 Consulting
Service to
locate
Merger
Candidate
7. June 8, 1995 La Calafia, 5,200,000 Acquisition
Inc. 99% of
GMIX,
S.A. de C.V.
per
Reorgan-
ization Plan
8. June 29, 1995 Fernando 35,000 Board of
Torres Director
Services
9. June 29, 1995 Eugene Yahn 15,000 Board of
Director
Services
10. June 29, 1995 Charles Cook 15,000 Board of
Director
Services
11. June 29, 1995 David Yeager 15,000 Accounting
Services
12. June 29, 1995 Dennis Swets 12,000 Architectural
Services
13. June 29, 1995 John Seelig, 25,000 Medical issue
M.D. Services
14. June 29, 1995 Ellen Harbeston 35,000 Administrative
Office Services
15. June 29, 1995 Trans Pacific 196,000 Reorganization
Group, Inc. of First
Manhattan,
Inc.
Services
16. June 29, 1995 Ventana 450,000 * Cash
Consultants $9,000
17. June 29, 1995 Allied 450,000 * Cash
Management $9,000
Corporation
-21-
<PAGE>
18. June 29, 1995 Pembridge 450,000 * Cash
Securities, Inc. $9,000
19. December 22, Farvel Arrendamientos, 2,000,000 ** Asset
1995 S.A. de C.V. Purchase -
Hospital Las
Americas
* Principal shareholders of Company's predecessor, First Manhattan, Inc.
Shares issued in consideration of cash and reverse merger of First Manhattan,
Inc.
** Shares are held in escrow subject to debt cancellation 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. de C.V. 110,000 Cash
$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 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 has 9,973,795 of the
Company's common stock (par value $0.001) outstanding.
The Company's Articles of Incorporation, filed on March 27, 1991,
authorized 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.
-22-
<PAGE>
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 rate
all assets remaining after payments 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 dare of one (1) year or, if the Notes are prepaid by
the Company, at any time 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.
ITEM 13. FINANCIAL STATEMENTS
(a) ANNUAL FINANCIAL STATEMENTS.
See Item 14(a).
(b) INTERIM FINANCIAL STATEMENTS.
See Item 14(a).
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR
ACCOUNTING AND FINANCIAL DISCLOSURE
(a) The Company's former accounting firm of Kafoury Armstrong & Co.
that prepared the 1993 and 1994 audited financial statements for First
Manhattan, Inc. resigned as the Company's accounting firm in June, 1995, and
was not retained after the reorganization of the Company. The Company
engaged the accounting firm of Hoffman McBryde & Co. to prepare the 1995
audited financial statements for the Company. The Company decided that it
needed an auditing
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<PAGE>
firm with international expertise and experience because of the location of
its major asset and its operations in Mexico.
There have been no adverse opinions or disclaimers of opinion, nor
were the financial statements modified as to uncertainty, audit scope or
accounting principles.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS. The following financial statements are
included herein:
1. GroupMed International, Inc.
Consolidated Audited Financial Statements for
Years Ended December 31, 1994 and 1995.
2. GroupMed International, Inc.
Consolidated Financial Statements for First
Quarter, 1996 - Unaudited.
3. First Manhattan, Inc. - Audited
Financial Statements - December
31, 1994, 1993, 1992 and 1991.
4. GroupMed International de Mexico,
S.A. de C.V. Financial Statements
and Independent Auditors' Report
Year Ended December 31, 1995.
5. Farvel Arrendamientos, S.A. de C.V.
Operadora de Hospitales S.A. de C.V.
Financial Statements Combined
September 30, 1995; December 31, 1994,
1993 and 1992.
6. GroupMed International de Mexico,
S.A. de C.V. Financial Statements
December 31, 1995, FASB-52,
"Conversion of Mexican Pesos to
U.S. Dollars."
7. GroupMed International de Mexico,
S.A. de C.V. Statements of Cash Flows
The Period Ended March 31, 1996.
8. GroupMed International de Mexico,
S.A. de C.V. Stockholders' Equity
Statement for the Period January 1 -
March 31, 1996.
-24-
<PAGE>
(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 of
Reorganization
10.2 Management Agreements with
Solymar, Inc., Fernando Torres, and
Seramex, Inc.
10.3 Contract by and Between Farvel
Arrendamientos, S.A. DE C.V. and La
Calafia, Inc. (Formerly GROUPMED,
Inc. - A Privately Held Corporation),
Dated May 20, 1995
10.4 Addendum to the Contract Dated July
1, 1995 Between Farvel
Arrendamientos, S.A. DE C.V. and
GROUPMED International de Mexico,
S.A. DE C.V., Dated December 27,
1995
10.5 Modification and Clarification to
Addendum to Original Contract Dated
December 27, 1995 Between
GROUPMED International, Inc.,
Farvel Arrendamientos, S.A. DE C.V.
and GROUPMED International de
Mexico, S.A. DE C.V., Dated
December 28, 1995 (Spanish Version)
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<PAGE>
10.6 Modification and Clarification to
Addendum to Original Contract Dated
December 27, 1995 Between
GROUPMED International, Inc.,
Farvel Arrendamientos, S.A. DE C.V.
and GROUPMED International de
Mexico, S.A. DE C.V., Dated
December 28, 1995 (English Version)
10.7 Mexico's FM3 Document Filed on
Daniel N. Lomax (Equivalent to
Working Papers Permitting Mr.
Lomax to Work at Hospital Las
Americas)
-26-
<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: October 8, 1996 BY: /s/
--------------------------------
DANIEL N. LOMAX
President
-27-
<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 condsolidated 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 $ 310,175
Building 6,027,392
Furniture and equipment 3,781,351
Computer equipment 59,433
------------
10,178,351
Accumulated depreciation (378,056) 9,800,295
------------
Other assets:
Deferred income taxes, net of valuation
allowance of $330,643 -
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
------------
$ 11,013,999
------------
------------
(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 65,921
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)
Translation adjustment (2,483,505)
Accumulated deficit (1,011,252)
------------
Total stockholders' equity 4,285,009
------------
$11,013,999
------------
------------
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 114 413,086
General and administrative expenses 2,397 681,425
------------ ------------
(2,511) 1,637,419
------------ ------------
Operating loss (2,511) (897,286)
------------ ------------
Other income (expense):
Interest expense - (6,242)
Interest income 180 -
Miscellaneous (net) - 16,668
Reorganization expense - (50,000)
------------
180 (39,574)
------------ ------------
Loss before minority interest (2,331) (936,860)
Minority interest - 6,351
------------ ------------
Net loss $(2,331) $(930,509)
------------ ------------
------------ ------------
Net loss per share $ (0.05) $ (0.23)
------------ ------------
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>
Common Stock Additional Accumu-
------------ paid-in lated Translation Unrealized
Shares Amount capital deficit adjustment loss Total
------ ------ ------- ------- ---------- ---- -----
<S> <C> <C> <C> <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 - - - (930,509) - - (930,509)
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
Translation adjustment - - - - $(2,483,505) - (2,483,505)
--------- --------- ---------- ----------- ----------- --------- -----------
Balance, December 31, 1995 7,480,250 $ 7,480 $7,773,886 $(1,011,252) $(2,483,505) $(1,600) $ 4,285,009
--------- --------- ---------- ----------- ----------- --------- -----------
--------- --------- ---------- ----------- ----------- --------- -----------
</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) $ (930,509)
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization 114 35,030
Depreciation - 378,056
Expenses paid by issuance of common stock - 50,022
Minority interest in subsidiary loss - (6,351)
Loss on sale of securities - 1,019
Changes in:
Accounts receivable - (53,478)
Inventories - (59,888)
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:
Acquisition 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)
Translation adjustment resulting from
devaluation of functional currency:
Translation adjustment - 2,483,505
Land - (87,625)
Building - (1,412,287)
Furniture and equipment - (983,593)
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.
REVENUE RECOGNITION
Revenue is recognized as services are provided.
<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
The financial statements of GMIX have been translated into U.S. dollars
in accordance with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation." The assets and liabilities denominated in
Mexican pesos were translated into U.S. dollars at the current rate of
exchange which existed at year end except for the note payable of GMIX
which is payable in a fixed amount stated in U.S. dollars and is reported
at that amount. Income and expense items were translated at the average
exchange rate for the year. The resulting translation adjustment has been
recorded as a separate component of stockholders' equity.
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) $ 635,074
2006 33,037
2007 43,945
<PAGE>
2008 1,430
2009 2,331
2010 (loss of Company in 1995) 301,786
-------
$1,017,603
----------
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 (635,074)
Total assets 10,404,158
Net assets 4,040,398
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 March 17, 1996; unsecured 3-17-95 200,000
<PAGE>
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 2,279,805
------------ ------------
Operating loss (1,839,299) (1,165,320)
Other expense (109,787) (9,411)
------------ ------------
Net loss $(1,949,086) $(1,174,731)
------------ ------------
------------ ------------
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.
NOTE 16 - ACCOUNTS RECEIVABLE
At December 31, 1995, the Company's accounts receivable are comprised of
the following:
$25,300 Due from private care patients
7,792 Taxes receivables
16,613 Due from predecessor hospital operator
1,065 Employees
2,708 Other
-------
$53,478
-------
-------
<PAGE>
NOTE 17 - CONTINGENCY
GMIX has not insured the operational assets of the hospital in Ensenada,
Mexico against the risk of future loss or damage by fire, explosion or
other hazards.
<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)
Consulting & professional fees (55,893)
Shareholder expense (1,006)
General & Office Administration (14,567)
Advertising & Marketing (44,685)
Depreciation & amortization (11,992)
--------
(731,014)
Operating Profit (Loss) (411,216)
Other Income (expense)
Interest expense (3,962)
Miscellaneous income 14,606
Exchange Loss (350,813)
---------
(340,169)
Net Loss (751,385)
---------
---------
<PAGE>
FIRST QUARTER, 1996 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Conversion Analysis End Diff:
Balance Sheet Quarter End/
As of March 31, 1996 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 0
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: 67
Net Profit (Loss) before Fluct. (1,709,366) (268,883) (227,007) (41,875)
---------
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
<PAGE>
GROUPMED
INTERNATIONAL GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
QUARTERLY 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 22880. B.C. Mexico Tel. (617) 6-03-01 Fax (617) 7-15-JI
<PAGE>
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 conjunction with this quarterly report.
Arenas # 151. Ensenada 22880, B.C.. Mexico Tel. (617) 6-03-01 Fax (617) 7-154J
<PAGE>
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, 1995.
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 # 151. Ensenada 22880, B.C.. Mexico Tel. (617) 6-03-01 Fax (617) 7-154J
<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.
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 $12,111 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
ADDITIONAL
COMMON STOCK PAID-IN
------------------- CAPITAL
SHARES AMOUNT ----------
--------- ---------
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 the 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>
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 $3,000 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>
HLB
OLEA, TRUJILLO Y ASOCIADOS, S.C.
CONTADORES PUBLICOS Y CONSULTORES
GROUPMED INTERNATIONAL DE MEXICO,
S.A. DE C.V.
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORT
YEAR ENDED
DECEMBER 31, 1995
CONTENT:
Page
Auditors' Report 1
Financial statements:
General Balance Sheet 3
Statement of Income (Loss) 4
Statements of Variations in Shareholders' Investment 5
Statements of Changes in the Financial Position 6
Notes to the Financial Statements 7
Tijuana B. C. Blvd. Sanchez Taboada 10116-510 Zona Rio C. P. 22320
Tele. (66) 84-14-61 y 34-04-62 Fax: (66) 34-04-62
Ensonada, B. C. Blvd. Ramirez Mendez 191-A Fracc. Bahia C.P. 22880
Tele. (617) 7-12-68 y 7-12-74 Fax: (617) 6-30-06
A member of HLB International
A world wide organization of accounting firms and business advisors
<PAGE>
HLB
OLEA, TRUJILLO Y ASOCIADOS, S.C.
CONTADORES PUBLICOS Y CONSULTORES
INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
TO THE SHAREHOLDERS'
GROUPMED INTERNATIONAL DE MEXICO, S. A. DE C.V.
We have examined the statements of financial position of GROUPMED
INTERNATIONAL DE MEXICO, S.A. DE C. V., as of December 31, 1995, statements
of shareholders equity that are relative to that date. This financial
statements are the responsibility of the company's administration. Our
responsibility consists in expressing an opinion of the financial statements
based on our audit.
Our tests were realized in accordance to the generally accepted Mexican
auditing norms, which require that the audit be planned and realized in a
manner that it allows the acquisition of reasonable security that the
financial statements do not have any important errors. The audit consists in
the examination, based on selective tests of the evidence that the numbers
and revelations of the financial statements support; it also includes the
evaluation of the accounting principles used, the significant estimates made
by the administration, and of the presentation of the financial statements.
We consider that our examinations give us a reasonable basis to sustain our
opinion.
<PAGE>
HLB
OLEA, TRUJILLO Y ASOCIADOS, S.C.
CONTADORES PUBLICOS Y CONSULTORES
As we mention in note 1 the adjoined financial statements are prepared based
on historical costs, except for the fixed assets and the accrued
depreciation. In an inflationary economy, like the one that prevails in
Mexico, historical amounts lose their significance so this have to be
modified so that their objectivity is returned there. Due that the before
mentioned financial statements do not recognize the effect of inflation in
now monetary accounts, such as: COST SALES and SHAREHOLDERS' INVESTMENT
neither do they recognize the monetary position result such financial
statements do not present the financial status of the company nor the results
of its operations in conformity with the generally accepted accounting
principles.
In our opinion, the adjoining financial information of GROUPMED INTERNATIONAL
DE MEXICO, S.A. DE C.V., as of December 31, 1995, is reasonably presented in
all important aspects according to the accounting policies and bases,
described in note 1 of the financial statements.
C.P. Adrian Olea Mendivil
Professional Certificate No. 1458686
Ensenada, B.C., March 19, 1995.
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
BALANCE SHEETS AS OF DECEMBER 31, 1995.
(IN MEXICAN PESOS)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 48,956
Accounts receivable:
Clients 194,687
Taxes receivable 59,961
Other accounts receivable 148,409
-------------
403,057
Inventories (Note 2) 1,270,455
Anticipated payments 6,019
-------------
TOTAL CURRENT ASSETS 1,728,487
NET FIXED ASSETS (Note 3) 75,354,663
DEFERRED FINANCE CHARGES (Note 6b) 3,641,970
-------------
TOTAL ASSETS $ 80,725,120
-------------
-------------
LIABILITIES AND SHAREHOLDERS' EQUITY
SHORT TERM LIABILITIES
Purveyor $ 1,042,210
Taxes payable 374 966
Accrued expenses 672,275
Related party (Note 4) 415,214
Current portion of long-term liabilities (Note 6a) 27,079,573
--------------
Total Short Term Liabllities 30,084,238
LONG-TERM DEBT
Long term Account Payable (Note 6a) 18,747,397
--------------
TOTAL LIABILITIES 48,831,635
SHAREHOLDERS' EQUITY (Note 7)
Common stock 50,000
Net Loss (13,638,615)
Surplus by revaluation (Note 3) 45,482,100
--------------
31,893,485
TOTAL LIABILITIES AND --------------
SHAREHOLDERS' EQUITY $ 80,725,120
--------------
--------------
</TABLE>
Lic. Fernando Torres Moreno
General Director
The accompanying notes are an integral part of the financial statements.
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO S.A. DE C.V.
STATEMENTS OF INCOME (LOSS), YEAR ENDED DECEMBER 31,1995.
(IN MEXICAN PESOS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES:
Net Income (Note 8) $ 4,759,875
Leasing income 63,407
------------
4,823,282
COSTS AND EXPENSES:
Cost of sales (Note 9) 1,223,284
Health care services cost 5,526,777
Administrative expenses and others 2,465,774
------------
9,215,835
------------
OPERATING LOSS (4,392,553)
INTEGRAL FINANCIAL COST
Interest - Net (22,769)
Currency exchange fluctuations (9,223,293)
------------
(9,246,062)
------------
NET LOSS $(13,638,615)
------------
------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Manager
This notes are an integral art of the financial statements
4
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
STATEMENTS OF VARIATIONS IN SHAREHOLDERS' INVESTMENT (Note 7)
(IN MEXICAN PESOS, EXCEPT FOR PER SHARE INFORMATION ).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
------------------- SURPLUS
NUMBER OF ACCUMULATED BY SHAREHOLDERS'
SHARES AMOUNT DEFICIT REVALUATION TOTAL
--------- ------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE OF APRIL 18,
1995 500 $50,000 $ $ $ 50,000
NET LOSS (13,638,315 ) (13,638,615)
SURPLUS BY REVALUATION
(Note 3) 45,482,100 45,482,100
--- ------- ------------ ----------- -------------
BALANCE AS OF DECEMBER,
1995 500 $50,000 $(13,638,615) $45,482,100 $ 31,893,485
--- ------- ------------ ----------- -------------
--- ------- ------------ ----------- -------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Director
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
STATEMENTS OF CHANGES IN THE FINANCIAL POSITION, YEAR ENDED DECEMBER 31, 1995
(IN MEXICAN PESOS)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
RESOURCES GENERATED BY THE OPERATION:
Net loss $(13,638,615)
Items not requiring resources
Depreciation and amortization 2,661,374
------------
(10,977,241)
CHANGES IN ASSETS AND LIABILITIES:
Others accounts receivable (148,409)
Accounts receivable (194,687)
Taxes receivable (59,961)
Deferred finance changes (3,641,970)
Inventories (1,270,455)
Anticipated payments (6,019)
Accounts payable 1,042,210
Related party 415,214
Taxes payable 874,966
Accrued expenses 672,275
------------
(2,316,836)
------------
FUNDS USED IN OPERATING ACTIVITIES (13,294,077)
FINANCING ACTIVITIES:
Common stock 50,000
Long term account payable 18,747,397
Current portion of long-term liabilities 27,079,573
------------
FUNDS GENERATED BY FINANCING ACTIVITIES 45,876,970
INVESTING ACTIVITIES:
Fixed assets (32,533,937)
------------
FUNDS USED IN INVESTING ACTIVITIES (32,533,937)
INCREMENT OF THE YEAR 48,956
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR 0
------------
END OF YEAR $ 48,956
------------
------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Manager
The accompanying notes are an integral part of the financial statements
6
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
NOTES TO THE FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995
(IN MEXICAN PESOS)
- --------------------------------------------------------------------------------
1. OPERATIONS AND PRINCIPAL ACCOUNTING POLICIES.
The company began April 18, 1995, and its principal activities are the
benefits of medical, hospital, and surgical services as those of social
welfare.
ACCOUNTING POLICIES. The accounting policies of the company are prewritten
by the administration as follows:
a) THE FINANCIAL STATEMENTS have been prepared on the historical-cost basis
of accounting, and, therefore, do not show the effects of inflation in
the financial information according to the generally accepted accounting
principles of Mexico, consequently this are expressed in new pesos of a
different purchasing power.
b) TEMPORARY INVESTMENTS are valuated at their true value which is similar
to its market value.
c) INVENTORIES are valuated at market value, which does not exceed its true
value. The cost of sales is brought up to date using the last purchase
method.
d) FIXED ASSETS are valuated at their cost of acquisition. Depreciation is
calculated using the straight-line method based on the maximum fiscal
rates, established in the Mexican Income Tax Law.
<TABLE>
<CAPTION>
YEARS
-----
<S> <C> <C>
Buildings 20
Medical Equipment 10
Fixed Assets 10
Computer Equipment 4
Transportation Equipment 4
</TABLE>
7
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
e) The assets and liabilities in foreign currency are valuated at the
rate of exchange (Peso-Dollar) of the date that the operations took
place, and this are registered in mexican pesos.
f) EMPLOYEE SEVERANCE BENEFITS:
Indemnizations are charged to the summary of operations when the
demandability of the liability is determined.
g) INCOME TAX, ASSET TAXES AND EMPLOYEE PROFIT-SHARING, are expensed in
the year in which they become payable, being adjusted in their case,
by the effects of certain temporary entries that are fiscally
acknowledged in different years than that in which it was accountably
acknowledged, of a non recurrent nature and its reversal will be in a
defined period.
Asset Taxes that exceed Income Taxes, are expensed in the year in
which they become payable.
h) In Accordance with the notice published by the Bank of Mexico in the
Official Diary of the Federation with date, November 15, 1995, starting
January 1, 1996, the word "nuevo" is remove from the name of the
monetary system's whit of the Mexican United States returning to the
denomination PESO.
2. INVENTORIES
The balance is integrate as follows:
DECEMBER 31,
1995
------------------
Warehouse general $ 1,108, 818
Inventory of pharmacy 161,637
------------------
$ 1, 270,455
------------------
8
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO S.A. DE C.V, NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. FIXED ASSETS.
The Balance is integrated as follows:
DECEMBER 31, 1995
---------------------------------------
HISTORICAL MARKET OR
COST REVALUATION ACTUAL VALUE
---------- ----------- ------------
Land $ 2,386,800 $ $ 2,386,800
Building 12,142,080 34,238,700 46,380,780
Movables and Medical equipment 12,137,400 11,243,400 23,380,800
Transportation equipment 5,200 5,200
Computer equipment 392,700 392,700
Movables and office equipment 73,300 73,300
Movables and Hospital equipment 5,396,457 5,396,457
----------- ----------- -----------
32,533,937 45,482,100 78,016,037
MINUS:
Accrued depreciation 1,241,236 1,418,138 2,661,374
----------- ----------- -----------
FIXED ASSETS-NET $ 31,290,701 $ 44,063,96 $ 75,354,663
----------- ----------- -----------
----------- ----------- -----------
During the year, the company had an appraisal of its fixed assets; which
was made by Corporacion de Desarrollo Urbano, S.A. de C.V. (MARA), located
in Tijuana, B.C. and CBMI, in El Cajon, California. U.S.A., those were
registered in the accounting books, incrementing the value of the building
and the medical equipment by an amount of $ 34,238,700 and $ 11,243,400
mexican pesos, respectively.
4. OPERATIONS WITH RELATED PARTIES.
GROUPMED INTERNATIONAL INC. is an entity with Its address In Nevada,
U.S.A., Its relation with GroupMed International of Mexico, S.A. de C.V.
is as follows:
a) Holder of 99% of the common stock.
b) Principal financial source.
c) Significative administrative influence.
9
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. BALANCES IN FOREIGN CURRENCY
a) As of December 31 1995, the balance is foreign currency are integrated
as follows:
Equivalent in
Balance in mexican
Cash USA Dollars currency
--------------------- -------------------- ---------------------
Cash $ 5,680 $ 40,801
Suppliers ( 3,810 ) ( 29,223 )
Related parties ( 55,215 ) ( 423,499 )
Documents payable ( 5,500,000 ) ( 42,185,000 )
-------------------- ---------------------
Net Position $ ( 5,553.345 ) $ ( 42,678,523 )
-------------------- ---------------------
b) At year's end, this were the actual PESO-USA Dollar rates:
Purchase $ 7.1833
Sale 7.6700
6. LONG TERM LIABILITIES.
a) During the year, the company celebrated a
"PURCHASE AND SALE CONTRACT WITH A
DOMINION RESERVE" with Farvel
Arrendamientos, S.A. de C.V.; through
which the acquisition was established of
the building and the equipment that form
the fixed assels of GroupMed International
de Mexico, S A. de C.V. for an amount
of $ 5,500,000. U.S.A. dollars, in 4
payments, one every three months starling
January 1, 1996, the first payment for an
amount of $ 1,000,000. U.S.A dollars,
the remaining four for an amount of
$ 1,125,000 U.S.A. dollars each, and
another one for $ 2,250,000. Agreeing on
an annual interest rate of 7.875% payable
based on the unpaid balance,starting on $ 42,185,000
the date mentioned before.
b) The added value tax of merchandise will 3,641,970
be paid as each partiality Is amortized.
MINUS: Current Portion 27,079,573 $ 18,747,397
------------- ------------
------------
10
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In a document payable, dated December 28, 1995
both parties agree that they will or will not
be able to offer to do on a cash basis the
before mentioned payments; or in such a case
with common stock shares of GroupMed, USA.
7. INVESTMENT OF THE SHAREHOLDERS'.
The common stock for $ 50,000 mexican pesos, is integrated by 500 shares,
with a par value of $100.00 mexican pesos, each, totally undersigned and
payed in cash.
The shareholders investment, except for the common stock and the actualized
fiscal profit included in the retained profit will cause a tax on dividends
of 34% charged to the company at the moment of its distribution charged to
its accrued profit.
During 1995, the Company had a fiscal result for ISR effects of $ O and it
did not cause asset tax due that the law of the subject in article 6 says
that first and second year business do not have to wake this tax payment.
8. INCOME.
The principal obtained income is integrated as follows:
December 31,
1995
----------------
Health care services income $ 4,703,281
Other income 56,594
----------------
$ 4,759,875
----------------
----------------
11
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. COST OF SALES.
The cost of sales include all of the costs that both companies have had
purchasing or selling items. Their integration is as follows:
December 31,
1995
----------------
Hospital material cost $ 635,743
Medicine cost 507,758
Other costs 79,783
----------------
$ 1,223,284
----------------
----------------
/s/ Fernando Torres Moreno
Lic. Fernando Torres Moreno
General Director
This notes are an Integral part or the financial statements.
12
<PAGE>
_______________________________________________________________________________
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
FINANCIAL STATEMENTS COMBINED
SEPTEMBER 30, 1995;
DECEMBER 31, 1994; 1993 AND 1992
_______________________________________________________________________________
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
FINANCIAL STATEMENTS COMBINED
SEPTEMBER 30, 1995;
DECEMBER 31, 1994; 1993 AND 1992
Combined General Balance Sheets 2
Combined Statements of Income (Loss) 3
Combined Statements of Variations in Shareholders' Investment 4
Combined Statements of Changes in the Financial Position 5
Notes to the Financial Statements Combined 7
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES S.A. DE C.V.
COMBINED GENERAL BALANCE SHEETS
(IN MEXICAN NEW PESOS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
SEPTEMBER 30 -------------------------------------------
1995 1992
(NO AUDIT) 1994 1993 (NO AUDIT)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents N$ 118,762 N$ 40,567 N$ 115,724 N$ 377,375
Accounts receivable (Note 2) 3,937,508 1,150,862 1,123,518 820,045
Taxes receivable (Note 3) 590,415 543,293 780,592 856,560
------------- ------------- ------------- -------------
4,646,685 1,734,722 2,020,134 2,053,980
Minus Estimation for doubtful recoverable accounts 21,767 21,767 -- --
Inventories (Note 4) 871,720 581,960 453,133 261,172
Anticipated payments 905,087 889,930 50,735 81,591
------------- ------------- ------------- -------------
TOTAL CURRENT ASSETS 6,401,705 3,184,825 2,524,002 2,396,743
NET FIXED ASSETS (Note 5) 19,926,458 21,305,788 23,902,659 25,567,942
------------- ------------- ------------- -------------
TOTAL ASSETS N$ 26,328,163 N$ 24,490,613 N$ 26,426,661 N$ 27,964,685
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C>
SHORT TERM LIABILITIES
Account payable N$ -- N$ 1,342,403 N$ 1,000,000 N$ 6,654,365
Taxes payable 294,381 321,712 333,017 334,530
Accrued expenses 476,954 668,298 669,952 300,591
Shareholders' 26,459,644 19,046,173 12,090,524 1,746,292
Current portion of long-term liabilities -- -- 925,722 --
------------- ------------- ------------- -------------
TOTAL SHORT TERM LIABILITIES 27,230,979 21,378,586 15,019,215 9,035,778
Long term bank loans -- -- 1,794,515 148,073
------------- ------------- ------------- -------------
TOTAL LIABILITIES 27,230,979 21,378,586 16,813,730 9,183,851
SHAREHOLDERS' INVESTMENT (Note 6)
Common stock 27,240,000 27,240,000 27,240,000 27,240,000
Accrued deficit (24,127,973) (17,627,069) (8,453,166) (1,119,434)
Corrections of past years (Note 7) (55,484)
Year's result (3,959,359) (6,500,904) (9,167,903) (7,339,732)
------------- ------------- ------------- -------------
(902,816) 3,112,027 9,612,931 18,780,834
------------- ------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY N$ 26,328,163 N$ 24,490,613 N$ 26,426,661 N$ 27,964,685
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Manager
The accompanying notes are an integral part of the financial statements
2
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
COMBINED STATEMENTS OF INCOME (LOSS)
(IN MEXICAN NEW PESOS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED DECEMBER 31
SEPTEMBER 30 ------------------------------------------------
1995 1992
(NO AUDIT) 1994 1993 (NO AUDIT)
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Net income (Note 8) N$ 4,417,944 N$ 7,168,945 N$ 5,353,846 N$ 3,070,649
Subleasing income 84,480 162,095 58,882 --
-------------- --------------- --------------- --------------
4,502,424 7,331,040 5,412,728 3,070,649
COSTS AND EXPENSES
Cost of sales (Note 9) 1,267,454 2,132,158 1,535,636 2,277,334
Administrative expenses and others 7,248,844 11,320,632 11,974,780 7,167,458
-------------- --------------- --------------- --------------
8,516,298 13,452,790 13,510,416 9,444,792
-------------- --------------- --------------- --------------
OPERATING LOSS (4,013,874) (6,121,750) (8,097,688) (6,374,143)
INTEGRAL FINANCIAL COST
Interest - Net 30,824 371,078 1,088,780 968,082
Currency exchange fluctuations (29,855) 8,076 (18,565) (2,493)
-------------- --------------- --------------- --------------
969 379,154 1,070,215 965,589
-------------- --------------- --------------- --------------
NET LOSS N$ (4,014,843) N$ (6,500,904) (9,167,903) N$ (7,339,732)
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Manager
The accompanying notes are an integral part of the financial statements
3
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
COMBINED STATEMENTS OF VARIATIONS IN SHAREHOLDERS' INVESTMENT.
(IN MEXICAN NEW PESOS, EXCEPT FOR PER SHARE INFORMATION)
<TABLE>
<CAPTION>
COMMON STOCK (NOTE 6)
-------------------------------
NUMBER OF ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
BALANCE AS OF JANUARY 1, 1992 2,940 N$ 27,240,000 N$ (1,119,434) N$ 26,120,566
(NO AUDITED)
NET LOSS (7,339,732) (7,339,732)
----- -------------- ---------------- ---------------
BALANCE AS OF DECEMBER 31, 1992 2,940 27,240,000 (8,459,166) 18,780,834
(NO AUDITED)
NET LOSS (9,167,903) (9,167,903)
----- -------------- ---------------- ---------------
BALANCE AS OF DECEMBER 31, 1993 2,940 N$ 27,240,000 N$ (17,627,069) N$ 9,612,931
NET LOSS (6,500,904) (6,500,904)
----- -------------- ---------------- ---------------
BALANCE AS OF DECEMBER 31, 1994 2,940 N$ 27,240,000 N$ (24,127,973) N$ 3,112,027
NET LOSS (3,959,359) (3,959,359)
CORRECTIONS OF PAST YEARS (Note 7) (55,484) (55,484)
----- -------------- ---------------- ---------------
BALANCE AS OF SEPTEMBER 30, 1995 2,940 N$ 27,240,000 N$ (28,142,816) N$ (902,816)
----- -------------- ---------------- ---------------
----- -------------- ---------------- ---------------
</TABLE>
/s/ FERNANDO TORRES MORENO
Lic. Fernando Torres Moreno
General Manager
The accompanying notes are an integral part of the financial statements
4
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA HOSPlTALES, S.A. DE C.V.
COMBINED STATEMENTS OF CHANGES IN THE FINANCIAL POSITION.
(IN MEXICAN NEW PESOS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31
September 30 --------------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
RESOURCES GENERATED BY THE OPERATION
Net loss N$ ( 3,959,359 ) N$ ( 6,500,904 ) N$ ( 9,167,903 ) N$( 7,339,732 )
Items not requiring resources:
Depreciation and amortization 1,461,359 1,942,009 1,910,619 804,932
Provision of uncollectable accounts 21,787 21,787 - -
---------------- ---------------- ---------------- ---------------
( 2,476,213 ) ( 4,537,108 ) ( 7,257,284 ) ( 6,534,800 )
Financing (investment) of operations resources
Accounts receivable 186,564 ( 284,071 ) ( 503,390 ) ( 139,182 )
Other account receivable ( 2,994,997 ) ( 132,735 ) 371,326 ( 151,482 )
Inventories ( 289,760 ) ( 128,827 ) ( 191,961 ) ( 261,172 )
Anticipated payments ( 15,157 ) ( 839,195 ) 30,856 ( 81,591 )
Taxes receivable ( 47,122 ) 237,599 75,668 42,686
Contingent interests - 389,462 ( 171,409 ) ( 218,053 )
Taxes payable ( 27,330 ) ( 11,305 ) ( 1,513 ) 309,247
Accrued expenses ( 191,339 ) ( 1,659 ) 369,361 4,073
Shareholders' 7,413,465 6,955,654 10,344,232 ( 3,393,911 )
Correction result before (Note 7) 55,484 - - -
---------------- ---------------- ---------------- ---------------
3,978,840 6,184,923 10,323,170 ( 3,889,385 )
---------------- ---------------- ---------------- ---------------
RESOURCES GENERATED (APPLIED) TO THE OPERATION 1,502,627 1,647,815 3,065,886 ( 10,424,185 )
FINANCING
Credit institutions ( 1,342,403 ) 342,403 ( 5,654,365 ) 4,590,080
Long term financing - ( 2,720,237 ) 2,572,164 148,073
Common stock - - - 14,000,000
---------------- ---------------- ---------------- ---------------
RESOURCES GENERATED (APPLIED) IN
FINANCING ACTIVITIES ( 1,342,403 ) ( 2,377,834 ) ( 3,082,201 ) 18,738,153
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
COMBINED STATEMENT OF CHANGES IN THE FINANCIAL POSITION.
(IN MEXICAN NEW PESOS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended December 31
September 30 -----------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT:
Movables and equipment ( 82,029 ) 654,862 ( 245,336 ) ( 8,015,795 )
------------- ------------- ------------- -------------
RESOURCES GENERATED (APPLIED) IN
INVESTMENT ACTIVITIES ( 82,029 ) 654,862 ( 245,336 ) ( 8,015,795 )
INCREASE (DECREASE) OF THE PERIOD 78,195 ( 75,157 ) ( 261,651 ) 298,173
CASH AND TEMPORARY INVESTMENTS:
CASH AT THE BEGINNING OF THE PERIOD 40,567 115,724 377,375 79,202
------------- ------------- ------------- -------------
CASH AT THE END OF THE PERIOD N$ 118,762 N$ 40,567 N$ 115,724 N$ 377,375
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
FARVEL ARRENDAMIENTOS, S.A. DE C.V.
OPERADORA DE HOSPITALES, S.A. DE C.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS,
FOR THE YEARS ENDED SEPTEMBER 30,1995 AND DECEMBER 31,1994, 1993 AND 1992.
(IN MEXICAN NEW PESOS)
- --------------------------------------------------------------------------------
1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES.
The adjoined combined financial statements, include balances of FARVEL
ARRENDAMIENTOS, S.A. DE C.V. and OPERADORA DE HOSPITALES, S.A. DE C.V.,
same that have a shareholder in common; their principal activity is the
acquisition and lease of realty goods necessary for the hospitals, besides
support services for health attention respectively. All the intercompany
accounts and operations of importance, have been eliminated in the
combination.
The information corresponding to the period ending September 30, 1995 and
December 31, 1992, have not been audit by a certified public accountant.
ACCOUNTING POLICIES. The accounting policies of the company are prewritten
by the administration as follows:
a) The financial statements have been prepared on the historical-cost
basis of accounting and therefore do not show the effects of inflation
in the financial information according to the generally accepted
accounting Principles of Mexico, consequently this are expressed in
pesos of a different purchasing power.
b) TEMPORARY INVESTMENTS are valuated at their true value which, is
similar to the market value.
c) ASSETS AND LIABILITIES IN FOREIGNER CURRENCY are valued at the
exchange rate of the date on the balance sheet. Transactions in
foreign currency are registered at the exchange rate of the date on
which these are made. Exchange fluctuations are applied to the summary
of operations.
d) FIXED ASSETS are valuated at their cost of acquisition. Depreciation
is calculated using the straight-line method based on the maximum
fiscal rates, established in the Mexican Income Tax Law.
YEARS
-----
Buildings 20
Movables and equipment 10
Transportation equipment 5
Computer equipment 4
- --------------------------------------------------------------------------------
7
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
e) INCOME TAX, ASSETS TAXES, are recognized in the results of the year in
which these were caused, being adjusted in their case, by the effects
of certain temporary entries that are fiscally acknowledged in
different years than in the accountably recognized year, of a non
recurrent nature and it's revision is expected to be made in a defined
period.
Assets Taxes that exceed Income Taxes, are recognized in the summary
of operations of the year they were caused.
f) Some RECLASSIFICATIONS were made in the financial statements of 1994,
1993 and 1992, to adjust them with the classifications used in 1995.
.
2. ACCOUNTS RECEIVABLE.
The accounts receivable balance is integrated as follows:
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Clients N$ 765,642 N$ 973,993 N$ 687,922 N$ 211,222
Contingent interests (*) - - 389,462 218,053
Other accounts receivable 3,171,866 176,869 46,134 390,770
---------- ---------- ---------- ----------
N$ 3,937,508 N$ 1,150,862 N$ 1,123,518 N$ 820,045
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(*) This contingent interests refer to the negotiation of the purchase of
radiology and image medical equipment; this will be condoned if the
equipment is payed in 2.5 years, being this the accrued as of
December 31, 1993 and would be applied to the principal.
3. TAXES RECEIVABLE.
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Added value tax receivable N$ 539,825 N$ 527,732 N$ 771,102 N$ 851,260
Income tax receivable 15,324 13,875 9,790 5,300
Assets tax 35,266 - - -
Credit to Salary - 1,686 - -
---------- ---------- ---------- ----------
N$ 590,415 N$ 543,293 N$ 780,892 N$ 856,560
---------- ---------- ---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. INVENTORIES.
The inventories balance is integrated as follows:
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
General warehouse N$ 870,116 N$ 580,356 N$ 308,016 N$ 261,172
Pharmacy inventory 1,604 1,604 145,117 -
---------- ---------- ---------- ----------
N$ 871,720 N$ 581,960 N$ 453,133 N$ 261,172
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
5. FIXED ASSETS.
The balance is integrated as follows:
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Land N$ 359,280 N$ 359,280 N$ 1,039,097 N$ 1,039,097
Buildings 12,913,889 12,913,889 12,913,889 12,913,889
Movables and kitchen equipment 7,138 7,138 7,138 7,138
Transportation equipment 10,500 10,500 10,500 -
Computer equipment 187,711 187,711 187,711 187,711
Movables and equipment 12,568,919 12,486,887 12,461,932 12,126,992
Constructions in process - - - 100,104
---------- ---------- ---------- ----------
26,047,437 25,965,405 26,620,267 26,374,931
MINUS:
Accrued depreciation 6,120,979 4,659,617 2,717,608 806,989
---------- ---------- ---------- ----------
FIXED ASSETS - NET N$ 19,926,458 N$ 21,305,788 N$ 23,902,659 N$ 25,567,942
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
6. INVESTMENT OF THE SHAREHOLDERS'.
a) The common stock of Farvel Arrendamientos, S.A. de C.V. and Operadora
de Hospitales, S.A. de C.V. is integrated by 2,940 common nominative
shares, subscribed and payed in their entirety; of those 240 shares
have a nominal value of N$ 1,000.00 (one thousand mexican new pesos)
each, and the other 2,700 have a value of N$ 10,000.00 (ten thousand
mexican new pesos) each, respectively for each company. The legal
common stock in historic value is integrated as follows:
- --------------------------------------------------------------------------------
9
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Number of shares
--------------------------------
Farvel Operadora de
Arrendamientos, Hospitales, September 30,
S.A. de C.V. S.A. de C.V. 1995
--------------- --------------- ---------------
Fixed stock 100 240 N$ 1,240,000
Variable stock 2,600 - 26,000,000
--------------- --------------- ---------------
TOTAL 2,700 240 N$ 27,240,000
--------------- --------------- ---------------
--------------- --------------- ---------------
b) The investment of the shareholders', except the actualized common
stock contributed and the actualized fiscal profits included in the
retained profits, will cause 34% of dividend tax charged to the
company at the moment of its distribution, with a charge to its
accrued profits.
c) The company has accrued losses in figures higher than two thirds of
the common stock, so, according to the Mercantile Corporations General
Law, the company can be dissolved and liquidated at the petition of
any interested third party. That same Law established that no
dividends can be taken until future profits absorber the accrued
losses as of September 30, 1995.
7. CORRECTIONS OF PAST YEARS.
After our auditing report was given for the 1994 period of Operadora de
Hospitales, S.A. de C.V. our services were contracted for the 1993 period.
In virtue of what we stated before, some corrections were made to 1993
registers related to modifications to the balance of the payroll taxes
account in the administrative expenses log, as consequence the years result
was altered.
8. INCOME
The principal obtained income is integrated as follows:
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Services income N$ 4,416,158 N$ 6,010,631 N$ 5,339,363 N$ 2,257,859
Sales of hospital material income - - - 800,894
Sale of fixed assets income - 1,143,370 14,483 -
Other income 1,786 14,944 - 11,896
----------- ----------- ----------- -----------
N$ 4,417,944 N$ 7,168,945 N$ 5,353,846 N$ 3,070,649
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
NOTES TO THE COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. COST OF SALES.
The cost of sales include all of the costs that both companies have had
purchasing or selling items. Their integration is as follows:
<TABLE>
<CAPTION>
September December 31
30 --------------------------------------------------
1995 1994 1993 1992
(NO AUDIT) (NO AUDIT)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Hospital material cost N$ 460,729 N$ 464,888 N$ 455,880 N$ 2,249,718
Medicine cost 460,743 539,773 646,326 -
Sale of fixed assets cost - 681,828 - -
Other costs 345,982 445,669 433,430 27,616
----------- ----------- ----------- -----------
N$ 1,267,454 N$ 2,132,158 N$ 1,535,636 N$ 2,277,334
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
The notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
FASB-52
"CONVERSION OF MEXICAN PESOS TO
U.S.A. DOLLARS"
- --------------------------------------------------------------------------------
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO,
S.A. DE C.V.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
FASB- 52
"CONVERSION OF MEXICAN PESOS TO
U.S.A. DOLLARS"
PAGE
General Balance Sheet 2
Statements of Income (Loss) 3
Statements of Variations in Shareholders' Investment 4
Statements of Changes in the Financial Position 5
Notes to the Financial Statements 6
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
BALANCE SHEETS AS OF DECEMBER 31, 1995.
(IN U.S.A. DOLLARS)
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash end cash equivalents $ 6,815
Accounts receivable
Clients 27,103
Taxes receivable 8,347
Other accounts receivable 20,660
------------
56,110
Inventories (Note 2) 175,862
Anticipated payments 838
------------
TOTAL CURRENT ASSETS 240,625
NET FIXED ASSETS (Note 3) 12,208,465
DEFERRED FINANCE CHARGES (Note 5b) 606,995
------------
TOTAL ASSETS $ 13,056,085
------------
------------
LIABILITIES AND SHAREHOLDERS' EQUITY
SHORT TERM LIABILITIES
Purveyor $ 135,881
Taxes payable 114,076
Accrued expenses 87,650
Related party (Note 4) 54,135
Current portion of long-term liabilities (Note 5a) 3,530,583
------------
TOTAL SHORT TERM LIABILITIES 3,922,325
Long term Account Payable (Note 5a) 2,444,250
------------
TOTAL LIABILITIES 6,366,575
SHAREHOLDERS' EQUITY (Note 6)
Common stock 7,874
Net Loss (703,352)
Surplus by Revaluation (Note 3) 7,219,381
Translation result 165,607
------------
6,689,510
------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 13,056,085
------------
------------
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
The accompanying notes are an integral part of the financial statements
- --------------------------------------------------------------------------------
2
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
STATEMENTS OF INCOME (LOSS), YEARS ENDED DECEMBER 31, 1995.
(IN U.S.A. DOLLARS)
- --------------------------------------------------------------------------------
REVENUES
Net income (Note 7) $ 747,979
Subleasing income 9,841
--------------
757,820
COST AND EXPENSES:
Cost of sales (Note 8) 190,479
Health care services cost 876,308
Administrative expenses and others 390,965
--------------
1,457,752
--------------
OPERATING LOSS (699,932)
INTEGRAL FINANCIAL COST
Interest - Net (3,420)
--------------
NET LOSS $ (703,352)
--------------
--------------
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
The notes are an integral part of the financial statements
- --------------------------------------------------------------------------------
3
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
STATEMENT OF VARIATIONS IN SHAREHOLDERS' INVESTMENT (Note 6)
(IN U.S.A. DOLLARS, EXCEPT FOR PER SHARE INFORMATION)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
------------------------ SURPLUS
NUMBER OF ACCUMULATED BY TRANSLATION SHAREHOLDERS'
SHARES AMOUNT DEFICIT REVALUATION RESULT TOTAL
--------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF APRIL 18, 1995 500 $ 7,874 $ 7,874
NET LOSS (703,352) (703,352)
SURPLUS BY REVALUATION (Note 3) 7,219,381 7,219,381
TRANSLATION RESULT 165,607 165,607
--------- ----------- ----------- ----------- ----------- ------------
BALANCE AS OF DECEMBER 31, 1995 500 $ 7,874 $ (703,352) $ 7,219,381 $ (165,607) $ 6,689,510
--------- ----------- ----------- ----------- ----------- ------------
--------- ----------- ----------- ----------- ----------- ------------
</TABLE>
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
The accompanying notes are an integral of the financial statements
- --------------------------------------------------------------------------------
4
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
STATEMENTS OF CHANGES IN THE FINANCIAL POSITION, YEAR ENDED DECEMBER 31,1995
(IN U.S.A. DOLLARS)
- -------------------------------------------------------------------------------
RESOURCES GENERATED BY THE OPERATION:
Net loss $ (703,352)
Items not requiring resources.
Depreciation and amortization 432,292
----------
(271,060)
Changes in assets and liabilities:
Others accounts receivable (20,660)
Accounts receivable (27,103)
Taxes receivable (8,347)
Deferred finance changes (606,995)
Inventories (176,862)
Anticipated payments (838)
Accounts payable 135,881
Related party 54,135
Taxes payable 114,076
Accrued expenses 87,650
----------
(449,063)
FUNDS USED IN OPERATING ACTIVITIES (720,123)
FINANCING ACTIVITIES:
Common stock 7,874
Long term account payable 2,444,250
Current portion of long-term liabilities 3,530,533
Translation result 165,607
----------
FUNDS GENERATED BY FINANCING ACTIVITIES 6,148,314
INVESTING ACTIVITIES
Fixed assets (5,421,376)
----------
FUNDS USED IN INVESTING ACTIVITIES (5,421,376)
INCREMENT OF THE YEAR 6,815
CASH AND CASH EQUIVALENTS
BEGINNING OF YEAR 0
----------
END OF YEAR $ 6,815
----------
----------
/s/ Fernando Torres Moreno
Lic. Fernando Torres Moreno
General Manager
The accompanyng notes are an integral part of the financial statements.
5
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
1. OPERATIONS AND PRINCIPAL ACCOUNTING POLICIES.
The company began April 18, 1995 and its principal activities are the
benefits of medical, hospital, and surgical services as those of social
welfare.
Accounting policies. The accounting policies of the company are
prewritten by the administration as follows:
a) The financial statements have been prepared on the historical-cost
basis of accounting, and, therefore, do not show the effects of
inflation in the financial information according to the generally
accepted accounting principles of Mexico, consequently this are
expressed in new pesos of a different purchasing power.
b) Temporary investments are valuated at their true value which is similar
to its market value.
c) Inventories are valuated at market value, which does not exceed its
true value. The cost of sales is brought up to date using the last
purchase method.
d) Fixed assets are valuated at their cost of acquisition. Depreciation
is calculated using the straight-line method based on the maximum
fiscal rates, established in the Mexican Income Tax Law.
YEARS
Buildings 20
Medical Equipment 10
Fixed Assets 10
Computer Equipment 4
Transportation Equipment 4
6
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S. A. DE C.V. NOTES TO THE FINANCIAL
STATEMENTS
e) The assets and liabilities in foreign currency are valuated at the
rate of exchange (Peso-Dollar) of the date that the operations took
place, and this are registered in mexican pesos.
f) Employee severance benefits: Indemnizations are charged to the summary
of operations when the demandability of the liability is determined.
g) Income Tax, Asset Taxes and Employee Profit-Sharing, are expensed in
the year in which they become payable, being adjusted in their case,
by the effects of certain temporary entries that are fiscally
acknowledged in different years than that in which it was accountably
acknowledged, of a non recurrent nature and its reversal will be in a
defined period.
Asset Taxes that exceed Income Taxes, are expensed in the year in
which they become payable.
2. INVENTORIES
The balance is integrate as follows:
December 31,
1995
----------------
Warehouse general $ 154,361
Inventory of pharmacy 22,501
----------------
$ 176,862
----------------
----------------
7
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S. A. DE C.V. NOTES TO THE FINANCIAL
STATEMENTS
3. FIXED ASSETS.
The Balance is integrated as follows:
December 31, 1995
---------------------------------
Historical Market or
Cost actual value
----------- -----------
Land $ 397,800 $ 397,800
Building 2,023,680 7,458,394
Movables and Medical Equipment 2,022,900 3,807,567
Transportation equipment 866 866
Computer equipment 65,450 65,450
Movables and office equipment 12,217 12,217
Movables and Hospital equipment 898,463 898,463
----------- -----------
5,421,376 12,640,757
MINUS:
Accrued depreciation 207,190 432,292
----------- -----------
Fixed Assets-Net $ 5,214,186 $12,208,465
----------- -----------
----------- -----------
During the year, the company had an appraisal of its fixed assets:
which was made by Corporacion de Desarrollo Urbano, S.A. de C.V.
(MARA), located in Tijuana, B.C. and CBMI, in El Cajon, California,
U.S.A., those were registered in the accounting books, incrementing
the value of the building and the medical equipment by an amount of
$5,434,714 and $ 1,784,667 dollars, respectively.
4. OPERATIONS WITH RELATED PARTIES.
GroupMed International Inc. is an entity with its address in Nevada,
U.S.A., its relation with GroupMed International of Mexico, S.A. de
C.V. is as follows:
a) Holder of 99% of the common stock.
b) Principal financial source.
c) Significative administrative influence.
8
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S. A. DE C.V. NOTES TO THE FINANCIAL
STATEMENTS
5. LONG TERM LIABILITIES.
a) During the year, the company celebrated a
PURCHASE AND SALE CONTRACT WITH A DOMINION
RESERVE" with Farvel Arrendamientos, S.A.
de C.V.; through which the acquisition was
established of the building and the equipment
that form the fixed assets of GroupMed
International de Mexico, S.A. de C.V. for an
amount of $5,500,000. U.S.A. dollars, in 4
payments, one every three months starting
January 1, 1996, the first payment for an
amount of $1,000,000. U.S.A dollars, the
remaining four for an amount of $1,125,000
U.S.A. dollars each, and another one for
$2,250,000. Agreeing on an annual interest
rate of 7.875%, payable based on the unpaid
balance starting on the date mentioned
before. $ 5,500,000
b) The added value tax of merchandise will be
paid as each partiality is amortized. 474,833
MINUS: Current Portion 3,530,583 $2,444,250
----------- ----------
in a document payable, dated December 28, 1995 both
parties agree that they will or will not be able to
offer to do on a cash basis the before mentioned
payments; or in such a case with common stock
shares of GroupMed, USA.
6. INVESTMENT OF THE SHAREHOLDERS:
a) The common stock for $7,874 dollars, is integrated by 500 shares,
with a par value of $15.74 dollars, each, totally undersigned and
payed in cash.
b) The shareholders investment, except for the common stock and the
actualized fiscal profit included in the retained profit will cause
a tax on dividends of 34% charged to the Company at the moment of
its distribution charged to its accrued profit.
9
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
c) During 1995, the Company had a fiscal result for ISR effects of $ 0 and it
did not cause asset tax due that the law of the subject in article 6 says
that first and second year business do not have to make this tax payment.
d) The historical dollars of the result of the year income (losses) as of
December 31, 1995 were as follows:
AMOUNT IN AMOUNT IN
PERIOD MEXICAN U.S.A.
ENDED: PESOS DOLLARS
------------- ---------------- ---------------
12/31/95 $ ( 13,638,615 ) $ ( 703,352 )
------------- -----------
$ ( 13,638,615 ) $ ( 703,352 )
------------- -----------
------------- -----------
e) The translation adjustment, is obtained through of the conversion to U.S.A.
dollars, of the assets, liabilities and operation results at different
exchange rates. The monetary assets and liabilities, including the
inventories because this had a high rotation level, were converted at the
current exchange rate at the end of the year which was $ 6.1833 and $ 6.67
mexican pesos for each U.S.A. dollar respectably; the fixed assets and the
common stock were converted using the exchange rate valid at the date of
acquisition and contribution. With the results of the year a monthly average
exchange rate.
7. INCOME.
The principal obtained income is integrated as follows:
December 31,
1995
----------------
Health care services income $ 740,133
Other income 7,846
----------------
$ 747,979
----------------
----------------
- ------------------------------------------------------------------------------
10
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V. NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. COST OF SALES.
The cost of sales include all of the costs that both companies have had
purchasing or selling items. Their integration is as follows:
December 31,
1995
----------------
Hospital material cost $ 99,269
Medicine cost 78,153
Other costs 13,057
----------------
$ 190,479
----------------
----------------
/s/ FERNANDO TORRES MORENO
LIC. FERNANDO TORRES MORENO
General Manager
This notes are an integral part of the financial statements
- ------------------------------------------------------------------------------
11
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V
(a subsidiary of GroupMed International, Inc.)
STATEMENTS OF CASH FLOWS
THE PERIOD ENDED MARCH 31, 1996
1st Quarter
Jan-Mar
1996
Cash flows from operating activities:
Net loss (96,324)
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization & Depreciation 192,906
Expenses paid by issuance of common stock
Minority interest in subsidiary loss
Loss on sale of securities
Changes in:
Accounts receivable (19,339)
Inventories (44,250)
Notes receivable (1,541)
Advanced payments (6,205)
Accounts payable (6,738)
Accrued expenses 64,459
Related Parties: GMII 28,040
Taxes Payable 67,998
Net cash used by operating activities 179,007
Cash flows from financing activities:
Exchange fluctuation effect on Dollar Liabilities (169,929)
Net cash provided by financing activities (169,929)
Net Increase (decrease) in cash 9,078
Cash at beginning of period 2,081
Cash at end of period 11,159
<PAGE>
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.
(a subsidiary of GroupMed International, Inc.)
Stockholders' Equity Statement
FOR THE PERIOD JANUARY 1 - MARCH 31, 1996
<TABLE>
<CAPTION>
Common Stock
-----------------------------------------
Additional Accumu-
Paid-in Translation lated
Shares Amount Capital Result deficit Total
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 500 7,874 7,219,381 165,607 (703,352) 6,689,510
Net loss for 1st Quarter, 1996 (619,696) (619,696)
Translation Result 195,362 195,362
------------------------------------------------------------------
Balance, March 31, 1996 500 7,874 7,219,381 360,969 (1,323,048) 6,265,176
</TABLE>
<PAGE>
EXHIBIT NO. 3.1
---------------
ARTICLES OF AMENDMENT
---------------------
<PAGE>
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.
<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 represented
- --------------- --------------- ----------------- ----------------------
Common Stock 200,000 200,000 200,000
The shareholders voted as follows on such amendment:
Voting Group Votes for Votes against
Designation Amendment 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/ [ILLEGIBLE]
--------------------------
President
/s/ [ILLEGIBLE] 6/3/95
--------------------------
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
[SEAL]
<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. Malugani
------------------------------
NOTARY PUBLIC
RESIDING IN CLARK COUNTY
MY COMMISSION EXPIRES:
Aug. 9, 1993
- ----------------------
[SEAL]
<PAGE>
[CERTIFIED SIGNATURE]
<PAGE>
EXHIBIT NO. 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 1: 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 occuring 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 or 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.
1
<PAGE>
b) The shares of FIRST MANHATTAN Common Stock to be issues 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 in 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.
2
<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
177,750 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 annexed 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.
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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.
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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;
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(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 and 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
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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.
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 an,
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 GMT, 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 kill 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
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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
informaton 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;
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(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 shall 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
the party under this Agreement.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The obligations of the parties under this Agreement are 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.
SECTION 8.2 PERFORMANCE. The obligations of GMI to be perfonned 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.
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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.
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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
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shall be rescinded and become null and void with the result that all shares of
FIRST MANHATTAN Common Stock issues 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 with any 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.
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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 an 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 any 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.
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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/ Daniel N. Lomax
------------------------- ------------------------
Its: President Secretary
FIRST MANHATTAN, INC. ATTEST:
By: /s/ Curtis M. Jamison /s/ Suzy Frost
------------------------- ------------------------
Its: Vice - President Secretary
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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/ Daniel N. Lomax
----------------------
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/ Curtis M. Jamison
-------------------------
Vice-President
By /s/ Suzy Frost
-------------------------
Secretary
18
<PAGE>
EXHIBIT NO. 10.2
MANAGEMENT AGREEMENTS WITH SOLYMAR, INC.,
FERNANDO TORRES, AND SERAMEX, INC.
<PAGE>
MANAGEMENT CONTRACT AGREEMENT
This contract is drawn this 1st day of July, 1995, representing the agreement
entered into by and between GROUPMED INTERNATIONAL, Inc., a Nevada
corporation, and/or its nominee, (hereinafter referred to as GMII) and
SOLYMAR, INC., a Nevada corporation, and/or its nominee, (hereinafter
referred to as SOLYMAR).
It is hereby agreed to as follows:
1. TERM OF AGREEMENT. GMII hereby agrees to contract the annual
management services of SOLYMAR for a time certain, beginning JULY 1, 1995 and
concluding JULY 1, 1996. The management services provided by SOLYMAR to GMII
shall be renewed, and re-negotiated if necessary, not later than July 1,
1996, so as to continue the effectiveness of the annual management contract
of SOLYMAR. The management contract shall be approved by the Board of
Directors of GMII at a properly noticed Board Meeting convened for said purpose.
2. SCOPE OF MANAGEMENT. SOLYMAR shall provide and render to GMII the
necessary services to conduct the business of GMII. The services provided by
SOLYMAR to GMII shall be consistent with the duties incidental to
the Presidency and Member of the Board of a corporation and those of an
Executive Officer of said corporation. In addition, SOLYMAR may, from time to
time, be called upon by the Board of Directors to perform similar duties that
will enhance the business of GMII.
3. COMPENSATION. SOLYMAR shall be compensated for its services to GMII,
and under the terms and conditions of this management contract as follows:
(a) Compensation. GMII shall pay to SOLYMAR a monthly base amount of EIGHT
THOUSAND, TWO HUNDRED FIFTY dollars ($8250) beginning 7/1/95. SOLYMAR
shall be responsible for the filing of all required tax documents in
regards to its corporate income, as well as all applicable federal
filings. SOLYMAR shall be entitled to receive an annual ten percent (10%)
salary increase, if said increase is in compliance with the terms and
conditions of Rule 15c2-11, if applicable, and the Articles of
Incorporation of GMII.
(b) Stock Benefit Plan Compensation. SOLYMAR shall be eligible to receive
awards through the GMII Board approved Incentive and Stock Award Plan. The
awards presented include stock options, restricted stock, restricted stock
units payable in GMII common stock or cash, and other stock-based awards
more particularly detailed within the GMII approved Board minutes
regarding such matters.
<PAGE>
MANAGEMENT CONTRACT AGREEMENT - GMII/SOLYMAR
Page 2 of 4
(c) Bonus Compensation. SOLYMAR, in addition to the monthly
compensation base amount, is eligible to participate in GMII's
subjective bonus plan, as reflected within the GMII approved Board
minutes regarding such matters. SOLYMAR, in addition to the above
compensation, will receive five percent (5%) of the net profits of GMII
for five years. This net profit bonus is not subject to termination. This
bonus compensation may be increased a minimum of one percent (1%) per
year, to a maximum of an additional three percent (3%) per year by the
Board of Directors for superior quality of service and financial
performance.
4. EXPENSES/REIMBURSEMENTS. SOLYMAR is authorized to incur reasonable
expenses as it relates to the business of GMII, including but not limited to
the expenses of entertainment and travel, and phone use. As detailed within
the GMII approved Board minutes regarding expense reimbursement, upon
presentation of expenses made by SOLYMAR, GMII shall reimburse SOLYMAR for
the same.
5. CORPORATE ALLOWANCES.
(a) AUTOMOBILE ALLOWANCE. A corporate automobile allowance of
$500.00 per month shall be received by SOLYMAR.
(b) HEALTH/LIFE INSURANCE. At such time when the corporation arranges for
health and life insurance coverage, DANIEL N. LOMAX, a designated
employee of SOLYMAR, shall receive said coverage.
6. TERMINATION. Except as otherwise provided herein, this agreement
shall terminate upon the expiration of this management contract, or upon the
death of DANIEL N. LOMAX, a designated EMPLOYEE OF SOLYMAR. Should
termination occur, for whatever reason, GMII shall remunerate to SOLYMAR or
its nominee, or heirs, as the case may be, with respect of all rights which
shall accrue prior or subsequent to termination.
7. TERMINATION FOR CAUSE. GMII shall have the right to terminate SOLYMAR
"for cause", in which event continued compensation and benefits shall cease.
Termination "for cause" shall be determined in good faith by the Board of
Directors of GMII and shall require a vote of not less than 75% of said
Directors. Board of Director Termination "for cause" shall be effective
immediately upon written notification being provided to SOLYMAR.
<PAGE>
MANAGEMENT CONTRACT AGREEMENT - GMII/SOLYMAR
PAGE 3 of 4
(a) Definition of "CAUSE". For purposes of this management contract, the
term "Cause" shall be strictly interpreted to:
(i) any material act of dishonesty by SOLYMAR's designated employee,
Daniel N. Lomax against GMII;
(ii) willful or gross negligence of the performance of SOLYMAR's
designated employee, DANIEL N. LOMAX as it relates to her duties
as an executive officer of GMII;
(iii) material breach by SOLYMAR's designated employee, DANIEL N. LOMAX of
this management contract;
(iv) misconduct by SOLYMAR's designated employee, DANIEL N. LOMAX, which
results in substantial adverse effect of the business of GMII.
8. DISABILITY. In the event that SOLYMAR's designated employee, Daniel
N. Lomax, becomes permanently disabled during the term of this management
contract, then he shall continue in the services of GMII, but SOLYMAR's
compensation hereunder shall be reduced to the amount of monthly base
compensation then in effect, (Item 3 herein) which compensation shall be
reduced by any amounts received from worker's compensation, social security,
disability programs, etc.
9. GENERAL PROVISIONS. Any NOTICE to be given herewith by either party
to the other shall be in writing, and may be effected either by personal
delivery or by facsimile, private courier, or certified mail, return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
set forth below. Parties may change the notice address by supplying to the
other party written notification of the change of address. Notices delivered
personally shall be deemed communicated upon receipt; however, facsimiles,
private courier deliveries, or mailed notices shall be deemed communicated as
of one day after faxing, delivery to a private courier or mailing.
DANIEL N. LOMAX GROUPMED, INTERNATIONAL, INC.
2390 Willits Road 3095 South Grade Rd., #B
Alpine, California 91901 Alpine, California 91901
619-445-0764 619-445-0977
(a) Partial Invalidity of this Management Contract. Should any portion
of this management contract agreement be held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
thereof, shall nevertheless continue in full force without being impaired or
invalidated in any way.
<PAGE>
MANAGEMENT CONTRACT AGREEMENT - GMII/SOLYMAR
Page 4 of 4
(b) Jurisdiction. This management contract agreement shall be governed
by the laws and statutes and construed in accordance with the laws of the
State of Nevada.
(c) Assignment. This management contract agreement shall inure to the
benefit of and bind the parties hereto, and their respective legal
representatives, successors and assigns.
DATED this _________ day of ___________________, 199_.
IN WITNESS THEREOF, the parties have executed this Management Contract
Agreement.
GROUPMED, INTERNATIONAL INC., by SOLYMAR, INC., by
________________________ _________________________________
THIS AGREEMENT IS SUBJECT TO THE APPROVAL OF THE BOARD OF DIRECTORS OF
GROUPMED INTERNATIONAL, INC., AND LEGAL COUNSEL FOR THE GROUPMED
INTERNATIONAL CORPORATION.
WITH SIGNATURES OF THE PRESIDENT AND SECRETARY OF GMII AFFIXED BELOW AND THE
IMPRINTMENT OF THE CORPORATE SEAL, AS WELL AS THE SIGNATURE OF CORPORATE
COUNSEL, THIS CONTRACT HAS BEEN APPROVED BY THE BOARD OF DIRECTORS FOR
GROUPMED INTERNATIONAL, INC. PURSUANT TO THE TERMS AND CONDITIONS PROVIDED
HEREIN.
__________________________________ ___________________________________
GROUPMED INTERNATIONAL, INC. CORPORATE LEGAL COUNSEL FOR GMII
BY PRESIDENT DAN LOMAX
ATTEST:
______________________________________
GROUPMED INTERNATIONAL, INC.
BY SECRETARY FERNANDO TORRES
(SEAL)
<PAGE>
CONSULTING CONTRACT AGREEMENT
This contract is drawn this 1st day of July, 1995, representing the
agreement entered into by and between GROUPMED INTERNATIONAL, INC., a Nevada
corporation, and/or its nominee, (hereinafter referred to as GMII) and
FERNANDO TORRES, and/or his nominee, (hereinafter referred to as TORRES).
It is hereby agreed to as follows:
1. TERM OF AGREEMENT. GMII hereby agrees to contract the annual
management services of TORRES for a time certain, beginning July 1, 1995 and
concluding July 1, 1996. The management services provided by TORRES to GMII
shall be renewed, and re-negotiated if necessary, not later than July 1,
1996, so as to continue the effectiveness of the annual consulting contract
of TORRES. The consulting contract shall be approved by the Board of
Directors of GMII at a properly noticed Board Meeting convened for said
purpose.
2. SCOPE OF CONSULTATION. TORRES shall provide and render to GMII the
necessary services to conduct the business of GMII, including but not limited
to the outline defined within Exhibit A, attached hereto, and by this
referenced incorporated as a permanent part of this MANAGEMENT consulting
contract agreement. The services provided by TORRES to GMII shall be
consistent with the duties incidental to a executive officer and member of the
Board of a corporation. In addition, TORRES may, from time to time, be called
upon by the Board of Directors to perform similar duties that will enhance
the business of GMII.
3. COMPENSATION. TORRES shall be compensated for its services to GMII,
and under the terms and conditions of this consulting contract as follows:
(a) Compensation. GMII shall pay to TORRES a monthly base amount of FIVE
THOUSAND Dollars ($5,000) beginning 7/1/95. TORRES shall be responsible for
the filing of all required tax documents in regards to its corporate
income, (if applicable) as well as all applicable federal filings. TORRES
shall be eligible to receive a minimum annual ten percent (10%) salary
increase, if said increase is in compliance with the terms and conditions
of Rule 15c2-11, if applicable, and the Articles of Incorporation of GMII,
and approved by the Board of Directors.
(b) Stock Benefit Plan Compensation. TORRES shall be eligible to receive
awards through the GMII Board approved Incentive and Stock Award Plan. The
awards presented include stock options, restricted stock, restricted stock
units payable in GMII common stock or cash, and other stock-based awards
more particularly detailed within the GMII approved Board minutes
regarding such matters.
<PAGE>
CONSULTING CONTRACT AGREEMENT - GMII/TORRES
Page 2 of 4
(c) Bonus Compensation. TORRES, in addition to the monthly compensation
base amount, is eligible to participate in GMII's subjective bonus plan,
as reflected within the GMII approved Board minutes regarding such matters.
As it specifically relates to GMIX, TORRES, in addition to the above
compensation, will receive two percent (2%) of the net profits
(after taxes) of GMIX for five years. This bonus compensation may be
increased a minimum of one percent (1%) per year, to a maximum of an
additional three percent (3%) per year by the Board of Directors for
superior quality of service and financial performance.
4. EXPENSES/REIMBURSEMENTS. TORRES is authorized to incur reasonable
expenses as it relates to the business of GMII, including but not limited to
the expenses of entertainment and travel, and phone use. As detailed within
the GMII approved Board minutes regarding expense reimbursement, upon
presentation of expenses made by SERAMEX, GMII shall reimburse TORRES for the
same.
5. CORPORATE ALLOWANCES.
(a) AUTOMOBILE ALLOWANCE. A corporate automobile allowance of
$500.00 per month shall be received by TORRES.
(b) HEALTH/LIFE INSURANCE. At such time when the corporation arranges for
health and life insurance coverage, FERNANDO TORRES, a designated
individual, shall receive said coverage.
6. TERMINATION. Except as otherwise provided herein, this agreement
shall terminate upon the expiration of this management contract, or upon the
death of FERNANDO TORRES, a designated individual. Should termination occur,
for whatever reason, GMII shall remunerate to TORRES or its nominee, or
heirs, as the case may be, with respect of all rights which shall accrue
prior or subsequent to termination.
7. TERMINATION FOR CAUSE. GMII shall have the right to terminate TORRES
"for cause", in which event continued compensation and benefits shall cease.
Termination "for cause" shall be determined in good faith by the Board of
Directors of GMII and shall require a vote of not less than 75% of said
Directors. Board of Director Termination "for cause" shall be effective
immediately upon written notification being provided to TORRES.
<PAGE>
CONSULTING CONTRACT AGREEMENT - GMII/TORRES
PAGE 3 of 4
(a) Definition of "CAUSE". For purposes of this consulting contract, the
term "Cause" shall be strictly interpreted to:
(i) any material act of dishonesty by TORRES's designated employee,
FERNANDO TORRES against GMII;
(ii) willful or gross negligence of the performance of TORRES's designated
employee, FERNANDO TORRES as it relates to her duties as a consultant
to GMII;
(iii) material breach by TORRES's designated employee, FERNANDO TORRES of
this consulting contract;
(iv) misconduct by TORRES's designated employee, FERNANDO TORRES, which
results in substantial adverse effect of the business of GMII.
8. DISABILITY. In the event that TORRES's designated employee, FERNANDO
TORRES, becomes permanently disabled during the term of this consulting
contract, then she shall continue in the services of GMII, but TORRES's
compensation hereunder shall be reduced to the amount of monthly base
compensation then in effect, (Item 3 herein) which compensation shall be
reduced by any amounts received from worker's compensation, social security,
disability programs, etc.
9. GENERAL PROVISIONS. Any notice to be given herewith by either party
to the other shall be in writing, and may be effected either by personal
delivery or by facsimile, private courier, or certified mail, return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
set forth below. Parties may change the notice address by supplying to the
other party written notification of the change of address. Notices delivered
personally shall be deemed communicated upon receipt; however, facsimiles,
private courier deliveries, or mailed notices shall be deemed communicated as
of one day after faxing, delivery to a private courier or mailing.
FERNANDO TORRES GROUPMED INTERNATIONAL, INC.
ADDRESS TO BE SUPPLIED 3095 South Grade Rd., #B
Alpine, California 91901 Alpine, California 91901
619-445-0764 619-445-0977
(a) Partial Invalidity of this Consulting Contract. Should any portion
of this consulting contract agreement be held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
thereof, shall nevertheless continue in full force without being impaired or
invalidated in any way.
<PAGE>
MANAGEMENT CONTRACT AGREEMENT - GMII/TORRES
Page 4 of 4
(b) Jurisdiction. This management contract agreement shall be governed
by the laws and statutes and construed in accordance with the laws of the
State of Nevada.
(c) Assignment. This management contract agreement shall inure to the
benefit of and bind the parties hereto, and their respective legal
representatives, successors and assigns.
DATED this ________ day of _______, 199__.
IN WITNESS THEREOF, the parties have executed this Management Contract
Agreement.
GROUPMED, INTERNATIONAL INC., by FERNANDO TORRES, by
________________________________ ____________________________
THIS AGREEMENT IS SUBJECT TO THE APPROVAL OF THE BOARD OF DIRECTORS OF
GROUPMED INTERNATIONAL, INC., AND LEGAL COUNSEL FOR THE GROUPMED
INTERNATIONAL CORPORATION.
WITH SIGNATURES OF THE PRESIDENT AND SECRETARY OF GMII AFFIXED BELOW AND THE
IMPRINTMENT OF THE CORPORATE SEAL, AS WELL AS THE SIGNATURE OF CORPORATE
COUNSEL, THIS CONTRACT HAS BEEN APPROVED BY THE BOARD OF DIRECTORS FOR
GROUPMED INTERNATIONAL, INC. PURSUANT TO THE TERMS AND CONDITIONS PROVIDED
HEREIN.
____________________________ ______________________________
GROUPMED INTERNATIONAL, INC. CORPORATE LEGAL COUNSEL FOR GMII
BY PRESIDENT DAN LOMAX
ATTEST:
_________________________________
GROUPMED INTERNATIONAL, INC.
BY SECRETARY FERNANDO TORRES
(SEAL)
<PAGE>
EXHIBIT "A"
TO BE ATTACHED TO MANAGEMENT
CONTRACT AGREEMENT PROPOSAL
GMII - FERNANDO TORRES MORENO
FERNANDO TORRES JOB DESCRIPTION
__________________________________________________________________________
DUTIES
Implement policy as established by the Board of Directors of GroupMed
International, Inc. (GMI)
Oversee the direction of all activities with regard to the operation of
GroupMed International subsidiaries, namely GMI-Mexico, and affiliated
companies, namely MHCC and TelMed.
Provide a liaison between the GMI Board and the GMI-Mexico Board, as well as
with the Medical Advisory Board and the Medical Director of the GroupMed-Las
Americas Hospital.
Establish, Monitor and Report to the GMI Board an acceptable policy of
Financial and Productivity standards for the effective control and efficient
utilization of GMI's subsidiaries and affiliates material, financial and
human resources.
Develop, per GMI Board policy, new enterprises or ventures which further
enhance the value of GMI's activities, assets and businesses.
<PAGE>
CONSULTING CONTRACT AGREEMENT
This contract is drawn this 1st day of July, 1995, representing the agreement
entered into by and between GROUPMED INTERNATIONAL, INC., a Nevada
corporation, and/or its nominee, (hereinafter referred to as GMII) and
SERAMEX, INC., and/or its nominee, (hereinafter referred to as SERAMEX).
It is hereby agreed to as follows:
1. TERM OF AGREEMENT. GMII hereby agrees to contract the annual
consulting services of SERAMEX for a time certain, beginning July 1, 1995 and
concluding July 1, 1996. The consulting services provided by SERAMEX to GMII
shall be renewed, and renegotiated if necessary, not later than July 1,
1996, so as to continue the effectiveness of the annual consulting contract
of SERAMEX. The consulting contract shall be approved by the Board of
Directors of GMII at a properly noticed Board Meeting convened for said
purpose.
2. SCOPE OF CONSULTATION. SERAMEX shall provide and render to GMII the
necessary services to conduct the business of GMII, including but not limited
to the outline defined within Exhibit A, attached hereto, and by this
referenced incorporated as a permanent part of this consulting contract
agreement. The services provided by SERAMEX to GMII shall be consistent with
the duties incidental to a consultant to the Board of a corporation. In
addition, SERAMEX may, from time to time, be called upon by the Board of
Directors to perform similar duties that will enhance the business of GMII.
3. COMPENSATION. SERAMEX shall be compensated for its services to GMII,
and under the terms and conditions of this consulting contract as follows:
(a) Compensation. GMII shall pay to SERAMEX a monthly base amount of FOUR
THOUSAND Dollars ($4,000) beginning 7/1/95. SERAMEX shall be responsible
for the filing of all required tax documents in regards to its corporate
income, as well as all applicable federal filings. SERAMEX shall be
eligible to receive a minimum annual ten percent (10%) salary increase, if
said increase is in compliance with the terms and conditions of
Rule 15c2-11, if applicable, and the Articles of Incorporation of GMII,
and approved by the Board of Directors.
(b) Stock Benefit Plan Compensation. SERAMEX shall be eligible to receive
awards through the GMII Board approved Incentive and Stock Award Plan. The
awards presented include stock options, restricted stock, restricted stock
units payable in GMII common stock or cash, and other stock-based awards
more particularly detailed within the GMII approved Board minutes
regarding such matters.
<PAGE>
CONSULTING CONTRACT AGREEMENT - GMII/SERAMEX
Page 2 of 4
(c) Bonus Compensation. SERAMEX, in addition to the monthly compensation
base amount, is eligible to participate in GMII's subjective bonus plan,
as reflected within the GMII approved Board minutes regarding such
matters. As it specifically relates to GMIX, SERAMEX, in addition to the
above compensation, will receive two percent (2%) of the net profits
(after taxes) of GMIX for five years. This bonus compensation may be
increased a minimum of one percent (1%) per year, to a maximum of an
additional three percent (3%) per year by the Board of Directors for
superior quality of service and financial performance.
4. EXPENSES/REIMBURSEMENTS. SERAMEX is authorized to incur reasonable
expenses as it relates to the business of GMII, including but not limited to
the expenses of entertainment and travel, and phone use. As detailed within
the GMII approved Board minutes regarding expense reimbursement, upon
presentation of expenses made by SERAMEX, GMII shall reimburse SERAMEX for
the same.
5. CORPORATE ALLOWANCES.
(a) HEALTH/LIFE INSURANCE At such time when the corporation
arranges for health and life insurance coverage, ELLEN HARBESTON, a
designated employee of SERAMEX, shall receive said coverage.
6. TERMINATION. Except as otherwise provided herein, this agreement
shall terminate upon the expiration of this management contract, or upon the
death of ELLEN HARBESTON, a designated employee of SERAMEX. Should
termination occur, for whatever reason, GMII shall remunerate to SERAMEX or
its nominee, or heirs, as the case may be, with respect of all rights which
shall accrue prior or subsequent to termination.
7. TERMINATION FOR CAUSE. GMII shall have the right to terminate SERAMEX
"for cause", in which event continued compensation and benefits shall cease.
Termination "for cause" shall be determined in good faith by the Board of
Directors of GMII and shall require a vote of not less than 75% of said
Directors. Board of Director Termination "for cause" shall be effective
immediately upon written notification being provided to SERAMEX.
<PAGE>
CONSULTING CONTRACT AGREEMENT - GMII/SERAMEX
PAGE 3 of 4
(a) Definition of "CAUSE". For purposes of this consulting contract, the
term "Cause" shall be strictly interpreted to:
(i) any material act of dishonesty by SERAMEX's designated employee,
ELLEN HARBESTON against GMII;
(ii) willful or gross negligence of the performance of SERAMEX's
designated employee, ELLEN HARBESTON as it relates to her duties as
a consultant to GMII;
(iii) material breach by SERAMEX's designated employee, ELLEN HARBESTON of
this consulting contract;
(iv) misconduct by SERAMEX's designated employee, ELLEN HARBESTON, which
results in substantial adverse effect of the business of GMII.
8. DISABILITY. In the event that SERAMEX's designated employee, ELLEN
HARBESTON, becomes permanently disabled during the term of this consulting
contract, then she shall continue in the services of GMII, but SERAMEX's
compensation hereunder shall be reduced to the amount of monthly base
compensation then in effect, (Item 3 herein) which compensation shall be
reduced by any amounts received from worker's compensation, social security,
disability programs, etc.
9. GENERAL PROVISIONS. Any notice to be given herewith by either party
to the other shall be in writing, and may be effected either by personal
delivery or by facsimile, private courier, or certified mail, return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
set forth below. Parties may change the notice address by supplying to the
other party written notification of the change of address. Notices delivered
personally shall be deemed communicated upon receipt; however, facsimiles,
private courier deliveries, or mailed notices shall be deemed communicated as
of one day after faxing, delivery to a private courier or mailing.
SERAMEX, INC. GROUPMED INTERNATIONAL, INC.
2250 Willits Road 3095 South Grade Rd., #B
Alpine, California 91901 Alpine, California 91901
619-445-0990 619-445-0977
(a) Partial Invalidity of this Consulting Contract. Should any portion
of this consulting contract agreement be held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions
thereof, shall nevertheless continue in full force without being impaired or
invalidated in any way.
<PAGE>
CONSULTING CONTRACT AGREEMENT - GMII/SERAMEX
Page 4 of 4
(b) Jurisdiction. This consulting contract agreement shall be governed by
the laws and statutes and construed in accordance with the laws of the State
of Nevada.
(c) Assignment. This consulting contract agreement shall inure to the
benefit of and bind the parties hereto, and their respective legal
representatives, successors and assigns.
DATED this ____________ day of _____________, 199_.
IN WITNESS THEREOF, the parties have executed this Consulting Contract
Agreement.
GROUPMED, INTERNATIONAL INC., by SERAMEX, INC., by
________________________________ _________________________
THIS AGREEMENT IS SUBJECT TO THE APPROVAL OF THE BOARD OF DIRECTORS OF
GROUPMED INTERNATIONAL, INC., AND LEGAL COUNSEL FOR THE GROUPMED
INTERNATIONAL CORPORATION.
WITH SIGNATURES OF THE PRESIDENT AND SECRETARY OF GMII AFFIXED BELOW AND THE
IMPRINTMENT OF THE CORPORATE SEAL, AS WELL AS THE SIGNATURE OF CORPORATE
COUNSEL, THIS CONTRACT HAS BEEN APPROVED BY THE BOARD OF DIRECTORS FOR
GROUPMED INTERNATIONAL, INC. PURSUANT TO THE TERMS AND CONDITIONS PROVIDED
HEREIN.
____________________________ ________________________________
GROUPMED INTERNATIONAL, INC. CORPORATE LEGAL COUNSEL FOR GMII
BY PRESIDENT DAN LOMAX
ATTEST:
_________________________________________
GROUPMED INTERNATIONAL, INC.
BY SECRETARY FERNANDO TORRES
(SEAL)
<PAGE>
EXHIBIT "A"
TO BE ATTACHED TO MANAGEMENT
CONTRACT AGREEMENT PROPOSAL
GMII - SERAMEX, INC.
Duties:
Implement appropriate and updated GroupMed International, Inc. {"GMII"}
Business Plan(s) for the Board of Directors review and approval as new assets
are acquired, or as otherwise needed.
In addition, develop and design similar Business Plan document(s) to include
all GMII's subsidiaries, both domestic and international. As of this
writing, projected Mexican subsidiaries are GroupMed International de Mexico,
S.A. de C.V., TelMed de Mexico (sic), Tierra de Mexico (sic), EMM de Mexico
(sic), and CBMI de Mexico (sic). It is anticipated that each international
entity will have a corresponding U.S. corporation.
Provide liaison among GMII subsidiaries and the GMII Chairman of the Board,
as required.
Specifically, as it pertains to Hospital Las Americas, develop and maintain
"new business" recommendations for GMII Board approval, to increase
profitability of facility.
Communicate with Management personnel in all subsidiaries to ensure and
enhance cohesive and effective interactive selling adeptness.
Recommend for development, per GMII Board policy, the availability of new
business opportunities which could further enhance GMII's assets.
<PAGE>
EXHIBIT NO. 10.3
CONTRACT BY AND BETWEEN
FARVEL ARRENDAMIENTOS. S.A. DE C.V. AND LA CALAFIA, INC.
(FORMERLY GROUPMED, INC. - A PRIVATELY HELD CORPORATION).
DATED MAY 20, 1995
<PAGE>
May 20, 1995
CONTRACT
BY AND BETWEEN
FARVEL ARRENDAMIENTOS, S.A. de C.V.,
and/or its nominee
and
GROUPMED, INC., a privately held corporation
and/or its nominee
As of the date above written, May 20, 1995, in consideration of 200,000
shares of GroupMed Inc. stock (and subject to a US$5,500,000 contract between
the parties FARVEL and GROUPMED), FARVEL ARRENDAMIENTOS and/or its
nominee will assign the additional equity in the HOSPITAL LAS AMERICAS land,
equipment and improvements located in Ensenada, Baja California, Mexico to
GROUPMED, INC. and/or its nominee.
Should the terms of the contract for US$5,500,000 referenced above not be
fulfilled by GROUPMED, INC. and/or its nominee, for any reason, the 200,000
shares of GROUPMED, INC. stock shall remain the property of FARVEL
ARRENDAMIENTOS and/or its nominee.
Executed this 20 day of May, 1995.
/s/ Daniel N. Lomax /s/ [ILLEGIBLE]
- -------------------- ----------------------
GROUPMED, INC. FARVEL ARRENDAMIENTOS
S.A. de C.V.
<PAGE>
EXHIBIT NO. 10.4
ADDENDUM TO THE CONTRACT DATED JULY 1, 1995
BETWEEN FARVEL ARRENDAMIENTOS S.A. DE C.V.
AND GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.,
DATED DECEMBER 27, 1995
<PAGE>
Addendum
to the Contract dated July 1st, 1995 between
Farvel Arrendamientos, S.A. de C.V. and
GroupMed International de Mexico, S.A. de C.V.
This document has been drawn up as an Addendum to the original Contract dated
July 1st, 1995 between Farvel Arrendamientos, S.A. de C.V.. (FARVEL) and
GroupMed International de Mexico, S.A. de C.V. (GROUPMED-MEXICO). Except for
the substantive changes contained in this Addendum to the Contract, all other
terms and conditions of the original contract shall retain their original
force and effect.
1. GroupMed International, Inc. (GROUPMED-USA), as the mayority stockholder of
GROUPMED-MEXICO hereby commits to establish an escrow account at a mutually
agreed agency to that effect in which 2'000,000 (two million) shares of
its capital stock will be deposited in escrow for FARVEL, as a deposit
representing the complete payment of the debt derived from the original
Contract between FARVEL and GROUPMED-MEXICO to which reference has been
made. Said deposit shall be made no later than December 31st, 1995.
2. The market value of the above mentioned shares shall be, by April 1st,
1996, a minimum of US$ 2.75 (two dollars and seventy five cents US cy)
each, such that the total value of the deposit shall be US$ 5'500,000
(five million five hundred thousand dollars US cy). The same minimum
value shall prevail on the subsequent release dates of the shares to
FARVEL. In case the market value of the shares does not attain the
specified minimum value on the release dates, FARVEL may or may not, at
its discretion, accept additional shares to arrive at the same total
value.
3. If by April 1st 1996 GROUPMED-USA shares do not have a market
value of US$ 2.75 each and FARVEL does not choose to accept an
alternate form of payment for GROUPMED-MEXICO's debt,
GROUPMED-USA shall release 100,000 (one hundred thousand) shares
from the escrow to FARVEL. The balance of the shares held in escrow,
that is to say 1'900,000 (one million nine hundred thousand) shares,
shall remain the sole property of GROUPMED-USA.
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Page 1 of 2
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4. If all the above mentioned commitments are met by April 1st, 1996,
GROUPMED-USA shall instruct the agency holding the escrow to make
the following releases of shares:
April 1st, 1996 363,636 shares shall be released to FARVEL
June 1st, 1996 363,636 shares shall be released to FARVEL
August 1st, 1996 363,636 shares shall be released to FARVEL
November 1st, 1996 363,636 shares shall be released to FARVEL
December 31st, 1996 545,456 shares shall be released to FARVEL (the
balance held for FARVEL in escrow) represent-
ing a total of 2'000,000 shares released to
FARVEL.
/s/ Daniel N. Lomax /s/ Fernando Ariza
------------------------ ----------------------
Daniel N. Lomax, Fernando Ariza,
GroupMed International, Inc. Farvel Arrendamientos, S.A.
y/o su representante de C.V. y/o su representante
fecha: 12/27/95 fecha: 12-29-95
----------------- ----------------
/s/ Fernando Torres Moreno
---------------------------
Fernando Torres Moreno,
GroupMed International de Mexico, S.A. de C.V.
y/o su representante
fecha: 12/27/95
-----------------
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Page 2 of 2
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EXHIBIT NO. 10.5
MODIFICATION AND CLARIFICATION TO ADDENDUM
TO ORIGINAL CONTRACT DATED DECEMBER 27, 1995
BETWEEN GROUPMED INTERNATIONAL, INC.,
FARVEL ARRENDAMIENTOS, S.A. DE C.V. AND
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.,
DATED DECEMBER 28, 1995 (SPANISH VERSION)
<PAGE>
Modificacion y Aclaracion al Addendum
al Contrato celebrado el 1DEG. de Julio de 1995 entre
Farvel Arrendamientos, S.A. de C.V. y
GroupMed International de Mexico, S.A. de C.V.
Este documento ha sido elaborado para modificar y aclarar el Addendum, de
fecha 27 de Diciembre de 1995, al Contrato original celebrado el 1DEG. de
Julio de 1995 entre Farvel Arrendamientos, S.A. de C.V. (FARVEL) y GroupMed
International de Mexico, S.A. de C.V. (GROUPMED-MEXICO). A excepcion de los
cambios de fondo contenidos en esta modificacion y aclaracion, todas las
demas condiciones y clausulas del contrato original y del Addendum al mismo
deberan retener su efecto y fuerza original.
En el parrafo 3 del Addendum al Contrato, GroupMed International, Inc.
(GROUPMED-EEUU) y/o GROUPMED-MEXICO podran o no, a su discrecion, ofrecer hacer
en efectivo los pagos de la deuda de GROUPMED-MEXICO a favor de FARVEL en caso
de que, para el 1DEG. de Abril de 1996, las acciones de GROUPMED-EEUU no
tuvlesen el valor de US$ 2.75 cada una y FARVEL no aceptase una forma
alternativa de pago.
/s/ Daniel N. Lomax /s/ Fernando Ariza
- -------------------------------- ----------------------------------
Daniel N. Lomax, Fernando Ariza,
GroupMed International, Inc. Farvel Arrendamientos, S.A.
y/o su representante de C.V. y/o su representante
fecha: 12/28/95 fecha: Dec-28-1995
---------------------- ----------------------
/s/ Fernando Torres Moreno
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Fernando Torres Moreno,
GroupMed International de Mexico, S.A. de C.V.
y/o su representante
fecha: 12/28/95
---------------------
<PAGE>
EXHIBIT NO. 10.6
MODIFICATION AND CLARIFICATION TO ADDENDUM
TO ORIGINAL CONTRACT DATED DECEMBER 27, 1995
BETWEEN GROUPMED INTERNATIONAL, INC.,
FARVEL ARRENDAMIENTOS, S.A. DE C.V. AND
GROUPMED INTERNATIONAL DE MEXICO, S.A. DE C.V.,
DATED DECEMBER 28, 1995 (ENGLISH VERSION)
<PAGE>
MODIFICATION AND CLARIFICATION TO
ADDENDUM TO ORIGINAL CONTRACT
DATED 12-27-95
This document has been drawn to Modify and Clarify the Addendum to the
original Contract (Addendum dated 12-27-95) (Original Contract dated 7-1-95)
between FARVEL Arrendamientos (FARVEL) and GroupMed International de Mexico
S.A. de C.V. (GROUPMED-MEXICO). Except for the substantive changes effected
by the Modification, the Addendum and Original Contract terms and conditions
shall retain their original force and effect.
Specifically, within paragraph 3 of the Addendum to Original Contract,
GROUPMED-USA may or may not, at its discretion, offer cash as satisfaction of
the debt in favor of FARVEL, should if by April 1, 1996, GROUPMED-USA shares
do not have a market value of US$ 2.75 each, and FARVEL does not choose to
accept an alternate form of payment.
/s/ Daniel N. Lomax
- ---------------------------- -----------------------------
Daniel N. Lomax Fernando Ariza
GroupMed International, Inc. Farvel Arrendamientos, S.A.
y/o su representante de C.V. y/o representante
fecha: fecha:
--------------------- ----------------------
- ----------------------------
Fernando Torres Moreno,
GroupMed International de Mexico, S.A. de C.V.
y/o su representante
fecha:
----------------------
<PAGE>
EXHIBIT NO. 10.7
MEXICO'S FM3 DOCUMENT FILED ON
DANIEL N. LOMAX (EQUIVALENT TO
WORKINGPAPERS PERMITTING MR. LOMAX TO
WORK AT HOSPITAL LAS AMERICAS)
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[PASSPORT]
