<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): June 19,2000
MED-EMERG INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Ontario, Canada 1-13861 N/A
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
organization) Identification No.)
2550 Argentia Road, Ontario, Canada L5N 5R1
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (905) 868-1368
Not Applicable
--------------------------------------------------------------------------------
Former name or former address; if changed since last report)
<PAGE>
ITEM 7. EXHIBITS
HARMONIE GROUP, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
TOGETHER WITH AUDITORS' REPORT
(Amounts Expressed in US Dollars)
<PAGE>
HARMONIE GROUP, INC.
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND DECEMBER 31, 1998
TOGETHER WITH AUDITORS' REPORT
(Amounts Expressed in US Dollars)
TABLE OF CONTENTS
Report of Independent Auditors 1
Balance Sheets 2
Statements of Income 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial statements 6 - 10
<PAGE>
Schwartz Levitsky Feldman llp
CHARTERED ACCOUNTANTS
TORONTO, MONTREAL, OTTAWA
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Harmonie Group, Inc.
We have audited the accompanying balance sheets of Harmonie Group, Inc.
as of December 31, 1999 and the related statements of income, cash flows
and changes in stockholders' equity for the year ended December 31, 1999.
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, these financial statements referred to above present
fairly, in all material respects, the financial position of Harmonie
Group, Inc. as of December 31, 1999 and the results of its operations and
its cash flows for the years ended December 31, 1999, and in conformity
with generally accepted accounting principles in the United States of
America.
Toronto, Ontario
August 31, 2000 Chartered Accountants
1167 Caledonia Road
Toronto, Ontario M6A 2X1
Tel: 416 785 5353
Fax: 416 785 5663
<PAGE>
HARMONIE GROUP, INC.
Balance Sheet
As at December 31, 1999 (audited) and December 31, 1998 (unaudited) (Amounts
expressed in US dollars)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
$ $
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments 390,875 48,871
Accounts receivable 59,781 --
-------- ------
450,656 48,871
CAPITAL ASSETS (note 4) 62,496 --
OTHER ASSETS - SECURITY DEPOSITS 32,500 --
-------- ------
545,652 48,871
======== ======
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 81,636 --
-------- ------
STOCKHOLDERS' EQUITY (DEFICIENCY)
CAPITAL STOCK (note 5) 937,055 800
TREASURY STOCK (200) (200)
RETAINED EARNINGS (DEFICIT) (472,839) 48,271
-------- ------
464,016 48,871
-------- ------
545,652 48,871
======== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
APPROVED ON BEHALF OF THE BOARD
Director
-----------------------
Director
-----------------------
2
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HARMONIE GROUP, INC.
Statement of Operations and Deficit
As at December 31, 1999 (audited) and December 31, 1998 (unaudited) (Amounts
expressed in US dollars)
December 31, December 31,
1999 1998
$ $
(Unaudited)
REVENUE 606,019 207,586
Outside services and other direct costs 685,579 173,977
-------- -------
(79,560) 33,609
-------- -------
EXPENSES
Salaries and benefits 278,538 18,959
General and administration 161,410 15,143
Occupancy costs and supplies -- 506
-------- -------
439,948 34,608
-------- -------
INCOME (LOSS) BEFORE AMORTIZATION
AND INCOME TAXES (519,508) (999)
Amortization 1,602 --
-------- -------
INCOME (LOSS) BEFORE INCOME TAXES (521,110) (999)
Income taxes -- --
-------- -------
NET LOSS BEFORE PREFERRED
SHARE DIVIDENDS (521,110) (999)
Preferred share dividends -- --
-------- -------
NET LOSS (521,110) (999)
Retained earnings, beginning of year 48,271 49,270
-------- -------
RETAINED EARNINGS (DEFICIT), END OF YEAR (472,839) 48,271
======== =======
Basic and fully diluted loss, per share (1.82) (0.02)
======== =======
Weighted average number of common shares 285,000 60,000
======== =======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
HARMONIE GROUP, INC.
Statement of Cash Flows
As at December 31, 1999 (audited) and December 31, 1998 (unaudited) (Amounts
expressed in US dollars)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
$ $
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (521,110) (999)
Adjustment for amortization of capital assets 1,602 --
Increase (decrease) in non-cash operating items (16,645) --
-------- -------
(530,153) (999)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to capital assets (64,098) --
-------- -------
CASH FLOWS FROM FINANCIANG ACTIVITIES
Shareholder loan -- (3,200)
Issue of common shares 936,255 --
Treasury stock -- (200)
-------- -------
936,255 (3,400)
-------- -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS 342,004 (4,399)
Cash and short-term investments, beginning of year 48,871 53,270
-------- -------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR 390,875 48,871
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
HARMONIE GROUP, INC.
Notes to Financial statements
December 31, 1999 and 1998
(Amounts expressed in US dollars)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Harmonie Group, Inc. specializes in component-based modular solutions and
integrated web site strategies for healthcare enterprises. The company's
product delivers an intelligent entry authoring system to simplify
ongoing management of healthcare provider websites.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) The financial statements are expressed in US dollars and are
prepared in accordance with US generally accepted accounting
principles.
b) Use of Estimates
Management of the company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities,
the reported amounts of revenues and expenses, and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
c) Capital Assets
Capital assets are recorded at cost and are amortized over their
estimated useful lives at the under noted rate and method:
Computer hardware 30% Declining balance
d) Revenue Recognition
The company recognizes revenue on a percentage completion basis
for implementation and consulting, and on delivery of software
products.
e) Deferred Income Taxes
The Company follows the "asset and liability method" of accounting
for deferred income taxes under pursuant to which recognition is
given to deferred taxes on all "temporary differences"
(differences between accounting basis and tax basis of the
Company's assets and liabilities) using tax rates expected to
apply to taxable income in the years in which temporary
differences are expected to be realized. The Company records
deferred tax assets for the future tax benefits of non-capital
losses carried forward, less a provision for any deferred tax
assets where it is more likely than not that the asset will not be
realized.
6
<PAGE>
HARMONIE GROUP, INC.
Notes to Financial statements December 31, 1999 and December 31, 1998 (Amounts
expressed in US dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
f) Stock Compensation
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS 123), was issued by the
Financial Accounting Standards Board in October 1995. SFAS 123
establishes financial accounting and reporting standards for
transactions in which an entity issues its equity instruments to
acquire goods or services from non-employees, as well as
stock-based employee compensation plans. All transactions in which
goods or services are the consideration received for the issuance
of equity instruments are to be accounted for based on the fair
value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable.
As allowed by SFAS 123, the Company has decided to continue to use
Accounting Principles Board Opinion No. 25 "Accounting for Stock
Issued to Employees" in accounting for the Company's Stock Option
Plan (the "Plan").
3. PRO-FORMA INFORMATION
The following pro forma statement of operations summarizes the results of
operations as if the business combination had occurred on January 1,
1999:
Revenue $ 13,254,447
Physician fees and other direct costs 9,562,718
------------
3,691,729
------------
Expenses
Salaries and benefits 2,116,814
General and administration 654,951
Occupancy costs and supplies 872,109
Public company costs 301,591
Travel and marketing 201,610
HealthyConnect.com development costs 798,943
------------
4,946,018
------------
Loss before amortization, interest and financing
expenses, goodwill amortization and taxes (1,254,289)
Amortization 195,699
Interest and financing expense 44,494
Goodwill amortization 167,235
------------
407,428
------------
Loss before income taxes (1,661,717)
Income taxes (recovery) (262,138)
------------
Net loss $ (1,399,579)
------------
7
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HARMONIE GROUP, INC.
Notes to Financial statements December 31, 1999 and December 31, 1998 (Amounts
expressed in US dollars)
4. CAPITAL ASSETS
1999 1998
---------------------------------- ---------
Accumulated
Cost Amortization Net Net
------ ------------ --------- ---------
$ $ $ $
Computer hardware 64,098 1,602 62,496 --
====== ====== ====== ======
5 CAPITAL STOCK
Authorized
1,000,000 Preference shares, designated as Preferred stock, $0.01 par
value, convertible at $28.42 per share to Common stock
300,000 Common shares designated as non-voting Common stock, $0.01 par
value
1,700,000 Common shares designated as Voting Common Stock, $0.01 par
value
Issued
1999 1998
$ $
(Unaudited)
31,668, Series A convertible Preferred stock 317 --
285,000 Common shares (60,000 in 1998) 936,538 600
------- ---
936,855 600
======= ===
Common Shares
Number Amount
------ ------
$
Balance, December 31, 1998 60,000 600
Shares repurchased and cancelled (60,000) (600)
Shares issued under Deleware Incorporation 285,000 936,538
------- -------
285,000 936,538
======= =======
Balance, December 31, 1999
8
<PAGE>
HARMONIE GROUP, INC.
Notes to Financial statements December 31, 1999 and December 31, 1998
(Amounts expressed in US dollars)
5 CAPITAL STOCK (cont'd)
a) Stock Option Plan
Pursuant to Harmonie's 1999 Stock Option Plan (the "Plan")
adopted on May 26, 1999, employees officers and directors of, and
consultants or advisors to Harmonie and Decision System Group
("DSG") may be granted qualified or non-qualified stock options to
purchase shares of non-voting Harmonie common stock. The Harmonie
Board of Directors is responsible for granting options and
administering the plan.
The following table summarizes the stock options granted by the
company:
Option price Number of shares
Expiry date per share 1999 1998
---------- ----------
June 2009 0.50 39,150 --
========== ==========
Outstanding, beginning of year -- --
Granted 39,150 --
Exercised -- --
Cancelled -- --
---------- ----------
Outstanding, end of year 39,150 --
========== ==========
6. DEFERRED INCOME TAXES
1999 1998
---------- ----------
Losses available to offset future income taxes $ 150,000 $ nil
Valuation allowance (150,000) nil
---------- ----------
$ -- $ --
At December 31, 1999, the Company has non-capital losses available for
carry-forward of approximately $500,000.
9
<PAGE>
HARMONIE GROUP, INC.
Notes to Financial statements December 31, 1999 and December 31, 1998
(Amounts expressed in US dollars)
7. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The carrying value of accounts receivable and accounts payable
approximates the fair value because of the short-term maturities on these
items.
The carrying amount of the capital assets approximates the fair value of
these assets.
8. SUBSEQUENT EVENTS
On June 19, 2000, HealthyConnect.com Inc., a majority owned subsidiary of
Med-Emerg International Inc. purchased 100% of the outstanding common and
preferred shares of the company through a share exchange at the rate of
6.842 HealthyConnect.com, Inc. common shares for each Harmonie Group,
Inc. share.
In February 2000, the company sold the assets to American Express
Equipment Finance, and entered into a twenty-four month capital lease.
The company is committed to payments under the capital lease for its
computer equipment totaling $66,480.
Annual payments under operating leases are as follows:
2000 $24,930
2001 33,240
2002 8,310
-------
$66,480
=======
9. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year
2000 Issue that may affect the entity, including those related to
customers, suppliers, or other third parties, have been fully resolved.
10
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
MED-EMERG INTERNATIONAL INC.
By: /s/ Carl Pahapill
----------------------------------
Carl Pahapill
President
Dated: September 5, 2000
