<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1999
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CENTRACAN INCORPORATED
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
FLORIDA 8071 65-0736042
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
4255 ROUTE 9, SUITE D
FREEHOLD, NEW JERSEY 07728
(732)409-1212
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
------------------------
SEAN P. O'CONNOR
PRESIDENT
CENTRACAN INCORPORATED
4255 ROUTE 9, SUITE D
FREEHOLD, NEW JERSEY 07728
(732)409-1212
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES OF COMMUNICATIONS TO:
CHARLES SNOW, ESQ. M. RICHARD CUTLER, ESQ.
Snow Becker Krauss P.C. 610 Newport Center Drive
605 Third Avenue Suite 800
New York, New York 10158-0125 Newport Beach, CA 92660
(212) 687-3860 (949) 719-1977
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
<PAGE>
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE FEE(1)
Common Stock,
par value $.001 per share 12,200,000 $3.375 $41,175,000 $11,446.65
</TABLE>
- ------------
(1) Estimated solely for the purpose of calculating the registration fee. In
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
the registration fee for the CentraCan Incorporated common stock, par value
$.001 per share (the "Common Stock"), to be issued in connection with the
acquisition of the Subsidiaries of Healthcare Merger Company, Inc. was
computed on the basis of the closing sale price reported on the National
Association of Securities Dealers, Inc.'s OTC Bulletin Board of the Common
Stock to be issued in the acquisition as of January 29, 1999.
THE REGISTRATION HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT HE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
-ii-
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1999
PROSPECTUS OF CENTRACAN INCORPORATED
INFORMATION STATEMENT OF
HEALTHCARE MERGER COMPANY, INC.
The Boards of Directors of CentraCan Incorporated, a Florida
corporation, formerly known as Premier Supplements Corp., and parent of HMC
Acquisition Corp., a Nevada corporation (collectively, "CentraCan" or the
"Company"), and Healthcare Merger Company, Inc., a Nevada corporation ("HMC"),
have approved of and signed an Asset Purchase Agreement dated as of February 20,
1998 and amended on May 20, 1998 ("Purchase Agreement").
The Purchase Agreement provides the following:
o on May 20, 1998, CentraCan acquired from HMC all of the common
stock of Impacto Internacional de Montes de OCA, S.A., a Costa
Rican corporation ("Impacto"), a subsidiary of HMC which owns
and operates a magnetic resonance imaging facility in Costa
Rica for 5,000,000 shares of Common Stock; and
o on or before March 31, 1999, CentraCan will purchase the
stock of HMC's wholly-owned subsidiary, Centro Medico Los
Angeles CENTRACAN, S.A., a Costa Rican corporation ("Centro
Medico"), which owns and operates a cancer center in Costa
Rica, and 90% of the outstanding common stock of its
subsidiary Centro de Biopsia Esterotaxica y Mamografia, S.A.,
a Costa Rican corporation ("Bioestermamografia"), which owns
and operates a clinic that has ultrasound, mammography and
stereotactic biopsy diagnostic facilities, for an additional
7,200,000 shares of Common Stock.
The 5,000,000 shares of Common Stock issued to HMC on May 20, 1998, in
connection with the purchase of Impacto represents 78% of CentraCan's Common
Stock. Accordingly, HMC has become the controlling person and principal
stockholder of CentraCan. Following the completion of the closing of the
transaction, HMC intends to distribute to its shareholders in complete
liquidation the 12,200,000 shares of Common Stock received by HMC in
consideration under the Purchase Agreement, which will represent approximately
90% of CentraCan's outstanding Common Stock. The effect of the consummation of
the transactions contemplated by the Purchase Agreement will be that each HMC
shareholder will receive approximately one share of Common Stock in exchange for
each HMC share held at the time of distribution of the shares of Common Stock.
SEE "RISK FACTORS" AT PAGE 15 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED REGARDING THE SECURITIES OFFERED HEREBY.
------------------------
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the issuance of the Common Stock to be issued under
this Prospectus/Information Statement or determined if this
Prospectus/Information Statement is accurate or adequate. Any representation to
the contrary is a criminal offense.
------------------------
THE DATE OF THIS PROSPECTUS/INFORMATION STATEMENT IS , 1999.
<PAGE>
TABLE OF CONTENTS
PAGE
----
TABLE OF CONTENTS........................................................... 2
AVAILABLE INFORMATION....................................................... 3
PROSPECTUS/INFORMATION STATEMENT SUMMARY.................................... 4
The Companies.......................................................... 4
Authorization by HMC and CentraCan..................................... 4
The Acquisition........................................................ 5
Conditions to the Acquisition.......................................... 5
Consideration.......................................................... 5
Right of Appraisal..................................................... 5
Reasons for the Acquisition............................................ 6
Termination............................................................ 6
Interests of Certain Persons in the Acquisition........................ 6
Accounting Treatment................................................... 6
Certain Federal Income Tax Consequences................................ 6
SELECTED FINANCIAL AND BALANCE SHEET DATA OF CENTRACAN, INC................. 7
SELECTED FINANCIAL AND BALANCE SHEET DATA OF HEALTHCARE MERGER COMPANY, INC. 8
SELECTED FINANCIAL AND BALANCE SHEET DATA OF COMBINED COMPANIES............. 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF CENTRACAN................................................ 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF HMC...................................................... 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF COMBINED COMPANIES....................................... 13
MARKET PRICES AND DIVIDENDS................................................. 14
RISK FACTORS................................................................ 16
AUTHORIZATION BY HMC AND CENTRACAN.......................................... 17
THE ACQUISITION............................................................. 17
Background of and Reasons for the Acquisition.......................... 18
Delivery of Consideration.............................................. 18
Certain Terms of the Purchase Agreement and Related Agreements......... 18
Interests of Certain Persons in the Acquisition........................ 21
Regulatory Matters..................................................... 21
OTC Bulletin Board Listing............................................. 21
Certain Federal Income Tax Consequences................................ 22
Accounting Treatment................................................... 22
Appraisal Rights....................................................... 22
Federal Securities Law Consequences.................................... 22
BUSINESS OF CENTRACAN....................................................... 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF
CENTRACAN ............................................................. 28
BUSINESS OF HMC............................................................. 28
DESCRIPTION OF CENTRACAN CAPITAL STOCK...................................... 31
LEGAL MATTERS............................................................... 31
EXPERTS..................................................................... 31
INDEX TO FINANCIAL STATEMENTS............................................... F-1
FINANCIAL STATEMENTS........................................................ F-2
ANNEX I ASSET PURCHASE AGREEMENT......................................... I-1
ANNEX II AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT..................II-1
ANNEX III NOTICE TO HMC SHAREHOLDERS......................................III-1
-2-
<PAGE>
THIS PROSPECTUS/INFORMATION STATEMENT IS FIRST BEING MAILED OR DELIVERED TO THE
STOCKHOLDERS OF HMC ON OR ABOUT _______________, 1999
The information in this Prospectus/Information Statement is not
complete and may be amended. We may not distribute these securities to the HMC
shareholders until the Registration Statement filed with the Securities and
Exchange Commission is effective. This Prospectus/Information Statement is not
an offer to sell nor is it seeking an offer to buy these securities in any state
where the offer or sale is not permitted.
AVAILABLE INFORMATION
This Prospectus/Information Statement does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement, including any amendments, schedules, and exhibits
thereto, is available for inspection and copying at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Place, 450 Fifth
Street, NW, Washington, D.C. 20549, and at the Commission's Offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and at 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such documents may also be obtained from the Public Reference Room of
the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549,
at prescribed rates. Statements contained in this Prospectus/Information
Statement as to the contents of any contract or other document referred to
herein include all material terms of such contract or other documents but are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
CentraCan Common Stock is traded on the OTC Bulletin Board. HMC is a
privately held company. Neither CentraCan nor HMC is subject to the
informational requirements or proxy rules contained in or adopted pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All information contained in this Prospectus/Information Statement
relating to CentraCan has been supplied by CentraCan and all information
relating to HMC has been supplied by HMC.
-3-
<PAGE>
PROSPECTUS/INFORMATION STATEMENT SUMMARY
This summary highlights selected information from this
Prospectus/Information Statement and may not contain all of the information that
is important to you. To understand this acquisition fully and for a more
complete description of the legal terms of the acquisition, you should read this
entire document carefully, including the Annexes.
THE COMPANIES
CENTRACAN. CentraCan's mailing address is 4255 Route 9, Suite D,
Freehold, New Jersey 07728. From March 1997 to December 1997, it distributed
vitamins and health products. CentraCan terminated this business in December
1997, shortly before entering into the Purchase Agreement, dated as of February
20, 1998, with HMC. Under the Agreement, on May 20, 1998, CentraCan purchased
all of the Common Stock of Impacto Internacional de Montes de OCA, S.A., a Costa
Rican corporation and subsidiary of HMC ("Impacto"), which owns and operates a
magnetic resonance imaging facility at the San Jose Clinica Catolica, Costa
Rica's second largest private hospital (the "MRI Facility"), from HMC for
5,000,000 shares of Common Stock. Under the Purchase Agreement, CentraCan will
also purchase on or before March 31, 1999, all of the common stock of (i) Centro
Medico Los Angeles CENTRACAN, S.A. ("Centro Medico"), which owns and operates a
cancer center in La Uruca section of San Jose, Costa Rica that will include two
x-ray linear accelerators and associated treatment computers (the "Cancer
Center"); and (ii) 90% of the common stock of Centro de Biopsia Esterotaxica y
Mamografia, S.A. ("Bioestermamografia"), which owns and operates a clinic in San
Jose, Costa Rica, that has ultrasound, mammography and stereotactic biopsy
diagnostic facilities (the "Mammography Center"). CentraCan is a Florida
corporation which was incorporated on March 21, 1997.
HMC. The mailing address and telephone number of the principal
executive offices of HMC are 19100 Von Karman, Suite 630, Irvine, California
92612, (949) 757-0222. See "BUSINESS OF HMC." HMC, through its subsidiaries
Centro Medico and Bioestermamografia, owns and/or operates the Cancer Center and
the Mammography Center. HMC is a Nevada corporation which was incorporated on
March 9, 1998 to acquire all the common stock of Impacto and Centro Medico and
90% of the common stock of Bioestermamografia in exchange for shares of HMC
common stock and thereafter to sell these companies to CentraCan pursuant to the
Purchase Agreement in exchange for a total of 12,200,000 shares of Common Stock.
If the transactions contemplated by the Purchase Agreement are
completed, CentraCan will be engaged in the business of owning and operating the
MRI Facility, the Cancer Center and the Mammography Center, and the 12,200,000
shares of CentraCan Common Stock issued to HMC in payment for these assets will
be distributed to HMC's stockholders in complete liquidation of HMC on the basis
of approximately one share of Common Stock for each share of HMC common stock.
AUTHORIZATION BY HMC AND CENTRACAN
The Board of Directors of HMC has approved the Purchase Agreement. This
approval is subject to the following: (i) the approval of the Purchase Agreement
by shareholders of HMC holding a majority of the outstanding shares of common
stock of HMC; (ii) the registration of at least 12,200,000 shares of Common
Stock that will be issued to HMC and distributed to HMC's Stockholders in
complete liquidation of HMC, (iii) your receipt of this Prospectus/Information
Statement; and (iv) the satisfaction of the conditions to closing set forth in
the Purchase Agreement. Shareholders of HMC holding a majority of the
outstanding shares of common stock of HMC have already approved the Purchase
Agreement. ACCORDINGLY, NO FURTHER APPROVAL BY SHAREHOLDERS OF THE PURCHASE
AGREEMENT IS NECESSARY FOR THE CONSUMMATION OF THE TRANSACTION AND HMC IS NOT
ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
The Board of Directors of CentraCan has approved the Purchase
Agreement. The Purchase Agreement and the acquisition do not require the
approval of the CentraCan stockholders. No additional corporate action by
CentraCan is required to effect the acquisition.
-4-
<PAGE>
THE ACQUISITION
The Purchase Agreement is attached as Annex I and Annex II to this
Prospectus/Information Statement. We encourage you to read the Purchase
Agreement as it is the legal document that governs the acquisition. See "THE
ACQUISITION--Certain Terms of the Purchase Agreement."
CONDITIONS TO THE ACQUISITION
The acquisition will be complete only if certain conditions are
satisfied or waived, including the following:
o the holders of no more than 10% of the outstanding shares of HMC
have exercised their appraisal rights; and
o no law or court order prohibits the acquisition. See "THE
ACQUISITION - Certain Terms of the Purchase Agreement."
In general, any condition to the closing may be waived by the board of
directors of each of CentraCan and HMC.
CONSIDERATION
The Purchase Agreement provides for the following consideration:
o on May 20, 1998, CentraCan purchased all of the Common Stock of
Impacto, the HMC subsidiary which owns and operates the MRI
Facility, from HMC for 5,000,000 shares of Common Stock; and
o on or before March 31, 1999, CentraCan will purchase all of the
common stock of Centro Medico, which owns and operates the Cancer
Center and 90% of the common stock of Bioestermamografia, which owns
and operates the Mammography Center, from HMC for 7,200,000 shares
of Common Stock. See "THE ACQUISITION--Certain Terms of the Purchase
Agreement."
Following the closing of the transaction, HMC intends to distribute to
its shareholders in complete liquidation the 12,200,000 shares of Common Stock
received by HMC in consideration under the Purchase Agreement. The effect of the
consummation of the transactions contemplated by the Purchase Agreement will be
that each HMC shareholder will receive approximately one share of Common Stock
in exchange for each HMC share held at the time of distribution of the shares of
Common Stock.
RIGHT OF APPRAISAL
The Board of Directors of HMC has determined that shareholders of HMC
such as you, who are not being asked to vote in favor of, or consent to the
consummation of the Purchase Agreement, have the right to demand appraisal of
your shares of HMC. Nevada law requires that you must demand appraisal in
writing. You must make this written demand to HMC. If you demand appraisal and
the transaction is consummated, you will have the right to receive the fair
market value for your shares of HMC in cash rather than in the Common Stock to
be distributed after the closing of the transactions under the Purchase
Agreement.
Under the Purchase Agreement, if more than 10% of the holders of HMC
demand appraisal the acquisition will not take place. The demand must be made on
the Form of Demand to Exercise Appraisal Rights included in Annex III to this
Prospectus/Information Statement no later than 30 days after delivery of this
Prospectus/Information Statement.
-5-
<PAGE>
REASONS FOR THE ACQUISITION
CENTRACAN. CentraCan views the ownership and operation of the MRI
Facility, the Cancer Center and the Mammography Center which it may acquire
pursuant to the Purchase Agreement as an attractive opportunity to enter a
growth business with potential to enhance shareholder value.
HMC. HMC views the sale of its operating subsidiaries to CentraCan in
exchange for Common Stock as an opportunity to afford to its securityholders a
more liquid market for their investment since CentraCan's shares are traded on
the OTC Bulletin Board.
TERMINATION
The Board of Directors of either HMC or CentraCan may terminate the
Purchase Agreement under various circumstances, including the following:
o the acquisition is not completed by March 31, 1999;
o the other party breaches any of the representations and warranties
it made or fails to comply with any of its obligations under the
Purchase Agreement. See "THE ACQUISITION -- Certain Terms of the
Purchase Agreement."
INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
Other than the ownership of HMC stock, the officers and directors of
HMC do not have any additional interests in the acquisition.
ACCOUNTING TREATMENT
On May 20, 1998, CentraCan acquired all of the common outstanding
shares of Impacto (collectively the Company) from HMC by issuing 5 million
common shares to HMC. In accordance with Accounting Principles Board Opinion
(APB) No. 16, "Business Combinations," this transaction is accounted for as a
reverse acquisition, with Impacto designated as the accounting acquirer and,
accordingly, CentraCan's financial statements for periods prior to May 20, 1998
represent those of Impacto. CentraCan's operating results are included in the
consolidated financial statements herein from May 20, 1998 through September 30,
1998. On May 20, 1998, the deemed acquisition of CentraCan was recognized by
recording the fair value of CentraCan's tangible net assets on that date
(consisting solely of $11,182 in cash) with a corresponding increase in equity.
As a result of this transaction, HMC obtained a 78% ownership interest in
CentraCan.
The proposed acquisition by CentraCan of HMC's two remaining
subsidiaries will be accounted for in accordance with Financial Accounting
Technical Bulletin No. 85-5 (FTB85-5). The provisions of FTB85-5 apply as the
exchange of 7 million common shares between HMC and CentraCan will not include
the issuance of common shares to the minority shareholders of CentraCan.
Accordingly, the exchange is deemed to be between companies under common control
and, the Acquisition will be accounted for by reflecting the existing carrying
amounts of the assets and liabilities of Centro Medico and Bioestermamografia.
See "THE ACQUISITION -- Accounting Treatment."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
We have structured the acquisition so that neither HMC, CentraCan nor
the stockholders of HMC or CentraCan will recognize any gain or loss for federal
income tax purposes as a result of the acquisition.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE
ACQUISITION TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU ARE URGED
TO CONSULT YOUR TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF
THE ACQUISITION TO YOU.
-6-
<PAGE>
Selected Financial and Balance Sheet Data of CentraCan, Inc.
The selected financial data should be read in conjunction with the
historical and pro forma financial statements and notes thereto included
elsewhere herein and "Managements Discussion and Analysis of Financial Condition
and Results of Operations". As discussed herein and in the notes to the
CentraCan, Inc. consolidated financial statements, on May 20, 1998, CentraCan,
Inc. acquired all of the outstanding shares of Impacto Internacional de Montes
de Oca, S.A. ("Impacto"), in a transaction accounted for in accordance with
Accounting Principles Board Opinion 16, as a reverse acquisition. The
presentation of the historical consolidated financial statements prior to May
20, 1998, has been revised to reflect the financial statements of Impacto, the
accounting acquirer. Accordingly, the historical financial data for the years
ended September 30, 1998, 1997, 1996 and 1995 reflect Impacto's historical
financial data except that for the year ended September 30, 1998 the
accompanying data includes the operations of CentraCan, Inc., for the period May
20, 1998 through September 30, 1998. The selected data should be read in
conjunction with the consolidated financial statements for the year ended
September 30, 1998, the related notes and the independent auditors report, which
contains an explanatory paragraph, that states the Company's recurring losses
from operations and net working capital deficiency raises substantial doubt
about the entity's ability to continue as a going concern, appearing elsewhere
in this prospectus. The consolidated financial statements and the selected data
do not include any adjustments that might result from the outcome of that
uncertainty.
The selected data presented below under the caption "Statement of Operations
Data" and "Balance Sheet Data" as of September 30, 1998 and 1997 and for the
period from October 1, 1997 to March 30, 1998 and for the period from March 31,
1998 to September 30, 1998 (presented below for the period October 1, 1997 to
September 30, 1998(1)) and for each of the years in the two-year period ended
September 30, 1997 are derived from the consolidated financial statements of
CentraCan, Inc. (the Company), which financial statements have been audited by
KPMG LLP, independent certified public accountants. The financial statements as
of September 30, 1998 and 1997 and for the period from October 1, 1997 to
March 30, 1998 and for the period from March 31, 1998 to September 30, 1998 and
for each of the years in the two-year period ended September 30, 1997, and the
report and notes thereon, are included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year ended September 30
-----------------------------------------------------------------
1998(1) 1997 1996 1995(2)
---------- --------- --------- ----------
<S> <C> <C> <C> <C>
Statement of operations data:
Patient revenues $ 599,239 576,847 416,186 -
---------- --------- --------- ---------
General and administrative
expenses 536,147 707,717 517,101 1,556,893
Depreciation and amortization 461,467 510,223 504,689 38,310
---------- --------- --------- ----------
Total operating
expenses (997,614) 1,217,940 1,021,790 1,595,203
----------- --------- --------- ----------
Operating loss $ (398,375) (641,093) (605,604) (1,595,203)
========== ========= ========= ==========
Net loss $ (401,171) (720,923) (539,758) (1,584,393)
========== ========= ========= ==========
Basic and diluted loss per share $ (.07) (.14) (.11) (.32)
========== ========= ========= ==========
Balance sheet data:
Working (deficit) capital $ (197,275) (262,674) 14,014 200,845
========== ========= ========= ==========
Total assets $1,280,223 1,207,321 1,706,569 2,080,196
========== ========= ========= ==========
Total liabilities $ 518,096 396,578 136,593 8,772
========== ========= ========= ==========
Stockholders' equity $ 762,127 810,743 1,569,976 2,071,424
========== ========= ========= ==========
</TABLE>
(1) Refer to note 1 of the Company's audited financial statements for the year
ended September 30, 1998 describing the transaction which created a new
basis of accounting for the accounting acquirer - Impacto. The 1998
Statement of Operations data is prepared for the period October 1, 1997
through September 30, 1998.
(2) Represents the first full year of operations.
-7-
<PAGE>
Selected Financial and Balance Sheet Data of
Healthcare Merger Company, Inc. ("HMC")
The following selected historical consolidated financial and balance sheet data
presented below under the captions "Statement of Operations Data" and "Balance
Sheet Data" reflect such data for the Combined Companies as of September 30,
1997 and for the year then ended and have been derived from the Combined
Companies' Financial Statements which have been audited by KPMG Peat Marwick San
Jose, Costa Rica, independent certified public accountants. The financial
statements as of March 30, 1998 and September 30, 1997 and 1996 and for the
period from October 1, 1997 to March 30, 1998 and for the two-year period ended
September 30, 1997, and the report thereon and the notes thereto, are included
elsewhere in the prospectus. The 1997 financial data is presented as a basis of
comparison to the pro forma HMC presentation of 1998 financial data. The 1998
pro forma financial and balance sheet data presented below under the captions
"Statement of Operations Data and Balance Sheet Data" for HMC has been prepared
as if the combined operations of Impacto, Centro Medico and Bioestermamografia
were combined for the year ended September 30, 1998. This 1998 data should be
read in conjunction with the Pro Forma Financial Statements included elsewhere
herein. The selected data should be read in conjunction with the HMC September
30, 1998 consolidated financial statements, the related notes and the
independent auditors report, which contains an explanatory paragraph that states
that the Company's recurring losses from operations and net working capital
deficiency raise substantial doubt about the entity's ability to continue as a
going concern, appearing elsewhere in this prospectus. The consolidated
financial statements and the selected data do not include any adjustments that
might result from the outcome of that uncertainty.
Actual Pro Forma
1998 1998 1997
-------- ---------- ----------
Statement of operations data:
Patient revenues $ 361,291 752,052 718,881
---------- ----------- -----------
General and administrative
expenses 696,220 1,285,502 1,091,500
Depreciation and amortization 219,383 509,198 557,887
---------- ----------- -----------
Total operating
expenses 915,603 1,794,700 1,649,387
---------- ----------- -----------
Loss from
operations $ (554,312) (1,042,648) (930,506)
========== =========== ===========
Net loss $ 498,279 (1,048,251) (1,021,049)
========== =========== ===========
Balance sheet data:
Working capital deficit $ (426,914) (426,914) (356,780)
========== =========== ===========
Total assets $3,466,876 3,466,876 2,414,355
========== =========== ===========
Total liabilities $ 856,984 856,984 487,378
========== =========== ===========
Stockholders' equity $2,609,892 2,609,892 1,926,977
========== =========== ===========
-8-
<PAGE>
Selected Financial and Balance Sheet Data of Combined Companies
The following selected historical combined financial data presented below under
the captions "Statement of Operations Data" and "Balance Sheet Data" of Impacto,
Centro Medico and Bioestermamografia (Combined Companies) as of September 30,
1997 and 1996 and for each of the years in the two-year period ended September
30, 1997 have been derived from the financial statements of the Combined
Companies which have been audited by KPMG Peat Marwick San Jose, Costa Rica,
independent certified public accountants. The financial statements as of
September 30, 1997 and 1996, and for the two-year period ended September 30,
1997, and the report thereon and the notes thereto, are included elsewhere in
this prospectus. The selected data should be read in conjunction with the
combined financial statements for the period ended March 30, 1998, the related
notes and the independent auditors' report, which contains an explanatory
paragraph that states the Company's recurring losses from operations and net
working capital deficiency raise substantial doubt about the entities' ability
to continue as a going concern, appearing elsewhere in this prospectus. The
combined financial statements and the selected data do not include any
adjustments that might result from the outcome of that uncertainty.
Combined Companies -
years ended September 30
-----------------------------
1997 1996
----------- ---------
Statement of operations data:
Patient revenues $ 718,881 442,352
----------- ---------
General and administrative
expenses 1,091,500 793,674
Depreciation and amortization 557,887 522,388
----------- ---------
Total operating
expenses 1,649,387 1,316,062
----------- ---------
Loss from operations $ (930,506) (873,710)
=========== =========
Net loss $(1,021,049) (806,541)
=========== =========
Balance sheet data:
Working (deficit) capital $ (356,780) 98
=========== =========
Total assets $ 2,414,355 2,584,533
=========== =========
Total liabilities $ 487,378 163,981
=========== =========
Stockholders' equity $ 1,926,977 2,420,552
=========== =========
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<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction
with the financial statements of (i) Combined Companies as of March 30, 1998 and
September 30, 1997 and 1996 and for the period from October 1, 1997 to March 30,
1998 and for the two-year period ended September 30, 1997, (ii) consolidated
financial statements of CentraCan, Inc. as of September 30, 1998 and 1997 and
for the period from October 1, 1997 to March 30, 1998 and for the period March
31, 1998 to September 30, 1998 and for each of the years in the two-year period
ended September 30, 1997, and (iii) consolidated financial statements of
Healthcare Merger Company, Inc. as of September 30, 1998 and for the period from
March 9, 1998 (date of inception) to September 30, 1998.
Overview
The Combined Companies consist of the operations of Impacto Internacional de
Montes de Oca, S.A. (Impacto), Centro Medico Los Angeles CENTRACAN, S.A. (Centro
Medico) and Centro de Biopsia Esterotaxica y Mamografia, S.A.
(Bioestermamografia). The Combined Companies operate in the country of Costa
Rica, and they provide radiology, magnetic resonance imaging (MRI) and other
health care services to the general population of Costa Rica. Specifically,
Impacto operates a 3,500 square foot MRI facility on the campus of Association
Clinica Catholica de la Purisma. The facility houses a Siemens MRI system. The
facility contracts with physicians licensed by the country of Costa Rica for
professional radiological services. In 1996, Centro Medico was organized to
operate a cancer treatment center. The cancer treatment center, which opened in
October of 1998, houses two X-ray linear accelerators, as well as other
associated treatment equipment. Bioestermamografia was formed in 1996 and
operates a clinic providing ultrasound/mammography and stereotactic biopsy
diagnostic services.
The Combined Companies believe that the demand for health care services will
continue to grow and expect that, (i) the government will begin to privatize
more and more health care services, especially those services which are part of
the Combined Companies core competencies, and (ii) the need for advanced health
care services throughout Central America (estimated population 35 million). In
addition, the Combined Companies have made the decision to combine in order to
achieve economies of scale, saving significant capital in operations and
management. Further, the Combined Companies have already received contracts from
the government of Costa Rica to treat an increasing number of patients; the
ability exists to provide the public sector patients an expedited treatment
cycle; currently, some patients must wait six to nine months before they can see
a physician via the public sector. The actual equipment used in treating
patients is state of the art and the appointment process for being treated is
expedited.
On March 9, 1998, HMC was formed for the purpose of combining the assets and
interests of 1994 Impact Partners, a U.S. limited partnership and shareholder of
Impacto, Radiation Oncology Partners, L.P., a U.S. limited partnership and
shareholder of Centro Medico, and Bioestermamografia. This combination was
completed on March 31, 1998 to provide an integrated and diversified
organization for cancer treatment.
On May 20, 1998, HMC exchanged all of its ownership interest in Impacto to
CentraCan, Inc. (CentraCan), a U.S. publicly held corporation, in exchange for 5
million common CentraCan shares. As a result of this transaction, Impacto was
considered the accounting acquirer of CentraCan. Additionally, the shares
acquired by HMC represent a 78% controlling interest in CentraCan.
The Combined Companies' primary sources of revenue are derived from private
patients and government-sponsored patients. The revenues of any particular
period may vary widely depending on the balance between private patients and
government-sponsored patients. It is the opinion of management that both sectors
will grow equally as the demand for high-quality services continues to rise not
only in Costa Rica but also throughout Central America.
Additionally, Costa Rica is growing rapidly as an air traffic center with the
current expansion of the San Jose airport. Due to these circumstances,
management also believes that Costa Rica will become increasingly sought after
by international patients looking for quality service while maximizing the
strength of their foreign currency.
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<PAGE>
CentraCan
Comparison of CentraCan, Inc. - Years ended September 30, 1998 and 1997
Consolidated revenues for the year ended September 30, 1998 were $599,239, an
increase of $22,392 from the year ended September 30, 1997. These increases were
primarily attributable to (i) an increase in government contracts to service the
backlog of public patients, (ii) an increase of daily patients treated, and
(iii) completion of construction allowing for health care services to expand.
General and administrative expenses for the year ended September 30, 1998 were
$536,147, a decrease of $171,570 from the year ended September 30, 1997. The
decrease is attributable to the termination of the existing management contract
with Ventura Pacifica, S.A. The termination was effective March 31, 1998. Such
fees totaled $262,680 in 1997. This decrease in management, education and
training fees was offset by an increase in supplies to support the expanded
operations of the MRI Facility.
Depreciation and amortization expense for the year ended September 30, 1998 was
$461,467, a decrease of $48,756 from the year ended September 30, 1997.
Comparison of CentraCan, Inc. - Years ended September 30, 1997 and 1996
Consolidated revenues for the year ended September 30, 1997 were $576,847, an
increase of $160,661 from the year ended September 30, 1996. These increases
were primarily attributable to (i) an increase in government contracts to
service the backlog of public patients, (ii) an increase in daily patients
treated.
General and administrative expenses for the year ended September 30, 1997 were
$707,717, an increase of $190,616 from the year ended September 30, 1996. The
increase is primarily attributable to management, education and training
expenses charged by Ventura Pacifica, S.A. Such fees totaled $262,680 in the
year ended September 30, 1997 as compared to $0 in the year ended September 30,
1996. This increase was offset by a decrease in professional fees which declined
$67,038 in the year ended September 30, 1997 to $52,160.
Depreciation and amortization expense for the year ended September 30, 1997 was
$510,223, an increase of $5,534 from the year ended September 30, 1996.
Limited Liquidity and Capital Resources
As of September 30, 1998, the Company's consolidated working capital deficit
totaled $197,275. The Company anticipates that its existing capital resources
will not be adequate to satisfy its operating expenses and capital requirements
for the next 12 months unless additional funding is obtained. The Company's
outside auditors have added an explanatory paragraph to their report stating
that the consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The auditors report states that
the Company has suffered recurring losses from operations and has a net working
capital deficiency that raise substantial doubt about its ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty.
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<PAGE>
The Company has relied on private funding from the sale of partnership
interests, shares of common stock and short-term borrowings from shareholders
and related parties to fund operations. To date, operations have resulted in
losses and the Company has extremely limited cash liquidity and capital
resources. Further, the Company is dependent on future health care revenues and,
if these revenues fall short of the levels targeted, revenues may not be
sufficient to fund continued operations. To the extent that the funds generated
by revenues are insufficient to fund the Company's activities, it may be
necessary to raise additional funds. Any equity financing could result in
dilution to the Company's then existing stockholders. Any financing, if
available, may be on terms unfavorable to the Company. If adequate funds are not
obtained, the Company may be required to reduce or curtail operations.
The Company's plans include the completion of the sale of private equity
securities in connection with a Private Offering Memorandum to sell 200,000
common shares at $2.50 per share. The Company's expectation is that this private
placement will be completed by the end of March 1999. Through December 31, 1998,
the Company has sold 139,000 common shares and received $347,500 in connection
with such sales. There can be no assurance that additional funds will be
obtained through the completion of this offering.
Inflation
Inflation has remained relatively low during the past four years and has had a
relatively low impact on the operating performance of the Company's health care
treatment facilities.
Impact of Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information."
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income in the financial statements. Comprehensive income is the
total of net income and all other non-owner changes in equity. SFAS No. 131
requires that companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance. SFAS Nos. 130 and 131 are effective for fiscal years beginning
after December 15, 1997. The Company will adopt the provisions of SFAS Nos. 130
and 131 in its financial statements for the year ending September 30, 1999.
Year 2000 Compliance
The Company is in the process of conducting a comprehensive review of its
computer systems to identify which of its systems will have to be modified,
upgraded or converted to recognize and process dates after December 31, 1999
(the Year 2000 Issue) and is in the initial stages of developing an
implementation plan to resolve the issue. The Company expects to incur internal
staff costs, as well as other expenses, related to testing and updating its
systems to prepare for the Year 2000. The Company presently believes that, with
modifications and upgrades to existing software and successful conversion to new
software, the Year 2000 Issue will not pose significant operational problems for
the Company's systems as so modified, upgraded or converted. Although the
Company is in the initial phases of determining the impact of the Year 2000
Issue, the Company anticipates it will be fully Year 2000 compliant by September
1, 1999; however, any delays or omissions by the Company or its customers,
suppliers or contractors in resolving the Year 2000 Issue could materially
adversely affect the Company's business, financial condition or results of
operations. There can be no assurance that amounts to be spent on addressing the
Year 2000 Issue will not be material. The Company plans to spend about $25,000
to assess and correct any and all aspects of the Year 2000 Issue. Also, the time
frame for this work to be completed is estimated to occur by the end of the
third quarter of 1999. At this time, if the assessment indicates a high
probability for operational difficulties as a result of the Year 2000 Issue, a
contingency plan will be implemented.
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<PAGE>
Healthcare Merger Company, Inc.
Comparison of HMC - Years ended September 30, 1998 (Pro Forma) and 1997
(Combined Companies)
Consolidated revenues for the year ended September 20, 1998 were 752,052, an
increase of 33,171 from the year ended September 30, 1997. These increases were
primarily attributable to (i) an increase in government contracts to service the
backlog of public patients, (ii) an increase of daily patients, treated, and
(iii) completion of construction allowing for health care services to expand.
General and administrative expenses for the year ended September 30, 1998 were
1,285,502, an increase of $194,002 from the year ended September 30, 1997. The
increase is primarily attributable to an increase in supplies to support the
cancer center, and an increase in professional fees attributable to the
transaction with the Combined Companies and professional arrangements with
physicians. The increase was partially offset by a decrease in management,
education and training fees charged by Ventura Pacifica, S.A. under a management
contract which was terminated on March 31, 1998. Since then, the Cancer Center
has been internally managed.
Depreciation and amortization expense for the year ended September 30, 1998 was
509,198, a decrease of $48,689 from the year ended September 30, 1997.
Combined Companies
Comparison of Combined Companies - Years ended September 30, 1997 and 1996
Consolidated revenues for the year ended September 30, 1997 were $718,881, an
increase of $276,529 from the year ended September 30, 1996. These increases
were primarily attributable to (i) an increase in government contracts to
service the backlog of public patients, (ii) an increase in daily patients
treated, and (iii) completion of construction allowing for additional health
care services to commence operations.
General and administrative expenses for the year ended September 30, 1997 were
$1,091,500, an increase of $297,826 from the year ended September 30, 1996. The
increase was primarily attributable to charges incurred for management,
education and training fees which totaled $296,365 in the year ended September
30, 1997 principally under the management contract with Ventura Pacifica, which
was terminated on March 31, 1998.
Depreciation and amortization expense for the year ended September 30, 1997 were
$557,887, an increase of $35,499 from the year ended September 30, 1996.
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<PAGE>
MARKET PRICES AND DIVIDENDS
HMC is a privately held company and its shares do not trade in any
established public market. CentraCan Common Stock is quoted on the OTC Bulletin
Board under the symbol "CTCE."
The table below sets forth, for the calendar quarters indicated, the
reported high and low per share sale prices for CentraCan Common Stock, as
reported on the OTC Bulletin Board.
CENTRACAN COMMON STOCK
---------------------------------
HIGH LOW
---- ---
1997
Third Quarter $ .0625 $ .0625
Fourth Quarter 1.00 1.75
1998
First Quarter 1.00 1.00
Second Quarter 5.625 1.0625
Third Quarter 5.625 1.50
Fourth Quarter 4.00 2.75
On January 29, 1999, the most recent date for which it was practicable
to obtain market price data prior to the printing of this Prospectus/Information
statement, the closing price per share of CentraCan Common Stock was $3.375. The
trading market for CentraCan Common Stock has been sporatic. See "Risk Factors--
Volatility of Share Price."
CentraCan has not declared any dividends on its common stock since its
inception. CentraCan intends to retain future earnings for use in its business
and does not anticipate paying any dividends on Common Stock in the foreseeable
future.
On January 20, 1999, there were approximately 22 holders of record of
Common Stock, including banks, brokers and nominees who hold of record shares
beneficially owned by others and the Company believes that there are
approximately 65 beneficial owners of the Common Stock.
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<PAGE>
RISK FACTORS
You should be aware that this Prospectus contains forward-looking
statements. Forward looking statements discuss future expectations, contain
projections of results of operations or financial condition, and general
business prospects. Words such as "expects," "may," "will," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates," and similar expressions
identify forward-looking statements. The forward-looking statements in this
Prospectus reflect the good faith judgment of CentraCan's management. However,
forward-looking statements can only be based on facts and factors currently
known. Consequently, actual results and outcomes may differ materially from the
results and outcomes discussed in the forward-looking statements. You should
carefully consider the risk factors described below together with all of the
other information included or incorporated by reference in this Prospectus.
New Business Resulting From Limited Partnership and Corporation
Combination. As detailed in the section entitled "Business of HMC", HMC was only
recently formed and recently acquired, in exchange for shares of HMC common
stock, ownership of three Costa Rican corporations engaged in the operation of
the MRI Facility, the Cancer Center and the Mammography Center. As a result, HMC
has and CentraCan will have a limited operating history as an entity operating
and managing the combined operations of three distinct health care properties in
Costa Rica. While Management believes that operating the three properties will
result in certain economies of scale so as to provide a unified health care
diagnostic and treatment capability, there is no assurance that the combined
operations will run any smoother or profitably.
Limited Liquidity and Capital Resources. HMC and the three Costa Rican
companies have relied on private funding from the sale of partnership interests,
shares of Common Stock and short term borrowings to fund operations. To date,
operations have resulted in losses and HMC has extremely limited cash liquidity
and capital resources. Present capitalization should be sufficient to fund
necessary expenses over the next year. However, if health care revenues fall
short of the levels targeted, revenues may not be sufficient to fund continued
operations. Although HMC currently has no specific plans or arrangements for
financing, to the extent that the funds generated by revenues are insufficient
to fund HMC's activities, it may be necessary to raise additional funds. Any
equity financings could result in dilution to HMC's then existing stockholders.
Sources of debt financing may result in higher interest expense. Any financing,
if available, may be on terms unfavorable to HMC. If adequate funds are not
obtained, HMC may be required to reduce or curtail operations. HMC's outside
auditors have added an explanatory paragraph to their report stating that the
consolidated financial statements have been prepared assuming HMC will continue
as a going concern. The auditors report states that the Company has suffered
recurring losses from operations and has a net working capital deficiency that
raise substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
Political or Economic Conditions in Costa Rica May Become Adverse. As
of the date of this Prospectus/ Information Statement, Management believes that
current political and economic conditions in Costa Rica are relatively stable,
thereby presenting an investment opportunity for certain prospective investors
to make an investment in HMC. However, at any time, the political and/or
economic conditions in Costa Rica may adversely change so as to affect
underlying business assumptions about the current opportunities which exist for
doing business in a foreign country. In particular, the Governmental regime may
change in Costa Rica or the region, the currency exchange rate may change, or
the cost of labor and/or goods and services necessary to the operations of the
medical properties may increase.
Competition. The diagnostic imaging services industry is highly
competitive. The Company and its MRI Facility competes with one other
independently operated imaging center in Costa Rica. Some of the Company's
competitors have greater financial resources than the Company. Other competitors
may have existing relationships with the local medical community which are
superior to those of the Company's. In addition, some hospitals use their
control over inpatient services to require exclusive arrangements or
advantageous pricing from third party payors for their outpatient services such
as diagnostic imaging. Some physicians prefer to refer patients and such
referral preference may negatively affect the Company's ability to compete with
other providers in certain markets. There is no assurance that the Company will
be able to maintain or improve its competitive position in the diagnostic
imaging industry.
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<PAGE>
Regulation. The activities of health care companies are monitored by
Costa Rican law enforcement agencies to assure compliance with local laws and
regulations. Such regulation increases the cost of operations of HMC's
facilities which, while not necessarily problematic, will involve time and
effort involved in compliance related activities that will impact on HMC's plan
of operation. While the Company believes that its operations substantially
comply with applicable laws and regulations, the Company has not sought or
received interpretive rulings to that effect. Additionally, there can be no
assurance that subsequent laws, subsequent changes in present laws or
interpretations of laws will not materially adversely affect the Company's
operations.
Scan Volume. The Costa Rican companies' revenue depends primarily on
the number of scanning procedures performed ("scan volume") and the fee received
per scan. Among the factors which could result in a reduction in scan volume are
non-renewal or cancellation of contracts, malfunctions, equipment downtime due
to upgrades or replacements, and a reduction in demand for the MRI Facility's
equipment or services.
Technical Obsolescence. Diagnostic imaging technology is continually
evolving. The development of new technologies or refinements of existing
technologies might make the Company's existing equipment technologically or
economically obsolete. If such obsolescence were to occur, the Company might
have to develop or purchase new equipment which could have a material adverse
effect on the Company's earnings and cash flow. Although the Company is not
currently aware of such pending technological developments, there can be no
assurance that such developments will not occur.
Risk of Professional and Products Liability. The provision of medical
services entails an inherent risk of professional malpractice and other similar
claims. In connection with the provision of the technical component of
diagnostic imaging services, CentraCan does not control or direct the practice
of medicine by physicians who are under contract with CentraCan to interpret the
procedures. Although the Company requires all of the physicians to carry medical
malpractice insurance, there can be no assurance that such insurance will always
be sufficient to cover claims or that indemnification by the physicians or their
insurers will always be available. There can be no assurance that claims, suits
or complaints relating to medical services and products provided by physicians
in connection with the Company's facilities will not be asserted against the
Company in the future.
Dependence on Key Personnel. The Company is dependent on the management
experience and continued services of its executive officers. The loss of the
services of any or all of such officers for any reason could have a material
adverse effect on the Company's business.
The ability of the Company to attract and to retain qualified
technologists to operate its MRI Facility is crucial to the Company's
operations. The Company to date has been able to attract and retain a sufficient
number of qualified technologists; however, there can be no assurance that this
will continue in the future.
Volatility of Share Price. There may be significant volatility in the
market price for the Common Stock. Quarterly operating results of the Company,
changes in general conditions in the economy, the financial markets or the
health care industry, or other developments affecting the Company or its
competitors, could cause the market price of the Common Stock to fluctuate
substantially. This volatility has affected the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
The Securities Enforcement and Penny Stock Reform Act of 1990, Risks of
Low-Priced Stocks. The Securities Enforcement and Penny Stock Reform Act of 1990
requires additional disclosure relating to the market for penny stocks in
connection with transactions in any stock defined as a penny stock. The
Commission has adopted regulations that generally define a penny stock to be any
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on NASDAQ
and any equity security issued by an issuer that has (1) net tangible assets of
at least $2,000,000, if such issuer has been in continuous operation for three
years, (ii) net tangible assets of at least $5,000,000, if such issuer has been
in continuous operation for less than three years or (iii) average annual
revenue of at least $6,000,000, if such issuer has been in continuous operation
for less than
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<PAGE>
three years. Unless an exception is available, the regulations require the
delivery, prior to any transaction involving a penny stock of a disclosure
schedule generally explaining the penny stock market and the risks associated
therewith.
Authorization of Preferred Stock and Other Anti-Takeover Devices. The
Board of Directors is authorized to issue shares of preferred stock and to fix
the relative voting, dividend, liquidation, conversion, redemption and other
rights, preferences and limitations thereof without any further vote or action
of the shareholders. The issuance of preferred stock could adversely affect the
voting power or other rights of the holders of Common Stock. In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change of control of
CentraCan. Although CentraCan has no present intention to issue any preferred
stock, there can be no assurance that CentraCan will not do so in the future.
Effect of Stock Options and Possible Impact on Future Finances;
Possible Dilution. The holders of options to purchase Common Stock that may be
outstanding or issued in the future have the opportunity to profit from any rise
in the value of the Common Stock, without assuming the risk of ownership.
CentraCan may find it more difficult to raise additional equity capital if it
should be needed for the business of CentraCan while options are outstanding. If
the price of the Common Stock of CentraCan increased enough for holders of
options to favorably exercise their options, CentraCan probably would be able to
obtain additional equity capital on terms more favorable than those provided by
the options. To the extent that any of the options granted by CentraCan are
exercised, the ownership interest of CentraCan's shareholders may be diluted.
There have been no options granted nor are there any outstanding as of the date
of this Prospectus.
Risks Associated With "Forward-looking" Statement. This Prospectus
contains and incorporates by reference certain statements that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Those statements include, among other things, the discussions
of the Company's business strategy and expectations concerning the Company's
market position, future operations, margins, profitability, liquidity and
capital resources. Investors in the Common Stock offered hereby are cautioned
that reliance on any forward-looking statement involves risks and uncertainties,
and that although the Company believes that the assumptions on which the
forward-looking statements contained herein are based, any of those assumptions
could prove to be inaccurate, and as a result, the forward-looking statements
based on those assumptions also could be incorrect. The uncertainties in this
regard include, but are not limited to, those identified in the risk factors
discussed above. In light of these and other uncertainties, the inclusion of a
forward-looking statement herein should not be regarded as a representation by
the Company that the Company's plans and objectives will be achieved.
AUTHORIZATION BY HMC AND CENTRACAN
The Purchase Agreement has been approved by the Board of Directors of
HMC subject to the effective registration of at least 12,200,000 shares of
Common Stock being issued to HMC in connection with the acquisition (the "Stock
Consideration") and the receipt by all stockholders of HMC of the
Prospectus/Information Statement and the satisfaction of the conditions to
closing set forth in the Purchase Agreement. Shareholders of HMC holding a
majority of the outstanding shares of common stock of HMC have already approved
the Purchase Agreement.
The Purchase Agreement also has been approved by the CentraCan Board
of Directors. The Purchase Agreement and the acquisition do not require the
approval of the CentraCan stockholders. No additional corporate action by
CentraCan will be required to effect the Acquisition.
THE ACQUISITION
The Description of the Purchase Agreement set forth in this section
includes all material terms of the Purchase Agreement but does not purport to be
complete and is qualified in its entirety by reference to the Purchase Agreement
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<PAGE>
which is attached as Annex I and Annex II to this Prospectus/Information
Statement and is incorporated by reference herein.
BACKGROUND OF AND REASONS FOR THE ACQUISITION
CENTRACAN. CentraCan views the ownership and operation of the MRI
Facility, the Cancer Center and the Mammography Center which it may acquire
pursuant to the Purchase Agreement as an attractive opportunity to enter a
growth business with potential to enhance shareholder value.
HMC. HMC views the sale of its operating subsidiaries to CentraCan in
exchange for CentraCan's common stock as an opportunity to afford to its
securityholders a more liquid market for their investment since CentraCan's
shares are traded on the OTC Bulletin Board.
DELIVERY OF CONSIDERATION
On May 20, 1998, CentraCan delivered 5,000,000 shares of Common Stock
to HMC (the "First Closing") in exchange for all of the Common Stock of Impacto,
the HMC subsidiary which owns and operates the MRI Facility. The Common Stock
acquired by HMC at the First Closing represents approximately 78% of CentraCan's
outstanding Common Stock, and has resulted in HMC becoming the controlling and
principal stockholder of CentraCan. The Purchase Agreement provides that on or
before March 31, 1999 (the "Second Closing") CentraCan shall deliver an
additional 7,200,000 shares of Common Stock to HMC in exchange for all of the
common stock of Centro Medico, which owns and operates a cancer center in Costa
Rica, and 90% of the common stock of Bioestermamografia, which owns and operates
a clinic that has ultrasound, mammography and stereotactic diagnostic
facilities.
Promptly after the Second Closing, HMC intends to distribute to its
stockholders in complete liquidation all 12,200,000 shares of Common Stock
received by HMC as consideration under the Purchase Agreement, which will
represent approximately 90% of CentraCan's outstanding Common Stock. As a result
of the distribution, HMC shareholders will receive approximately one share of
Common Stock for each share of HMC common stock then held by such stockholders.
CERTAIN TERMS OF THE PURCHASE AGREEMENT
REPRESENTATIONS AND WARRANTIES. The Purchase Agreement contains various
representations and warranties of the parties, including, among other things,
representations from the parties, as of the date of the Purchase Agreement
relating to (i) each party's organization and similar corporate matters; (ii)
the authorization, execution, delivery, performance and enforceability of the
Purchase Agreement and related matters; (iii) the absence of conflicting
agreements or required consents; and (iv) the accuracy of certain financial
statements and compliance with generally accepted accounting principles.
COVENANTS. Pursuant to the Purchase Agreement, CentraCan and HMC have
agreed, subject to the satisfaction of the conditions of the Purchase Agreement,
to (i) use their best efforts to take all action and to do all things necessary
or advisable in order to consummate and make effective the acquisition; (ii)
give any notices to, make any filings with, and use its reasonable efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies; and (iii) notify the other party in writing of any change
in any of the information contained in the representations and warranties
contained in the Purchase Agreement.
Pursuant to the Purchase Agreement, HMC has agreed to (i) give any
notices to third parties, and will use its reasonable efforts to obtain any
third party consents that CentraCan reasonably may request in connection with
the acquisition; (ii) not engage in any practice, take any action, or enter into
any transaction outside the Ordinary Course of Business (as defined in the
Purchase Agreement), including, without limiting the generality of the
foregoing: (a) not authorize or effect any change in its charter or bylaws; (b)
not grant any options, warrants, or other rights to purchase or obtain any of
its capital stock or issue, sell, or otherwise dispose of any of its capital
stock (except upon the conversion or exercise of options, warrants, and other
rights currently outstanding); (c) not declare, set aside, or pay any dividend
or distribution with respect to its capital stock (whether in cash or in kind),
or redeem, repurchase, or otherwise
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acquire any of its capital stock; (d) not issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation; (e) not impose any Security Interest upon
any of its assets; (f) not make any capital investment in, make any loan to, or
acquire the securities or assets of any other Person; (g) not make any change in
employment terms for any of its directors, officers, and employees; and (h) not
commit to any of the foregoing; (iii) permit representatives of CentraCan to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of HMC, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to HMC. CentraCan will treat and hold as such any Confidential
Information (as defined in the Purchase Agreement) it receives from HMC in the
course of the reviews contemplated by the Purchase Agreement, will not use any
of the Confidential Information except in connection with the Purchase
Agreement, and, if the Purchase Agreement is terminated for any reason
whatsoever, agrees to return to HMC all tangible embodiments (and all copies)
thereof which are in its possession; and (iv) not solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of all or substantially all of the capital stock or assets of
HMC (including any acquisition structured as a merger, consolidation, or share
exchange).
Pursuant to the Purchase Agreement, CentraCan has agreed to prepare
and file with the SEC a registration statement under the Securities Act relating
to the offering and issuance of Common Stock to be distributed to HMC
shareholders (the "Registration Statement") and use its reasonable efforts to
respond to the comments of the SEC thereon and will make any further filings
(including amendments and supplements) in connection therewith that may be
necessary or advisable.
CONDITIONS PRECEDENT TO THE ACQUISITION. The obligations of CentraCan
and HMC to effect the acquisition are subject to the fulfillment or waiver of
certain conditions specified in the Purchase Agreement.
The obligations of CentraCan to consummate the transactions to be
performed by it in connection with the Closing are subject to satisfaction of
the following conditions: (i) the number of Dissenting Shares (as defined in the
Purchase Agreement) shall not exceed 10% of the number of outstanding shares of
HMC; (ii) the representations and warranties of HMC set forth in the Purchase
Agreement shall be true and correct in all material respects at and as of the
Closing Date; (iii) HMC shall have performed and complied with all of its
covenants under the Purchase Agreement in all material respects through the
Closing; (iv) there shall not be any judgment, order, decree, stipulation,
injunction, or charge in effect preventing consummation of any of the
transactions contemplated by the Purchase Agreement; (v) HMC shall have
delivered a certificate to the effect that each of the conditions specified
above is satisfied in all respects; (vi) the Purchase Agreement and the
acquisition shall have received the Requisite HMC Stockholder Approval (as
defined in the Purchase Agreement); (vii) HMC shall have received all
authorizations, consents, and approvals of governments and governmental agencies
required by the Purchase Agreement; (viii) CentraCan shall have received from
counsel to HMC an opinion covering customary matters in form and substance as
set forth in the Purchase Agreement, addressed to CentraCan, and dated as of the
Second Closing Date; and (ix) all actions to be taken by HMC in connection with
consummation of the transactions contemplated by the Purchase Agreement and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated by the Purchase Agreement hereby will be reasonably
satisfactory in form and substance to CentraCan.
The obligation of HMC to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions: (i) the representations and warranties CentraCan set forth in the
Purchase Agreement shall be true and correct in all material respects at and as
of the Closing Date; (ii) CentraCan shall have performed and complied with all
of its covenants under the Purchase Agreement in all material respects through
the Closing; (iii) there shall not be any judgment, order, decree, stipulation,
injunction, or charge in effect preventing consummation of any of the
transactions contemplated by the Purchase Agreement; (iv) CentraCan shall have
delivered to HMC a certificate to the effect that each of the conditions
specified above in the Purchase Agreement is satisfied in all respects; (v)
CentraCan shall have received all authorizations, consents, and approvals of
governments and governmental agencies referred to in the Purchase Agreement;
(vi) HMC shall have received from counsel to CentraCan an opinion covering
customary matters in form and substance as set forth in the Purchase Agreement,
addressed to
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HMC, and dated as of the Second Closing Date; and (vii) all actions to be taken
by CentraCan in connection with consummation of the transactions contemplated by
the Purchase Agreement and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to HMC.
TERMINATION. CentraCan or HMC may terminate the Purchase Agreement with
the prior authorization of its board of directors (whether before or after
stockholder approval) as follows: (i) CentraCan and HMC may terminate the
Purchase Agreement by mutual written consent at any time prior to the Effective
Time (as defined in the Purchase Agreement); (ii) CentraCan may terminate the
Purchase Agreement by giving written notice to HMC at any time prior to the
Effective Time (as defined in the Purchase Agreement) in the event HMC has
breached any material representation, warranty, or covenant contained in the
Purchase Agreement in any material respect, CentraCan has notified HMC of the
breach, and the breach has continued without cure for a period of 30 days after
the notice of breach; (iii) HMC may terminate the Purchase Agreement by giving
written notice to CentraCan at any time prior to the Effective Time (as defined
in the Purchase Agreement) in the event CentraCan has breached any material
representation, warranty, or covenant contained in Agreement in any material
respect, HMC has notified CentraCan of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach; and (iv) either
HMC or CentraCan may terminate the Purchase Agreement by giving written notice
to the other if the Second Closing has not occurred by March 31, 1999
notwithstanding the best good faith efforts of the terminating party.
SURVIVAL. The Purchase Agreement provides none of the representations,
warranties, and covenants of CentraCan and HMC (other than the provisions
concerning issuance of Common Stock and the provisions concerning
indemnification) will survive the Effective Time as defined in the Purchase
Agreement.
INDEMNIFICATION. The Purchase Agreement provides that HMC shall
indemnify and hold harmless CentraCan against any and all losses, liabilities,
damages, and expenses whatsoever (which shall include, but not be limited to
counsel fees and any and all expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in connection
with (A) (i) any breach of any representation, warranty, covenant, or agreement
of HMC contained in the Purchase Agreement, (ii) any obligation or liability of
any nature, accrued or contingent, not assumed by CentraCan in accordance with
the Purchase Agreement, the waiver by CentraCan of compliance by HMC with the
provisions of applicable bulk sales laws; and (B) if the Closing takes place,
any act, alleged act, omission, or alleged omission occurring at or prior to the
Closing (including without limitation any which arise out of, are based upon, or
are in connection with any of the transactions contemplated by the Purchase
Agreement). The agreement to indemnify shall be in addition to any liability HMC
may otherwise have, including liabilities arising under the Purchase Agreement.
AMENDMENTS AND WAIVERS. CentraCan and HMC may amend any provision of
the Purchase Agreement at any time prior to the Effective Time (as defined in
the Purchase Agreement) with the prior authorization of their respective boards
of directors; provided, however, that any amendment effected subsequent to
stockholder approval will be subject to the restrictions contained in the Nevada
and Florida General Corporation Laws. No amendment of any provision of the
Purchase Agreement shall be valid unless the same shall be in writing and signed
by CentraCan and HMC. No waiver by CentraCan and HMC of any default,
misrepresentation, or breach of warranty or covenant under the Purchase
Agreement, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
EXPENSES. CentraCan and HMC will each bear its own costs and expenses
(including legal fees and expenses) incurred in connection with the Purchase
Agreement and the transactions contemplated thereby.
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INTERESTS OF CERTAIN PERSONS IN THE ACQUISITION
Other than the Stockholder's ownership of the Stock of HMC, the
officers and directors of HMC do not have any additional interests in the
acquisition.
REGULATORY MATTERS
The International Monetary Fund is pushing most borrower countries
towards structural reform of their economics, with heavy emphasis on decreasing
the size of governmental services and encouraging privatization.
Costa Rica is already moving in this direction in several economic sectors.
For example, several government-run agencies have already been sold to
the public including the government's cement and Fertilizer companies. Four of
the largest government companies that remain to be privatized include the
national insurance company, the petrochemical companies, the electricity and
telecommunications industries, and the national banks. Although these companies
have monopoly status, plans have been put forward to de-monopolize them.
There are hints that the government may relinquish its own monopoly on
insurance after 1998. The Instituto Nacional de Seguros (INS), the state
insurance agency, has taken the first stop by privatizing its sales activities.
It is now processing public bidding to allocate sales agency licenses and has
signed contracts that will commercialize simple forms of insurance.
Co-investors are being sought for the government's electricity monopoly
and new laws have increased the amount of electricity the private sector is
allowed to produce. The state telecommunications monopoly may soon be allowed to
set up subsidiaries in which the private sector has a controlling interest,
although the infrastructure will remain owned by the public agency. The national
banking system has moved furthest toward privatization. Beginning in August
1996, private banks were able to issue checks; before then only government banks
were permitted to have checking accounts. The fear of coming competition is
forcing government banks to modernize services and reduce their work force.
Similar trends are beginning in health care. The state-run system was
adequate when the government's main concern was raising health standards and
inoculating people against disease. Now, with a rapidly growing middle class,
more and more people are able to afford quality, sophisticated health
technologies. However, even though Costa Rican health care utilization (and
cost) is increasing, the quality of health care is not. By introducing some of
the discipline of the market place to health care, Costa Ricans anticipate
better quality medicine will be provided and queues for service will be reduced.
As the pressure to change the state-run medical system increases, early
signs of privatization have begun to appear. For example, in January of 1997,
seven regional hospitals were allowed to provide private health care services
and physicians were permitted to admit private patients. One of the reasons for
these changes is the desire by local physicians to prepare for and take full
advantage of the coming shift to privatization of the country's health care.
OTC BULLETIN BOARD LISTING
CentraCan will use its reasonable best efforts to cause the Common
Stock to be issued pursuant to the acquisition to be listed for trading on the
OTC Bulletin Board.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Purchase Agreement contemplates a tax-free reorganization pursuant
to Code Sec. 368(a)(1)(C).
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE
ACQUISITION. THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE
CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER AND CURRENT
ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO
CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THE
DISCUSSION. EACH STOCKHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION TO THE HOLDER, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
On May 20, 1998, CentraCan acquired all of the common outstanding
shares of Impacto (collectively the Company) from HMC by issuing 5 million
common shares to HMC. In accordance with Accounting Principles Board Opinion
(APB) No. 16, "Business Combinations," this transaction is accounted for as a
reverse acquisition, with Impacto designated as the accounting acquirer and,
accordingly, CentraCan's financial statements for periods prior to May 20, 1998
represent those of Impacto. CentraCan's operating results are included in the
consolidated financial statements herein from May 20, 1998 through September 30,
1998. On May 20, 1998, the deemed acquisition of CentraCan was recognized by
recording the fair value of CentraCan's tangible net assets on that date
(consisting solely of $11,182 in cash) with a corresponding increase in equity.
As a result of this transaction, HMC obtained a 78% ownership interest in
CentraCan.
The proposed acquisition by CentraCan of HMC's two remaining
subsidiaries will be accounted for in accordance with Financial Accounting
Technical Bulletin No. 85-5 (FTB85-5). The provisions of FTB85-5 apply as the
exchange of 7 million Common Shares between HMC and CentraCan will not include
the issuance of common shares to the minority shareholders of CentraCan.
Accordingly, the exchange is deemed to be between companies under common control
and, the Acquisition will be accounted for by reflecting the existing carrying
amounts of the assets and liabilities of Centro Medico and Bioestermamografia.
APPRAISAL RIGHTS
The Board of Directors of HMC has determined that shareholders of HMC
such as you, who are not being asked to vote in favor of or consent to the
Consummation of the Purchase Agreement have the right to demand appraisal of
your shares of HMC. Nevada law requires that you must demand appraisal in
writing. You must make this written demand to HMC. If you demand appraisal and
the transaction is consummated, you will have the right to receive the fair
market value for your shares of HMC in cash rather than in the shares of Common
Stock to be distributed after the closing of the transactions under the Purchase
Agreement.
Annex III hereto contains the notice required to be given pursuant to
Nevada Statutes 92A.410 of a dissenter's right to demand appraisal of his
shares, and also sets forth the provisions of Nevada Statutes 92A.440 through
92A.500 which govern the procedures for determining the fair value of the
dissenter's shares and obtaining payment thereof.
Demand for payment by a dissenting stockholder in the form included in
Annex III hereto must be sent to the offices of HMC at 19100 Von Karman, Suite
630, Irvine, California 92612 and must be received by HMC not later than 30 days
after the delivery of this Prospectus/Information Statement to such stockholder,
and must be accompanied by certificates representing the shares of Common Stock
for which the demand is made. The demand must also certify that the dissenter
acquired beneficial ownership of the shares prior to the date of this
Prospectus/Information Statement.
The acquisition contemplated by the Purchase Agreement will not be
completed if the holders of more than 10% of the outstanding shares of HMC
exercise their appraisal rights, in which case appraisal rights will not be
available, certificates representing shares of common stock of HMC accompanying
any demand for appraisal will be returned to the delivering stockholder and such
stockholder will continue as a stockholder of HMC.
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of CentraCan Common Stock received by the stockholders of
HMC in the acquisition will be freely transferable, except that shares of Common
Stock received by persons who are deemed to be "affiliates" (as such term is
defined under the Securities Act) of HMC prior to the acquisition may be resold
by them only in transactions permitted by the resale provisions of Rule 145
promulgated under the Securities Act (or Rule 144 in the case of such persons
who become affiliates of CentraCan) or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of CentraCan or HMC
generally include individuals or entities that control, are controlled by,
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or are under common control with, such party and may include certain officers
and directors of such party as well as principal shareholders of such party.
Pursuant to the Purchase Agreement, CentraCan will also file an
application with the OTC Bulletin Board seeking approval for quotation on the
OTC Bulletin Board of the shares of Common Stock to be issued in connection with
the acquisition.
BUSINESS OF CENTRACAN
CentraCan is a corporation organized under the laws of the State of
Florida on March 21, 1997 and maintains its principal executive offices at 4255
Route 9, Suite D, Freehold, New Jersey 07728. From March 1997 to December 1997,
it was engaged in the distribution of vitamin and health products. That business
was terminated in December 1997, shortly before CentraCan initiated acquisition
discussions with HMC. In February 1998, CentraCan entered into the Purchase
Agreement with HMC and on May 21, 1998, purchased from HMC all of the common
stock of Impacto, the HMC subsidiary which owns and operates the MRI Facility.
The operation of the MRI Facility and the completion of the transactions
contemplated by the Purchase Agreement are CentraCan's only ongoing business
activities.
The MRI Facility, located at the San Jose Clinica Catholica, houses a
Siemens 1.0 tesla Impact Magnetom Magnetic Resonance Imaging System. The MRI
Facility is managed by John C. Gullesserian, who has served as Impacto's
president since April 1, 1998 and who was also responsible for the design,
development and marketing of the facility, as well as the training and
supervision of the medical personnel at the facility. The MRI Facility contracts
with physicians licensed by the country of Costa Rica for professional
radiological services. Prior to March 31, 1998, Mr. Gullesserian served as
president of Ventura Pacifica, an external management company which managed
Impacto's operations pursuant to a management contract which terminated on that
date.
THE MRI FACILITY
John Gullesserian manages the MRI Facility as president of Impacto. The
MRI Facility currently is housed in a 3,500 square foot space contiguous to
Clinica Catolica, a hospital in San Jose, Costa Rica, that has been operated by
the Society of La Purisima Nuns, since 1956. It is the second largest private
hospital in San Jose. Prior to March 31, 1998, the MRI Facility was managed
pursuant to a management contract with Ventura Pacifica, of which Mr.
Gullesserian was president.
The MRI Facility is one of only two magnetic resonance imaging systems
in Costa Rica. There are two Computerized Axiel Tomography Scanners ("Cat
Scanners") at the Calderon Guardia Hospital and one Cat Scanner at the San Juan
Dios Hospital. The Calderon Guardia Hospital has 450 beds and the San Juan Dios
Hospital has 600 beds. These three machines are currently doing 1400 scans per
month working on average 6-1/2 days a week. CentraCan believes that the high
utilization of Cat Scanners is an excellent indicator as to future utilization
of MRI technology.
Currently the MRI facility provides MRI diagnostics for an average of
10 patients per day. In September 1998, the facility treated the largest number
of patients to date. Monthly patient increases have averaged 3% to 4%.
Currently, MRI Facility revenue is averaging approximately $55,000 per month and
expects to average $75,000 to $80,000 per month within the next three months.
The MRI Facility is under the medical direction of Dr. Faylan Esquivel
Solis and Dr. Melvin Esquivel Solis. Faylan Esquivel Solis, M.D., received his
training in radiology in Costa Rica and the University of Michigan. Currently,
he is head of radiology at Clinica Catolica. He is President of the Association
of Radiologists and in charge of the Radiology Residents program at the Calderon
Hospital. Melvin Esquivel Solis, M.D. is head of radiology and manages the CAT
Scan at Costa Rica's largest public hospital. He was trained in Costa Rica and
the Baylor College of Medicine. Both are full-time medical directors at the MRI
Facility. Approximately 140 physicians have invested in the MRI Facility through
the purchase of 160 shares of Preferred Stock of Impacto.
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EMPLOYEES
As of January 29, 1999, CentraCan employed approximately 35 persons.
PROPERTIES/FACILITIES
CentraCan owns and operates the MRI Facility.
LITIGATION
CentraCan is not a party to or under threat of any litigation.
MANAGEMENT
Board of Directors and Executive Officers
NAME AGE TITLE
Richard Wm. Talley 55 Chairman of the Board
Sean P. O'Connor 28 President and Director
Carlos Camacho 36 Director
John C. Gullesserian 56 Director
W.F.O. Rosenmiller 66 Secretary and Director
Richard Wm. Talley holds a bachelor of arts degree in European History
from the University of California, Santa Barbara and an MBA in Finance from
Cornell University, Ithaca, New York. Mr. Talley began his finance career with
Smith Barney in New York. A resident of Santa Barbara starting in 1975, he
opened and managed the Shearson office there until its sale to American Express
in 1983, at which time he founded Talley McNeil and Tormey, a regionally focused
investment bank and brokerage firm. The firm was merged into a larger Southern
California investment banking and brokerage firm in 1989. In 1993, Mr. Talley
and Paul D. King founded Talley, King and Co., Inc. ("Talley King") with offices
in Irvine and Santa Barbara. Talley, King & Co., Inc. is an investment bank
which focuses on private placement financing. Mr. Talley has been actively
involved in Costa Rica for the last six years.
Messrs. Talley and King currently are involved in the development of
three resort properties in Costa Rica. Hotel Alta, a 5-star garden hotel in the
capital of San Jose opened in November 1997. Talley, King & Co., Inc.'s second
project is in the Monteverde Cloud Forest. Ecolodge "San Luis" is an
Eco-destination designed to allow tourists to experience the rain forest. The
third leg of the eco-driven soft information adventure is Sunset Reef which is
bordered by the world famous Cabo Blanco Reserve. This beach facility is located
on the Pacific side of the Guancaste Peninsula, 80 miles due west of San Jose.
Talley King and their clients have committed over $10 million to these tourism
projects. All of these projects have been built debt-free.
Sean P. O'Connor holds a bachelor of science degree from Syracuse
University. Mr. O'Connor started his career working for Morgan Stanley & Co. in
New York City, where his assignments took him on tours of duty at the Chicago
Board of Trade, Chicago Board of Options Exchange and the Sydney, Australia
office. After working at Morgan Stanley & Co. for 4 years, Mr. O'Connor accepted
a position at Deloitte & Touche Consulting, working in the management consulting
division Management Solutions and Services ("MSS"). MSS concentrated on working
with
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clients that had under $5 billion in market capitalization. Mr. O'Connor's focus
was in business process improvement, cost-benefit analysis, change management,
corporate strategy and corporate re-engineering. He worked at Deloitte & Touche
for two years prior to co-founding Atlas Equity Group, Inc., a financial
services company with offices in New York City and Miami. Mr. O'Connor brings to
the Company a unique background of investment banking and management consulting
experiences, including experiences with Netscape, Chartwell Leisure, Time Warner
and Sumitomo Bank of Japan.
Carlos Comacho is President of the consulting firm, Grupo Camacho,
based in San Jose, Costa Rica. For the past 15 years, he has provided a full
range of professional consulting services to importers, exporters and investors.
He specializes in the impact of taxes on international corporations. Carlos
Camacho is a licensed CPA and a graduate of the University of Costa Rica.
John C. Gullesserian is recognized as a pioneer in the financing,
management and operation of outpatient diagnostic imaging centers. Drawing on a
distinguished career in investment banking, Mr. Gullesserian has substantial
expertise in financing and managing outpatient medical facilities. In the last
seven years alone, Mr. Gullesserian has designed and constructed seven
freestanding MRI facilities and managed the operation of other MRI/CT centers
for other owners. Three of these facilities included state-of-the-art radiation
therapy Centers similar to the one presently being developed in San Jose, Costa
Rica. Formerly based in Southern California, Mr. Gullesserian specializes in the
location, development, administration and marketing of freestanding diagnostic
and therapeutic facilities, providing outstanding service to the MRI and
radiation oncology marketplace.
Mr. Gullesserian is President of Centro Medico which owns and operates
HMC's cancer treatment center in San Jose. He is also President and CEO of
Impacto Internacional de Montes de Oca S.A. and Bioestermamografia S.A., which
operates the MRI Facility and the Mammography Center.
Mr. Gullesserian started his career in finance in New York City with
First National City Bank's (now known as Citibank) Corporate Trust Department.
His banking career took him to Los Angeles where he worked for Union Bank. In
1971, he joined Beverly Hills National Bank to head its Trust Operations
Department. He was subsequently promoted to Vice President and Trust Operations
Officer in charge of all bank operations. In 1973, Mr. Gullesserian joined a
group of radiologists as their Business Manager, shortly thereafter forming
Armacost Management Services, Inc. (predecessor to JCG Enterprises. Inc.)
through which he managed the affairs of high-income physician groups. During the
seventies, he developed and operated a number of real estate and leasing
companies specializing in tax sheltered investments.
In 1975, Mr. Gullesserian pioneered the acquisition of the first CT
scanner that was ever installed in the West Los Angeles market by a group of
radiologists. In 1977, he helped them acquire the full body CT scanner. These
were very bold and major acquisitions, given that in the mid-seventies, CT
technology was in its embryonic stage. Both projects proved successful business
ventures. In 1982-83, Mr. Gullesserian developed and started Beverly Hills-
based Spalding Radiology Center, Inc. Spalding Radiology was one of the first
fully-equipped free-standing diagnostic imaging centers in the country. In 1985.
Mr. Gullesserian acquired the first General Electric 1.5 tesla MRI system for
operation in Beverly Hills. Following this success, he acquired a Siemens 1.5
tesla MRI system.
In 1983, together with nine associates, Mr. Gullesserian founded
Guardian Bancorp, holding company for Southern California based Guardian Bank.
Mr. Gullesserian served on the Boards of Guardian Bancorp, Guardian Bank and its
wholly-owned subsidiary, Guardian Trust Company. He served as a ranking member
of the Senior Loan Committee since the company was founded and was the
Committee's chairman until his resignation in May 1993. Mr. Gullesserian was
also a member of the company's Executive Committee and served as Chairman of the
Audit and Personnel Committees. Guardian Bancorp was listed on the American
Stock Exchange.
W.F.O. Rosenmiller is a graduate of Penn State University (BS) and
Drexel University (MBA). Mr. Rosenmiller spent four years in the US Navy and was
honorably discharged as a full lieutenant with expertise in open
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sea navigation as well as general nautical knowledge. Mr. Rosenmiller brings to
the Company a wealth of management and development experience. As a
director/owner of Snow Time, Inc, a ski resort complex consisting of facilities
in New York State and Lancaster, Pennsylvania with revenues in excess of $20
million, Mr. Rosenmiller who founded Ski Windham, Ski Round Top and Ski Liberty
has had over 30 years experience in the hotel, restaurant and bar business. As a
director of Hamilton Bank (subsidiary of CoreStates Bank) he has had extensive
experience on both the audit and credit sides of partnership lending as well as
project projection. Most recently he has been involved in all aspects of a
200-acre subdivision of high end homes in York, Pennsylvania. This project has
received numerous national design awards. Active in civic activities for over 30
years in York, he was the recipient of the Jaycee's Distinguished Service Award.
Special Advisors to the Board of Directors
NAME AGE TITLE
---- --- -----
Paul D. King 33 Special Advisor to the Board of Directors
Michael Caggiano 44 Special Advisor to the Board of Directors
Steven J. Aronson 47 Special Advisor to the Board of Directors
Jose M. Gutierrez 43 Special Advisor to the Board of Directors
Paul D. King is a principal in Talley, King & Co., Inc. and a partner
with Mr. Talley since 1989. During the last six years, Mr. King has been
intimately involved in the development of the Costa Rican properties. He has
overseen the land acquisition, permit, bidding, and construction process. He is
currently responsible for all activities including the interface between Costa
Rican corporations and US entities. This project opened in November 1995. Mr.
King attended Westmont College.
Michael Caggiano is President of a small Los Angeles-based business and
economic policy consulting firm. He specializes in furnishing advice to
management regarding economic performance, corporate strategy, obtaining
financing (business plans and prospectuses, acquisitions, and organizational
change. His clients have included health care, real estate, hospitality,
international exporting, electronics, and manufacturing companies. During the
past three years. Dr. Caggiano has provided extensive advice to corporations
investing in Costa Rica. Working with Talley King & Co.., he has analyzed the
Costa Rican economy and its hotel, health care, and coffee producing industries.
He has prepared business plans and prospectuses for Central American Equities,
Inc. (hotels and econolodges), Radiation Oncology Partners (cancer treatment),
and Cafe Britt (premium coffee exporting).
Together with Mr. Talley and Mr. King, Dr. Caggiano is currently
writing a guide book to doing business in Costa Rica.
Prior to establishing his own company, Dr. Caggiano was Executive Vice
President in Charge of Consulting Operations at Robert Charles Lesser & Co.
(RCLCo.) a 50-person, 5-office, national consulting firm based in Los Angeles.
While at RCLCo. he oversaw the management of more than 300 consulting
engagements and worked closely with clients on real estate and hospitality
development, economic development, public policy issues, valuation, feasibility,
and corporate strategy.
In 1990, Dr. Caggiano was elected to the first City Council of Malibu
and later served as its Mayor Pro Tem, He helped create the city from
conception: hired and directed staff, established the first city budget,
introduced city services, created and implemented city programs and ordinances,
and successfully advocated policies and legislation before numerous state
Governmental bodies.
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Before serving as an elected official, Dr. Caggiano was a Fellow and
Policy Analyst with The RAND Corporation. While at RAND, he specialized in
solving state and local government finance and criminal justice problems. He
devised methodologies to forecast revenues and costs, designed administrative
and accounting structures necessary to allow public entities to operate as
private enterprises, and created action plans for the operation and marketing of
governmental services. During his nine years at RAND, Dr. Caggiano authored or
co-authored nearly 20 publications on finance and criminal justice issues.
For the past five years. Dr. Caggiano has also served as the President
of Heal the Bay, one of Southern California's most successful environmental
groups. This 15,000 member volunteer organization is dedicated to improving
ocean water quality and cleaning up beaches in Southern California. Heal the
Bay's legislative advocacy work extends to Sacramento, CA and Washington, DC.
Dr. Caggiano holds a Ph.D. in Public Policy Analysis from the RAND
Graduate School of The RAND 91 Corporation, an M.P.A. from the University of
Southern California, and a B.A. in Government from Pomona College.
Steven J. Aronson is the President and Chief Executive Officer of Cafe
Britt, Costa Rica's premium coffee roasting company. Mr. Aronson, an American
permanently residing in Costa Rica with many years of coffee procurement and
international trading experience earned working in both environments as an
officer in multinational companies and as an entrepreneur. He has founded coffee
and cocoa processing companies in several countries in Latin America. He also
has a worldwide network of coffee market contacts as well as intimate knowledge
of coffee farm practices in Costa Rica. Cafe Britt is now known internationally
for the excellence of its products, surveys indicate that more than 80% name
Britt as the highest quality coffee in Costa Rica.
Mr. Aronson is a well-respected authority on coffee in Costa Rica as
well as being recognized in world coffee circles. He has been continuously
involved in the coffee industry for over 20 years, having previously worked in
futures trading, coffee purchasing, sales, and quality control prior to founding
coffee processing and trading companies in Costa Rica. Mr. Aronson, a Ph.D.
candidate at Stanford University, is a frequent speaker and moderator at
domestic and international coffee industry forums. He has also counseled the
Costa Rican government at international coffee meetings. He earned his BA in
economics from the University of Michigan at Ann Arbor and has complete speaking
fluency in four languages and reading ability in six.
Jose M. Gutierrez has been the Ambassador and Deputy Permanent
Representative of Costa Rica to the United Nations since July 1995. Mr.
Gutierrez received his law degree from the University of Costa Rica. He has done
postgraduate studies on Jurisprudence and Sociology of Law at the University of
Saar in (at the time) West Germany and he has earned a Master of Public
Administration degree from the Kennedy School of Government at Harvard
University where he was a Mason Fellow.
Since 1981 he has been a partner and practicing lawyer of the San Jose
firm of Gutierrez, Hernandez & Pauly. Between 1981 and 1985 he also lectured in
law at the University of Costa Rica. Between 1985 and 1995 he was a member of
the board of directors of numerous banking, industrial, and agroindustrial
corporations in Costa Rica. From 1992 to 1994 he was the publisher of La
Republica, at the time, the second largest daily newspaper in Costa Rica. Mr.
Gutierrez was born in Costa Rica in 1933.
-27-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF CENTRACAN
The following table sets forth, as of January 20, 1999, the number of
shares and percentage of Common Stock beneficially owned by each person who is
known to CentraCan to be (i) the beneficial owner of more than 5% of its Common
Stock, (ii) by each of CentraCan's directors and nominees for election as
directors, (iii) by CentraCan's named executive officers, and (iv) by all of
CentraCan's executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership (1) Class
------------------------ ------------------------ ---------
Directors and Executive Officers
--------------------------------
<S> <C> <C>
Richard Wm. Tally 0 0%
Sean O'Connor 35,000 *%
Carlos Camacho 0 0%
John C. Gullesserian 0 0%
W.F.O. Rosenmiller 0 0%
Healthcare Merger Company, Inc. 5,000,000 78%
All executive officers and directors as a 35,000 *%
group (5)
</TABLE>
- ------------
* Less than 1%
BUSINESS OF HMC
HMC, through its subsidiary, Centro Medico, owns a cancer treatment
center which will have two state of the art linear accelerators, as well as
associated treatment computers, for radiation therapy treatment housed in a
3,000 square foot building in San Jose, Costa Rica (the "Cancer Center"). The
Cancer Center is operating under the direction of Dr. Vinicio Perez as well as
several radiotherapists licensed by Costa Rica. Through March 31, 1998 the
Cancer Center was operated and managed by Ventura Pacifica S.A. John
Gullesserian, as president of Centro Medico, manages the business operations of
the Cancer Center. The Cancer Center opened on October 9, 1998.
HMC, through its Bioestermamografia subsidiary, also owns a stand alone
3,500 square foot clinic that has ultrasound, mammography and stereotactic
biopsy diagnostic equipment, providing state-of-the-art breast cancer diagnostic
facilities to San Jose (the "Mammography Center"). John Gullesserian, as
president of Bioestermamografia, manages the business operations of the
Mammography Center.
-28-
<PAGE>
HMC believes that the Cancer Center, when combined with the Mammography
Center, create not only the finest cancer diagnostic/treatment facilities in
Costa Rica, but in all of Central America. There are no linear accelerators
currently in Central America.
There are over 35,000 reported cancer cases in Central America, with
some 7,000 in Costa Rica alone. It is anticipated that 5,500 additional cases
will be reported each year in Costa Rica.
The mailing address and telephone number of the principal executive
offices of HMC are 19100 Von Karman, Suite 630, Irvine, California 92612, (949)
757-0222.
THE CANCER CENTER
The Cancer Center is expected to provide the people of Costa Rica and
patient-visitors from other countries with the finest, state-of-the-art medical
technology for the treatment of cancerous tumors. The Cancer Center is located
in La Uruca, a part of San Jose, approximately equidistant from four major
hospitals.
Construction of the Cancer Center was begun during the Summer of 1997
and was completed on October 9, 1998. The first patients were treated in January
1999. The Cancer Center houses one state-of-the-art 12MeV and one 4MeV linear
x-ray accelerator and all the associated treatment computers.
The Cancer Center provides superior radiation therapy with X-ray linear
accelerators that are unique in Central America. Although linear accelerator
technology has been the standard for radiation technology in the United States
for more than three decades, these linear accelerators are the first of their
kind in Central America. It is management's strong belief that when coupled with
CentraCan's MRI Facility at the Clinica Catolica, the Cancer Center will create
not only the finest cancer treatment center in Costa Rica but in all of Central
America.
At a rate of 110 per 10,000 inhabitants, Costa Rica has one the highest
per capita incidences of cancer in the world. Currently, the Costa Rican
population of 3.4 million is served by only three first-generation cobalt
machines, called Cobalt 60s. The Cobalt 60 machines are owned and operated by
CAJA (Costarricense de Seguro Social), the state-run health agency. These
machines are experiencing significant downtime and have a 5-month backlog of
patients. CAJA currently treats 100-160 patients per day in the national health
care system on the Cobalt 60 machines. An average of 50 to 60 patients wait for
such treatment in each hospital for as long as three to five months.
Linear accelerator treatments are better, faster, healthier, and more
efficient than the Cobalt 60s. When offered an alternative, HMC believes that
patients and doctors in Costa Rica and other Central American countries will
choose the Cancer Center's linear accelerators for their treatment.
Cobalt 60 machines are significantly more dangerous in their treatment
of cancer than the linear accelerators HMC will install in the Cancer Center.
HMC believes that as the demand for cancer treatment continues to
increase, the current supply of antiquated Cobalt 60 machines will be retired.
HMC anticipates that the Cancer Center's two machines will quickly reach their
maximum capacity and be treating 80-100 patients per day. When they reach that
plateau, HMC plans to install two additional machines.
The Cancer Center is managed by its president, John Gulleserian. Mr.
Gulleserian is guided by a full-time medical director and a medical advisory
committee consisting of five Costa Rican physicians. This committee will
establish medical protocols and treatment procedures. They will also act as the
liaison between the Cancer Center and the Costa Rican Ministry of Health. Two of
the five doctors are employed by the Cancer Center as department heads for the
Radiation Therapy Department.
-29-
<PAGE>
The medical direction of the Cancer Center will be under the
supervision of Jose Anglada, MD. He will be joined by the following
radiotherapists: Drs. Fernando Medina, Alvaro Camacho, Hugo Recinos, Bruno
Ramirez and Vinicio Perez. The doctors as a group will receive a percentage of
the gross revenues of the project. These doctors are prominent in Costa Rica,
and internationally, and currently work for CAJA and operate the Cobalt 60
machines. Management considers these contractual agreements a significant
barrier to entry for new competitors. Doctors from foreign countries cannot
practice in Costa Rica unless they complete five years of Costa Rican residency
and then pass the Costa Rican medical boards.
It is the lack of heavy government regulation that leads to one of the
key marketing advantages of the Cancer Center. Physician-investors in the Cancer
Center will also be a part of the patient-referral system. In the United States,
Federal law (known as Stark Legislation) prohibits ownership in a medical
facility to which a doctor-investor sends patients. However, in Costa Rica, no
such laws exist, making patient referral a longstanding, traditional method of
acquiring fees.
THE MAMMOGRAPHY CENTER
HMC also owns a stand alone 3,500 square foot clinic in La Yoses, a
suburb of San Jose. The Mammography Center has been receiving patients for
prevention, detection, and diagnostic evaluation since June 1996. The
Mammography Center is equipped with ultrasound, mammography, and stereotactic
biopsy diagnostic equipment, providing state-of-the-art breast cancer diagnostic
facilities.
The Mammography Center has the only stereotactic biopsy machine in
Central America. Stereotactic cancer biopsy machines provide a biopsy procedure
that is superior to common surgical biopsies. With computer-guided precision,
the stereotactic machine inserts a needle through the skin into the tumor for
removal. Stereotactic biopsies are considered superior to surgical biopsies
because they are more accurate and they leave no scar. An open surgical biopsy
in a CAJA facility currently takes about three days on an in-patient basis,
including administrative time for check-in. Stereotactic biopsy machines are
used on an outpatient basis, saving significant time and hospital expense.
The Mammography Center currently sees approximately 25 patients per day
for diagnostic breast examinations and generates approximately $18,000 in
monthly revenues. The facility is operated and managed by John Gulleserian.
BUSINESS STRATEGY
HMC's financial goal in combining the MRI Facility, the Cancer Center
and the Mammography Center and selling them to CentraCan is to maximize
shareholder value and increase the return on investment. Its strategy in
achieving this goal has several components:
(1) Seek "synergistic" opportunities. By combining the treatment and
diagnostic capabilities of the MRI Facility, the Cancer Center and
the Mammography Center, HMC believes that the revenues of the
combined entities will exceed what each could do individually
because of the opportunity to provide patients to each other and
to provide a wide range of diagnostic and treatment choices to
patients and medical personnel.
(2) Minimize debt. The MRI Facility, the Cancer Center and the
Mammography Center are debt free.
(3) Capture the continuing demand for high quality health care. Costa
Rica has the highest quality health care in Central America and
demand continues to grow for better quality health care. HMC's
state of the art cancer diagnostic and treatment facilities
compliment this increased demand for quality, and should prove to
be profitable to the shareholders of HMC.
The health care facilities expect to receive revenues from two sources:
(i) government payments through the national health care system and (ii) private
patients.
<PAGE>
HMC intends to achieve a number of purposes by combining the operations
of the MRI Facility, the Cancer Center and the Mammography Center and selling
them to CentraCan:
o The combined entities gained economies of scale in administration,
patient development and marketing, computer software and hardware,
accounting, billing, purchasing, telecommunications, and
marketing. By providing one-stop shopping for varied diagnostic
and treatment requirements, the combined entities whole is greater
than the sum of its parts.
o The combination of entities makes the new company more attractive
to an international Health Maintenance Organization (HMO)
acquisition.
EMPLOYEES
As of January 29, 1999 HMC employed approximately 35 persons.
PROPERTIES/FACILITIES
The Mammography Center owns and operates a 3,500 square foot clinic
in Las Yoses, a suburb of San Jose.
LITIGATION
HMC is not a party to or under threat of any litigation.
CERTAIN TRANSACTIONS
Beginning on March 8, 1998 and ending on September 30, 1998, HMC
purchased certain assets totaling approximately $340,000 from Montecatin
Inversiones, whose president and chief executive officer is John C.
Gullesserian. Mr. Gullesserian will be the president and a director of
Centracan.
-30-
<PAGE>
DESCRIPTION OF CENTRACAN CAPITAL STOCK
COMMON STOCK
CentraCan is authorized to issue 50,000,000 shares of Common Stock,
$.001 par value per share. As of the date of this Prospectus/Information
Statement 6,400,000 shares were issued and outstanding. Each outstanding share
of common stock is entitled to one vote, either in person or by proxy, on all
matters that may be voted on by the owners thereof at meetings of CentraCan's
shareholders. The holders of shares of Common Stock do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares can elect all of the directors of CentraCan.
PREFERRED STOCK
CentraCan is authorized to issue 10,000,000 shares of Preferred Stock
with such rights and preferences, and in such series, as the Board of Directors,
in its sole discretion, may determine from time to time. CentraCan has not
designated any series of Preferred Stock and presently has no plans to do so.
DIVIDEND POLICY
It is unlikely that CentraCan will declare or pay cash dividends in the
foreseeable future. CentraCan intends to retain earnings, if any, to expand its
operations.
LEGAL MATTERS
The legality of the Common Stock to be issued in connection with the
acquisition is being passed upon for CentraCan by Snow Becker Krauss, P.C., 605
Third Avenue, New York, New York 10158-0125.
EXPERTS
The consolidated financial statements of CentraCan, Inc. as of
September 30, 1998 and 1997, and for the periods from October 1, 1997 to March
30, 1998 and from March 31, 1998 to September 30, 1998, and for each of the
years in the two-year period ended September 30, 1997 have been included herein
in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG LLP covering the
consolidated CentraCan, Inc. September 30, 1998 financial statements contains an
explanatory paragraph that states that the Company's recurring losses from
operations and net working capital deficiency raise substantial doubt about the
entity's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
The consolidated financial statements of Healthcare Merger Company,
Inc. as of September 30, 1998 and for the period from March 9, 1998 (date of
inception) to September 30, 1998 have been included herein in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG LLP covering the consolidated Healthcare Merger
Company, Inc. September 30, 1998 financial statements contains an explanatory
paragraph that states that the Company's recurring losses from operations and
net working capital deficiency raise substantial doubt about the entity's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of that
uncertainty.
The combined financial statements of the Combined Companies as of March
30, 1998 and September 30, 1997 and 1996, and for the period from October 1,
1997 to March 30, 1998 and for each of the years in the two-year period ended
September 30, 1997 have been included herein in reliance upon the report of KPMG
Peat Marwick, San Jose, Costa Rica, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick, San Jose Costa Rica
covering the Combined Companies' March 30, 1998 financial statements contains an
explanatory paragraph that states the Company's recurring losses from operations
and net working capital deficiency raise substantial doubt about the entity's
ability to continue as a going concern. The combined financial statements do not
include any adjustments that might result from the outcome of that uncertainty.
-31-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
CentraCan, Inc. and Subsidiaries Consolidated Financial Statements:
Independent Auditors' Report ...................................................................... F-3
Consolidated Balance Sheets as of September 30, 1998 and 1997 ..................................... F-4
Consolidated Statements of Operations for the period from October 1, 1997 to March 30, 1998 and
for the period from March 31, 1998 to September 30, 1998.......................................... F-5
Consolidated Statements of Operations for the years ended September 30, 1997 and 1996.............. F-6
Consolidated Statements of Changes in Stockholders' Equity for the period from October 1, 1997 to
March 30, 1998 and for the period from March 31, 1998 to September 30, 1998 and for the years
ended September 30, 1997 and 1996 ................................................................ F-7
Consolidated Statements of Cash Flows for the period from October 1, 1997 to March 30, 1998 and
from the period March 31, 1998 to September 30, 1998.............................................. F-8
Consolidated Statements of Cash Flows for the years ended September 30, 1997 and 1996.............. F-9
Notes to Consolidated Financial Statements ........................................................ F-10
Healthcare Merger Company, Inc. Consolidated Financial Statements:
Independent Auditors' Report ...................................................................... F-20
Consolidated Balance Sheet as of September 30, 1998 ............................................... F-21
Consolidated Statement of Operations for the period from March 9, 1998 (date of inception) to
September 30, 1998 ............................................................................... F-22
Consolidated Statement of Changes in Stockholders' Equity for the period from March 9, 1998 (date
of inception) to September 30, 1998 .............................................................. F-23
Consolidated Statement of Cash Flows for the period from March 9, 1998 (date of inception) to
September 30, 1998 ............................................................................... F-24
Notes to Consolidated Financial Statements ........................................................ F-25
Impacto Internacional de Montes de OCA, S.A., Centro Medico Los Angeles CENTRACAN, S.A. and
Centro de Biopsia Esterotaxica y Mamografia, S.A. Combined Financial Statements:
Independent Auditors' Report ...................................................................... F-34
Combined Balance Sheets as of March 31, 1998 and September 30, 1997 and 1996 ...................... F-35
Combined Statements of Operations for the period from October 1, 1997 to March 30, 1998 and for
the years ended September 30, 1997 and 1996 ...................................................... F-36
Combined Statements of Changes in Stockholders' Equity for the period from October 1, 1997 to
March 30, 1998 and for the years ended September 30, 1997 and 1996................................ F-37
Combined Statements of Cash Flows for the period from October 1, 1997 to March 30, 1998 and for
the years ended September 30, 1997 and 1996 ...................................................... F-39
Notes to Combined Financial Statements ............................................................ F-40
Unaudited Pro Forma Condensed Consolidated Financial Statements:
Basis of Presentation ............................................................................. F-48
Statement of Operations For the Year Ended September 30, 1998 ..................................... F-49
Footnotes to Unaudited Pro Forma Condensed Statement of Operations ................................ F-50
Consolidated Balance Sheet ........................................................................ F-51
Footnotes to Unaudited Pro Forma Condensed Balance Sheet .......................................... F-52
</TABLE>
F-1
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Financial Statements
September 30, 1998 and 1997
(With Independent Auditors' Report Thereon)
F-2
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
CentraCan, Inc.:
We have audited the accompanying consolidated balance sheets of CentraCan, Inc.
(a majority-owned subsidiary of Healthcare Merger Company, Inc.) and
subsidiaries (the Company) as of September 30, 1998 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the periods from October 1, 1997 to March 30, 1998 and from March 31,
1998 to September 30, 1998, and for each of the years in the two-year period
ended September 30,1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our 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 from 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CentraCan, Inc. and
subsidiaries as of September 30, 1998 and 1997, and the results of their
operations and their cash flows for the period from March 31, 1998 to September
30, 1998, and for the period from October 1, 1997 to March 30, 1998 and for each
of the years in the two-year period ended September 30, 1997 in conformity with
generally accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, effective March
31, 1998, all of the outstanding common stock of Impacto International de Montes
de OCA, S.A. was acquired in a transaction accounted for as a purchase. As a
result of the acquisition, Impacto International De Montes de OCA, S.A.'s
financial information included in the accompanying consolidated financial
statements for the periods after the acquisition is presented on a different
cost basis than that for the periods before the acquisition and, therefore, is
not comparable.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a net working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ KPMG LLP
-----------------------------
January 4, 1999
New York, New York
F-3
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Balance Sheets
September 30, 1998 and 1997
<TABLE>
<CAPTION>
Assets 1998 1997
---- ----
<S> <C> <C>
Current assets:
Cash $ 40,144 5,123
Accounts receivable 59,754 61,038
Prepaid expenses 15,754 -
Due from related parties 35,269 29,243
----------- -----------
Total current assets 150,921 95,404
Fixed assets, net 1,125,096 1,093,671
Other assets 4,206 18,246
----------- -----------
Total assets $ 1,280,223 1,207,323
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 105,421 90,822
Accrued expenses 23,654 28,398
Due to related parties 219,121 238,858
----------- -----------
Total current liabilities 348,196 358,078
Deferred income taxes 156,400 -
Other liabilities 13,500 38,500
----------- -----------
Total liabilities 518,096 396,578
----------- -----------
Stockholders' equity:
Preferred stock, $581.43 par value. Authorized 500 shares;
160 shares issued and outstanding 93,029 93,029
Preferred stock, .001 per value; 10,000,000 shares
authorized; none issued and outstanding - -
Common stock, $.001 par value. Authorized 50,000,000
shares; issued and outstanding 6,400,000 and 5,000,000
shares in 1998 and 1997, respectively 6,400 5,000
Additional paid-in capital 863,217 3,557,788
Accumulated deficit (200,519) (2,845,074)
----------- -----------
Total stockholders' equity 762,127 810,743
Commitments and contingencies
----------- -----------
Total liabilities and stockholders' equity $ 1,280,223 1,207,321
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Period Period
from from
October 1, March 31,
1997 to 1998 to
March 30, September 30,
1998 1998
---------- -------------
<S> <C> <C>
Patient service revenue $ 309,786 289,453
---------- -----------
Operating expenses:
Salaries and benefits 55,940 66,809
Commissions 24,583 26,479
Professional fees 40,330 45,651
Supplies 39,401 31,270
Rent 10,985 37,707
Other general and administrative 85,862 71,130
Depreciation and amortization 250,560 210,907
---------- -----------
Total operating expenses 507,661 489,953
---------- -----------
Loss from operations (197,875) (200,500)
Other income (expenses), net (23,647) 2,666
Foreign currency gain (loss) 20,870 9,715
---------- -----------
Loss before income taxes (200,652) (188,119)
Income tax expense - 12,400
---------- -----------
Net loss $ (200,652) (200,519)
========== ===========
Basic and diluted loss per share $ (.04) (.03)
=========== ===========
Weighted number of common shares
outstanding 5,000,000 6,400,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Statements of Operations
Years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- -------------
<S> <C> <C>
Patient service revenue $ 576,847 416,186
---------- -----------
Operating expenses:
Salaries and benefits 124,556 120,201
Commissions 69,925 40,176
Professional fees 52,160 119,198
Supplies 33,469 44,737
Management fees, education and training 262,680 -
Rent 40,515 44,696
Other general and administrative 124,412 148,093
Depreciation and amortization 510,223 504,689
---------- -----------
Total operating expenses 1,217,940 1,021,790
---------- -----------
Loss from operations (641,093) (605,604)
Other income (expenses), net 11,193 535
Foreign currency gain (loss) (91,023) 65,311
---------- -----------
Loss before income taxes (720,923) (539,758)
Income tax expense - -
---------- -----------
Net loss $ (720,923) (539,758)
========== ===========
Basic and diluted loss per share $ (.14) (.11)
=========== ===========
Weighted number of common shares
outstanding 5,000,000 5,000,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Statements of Changes in Stockholders' Equity
For the period from October 1, 1997 to March 30, 1998
and for the period from March 31, 1998 to September 30, 1998
and for years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Preferred
stock Common stock Sub-
------------------ ----------------- scription Addi-
Number Number receivable - tional Accu-
of of common paid-in mulated
shares Amount shares Amount stock capital deficit Total
------ ------ ------ ------ ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1995 160 $ 93,029 5,000,000 $5,000 - 3,557,788 (1,584,393) 2,071,424
Net loss - - - - - - (539,758) (539,758)
---- --------- --------- ------- -------- ---------- ----------- -----------
Balance at September 30, 1996 160 93,029 5,000,000 5,000 - 3,557,788 (2,124,151) 1,531,666
Net loss - - - - - - (720,923) (720,923)
---- --------- --------- ------- -------- ---------- ----------- -----------
Balance at September 30, 1997 160 93,029 5,000,000 5,000 - 3,557,788 (2,845,074) 810,743
Net loss through March 30, 1998 - - - - - - (200,652) (200,652)
---- --------- --------- ------- -------- ---------- ----------- -----------
Balance at March 30, 1998 160 93,029 5,000,000 5,000 - 3,557,788 (3,045,726) 610,091
Basis adjustment resulting
from Healthcare Merger
Company, Inc.'s acquisition
of Impacto's outstanding
shares - March 30, 1998 - - - - - (2,708,153) 3,045,726 337,573
Reverse acquisition of
CentraCan, Inc. -
May 20, 1998 - - 1,400,000 1,400 (3,800) 13,582 - 11,182
Receipt of common stock
subscription receivable - - - - 3,800 - - 3,800
Net loss - March 31, 1998
through September 30, 1998 - - - - - - (200,519) (200,519)
---- --------- --------- ------- -------- ---------- ----------- -----------
Balance at September 30, 1998 160 $ 93,029 6,400,000 $6,400 - 863,217 (200,519) 762,127
==== ======== ========= ======= ======== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Period Period
from from
October 1, March 31,
1997 to 1998 to
March 30, September 30,
1998 1998
---------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(200,652) (200,519)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 250,560 210,907
Gain loss on foreign currency translation (20,870) (9,715)
Deferred income taxes - 12,400
Increase (decrease) due to changes in:
Accounts receivable (22,060) 32,404
Prepaid expenses (6,884) (9,123)
Other assets 11,917 2,123
Accounts payable (7,666) 22,265
Accrued expenses 14,235 (16,424)
Other liabilities (18,511) (6,489)
--------- -----------
Net cash provided by
operating activities 69 37,829
--------- -----------
Cash flows from investing activities - purchase
of fixed assets (119) (11,198)
--------- -----------
Cash flows from financing activities:
Decrease in due to related parties - (13,711)
Proceeds from common stock issuances - 11,182
Receipt of common stock subscribed - 3,800
--------- -----------
Net cash provided by financing
activities - 1,271
--------- -----------
Effects of exchange rate changes on cash 7,007 162
--------- -----------
Increase in cash 6,957 28,064
Cash at beginning of period 5,123 12,080
--------- -----------
Cash at end of period $ 12,080 40,144
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
CENTRACAN, INC. AND SUBSIDIARY
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Consolidated Statements of Cash Flows
Years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(720,923) (539,758)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 510,223 504,689
(Gain) loss on foreign currency translation 91,023 (65,311)
Deferred income taxes - -
Increase (decrease) due to changes in:
Accounts receivable (20,333) 139,218
Prepaid expenses 7,650 (1,063)
Other assets (14,854) (1,149)
Accounts payable 46,634 42,628
Accrued expenses 5,888 17,198
Increase in due to related parties 233,338 -
Other liabilities (31,395) 67,895
--------- -----------
Net cash provided by
operating activities 107,251 164,347
--------- -----------
Cash flows from investing activities - purchase
of fixed assets (19,737) (285,496)
--------- -----------
Effects of exchange rate changes on cash (99,095) 132,299
--------- -----------
(Decrease) increase in cash (11,581) 11,150
Cash at beginning of year 16,704 5,554
--------- -----------
Cash at end of year $ 5,123 16,704
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-9
<PAGE>
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements
September 30, 1998 and 1997
(1) Summary of Significant Accounting Policies
Organization and Description of Business
Premier Supplements Corp. (Premier), a corporation organized under the
Florida State laws, was formed on March 21, 1997. It was engaged in the
distribution of vitamins and health products. The business was terminated in
December 1997 and from that point, until the acquisition described below,
was a public shell corporation. During 1998, the Articles of Incorporation
of Premier were amended to change its name to CentraCan, Inc. (CentraCan).
On May 20, 1998, CentraCan acquired all of the common outstanding shares of
Impacto International de Montes de OCA, S.A. (Impacto) (collectively the
Company) from Healthcare Merger Company, Inc. (HMC) by issuing 5 million
common shares to HMC. In accordance with Accounting Principles Board Opinion
(APB) No. 16, "Business Combinations," this transaction is accounted for as
a reverse acquisition, with Impacto designated as the accounting acquirer
and, accordingly, CentraCan's financial statements for periods prior to May
20, 1998 represent those of Impacto. CentraCan's operating results are
included in the consolidated financial statements herein from May 20, 1998
through September 30, 1998. On May 20, 1998, the deemed acquisition of
CentraCan was recognized by recording the fair value of CentraCan's tangible
net assets on that date (consisting solely of $11,182 in cash) with a
corresponding increase in equity. As a result of this transaction, HMC
obtained a 78% ownership interest in CentraCan.
The Company retained its name, CentraCan, subsequent to its acquisition of
Impacto.
On or before March 31, 1999 and following the effectiveness of CentraCan's
S-4 Registration Statement, CentraCan will acquire the remaining
subsidiaries of HMC in exchange for 7,200,000 common shares.
The Board of Directors of either HMC or CentraCan may terminate this planned
transaction under various circumstances, including the following:
(i) the acquisition is not completed by March 31, 1999; or
(ii) the other party breaches any of the representations and warranties
it made or fails to comply with any of its obligations under the
agreement.
(iii) the holders of no more than 10% of the outstanding shares of HMC
have exercised their appraisal rights; and
(iv) no law or court order prohibits the acquisition.
The Company provides radiology and magnetic resonance imaging services to
the local Costa Rican population.
New Basis of Accounting for Impacto
On March 31, 1998, the general and limited partners of 1994 Impact Partners,
L.P., Impacto's sole shareholder, participated in a transaction with HMC. As
a result of this transaction, the net assets of Impacto were revalued and
recorded at their estimated fair values. Accordingly, a new basis of
accounting for Impacto was created, and the accompanying consolidated
financial statements reflect this new basis of accounting for periods after
March 30, 1998. Therefore, the accompanying consolidated balance sheet,
statement of operations, stockholders' equity and cash flows for periods
after March 30, 1998 are not comparable to prior periods.
F-10
<PAGE>
2
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(1), Continued
Principles of Consolidation
The accompanying consolidated financial statements include the historical
financial statements for Impacto as of September 30, 1997 and for the years
ended September 30, 1997 and 1996. The September 30, 1998 consolidated
statement of operations includes the historical operations of Impacto for
the full 12-month period adjusted for the operations of CentraCan for the
period May 20, 1998 through September 30, 1998 (see note 1). The September
30, 1998 balance sheet includes the consolidated financial position of
Impacto and CentraCan. All intercompany transactions are eliminated.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities 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.
Revenue Recognition
Patient service revenue is reported at the estimated net realizable amounts
from patients and others for healthcare services rendered.
Fixed Assets
Fixed assets are stated at cost. Depreciation and amortization is computed
by the straight-line method over the estimated useful lives of the assets.
Leasehold improvements are amortized over the shorter of the lease term or
estimated useful life of the asset.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of the Financial Accounting Standards
Board's (FASB) Statement of Financial Accounting Standard (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of," on October 1, 1996. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value
less costs to sell. Adoption of this statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.
F-11
<PAGE>
3
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(1), Continued
Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Fair Value of Financial Instruments
Financial instruments are not held for trading purposes. The Company
estimates that the fair value of all financial instruments as of September
30, 1998 and 1997 does not differ materially from the aggregate carrying
values recorded in the consolidated financial statements. The estimated fair
value and, accordingly, the estimates, are not necessarily indicative of the
amounts that the Company could realize in a current market exchange.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but
does not require, companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to account
for stock-based compensation using the intrinsic value method prescribed in
APB No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee must pay to
acquire the stock.
Earnings (Loss) Per Share
Loss per share for all periods presented has been computed on the basis of
the weighted-average number of common shares outstanding.
F-12
<PAGE>
4
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(1), Continued
Translation of Foreign Currency
Foreign denominated assets and liabilities of the Company are translated
from local currency into U.S. dollars at the exchange rates in effect at the
end of the period. Revenues and expenses are translated at average exchange
rates prevailing during the period. The U.S. dollar is considered to be the
functional currency of the Company. Translation adjustments that arise from
translation of the Company's local currency to the U.S. dollar is included
in the consolidated statement of operations for the applicable period.
New Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information."
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income in financial statements. Comprehensive income is the
total of net income and all other nonowner changes in equity. SFAS No. 131
requires that companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance.
Adoption of these standards is not expected to materially impact the
Company's financial position or results of operations.
(2) Going Concern-Liquidity
The accompanying consolidated financial statements have been prepared on a
going-concern basis which contemplates the continuation of operations,
realization of assets and liquidation of liabilities in the ordinary course
of business. The Company's operations have not generated sufficient
operating cash flows to date necessary to support operating cash flow
requirements. The Company has incurred substantial losses since inception.
The Company incurred a net loss for the periods October 1, 1997 through
March 30, 1998 and March 31, 1998 through September 30, 1998 aggregating
$401,171 and, as of September 30, 1998 had a net working capital deficiency
of $197,275. The Company expects to incur additional operating losses in the
foreseeable future requiring additional funding to meet the necessary
operating cash flow requirements.
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
In addition, under Costa Rican law, the Company is expected to maintain a
minimum equity position, which is currently not maintained. These rules have
not been strictly enforced under Costa Rican law. There is no assurance that
such rules will not be more closely enforced in the future.
F-13
<PAGE>
5
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(2), Continued
Subsequent to September 30, 1998, the Company has raised approximately
$347,500 in a private placement of its equity through December 31, 1998 (see
note 9). Beyond this private offering, the Company has no binding
commitments from any third parties to provide funds to the Company. There
can be no assurance that the Company will be able to obtain financing from
any other sources on acceptable terms or at all. Management's plans for the
next 12 months include the sale of additional securities under appropriate
market conditions in both the private and public sectors, or other business
transactions which may generate sufficient resources to ensure continuation
of the Company's operations. However, no assurances can be given that the
Company will be successful in raising additional capital.
(3) Fixed Assets
Fixed assets as of September 30, 1998 and 1997 are detailed as follows:
<TABLE>
<CAPTION>
1998 1997 Useful lives
---- ---- ------------
<S> <C> <C> <C>
Medical equipment $782,708 1,378,283 3 years
Leasehold improvements 495,000 687,972 Life of lease
Furniture and office equipment 58,295 41,004 7 years
Vehicles - 39,634 3 years
---------- --------- ==============
1,336,003 2,146,893
Less accumulated depreciation 210,907 1,053,222
---------- ---------
$1,125,096 1,093,671
========== =========
</TABLE>
(4) Accrued Expenses and Other Liabilities
Accrued expenses represents social benefits, employer withholdings and
income tax withholdings. Other liabilities primarily consists of long-term
agreements with vendors for the purchase of equipment.
F-14
<PAGE>
6
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(5) Balances and Transactions with Related Parties
Balances and transactions with related parties as of September 30, 1998 and
1997 and for the three years ended September 30, 1998 are detailed as
follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Due from related party:
Centro de Biopsia Esteroto xica
y Mamografia S.A. $ 29,204 29,243
CALTKCO, S.A. 6,065 -
-------- -------
$ 35,269 29,243
======== =======
Due to related party:
Centro Medico Los Angeles
CENTRACAN, S.A. 3,148 -
Ventura Pacifica, S.A. 144,034 159,296
CALTKCO, S.A. 71,939 79,562
-------- -------
$219,121 238,858
======== =======
Years ended September 30
-----------------------------------
1998 1997 1996
---- ---- ----
Transaction - education and training expenses:
Ventura Pacifica, S.A. $ - 126,086 -
CALTKCO, S.A. - 136,594 -
------- ------- --------
$ - 262,680 -
======= ======= =======
</TABLE>
Ventura Pacifica, S.A. and CALTKCO, S.A. are external management companies
that managed Impacto's operations pursuant to a management contract. Amounts
due to Ventura Pacifica, S.A. and CALTKCO, S.A. correspond to commissions
calculated on total patient service revenue and for professional fees
charged for education, training and management assistance. Such fees were
contractually defined. Repayment terms have not been established. This
management agreement was terminated effective March 31, 1998.
F-15
<PAGE>
7
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(6) Preferred Stock
CentraCan is authorized to issue 10,000,000 shares of preferred stock with
such rights and preferences, and in such series, as the Board of Directors,
in its discretion, may, determine from time to time. CentraCan has not
designated any series of preferred stock as of September 30, 1998.
Authorized capital shares of Impacto include 500 shares of preferred stock
with a par value of $581.43 per share. The rights and preferences of
preferred stock are established by Impacto's board of directors upon
issuance. The preferred stock share preference is based on 10% participation
in all Impacto's equity rights, as well as annual dividends at a rate of 10%
on any profits that are distributed. At September 30, 1998 and 1997, 160
shares were issued and outstanding.
(7) Commitments and Contingencies
The Company rents certain space under various operating lease agreements.
The following is a schedule by years of future minimum lease payments under
noncancelable leases as of September 30, 1998:
1999 $19,800
2000 8,250
=======
The Company is party to an agreement (the Agreement) with Asociacion
Hospital Clinica Catolica de la Purisma Concepcion (the Clinic) which allows
the Company to operate a magnetic resonance imaging equipment facility on
the Clinic's property. The Agreement provides for the following:
o Base rental amounts while the Company occupies the property
o Additional rental of $40,000 payable in monthly installments of $3,344.
This amount increases to $60,000 annually if more than 20 exams per day
performed.
o The payment of a 3% commission based on revenue. The commission increases
to 5% when more than 20 exams per day are performed.
o The Company agrees to add improvements to the property which will be
occupied by the Clinic at the end of the Agreement.
o The Company will not compete with other medical services currently
provided by the Clinic.
In August 1998, the Agreement was renewed for an additional three-year
period from the original expiration date of November 1998. An additional
provision provides the Clinic with a three-month period to terminate the
Agreement if the Company does not make its scheduled payments.
Base payments under the Agreement as of September 30, 1998 are as follows:
1999 $59,800
2000 59,800
2001 59,800
=======
F-16
<PAGE>
8
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(7), Continued
Rent expense, including contingent rent and commissions under the Agreement
in 1998, 1997, and 1996 was as follows:
Rental Commissions
------ -----------
1998 $43,943 18,126
1997 31,710 16,944
1996 34,810 15,071
======= ======
Commitments - Employment Contract
Effective September 30, 1998, the Company entered into an agreement with the
President of Impacto (President) which expires September 30, 2003. Beginning
October 1, 1999, the agreement is cancelable by either the Company or the
President, with or without cause, within 90 days. This agreement will only
become effective upon the Company's successful completion of its S-4
Registration. The terms of the agreement include the following:
o Salary -- $180,000/year
o Housing/Auto allowance -- $30,000/year
o Bonus arrangements tied to the Company's financial performance
o Stock options tied to the Company's financial performance
o A non-compete agreement extending one year beyond any termination date
o Borrowing authority up to $150,000 from a local Costa Rican financial
institution. Such amounts will be guaranteed by CALTKCO, S.A., a related
party.
(8) Concentration of Risk
Credit risk is mitigated due to the fact that the Company has a diverse
customer base. No one customer accounted for more than 5% of the Company's
net sales in 1998, 1997 and 1996.
The Company does not have financial instruments potentially subject to
concentrations of credit risk.
F-17
<PAGE>
9
CENTRACAN, INC. AND SUBSIDIARIES
(A Majority-owned Subsidiary of
Healthcare Merger Company, Inc.)
Notes to Consolidated Financial Statements, Continued
(9) Income Taxes
The Company's net operating loss carryforwards from U.S. sources totaled
$79,844. The Company terminated its original business (see note 1) and,
accordingly, $50,301 of such net operating losses are not available to
offset future federal taxable income. The remaining net operating losses of
$29,543 are available to offset future taxable income, but the utilization
of such losses are limited due to the change in ownership of the Company.
The Company has provided a full valuation allowance of $10,044 against the
tax benefit derived from such tax loss carryforwards as the realization of
such losses is not considered likely.
Losses incurred by Impacto are incurred in Costa Rica and subject to Costa
Rican tax law. In accordance with Costa Rican tax law, no future benefit is
available to Impacto relating to net operating loss carryforwards.
In accordance with Costa Rican income tax regulations, Impacto is required
to file income tax returns for the 12-month periods ended September 30 of
each year.
According to the Law for Tax on Assets enacted in 1995, the individual Costa
Rican entities are required to file an annual tax on assets return. Tax on
assets is equivalent to 1% of the Company's total assets less deductions
established by regulation. Amounts paid for tax on assets may be used as an
income tax credit.
Deferred income tax expense relates to fixed asset temporary differences
computed at the Costa Rican income tax rate of 30%. At September 30, 1998
such temporary differences total approximately $523,000.
(10) Private Placement
Subsequent to September 30, 1998, the Company has sold, in a private
placement, 139,000 common shares at $2.50 per share for total proceeds of
$347,500. The sale of such securities is part of the Company's plan to sell
a total of 200,000 common shares at $2.50 per share in a private placement.
F-18
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
September 30, 1998
F-19
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Healthcare Merger Company, Inc.:
We have audited the accompanying consolidated balance sheet of Healthcare Merger
Company, Inc. and subsidiaries as of September 30, 1998, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the period from March 9, 1998 (date of inception) to September 30,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Healthcare Merger
Company, Inc. and subsidiaries as of September 30, 1998, and the results of
their operations and their cash flows for the period from March 9, 1998 (date of
inception) to September 30, 1998 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a net working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also discussed in note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ KPMG LLP
------------------------
January 4, 1999
New York, New York
F-20
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Consolidated Balance Sheet
September 30, 1998
Assets
Current assets:
Cash $ 48,730
Accounts receivable 83,185
Prepaid expenses 20,626
----------
Total current assets 152,541
Advances to Konstructiva, S.A. 385,260
Fixed assets, net 2,916,575
Other assets 12,500
----------
Total assets $3,466,876
==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 117,986
Accrued expenses 52,680
Due to related parties 288,789
Due to stockholders 120,000
----------
Total current liabilities 579,455
Deferred income taxes 171,000
Other liabilities 13,500
Minority interest 93,029
----------
Total liabilities 856,984
----------
Stockholders' equity:
Common stock, $.001 par value. Authorized 20,000,000
shares; issued and outstanding 12,200,000 shares 650
Additional paid-in capital 3,828,817
Accumulated deficit (1,219,575)
----------
Total stockholders' equity 2,609,892
Commitments and contingencies
----------
Total liabilities and stockholders' equity $3,466,876
==========
See accompanying notes to consolidated financial statements.
F-21
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statement of Operations
Period from March 9, 1998 (Date of Inception)
to September 30, 1998
Patient service revenue $ 361,291
----------
Operating expenses:
Salaries and benefits 122,276
Commissions 40,639
Professional fees 271,892
Supplies 39,553
Management fees, education and training 23,746
Rent 64,077
Other general and administrative 134,037
Depreciation and amortization 219,383
----------
Total operating expenses 915,603
----------
Loss from operations (554,312)
Minority interest in losses of majority-owned subsidiary 11,182
Foreign currency gain 54,892
Other income 6,959
----------
Loss before income taxes (481,279)
Income tax expense 17,000
----------
Net loss $(498,279)
==========
See accompanying notes to consolidated financial statements.
F-22
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
Period from March 9, 1998 (Date of Inception)
to September 30, 1998
<TABLE>
<CAPTION>
Sub-
Common stock scription
-------------------- receiv-
Number able Additional Accumu-
of common paid-in lated
shares Amount stock capital deficit Total
------ ------ ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 9, 1998
(date of inception) - $ - - - - -
---------- ---- -------- --------- ---------- ---------
Common shares issued in
transaction with Impacto,
Centro Medico and
Bioestermamografia -
March 31, 1998 12,200,000 650 (481,732) 3,828,817 (721,296) 2,626,439
Receipt of common stock
subscription receivable - - 481,732 - - 481,732
Net loss - - - - (498,279) (498,279)
---------- ---- -------- --------- ---------- ---------
Balance at September 30, 1998 12,200,000 $650 - 3,828,817 (1,219,575) 2,609,892
========== ==== ======== ========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Period from March 9, 1998 (Date of Inception)
to September 30, 1998
Cash flows from operating activities:
Net loss $ (498,279)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 219,383
Foreign currency (54,892)
Deferred income taxes 17,000
Increase (decrease) in cash due to changes in:
Accounts receivable 41,061
Prepaid expenses (14,068)
Other assets (3,214)
Accounts payable (20,287)
Accrued expenses 18,261
Other liabilities (6,927)
Minority interest (11,182)
----------
Net cash used in operating activities (313,144)
----------
Cash flows from investing activities:
Advances to Konstructiva (31,003)
Purchase of fixed assets (346,268)
----------
Net cash used in investing activities (377,271)
----------
Cash flows from financing activities:
Decrease in due to related parties (1,178)
Increase in due to stockholders 120,000
Receipt of common stock subscription receivable 481,732
----------
Net cash provided by financing activities 600,554
----------
Effect of exchange rate changes on cash 66,165
----------
Decrease in cash (23,696)
Cash at beginning of period 72,426
----------
Cash at end of period $ 48,730
==========
Supplemental schedule of noncash investing activities - stock
issued in exchange for the common ownership interests of
Impacto and Bioestermamografia at acquisition date $1,025,517
==========
See accompanying notes to consolidated financial statements.
F-24
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(1) Organization and Principles of Consolidation
Healthcare Merger Company, Inc. (HMC or the Company) was formed on March 9,
1998. On March 31, 1998, the Company entered into a transaction with the
general and limited partners of 1994 Impact Partners, L.P., a U.S. limited
partnership (the shareholder of Impacto International de Montes de Oca,
S.A.), Radiation Oncology Partners, L.P. (the Partnership), a U.S. limited
partnership (the shareholder of Centro Medico Los Angeles CENTRACAN, S.A.),
and the shareholders of Centro de Biopsia Esterotaxica y Mamografia, S.A.
(Bioestermamografia). The transaction resulted in HMC exchanging 12,200,000
common shares for all of the outstanding general and limited partnership
interests of 1994 Impact Partners, L.P. and the Partnership, as well as 90%
of the common equity of Bioestermamografia. Specifically, the limited and
general partners of 1994 Impact Partners, L.P. and the Partnership received
one share of HMC common stock for each unit of interest in the respective
partnerships. Each Bioestermamografia shareholder who exchanged their
shares, received one share of HMC common stock.
The U.S. limited partnerships, 1994 Impact Partners, L.P. and the
Partnership were dissolved at the date of the aforementioned transaction.
In connection with the HMC transaction, Centro Medico has been designated
the accounting acquirer in accordance with SEC Staff Bulletin No. 97
(SAB 97), which states that the combining company receiving the largest
portion of voting rights in the combined corporation is presumed to be the
acquirer for accounting purposes unless other evidence clearly indicates
that another company is the acquirer. In this transaction, the shareholders
of Centro Medico, Impacto Internacional de Montes de Oca, S.A. (Impacto) and
Bioestermamografia received 7 million, 5 million and 200,000 common shares
of HMC, respectively.
The transaction was accounted for using the purchase method in accordance
with Accounting Principles Board Opinion No. 16. Accordingly, Centro
Medico's financial statements are included at historical value and the
financial statements of Impacto and Bioestermamografia are included at their
respective March 31, 1998 fair values.
The fair value of the acquired assets and liabilities assumed is summarized
as follows:
<TABLE>
<CAPTION>
Impacto Bioestermamografia
------- ------------------
<S> <C> <C>
Current assets $ 124,877 2,966
Fixed assets 1,324,805 171,000
Current liabilities 350,870 111,424
Long-term liabilities 13,475 6,952
---------- -------
Net asset value $1,085,337 55,590
========== =======
</TABLE>
Costs relating to the HMC transaction amounted to $67,000 and are included
in professional fees in the accompanying statement of operations.
F-25
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), Continued
The consolidated financial statements include the accounts of Impacto,
Centro Medico and Bioestermamografia for the period from March 31, 1998 to
September 30, 1998. As further described in note 13, the common shares of
Impacto were exchanged for a 78% interest in CentraCan, Inc. (CentraCan), a
U.S. public shell corporation in a transaction in which Impacto was deemed
the accounting acquirer. As a result of this exchange, HMC obtained a 78%
interest in CentraCan and, accordingly, consolidates CentraCan's accounts
from May 20, 1998 through September 30, 1998. All intercompany transactions
are eliminated.
The Company is engaged in the development and operation of health care
facilities and the delivery of health care services. The Company's
operations are located in Costa Rica. The Company owns and operates a
magnetic resonance imaging facility; a cancer center that houses two x-ray
linear accelerators and associated treatment computers; and a clinic that
provides ultrasound, mammography and stereotactic biopsy diagnostic
services.
(2) Going Concern-Liquidity
The accompanying consolidated financial statements have been prepared on a
going-concern basis which contemplates the continuation of operations,
realization of assets and liquidation of liabilities in the ordinary course
of business. HMC's operations have not generated sufficient operating cash
flows to date necessary to support operating cash flow requirements. The
Company has incurred substantial losses since inception. The Company
incurred a net loss for the period from March 9, 1998 (date of inception) to
September 30, 1998 of $498,279, and as of September 30, 1998 had a net
working capital deficiency of $426,914. The Company expects to incur
additional operating losses for the foreseeable future requiring further
funding to meet the necessary operating cash flow requirements.
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
In addition, under Costa Rican law, the Company's wholly-owned subsidiaries
are expected to maintain certain minimum equity positions which are
currently not maintained. These rules have not been strictly enforced under
Costa Rican law; however, there is no assurance that such rules will not be
more closely enforced in the future.
Management's plans for the next 12 months include the sale of additional
securities under appropriate market conditions in the private sector, the
successful "start-up" of a cancer treatment facility, or other business
transactions which may generate sufficient resources to ensure continuation
of the Company's operations. However, no assurances can be given that the
Company will be successful in raising additional capital, starting up its
cancer treatment facility, or entering into other business transactions.
F-26
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3) Significant Accounting Policies
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
Revenue Recognition
Patient service revenue is reported at the estimated net realizable amounts
from patients and others for services rendered.
Fixed Assets
Fixed assets are stated at cost. Depreciation and amortization is calculated
using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized over the shorter of the lease
term or estimated useful life of the asset.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Financial Accounting Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Disposed of," requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets.
F-27
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(3), Continued
Deferred Income Taxes
Deferred income taxes are accounted for using the asset and liability
method. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Translation of Foreign Currencies
Foreign denominated assets and liabilities of the Company are translated
from local currencies into U.S. dollars at the exchange rates in effect at
the end of the period. Revenues and expenses are translated at average
exchange rates prevailing during the period. The U.S. dollar is considered
to be the functional currency of the Company and its subsidiaries.
Translation adjustments that arise from translation of the Company and its
subsidiaries' local currency to the U.S. dollar are included in the
consolidated statement of operations.
New Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information."
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income in the financial statements. Comprehensive income is
the total of net income and all other nonowner changes in equity. SFAS No.
131 requires that companies disclose segment data based on how management
makes decisions about allocating resources to segments and measuring their
performance. SFAS Nos. 130 and 131 are effective for fiscal years beginning
after December 15, 1997.
Adoption of these standards is not expected to materially impact the
Company's financial position or results of operations.
(4) Advances to Konstructiva, S.A.
On June 27, 1997, Centro Medico entered into a contract with Konstructiva,
S.A. for the construction of medical premises. As of September 30, 1998,
$385,260 had been advanced as payment for the project. As the project is
completed, the advances will be capitalized as part of fixed assets.
F-28
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5) Fixed Assets
Fixed assets are detailed as follows:
Useful lives
------------
Land $ 447,304 -
Medical equipment 1,933,869 3 years
Leasehold improvements 502,542 Life of lease
Furniture 65,891 7 years
=============
Construction in progress 186,352
----------
3,135,958
Less accumulated depreciation 219,383
----------
$2,916,575
==========
(6) Accrued Expenses
Accrued expenses primarily represents social benefits, employer withholdings
and income tax withholdings.
(7) Balances and Transactions with Related Parties and Stockholders
Balances and transactions with related parties and stockholders are detailed
as follows:
Due to related parties:
Management fees and commissions:
Ventura Pacifica, S.A. $177,650
CAL TKCO, S.A. 81,139
--------
258,789
Working capital advances:
Ventura Pacifica, S.A. 10,000
Jonathan Stewart 10,000
CAL TKCO, S.A. 10,000
--------
$288,789
========
Transactions - education - Ventura Pacifica, S.A. $ 23,746
========
Due to stockholders $120,000
========
F-29
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(7), Continued
Included in fixed assets are assets purchased from a Company whose President
and CEO is the President of Impacto, Centro Medico and Bioestermamografia
and a director of CentraCan. Amounts purchased for the period March 9,
1998 to September 30, 1998 totaled approximately $340,000.
Amounts due to related parties for management fees and commissions
correspond to commissions calculated on the total income of the Company for
professional fees charged for education and management assistance provided
by these companies. Such fees are contractually defined. Repayment terms
have not been established. The management contract with Ventura Pacifica,
S.A. was terminated effective March 31, 1998.
Amounts due to stockholders are for working capital purposes. Working
capital advances are noninterest bearing.
(8) Minority Interest-Impacto Preferred Shares
The authorized capital shares of Impacto also includes 500 shares of
preferred stock with a par value of $581.43. The rights and preferences of
preferred stock are established by Impacto's board of directors upon
issuance. The preferred stock share preference is based on 10% participation
in all Impacto's equity rights, as well as annual dividends at a rate of 10%
on any profits that are distributed. At September 30, 1998, 160 shares were
issued and outstanding. Such issued and outstanding preferred stock,
totaling $93,029, is reflected as minority interests in the accompanying
consolidated balance sheet.
(9) Common Stock Subscribed
Centro Medico was organized and capitalized in 1996 with the issuance of 100
shares of common stock. Its shareholder, the Partnership, had not yet paid
in all of the committed capital amounts. Accordingly, such amounts were
contributed as the Partnership raised money. Such amounts are classified as
common stock subscribed and, accordingly, as a reduction of shareholders'
equity. At September 30, 1998, all such amounts were received.
(10) Commitments and Contingencies
The Company rents certain space under various operating lease agreements.
The following is a schedule by years of future minimum lease payments under
noncancelable leases as of September 30, 1998:
1999 $19,800
2000 8,250
=======
The Company is party to an agreement (the Agreement) with Asociacion
Hospital Clinica Catolica de la Purisma Concepcion (the Clinic) which allows
the Company to operate a magnetic resonance imaging equipment facility on
the Clinic's property. The Agreement provides for the following:
o Base rental amounts while the Company occupies the property.
o Additional rental of $40,000 payable in monthly installments of $3,344.
This amount increases to $60,000 annually if more than 20 exams per day
are performed.
o The payment of a 3% commission based on revenue. The commission increases
to 5% when more than 20 exams per day are performed.
o The Company agreed to add improvements to the property which will be
occupied by the Clinic at the end of the Agreement.
F-30
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10), Continued
o The Company will not compete with other medical services currently
provided by the Clinic.
In August 1998, the Agreement was renewed for an additional three-year
period from the original expiration date of November 1998. An additional
clause provides the Clinic with a three-month period to terminate the
Agreement if the Company does not make its scheduled payments.
Future base payments under the Agreement as of September 30, 1998 are as
follows:
1999 $59,800
2000 59,800
2001 59,800
=======
Rent expense, including contingent rent and commissions under the Agreement
for the period March 9, 1998 (date of inception) to September 30, 1998 was
as follows:
Rental Commissions
------ -----------
$ 25,600 $ 10,500
========= =========
(11) Concentration of Risk
Credit risk is mitigated due to the fact that the Company has a diverse
customer base. No one customer accounted for more than 5% of the Company's
net sales in 1998.
The Company does not have financial instruments potentially subject to
concentrations of credit risk.
(12) Income Taxes
In connection with the transaction described in note 1, Impacto and
Bioestermamografia recorded their respective fixed assets at fair value
which exceeded the tax basis for such assets. Accordingly, the Company
recorded a deferred tax liability totaling $154,000 representing the tax
effect of this temporary difference.
F-31
<PAGE>
HEALTHCARE MERGER COMPANY, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(12), Continued
The Company's subsidiaries operate in Costa Rica. Accordingly, they file
individual tax returns under Costa Rican tax law. In accordance with Costa
Rican income tax regulations, the Company is required to file income tax
returns for the 12-month period ended September 30 of each year. No tax
benefit exists for any losses generated by the Costa Rican subsidiaries
prior to March 31, 1998. Such losses are subject to Costa Rican tax law,
which does not provide for the carryforward of such losses, except for
certain types of businesses.
According to the Law for Tax on Assets enacted in 1995, the Company is
required to file an annual tax on assets return. Tax on assets is
equivalent to 1% of the Company's total assets less deductions established
by regulation. Amounts paid for tax on assets may be used as an income tax
credit.
Deferred income tax expense relates to the fixed assets basis difference
computed at the Costa Rican income tax rate of 30%. At September 30, 1998
such temporary difference totals $570,000.
(13) Exchange of Impacto Shares
On May 20, 1998, HMC exchanged all of its common ownership interest in its
wholly-owned subsidiary, Impacto, for a 78% ownership interest in
CentraCan. In this exchange, HMC received 5 million CentraCan common
shares. Accordingly, the accompanying consolidated financial statements
include the accounts of CentraCan for the period from May 20, 1998 through
September 30, 1998. In connection with this exchange, HMC recorded a
minority interest of $11,182 representing CentraCan's tangible net assets
which consisted entirely of cash at May 20, 1998. This minority interest of
$11,182 was completely absorbed in recognizing the equity in losses of the
minority interest in CentraCan through September 30, 1998. The Company's
consolidated statement of operations reflects 100% of all losses in excess
of such minority interests.
F-32
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Combined Financial Statements
March 30, 1998 and September 30, 1997 and 1996
(With Independent Auditors' Report Thereon)
F-33
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Impacto Internacional de Montes de Oca, S.A.
Centro Medico Los Angeles CENTRACAN, S.A.
Centro de Biopsia Esterotaxica y Mamografia, S.A.:
We have audited the accompanying combined balance sheets of Impacto
Internacional de Montes de Oca, S.A., Centro Medico Los Angeles CENTRACAN, S.A.,
and Centro de Biopsia Esterotaxica y Mamografia, S.A. as of March 30, 1998 and
September 30, 1997 and 1996, and the related combined statements of operations,
changes in stockholders' equity, and cash flows for the period from October 1,
1997 to March 30, 1998 and for each of the years in the two-year period ended
September 30, 1997. These combined financial statements are the responsibility
of the companies' management. Our responsibility is to express an opinion on
these combined financial statements based on our audits.
We conducted our audits in accordance with United States 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the companies as of
March 30, 1998 and September 30, 1997 and 1996, and the results of their
operations and their cash flows for the period from October 1, 1997 to March 30,
1998 and for each of the years in the two-year period ended September 30, 1997
in conformity with United States generally accepted accounting principles.
The accompanying combined financial statements have been prepared assuming the
companies will continue as going concerns. As discussed in note 2 to the
combined financial statements, the companies have suffered recurring losses from
operations and have a net working capital deficiency that raise substantial
doubt about their ability to continue as going concerns. Management's plans in
regard to this matter are also discussed in note 2. The combined financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ KPMG Peat Marwick
-----------------------
November 27, 1998
San Jose, Costa Rica
F-34
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Combined Balance Sheets
March 30, 1998 and September 30, 1997 and 1996
<TABLE>
<CAPTION>
Assets 1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current assets:
Cash $ 72,426 24,899 46,670
Accounts receivable 124,246 62,821 38,989
Prepaid expenses 6,558 - 8,526
---------- ---------- ----------
Total current assets 203,230 87,720 94,185
Advances to Konstructiva, S.A. 354,257 261,056 -
Fixed assets, net 2,274,334 2,043,313 2,483,798
Other assets 9,286 22,266 6,550
---------- ---------- ----------
Total assets $2,841,107 2,414,355 2,584,533
========== ========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 138,182 104,510 51,577
Accrued expenses 34,419 37,488 22,510
Due to related parties 289,967 302,502 20,000
---------- ---------- ----------
Total current liabilities 462,568 444,500 94,087
Other liabilities 20,426 42,878 69,894
---------- ---------- ----------
Total liabilities 482,994 487,378 163,981
---------- ---------- ----------
Stockholders' equity:
Impacto:
Preferred stock, $581.43 par value. Authorized 500 shares;
160 shares issued and outstanding 93,029 93,029 93,029
Common stock, $66.45 par value. Authorized,
issued and outstanding 12,120 shares 805,374 805,374 805,374
Additional paid-in capital 2,757,414 2,757,414 2,757,414
Centro Medico:
Common stock, $6.50 par value. Authorized,
issued and outstanding 100 shares 650 650 650
Subscription receivable - common stock (481,732) (1,446,376) (1,973,850)
Additional paid-in capital 2,927,423 2,927,423 2,927,423
Bioestermamografia:
Common stock, $.0273 par value. Authorized,
issued and outstanding 20,000 shares 547 547 547
Additional paid-in capital 200,899 200,899 200,899
Accumulated deficit (3,945,491) (3,411,983) (2,390,934)
---------- ---------- ----------
Total stockholders' equity 2,358,113 1,926,977 2,420,552
Commitments and contingencies
---------- ---------- ----------
Total liabilities and stockholders' equity $2,841,107 2,414,355 2,584,533
========== ========== ==========
</TABLE>
See accompanying notes to combined financial statements.
F-35
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Combined Statements of Operations
Period from October 1, 1997 to March 30, 1998
and Years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ---------- ---------
Patient service revenue $ 390,761 718,881 442,352
------------ ---------- ---------
<S> <C> <C> <C>
Operating expenses:
Salaries and benefits 102,184 204,738 138,685
Commissions 38,799 110,604 195,530
Professional fees 183,369 191,314 158,417
Supplies 51,577 33,469 44,737
Management fees, education and training 89,930 296,365 -
Rent 27,443 60,293 52,227
Other general and administrative 110,256 194,717 204,078
Depreciation and amortization 274,416 557,887 522,388
------------ ---------- ---------
Total operating expenses 877,974 1,649,387 1,316,062
------------ ---------- ---------
Loss from operations (487,213) (930,506) (873,710)
Other expenses (income) 24,007 (11,390) (4,318)
Foreign currency losses (gains) 22,288 101,933 (62,851)
------------ ---------- ---------
Net loss $ (533,508) (1,021,049) (806,541)
============ ========== =========
</TABLE>
See accompanying notes to combined financial statements.
F-36
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Combined Statements of Changes in Stockholders' Equity
Period from October 1, 1997 to March 30, 1998
and Years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Preferred stock Common stock
---------------------- -----------------------
Number Number
of of
shares Amount shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Impacto:
Balance at September 30, 1995 160 $ 93,029 12,120 $805,374
Net loss - - - -
--- -------- ------ --------
Balance at September 30, 1996 160 93,029 12,120 805,374
Net loss - - - -
--- -------- ------ --------
Balance at September 30, 1997 160 93,029 12,120 805,374
Net loss - - - -
--- -------- ------ --------
Balance at March 30, 1998 160 $ 93,029 12,120 $805,374
=== ======== ====== ========
Centro Medico:
Balance at September 30, 1995 - - - -
Issuance of common stock - - 100 650
Subscription receivable - - - -
Net loss - - -
--- -------- ------ --------
Balance at September 30, 1996 - - 100 650
Receipt of common stock subscription receivable - - - -
Net loss - - -
--- -------- ------ --------
Balance at September 30, 1997 - 100 650
Receipt of common stock subscription receivable - - - -
Net loss - - - -
--- -------- ------ --------
Balance at March 30, 1998 - $ - 100 $ 650
=== ======== ====== ========
Bioestermamografia:
Balance at September 30, 1995 - - - -
Issuance of common stock - - 20,000 547
Net loss - - -
--- -------- ------ --------
Balance at September 30, 1996 - - 20,000 547
Net loss - - - -
--- -------- ------ --------
Balance at September 30, 1997 - - 20,000 547
Net loss - - - -
--- -------- ------ --------
Balance at March 30, 1998 - $ - 20,000 $ 547
=== ======== ====== ========
</TABLE>
See accompanying notes to combined financial statements.
F-37
<PAGE>
[RESTUBED TABLE FOR ABOVE
<TABLE>
<CAPTION>
Subscription Addi-
receivable - tional Accu-
common paid-in mulated
stock capital deficit
----- ------- -------
<S> <C> <C> <C>
Impacto:
Balance at September 30, 1995 - 2,757,414 (1,584,393)
Net loss - - (539,758)
---------- --------- -----------
Balance at September 30, 1996 - 2,757,414 (2,124,151)
Net loss - - (720,923)
---------- --------- -----------
Balance at September 30, 1997 - 2,757,414 (2,845,074)
Net loss - - (200,652)
---------- --------- -----------
Balance at March 30, 1998 - 2,757,414 (3,045,726)
========== ========= ===========
Centro Medico:
Balance at September 30, 1995 - - -
Issuance of common stock - 2,927,423 -
Subscription receivable (1,973,850) - -
Net loss - - (226,364)
---------- --------- -----------
Balance at September 30, 1996 (1,973,850) 2,927,423 (226,364)
Receipt of common stock subscription receivable 527,474 - -
Net loss - - (200,329)
---------- --------- -----------
Balance at September 30, 1997 (1,446,376) 2,927,423 (426,693)
Receipt of common stock subscription receivable 964,644 - -
Net loss - - (294,603)
---------- --------- -----------
Balance at March 30, 1998 (481,732) 2,927,423 (721,296)
========== ========= ===========
Bioestermamografia:
Balance at September 30, 1995 - - -
Issuance of common stock - 200,899 -
Net loss - - (40,419)
---------- --------- -----------
Balance at September 30, 1996 - 200,899 (40,419)
Net loss - - (99,797)
---------- --------- -----------
Balance at September 30, 1997 - 200,899 (140,216)
Net loss - - (38,253)
---------- --------- -----------
Balance at March 30, 1998 - 200,899 (178,469)
========== ========= ===========
$(3,945,491)
===========
</TABLE>
F-38
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Combined Statements of Cash Flows
Period from October 1, 1997 to March 30, 1998
and Years ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(533,508) (1,021,049) (806,541)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 274,416 557,887 522,388
Loss (gain) on foreign currency translation 22,288 101,933 (62,851)
Increase (decrease) in cash due to changes in:
Accounts receivable (61,425) (21,990) 155,711
Prepaid expenses (6,558) 7,650 (1,063)
Other assets 12,980 (15,716) (4,310)
Accounts payable 33,670 47,259 50,017
Accrued expenses (3,069) 22,150 17,198
Other liabilities (22,450) (15,278) 67,994
--------- ---------- ----------
Net cash used in operating
activities (283,656) (337,143) (61,457)
--------- ---------- ----------
Cash flows from investing activities:
Purchase of fixed assets (505,437) (117,404) (1,202,935)
Advances to Konstructiva (93,201) (256,529) -
--------- ---------- ----------
Net cash used in investing
activities (598,638) (373,933) (1,202,935)
--------- ---------- ----------
Cash flows from financing activities:
Proceeds from common stock issued - - 1,155,669
Receipt of common stock subscription receivable 964,644 527,474 -
(Decrease) increase in due to related parties (12,535) 281,064 20,000
--------- ---------- ----------
Net cash provided by financing
activities 952,109 808,538 1,175,669
--------- ---------- ----------
Effects of exchange rate changes on cash (21,988) (119,233) 129,839
--------- ---------- ----------
Increase (decrease) in cash 47,827 (21,771) 41,116
Cash at beginning of year 24,899 46,670 5,554
--------- ---------- ----------
Cash at end of period $ 72,726 24,899 46,670
========= ========== ==========
</TABLE>
Supplementary disclosure - the combined companies had outstanding at September
30, 1996 $1,973,850 of common stock subscribed, representing capital not yet
received from a combined companies' principal shareholder, Radiation Oncology
Partners L.P.
See accompanying notes to combined financial statements.
F-39
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements
March 30, 1998 and September 30, 1997 and 1996
(1) Summary of Significant Accounting Policies
Principles of Combination
The combined financial statements include the accounts of Impacto
Internacional de Montes de Oca, S.A. (Impacto), Centro Medico Los Angeles
CENTRACAN, S.A. (Centro Medico) and Centro de Biopsia Esterotaxica y
Mamografia, S.A. (Bioestermamografia) (collectively referred to as the
Company). All significant intercompany balances and transactions have been
eliminated in combination.
Organization and Description of Business
Impacto provides radiology and magnetic resonance imaging medical services
to the local Costa Rican population.
The shareholder of Impacto is 1994 Impact Partners, L.P., a U.S. limited
partnership. 1994 Impact Partners, L.P. was formed in 1994 to finance the
construction and operation of the principal operations of Impacto. The
general partners of 1994 Impact Partners L.P. are Ventura Pacifica, S.A. and
CAL TKCO, S.A. Ventura Pacifica, S.A. is also responsible for managing the
operations of Impacto.
Centro Medico is constructing a cancer treatment center which, when
completed, will provide cancer treatment to the local Costa Rican
population.
The shareholder of Centro Medico is Radiation Oncology Partners L.P. (the
Partnership), a U.S. limited partnership. The Partnership was formed in 1996
to provide financing to Centro Medico to purchase x-ray linear accelerators
as well as associated treatment equipment for radiation therapy. The general
partners of the Partnership are Ventura Pacifica, S.A. and CAL TKCO, S.A.
Ventura Pacifica, S.A. is also responsible for managing the operations of
Centro Medico.
Bioestermamografia provides ultrasound and other imaging treatments to the
local Costa Rican population.
Bioestermamografia was formed in 1996 to finance the construction and
operation of a stand-alone ultrasound, mammography and stereotactic biopsy
clinic. The principal shareholders of Bioestermamografia are Ventura
Pacifica, S.A. (30%), CAL TKCO, S.A. (30%) and Jonathon Stewart (30%). The
facility is managed and operated by Ventura Pacifica, S.A.
F-40
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(1), Continued
As noted above, Ventura Pacific, S.A. and CAL TKCO, S.A. are general
partners for the two U.S. limited partnerships and principal shareholders of
Bioestermamografia. Ventura Pacifica, S.A. also manages all three entities
in accordance with management agreements currently in place. The
accompanying financial statements are presented on a combined basis because
the combining entities are under common management as a result of the
management agreements with Ventura Pacifica, S.A.
Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these combined financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
Revenue Recognition
Patient service revenue is reported at the estimated net realizable amounts
from patients and others for health care services rendered.
Fixed Assets
Fixed assets are stated at cost. Depreciation and amortization is computed
using the straight-line method over the estimated useful lives of the
assets. Leasehold improvements are amortized over the shorter of the lease
term or estimated useful life of the asset.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Disposed of," on October 1, 1996. This statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. Adoption of this statement did not have a
material impact on the Company's financial position, results of operations,
or liquidity.
F-41
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(1), Continued
Preferred Stock
The authorized capital shares of Impacto also includes 500 shares of
preferred stock with a par value of $581.43. The rights and preferences of
preferred stock are established by Impacto's board of directors upon
issuance. The preferred stock share preference is based on 10% participation
in all Impacto's equity rights, as well as annual dividends at a rate of 10%
on any profits that are distributed. At September 30, 1998 and 1997 160
shares were issued and outstanding.
Income Taxes
Income taxes are accounted for using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
Translation of Foreign Currencies
Foreign denominated assets and liabilities of the Company are translated
from local currencies into U.S. dollars at the exchange rates in effect at
the end of the period. Revenues and expenses are translated at average
exchange rates prevailing during the period. The U.S. dollar is considered
to be the functional currency of the Company. Translation adjustments that
arise from translation of the Company's local currency to the U.S. dollar is
included in the combined statement of operations for the applicable period.
(2) Going Concern-Liquidity
The accompanying combined financial statements have been prepared on a
going-concern basis which contemplates the continuation of operations,
realization of assets and liquidation of liabilities in the ordinary course
of business. The Company's operations have not generated sufficient
operating cash flows to date necessary to support operating cash flow
requirements. The Company has incurred substantial losses since inception
and expects that losses will continue in the foreseeable future requiring
additional operating cash resources. The Company incurred a net loss for the
period from October 1, 1997 to March 30, 1998 and the years ended September
30, 1997 and 1996 of $533,508, $1,021,049 and $806,541, respectively. As of
March 30, 1998, the Company had a net working capital deficiency of
$259,338.
F-42
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(2), Continued
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
In addition, under Costa Rican law, the Company is expected to maintain
certain minimum equity positions which are currently not maintained. These
rules have not been strictly enforced under Costa Rican law. There is no
assurance that such rules will not be more closely enforced in the future.
Management's plans for the next 12 months include the sale of additional
securities under appropriate market conditions in the private sector, the
successful "start-up" of cancer treatment facilities, or other business
transactions which may generate sufficient resources to ensure continuation
of the Company's operations. However, no assurances can be given that the
Company will be successful in raising additional capital, commencing its
cancer treatment facilities, or entering into other business transactions.
(3) Advances to Konstructiva, S.A.
On June 27, 1997, Centro Medico entered into a contract with Konstructiva,
S.A. for the construction of medical premises. As of March 30, 1998,
$354,257 had been advanced as payment for the project. As the project is
completed, the advances will be capitalized as part of fixed assets.
(4) Fixed Assets
Fixed assets as of March 30, 1998 and September 30, 1997 and 1996 are
detailed as follows:
<TABLE>
<CAPTION>
September 30
March 30, --------------------------
1998 1997 1996 Useful lives
---- ---- ---- ------------
<S> <C> <C> <C> <C>
Land $ 447,304 447,304 447,304 -
Medical equipment 2,225,622 1,722,895 1,653,371 5 years
Leasehold improvements 717,529 717,529 715,701 Life of lease
Furniture 49,838 47,789 44,691 10 years
Office equipment 2,989 2,328 - 10 years
Vehicles 39,634 39,634 25,411 3 years
=============
Construction in progress 184,422 184,422 158,021
---------- --------- ---------
3,667,338 3,161,901 3,044,499
Less accumulated
depreciation 1,393,004 1,118,588 560,701
---------- --------- ---------
$2,274,334 2,043,313 2,483,798
========== ========= =========
</TABLE>
F-43
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(5) Accrued Expenses and Other Liabilities
Accrued expenses represents social benefits, employer withholdings and
income tax withholdings. Other liabilities primarily consists of long-term
agreements with vendors for the purchase of equipment.
(6) Balances and Transactions with Related Parties
Balances and transactions with related parties as of March 30, 1998 and
September 30, 1997 and 1996 and for the period from October 1, 1997 to March
30, 1998 and the years ended September 30, 1997 and 1996 are detailed as
follows:
<TABLE>
<CAPTION>
September 30
March 30, ------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Due to related parties:
Commissions and fees:
Ventura Pacifica, S.A. $177,650 186,242 -
CALTKCO, S.A. 82,317 86,260 -
-------- ------- ------
259,967 272,502 -
-------- ------- ------
Working capital advances:
Ventura Pacifica, S.A. 10,000 10,000 10,000
Jonathan Stewart 10,000 10,000 10,000
CAL TKCO, S.A. 10,000 10,000 -
-------- ------- ------
30,000 30,000 20,000
-------- ------- ------
$289,967 302,502 20,000
======== ======= ======
Period from
October 1,
1997 Years ended
to September 30
March 30, --------------------
1998 1997 1996
---- ---- ----
Transactions:
Education and training expenses:
Ventura Pacifica, S.A. - 132,823 -
CAL TKCO, S.A. - 136,594 -
Management fees:
Ventura Pacifica, S.A. 89,930 20,211 -
CAL TKCO, S.A. - 6,737 -
-------- ------- ------
$ 89,930 296,365 -
======== ======= ======
</TABLE>
F-44
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(6), Continued
Included in fixed assets are assets purchased from a Company whose President
and CEO is the President of the Combined Companies. Amounts purchased for
the period October 1, 1997 through March 30, 1998 totaled approximately
$500,000.
Amounts due to related parties are due to Ventura Pacifica, S.A. and CAL
TKCO, S.A., external management companies that managed Impacto's operations
pursuant to a management contract. Amounts due correspond to commissions
calculated on total patient service revenue for professional fees charged
for education, training and management assistance provided thereby. Such
fees are contractually defined. Repayment terms have not been established.
The management agreement was terminated effective March 31, 1998. Working
capital advances are noninterest bearing.
Effective March 31, 1998, Ventura Pacifica, S.A. and CAL TKCO, S.A. agreed
to terminate substantially all education, training and management fees to
the Company.
(7) Common Stock Subscribed
Centro Medico was organized and capitalized in 1996 with the issuance of 100
shares of common stock. Its shareholder, the Partnership, had not yet paid
in all of the committed capital amounts. Accordingly, such amounts were
contributed as the Partnership raised money. Such amounts are classified as
common stock subscribed and, accordingly, as a reduction of shareholders'
equity. At March 30, 1998, such amounts amounted to $481,732. Such amounts
were subsequently paid.
(8) Commitments and Contingencies
The Company rents certain space under various operating lease agreements.
The following is a schedule by years of future minimum lease payments under
noncancelable leases as of March 30, 1998:
1999 $9,800
2000 18,150
======
The Company is party to an agreement (the Agreement) with Asociacion
Hospital Clinica Catolica de la Purisma Concepcion (the Clinic) which allows
the Company to operate a magnetic resonance imaging equipment facility on
the Clinic's property. The Agreement provides for the following:
o Base rental amounts while the Company occupies the property.
o Additional rental of $40,000 payable in monthly installments of $3,344.
This amount increases to $60,000 annually if more than 20 exams per day
are performed.
F-45
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(8), Continued
o The payment of a 3% commission based on revenue. The commission increases
to 5% when more than 20 exams per day are performed.
o The Company agreed to add improvements to the property which will be
occupied by the Clinic at the end of the Agreement.
o The Company will donate certain mammography equipment to the Clinic at the
end of the Agreement.
Future base payments under the Agreement as of March 30, 1998 are as
follows:
1999 $59,800
2000 48,250
=======
In August 1998, the Agreement was renewed for an additional three-year
period from the original expiration date of November 1998. An additional
clause provides the Clinic with a three-month period to terminate the
Agreement if the Company does not make its scheduled payments.
Rent expense, including contingent rent and commissions under the Agreement
for the period October 1, 1997 to March 30, 1998 and the years ended
September 30, 1997 and 1996 was as follows:
Rental Commissions
------ -----------
March 30, 1998 $22,000 9,100
September 30, 1997 31,710 16,944
September 30, 1996 34,810 15,071
======= ======
(9) Concentration of Risk
Credit risk is mitigated due to the fact that the Company has a diverse
customer base. No one customer accounted for more than 5% of the Company's
net sales for the period October 1, 1997 to March 30, 1998 and the years
ended September 30, 1997 and 1996.
The Company does not have financial instruments potentially subject to
concentrations of credit risk.
F-46
<PAGE>
IMPACTO INTERNACIONAL DE MONTES DE OCA, S.A.
CENTRO MEDICO LOS ANGELES CENTRACAN, S.A.
CENTRO DE BIOPSIA ESTEROTAXICA Y MAMOGRAFIA, S.A.
Notes to Combined Financial Statements Continued
(10) Income Taxes
In accordance with Costa Rican tax law, no future benefit is available to
the Company relating to net operating losses.
In accordance with Costa Rican income tax regulations, the Company is
required to file income tax returns for the 12-month period ended September
30 of each year.
According to the Law for Tax on Assets enacted in 1995, the individual
Costa Rican entities are required to file an annual tax on assets return.
Tax on assets is equivalent to 1% of the Company's total assets less
deductions established by regulation. Amounts paid for tax on assets may be
used as an income tax credit.
(11) Subsequent Events
On March 31, 1998, the general and limited partners of 1994 Impact
Partners, L.P. and the Partnership and the principal shareholders of
Bioestermamografia exchanged their respective partnership and shareholder
interests for an equivalent ownership interest in a U.S. holding company,
Healthcare Merger Company, Inc. (HMC). Specifically, the respective limited
and general partners of 1994 Impact Partners, L.P. and the Partnership
received one share of HMC stock for each unit of partnership interest
owned. The principal shareholders of Bioestermamografia received one share
of HMC common stock for each share of Bioestermamografia common stock
exchanged.
The general and limited partners of 1994 Impact Partners, L.P. and the
Partnership received 5 million and 7 million HMC common shares,
respectively. Bioestermamografia shareholders received 200,000 HMC common
shares. Accordingly, 1994 Impact Partners, L.P., and the Partnership were
dissolved effective March 31, 1998. As a result of this change in
ownership, Impacto and Centro Medico are wholly-owned subsidiaries of HMC;
Bioestermamografia is a 90%-owned subsidiary of HMC.
The aforementioned transaction is not reflected in the accompanying
combined financial statements.
F-47
<PAGE>
Unaudited Pro Forma Condensed
Consolidated Financial Statements
Basis of Presentation
The following unaudited pro forma condensed consolidated financial statements
(the Pro Froma Financial Statements) gives effect to (i) the planned acquisition
by CentraCan of all the outstanding shares of Centro Medico and 90% of the
outstanding shares of Bioestermamografia, subsidiaries of HMC (the Acquisition),
and (ii) the March 31, 1998 transaction between HMC and the Combined Companies
(the "Purchase"). The unaudited pro forma condensed consolidated statement of
operations for the year ended September 30, 1998 gives effect to the Acquisition
and the Purchase as if they occurred on October 1, 1997. The September 30, 1998
unaudited pro forma balance sheet gives effect to the Acquisition as if it
occurred at September 30, 1998.
The Purchase transaction was accounted for using the purchase method in
accordance with APB16. Centro Medico, a wholly owned subsidiary of HMC was
designated the accounting acquirer in accordance with SAB97. Accordingly, the
pro forma condensed consolidated statement of operations for the year ended
September 30, 1998 reflects the impact of recording the assets and liabilities
of Impacto and Bioestermamografia at their fair value.
The Acquisition will be accounted for in accordance with Financial Accounting
Technical Bulletin No. 85-5 (FTB85-5). The provisions of FTB85-5 apply as the
exchange of 7 million Common Shares between HMC and CentraCan will not involve
the minority shareholders of CentraCan. Accordingly, the exchange is deemed to
be between companies under common control and, the Acquisition will be accounted
for reflecting the existing carrying amounts of the assets and liabilities of
Centro Medico and Bioestermamografia.
The Pro Forma Financial Statements do not purport to represent what CentraCan's
financial position or results of operations would actually have been if such
transactions, in fact, had occurred on those dates and are not necessarily
representative of CentraCan's financial position or results of operations for
any future period.
The Pro Forma Financial Statements should be read in conjunction with the
CentraCan, Inc. and Healthcare Merger Company, Inc.'s consolidated financial
statements and notes thereto included elsewhere in the document.
F-48
<PAGE>
Unaudited Pro Forma Condensed Consolidated
Statement of Operations
Year ended September 30, 1998
<TABLE>
<CAPTION>
Healthcare Pro
Merger Forma
CentraCan, Company, Acquisi- Pro Forma
Inc. Inc. (1) tion Consolidated
---- -------- ---- ------------
<S> <C> <C> <C> <C>
Patient revenues $ 599,239 152,813 752,052
---------- -------- --------- ---------
Operating expenses:
General and administrative
expenses 536,147 763,631 1,299,778
Depreciation and amortization 461,467 47,731 (45,250) (2) 463,948
---------- -------- --------- ----------
Total operating expenses 997,614 811,362 1,763,726
---------- -------- --------- ----------
Operating loss (398,375) (658,549) (45,250) (1,011,674)
---------- -------- --------- ----------
Other income (expense) (20,981) (228) (21,209)
Foreign currency gains 30,585 2,021 32,606
---------- -------- --------- ----------
Loss before income taxes (388,771) (656,756) (45,250) (1,000,277)
Income tax expense 12,400 17,000 (12,400) (3) 17,000
---------- -------- --------- ----------
Net loss $ (401,171) (673,756) (57,650) (1,017,277)
========== ======== ========= ==========
Loss per common share -- basic and diluted $ (.07)
===========
Common shares outstanding -- basic and
diluted 13,600,000
===========
</TABLE>
See Footnotes to Unaudited Pro Forma Condensed Consolidated Statement
of Operations.
F-49
<PAGE>
Footnotes to Unaudited Pro Forma Condensed
Consolidated Statement of Operations
(1) CentraCan, Inc.'s condensed consolidated statement of operations data
includes the operating results of Impacto for the year ended September
30, 1998. The pro forma information representing HMC shows the operating
results for HMC's two subsidiaries, Centro Medico and Bioestermamografia.
A summary of these results for Centro Medico and Bioestermamografia is as
follows:
<TABLE>
<CAPTION>
Period Period
from from
October 1, March 31,
1997 1998
through through
March 30, September 30,
1998 1998 Total
---- ---- -----
<S> <C> <C> <C>
Patient revenues $ 80,975 71,838 152,813
Operating expenses:
General and administrative 346,457 417,174 763,631
Depreciation and amortization 23,856 23,875 47,731
----------- ----------- -----------
Operating loss (289,338) (369,211) (658,549)
Other income (expense) (360) 132 (228)
Foreign currency gains (losses) (43,158) 45,179 2,021
----------- ----------- -----------
Loss before income
tax expense (332,856) (323,900) (656,756)
Income tax expense - 17,000 17,000
----------- ----------- -----------
Net loss $ 332,856 340,900 673,756
=========== =========== ===========
</TABLE>
(2) Reflects depreciation expense adjustment relating to revaluation of
Impacto's fixed assets in connection with the Purchase.
(3) Eliminates income tax expense relating to Impacto's basis adjustment.
Such amounts are reflected in HMC's consolidated tax expense.
F-50
<PAGE>
Unaudited Pro Forma Condensed
Consolidated Balance Sheet
September 30, 1998
<TABLE>
<CAPTION>
Pro Forma
Healthcare Acquisi-
Merger tion
CentraCan, Company, Adjust- Pro Forma
Assets Inc. Inc. ments Consolidated
---- -------- -------- ------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 40,144 48,730 (40,144) (A) 48,730
Accounts receivable, net 59,754 83,185 (59,754) (A) 83,185
Prepaid expenses 15,754 20,626 (15,754) (A) 20,626
Due from related parties 35,269 -- (35,269) (A) --
------------ ------------- ----------- ----------
Total current assets 150,921 152,541 (150,921) 152,541
Advances to Konstructiva, S.A. -- 385,260 -- 385,260
Plant, property and equipment, net 1,125,096 2,916,575 (1,125,096) (A) 2,916,575
Other assets 4,206 12,500 (4,206) (A) 12,500
------------ ------------- ----------- ----------
Total assets $ 1,280,223 3,466,876 (1,280,223) 3,466,876
============ ============= =========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 105,241 117,986 (105,421) (A) 117,986
Accrued expenses 23,654 52,680 (23,654) (A) 52,680
Due to related parties 219,121 288,789 (219,121) (A) 288,789
Due to stockholders - 120,000 -- (A) 120,000
------------ ------------- ----------- ----------
Total current liabilities 348,196 579,455 (348,196) 579,455
Deferred income taxes 156,400 171,000 (156,400) (A) 171,000
Other long-term liabilities 13,500 13,500 (13,500) (A) 13,500
Minority interest -- 93,029 -- 93,029
------------ ------------- ----------- ----------
Total liabilities 518,096 856,984 (518,096) 856,984
------------ ------------- ----------- ----------
Stockholders' equity:
Preferred stock 93,029 -- (93,029) --
Common stock 6,400 650 6,550 (B) 13,600
Additional paid-in capital 863,217 3,828,817 (1,895,223) (A) 2,796,811
Accumulated deficit (200,519) (1,219,575) 1,219,575 (A) (200,519)
------------ ------------- ----------- ----------
Total stockholders' equity 762,127 2,609,892 (762,127) 2,609,892
------------ ------------- ----------- ----------
Total liabilities and
stockholders' equity $ 1,280,223 3,466,876 (1,280,223) 3,466,876
============ ============= =========== ==========
</TABLE>
See Footnotes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
F-51
<PAGE>
Footnotes to Unaudited Pro Forma Condensed
Consolidated Balance Sheet
A) Reflects the elimination of the CentraCan, Inc.'s September 30, 1998
consolidated accounts which are included in the Healthcare Merger
Company, Inc.'s September 30, 1998 consolidated financial statements.
B) Reflects the issuance of 7,200,000 common shares in exchange for all of
the outstanding shares of Centro Medico and 90% of Bioestermamografia.
C) Reflects the elimination of the preferred stock in connection with
preferred shares issued by Impacto.
F-52
<PAGE>
ANNEX I
ASSET PURCHASE AGREEMENT
Agreement entered into as of February 20, 1998 by and among HMC
Acquisition Corp., a Nevada corporation ("Acquisition Sub"), CentraCan
Supplements Corp., a Florida corporation which owns all the issued and
outstanding shares of capital stock of Acquisition Sub ("CentraCan"), and
Healthcare Merger Company, Inc., a Nevada corporation ("Healthcare").
Acquisition Sub, CentraCan and Healthcare are referred to collectively herein as
the "Parties."
This Agreement contemplates a tax-free reorganization pursuant to Code
Sec. 368(a)(1)(C). CentraCan proposes to acquire, through Acquisition Sub,
substantially all the properties and assets and the entire business and good
will of Healthcare in exchange for voting common stock, par value $.0001 per
share, of CentraCan, and the assumption by Acquisition Sub of certain
obligations and liabilities of Healthcare as hereinafter provided, and
Healthcare desires to effect such exchange and thereafter to dissolve and
completely liquidate.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquisition Sub" has the meaning set forth in the preface above.
"Affiliate" has the meaning set forth in Rule of the regulations
promulgated under the Securities Exchange Act.
"CentraCan" has the meaning set forth in the preface above.
"CentraCan Share" means any share of the Common Stock, $.0001 par value
per share, of CentraCan.
"Closing" has the meaning set forth in Section 2 below.
"Confidential Information" means any information concerning the
businesses and affairs of Healthcare and its Subsidiaries that is not already
generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
I-1
<PAGE>
"Dissenting Share" means any Healthcare Share which any stockholder who
or which has exercised his or its appraisal rights under the Nevada General
Corporation Law holds of record.
"Florida General Corporation Law" means the General Corporation Law of
the State of Florida, as amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Healthcare" has the meaning set forth in the preface above.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge without independent investigation.
"Merger" has the meaning set forth in Section 2(a) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section
3(f) below.
"Nevada General Corporation Law" means the General Corporation Law of
the State of Nevada, as amended.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prospectus" means the final prospectus relating to the registration of
CentraCan Shares under the Securities Act.
"Public Report" has the meaning set forth in Section 3(e) below.
"Registration Statement" has the meaning set forth in Section 5(c)(i)
below.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, material, men's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Healthcare Share" means any share of the Common Stock, $_____ par
value per share, of Healthcare.
"Healthcare Stockholder" means any Person who or which holds any
Healthcare Shares.
2. Basic Transaction.
(a) Agreement to Sell and Assume. On the basis of the representations,
warranties, covenants, and agreements contained in this Agreement and subject to
the terms and conditions of this Agreement, Healthcare shall sell, assign,
transfer, and convey as a going concern to Acquisition Sub at the Closing all
properties and assets of Healthcare at the date of the Closing of every kind and
nature whatsoever, including the names, trademarks, contractual rights, books
and records (other than stock ledgers and stock transfer books), business, and
good will of Healthcare; and, in consideration therefor, Acquisition Sub shall:
(i) Deliver at the Closing to Healthcare a certificate
registered in its name for 12,200,000 shares of CentraCan Common Stock and
(ii) Assume at the Closing all obligations and liabilities of
Healthcare as are in conformity with the representations and warranties of
Healthcare except (A) any tax or other obligation or liability, including any
appraisal or dissenters' rights obligations, arising out of or based upon the
transactions contemplated by this Agreement or incurred by Healthcare by reason
of the preparation of this Agreement, and (B) any obligation or liability under
any contract, agreement, instrument, lease, license, understanding, or
arrangement which is assigned by Healthcare to Acquisition Sub (I) if failure to
obtain a required consent to assignment by Healthcare to Acquisition Sub
deprives CentraCan or Acquisition Sub of the enjoyment of any of Healthcare's
rights thereunder, (II) if such contract, agreement, instrument, lease, license,
understanding, or arrangement is not assigned by Healthcare to Acquisition Sub
in compliance with the provisions of this Agreement or otherwise, or (III) if a
party is in default thereunder.
(b) No Implied Assumption. Except as set forth in Section 2(a)(ii),
neither CentraCan nor Acquisition Sub shall assume or be responsible for any
obligation or liability of Healthcare of any nature, accrued or contingent.
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(c) Third Party Possession. With respect to any properties or assets
sold hereunder that cannot be physically delivered to Acquisition Sub because
they are in the possession of third parties, or otherwise, Healthcare shall give
irrevocable instructions to the party in possession thereof, if such be the
case, with copies to CentraCan, that all right, title, and interest therein have
been vested in Acquisition Sub and that the same are to be held for Acquisition
Sub's exclusive use and benefit.
(d) Absence of Required Consent. To the extent that the assignment by
Healthcare to Acquisition Sub of any contract, agreement, instrument, lease,
license, understanding, or arrangement to be assigned to Acquisition Sub
hereunder shall require the consent of a party other than Healthcare which has
not been obtained by the Closing and if CentraCan and Acquisition Sub shall
nevertheless elect to consummate the transactions contemplated by this
Agreement, this Agreement shall not constitute an agreement to assign the same
if an attempted assignment without such consent would constitute a breach
thereof unless CentraCan before, at, or after the Closing elects in a writing
delivered to Healthcare, specifically identifying such absent consent, to waive
such consent. Nothing in this Section 2(d) regarding such non-assignment or such
election shall limit any rights CentraCan or Acquisition Sub may have against
Healthcare or any Stockholder as a result of the failure to obtain such consent.
(e) Closing. The closing of the transactions contemplated by
Sections 2(a)(i) and 2(a)(ii) shall take place at the offices of CentraCan at
4255 Route 9, Suite D, in Freehold, New Jersey, at 10:00 A.M., local time on or
before March 31, 1998, upon satisfaction or waiver of the conditions precedent
to closing provided for in this Agreement. The closing may occur at such
different place, such different time, or such different date or a combination
thereof as CentraCan and Healthcare agree in writing. The closing of the
transactions contemplated by Sections 2(a)(i) and 2(a)(ii) is herein called the
"Closing." If the Closing shall not take place by September 30, 1998, then the
parties not at fault shall, in addition to all other rights and remedies
available at law or in equity against the defaulting parties, have the right to
cancel and terminate this Agreement.
(f) Transactions at Closing. The following transactions shall take
place at the Closing:
(i) Healthcare shall deliver to Acquisition Sub all such warranty deeds
in form for recording, bills of sale, assignments, evidences of consent,
certificates representing all the outstanding shares of capital stock of the
Subsidiaries and certificates representing all other securities (in each case
duly endorsed in blank or accompanied by stock or other powers duly endorsed in
blank, with signatures guaranteed by a commercial bank located in the City of
New York or a member firm of the New York Stock Exchange, Inc., and with all
stock transfer and any other required documentary stamps affixed thereto), and
other instruments or documents as in the opinion of counsel to CentraCan may be
necessary or desirable to evidence or perfect the sale, assignment, transfer,
and conveyance of good and marketable title in fee simple absolute to all real
properties and of good title to all other properties and assets to be sold to
Acquisition Sub by Healthcare hereunder, in each case free and clear of all
liens, mortgages, security interests,
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pledges, charges, and encumbrances (except such as are being assumed by
Acquisition Sub pursuant to this Agreement). Healthcare shall also deliver to
Acquisition Sub all books and records of Healthcare (except stock ledgers and
stock transfer books, which shall always be available for inspection by
CentraCan and Acquisition Sub); provided, however, that Healthcare and its
officers, employees, counsel, and agents shall be afforded free and full access
to its tax and accounting records relating to periods prior to the Closing and
shall be permitted to make extracts from and copies of such records.
(ii) Acquisition Sub shall deliver to Healthcare a certificate
registered in its name for 12,200,00 shares of CentraCan Common Stock.
(iii) Acquisition Sub shall deliver to Healthcare an instrument of
assumption of the obligations and liabilities of Healthcare which Acquisition
Sub has agreed to assume pursuant to Section 2(a)(ii), in form and substance
satisfactory to Healthcare. In addition, Acquisition Sub shall deliver a
specific instrument of assumption of any contractual obligation of Healthcare
which Acquisition Sub has agreed to assume pursuant to Section 2(a)(ii) if a
party thereto (other than Healthcare) shall condition the assignment thereof to
Acquisition Sub on receipt of such specific instrument.
(g) Liquidation; Covenant to Register. CentraCan agrees that it will
cause to become effective as promptly as practicable after the Closing a
Registration Statement in respect of the 12,200,000 shares of CentraCan Common
Stock received by Healthcare under the Securities Act of 1933 and applicable
state securities laws. Within ten days after the Registration Statement becomes
effective, Healthcare will distribute in liquidation such shares and the rights
of Healthcare under this Agreement.
(h) Indemnification. Healthcare agrees to indemnify and hold harmless
the acquisition Sub and CentraCan against any and all losses, liabilities,
damages, and expenses whatsoever (which shall include for all purposes of this
Section 2(h), but not be limited to counsel fees and any and all expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (A) (i) any breach of any
representation, warranty, covenant, or agreement of Healthcare contained in this
Agreement, (ii) any obligation or liability of any nature, accrued or
contingent, not assumed by CentraCan or Acquisition Sub in accordance with
Section 2.01(a)(ii) or (iii) the waiver by CentraCan of compliance by Healthcare
with the provisions of applicable bulk sales laws; and (B) if the Closing takes
place, any act, alleged act, omission, or alleged omission occurring at or prior
to the Closing (including without limitation any which arise out of, are based
upon, or are in connection with any of the transactions contemplated hereby).
The foregoing agreement to indemnify shall be in addition to any liability
Healthcare may otherwise have, including liabilities arising under this
Agreement.
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(i) Composition of CentraCan Board; Officers. At Closing, the Board of
Directors of CentraCan shall appoint a number of designees of Healthcare to
vacancies on CentraCan's Board of Directors so that such designees shall
constitute a majority of the whole Board of Directors of CentraCan. The terms of
the directors and officers of Acquisition Sub in office at and as of the Closing
will expire and CentraCan as the sole shareholder of Acquisition Sub will cause
to be elected as successors to such directors and officers the designees of
Healthcare.
(j) Change of Name. Upon or promptly after the Closing, CentraCan will
cause its Certificate of Incorporation to be amended to change its corporate
name to CentraCan Corp."
3. Representations and Warranties of Healthcare.
Healthcare represents and warrants to Acquisition Sub and to CentraCan
that the statements contained in this Section 3 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3), except as set forth in
the disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
(a) Organization, Qualification, and Corporate Power. Healthcare is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. Healthcare has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it.
(b) Capitalization. The entire authorized capital stock of Healthcare
consists of 12,200,00 Healthcare Shares, all of which are issued and
outstanding. All of the issued and outstanding Healthcare Shares have been duly
authorized and are validly issued, fully paid, and nonassessable. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Healthcare to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to Healthcare.
(c) Authorization of Transaction. Healthcare has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
Healthcare cannot consummate the Merger unless and until it receives the
Requisite Healthcare Stockholder Approval. This Agreement constitutes the valid
and legally binding obligation of Healthcare, enforceable in accordance with its
terms and conditions.
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(d) Noncontravention. To the Knowledge of any director or officer of
Healthcare, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of Healthcare and its Subsidiaries is subject or any
provision of the charter or bylaws of any of Healthcare and its Subsidiaries or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which any of Healthcare and its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). To the Knowledge of any director or officer of Healthcare, and other
than in connection with the Nevada General Corporation Law, the Securities Act
and state securities laws, Healthcare is not required to make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(e) Financial Statements. The financial statements delivered by
Healthcare to CentraCan (the "Healthcare Financial Statements") have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of Healthcare
and its Subsidiaries as of the indicated dates and the results of operations of
Healthcare and its Subsidiaries for the indicated periods; provided, however,
that the interim statements are subject to normal year-end adjustments.
(f) Subsequent Events. Since the most recent quarter end covered by the
Healthcare Financial Statements, there has not been any material adverse change
in the financial condition of Healthcare and its Subsidiaries taken as a whole.
(g) Brokers' Fees. Healthcare does not have any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
4. Representations and Warranties of Acquisition Sub and CentraCan. Each of
Acquisition Sub and CentraCan represents and warrants to Healthcare that the
statements contained in this Section 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 4), except as set forth in the Disclosure
Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this ss.4.
(a) Organization. Each of Acquisition Sub and CentraCan is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
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(b) Capitalization. The entire authorized capital stock of CentraCan
consists of 50,000,000 CentraCan Shares, of which 1,400,000 CentraCan Shares are
issued and outstanding and none are held in treasury. All of the CentraCan
Shares to be issued in the Merger have been duly authorized and, upon
consummation of the Merger, will be validly issued, fully paid, and
nonassessable. All of the issued and outstanding shares of capital stock of
Acquisition Sub are owned by CentraCan
(c) Authorization of Transaction. Each of Acquisition Sub and CentraCan
has full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
Acquisition Sub and CentraCan, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Acquisition Sub or CentraCan is subject
or any provision of the charter or bylaws of CentraCan or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument
or other arrangement to which Acquisition Sub or CentraCan is a party or by
which either of them is bound or to which any of the assets of either of them is
subject. Other than in connection with the provisions of the Nevada General
Corporation Law, the Securities Act and state securities laws, neither
Acquisition Sub nor CentraCan is required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(e) Brokers' Fees. Neither Acquisition Sub nor CentraCan has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
any of Healthcare and its Subsidiaries could become liable or obligated.
(g) Disclosure. The issue and sale of the CentraCan Shares pursuant to
this agreement will not contravene the provisions of Section 5 of the Securities
Act of 1933 or the registration provisions of any applicable state securities
laws. The information furnished by CentraCan to Healthcare in connection with
Healthcare's evaluation of its acquisition of CentraCan Shares pursuant to this
Agreement, and the Registration Statement to be filed by CentraCan after the
Closing covering the CentraCan Shares, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they will be made, not misleading.
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5. Covenants. The Parties agree as follows with respect to the period from and
after the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to take all
action and to do all things necessary or advisable in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. Healthcare will give any notices to third
parties, and will use its reasonable efforts to obtain any third party consents,
that CentraCan reasonably may request in connection with the matters referred to
in ss.3(d) above. Notwithstanding the foregoing, Acquisition Sub and CentraCan
hereby waive compliance by Healthcare with all applicable "bilk sales" laws.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3(d) and Section 4(d)
above.
(d) Securities Act and State Securities Laws. CentraCan will, and will
cause Acquisition Sub to, prepare and file with the SEC a registration statement
under the Securities Act relating to the offering and issuance of CentraCan
Shares to be distributed to healthcare shareholders (the "Registration
Statement"). CentraCan will use its reasonable efforts to respond to the
comments of the SEC thereon and will make any further filings (including
amendments and supplements) in connection therewith that may be necessary or
advisable. Healthcare represents that it is acquiring the CentraCan Shares for
investment and not with a view toward the resale or distribution thereof in
contravention of Section 5 of the Securities Act of 1933 or applicable state
securities laws and agrees that the certificate evidencing such shares shall
bear a legend to such effect. Healthcare further agrees that it will not
distribute such shares in complete liquidation unless a registration statement
under the Securities Act of 1933 and any applicable state securities laws is in
effect. Healthcare further represents that the decision of its stockholders to
authorize the transactions contemplated by this agreement was made by not more
than __ shareholders owning in the aggregate not less than _% of the outstanding
healthcare shares, acting by written consent, without prior notice to, consent
from or solicitation of any other shareholder of Healthcare or any other person.
(e) Operation of Business. Healthcare will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing:
(i) Healthcare will not authorize or effect any change in its
charter or bylaws;
(ii) Healthcare will not grant any options, warrants, or other
rights to purchase or
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obtain any of its capital stock or issue, sell, or otherwise dispose of
any of its capital stock (except upon the conversion or exercise of
options, warrants, and other rights currently outstanding);
(iii) Healthcare will not declare, set aside, or pay any
dividend or distribution with respect to its capital stock (whether in
cash or in kind), or redeem, repurchase, or otherwise acquire any of
its capital stock outside the Ordinary Course of Business;
(iv) Healthcare will not issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation outside the Ordinary
Course of Business;
(v) Healthcare will not impose any Security Interest upon any
of its assets outside the Ordinary Course of Business;
(vi) Healthcare will not make any capital investment in, make
any loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) Healthcare will not make any change in employment terms
for any of its directors, officers, and employees outside the Ordinary
Course of Business; and
(viii) Healthcare will not commit to any of the foregoing.
(g) Full Access. Healthcare will permit representatives of Acquisition
Sub and CentraCan to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of Healthcare, to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to Healthcare. CentraCan will treat
and hold as such any Confidential Information it receives from any of Healthcare
in the course of the reviews contemplated by this Section 5(g), will not use any
of the Confidential Information except in connection with this Agreement, and,
if this Agreement is terminated for any reason whatsoever, agrees to return to
Healthcare all tangible embodiments (and all copies) thereof which are in its
possession.
(h) Notice of Developments. Each Party will give prompt written notice
to the other of any material adverse development causing a breach of any of its
own representations and warranties in Section 3 and Section 4 above. No
disclosure by any Party pursuant to this Section 5(h), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
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(i) Exclusivity. Healthcare will not solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of all or substantially all of the capital stock or assets of
Healthcare (including any acquisition structured as a merger, consolidation, or
share exchange).
6. Conditions to Obligation to Close.
(a) Conditions to Obligations of Acquisition Sub and CentraCan. The
obligations of Acquisition Sub and CentraCan to consummate the transactions to
be performed by them in connection with the Closing are subject to satisfaction
of the following conditions:
(i) the number of Dissenting Shares shall not exceed 10% of
the number of outstanding Healthcare Shares;
(ii) the representations and warranties set forth in Section
3 above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) Healthcare shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iv) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(v) Healthcare shall have delivered to Acquisition Sub and
CentraCan a certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iv) is satisfied in all respects;
(vi) this Agreement and the Merger shall have received the
Requisite Healthcare Stockholder Approval;
(vii) the Parties shall have received all authorizations,
consents, and approvals of governments and governmental agencies
referred to in Section 3(d), and Section 4(d) above;
(viii) Acquisition Sub and CentraCan shall have received from
counsel to Healthcare an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to Acquisition Sub and CentraCan,
and dated as of the Closing Date; and
(ix) all actions to be taken by Healthcare in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Acquisition Sub and CentraCan.
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Acquisition Sub and CentraCan may waive any condition specified in this Section
6(a) if each of them executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Healthcare. The obligation of
Healthcare to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Each of Acquisition Sub and CentraCan shall have
performed and complied with all of their respective covenants hereunder
in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) Each of Acquisition Sub and CentraCan shall have
delivered to Healthcare a certificate to the effect that each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in
all respects;
(v) the Parties shall have received all authorizations,
consents, and approvals of governments and governmental agencies
referred to in ss.3(d) and Section 4(d) above;
(vi) Healthcare shall have received from counsel to
Acquisition Sub and CentraCan an opinion in form and substance as set
forth in Exhibit F attached hereto, addressed to Healthcare, and dated
as of the Closing Date; and
(vii) all actions to be taken by Acquisition Sub or CentraCan
in connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Healthcare.
Healthcare may waive any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination of Agreement.
CentraCan or Healthcare may terminate this Agreement with the prior
authorization of its board of directors (whether before or after stockholder
approval) as provided below:
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(i) CentraCan and Healthcare may terminate this Agreement by
mutual written consent at any time prior to the Effective Time;
(ii) CentraCan may terminate this Agreement by giving written
notice to Healthcare at any time prior to the Effective Time in the
event Healthcare has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, CentraCan
has notified Healthcare of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach;
(iii) Healthcare may terminate this Agreement by giving
written notice to Acquisition Sub and CentraCan at any time prior to
the Effective Time in the event Acquisition Sub or CentraCan has
breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, Healthcare has notified
Acquisition Sub and CentraCan of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach;
(iv) Either Healthcare or CentraCan may terminate this
Agreement by giving written notice to the other if the Closing has not
occurred by September 30, 1998 notwithstanding the best good faith
efforts of the terminating party.
8. Miscellaneous.
(a) Survival. None of the representations, warranties, and covenants of
the Parties (other than the provisions in Section 2 above concerning issuance of
CentraCan Shares and the provisions in Section 5(i) above concerning
indemnification will survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable efforts to advise the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions in
ss.2 above concerning issuance of CentraCan Shares and are intended for the
benefit of Healthcare Stockholders and (ii) the provisions in Section 5(i) above
concerning and indemnification are intended for the benefit of the individuals
specified therein and their respective legal representatives.
(d) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they
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related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Healthcare:
In Care of Richard Wm. Talley
19200 Von Karman, Suite 850
Irvine, California 92612
If to Acquisition Sub or CentraCan:
CentraCan Supplements Corp.
4255 Route 9, Suite D
Freehold, New Jersey 07728
Copy to:
Snow Becker Krauss, P.C.
605 Third Avenue, 25th Floor
New York, New York 10158-0125
Attention of Charles Snow, Esq,
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal
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delivery, expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the address
to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other Party notice in the manner herein set
forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(j) Amendments and Waivers. The Parties may amend any provision of this
Agreement at any time prior to the Effective Time with the prior authorization
of their respective boards of directors; provided, however, that any amendment
effected subsequent to stockholder approval will be subject to the restrictions
contained in the Nevada and Florida General Corporation Laws. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by each of the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
HEALTHCARE MERGER COMPANY, INC.
By: /s/ Richard Wm. Talley
--------------------------------
Richard Wm. Talley
Title: Chairman
HMC ACQUISITION CORP.
By: /s/ Sean P. O'Connor
--------------------------------
Sean P. O'Connor
Title: Chairman
CENTRACAN INCORPORATED
By: /s/ Sean P. O'Connor
--------------------------------
Sean P. O'Connor
Title: Chairman
I-16
<PAGE>
ANNEX II
AMENDMENT NO. 1 (the "Amendment"), dated as of May 20, 1998 to Asset Purchase
Agreement (the "Agreement") entered into as of February 20, 1998, by and among
HMC Acquisition Corp., a Nevada corporation ("Acquisition Sub"), Premier
Supplements Corp., a Florida corporation ("Premier"), and Healthcare Merger
Company, Inc., a Nevada corporation ("Healthcare") (collectively, the
"Parties"). Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Agreement.
RECITALS
A. The Parties have determined that it is in their best interest, and in
the best interest of their respective shareholders, to amend the
Agreement as sct forth herein.
B. It is intended that the Transaction (as defined below) shall be consist
of two separate transactions, the first of which (the "NM Acquisition")
shall be consummated contemporaneously with the execution and delivery
of this Amendment, and the second of which (the "Remaining
Acquisition") shall be consummated following the occurrence of certain
events stated below.
C. It is further intended that contemporaneous with the MRI Acquisition,
the day-to-day management of Premier shall be assumed by the management
personnel of Healthcare.
D. Any conflict between this Amendment and the Agreement shall be resolved
in favor of this Amendment.
Now therefore, in consideration of the premises and mutual promises set forth
herein, and for such other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Parties, intending to be legally
bound, agree as follows:
1. The foregoing Recitals are true and correct and are incorporated herein.
2. Section 1 of the Agreement is amended to delete definitions of all
terms not used elsewhere in the Agreement or in this Amendment
(including but not limited to "Merger), and to add the following
definition:
"Healthcare Subsidiary" shall mean any one (and Healthcare Subsidiaries
shall mean all) of the following: 1994 Impact Partners L.P., a
California Limited Partnership, a Costa Rican corporation;
Bimester-mammography, S.A., a Costa Rican corporation; and Radiation
Oncology Partners, a California Limited Partnership.
3. Section 2 of the Agreement is amended to read as follows:
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2. Basic Transaction
(a) The ADU Acquisition. On the basis of the representations and
warranties, covenants and agreements set forth in this Agreement,
and subject to the terms and conditions of this Agreement, and
contemporaneously herewith, Healthcare shall sell, assign,
transfer and convey to Acquisition Sub all of the rights, title
and interest to the Healthcare Subsidiary known as 1994 Impact
Partners L.P., a California Limited Partnership, a Costa Rican
corporation ("Impact'), along with the ongoing operations and all
assets thereof, such that Impact shall become a wholly-owned
subsidiary of Acquisition Sub contemporaneous herewith, which
shall constitute the First Closing, all as are more particularly
described in Section 6, below.
(b) The Remaining Acquisition. On the basis of the representations
and warranties, covenants and agreements set forth in this
Agreement, and subject to the terms and conditions of this
Agreement, 'including but not limited to the conditions described
in Section 5(d) below, Healthcare shall sell, assign, transfer
and convey to Acquisition Sub all of the rights, title and
interest to the remaining Healthcare Subsidiaries, along with the
ongoing operations and all assets thereof, such that those
Subsidiaries shall become wholly-owned subsidiaries of
Acquisition Sub following the Second Closing (as hereinafter
defined); the foregoing shall constitute the "Remaining
Acquisition."
(c) Consideration. In consideration of the NM Acquisition and the
Remaining Acquisition, at the First Closing, Premier shall issue
in the name of Healthcare 5 million shares of Premier Common
Stock (the "First Shares").
(d) Third Party Possession. With respect to any properties or assets
of any of the Subsidiaries that cannot be physically delivered to
the acquisition Sub because they are in the possession of third
parties, or otherwise, Healthcare and each applicable Healthcare
Subsidiary, shall give irrevocable instructions to the party in
possession thereof, if such be the case, with copies to Premier,
that all right, title, and interest therein have been vested in
Acquisition Sub and that the same are to be held for Acquisition
Sub's exclusive use and benefit, and for the benefit of its
wholly-owned Subsidiaries.
(e) Absence of Required Convent. To the extent that any of the
transactions contemplated hereby shall require the consent of any
party other than Healthcare or the Healthcare Stockholders that
has not been obtained by the First Closing or by the Second
Closing, as applicable, and if Premier
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<PAGE>
and Acquisition Sub shall nevertheless elect to consummate the
transactions contemplated hereby, this Agreement shall not
constitute an agreement to transfer the same if an attempted
transfer without such consent would constitute a breach of the
subsequent of counsel, unless Premier, before or at the First
Closing or Second Closing, as applicable, elects to waive such
consent, which election shall be in writing delivered to
Healthcare, specifically identifying such absent consent. Nothing
in this Section 2(e) shall limit any rights Premier or
Acquisition Sub may have against Healthcare or any of the
Healthcare Stockholders as a result of failure to obtain such
consent.
(f) Closings.
(A) The First Closing shall take place contemporaneously
herewith, and may be deemed to have occurred with the
transfer of facsimile signatures on this document and other
accompanying documents pertaining hereto, if any.
(B) The Second Closing shall take place at such location and at
such time as the Parties shall agree, on or before March 31,
1999 (unless extended by agreement among the Parties), upon
satisfaction or waiver of the conditions precedent to the
Second Closing provided for in this Agreement. If the Second
Closing shall not take place by March 31, 1999, then the
party or parties not at fault shall have the right to cancel
and terminate this Agreement and the transactions
contemplated hereby, in addition to all other rights and
remedies available at law or in equity against the
defaulting party or parties; provided, However, that if the
Second Closing does not occur by March 31, 1999 (or such
other date to which this may be extended by agreement among
the Parties), then the further actions described in Section
5(k) shall occur.
(g) Transactions at Closings. The following transactions shall take
place at the First Closing and the Second Closing, respectively.
(A) At or prior to the First Closing,
(i) Healthcare shall deliver to Premier and Acquisition Sub
certificates representing all of the outstanding
capital stock of Impact, and such other instruments or
documents as may be deemed necessary or desirable by
counsel to Premier in order to convey Impact and all of
its ongoing operations
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<PAGE>
and assets, to Acquisition Sub, along with all books
and records of Impact; provided, however, that
Healthcare and its officers, employees, counsel, and
agents shall be afforded reasonable access to Impact's
tax and accounting records relating to periods prior to
the First Closing and shall be permitted to make
extracts from and copies of such records; and
(ii) Acquisition Sub will cause to be delivered to
Healthcare a certificate representing the First Shares
of Premier Common Stock registered in the name of
Healthcare, which shares shall bear the voting
restrictions and transfer restrictions set forth in
Section S hereof; and
(iii) The Board of Directors of Premier and Acquisition Sub
shall take such steps as are necessary to cause the
addition to the Board of Directors of Premier (and
Acquisition Sub, as appropriate) of the following
W.F.O. Rosenmiller; Carlos Camacho; Richard Wm. Talley;
and John C. Gullesserian; and
(iv) The articles of incorporation of Premier shall have
been amended to change its name to "CentraCan
Incorporated."
(B) At the Second Closing,
(i) Healthcare shall deliver to Premier and Acquisition Sub
certificates representing all of the outstanding
capital stock of the remaining Healthcare Subsidiaries,
and such other instruments or documents as may be
deemed necessary or desirable by counsel to Premier in
order to convey the remaining Healthcare Subsidiaries,
and all of their respective ongoing operations and
assets, to Acquisition Sub, along with all books and
records of the remaining Healthcare Subsidiaries;
provided, however, that Healthcare and its officers,
employees, counsel, and agents shall be afforded
reasonable access to the remaining Healthcare
Subsidiaries' tax and accounting records relating to
periods prior to the Second Closing and shall be
permitted to make extracts from and copies of such
records;
(ii) The Acquisition Sub will cause to be delivered to
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<PAGE>
Healthcare a certificate representing 7,200,000 shares
(the "Second Shares") of Premiere Common Stock
registered in the name of Healthcare; and
(iii) Any and all members of the Board of Directors of
Premier and/or Acquisition Sub, and any and all
officers of Premier and/or Acquisition Sub, that had
held such office prior to the First Closing shall
resign.
(h) Liquidation; Covenant to Register. Premier and Healthcare
each agree to use their best efforts to cause to become
effective as soon after the First Closing as possible a
Registration Statement under the Securities Act and under
applicable state securities laws, in respect of the
12,200,000 shares of Premier Common Stock registered in the
name of Healthcare, and such other matters as may be deemed
by legal counsel to Premier to require registration under
the Securities Act. Healthcare agrees to use its best
efforts to assist in the preparation and filing of the
Registration Statement, and to use its best efforts to cause
the Registration Statement to be declared effective as
quickly as practicable. Within ten business days following
the effective date of the Registration Statement, Healthcare
will distribute in complete liquidation such shares to the
Healthcare Stockholders.
(i) Indemnification. Healthcare agrees to indemnify and hold
harmless Premier and Acquisition Sub from and against any
and all losses, liabilities, damages, and expenses
whatsoever (which shall include for all purposes of this
Section 2(h), but not be limited to, counsel fees and any
and all expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, whether
commenced or threatened, or any claim whatsoever, and any
and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon,
or in connection with (A)(i) any breach of any
representation, warranty, covenant, or agreement of
Healthcare and/or any Healthcare Subsidiary contained in
this Agreement; (ii) any obligation or liability of any
nature, accrued or contingent not transferred to Premier or
Acquisition Sub for any reason; or (iii) the waiver by
Premier of compliance by Healthcare with the provisions of
applicable bulk sales laws; and (B) any act, alleged act,
omission, or alleged omission occurring at or prior to each
of the First Closing and Second Closing, as the case may be
(including without limitation any that arise out of, are
based upon,
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<PAGE>
or are in connection with, any of the transactions
contemplated hereby); and (C) any act, alleged act,
omissions, or alleged omission relating to the management of
Premier and its Subsidiaries by the nominees and
representatives of Healthcare and/or the Healthcare
Subsidiaries from the First Closing through the earlier of
the Second Closing or the termination of this Agreement
(without limiting the generality of any of the foregoing).
Healthcare and Premier represent that this transaction has
been approved by their respective Board of Directors.
8. Section 3 of the Agreement is amended as follows:
(a) All references to Healthcare shall be amended to include
each of the Healthcare Subsidiaries (unless the context
clearly indicates otherwise).
(b) All references to the Closing Date shall refer to each and
both of the dates of the First Closing and the Second
Closing.
(c) Section 3(b) is amended to include the following provisions
at the end thereof:
The authorized capital stock and/or partnership interests of
each of the Healthcare Subsidiaries is as follows: (i)
Impact has 5.0 million shares of which the following is
issued and outstanding (ii) Radiate Oncology Partners has
7.0 million shares of which the following is issued and
outstanding and (iii) Bioestermmnografla, S.A. has 200,000
shares of which the following is issued and outstanding. All
of the issued and outstanding capital stock and/or
partnership interests of the Healthcare Subsidiaries has
been duly authorized and is validly issued, fully paid and
nonassessable. There are no outstanding or authorized
options, wan-ants, purchase rights, subscription Tights,
conversion rights, exchange rights, or other contracts or
commitments that could require any of the Healthcare
Subsidiaries to issue, sell or otherwise cause to become
outstanding any of its capital stock and/or partnership
interests. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or
similar rights with respect to any of the Healthcare
Subsidiaries.
(d) Section 3(c) is amended to read as follows:
Authorization of Transaction. Healthcare has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its
obligations hereunder; provided, however, that Healthcare
cannot consummate the Remaining Acquisition unless and
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<PAGE>
until it receives the Requisite Healthcare Stockholder
Approval. This Agreement constitutes the valid and legally
binding obligation of Healthcare, enforceable in accordance
with its terms.
(e) Section 3(h) is added as follows:
Disclosure. The information furnished by Healthcare and/or
the Healthcare Subsidiaries in connection with Premier's
evaluation of the transactions contemplated hereby did not,
and the information to be provided by Healthcare, the
Healthcare Subsidiaries and the members of their management
for inclusion in the Registration Statement will not,
contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements made, in light of the circumstances under which
they were or will be made, not misleading.
5. Section 4 of the Agreement is amended as follows:
(a) All references to the Closing Date shall refer to each and
both of the dates of the First Closing and the Second
Closing.
(b) Section 4(b) is amended to read as follows:
Capitalization. The entire authorized capital stock of
Premier consists of 50,000,000 Premier Shares, of which
1,400,000 Premier Shares are issued and outstanding and none
are held in treasury. All of the Premier Shares to be issued
hereunder have been duly authorized and, as of the Second
Closing, all will be deemed fully paid and nonassessable.
All of the issued and outstanding shares of capital stock of
Acquisition Sub are owned by Premier.
(c) Section 4(d) is amended to qualify the representations set
forth therein to the Knowledge of the respective directors
and officers of Premier and Acquisition Sub; the last
sentence thereof is further amended to read, in pertinent
part:
Other than in connection with the provisions of the Nevada
General Corporation Law, the Florida Business Corporation
Act, the Securities Act and state securities laws, .
(d) The second sentence of Section 4(g) is amended to read, in
pertinent part:
The information furnished by Premier to Healthcare in
connection with Healthcare's evaluation of its acquisition
of Premier Shares pursuant to
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<PAGE>
this Agreement did not and will not contain ....
6. Section 5 of the Agreement is amended as follows:
(a) Section 5(d) is amended to read as follows:
Securities Act and State Securities Laws. As soon after the
first Closing as possible, the Parties will use their
collective best efforts to diligently prepare and file with
the SEC a registration statement under the Securities Act
relating to the offering and issuance of Premier Shares to
be distributed to the Healthcare Stockholders and further
relating to such other matters as legal counsel to Premier
reasonably deems appropriate (the "Registration Statement").
The Parties will use their collective best efforts to
diligently respond to the comments of the SEC thereon and
will make any further filings (including amendments and
supplements) in connection therewith that may be necessary
or advisable. Healthcare represents that it is acquiring the
Premier Shares for investment and not with a view toward the
resale or distribution thereof in contravention of Section 5
of the Securities Act or applicable state securities laws
and agrees that the certificate evidencing such shares shall
bear a legend to such effect. Healthcare further agrees that
it will not distribute the Premier Shares in complete or
partial liquidation nor will it submit the Agreement to the
Healthcare Stockholders for approval or take any other
action that would require the giving of notice to, the
consent or approval of, or create a right of appraisal or
dissenters' right exercisable by, the Healthcare
Stockholders, or which might otherwise constitute a public
offering of the Premier Shares intended to be acquired
pursuant to this Agreement, unless a Registration Statement
is then in effect under the Securities Act and applicable
state securities laws. Healthcare further represents that
all of its shareholders is sophisticated in business and
financial affairs, is capable of evaluating the risks and
merits of an investment in the Premier Shares and was not
approached through means of any general solicitation or
advertising, have agreed to vote their Healthcare Shares in
favor of the transactions contemplated by this Agreement,
and that it bas not heretofore taken any action that would
have been prohibited by the provisions of this Section 5(d).
(b) Section 5(e) is amended such that all references to
Healthcare shall include the Healthcare Subsidiaries and
each of them.
(c) Section 5(f) is noted as having been intentionally omitted
from the Agreement.
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<PAGE>
(d) Section 5(g) is amended such that all references to
Healthcare shall include the Healthcare Subsidiaries and
each of them.
(e) New Section 50) is added as follows:
Operation of Premier after First Closing. Healthcare shall
direct its nominees to the Board of Directors of Premier and
Acquisition Sub to cause each of those entities not to
engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business, from
the First Closing through the earlier of the Second Closing
or the termination of the Agreement without the express
written consent of Sean P. O'Connor or his designee
("O'Connor"), the President and Sole Director of Premier
prior to the First Closing, other than those transactions
expressly contemplated hereby. Without limiting the
generality of the foregoing:
(i) Neither Premier, nor Acquisition Sub will authorize nor
effect any change in its articles of incorporation or
bylaws;
(ii) Neither Premier nor Acquisition Sub will grant any
options, warrants, or, other rights to purchase or
obtain any of its capital stock nor issue, sell, or
otherwise dispose of any of its capital stock;
(iii) Neither Premier nor Acquisition Sub will declare, set
aside, or pay any dividend or distribution with respect
to its capital stock (whether in cash or in kind), nor
redeem, repurchase, or otherwise acquire any of its
capital stock outside the Ordinary Course of Business;
(iv) Neither Premier nor Acquisition Sub will issue any
note, bond, or other debt security or create, incur,
assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation outside the
Ordinary Course of Business;
(v) Neither Premier nor Acquisition Sub will impose any
Security Interest upon any of their respective assets
outside the Ordinary Course of Business;
(vi) Neither Premier nor Acquisition Sub will make any
capital investment in, make any loan to, nor acquire
the assets of any other Person outside the Ordinary
Course of Business; and
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<PAGE>
(vii) Neither Premier nor Acquisition Sub will commit to any
of the foregoing,
all without the prior written consent of O'Connor.
7. Section 6 is replaced in its entirety with the following
(with the understanding that Section 6 of the Agreement will
become Section 7 and all subsequent sections will be deemed
to be renumbered):
6. Closing of the MRI Acquisition.
(a) Delivery and Acceptance of Impact Stock. Effective
with the execution and delivery of this Amendment
No. 1, Healthcare hereby transfers, assigns,
conveys and delivers unto Acquisition Sub,
certificates for shares representing all of the
issued and outstanding capital stock of Impact
(the "Impact Stock"), along with all rights
pertaining thereto, Premier and Acquisition Sub,
by their execution and delivery of this Amendment,
hereby acknowledge receipt of such certificates,
and agree to take such steps as may be necessary
to consummate the First Closing, as described in
Section 2(g)(A)(i) hereof.
(b) Delivery of Premier Shares. Upon the execution and
delivery of this Amendment No. I to the Agreement,
Premier and/or Acquisition have caused to be
issued and delivered to (the "Healthcare") a
single certificate representing 5,000,000 Premier
Shares registered in the name of Healthcare, which
certificate bears legends (or will be re-legended
as soon hereafter as practicable, if already
issued without such legends) to the effect that
the shares represented by it will not be sold,
transferred, assigned, pledged or otherwise
disposed of unless a registration statement shall
then be effective under the Securities Act and
applicable state law and is also subject to the
restrictions of the Asset Purchase Agreement
entered into as of February 20, 1998 as amended by
Amendment No. 1 dated as of May 20, 1998.
(c) Further Representations and Covenants of the
Parties. Healthcare represents that the transfer
and delivery of the Impact Stock has been duly
authorized by all necessary corporate action and
that no consent or approval of the shareholders or
creditors of Healthcare or of Impact is necessary
for such transfer and delivery. The Parties
covenant that from the date of this First Closing
through the earlier of the Second Closing or the
termination of this
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<PAGE>
Agreement in accordance with the provisions hereof,
they will maintain Impact as a separate business
entity; and that they will not cause or permit
Impact to declare or distribute any dividend to
Impact's shareholder. The Parties agree to
diligently use their best efforts to (i) procure a
new CUSEP number for Premier's Common Stock; (ii)
obtain a new OTC trading symbol for Premier's
Common Stock, and (iii) cause an application to be
submitted and approved for inclusion of Premier in
Standard and Poors' Corporation Records, all as
quickly as possible following the First Closing,
and to otherwise take such action as may be
advisable and appropriate in order to ensure an
orderly market for Premier's Common Stock.
8. Section 6 of the Agreement is amended as follows:
(a) The heading of Section 6 shall read as follows:
7. Conditions to Obligations to Consummate Second Closing.
(b) All references to Closing and Closing Date set
forth in old Section 6 (new Section 7) shall be
deemed to the Second Closing and the date of the
Second Closing; all section references shall be
deemed to be renumbered to reflect the change from
Section 6 to Section 7; and subsection (a)(8) and
(b)(vi) shall be deleted.
(c) The following provision shall be added as both
subsection (a)(xi) and (b) viii):
the declaration by the SEC of the effectiveness of
the Registration Statement, which Registration
Statement also shall have been declared effective
under applicable state securities laws.
9. Section 7 of the Agreement is amended as follows:
(a) Section 7 shall now be referred to as Section 8.
(b) All references to the Effective Time shall be amended to
refer to the Second Closing.
(c) Subsection (iv) is amended to change the reference to the
Closing to the Second Closing and to change the reference to
September 30, 1998, to March 31, 1999.
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<PAGE>
(d) New subsection (v) is added as follows:
Notwithstanding anything set forth herein to the contrary,
for purposes of this Section 8 only, termination by Premier,
in accordance herewith, may be taken unilaterally by
O'Connor, as the only disinterested member of the Board with
respect to this matter.
10. Section 8 of the Agreement is amended as follows:
(a) Section 8 shall now be referred to as Section 9.
(b) All references to the Effective Time shall be amended to
refer to the Second Closing.
(c) Subsection (b) is amended by adding the following clause at
the end thereof:
; and further provided, however, that from the First Closing
through the earlier of the Second Closing or the termination
of this Agreement in accordance with the provisions hereof,
no Party shall make any press release regarding the subject
matter hereof without the prior written approval of
O'Connor.
(d) Subsection (0) is amended by adding the following clause at
the end thereof:
Notwithstanding anything set forth herein to the contrary,
from the First Closing through the earlier of the Second
Closing or the termination of this Agreement in accordance
with the provision hereof no amendment, nor any waiver on
the part of Premier or Acquisition Sub, shall be effective
without the written consent of O'Connor. In addition all of
the rights powers and privileges of Premier with respect to
this agreement up to or through and including the latter of
the second closing be exercised by O'Connor.
(11) Effect of Amendment. Except as amended hereby, the Agreement as
originally executed hall remain in full force and effect.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first written above.
HEALTHCARE MERGER COMPANY, INC.
By: /s/ Richard Wm. Talley
--------------------------------
Richard Wm. Talley
Title: Chairman
HMC ACQUISITION CORP.
By: /s/ Sean P. O'Connor
--------------------------------
Sean P. O'Connor
Title: Chairman
CENTRACAN INCORPORATED
By: /s/ Sean P. O'Connor
--------------------------------
Sean P. O'Connor
Title: Chairman
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<PAGE>
ANNEX III
FORM OF NOTICE TO STOCKHOLDERS
Healthcare Merger Company, Inc.
19200 Von Karman, Suite 850
Irvine, California 92612
Dear Stockholder:
The Boards of Directors of CentraCan Incorporated, a Florida
corporation, and Healthcare Merger Company, Inc., a Nevada corporation ("HMC"),
have approved of and signed an Asset Purchase Agreement, dated as of February
20, 1998 and amended on May 20, 1998 ("Purchase Agreement").
The Purchase Agreement provides the following:
o on May 20, 1998, CentraCan purchased magnetic resonance imaging
facilities from HMC for 5,000,000 shares of Common Stock; and
o on or before March 31, 1999, CentraCan will purchase a cancer
center that will have two x-ray linear accelerators and a clinic
that has ultrasound, mammography and stereotactic biopsy
diagnostic facilities from HMC for 7,200,000 shares of Common
Stock.
Pursuant to Nevada Statute 92A.410 of a dissenter's right to demand
appraisal of his shares, you have the right to demand appraisal for you shares
of HMC common stock. Nevada law requires that you must demand appraisal in
writing. You may make this written demand to HMC by completing the form attached
hereto and sending it to the offices of HMC at 19200 Von Karman, Suite 850,
Irvine, California 92612 not later than 30 days after the delivery of this
Prospectus/Information Statement to you, and it must be accompanied by
certificates representing the shares of common stock of HMC for which the demand
is made. The demand must also certify that the you acquired beneficial ownership
of the shares prior to the date of this Prospectus/Information Statement [date
of first announcement to the news media or stockholders of the terms of the
transaction]. If you do not contact HMC by such date, your right to demand
appraisal will terminate.
If you demand appraisal and the transaction is consummated, you will
have the right to receive the fair market value for your shares of HMC in cash
rather than in Centra Can common stock to be distributed after the closing of
the transactions under the Purchase Agreement.
You are hereby requested to carefully review and consider the
information in the Nevada Statutes attached hereto and notify HMC as to whether
you wish to exercise your dissenters rights.
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FORM OF DEMAND TO EXERCISE APPRAISAL RIGHTS
TO: Healthcare Merger Company, Inc.
19200 Von Karman, Suite 850
Irvine, California 92612
I, the undersigned stockholder of Healthcare Merger Company, Inc., a
Nevada corporation ("HMC"), desire to exercise my right appraisal. I have
enclosed the following share certificates for HMC common stock for the following
number of shares (attach additional pages if necessary):
Share Certificate Number Number of Shares
------------------------ ----------------
________________________ _________________
________________________ _________________
The undersigned hereby exercises the above right of appraisal and
requests to receive the fair market value for my shares of HMC in cash.
_________________________________ ____________________________
Signature of Stockholder Signature of Stockholder
_________________________________ ____________________________
Print Name Print Name
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Rights of Dissenting Owners
92A.300 DEFINITIONS. - As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. - "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record.
92A.310 "CORPORATE ACTION" DEFINED. -"Corporate action" means the
action of a domestic corporation.
92A.315 "DISSENTER" DEFINED. -"Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.410 to
92A.480, inclusive.
92A.320 "FAIR VALUE" DEFINED. -"Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
92A.325 "STOCKHOLDER" DEFINED. -"Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
92A.330 "STOCKHOLDER OF RECORD" DEFINED. -"Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "SUBJECT CORPORATION" DEFINED - "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340 COMPUTATION OF INTEREST - Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.
- -A partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
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provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED LIABILITY
COMPANY. - The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT
CORPORATION. - 1. Except as otherwise provided in subsection 2 and unless
otherwise provided in the articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the merger may, without prior
notice, but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to
subsection 1.
92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN COR PORATE ACTIONS
AND TO OBTAIN PAYMENT FOR SHARES- 1. Except as otherwise provided in NRS 92A.370
to 92A.390, a stockholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation
is a party:
(1) If approval by the stockholders is required for the merger by NRS
92A.120 to 92A. 1 60, inclusive, or the articles of incorporation and he is
entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with its
parent under NRS 92A. 1 80.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests will
be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares. 2. A stockholder who is entitled
to dissent and obtain payment under NRS 92A.300 to 92A.500, inclusive, may not
challenge the corporate action creating his entitlement unless the action is
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unlawful or fraudulent with respect to him or the domestic corporation.
92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN
CLASSES OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER-1.
There is no right of dissent with respect to a plan of merger or exchange in
favor of stockholders of any class or series which, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting at which the plan of merger or exchange is to be acted on, were either
listed on a national securities exchange, included in the national market system
by the National Association of Securities Dealers, Inc., or held by at least
2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide other wise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities exchange,
included in the national market system by the National Association of Securities
Dealers, Inc., or held of record by a least 2,000 holders of owner's interests
of record; or
(2) A combination of cash and owner's interests of the kind described
in sub-subparagraphs (I) and (11) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A. 1 30.
92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO POR TIONS ONLY
TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER. - 1. A
stockholder of record may assert dissenter's rights as to fewer than all of the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the subject corporation in
writing of the name and address of each person on whose behalf he asserts
dissenter's rights. Me rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if-
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
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92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF
DISSENT. - 1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Last amended by Ch. 208, L. '97, eff.
10-1-97.)
- -----------
Ch. 208, L. '97, eff. 10-1-97, added matter in italic.
92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES. - If a proposed
corporate action creating dissenters' rights is submitted to a vote at a
stockholders' meeting, 4 stockholder who wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection I
is not entitled to payment for his shares under this chapter.
92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS. - 1. If a proposed corporate action creating dissenters'
rights is authorized at a stockholders' meeting, the subject corporation shall
deliver a written dissenter's notice to all stockholders who satisfied the
requirements to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the date
the notice is delivered; and (e) Be accompanied by a copy of NRS 92A.300 to
92A.500, inclusive.
92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER. - 1. A stockholder to whom a dissenter's
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notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are canceled or modified by the taking of
the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter. (Last
amended by Ch. 208, L. '97, eff. 10-1-97.)
- ------------
Ch. 208, L. '97, eff. 10- 1 -97, added matter in italic.
92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER
DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER. - 1. The subject
corporation may restrict the transfer of shares not represented by a certificate
from the date the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS. - 1. Except as
otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for
payment, the subject corporation shall pay each dissenter who complied with NRS
92A.440 the amount the subject corporation estimates to be the fair value of his
shares, plus accrued interest. The obligation of the subject corporation under
this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment, must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and (e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE
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OF DISSENTER'S NOTICE. - 1. A subject corporation may elect to withhold payment
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenter's notice as the date of the first announcement
to the news media or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to NRS 92A.480.
92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE. - 1. A dissenter may notify the
subject corporation in writing of his own estimate of the fair value of his
shares and the amount of interest due, and demand payment of his estimate, less
any payment pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470
and demand payment of the fair value of his shares and interest due, if he
believes that the amount paid pursuant to NRS 92A.460 or offered pursuant to NRS
92A.470 is less than the fair value of his shares or that the interest due is
incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.1. If a demand for payment
remains unsettled, the subject corporation shall commence a proceeding within 60
days after receiving the demand and petition the court to determine the fair
value of the shares and accrued interest. If the subject corporation does not
commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The
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dissenters are entitled to the same discovery rights as parties in other civil
proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS
AND FEES. - 1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the subject corporation,
the court may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefitted.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS/INFORMATION STATEMENT
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 11 of CentraCan's Bylaws provides that the Board of Directors
or the shareholders of CentraCan will indemnify its officers and directors when
they are acting in their capacity as officers and directors or at the request of
CentraCan, if it is determined by the Board of Directors or shareholders of
CentraCan that such officer or director acted in good faith.
The preceding discussion of the Bylaws is not intended to be exhaustive
and is qualified in its entirety by reference to the complete texts of the
Bylaws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following Exhibits are filed herewith and made a part hereof:
2.1 Asset Purchase Agreement, dated as of February 20, 1998 and amended
on May 20, 1998**
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2 By-Laws of the Registrant*
5.1 Opinion of Snow Becker Krauss P.C.*
10.1 Purchase Agreement, dated as of February 20, 1998 between the
Registrant and HMC**
10.2 Purchase Agreement, dated as of May 20, 1998, between the Registrant
and HMC**
23.1 Consent of Snow Becker Krauss P.C.*
23.2 Consent of KPMG LLP (CentraCan, Inc.)
23.3 Consent of KPMG LLP (Healthcare Merger Company Inc.)
23.4 Consent of KPMG Peat Marwick - SAN JOSE COSTA RICA
(Combined Companies)
24.1 The Power of Attorney is included in the Signature of this
Registration Statement
- ---------------------
* To be filed by Amendment
** See Annex I and Annex II to the Prospectus.
(b) The following Financial Schedules are filed herewith and made a
part hereof:
None.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus file
with Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed a new registration statement
relating to the securities offered therein, and the offering of such securities
at the that time shall be deemed the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
this offering.
(4) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(5) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(6) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(7) The undersigned registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of New York, State
of New York on this 5th day of February, 1999.
CENTRACAN INCORPORATED
By: /s/ Sean P. O'Connor
--------------------
SEAN P. O'CONNOR
POWER OF ATTORNEY
NOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Sean P. O'Connor, as such
signatory's true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such signatory and in such signatory's
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
foregoing, as fully as to all intents and purposes as such signatory might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 5, 1999 by the following
persons in the capacities indicated.
/s/ Sean P. O'Connor
- ------------------------
Sean P. O'Connor President and a Director February 5, 1999
/s/ Richard Wm. Talley
- ------------------------
Richard Wm. Talley Chairman and a Director February 5, 1999
- ------------------------
Carlos Comacho Director February 5, 1999
- ------------------------
John C. Gullesserian Director February 5, 1999
/s/ W.F.O. Rosenmiller
- ------------------------
W.F.O. Rosenmiller Secretary and a Director February 5, 1999
*By: /s/ Sean P. O'Connor
-----------------------------------
Sean P. O'Connor, Attorney-in-Fact
for each of the above named persons
<PAGE>
ARTICLES OF INCORPORATION
Article I. Name
- ---------------
The name of this Florida corporation is:
Premier Supplements Corp.
Article II. Address
- -------------------
The mailing address of the Corporation is:
Premier Supplements Corp.
340 Royal Palm Way, Suite 201
Palm Beach FL 33480
Article III. Registered Agent
- -------------------------------
The name and address of the registered agent of the Corporation is:
Don Mintmire, Esq.
265 Sunrise Avenue, Suite 204
Palm Beach FL 33480
Article IV. Board of Directors
- ------------------------------
The incorporator shall hold an organizational meeting or execute a written
consent to elect a Board of Directors who shall complete the organization of the
Corporation.
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the fullest
extent permitted by applicable law.
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
(305) 672-0686
<PAGE>
Article V. Capital Stock
- ------------------------
The Corporation shall have the authority to issue 2,000 shares of common stock
value $.01 per share.
Article VI. Incorporator
- -------------------------
The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
Article VII. Corporate Existence
- ---------------------------------
The corporate existence of the Corporation shall begin effective March 21, 1997
The undersigned incorporator executed these Articles of Incorporation on
March 21, 1997
Corporate Creations International Inc.
By: Kara O'Donnell
---------------------------------------
Kara O'Donnell Vice President
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach FL 33139-6629
(305) 672-0686
<PAGE>
Article I. Name
- ---------------
The name of this Florida corporation is: Premier Supplements Corp. (the
"Corporation").
Article II. Amendment
- ----------------------
The Articles of Incorporation of the Corporation are amended as follows:
Artcle V shall be deleted in its entirety and replaced with the following:
The Corporation shall have the authority to issue 50,000,000 shares of Common
stock, par value $.001 per share. The Corporation shall have the authority to
issue 10,000,000 shares of preferred stock, par value $.001 per share, which
may be divided into series and with preferences, limitaions and relative rights
determined by the Board of Directors.
Article III. Date Amendment Adopted
- ------------------------------------
The amendment set forth in these Articles of Amendment was adopted on March 24,
1997.
Article IV. Shareholder Approval of Amendment
- ----------------------------------------------
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
An authorized representative of the Corporation executed these Articles of
Amendment on March 24, 1997.
Premier Supplements Corp.
By: B. R. Fons
-------------------------------
B. R. Fons
Its: Assistant Secretary
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach FL 33480
561-832-5696
<PAGE>
ARTICLES OF AMENDMENT
to
ARTICLES OF INCORPORATION
of
PREMIER SUPPLEMENTS, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Statutes,
this Florida corporation adopts the following amendment to its articles of
incorporation:
FIRST: Article I. is hereby amended to read as follows:
The name of the corporation is CentraCan, Inc.
SECOND: The date of the adoption of the foregoing amendment is May 15, 1998.
THIRD: The foregoing amendment was approved by the shareholders of the
corporation. The number of votes case for the amendment was sufficient
for approval.
Signed this 15th day of May 1998.
Sean P. O'Connor
-------------------------------
Sean P. O'Connor
President and Sole Director
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Exhibit 3.2
BY-LAWS
OF
PREMIER SUPPLEMENTS CORP.
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Florida shall be
located in the City of Palm Beach. The Corporation may have such other offices,
either within or without the State of Florida, as the business of the
Corporation may require from time to time.
The Registered office of the Corporation may be, but need not be, identical
with its principal office in the State of Florida and the address of the
Registered Office may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders shall be held
in the month of July of each year, beginning with the year 1997 on such date, at
such time and place as the Board of Directors shall determine for the purpose of
electing directors 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 any annual meeting, or at any adjournment thereof, the Board of
Directors shall cause the
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election to be held at a special meeting of the shareholders to be held as soon
thereafter as may be convenient.
SECTION 2. SPECIAL MEETING. Special meetings of the shareholders may be
called by the President, by the Board of Directors or any member thereof, or by
the holders of not less than one-fifth (1/5) of the voting power of all
shareholders of the corporation.
SECTION 3. PLACE OF MEETING. The Board of Directors may designate any place
within or without the State of Florida as the place of meeting for any annual
meeting, or any place either within or without the State of Florida as the place
of meeting for any special meeting called by the Board of Directors.
A waiver of notice signed before or after the meeting by all shareholders
may designate any place, either within or without the State of Florida as the
place for the holding of such meeting. If no such designation is made, or if a
special meeting is called by any person other than the Board of Directors, the
place of meeting shall be the principal office of the Corporation in the State
of Florida, except as otherwise provided in Section 5 of this Article.
SECTION 4. NOTICE OF MEETINGS AND WAIVER. Written or printed notice stating
the place, day and hour of the meting 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) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the President, or the Secretary, or the officer or persons calling
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the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail in a sealed envelope addressed to the
shareholder at his address as it appears on the records of the Corporation,
with postage thereon prepaid. Notice of any shareholders' meeting may be
waived in writing by any shareholder at any time before or after the meeting.
SECTION 5. MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall
meet at any time and place, either within or without the State of Florida, and
consent to the holding of a meeting, such meeting shall be valid without call or
notice, and at such meeting any corporate action may be taken.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of
Directors of the Corporation may close its stock transfer books for a period not
exceeding sixty (60) (but, if closed, for not less than ten (10) days prior to
the date of any meeting of shareholders, or the date for the payment of any
dividend or for the allotment of rights, or the date when any exchange or
reclassification of shares shall be effective; or in lieu thereof, may fix in
advance a date, not exceeding sixty (60) and not less than ten (10) days prior
to the date of any meeting of shareholders, or to the date for the payment of
any dividend or for the allotment of rights, or to the date when any exchange or
reclassification of shares shall be effective, as the record date for the
determination of shareholders entitled to receive payment of any such dividend
or to receive any such allotment of rights, or to exercise rights in respect of
any exchange or reclassification
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of shares; and the shareholders of record on such date shall be the
shareholders entitled to notice of and to vote at, such meeting, or to receive
payment of such dividend or to receive such allotment of rights, or to
exercise such rights, in the event of an exchange or reclassification of
shares, as the case may be. If the transfer books are not closed and no record
date is fixed by the Board of Directors, the date on which notice of the
meeting is mailed shall be deemed to be the record date for the determination of
shareholders entitled to vote at such meeting. Transferees of shares which are
transferred after the record date shall not be entitled to notice of or to vote
at such meeting.
SECTION 7. VOTING LISTS. The officer or agent having charge of the transfer
book for shares of the Corporation shall make, at least ten (10) days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting, arranged in alphabetical order, with the address and the
number of shares held by each shareholder, which list, for a period of ten (10)
days prior to such meeting, shall be kept on file at the office of the
Corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
stock transfer book, or a duplicate thereof kept in this State, shall be prima
facie evidence as to who are the shareholders entitled to
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examine such list or share ledger or stock transfer book or to vote at any
meeting of shareholders.
SECTION 8. QUORUM. A majority of the outstanding shares of the Corporation,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders; provided, that if less than a majority of the outstanding shares
are represented at said meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder may vote
by proxy executed in writing by the shareholder 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
eleven (11) months from the date of its execution, unless otherwise provided in
the proxy, and such proxy may be withdawn at any time.
SECTION 10. VOTING OF SHARES. Each outstanding share of Common Stock shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the By-Laws of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such corporation may
determine.
Shares standing in the name of a deceased person may be voted by his
administrator or executor, either in person or by proxy.
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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 a transfer of such shares into his name.
Shares standing in the joint names of four (4) or more fiduciaries shall be
voted in the manner determined by the majority of such fiduciaries, unless the
instrument or order appointing such fiduciaries otherwise directs.
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 is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares (except that if the right to vote be expressly given in writing to the
pledgee and notice thereof delivered to the Corporation in writing by the
pledgee, the shareholder shall not have the right to vote the shares so pledged)
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required to be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action
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so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
SECTION 13. ADJOURNMENTS. If a meeting is adjourned to another time or
place, notice of the adjourned meeting need not be given if the time and place
thereof are announced at the meeting at which the adjournment is taken. The
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty (30) days or a new
record is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each shareholder of record entitled to vote at the meeting,
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS AND EXECUTIVE COMMITTEE. The business and affairs
of the Corporation shall be managed by its Board of Directors. The Board of
Directors may, by resolution passed by a majority of the whole Board, designate
two (2) or more of its number to constitute an Executive Committee, who, to the
extent provided in the resolution, shall have and exercise the authority of the
Board of Directors in the management of the Corporation.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors which
shall constitute the whole Board of Directors shall be fixed from time to time
by resolution passed by the Board or by
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the shareholders (any such resolution of either the Board of Directors or
shareholders being subject to any later resolution by either of them) but in no
event shall such number be less than one. No resolution shall have the effect of
shortening the term of any incumbent director. Directors shall be elected at the
annual meeting of shareholders and shall continue in office until their
successors shall have been elected and qualified. Directors need not be
residents of Florida nor need they be the holder of any shares of the capital
stock of the Corporation.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held without other notice than this By-Law, immediately after, and at
the same place as, the annual meeting of shareholders The Board of Directors may
provide, by resolution, the time and place, either within or without the State
of Florida, for holding of additional regular meetings without other notice than
such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board, the President or
any two (2) directors. The person or persons authorized to call special meetings
of the Board of Directors may fix any place, either within or without the State
of Florida, as the place for holding any special meeting of the Board of
Directors called by them.
SECTION 5. NOTICE. Written notice of any special meeting shall be given to
each director at least two (2) days before the meeting, either by personal
delivery or by mail, telegram or
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cablegram. Any director may waive notice of any meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such meeting, and
a waiver of any and all objections to the place of meeting, the time of meeting,
or the manner in which it was called or convened, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither, the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver or notice of
such a meeting.
SECTION 6. QUORUM. A majority of the number of directors fixed by or in the
manner prescribed in the By-Laws of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
provided, that if less than a majority of the directors are present at that
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
SECTION 7. MANNER OF ACTING. The act of majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors.
SECTION 8. INFORMAL ACTION BY DIRECTORS. Any action required to be taken at
a meeting of the Directors of a corporation or any action which may be taken at
such meeting may be taken without a meeting if a consent in writing, setting
forth the action so taken,
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shall be signed by all directors and such consent shall have the same effect as
a unanimous vote.
SECTION 9. VACANCIES Any vacancy occurring in the Board of Directors or in
a directorship to be filled by reason of an increase in the number of directors,
may be filled by the affirmative vote of a majority of the remaining directors
though 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
or until the next succeeding annual meeting of shareholders. Any directorship to
be filled by reason of an increase in the number of directors may be filled by
election by the Board of Directors for a term of office continuing only until
the next election of the directors by the shareholders.
SECTION 10. COMPENSATION. Directors, as such, shall not receive any stated
salaries for their services, but by resolution of the Board of Directors, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board of Directors; provided, that
nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 11. REMOVAL. At a meeting or shareholders called expressly for that
purpose, directors may be removed, with or without cause, by a vote of the
majority of the shares then entitled to vote at an election of directors.
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ARTICLE IV
OFFICERS
SECTION 1. CLASSES. The officers of the Corporation shall be a President, a
Treasurer, and a Secretary, and such other officers and assistant officers as
from time to time may be deemed necessary by the Board of Directors and elected
in accordance with the provisions of this Article. Any two (2) or more offices
may be held by the same person, except that the offices of President and
Secretary may not be held by the same person if there is more than one
shareholder. The failure to elect a President, Secretary or Treasurer shall not
affect the existence of this Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. 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 shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as convenient. Vacancies may be filled or new offices
created and filled at any meeting of the Board of Directors. Each officer shall
hold office until his successor shall have been duly elected and shall have
qualified or until his death, his resignation or his removal from office in the
manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever, in its judgment,
the best interests of the Corporation would be served thereby, but such removal
shall be
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without prejudice to the contract rights, if any, of the person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. PRESIDENT. The President shall be the principal executive
officer of the Corporation and shall in general supervise and control all of the
business and affairs of the Corporation. He shall preside at all meetings of the
shareholders and of the Board of Directors. He may sign, with the Secretary or
any other proper officer of the Corporation thereunto authorized by the Board of
Directors, certificates for shares of the Corporation, any deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors have
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
By-Laws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. VICE PRESIDENT. In the absence of the President or in the event
of his inability or refusal to act, the Vice President shall perform the duties
of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Vice President shall
perform
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such other duties as from time to time may be assigned to him by the President
or by the Board of Directors.
SECTION 7. TREASURER. If required by the Board of Directors, the Treasurer
shall give a bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the Board of Directors shall determine. He shall: (a)
have charge and custody of and be responsible for all funds and securities of
the Corporation; (b) receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies, or other depositories as
shall be selected in accordance with the provisions of Article V of these
By-Laws; and (c) in general perform all the duties as from time to time may be
assigned to him by the President or the Board of Directors.
SECTION 8. SECRETARY. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors', meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all certificates for shares prior
to the issue thereof and to all documents, the execution of which on behalf of
the Corporation under this seal is duly authorized in accordance with the
provisions of these By-Laws; (d) keep a register of the post office address of
each shareholder which shall be furnished to the Secretary by such shareholder;
(e)
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sign with the President, or Vice President, certificates for shares of the
Corporation, the issue of which shall have been authorized by resolution of the
Board of Directors; (f) sign with the President, or Vice President, certificates
for shares for the Corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (g) have personal charge of the stock
transfer books of the Corporation; and (h) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the President or the Board of Directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers shall respectively, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The Assistant Secretaries, as and if
authorized by the Board of Directors, may sign with the President or Vice
President certificates for shares of the Corporation, the issue of which shall
have been authorized by a resolution of the Board of Directors. The Assistant
Treasurers and Assistant Secretaries in general shall perform such duties as
shall be assigned to them by the Treasurer or Secretary, respectively, or by the
President or the Board of Directors.
SECTION 10. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.
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ARTICLE V
CONTRACTS, LOANS, CHECK AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instruments in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the Corporation
and no evidence 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. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or 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. DEPOSITS. 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.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of the
Corporation shall be in such form as may
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be determined by the Board of Directors. Such certificates shall be signed by
the President and shall be sealed with the seal of the Corporation. All
certificates for shares shall be consecutively numbered. The name of the persons
owning the shares represented thereby with the number of shares and date of
issue shall be entered on the 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 that in the 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. Transfer of shares of the Corporation shall
be made only by the registered holder thereof or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of the certificate for such
share. The person in whose name shares stand on the books of the Corporation
shall be deemed the owner thereof for all purposes as regards the Corporation.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the resolution of
the Board of Directors.
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ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
SEAL
The Board of Directors shall provide a corporate seal which shall be in the
form of a circle and shall have inscribed thereon appropriate wording.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of these By-Laws, or under the provisions of the Articles of Incorporation, or
under the provisions of the corporation laws of the State of Florida, waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify each of its directors and officers who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or
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investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys, fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful.
Except as provided hereinbelow, any such indemnification shall be made by
the Corporation only as, authorized in the specific case upon determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth above. Such
determination shall be made: (a) by the Board of Directors by a majority vote
of a quorum of directors; or (b) by the shareholders.
Expenses (including attorneys' fees) incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action or proceeding if authorized by the Board of
Directors and upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation.
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To the extent that a director or officer has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to above, or
in defense of any claim issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith without any further determination that he has met
the applicable standard of conduct set forth above.
ARTICLE XII
AMENDMENTS
The Board of Directors shall have the power and authority to alter, amend
or rescind the By-Laws of the Corporation at any regular or special meeting at
which a quorum is present by a vote of a majority or the whole Board of
Directors, subject to the power of the shareholders to change or repeal such
By-Laws at any annual or special meeting of shareholders at which a quorum is
present, by a vote of a majority of the stock represented at such meeting,
provided, that the notice of such meeting shall have included notice of any
Proposed alteration, amendment or rescission.
I certify that these are the By-Laws adopted by the Board of Directors of
the Corporation.
/s/ Donald F. Mintmire
------------------------------------
Secretary
Date Signed: 3/24/97
------------------------
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Consent of Independent Certified Public Accountants
The Board of Directors and Stockholders
CentraCan, Inc.
We consent to the use of our report dated January 4, 1999, included herein, with
respect to the consolidated financial statements of CentraCan, Inc. and
subsidiary as of September 30, 1998 and 1997 and for the period from October 1,
1997 to March 30, 1998 and the period from March 31, 1998 to September 30, 1998
and for each of the years in the two-year period ended September 30, 1997, and
to the reference to our Firm under the heading "Experts"in the Prospectus.
Our report dated January 4, 1999, contains an explanatory paragraph that states
that the Company has suffered recurring losses from operations and has a net
working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG LLP
------------------------
New York, New York
February 5, 1999
<PAGE>
Consent of Independent Certified Public Accountants
The Board of Directors and Stockholders
Healthcare Merger Company, Inc.
We consent to the use of our report dated January 4, 1999, included herein, with
respect to the consolidated financial statements of Healthcare Merger Company,
Inc. as of September 30, 1998 and for the period from March 9, 1998 (date of
inception) to September 30, 1998 and to the reference to our Firm under the
heading "Experts" in the Prospectus.
Our report dated January 4, 1999, contains an explanatory paragraph that states
that the Company has suffered recurring losses from operations and has a net
working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG LLP
------------------------
New York, New York
February 5, 1999
<PAGE>
Consent of Independent Certified Public Accountants
The Board of Directors and Stockholders
Impacto Internacional de Montes de Oca, S.A.
Centro Medico Los Angeles, CENTRACAN, S.A.
Centro de Biopsia Esterotaxica y Mamografia, S.A.
We consent to the use of our report dated November 27, 1998, included herein,
with respect to the combined financial statements of Impacto Internacional de
Montes de Oca, S.A., Centro Medico Los Angeles, CENTRACAN, S.A. and Centro de
Biopsia Esterotaxica y Mamografia, S.A., as of March 30, 1998 and September 30,
1997 and 1996 and the related combined statements of operations, stockholders'
equity and cash flows for the period from October 1, 1997 to March 30, 1998 and
for each of the years in the two-year period ended September 30, 1997 and to the
reference to our Firm under the heading "Experts" in the Prospectus.
Our report dated November 27, 1998, contains an explanatory paragraph that
states that the Company has suffered recurring losses from operations and has a
net working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. The combined financial statements do not include
any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG Peat Marwick
---------------------
San Jose, Costa Rica
February 5, 1999
