UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to _______________
Commission File No: 2-35700
Wasatch Pharmaceutical, Inc. (formerly Ceron Resources
Corporation)
(Exact name of registrant as specified in charter)
Utah 84-0854009
State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization
714 East 7200 South, Midvale, Utah 84047
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 566-9688
Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to section 12(g) of the Act:
None
(Title of class)
Check whether the Issuer (1) filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the Registrant was
required to file such reports), Yes [ ] No [X ] and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year:
$225,041
At May 28, 1996, the aggregate market value of the voting stock
held by non-affiliates was $0, because there is currently no
established trading market for the Issuer's voting stock.
As of May 28, 1996, registrant had 18,239,256 shares of Common
Stock issued and outstanding.
<Page 1>
(Cover page continued on next page)
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by
reference and the part of the form 10-KSB (e.g., part I, part II,
etc.) into which the document is incorporated: (1) Any annual
report to security holders; (2) Any proxy or other information
statement; and (3) Any prospectus filed pursuant to rule 424(b)
or (c) under the Securities Act of 1933: None
Transitional Small Business Disclosure Format: Yes [ ] No [X]
EXPLANATORY NOTE
On December 29, 1995, the Registrant acquired all of the issued
and outstanding shares of Medisys Research Group, Inc., a Utah
corporation, through the issuance of shares of Common Stock of
the Registrant. Thereafter, on January 16, 1996, the Registrant
merged with and into Wasatch Pharmaceutical, Inc., a Utah
corporation, wherein Wasatch Pharmaceutical, Inc. became the
surviving corporation. The merger was performed for the purpose
of changing the domicile of the Registrant from Delaware to Utah,
effecting a name change to Wasatch Pharmaceutical, Inc., and
changing the par value of the Common Stock from $0.01 per share
to $0.001 per share.
In addition, the Registrant has changed its fiscal year end to
December 31.
<Page 2>
TABLE OF CONTENT
PART 1 Page
- ------ ----
ITEM 1. DESCRIPTION OF BUSINESS 4
ITEM 2. DESCRIPTION OF PROPERTIES 5
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5
PART II
- -------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 5
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 6
ITEM 7. FINANCIAL STATEMENTS 7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 7
PART III
- --------
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT 8
ITEM 10. EXECUTIVE COMPENSATION 9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12
PART IV
- -------
ITEM 13. FINANCIAL STATEMENTS, EXHIBITS AND REPORTS ON FORM 8-K 12
<Page 3>
ITEM I. DESCRIPTION OF BUSINESS
History and Organization
The Company was organized under the laws of the State of Utah
as Ceron Oil Company on March 25, 1980. In a series of
transactions completed on February 6, 1981, the Company acquired,
merged with and became successor to Folio One Productions, Ltd.
("Folio"), a publicly held, inactive Delaware Corporation, the
name of which was changed to Ceron Resources Corporation.
Since the Company's inception and until its acquisition of
Medisys Research Group, Inc. on December 29, 1995, the Company's
revenue, operating profit or loss, and identifiable assets have
been attributable to only one industry segment, the oil and gas
industry. During December, 1985, the two oil and gas wells the
Company had an interest in were plugged and abandoned due to the
depletion of reserves and economic conditions in the industry.
Since that time, the business activity of the company, including
the acquisition, development and promotion of oil and gas
properties, have been conducted on a limited scale with primary
emphasis on maintaining assets held by the Company. Since
December, 1985, the Company's principal resources have been the
sublease income from its office spaces, interest, and de minims
film royalties.
On December 29, 1995, the Issuer acquired all of the issued and
outstanding shares of Medisys Research Group, Inc., a Utah
corporation ("Medisys"), through the issuance of shares of Common
Stock of the Issuer. Thereafter, on January 16, 1996, the Issuer
merged with and into Wasatch Pharmaceutical, Inc., a Utah
corporation ("Wasatch"), wherein Wasatch became the surviving
corporation. The merger was performed for the purpose of
changing the domicile of the Registrant from Delaware to Utah,
effecting a name change to Wasatch Pharmaceutical, Inc. and
changing the par value to $0.001.
Medisys is a research company in the field of Dermatology and
was incorporated in Utah in September, 1989. Prior research was
conducted primarily by Gary V. Heesch (currently President and
CEO of Wasatch) through a predecessor company called Dermacare
Pharmaceutical, Inc. ("Dermacare") beginning in the early 1980's.
A substantial portion of Medisys's research has been devoted to
developing the "Skin Fresh Methodology" for the treatment of
acne, eczema, psoriasis, contact dermatitis, seborrhea, and other
less serious skin disorders. The treatment program avoids the
use of prescription drugs taken internally and includes a regimen
and the topical application of FDA approved antibiotics.
Clinical studies were conducted in 1983 and 1985 using the Skin
Fresh Technology with very favorable results. In 1989, Dermacare
discontinued its operations and all of the rights to the
technology were assigned to Medisys in exchange for a 5% royalty
on product sales being paid to the former shareholders of
Dermacare.
In addition, Medisys has developed a family of products,
including cleansers, astringents, and lotions that are sold as
part of the treatment regimen. These products are manufactured
in an FDA approved laboratory located in California. In
connection with the sale of its products, Medisys may offer other
skin care products such as soaps and cosmetics.
Through clinical studies and test marketing at doctors'
offices, the management of Medisys determined that optimum
commercialization of the treatments could be accomplished only in
a uniform and consistent clinical environment as opposed to the
sale of the active prescription drug through pharmacies.
Further, management of Medisys believes that for its skin care
treatment to be successful (i.e., total or near total clearing of
acne or eczema condition), the treatments must be used under a
prescribed topical maintenance regimen. For this reason, Medisys
created a wholly-owned subsidiary, American Institute of Skin
Care, Inc. ("AISC"), for the purpose of operating medical skin
care clinics. AISC set up three prototype clinics to begin
treating patients, to train a staff of medical and support
personnel, and to develop administrative procedures. The first
clinic was established in Salt Lake City, Utah in February, 1994.
The second clinic was established in Pocatello, Idaho in August,
1994, and a third clinic established in Provo, Utah in November,
1994. Hundreds of patients were treated in these three clinics
through 1995 while medical and administrative procedures were
finalized. During this prototype clinic stage, a limited amount
of advertising was conducted by each clinic to experiment with
different advertising media. A national advertising company
supervised these experiments and used the test results to develop
a comprehensive advertising and public relations plan to launch
with each new medical skin care clinic.
Having completed the purposes for establishing the prototype
clinics, and in an effort to reduce costs during the
developmental stage, AISC closed its Pocatello, Idaho clinic in
February, 1996 and reduced its Provo, Utah clinic operation to
two days per week in March 1996. Wasatch now intends to launch
its advertising campaign and to set up additional skin care
clinics. (See "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.")
<Page 4>
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's administrative and clinical offices are located
at 714 East 7200 South, Midvale, Utah, and consists of 1,800
square feet. The Company leases this space from an unrelated
third party for $1,889 per month. The term of the lease is 12
months, of which there are 4 months remaining. In addition, the
Company operates a part-time clinic at 777 North 500 West #206,
Provo, Utah, consisting of 1,000 square feet. The Company leases
this space from an unrelated third party for $650 per month. The
term of the lease is 12 months, of which there are 6 months
remaining.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At the present time, there is no public market for the
Company's common stock and there is no assurance that a public
market will develop. The last known closing bid price was $0.05
on May 23, 1986, as reported by Wilson-Davis & Company of Salt
Lake City, Utah. The Company will attempt to obtain a principal
market maker to include the Company's common stock from quotation
in the over-the-counter market on the NASD's OTC Bulletin Board.
Fiscal Year Ended December 31, 1993 High Bid Low Bid
----------------------------------- -------- -------
First, Second, Third and Fourth Quarter N/A N/A
Fiscal Year Ended December 31, 1994 High Bid Low Bid
----------------------------------- -------- -------
First, Second, Third and Fourth Quarter N/A N/A
Fiscal Year Ended December 31, 1995 High Bid Low Bid
----------------------------------- -------- -------
First, Second, Third, and Fourth Quarter N/A N/A
There were approximately 430 record holders of the Company's
Common Stock on May 28, 1996, as reported by the Company's
transfer agent. No dividends have been paid on the Company's
stock to date. The Company's preferred stock is not publicly
traded.
<Page 5>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
At this time, the operation of Wasatch consists of the
operation of its two wholly owned subsidiaries, Medisys Research
Group, Inc. ("Medisys") and American Institute of Skin Care, Inc.
("AISC").
Medisys owns all the rights to the technology developed by Mr.
Heesch through Dermacare and Medisys and has licensed AISC to
operate clinics and sell products that relate to this technology
and any future technology developed by Medisys. The technology
has been used in prototype clinics for the past two years and has
proven to be effective in its present form without additional
development. Currently, other research and development has been
limited due to limited financial resources. However, as funds
become available, Medisys will conduct additional research in the
field of dermatology and other related medical fields, and will
market its technology and products through AISC clinics and other
marketing channels. Although the Company may choose to market
its technology through licencing agreements, Medisys is not
actively promoting the licensing of its technology.
AISC currently operates a full time clinic in Salt Lake City,
Utah and a part-time clinic in Provo, Utah. As funds are
available for expansion of its clinical operations, AISC plans to
open and operate medical skin care clinics across the country
using the "Skin Fresh Methodology". These company owned clinics,
which are patterned after the prototype clinics, would be
established in large metropolitan areas under the supervision of
a licensed physician. Because the treatment approach to these
common skin problems is mainly topical and doesn't rely on hard
prescription drugs taken internally, medical assistants are used
for most of the treatment follow-up. Physicians are used when it
is medically necessary.
The market in the United States for those suffering from these
common skin disorders is substantial, accounting for over 70% of
the patients that seek medical treatment from dermatologists. In
addition, a much larger market has opened up with the recent
development of a skin rejuvenation treatment program that can be
administered through the skin care clinics. The Company believes
the key to successful clinic operation and to introduce the Skin
Fresh Technology into the market place is an aggressive
advertising and public relation campaign which includes a
physician referral program, working closely with HMO's and
insurance companies to become a preferred provider, and various
media advertising. A national advertising agency has developed a
comprehensive marketing and advertising campaign for the Company
which will be launched as funding becomes available.
At the present time and for the foreseeable future, the primary
source of revenue and profits will come from the clinic
operations of AISC.
Revenues
The purpose of the development stage was to establish medical
and administrative procedures. During this period, revenues from
operations have been limited because substantial funds have not
been available to the Company to launch a major advertising and
public relations campaign to promote the Skin Fresh Methodology.
Revenues from clinic operations consist of professional fees
charged for the services of the physician and trained medical
assistants and product sales from the sale of products through
the clinics. During the first year of operation in 1994,
combined revenues were approximately $115,000. Because of a
second and third clinic opening in the second half of 1994,
revenues for fiscal year 1995 increased to $225,000, with two-
thirds of the revenue coming from product sales. With the
closing down of the Pocatello clinic in March, 1996 and a minimal
amount of money being spent on advertising, revenue from the
existing two clinics is not expected to increase during the first
half of fiscal year 1996. However, as funds become available to
launch the marketing campaign and to open up additional clinics
during the second half of fiscal year 1996, revenues from
professional fees and product sales should increase following a
two to three month ramp up period for each new clinic.
Expenses
The company is currently operating at a loss because of the
startup expenses, the training of the support staff and the
minimal amount of money being spent on marketing. The Company
had a combined operating loss of $816,444 for the past two fiscal
years due to the costs of start-up and from operating the three
prototype clinics. The report of the Company auditor contains a
going concern modification as to the ability of the Company to
continue operations. Fixed monthly expenses to operate the
clinics and the support staff of Wasatch amount to approximately
$42,000 per month. Without additional funding from equity or
debt sources, of which there can be no assurance that additional
funds will be received, there is substantial doubt as to the
Company's ability to satisfy its current obligations and continue
in business.
<Page 6>
Plan of Operations
The results of operations during the first two years of
operating the prototype clinics are not indicative of future
operating results because the purpose of the prototype clinics
was to establish operational procedures and the Company did not
have the funding available to launch the appropriate related
advertising and marking campaign necessary properly promote the
Company's technology. Working capital requirements for the past
two years were financed through loans from private individuals.
In order to continue operating the prototype clinics and pay the
staff of the Company, additional funding will be needed until
revenues from professional fees and the sale of product increase
to the point to covering such costs. The Company currently is
operating at a loss of approximately $30,000 per month and
expects to continue operating at such a loss. Additional funds
from either debt or equity sources will be required by the
Company to meet the Company's current and ongoing obligations. In
April 1996, the Company entered into a contract with an insurance
company intended to provide the Company with working capital over
the next two years, beginning in August 1996. In addition, the
Company is seeking other funding sources including debt
financing. However, with over $900,000 in current liabilities
and only $48,000 in assets, there is little, if any, assurance
that debt financing can be obtained, and if obtain, would require
the personal guarantees of the Company's officers and directors
or other persons.
If the Company can obtain additional funding, the Company plans
to open four additional clinics in strategic metropolitan areas
and to begin a related advertising and marketing campaign to
support the new clinics and the two clinics currently in
operation. The Company's goal would be to expand clinical
operations to other locations once the six clinics were operating
profitability. The Company estimates that it will need
approximately $500,000 to establish the four additional clinics
and to launch the related marketing campaign. The Company will,
for the time being, be dependent on the contract from the
insurance company to fund the expansion of the its clinical
operations. If the Company's contract with the insurance company
does not produce the anticipated revenue, the Company will not
have sufficient funds to carry out its plan without looking to
other sources for funding.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are set forth
immediately following the signature page to this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has had no disagreements with its certified public
accountants with respect to accounting practices or procedures or
financial disclosure.
<Page 7>
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth as of May 28, 1996, the name,
age, and position of each executive officer and director and the
term of office of each director of the Company.
Name Age Position Director or Officer Since
---- --- -------- -------------------------
Gary V. Heesch 59 President & Director December 29, 1995
David K. Giles 50 C.F.O., V.P & Secretary December 29, 1995
Craig Heesch 58 Director December 29, 1995
Jack D. Brotherson 57 Director December 29, 1995
Robert Arbon, M.D. 59 Director December 29, 1995
Set forth below is the biographical information on each of the
board of directors:
Gary V. Heesch. Mr. Heesch has been a director of Medisys
Research Group, Inc. since its incorporation in 1989 and its
president since January, 1993. Since 1983, Mr. Heesch has
developed technology in the field of Dermatology resulting in
medical therapies directed at the treatment of acne, eczema and
other common skin disorders.
David K. Giles, MBA. Mr. Giles has been a consultant with
Medisys since 1993 and a vice president and secretary/treasurer
of Medisys since June, 1994. Prior to coming to Medisys, Mr.
Giles worked from 1981 to 1993 for EFI Electronics Corporation,
Salt Lake City, Utah, a Utah public corporation [NASDAQ: EFIC],
serving for most of that time as CFO and Vice President of
Finance and Administration. Mr. Giles received his BS degree
from the University of Utah (1970) and an MBA from the University
of Utah (1971).
Craig Heesch. Mr. Heesch has been a director of Medisys since
1989. Since 1975, Mr. Heesch has been a senior partner at CV
Associates, Vancouver, Washington, a technical consulting firm
assisting in the development of technologies for disposition into
the marketplace.
Jack D. Brotherson, Ph.D. Dr. Brotherson has been a director of
Medisys since 1991 and has worked full time for Brigham Young
University , Provo, Utah since 1969. Dr. Brotherson is currently
a professor of Resource Management in the Department of Botany
and Range Sciences, having earned several degrees including a BS
from B.Y.U. (1964), a MS from Iowa State University (1967), and a
Ph. D. from Iowa State University (1969).
Robert Arbon, M.D. Dr. Arbon has been a director of Medisys
since 1991. Dr. Arbon is an ear, nose and throat specialist, and
has for in excess of the past five years been practicing in
Provo, Utah. Dr. Arbon received his BS degree from the
University of Utah (1961) and M.D. from the University of Utah,
College of Medicine (1964).
Each director of the company serves for a term of one year and
until his successor is elected at the Company's annual
shareholders' meeting and is qualified, subject to removal by the
Company's shareholders. Each officer serves, at the pleasure of
the board of directors, for a term of one year and until his
successor is elected at the annual meeting of the board of
directors and is qualified.
Except as indicated below, to the knowledge of management,
during the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any
state insolvency law, nor had a receiver, fiscal agent or similar
officer appointed by a court for the business or property of such
person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any
corporation or business association of which he was an executive
officer at or within two years before the time of such filing.
(2) was convicted in a criminal proceeding or named subject of
a pending criminal proceeding (excluding traffic violations and
other minor offenses):
<Page 8>
(3) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining him
or otherwise limiting, the following activities:
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, associated person of any
of the foregoing, or as an investment advisor, underwriter,
broker or dealer in securities, or as an affiliate person,
director or employee of any investment company, or engaging in or
continuing any conduct or practice in connection with such
activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection
with any violation of federal or state securities laws or federal
commodities laws;
(4) was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any federal or
state authority barring, suspending, or otherwise limiting for
more than 60 days the right of such person to engage in any
activity described above under this Item, or to be associated
with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission to have
violated any federal or state securities law, and the judgment in
such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or
vacated.
(6) was found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.
Compliance with Section 16(a) of the Exchange Act
The Company is not subject to section 16(a) of the Exchange
Act.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table set forth certain summary information
concerning the compensation paid or accrued for each of the
Company's last three completed fiscal years to the Company's or
its principal subsidiaries chief executive officer and each of
its other executive officers that received compensation in excess
of $100,000 during such period (as determined at December 31,
1995, the end of the Company's last completed fiscal year):
<TABLE>
Long Term
Compensation
------------
Annual Compensation Awards Payouts
------------------- ------ -------
Name and Principal
- ------------------ Restricted
Position Bonus Other Annual Stock Options/ LTIP All Other
Year Salary ($) Compensation Awards SARs Payout Compensation
---- ------ ----- ------------ ---------- -------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Doyle Huber 1995 -0- -0- -0- -0- -0- -0- -0-
President 1994 -0- -0- -0- -0- -0- -0- -0-
and CEO 1993 -0- -0- -0- -0- -0- -0- -0-
Gary V. Heesch
President
and CEO 1995 -0- -0- $36,595 -0- -0- -0- -0-
[Medisys
Research Group]
</TABLE>
<Page 9>
It is anticipated that Mr. Heesch will receive a annual
compensation of approximately $75,000 for fiscal year 1996.
Employment Contracts and Termination of Employment and Changes in
Control Arrangements
The Company does not have employment contracts with any of its
officers and there are no compensatory plans or arrangements,
including payments to be received from the Company, with respect
to any person named as a director, executive officer, promoter or
control person above which would in any way result in payments to
any such person because of his resignation, retirement, or other
termination of such person's employment with the Company or its
subsidiaries, or any change in control of the Company, or a
change in the person's responsibilities following a changing in
control of the Company.
Board Compensation
The Company may, from time to time, retain certain of its
directors to provide consulting or other professional services to
the Company at standard industry rates or enter into transactions
in which non-salaried directors receive compensation as sellers,
brokers, or is some other capacity. Any decision to retain such
individuals or to enter into such transaction will be subject to
the approval of a majority of the disinterested directors.
The Company's directors do not receive a payment for each
meeting of the board of directors which they attend. However,
all directors are entitled to be reimbursed for travel and other
expenses incurred in connection with attendance at such meetings.
During the year ended December 31, 1995, no directors' fees or
cost reimbursement were paid.
<Page 10>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MAN
AGEMENT
The following tables set forth as of May 28, 1996, the name
and the number of shares of the Company's Common Stock, par value
$0.001 per share, held of record or beneficially by each person
who held of record, or was known by the Company to own
beneficially, more than 5% of the 18,239,256 issued and
outstanding shares of the Company's Common Stock, and the
shareholdings of the officers and directors of the Company and
its principal subsidiaries.
Security Ownership of Certain Beneficial Owners
Title of Amount and Nature of
Class Name of Beneficial Beneficial Ownership (1) Percent
- -------- ------------------ ------------------------ -------
Owner
-----
Common Gary V. Heesch 2,396,682 13.1
1614 East 5600 South
SLC UT 84121
Craig Heesch 1,581,818 8.7
3201 S.E. Balboa Dr.
Vancouver WA 98684
Dan B. Roberts 1,000,000 5.5
3355 N. University, #250
Provo UT 84604
Security Ownership of Officers and Directors of the Company
and Principal Subsidary
Title of Amount of Nature of
Class Name of Beneficial Beneficial Ownership (1) Percent
------- ------------------ ------------------------ -------
Owner
-----
Common Gary V. Heesch, D 2,396,682 13.1
Pres., CEO, and
Director <2>
Common Craig Heesch, Director D 1,581,818 8.7
Common David K. Giles, V.P.,
Secretary D 800,000 4.4
Common Robert Arbon, Director D 300,000 1.6
Common Jack Brotherson, Director D 200,000 1.1
Common Dan B. Roberts <3> D 1,000,000 5.5
--------- ---
All Officers and Director
Directors as a Group (6)
Total Beneficial Ownership D 6,278,500 34.4
========= ====
(1) Indirect and direct ownership are referenced by an "I" or
"D", respectively. All shares owned directly are owned
beneficially and of record and such shareholder has sole voting,
investment, and dispositive power, unless otherwise noted.
(2) Includes 1,199,500 held in trust for the benefit of the
children of Gary V. Heesch and 100,000 shares held in trust for
the benefit of Carol Lee Poulton, all of which are deemed to be
controlled by Mr. Heesch.
(3) Resigned from the board of directors, effective December
31, 1995.
<Page 11>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 13. FINANCIAL STATEMENTS, EXHIBITS AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The following financial statements
are included in this report.
Title of Document Page
- ----------------- ----
Report of Jones, Jensen & Company, Certified Public Accountants 15
Consolidated Balance Sheets as of December 31, 1995 and 1994 17
Consolidated Statements of Operations for the years ended
December 31, 1995, 1994, and 1993, and from inception (March 25, 1980)
through December 31, 1995 19
Consolidated Statements of Stockholders Equity (Deficit) through
December 31, 1995 21
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993, and from inception (March 25, 1980)
through December 31, 1995 23
Notes to Consolidated Financial Statements 25
(a)(2) Financial Statement Schedules. The following financial
statement schedules are included as part of this report:
None.
<Page 12>
(a)(3) Exhibits. The following exhibits are included as part of
this report:
SEC
---
Exhibit Reference
Number Number Title of Document Location
- ------- --------- ----------------- --------
Item 2 Plan of Acquisition, Reorganization, etc.
- -------------------------------------------------
2.01 2 Acquisition Agreement between Ceron
Subsidiary, Inc. and Medisys Research
Group, Inc., a Utah corporation Incorporated
by reference(2)
Item 3 Articles of Incorporation and Bylaws
- --------------------------------------------
3.01 3 Articles of Incorporation of Ceron
Resources Corporation Incorporated
by reference*
3.02 3 Bylaws of Wasatch Pharmaceutical, Inc.
This filing
3.03 3 Articles of Amendment to the Articles of
Incorporation Incorporated
by reference*
3.04 3 Articles of Incorporation of Wasatch
Pharmaceutical, Inc. This filing
3.05 3 Certificate/Articles of Merger of
Ceron Subsidiary, Inc. and Medisys
Research Group, Inc. Incorporated
by reference(2)
3.06 3 Certificate/Articles of Merger of Ceron
Resources Corporation, with and into
Wasatch Pharmaceutical, Inc. This filing
Item 4 Instruments Defining the Rights of Security Holders
- -------------------------------------------------------------
4.01 4 Designation of Rights, Privileges, and
Preferences of Series A Preferred Stock of
Wasatch Pharmaceutical, Inc. This filing
Item 10 Material Contracts
- ---------------------------------------
10.01 5 Lindberg-Hammar Associates, Inc. Agreement,
dated April 15, 1996 This filing
10.02 6 Schmidt/Westerdahl Group, Ltd. Agreement
for Professional Services This Filing
* Incorporated by reference from the Company's registration
statement on form S-1 filed with the Commission, SEC file no. 2-35700.
(2) Incorporated by reference from the Company's Current Report on
Form 8-K filed with the Commission on January 16, 1996.
(b) Reports on form 8-K
-------------------
None.
<Page 13>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this amended report has been signed below by
the following person on behalf of the Registrant and in the
capacity and on the date indicated:
Date: July 12, 1996 WASATCH PHARMACEUTICAL, INC.
By /s/ Gary V. Heesch
--------------------------
Gary V. Heesch, President and
Chief Executive Officer
Date: July 12, 1996 By /s/ David K. Giles
-------------------------
David K. Giles, Secretary
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Date: July 12, 1996 By /s/ Gary V. Heesch
-----------------------
Gary V. Heesch, Director
Date: By
------------------------
Craig Heesch, Director
Date: July 12, 1996 By /s/ Jack D. Brotherson
---------------------------
Jack D. Brotherson, Director
Date: July 12, 1996 By /s/ Robert Arbon, M.D.
---------------------------
Robert Arbon, M.D., Director
<Page 14>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Wasatch Pharmaceutical, Inc.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheets of
Wasatch Pharmaceutical, Inc. (formerly Ceron Resources
Corporation) (a development stage company) as of December 31,
1995 and 1994, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for
the years ended December 31, 1995, 1994 and 1993 and from
inception on March 25, 1980 through December 31, 1995. 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.
Except as discussed in the following paragraph, we conducted our
audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatements. 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.
We did not observe the physical inventory (stated at $15,564)
taken as of December 31, 1994, since that date was prior to our
initial engagement as auditors for the Company, and the Company's
records do not permit adequate retroactive tests of inventory
quantities.
In our opinion except for the effects of such adjustments, if
any, as might have been determined to be necessary in the
consolidated balance sheet as of December 31, 1994 and the
consolidated statements of income, stockholders' equity (deficit)
and cash flows had we been able to observe the physical inventory
taken as of December 31, 1994, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Wasatch Pharmaceutical, Inc.
(formerly Ceron Resources Corporation) (a development stage
company) as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for the years ended December 31,
1995, 1994 and 1993 and from inception on March 25, 1980 through
December 31, 1995 in conformity with generally accepted
accounting principles.
<Page 15>
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 7 to the consolidated financial
statements, the Company is a development stage company with no
significant operating results to date. These circumstances raise
substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note 7. The consolidated financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Jones, Jensen & Company
May 14, 1996
<Page 16>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
December 31,
--------------------
1995 1994
CURRENT ASSETS ---- ----
Cash $ 777 $ 34,968
Accounts receivable trade 2,081 3,042
Accounts receivable stockholder (Note 2) 500 500
Inventory (Note 1) 9,374 15,564
Prepaid expenses 600 925
--- ---
Total Current Assets 13,332 54,999
------ ------
PROPERTY AND EQUIPMENT - Net (Note 1) 34,456 34,503
------ ------
OTHER ASSETS
Deposits 266 1,334
--- -----
TOTAL ASSETS $ 48,054 $ 90,836
====== ======
<Page 17>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
December 31,
---------------
1995 1994
---- ----
CURRENT LIABILITIES
<S> <C> <C>
Cash overdraft $ 26,963 $ 89
Accounts payable trade 112,628 57,596
Accounts payable related party (Note 2) 12,500 7,500
Royalties payable (Note 3) 7,773 4,659
Accrued interest 90,306 36,663
Accrued payroll taxes 29,911 -
Current portion of notes payable (Note 4) 649,640 318,692
------- -------
Total Current Liabilities 929,721 425,199
------- -------
LONG-TERM LIABILITIES
Notes payable - less current portion (Note 4) - 100,000
------- -------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.05 par value, 1,000,000
shares authorized, 49,258 shares issued
and outstanding 2,463 -
Common stock, $0.001 par value 50,000,000
shares authorized, 12,089,256 and -0- shares
issued and outstanding, respectively 12,089 -
Common stock, no par value, 10,000,000 shares
authorized, -0- and 9,475,000 shares issued and
outstanding, respectively - 194,652
Additional paid-in capital 184,051 -
Deficit accumulated during the development stage (1,080,270) (629,015)
----------- ---------
Total Stockholders' Equity (Deficit) (881,667) (434,363)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 48,054 $ 90,836
=========== ==========
</TABLE>
<Page 18>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
From Inception
on March 25,
For the Years Ended 1980 Through
December 31, December 31,
---------------------------------- ---------------
1995 1994 1993 1995
---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C>
Professional fee income $69,251 $45,086 $ - $114,337
Product sales 155,790 67,573 - 223,363
------- ------ ---- -------
Total Revenues 225,041 112,659 - 337,700
------- ------- ---- -------
COST OF GOODS SOLD 17,664 12,558 - 30,222
------- ------- ---- -------
Gross Profit on Sales 207,377 100,101 - 307,478
------- ------- ---- -------
OPERATING EXPENSES
Salaries 83,663 300 - 83,963
Payroll taxes 8,700 - - 8,700
Advertising 86,250 80,923 10,663 185,068
Professional medical
services 77,893 30,375 - 108,268
Legal and accounting 2,910 8,613 33,620 129,223
Rent 34,629 24,695 - 59,324
Depreciation 7,499 2,890 - 10,389
Employee leasing 113,347 105,398 - 218,745
Consulting fees 107,035 112,540 24,000 273,575
General and administrative 73,447 73,778 18,490 165,931
------- ------- ------ -------
Total Operating
Expenses 595,373 439,512 86,773 1,243,186
INCOME (LOSS) BEFORE OTHER
INCOME (EXPENSE) AND PROVISION
FOR INCOME TAXES (387,996) (339,411) (86,773) (935,708)
OTHER INCOME (EXPENSES)
Royalty income - 430 1,892 2,322
Interest income 63 - - 63
Royalty expense (7,832) (5,470) (100) (13,401)
Interest expense (55,490) (20,738) (7,950) (94,132)
Loss on disposition of assets - - - (39,414)
-------- -------- ------ --------
Total Other Expenses $(63,259) $(25,778) $(6,158) $(144,562)
</TABLE>
<Page 29>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
From Inception
on March 25,
For the Years Ended 1980 Through
December 31, December 31,
------------------- ---------------
1995 1994 1993 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME (LOSS) BEFORE
PROVISION FOR
INCOME TAXES $(451,255) $ (365,189) $(92,931) $(1,080,270)
Provision for income
taxes (Note 1) - - - -
--------- -------- ------- -----------
NET INCOME (LOSS) $(451,255) $ (365,189) $ (92,931) $(1,080,270)
========= ======== ======= ===========
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK $ (0.05) $ (0.04) $ (0.01) $ (0.11)
====== ====== ====== ======
</TABLE>
<Page 20>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-in Development
--------------- ------------ Capital Stage
Shares Amount Shares Amount
------ ------ ------ ------ ---------- ------------
Balance,
<S> <C> <C> <C> <C> <C> <C>
September 7, 1989 - $- - $- $- $-
Stock issued at inception
at approximately $0.0005
to the Company's founders
for services rendered - - 10,000,000 5,334 - -
Contribution of capital by a
shareholder - - - 23,509 - -
Net loss from inception
through December
31, 1992 - - - - - (170,895)
----------- ---------- ---------- --------- ----------- ----------
Balance, December 31, 1992 - - 10,000,000 28,843 - (170,895)
Contribution of capital by
a shareholder - - - 20,000 - -
Net loss for the year ended
December 31, 1993 - - - - - (92,931)
---------- --------- --------- -------- ----------- ---------
Balance, December 31, 1993 - - 10,000,000 48,843 - (263,826)
Common stock issued in
payment of loan fees at
$0.005 per share in
December, 1994 - - 75,000 375 - -
Capital contributed by
a shareholder - - - 170,434 - -
Redemption and cancellation
of common stock for cash
and note payable - - (600,000) (25,000) - -
Net loss for the year ended
December 31, 1994 - - - - - (365,189)
----------- ---------- ---------- -------- ------------ -----------
Balance, December 31, 1994 - $ - 9,475,000 $194,652 $- $(629,015 )
----------- ---------- ---------- -------- ------------ -----------
</TABLE>
<Page 21>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
Deficit
Accumulated
Additional During the
Preferred Stock Common Stock Paid-in Development
Shares Amount Shares Amount Capital Stage
------ ------ ------ ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December
31, 1994 - $ - 9,475,000 $194,652 $- $ (629,015)
Stock issued at
$0.005 per share
for services rendered
during 1995 - - 550,000 2,767 - -
Common stock
issued at
$0.005 per share
in payment of loan
fees in
November 1995 - - 287,216 1,419 - -
Capital contributed
by a shareholder - - - 1,000 - -
Stock issued and
exchanged per merger
agreement between
Medisys Research
Group, Inc. and
Wasatch
Pharmaceutical 49,258 2,463 1,777,040 (187,749) 184,051 -
Net loss for
the year ended
December 31, 1995 - - - - - (451,255)
------ -------- ---------- ------- -------- ------------
Balance, December
31, 1995 49,258 $ 2,463 12,089,256 $12,089 $184,051 $(1,080,270)
====== ======= ========== ======= ======== ============
</TABLE>
<Page 22>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
From Inception
on March 25,
For the Years Ended 1980 Through
December 31, December 31,
1995 1994 1993 1995
---- ---- ---- --------------
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C> <C>
Net Income (Loss) $(451,255) $(365,189) $ (92,931) $ (1,080,270)
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided (Used) by Operating
Activities
Depreciation 7,861 2,888 - 10,749
Expenses paid with
common stock 4,186 375 - 5,709
Expenses paid by
shareholder 1,000 5,900 - 46,738
(Increase) decrease
in receivables 961 (3,042) - (2,081)
(Increase) decrease
in inventory 6,190 (15,564) - (9,374)
(Increase) decrease
in prepaids 325 (925) - (600)
(Increase) decrease
in deposits 1,068 (1,334) - (266)
Increase (decrease)
in cash overdraft 26,874 89 - 26,963
Increase (decrease)
in accounts payable 58,797 22,710 63,221 116,393
Increase (decrease)
in accrued payables 33,025 4,659 - 37,684
Increase (decrease)
in accrued interest 53,109 18,759 7,950 89,772
------ ------ ----- -------
Net Cash Provided
(Used) by Operating
Activities (257,859) (330,674) (21,760) (758,583)
--------- --------- -------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (7,814) (17,391) - (25,205)
--------- --------- ------- ---------
Net Cash Provided
(Used) by Investing
Activities $(7,814) $ (17,391) $ - $ (25,205)
--------- --------- -------- --------
</TABLE>
<Page 23>
WASATCH PHARMACEUTICAL, INC.
(Formerly Ceron Resources Corporation)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
<TABLE>
From Inception
on March 25,
For the Years Ended 1980 Through
December 31, December 31,
1995 1994 1993 1995
---- ---- ---- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES
<S> <C> <C> <C> <C>
Proceeds from loans $233,831 $292,500 $ - $ 656,121
Contribution of
capital by shareholder - 114,500 20,000 154,800
Repayment of loans (2,349) (3,598) - (5,947)
Redemption of common stock - (20,409) - (20,409)
--------- -------- ------- ---------
Net Cash Provided
(Used) by Investing
Activities 231,482 382,993 20,000 784,565
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (34,191) 34,928 (1,760) 777
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 34,968 40 1,800 -
-------- ------- ----- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 777 $ 34,968 $ 40 $ 777
======== ======= ====== =========
CASH PAID FOR
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON CASH FINANCING ACTIVITIES
Common stock issued for
services rendered $ 4,186 $ 375 $ - $ 5,709
Operating expenses paid
by shareholder $ 1,000 $ 5,900 $ - $ 46,738
</TABLE>
<Page 24>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
The consolidated financial statements presented are those of
Wasatch Pharmaceutical, Inc. (formerly Ceron Resources Corporation)
(a development stage company) (the Company), and its wholly owned
subsidiaries, Medisys Research Group, Inc. and American Institute of
Skin Care, Inc.. The Company was incorporated under the laws of the
State of Utah on March 25, 1980. The Company was initially engaged
in oil and gas exploration and development. In February 1981, the
Company merged with Folio One Productions, LTD. (a Delaware
Corporation) (Folio). The transaction was recorded as a purchase of
Folio by the Company. The Company ceased operations in 1986 and has
been inactive since that time.
Medisys Research Group, Inc. (Medisys), currently a wholly-
owned subsidiary of the Company was incorporated for the purpose of
developing treatment programs for various skin disorders. Medisys
was organized on September 7, 1989 as a Utah Corporation.
American Institute of Skin Care, Inc. (AISC), currently a
wholly-owned subsidiary of the Company, was incorporated to
administer the skin treatment programs developed by Medisys. AISC
was organized January 21, 1994 as a Utah corporation.
On December 29, 1995, Wasatch Pharmaceutical, Inc. (Wasatch)
and Medisys Research Group, Inc. (Medisys) completed an Agreement
and Plan of Reorganization whereby Wasatch issued 10,312,216 (on a 1
share for 1 share basis) shares of its common stock in exchange for
all of the issued and outstanding common stock of Medisys. Pursuant
to the reorganization, the name of the Company was changed to
Wasatch Pharmaceutical, Inc.
The acquisition was accounted for as a purchase by Medisys of
Wasatch, because the shareholders of Medisys control the company
after the acquisition. Therefore, Medisys is treated as the
acquiring entity. There was no adjustment to the carrying value of
the assets or liabilities of Wasatch in the exchange as the market
value approximated the net carrying value. Wasatch is the acquiring
entity for legal purposes and Medisys is the surviving entity for
accounting purposes.
b. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a December
31, year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid
investments with maturities of three months or less at the time of
acquisition.
d. Loss Per Share
The computations of loss per share of common stock are based
on the weighted average number of shares outstanding at the date of
the financial statements.
<Page 25>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
NOTE 1- ORGANIZATION AND HISTORY (Continued)
e. Provision for Taxes
At December 31, 1995, the Company had net operating loss
carryforwards of approximately $1,080,000 that may be offset against
future taxable income through 2010. No tax benefit has been reported
in the financial statements, because the Company believes there is a
50% or greater chance the carryforward will expire unused.
Accordingly, the potential tax benefits of the loss carryforward are
offset by a valuation allowance of the same amount.
f. Inventory
Inventory is recorded at the lower of cost or market, on a
first-in, first-out basis.
g. Property and Equipment
Property and equipment consisted of the following:
December 31,
1995 1994
---- ----
Furniture and fixtures $ 45,205 $37,391
Less accumulated depreciation (10,749) (2,888)
-------- -------
Net property and equipment $ 34,456 $ 34,503
======== =======
Furniture and office equipment are depreciated using the
straight-line method over their estimated useful lives of five to
seven years. Depreciation expense was $7,499, $2,890 and $-0- for the
years ended December 31, 1995, 1994 and 1993, respectively.
h. Principles of Consolidation
The consolidated financial statements include the accounts of
the Company's wholly owned subsidiaries, Medisys Research Group, Inc.
and American Institute of Skin Care, Inc. All material intercompany
transactions and balances have been eliminated.
NOTE 2 - RELATED PARTY TRANSACTIONS
During the years ended December 31, 1995, 1994 and 1993, the
shareholders of the Company contributed $1,000, $170,434 and $20,000,
respectively, to the Company for the payment of expenses on its behalf.
These amounts were treated as additional paid-in capital.
On October 11, 1994, the Company entered into an agreement
with a shareholder to redeem 600,000 shares of the shareholders issued
and outstanding common stock for $25,000. The Company paid the
shareholder $12,500 upon execution of the agreement, and an additional
$5,000 during 1994. The remaining balance of $7,500 is non-interest
bearing and is due on demand.
<Page 26>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
NOTE 2 - RELATED PARTY TRANSACTIONS (Continued)
During 1995, a director of a subsidiary of the Company
advanced $5,000 to the subsidiary. The advance is non-interest bearing
and is due upon demand.
During 1994, the Company loaned $500 to one of its officers
who is also a shareholder. The amount bears interest at a rate of 7%
per annum and is due upon demand.
NOTE 3 - ROYALTIES PAYABLE
A subsidiary of the Company (Medisys) acquired the marketing
rights to certain skin care products during 1991. As part of the
agreement, Medisys is required to pay royalties equal to 5% of gross
product sales. Once royalties totalling $10,000,000 have been paid,
Medisys will own the technology associated with the skin care products.
Annual royalty payments are due April 1 of the following year.
NOTE 4 - NOTES PAYABLE
December 31,
1995 1994
---- ----
The following is a description of the notes payable
Note payable, dated October 1, 1991, payable
to an attorney, due June 30, 1994, accruing
interest at 10%, unsecured $ 42,000 $42,000
Note payable, dated October 1, 1991, payable
to a CPA firm, due June 30, 1994, accruing
interest at 10%, unsecured 34,000 34,000
Note payable, dated October 1, 1991, payable
to an attorney, due June 30, 1994, accruing
interest at 10%, unsecured 3,500 3,500
Note payable, dated May 9, 1994, payable
to an individual, due November 9, 1996,
accruing interest at 10%, unsecured 100,000 100,000
Note payable, dated July 20, 1994, payable
to an individual, to be paid from the
proceeds of a proposed public offering,
accruing interest at 10%, unsecured 50,000 50,000
Note payable, dated July 20, 1994, payable
to an individual, to be paid from the
proceeds of a proposed public offering,
accruing interest at 10%, unsecured 50,000 -
-------- --------
Balance forward $ 279,500 $ 229,500
======== ========
<Page 27>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
December 31,
1995 1994
---- ----
Balance forward $ 279,500 $ 229,500
Note payable, dated July 30, 1994,
payable to a corporation, no stated
due date, accruing interest at 6%,
unsecured 32,852 34,192
Note payable, dated October 7, 1994,
payable to an individual, to be paid
from the proceeds of a proposed public
offering, accruing interest at 10%,
unsecured 50,000 50,000
Note payable, dated November 14, 1994,
payable to an individual, to be paid
from the proceeds of a proposed public
offering, accruing interest at 10%,
unsecured 50,000 50,000
Note payable, dated December 14, 1994,
payable to an individual, to be paid
from the proceeds of a proposed public
offering, accruing interest at 10%,
unsecured 50,000 50,000
Note payable, dated April 25, 1995,
payable to an individual, to be paid
the proceeds of a proposed public offering,
accruing interest at 10%, unsecured 115,000 -
Note payable, dated June 14, 1994, payable
to an individual, to be paid from the
proceeds of a proposed public offering,
accruing interest at 10%, unsecured 5,000 5,000
Note payable, dated August 23, 1995, payable
to an individual, to be paid from the proceeds
of a proposed public offering, accruing
interest at 10%, unsecured 10,000 -
Note payable, dated September 2, 1995, payable
to an individual, to be paid from the proceeds
of a proposed public offering, accruing
interest at 10%, unsecured 15,000 -
------ ------
Balance forward $ 607,352 $ 418,692
------- -------
<Page 28>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
Balance forward $ 607,352 $418,692
Note payable, dated November 28, 1995,
payable to an individual, to be paid from the
proceeds of a proposed public offering, accruing
interest at 10%, unsecured 20,000 -
Various notes payable, dated October through
December 1995 payable to individuals, to be
paid from the proceeds of a proposed public
offering, accruing interest at 10%,
unsecured 22,288 -
------- ---------
Total 649,640 418,692
Less current portion (649,640) (318,692)
--------- ---------
Total Long-term Liabilities $ - $ 100,000
========= =========
NOTE 5 - SUBSEQUENT EVENTS
On January 16, 1996, Ceron Resources Corporation merged with
and into Wasatch Pharmaceutical, Inc., which became the surviving
corporation. The merger was performed for the purpose of changing the
domicile of Ceron Resources Corporation to Utah from Delaware and
effecting a name change to Wasatch Pharmaceutical, Inc.
On April 15, 1996, the Company entered into an agreement with
Lindbergh-Hammar Associates, Inc. (Lindbergh), to exchange 6,000,000
shares of its common stock for 7,350 shares of Preferred Stock of
Lindbergh. The voting rights of the 6,000,000 shares of the Company's
common stock will remain with the Company's board of directors and
Lindbergh will be granted one seat on the Company's board of directors.
Lindbergh will redeem the preferred stock shares at their par value of
$1,000 per share in monthly increments equal to ten percent (10%) of
the Insurance Premium income generated as a result of the Company's
stock being assigned to the capital and surplus account of Lindbergh.
Lindbergh will redeem a minimum of $100,000 face value of the preferred
stock within 90 days after receiving a Certified Public Accountants
Certification letter confirming the bid price or value of the trading
shares of the Company. Lindbergh will also extend an option to the
Company to repurchase up to 90% of the 6,000,000 shares of its common
stock issued to Lindbergh at a price equal to 200% of Lindbergh's
original acquisition price. This option will expire three years from
the date of the agreement. All shares issued in accordance with this
agreement will be held in escrow until Lindbergh has redeemed all of
its preferred stock issued to the Company.
On April 1, 1996, the Company agreed to sell a total of
150,000 shares of unregistered common stock to two former directors and
officers of the company in a private placement transaction at $1.00 per
share. As of May 20, 1996, $96,750 had been received from the sale of
these restricted shares.
<Page 29>
WASATCH PHARMACEUTICAL, INC.
(formerly Ceron Resources Corporation)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1995 and 1994
NOTE 6 - PREFERRED STOCK
The Company's preferred stock (Series A) entitles the holder
to per-share annual dividends equal to 20% of the Company's net income
divided by 300,000, times the number of shares of preferred stock
outstanding (3.28% of net income based on preferred stock outstanding
at December 31, 1995 and 1994). Dividends are required to the extent
that there is net income and that there are funds legally available.
To the extent funds are not legally available in net income years, the
payment of the dividends calculated shall be deferred until such time
as there shall be funds legally available. The shares are redeemable
at the option of the Company at $2.00 per share plus accrued and unpaid
dividends. The shares have a liquidating value of $1 per share plus
accrued and unpaid dividends. There were no accrued and unpaid
dividends at December 31, 1995 and 1994.
On July 26, 1994, the shareholders of the Company passed a
resolution to allow the exchange of one share of preferred stock for
two shares of common stock. To date, no shares of preferred stock have
been exchanged.
NOTE 7 - GOING CONCERN
The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company is
in the development stage and has not established a source of revenues
sufficient to cover its operating costs which would allow it to
continue as a going concern. The Company has reached an agreement
with another corporation to raise short-term funding. (Note 5) The
Company plans to eventually seek long-term funding through a stock
offering. Management believes that sufficient funding will be raised
to meet the operating needs of the Company during the development
stage.
<Page 30>
Certificate/Articles of Merger
of
Ceron Resources Corporation
a Delaware corporation
with and into
Wasatch Pharmaceutical, Inc.,
a Utah corporation
THESE ARTICLES OF MERGER are executed and entered into this 12th
day of January, 1996, by and between WASATCH PHARMACEUTICAL, INC.,
a Utah corporation (hereinafter referred to as "WASATCH or the "Surviving
Corporation"), and CERON RESOURCES CORPORATION, a Delaware
corporation (hereinafter referred to as "CERON").
Witnesseth
I. Plan of Merger
Pursuant to these Articles of Merger, it is intended and agreed
that CERON will be merged with and into WASATCH and that WASATCH shall
be the Surviving Corporation, as provided below. The terms, conditions,
and understandings of the merger are set forth in the Agreement and Plan
of Merger between WASATCH and CERON dated as of January 12, 1996, a copy
of which is attached hereto as Exhibit "A" and incorporated herein by
this reference.
II. Certificate of Incorporation and Bylaws
On the consummation of the merger, the articles of incorporation and
bylaws of WASATCH shall be the articles of incorporation and bylaws of the
Surviving Corporation.
III. Name of Surviving Corporation
The name of the Surviving Corporation, which will continue in
existence after the merger, shall remain WASATCH PHARMACEUTICAL, INC.
IV. Officers and Directors
The officers and directors of CERON, shall become the officers and
directors of the Surviving Corporation.
V. Authorized and Outstanding Shares of CERON
CERON is authorized to issue 51,000,000 shares of capital stock,
consisting of 50,000,000 shares of common stock, $0.01 par value, of which
12,089,256 shares are issued and outstanding, and 1,000,000 shares of
preferred stock, $0.05 par value, of which 49,258 shares of Class A
Series Preferred Stock are issued and outstanding.
VI. Authorized and Outstanding Shares of WASATCH
WASATCH is authorized to issue 51,000,000 shares of capital stock,
consisting of 50,000,000 shares of common stock, $0.001 par value, of which
1,000 shares are issued and outstanding, and 1,000,000 shares of
preferred stock, par value $0.001, of which no shares are issued and
outstanding.
<Page 1>
VII. Approval by Shareholders of CERON
Of the 12,089,256 shares of common stock of CERON issued and
outstanding, all shares were voted in favor of the Agreement and Plan of
Merger, with no shares voting against or abstaining, all in accordance
with the provisions of the General Corporation Law of the State of
Delaware. Such shares were voted as a class; no shares of any other
class of stock issued and outstanding were entitled to vote thereon.
VIII. Approval by Shareholder of WASATCH
Of the 1,000 shares of common stock of WASATCH issued and
outstanding all shares were voted in favor of the Agreement and Plan of
Merger, with no shares voting against or abstaining, all in accordance
with the provisions of the Utah Revised Business Corporation Act. Such
shares were voted as a class; no shares of any other class of stock were
issued and outstanding and entitled to vote thereon.
IX. Statutory Basis for Merger
An Agreement and Plan of Merger has been approved, adopted, certified,
executed, and acknowledged by each of the aforesaid corporations in
accordance with subsection (c) of Section 252 of the General Corporation
Law of the State of Delaware and Section 16-10a-1101 of the Utah Revised
Business Corporation
Act.
X. Agreement of Surviving Corporation
The Surviving Corporation hereby consents and agrees that:
(a) The Surviving Corporation may be served with process in
the State of Delaware in any proceeding for the enforcement of any
obligation of CERON as well as for enforcement of any
obligation of the Surviving Corporation arising from the merger
and in any proceeding for the enforcement of the rights of a
dissenting shareholder of CERON against the Surviving Corporation;
(b) The Secretary of State of the State of Delaware shall be,
and hereby is, irrevocable appointed as the agent of such
Surviving Corporation to accept service of process in any
such proceeding;
(c) The Surviving Corporation's address for any service of
process received by the Secretary of State is 714 East 7200
South, Midvale, Utah 84047. .
(d) Such Surviving Corporation will promptly pay to the
dissenting shareholders of CERON the amount, if any, to which
they shall be entitled under the provisions of the General
Corporation Law of the State of Delaware with respect to the
rights of dissenting shareholders; and
(e) The Surviving Corporation shall keep on file at its
principal place of business a copy of the Agreement and Plan
of Merger, which will be provided, without cost, to
shareholders of the Surviving Corporation when request.
<Page 2>
IN WITNESS WHEREOF, the undersigned corporations, acting by their
respective Presidents and Secretaries, have executed these Articles of
Merger as of the date first above written.
CERON RESOURCES CORPORATION
Attest: a Delaware corporation
/S/ David K. Giles, Secretary /S/ Gary V. Heesch, President
WASATCH PHARMACEUTICAL, INC.
Attest: a Utah corporation
/S/ David K. Giles, Secretary /S/ Gary V. Heesch, President
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 12th
day of January, 1996, personally appeared before me Gary V. Heesch and
David K. Giles, the President and Secretary, respectively, of Ceron
Resources Corporation, a Delaware corporation, who being be me first
duly sworn, severally declared that they are the persons who signed the
foregoing documents as President and Secretary of Ceron Resources
Corporation, a Delaware corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Elliott N. Taylor
[Notary Seal]
Elliott N. Taylor
1835 East 900 South
Salt Lake City, UT 84108
My Commission Expires March 3, 1997
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 12th
day of January, 1996, personally appeared before me Gary V. Heesch and
David K. Giles, the President and Secretary, respectively, of Wasatch
Pharmaceutical, Inc., a Utah corporation, who being be me first duly
sworn, severally declared that they are the persons who signed the
foregoing documents as President and Secretary of Wasatch
Pharmaceutical, Inc., a Utah corporation, and that the statements
therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Elliott N. Taylor
[Notary Seal]
Elliott N. Taylor
1835 East 900 South
Salt Lake City, UT 84108
My Commission Expires March 3, 1997
<Page 3>
Plan of Merger
of
Ceron Resources Corporation
and
Wasatch Pharmaceutical, Inc.
THIS PLAN OF MERGER (the "Plan") dated as of January 12, 1996, is
entered into by and between CERON RESOURCES CORPORATION, a Delaware
corporation ("CERON"), and WASATCH PHARMACEUTICAL, INC., a Utah
corporation ("WASATCH"), such corporations being hereinafter collectively
referred to as the "Constituent Corporations."
Recitals
WHEREAS, WASATCH is a corporation duly organized and existing
under the laws of the state of Utah, having an authorized capital of
51,000,000 shares, consisting of 50,000,000 shares of common stock,
$0.001 par value (the "Common Stock of WASATCH"), of which 1,000 shares
are issued and outstanding as of the date hereof, and 1,000,000 shares
of preferred stock, $0.001 par value (the Preferred Stock of WASATCH ),
of which no shares are issued and outstanding.
WHEREAS, CERON is a corporation duly organized and existing under
the laws of the state of Delaware, having an authorized capital of
51,000,000 shares, consisting of 50,000,000 shares of common stock,
$0.01 par value (the "Common Stock of CERON"), of which 12,089,256
shares are issued and outstanding as of the date hereof, and 1,000,000
shares of preferred stock, $0.05 par value (the Preferred Stock of
CERON ), of which 49,258 shares are issued and outstanding.
WHEREAS, the respective boards of directors and shareholders of the
Constituent Corporations have each duly approved this Plan providing for
the merger of CERON with and into WASATCH with WASATCH as the surviving
corporation as authorized by the statutes of the states of Delaware and
Utah.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for the purpose of
setting forth the terms and conditions of said merger and the manner and
basis of causing the shares of CERON to be converted into shares of
stock of WASATCH and such other provisions as are deemed necessary or
desirable, the parties hereto have agreed and do hereby agree, subject
to the approval and adoption of this Plan by the requisite vote of the
stockholders of each Constituent Corporation, and subject to the
conditions hereinafter set forth, as follows:
Article I
Merger and Name of Surviving Corporation
On the effective date of the merger, CERON and WASATCH shall cease
to exist separately and CERON shall be merged with and into WASATCH, which
is hereby designated as the "Surviving Corporation," the name of which
on and after the Effective Date (as hereinafter defined) of the merger
shall be "WASATCH PHARMACEUTICAL, INC."
Exhibit A-1
Article II
Terms and Conditions of Merger
The terms and conditions of the merger (in addition to those set forth
elsewhere in this Plan) are as follows:
(a) On the Effective Date of the merger:
(1) CERON shall be merged into WASATCH to form
a single corporation, and WASATCH shall be designated
herein as the Surviving Corporation.
(2) The separate existence of CERON shall cease.
(3) The Surviving Corporation shall have all the rights,
privileges, immunities, and powers and shall be subject
to all duties and liabilities of a corporation organized
under the laws of the state of Utah.
(4) The Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges,
immunities, and franchises, of a public as well as a
private nature, of each of the Constituent Corporations;
all property, real, personal, and mixed, and all debts
due of whatever account, including subscriptions to
shares, and all and every other interest, of or belonging
to or due to each of the Constituent Corporation shall be
taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; the
title to any real estate, or any interest therein, vested
in either Constituent Corporation shall not revert or be
in any way impaired by reason of the merger; the Surviving
Corporation shall thenceforth be responsible and liable
for all the liabilities and obligations of each of the
Constituent Corporations; any claim existing or action or
proceeding pending by or against either of such
Constituent Corporations may be prosecuted as if the
merger had not taken place, or the Surviving Corporation
may be substituted in place of the Constituent
Corporation; and neither the rights of creditors nor any
liens on the property of either of the Constituent
Corporations shall be impaired by the merger.
(b) On the Effective Date of the merger, the board of directors
of the Surviving Corporation shall consist of the members of
the board of directors of CERON immediately prior to the
merger, to serve thereafter in accordance with the bylaws of
the Surviving Corporation and until their respective
successors shall have been duly elected and qualified in
accordance with such bylaws and the laws of the state of Utah.
(c) On the Effective Date of the merger, the officers of the
Surviving Corporation shall be the officers of CERON
immediately prior to the merger, with such officers to serve
thereafter in accordance with the bylaws of the Surviving
Corporation and until their respective successors shall have
been duly elected and qualified in accordance with such bylaws
and the laws of the state of Utah.
If on the Effective Date of the merger, a vacancy shall exist in
the board of directors or in any of the offices of the Surviving
Corporation, such vacancy may be filled in the manner provided for
in the bylaws of the Surviving Corporation.
Exhibit A-2
Article III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of the Constituent
Corporations and the mode of carrying the merger into effect are as
follows.
(a) Each share of Common Stock of CERON outstanding on the
Effective Date of the merger shall, without any action on the
part of the holder thereof, be converted into one fully paid
and nonassessable share of Common Stock of WASATCH which
shall, on such conversion, be validly issued and outstanding,
fully paid, and nonassessable, and shall not be liable to any
further call, nor shall the holder thereof be liable for any
further payments with respect thereto. After the Effective
Date of the merger, each holder of an outstanding certificate
which prior thereto represented shares of Common Stock of
CERON shall be entitled, on surrender thereof to Fidelity
Transfer Company, 1800 South West Temple, Suite 301, Salt Lake
City, Utah 84115, to receive in exchange therefor a
certificate or certificates representing the number of whole
shares of Common Stock of WASATCH, which such shares shall
have converted into. Until so surrendered, each such
outstanding certificate (which prior to the Effective Date of
the merger represented shares of Common Stock of CERON) shall
for all purposes evidence the ownership of the shares of
WASATCH into which such shares shall have been converted.
(b) All shares of the Common Stock of WASATCH into which
shares of the Common Stock of CERON shall have been converted
pursuant to Article III shall be issued in full satisfaction
of all rights pertaining to the shares of Common Stock of
CERON, as applicable.
(c) If any certificate for shares of WASATCH is to be issued
in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the certificate so
surrendered shall be properly endorsed and otherwise in proper
form for transfer, that the transfer be in compliance with
applicable federal and state securities laws, and that the
person requesting such exchange pay to WASATCH or any agent
designated by it any transfer or other taxes required by
reason of the issuance of a certificate for shares of WASATCH
in any name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of
WASATCH or any agent designated by it that such tax has been
paid or is not payable.
Article IV
Certificate of Incorporation and Bylaws
The articles of incorporation of WASATCH shall, on the merger becoming
effective, be and constitute the articles of incorporation of the Surviving
Corporation until amended in the manner provided by law. The bylaws of
WASATCH shall, on the merger becoming effective, be and constitute the
bylaws of the Surviving Corporation until amended in the manner provided
by law.
Article V
Shareholder Approval
This Plan has been approved by a majority of the stockholders of
each of the Constituent Corporations as provided by the laws of the
States of Utah and Delaware. All required documents shall be executed,
filed, and recorded, and all required acts shall be done in order to
accomplish the merger under the provisions of the laws of the states of
Utah and Delaware.
Article VI
Officers and Directors
The officers and directors of CERON shall, be presented to the
shareholder of WASATCH for election, so that on the merger becoming
effective, such officers and directors shall become the officers and
directors of WASATCH, and such officers and directors shall serve until
the next annual meeting of shareholders and until such time as their
successors are duly elected and shall qualify.
Exhibit A-3
Article VII
Approval and Effective Date of the Merger; Miscellaneous Matters
1. The merger shall become effective when all the following actions
shall have been taken:
(a) This Plan shall be authorized, adopted, and approved by and
on behalf of each Constituent Corporation in accordance with
the laws of the states of Utah and Delaware;
(b) This Plan, or certificate of merger if the form required,
executed and verified in accordance with the laws of the
states of Utah and Delaware, shall be filed in the Offices of
the Secretary of State of Utah and Delaware; and
(c) The date on which such actions are completed and such
merger is effected is herein referred to as the "Effective Date."
2. If at any time the Surviving Corporation shall deem or be advised
that any further grants, assignments, confirmations, or assurances are
necessary or desirable to vest, perfect, or confirm title in the
Surviving Corporation, of record or otherwise, to any property of CERON
acquired or to be acquired by, or as a result of, the merger, the
officers and directors of CERON or any of them shall be severally and
fully authorized to execute and deliver any and all such deeds,
assignments, confirmations, and assurances and to do all things
necessary or proper so as to best prove, confirm, and ratify title to
such property in the Surviving corporation and otherwise carry out the
purposes of the merger and the terms of this Plan.
3. The Surviving Corporation may be served with process in the State
of Delaware in any proceeding for the enforcement of any obligation of
CERON as well as for enforcement of any obligation of the Surviving
Corporation arising from the merger and in any proceeding for the
enforcement of the rights of a dissenting shareholder of CERON against
the Surviving Corporation.
4. The Secretary of State of the State of Delaware shall be
irrevocable appointed as the agent of the Surviving Corporation to
accept service of process in any such proceeding;
5. The Surviving Corporation's address for any service of process
received by the Secretary of State is 714 East 7200 South, Midvale, Utah
84047.
6. This Plan cannot be altered or amended, except pursuant to an
instrument in writing signed on behalf of the parties hereto.
7. For the convenience of the parties and to facilitate the
filing and recording of this Plan, any number of counterparts hereof may
be executed, each such counterpart shall be deemed to be an original
instrument, and all such counterparts together shall be considered one
instrument.
8. This Plan shall be governed by and construed in accordance with
the laws of the state of Utah.
The foregoing Plan of Merger, having been approved by the board of
directors of each Constituent Corporation, and having been adopted
separately by the stockholders of each Constituent Corporation thereto
in accordance with the laws of the states of Utah and Delaware, the
president and secretary of CERON, and the president and secretary of
WASATCH, do hereby execute this Plan of Merger this 12th day of
January, 1996, declaring and certifying that this is our act and deed
and the facts herein stated are true.
Exhibit A-4
CERON RESOURCES CORPORATION
Attest: A Delaware corporation
By: /S/ David K. Giles, Secretary By: /S/ Gary V. Heesch, President
WASATCH PHARMACEUTICAL, INC.
Attest: A Utah corporation
By: /S/ David K. Giles, Secretary By: /S/ Gary V. Heesch, President
CERTIFICATE OF THE SECRETARY
CERON RESOURCES CORPORATION
I, David K. Giles, secretary of Ceron, hereby certify in
accordance with the General Corporation Law of the State of Delaware
that the Plan of Merger to which this certificate is attached, after
having been first duly approved and adopted by Ceron and Wasatch was
duly approved and adopted pursuant to section 252 of the General
Corporation Law of the State of Delaware by the vote of holders of a
majority of all of the outstanding stock of Ceron; and that thereby the
Plan of Merger was duly adopted as the act of the stockholders of said
corporation and is the duly adopted agreement and act of said corporation.
I have executed this certificate this 12th day of January, 1996.
By: /S/ David K. Giles, Secretary
CERTIFICATE OF THE SECRETARY
WASATCH PHARMACEUTICAL, INC.
I, David K. Giles, secretary of Wasatch, hereby certify in
accordance with the Utah Revised Business Corporation Act that the Plan
of Merger to which this certificate is attached, after having first duly
approved and adopted pursuant to section 16-10a-1101 of the Utah Revised
Business Corporations Act by the vote of holders of a majority of all of
the outstanding stock of Wasatch and that thereby the Plan of Merger was
duly adopted as the act of the stockholders of said corporation and is
the duly adopted agreement and act of said corporation.
I have executed this certificate this 12th day of January, 1996.
By: /S/ David K. Giles, Secretary Exhibit A-5
EXECUTION AND ACKNOWLEDGMENT
The foregoing Plan of Merger, having been approved by the board of
directors of each Constituent Corporation, having been adopted by the
stockholders of Ceron in accordance with the General Corporation Laws of
the State and Delaware and the majority vote of the stockholders of
Wasatch in accordance with the Utah Revised Business Corporation Act,
the president and secretary of Ceron and the president and secretary of
Wasatch do hereby execute this Plan of Merger this 12th day of
January, 1996, declaring and certifying that this is our act and deed
and the facts herein stated are true.
Ceron Resources Corporation
Attest: A Utah corporation
By: /S/ David K. Giles, Secretary By: /S/ Gary V. Heesch, President
Wasatch Pharmaceutical, Inc.
Attest: A Utah corporation
By: /S/ David K. Giles, Secretary By: /S/ Gary V. Heesch, President
STATE OF UTAH )
:ss
COUNTY OF SALE LAKE )
I, the undersigned notary public, hereby certify that on the 12th
day of January, 1996, personally appeared before me Gary V. Heesch and
David K. Giles, the president and secretary, respectively, of Ceron
Subsidiary Corporation, a Delaware corporation, who being be me first
duly sworn, severally declared that they are the persons who signed the
forgoing documents as president and secretary of said corporation, and
that the statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Elliott N. Taylor
[Notary Seal]
Elliott N. Taylor
1835 East 900 South
Salt Lake City, UT 84108
My Commission Expires March 3, 1997
STATE OF UTAH )
:ss
COUNTY OF SALE LAKE )
I, the undersigned notary public, hereby certify that on the 12th
day of January, 1996, personally appeared before me Gary V. Heesch and
David K. Giles, the president and secretary, respectively, of Wasatch
Pharmaceutical, Inc., a Utah corporation, who being be me first duly
sworn, severally declared that they are the persons who signed the
forgoing documents as president and secretary of said corporation, and
that the statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/ Elliott N. Taylor
[Notary Seal]
Elliott N. Taylor
1835 East 900 South
Salt Lake City, UT 84108
My Commission Expires March 3, 1997
Exhibit A-6
WASATCH PHARMACEUTICAL, INC.
DESIGNATION OF RIGHTS, PRIVILEGES, AND PREFERENCES OF
SERIES A PREFERRED STOCK
Pursuant to the provisions of section 16-10a-602, of the Utah Revised
Business Corporation Act, the above corporation (the "Corporation") hereby
adopts the following Designation of Rights, Privileges, and Preferences of
Series A Preferred Stock (the "Designation"):
FIRST: The name of the Corporation is WASATCH PHARMACEUTICAL, INC.
SECOND: The following resolution establishing a series of preferred
stock designated as the "Series A Preferred Stock" consisting of 300,000
shares of the Corporation s preferred stock, par value $0.001, was duly
adopted by the board of directors of the Corporation on January 12, 1996, in
accordance with the articles of incorporation of the Corporation and the
corporationlaws of the state of Utah:
RESOLVED, that of the 1,000,000 shares of preferred stock of the
Corporation, par value $.001 per share, which the Corporation is authorized
to issue pursuant to Article IV of the Corporation's Articles of
Incorporation, an aggregate of 300,000 shares of such preferred stock may be
issued as a separate series, the designation, voting powers, preferences,
relative, participating and other rights and qualifications and limitations of
which are as follows:
1. Number of shares and designation. The aggregate number of
shares of preferred stock authorized by this resolution to be
issued shall be 300,000 shares and the designation of the series
(the "Series") so authorized shall be "Preferred Stock, Series A".
The shares of preferred stock of the Series are hereinbelow
referred to as the "Preferred Stock."
2. Dividends: The holders of each share of the Preferred Stock
shall be entitled to receive, from funds legally available
therefor, in preference to holders of common stock of the
Corporation and before any dividends may be declared upon the
common stock of the Corporation, dividends as follows:
(A) The Preferred Stock shall have participating interest
equivalent to 20% of the net profits after taxes of the corporation
in each fiscal year of the Corporation. The net profits after
taxes of the Corporation shall be determined by the independent
Certified Public Accountants then servicing the books and records
of the Corporation, and such determination shall be conclusive.
20% of such net profits after taxes shall be applied to dividends
upon the Preferred Stock, and each outstanding share of Preferred
Stock shall be entitled to receive, as an annual dividend, an
amount determined by dividing 20% of the Corporation's net profits
after taxes for the subject fiscal year by 300,000. Within 30 days
after the Corporation has received from its independent Certified
Public Accountants a certified statement of the net profits after
taxes of the Corporation for the preceding fiscal year, the Board
of Directors of the Corporation shall meet and, to the extent that
there are funds legally available therefor, shall declare a dividend
upon the Preferred Stock to the extent and in the amounts set forth
above. The record and payment dates of such divided shall be
determined by the Corporation's Board of Directors in its sole
discretion, provided, however, that the record date shall not be
less than 15 days after the date of such meeting and the payment date
shall not be more than 30 days after the record date. The divided
shall not be cumulative; provided, however, that if there shall not
be funds legally available for payment of dividends on the
Preferred Stock, notwithstanding that the Corporations shall have
had net profits after taxes, the payment of the dividends
calculated as set forth above shall be deferred, cumulatively,
until such time as there shall be funds legally available for the
payment of such dividends.
<Page 1>
(B) The Preferred Stock shall not be entitles to receive
dividends beyond those set forth above. In any year, after the
Preferred Stock has received its stipulated dividend the Board of
Directors of the Corporation may declare dividends upon any other
class or series of stock of the Corporation and the Preferred Stock
shall not be entitled to share therein
3. Absence of Voting Rights: Except as may be otherwise required
by law, the holders of common stock of the Corporation have the sole and
exclusive right to vote for election of directors and for all other purposes,
and the holders of Preferred Stock shall not have any voting rights whatsoever.
4. Absence of Conversion Privileges: The Preferred Stock shall
not have any conversion privileges.
5. Redemption: The Corporation shall have the right to redeem,
at any time, and from time to time, all or any part of its Preferred Stock
issued and outstanding; provided, however, that no share of Preferred Stock
may be redeemed until four years after the date of its issuance and not less
than 25,000 shares of Preferred Stock may be redeemed at any time unless
there are then less than 25,000 shares of Preferred Stock outstanding. Any
redemption of Preferred Stock shall be at such time ("Date of Redemption")
and place as the Board of Directors of the Corporation shall determine,
provided that not less than 15 nor more than 60 days before the Date of
Redemption a written notice of such redemption giving Date of Redemption,
Redemption Price (as defined below) and place and terms thereof shall be
mailed postage prepaid to the holders of record of each share of Preferred
Stock to be redeemed on a record date fixed by the Board of Directors, at
their addresses as the same appear on the books of the corporation. In case
of a redemption in part only of the Preferred Stock, such redemption shall be
effective pro rata among the holders of issued and outstanding shares of
Preferred Stock. Upon redemption, each holder of shares of Preferred Stock to
be redeemed shall be entitled to receive payment of the Redemption Price,
without interest upon surrender to the corporation on or after the Date of
Redemption of his certificate or certificates in transferable from and, if
required by law, properly stamped for transfer. From and after the Date of
Redemption, all dividend rights on shares of Preferred Stock to be redeemed
upon such Date of Redemption shall cease and such shares shall be deemed to
be no longer outstanding, and all rights with respect to such shares shall
terminate except for the right of the holders thereof to receive the
Redemption Price.
6. Redemption Price. The Redemption Price shall consist of $2.00
per share of Preferred Stock, plus any dividends declared on the Preferred
Stock during prior years but unpaid as of the Date of Redemption, plus
dividends, if any, due during the year of redemption, calculated as follows:
(A) In the event that the Date of Redemption shall be not
later than 120 days after the close of any fiscal year of the
Corporation, dividends if any payable upon the Preferred Stock
to be redeemed shall be calculated as set forth above based
upon the net profits after taxes of the Corporation
immediately preceding the year of redemption. In the event
that the Date of Redemption shall be more that 120 days after
the close of any fiscal year of the Corporation, the Redemption
Price shall include dividends, calculated as set forth above,
out of 20% of the net profits after taxes of the Corporation
for the period during the year of redemption ending at the
close of the fiscal quarter of the Corporation immediately
preceding the fiscal quarter during which the Date of
Redemption shall occur.
7. Preference: In the event of any liquidation, dissolution or
winding up of the Corporation, voluntarily or involuntarily, the holders of
the Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, a sum equivalent
to ($1.00) per share of Preferred Stock, plus an amount equal to all declared
but unpaid dividends on the Preferred Stock, before any sum shall be paid to,
or any assets distributed among, the holders of the common stock of the
Corporation.
<Page 2>
8. Registry: The Corporation shall maintain a registry for its
Preferred Stock, and all notice and payment with respect to the Preferred
Stock shall be mailed to the holders of record of the Preferred Stock at
their addresses as the same appear upon the registry books of the Corporation.
FURTHER RESOLVED, that the statements contained in the foregoing
resolution creating and designating the said Series of Preferred Stock and
fixing the number, powers, preferences and relative optional, participation,
and other special rights and the qualifications, limitations, restrictions,
and other distinguishing characteristics thereof shall, upon the effective
date of said Series, be deemed to be included in and be a part of the
Articles of Incorporation of the Corporation.
IN WITNESS WHEREOF, the foregoing Designation of Rights, Privileges, and
Preferences of Series A Preferred Stock of the Corporation has been executed
this 12 day of January, 1996
ATTEST: WASATCH PHARMACEUTICAL, INC.
/S/ David K. Giles, Secretary /S/ Gary V. Heesch, President
STATE OF UTAH )
:ss
COUNTY OF UTAH )
On January 12, 1996, before me the undersigned, a notary public in and
for the above county and state, personally appeared Gary V. Heesch and David
K. Giles, who being by me duly sworn, did state, each for himself, that he,
Gary V. Heesch, is the president, and that he, David K. Giles, is the
secretary, of Wasatch Pharmaceutical, Inc., a Utah corporation, and that the
foregoing Designation of Rights, and Preferences of Series A Preferred Stock
of the corporation was signed on behalf of such corporation by authority of a
resolution of its board of directors, and that the statements contained
therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
/S/ Elliott N. Taylor
NOTARY PUBLIC
[NOTARY SEAL]
Elliott N. Taylor
1835 East 900 South
Salt Lake City, Utah 84108
My Commission Expires March 3, 1997
STATE OF UTAH
<Page 3>
AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of April 15, 1996, is entered into
by and between Lindbergh-Hammar Associates, Inc., a Texas corporation, whose
address is, P.O.Box 1329 Weatherford, Texas 76086; and Wasatch
Pharmaceutical, Inc., a Utah corporation, whose address is, 714 East 7200
South, Midvale, Utah 84047.
WITNESSETH
WHEREAS, Lindbergh-Hammar Associates, Inc., desires to purchase six million
(6,000,000,) shares of the Common Stock of Wasatch Pharmaceutical, Inc.
NOW, THEREFORE, the parties hereby agree as follows:
1. Sale of Shares. At the Closing (as designed in Section 5 below),
Wasatch Pharmaceutical, Inc. shall issue, sell and deliver to
Lindbergh-Hammar Associates, Inc., and Lindbergh-Hammar Associates, Inc.,
agrees to purchase from Wasatch Pharmaceutical, Inc., the six million
(6,000,000) Shares of common stock in consideration for the issuance of
seven thousand three hundred fifty (7,350) shares of Preferred Stock, par
value $1,000.00 per share. The voting rights to the said six million shares of
Wasatch Pharmaceutical, Inc., will remain with the Board of Directors of
Wasatch Pharmaceutical, Inc., provided however, that Lindbergh-Hammar
Associates, Inc., is herewith being granted one seat on the Wasatch
Pharmaceutical, Inc., Board of Directors to its designee.
2. Representations and Warranties by Wasatch Pharmaceutical, Inc. To
induce Lindbergh-Hammar Associates, Inc., to purchase the six million
(6,000,000) shares of it's stock, hereby represents and warrants to
Lindbergh-Hammar Associates, Inc., as follows:
2.1 Organization: Qualification. Wasatch Pharmaceutical, Inc., is a
corporation duly organized, validly existing and in good standing, under the
laws of the State of Utah. Wasatch Pharmaceutical, Inc., has full corporate
power and authority to own, lease and operate its assets and properties and
to carry on its business as now being conducted, as and in the places where
its assets and properties are now owned, leased or operated and where such
business is now being conducted.
2.2 Capitalization of Wasatch Pharmaceutical, Inc. The authorized
capital stock of Wasatch Pharmaceutical, Inc., consists of fifty million
(50,000,000) shares of common stock, $0.001 par value ("Common Stock"), of
which twelve million eighty-nine thousand two hundred fifty six (12,089,256)
shares of Common Stock were issued and outstanding as of April 10, 1996. In
addition, Wasatch Pharmaceutical, Inc., is authorized 1,000,000 shares of
Preferred Stock with a par value of $.001 per share; of which 49,258 shares
have been issued and are presently outstanding.
2.3 Status of the Shares of Wasatch Pharmaceutical, Inc. Six million
(6,000,000) common shares have been duly authorized and, when delivered at
the Closing, the Shares will be duly and validly issued, fully paid,
non-assessable and will not have been issued in violation of any preemptive
or other right of any other person.
2.4 Authority Relative to this Agreement. Wasatch Pharmaceutical,
Inc., has full power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby and to perform any other
obligations required of it hereunder. This Agreement has been duly and
validly executed and delivered by Wasatch Pharmaceutical, Inc., and
constitutes the legal, valid and binding agreement and obligation of Wasatch
Pharmaceutical, Inc., enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors rights generally or by
general principles of equity, including principles governing the availability
of equitable remedies.
2.5 Consents and Approvals: No Violation. The execution and delivery
of this Agreement by Wasatch Pharmaceutical, Inc., and the consummation of
the transactions contemplated hereby will not; (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation of Bylaws of
Wasatch Pharmaceutical, Inc.; (ii) require any consent, approval,
authorization or permit of any United States or Foreign governmental or
regulatory authority or other third party; (iii) result in a breach of the
terms, conditions or provisions of, constitute a default under or cause, permit
or give rise to any right of termination, cancellation or acceleration under
any of the terms, conditions or provisions of any material contract; or, (iv)
conflict with or result in a violation of any provision of, (A) any
applicable statute, rule, regulation or ordinance or, (B) any material
order, write, injunction judgment, award, decree, grant, concession, grant,
franchise or license applicable to Wasatch Pharmaceutical, Inc. or any
material portion of its properties or assets.
<Page 1>
2.6 Financial Statement Matters: Undisclosed Liabilities. Wasatch
Pharmaceutical, Inc., hereto fore agrees to deliver to Lindbergh-Hammar
Associates, Inc., via U.S. Mail or telefax, a copy of its Form 10K dated
December 31, 1995, as soon as it is available.
2.7 Disclosure. No representation or warranty by Wasatch Pharmaceutical,
Inc., contained in this Agreement nor any oral or written statement or
certificate or to be furnished by Wasatch Pharmaceutical, Inc. to
Lindbergh-Hammar Associates, Inc., or its representatives, in connection
herewith or pursuant hereto contains or will contain any untrue statement of
a material fact or omit to state any material fact required to make the
statements herein or herein contained not misleading and Wasatch
Pharmaceutical, Inc., has disclosed to all information which is material to
Lindbergh-Hammar Associates, Inc., concerning it's purchase of the Common Stock.
3. Representations and Warranties by Lindbergh-Hammar Associates, Inc.
In order to induce Wasatch Pharmaceutical, Inc., to purchase its Preferred
Stock, Lindbergh-Hammar Associates, Inc., hereby represents and warrants to
Wasatch Pharmaceutical, Inc., as follows:
3.1 Organization: Qualification. Lindbergh-Hammar Associates, Inc., is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. Lindbergh-Hammar Associates, Inc., has full
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted, as and in the
places where its assets and properties are now owned, leased or operated and
where such business is now being conducted.
3.2 Capitalization of Lindbergh-Hammar Associates, Inc. The aggregate
number of shares which Lindbergh-Hammar Associates, Inc., has the authority
to issue is one million (1,000,000) shares, classed as follows:
A) Five hundred thousand (500,000) shares of common stock, no par value, of
which 50,000 shares of Common Stock is issued and outstanding; and,
B) 500,000 shares of preferred stock, par value one thousand Dollars
($1,000.00) per share, bearing a non-cumulative Dividend rate of 5% per annum.
3.3 Status of the Preferred Stock. The Preferred Stock is duly
authorized and, when delivered at the closing, the Preferred Stock will be
duly and validly issued, fully paid, non-assessable and will not have been
issued in violation of any preemptive or other right of any other person.
3.4 Authority Relative to this Agreement. Lindbergh-Hammar Associates,
Inc., has the full power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and to perform and
other obligations required of it hereunder. This Agreement has been duly and
validly executed and delivered by Lindbergh-Hammar Associates, Inc., and
constitutes the legal, valid and binding agreement and obligation of
Lindbergh-Hammar Associates, Inc., enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors; rights generally or by
general principle of equity, including principles governing the availability
of equitable remedies.
3.5 Consents and Approvals: No Violation. The execution and delivery of
this Agreement by Lindbergh-Hammar Associates, Inc., and the consummation of the
transactions contemplated hereby will not; (i) conflict with or result in any
breach of any provision of the Articles of Incorporation or the By-laws of
the Corporate Charter; (ii) require any consent approval, authorization or
permit of, or filing with or notification to, any United States or Foreign
governmental or regulatory authority or other third party; (iii) result in a
breach of the terms, conditions or provisions of, constitute a default under
or cause, permit or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any material
contract; or, (iv) conflict with or result in a violation of any provision
of; (A) any applicable Statue, ruler, regulation or ordinance; or, (B) any
material order, writ, injunction, judgment, award, decree, permit,
concession, grant, franchise or license applicable to Lindbergh-Hammar
Associates, Inc., or any material portion of its properties or assets.
<Page 2>
3.6 Financial Statement Matters: Undisclosed Liabilities. Lindbergh-Hammar
Associates, Inc., has heretofore delivered to Wasatch Pharmaceutical, Inc.,
the un-audited balance sheet of Lindbergh-Hammar Associates, Inc., dated
March 1, 1996; and, audited statements will be provided to Wasatch
Pharmaceutical, Inc., as they become available.
3.7 Securities Representations. Lindbergh-Hammar Associates, Inc., hereby
makes each and every warranty and covenant contained in the Subscription
Agreement attached as Exhibit "A" hereto.
3.8 Disclosure. No representation or warranty by Lindbergh-Hammar
Associates, Inc., contained in this Agreement nor any oral or written
statement or certificate furnished or to be furnished by Lindbergh-Hammar
Associates, Inc., to Wasatch Pharmaceutical, Inc., or its representatives,
in connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material
fact required to make the statements herein or therein contained not
misleading and Lindbergh-Hammar Associates, Inc., has disclosed to Wasatch
Pharmaceutical, Inc., all information which is material to Wasatch
Pharmaceutical, Inc., concerning it's purchase of the Preferred Stock.
3.9 Escrow's and Safekeeping. Lindbergh-Hammar Associates, Inc., warrants
to Wasatch Pharmaceutical, Inc., that the Wasatch Pharmaceutical, Inc.,
Shares will only be held on deposit in an Escrow or Safekeeping Account with
an institution, i.e., Stock Transfer Company, Bank, Brokerage Firm, Attorneys
Trust, Certified Accounting Firm, etc., in the United States of America. The
securities will not be delivered or held in Escrow or Safekeeping, by any of
the aforementioned institutions or firm outside the United States of America.
4. Covenants
4.1 Lindbergh-Hammar Associates, Inc., agrees that any insurance company
or companies owned, controlled or managed by it will obtain and maintain in
effect at all relevant times a level of reinsurance coverage which is
equivalent to the level of reinsurance coverage customary in the insurance
industry for businesses similar to that of Lindbergh-Hammar Associates, Inc.
5. Closing
5.1 On or before April 19, 1996, Lindbergh-Hammar Associates, Inc., will
deliver to an escrow holder (the"Escrowholder"), the duly authorized and
valid Preferred Stock Issue and all other agreements, documents, instruments,
and writings required to be delivered by Lindbergh-Hammar Associates, Inc.
5.2 At the Closing, Wasatch Pharmaceutical, Inc., will deliver a duly
authorized and valid Certificate, or Certificates, evidencing the shares to
the Escrowholder to hold pursuant to escrow instructions to be mutually
agreed upon by the parties; and, shall deliver to Lindbergh-Hammar
Associates, Inc., all other agreements, documents, instruments and writings
required to be delivered by Wasatch Pharmaceutical, Inc., Wasatch
Pharmaceutical, Inc., further agrees to deliver to Lindbergh-Hammar Associates,
Inc., a valuation letter from a Certified Public Accounting Firm, confirming
the value of their six million (6,000,000) shares; said letter is to be
delivered to Lindbergh-Hammar Associates, Inc., within five (5) days after
trading begins on the Wasatch Pharmaceutical, Inc. stock.
6. Survival of Representations and Warranties. All representations and
warranties of Lindbergh-Hammar Associates, Inc., on the one hand, and Wasatch
Pharmaceutical, Inc., on the other, in this Agreement or in any document or
other papers delivered pursuant to or in connection with this Agreement shall
survive the Closing.
7. Indemnification Obligations.
7.1 Lindbergh-Hammar Associates, Inc., agrees to indemnify, defend and
hold harmless Wasatch Pharmaceutical, Inc., (and its directors, officers,
employees, agents, subsidiaries and affiliates, and their respective
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including reasonable attorneys fees and
disbursements) ("Losses"') which any of them shall incur or suffer based upon
arising out of or otherwise involving any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Lindbergh-Hammar
Associates, Inc., contained in the Agreement or in any document or other
paper delivered by Lindbergh-Hammar Associates, Inc., in connection with the
transactions contemplated by this agreement which was not waived Wasatch
Pharmaceutical, Inc., prior to Closing.
<Page 3>
7.2 Wasatch Pharmaceutical, Inc., agrees to indemnify, defend and hold
harmless Lindbergh-Hammar Associates, Inc., (and its directors, officers,
employees, agents, subsidiaries and affiliates, and their respective
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including reasonable attorneys fees and
disbursements) ("Losses"') which any of them shall incur or suffer based upon
arising out of or otherwise involving any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Wasatch Pharmaceutical, Inc.,
contained in the Agreement or in any document or other paper delivered by
Wasatch Pharmaceutical, Inc., in connection with the transactions
contemplated by this agreement which was not waived Lindbergh-Hammar
Associates, Inc., prior to Closing.
8. Terms for redemption and or repurchase of subject stocks.
8.1 Lindbergh-Hammar Associates, Inc., agrees:
(A) to redeem the Preferred Stock Shares over a two (2) year period of
time. Should Lindbergh-Hammar Associates, Inc. require additional time to
redeem all of the Preferred Shares issued to Wasatch Pharmaceutical, Inc.,
Wasatch Pharmaceutical, Inc. will be entitled to an additional ten percent
(10%) over and above the face and/or par value of the then unredeemed
Preferred Shares. The Preferred Stock shares will be called and redeemed at
par value in monthly increments equal to ten percent (10%) of the Insurance
Premium income generated as a result of Wasatch Pharmaceutical, Inc., stock
being assigned to the Capital and Surplus Account of the Insurance Company
(i.e., should the Wasatch Pharmaceutical, Inc., shares receive a
certification value of $21,000,000; and should Lindbergh-Hammer Associates,
Inc., acquire an additional $4,000,000 block of capital for the Insurance
Company Capital and Surplus Account, causing the Insurance Company to have
cumulative Capital and Surplus of $25,000,000; Wasatch Pharmaceutical, Inc.,
would be entitled to 21/25 or 84% of the 10% of premiums). Lindbergh-Hammar
Associates, Inc., agrees to call and redeem a minimum of One Hundred Thousand
($100,000.00) Dollars face value (par value) Preferred Stock, by the end of
ninety days after receiving the Certified Public Accountant's Certification
letter confirming the bid price, or value, of the trading shares of Wasatch
Pharmaceutical, Inc.;
and,
(B) To extend an option to Wasatch Pharmaceutical, Inc., to repurchase
up to ninety percent (90%) of the six million shares of Wasatch
Pharmaceutical, Inc., common stock to be issued to Lindbergh-Hammar
Associates, Inc. This option to repurchase these shares will be at a figure
equal to 200% of Lindbergh-Hammar Associates, Inc.'s original acquisition
price; said option will expire at the end of three years after the Closing of
this Agreement; and,
(C) To provide Wasatch Pharmaceutical, Inc., with Quarterly reports
confirming the Insurance Premium Income related to the Wasatch
Pharmaceutical, Inc., common stock held in the Capital and Surplus Account of
the Insurance company; and,
(D) To allow (with proper notice) Wasatch Pharmaceutical, Inc.,
representatives to inspect the books of the Insurance Company for the express
limited purpose of verifying the Insurance Premium Income related to the
subject stock.
8.2 This Agreement and the additional written agreements called for herein
together contain the entire agreement between Lindbergh-Hammar Associates,
Inc., and Wasatch Pharmaceutical, Inc., with respect to the sale of six
million (6,000,000) shares of Wasatch Pharmaceutical, Inc., common stock to
Lindbergh-Hammar Associates, Inc.; and the issuance of seven thousand three
hundred fifty (7,350) of Lindbergh-Hammar Associates, Inc., Preferred Stock
Shares to Wasatch Pharmaceutical, Inc.; and, supersedes all prior
arrangements or understandings with respect thereto, and there have been no
oral representations or warranties and neither party has relied on any
representation not contained herein.
8.3 This liability of Agency, including
litigation costs and attorney s fees, arising from Client s failure to do so.
11. Disposition of Property and Materials. Upon expiration of the term of
this agreement, and provided that all payments coming due under this
agreement have been paid in full, all plans, preliminary outlines, sketches,
art work, copy, and all other property and materials which are produced under
this agreement shall be the property of the Client. Should Client breach
this agreement by early termination, by failure to make the payments called
for herein as and when due, or by any other material breach of Client s
obligations under this agreement, all property and materials produced under
this agreement shall be the property of Agency, even though Client or
another party has physical possession of same.
12. Confidentiality. During the course of Agency s performance under this
agreement, Agency may have access to certain confidential and proprietary
information of Client. All such information disclosed by Client Agency
shall be maintained in confidence by Agency and Agency shall not use the
information except as necessary for the performance of its obligations under
this agreement. To the extent that confidential information has been
supplied to Agency by Client in written form, and identified by Client as
Confidential or Proprietary by notation on the face of the document, all
such confidential written information shall be returned by Agency to Client
upon the expiration of the term or earlier termination of this agreement.
13. Independent Contractor. Agency is an independent contractor. Nothing
contained in this agreement shall be constructed to create the relationship
of joint venture or partnership between the parties hereto.
14. Attorney Fees and Costs. In the event a lawsuit is instituted to
interpret or enforce any provision of this agreement, the prevailing party
shall be entitled to recover such sum as the court may adjudge reasonable as
attorney s fees, together with all legal costs incurred by such party in the
prosecution or defense of such lawsuit, inclusive of all attorney s fees and
legal costs incurred prior to trial, at trial and upon any appeal or appeals.
Legal costs as used herein, shall include all costs and disbursements
awardable by statute or rule, together with the costs incurred in the taking
of depositions, whether or not such depositions are used at trial.
15. Controlling Law. This agreement shall be governed by the law of
the state of Oregon.
16. Modification. This writing contains the entire agreement of the
parties. No representations were made or relied upon by either party, other
than those that are expressly set forth. This agreement may not be modified,
except by a writing signed by an authorized representative of each of the
parties.
17. Waiver. The failure of either party to object to or to take
affirmative action with respect to any conduct of the other which is in
violation of this agreement shall not be construed as a waiver thereof, or of
any future breach or subsequent wrongful conduct.
THE SCHMIDT/WESTERDAHL GROUP, LTD.
BY:
/S/Edward G. Westerdahl, II Date: January 9, 1996
Chairman
MEDISYS RESEARCH GROUP, INC.
BY:
/S/ Gary Heesch, President Date: January 10, 1996
THE AMERICAN INSTITUTE OF
SKIN CARE, INC.
BY:
/S/ David Giles, Vice President Date: January 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 777
<SECURITIES> 0
<RECEIVABLES> 2581
<ALLOWANCES> 0
<INVENTORY> 9374
<CURRENT-ASSETS> 13332
<PP&E> 34456
<DEPRECIATION> 0
<TOTAL-ASSETS> 48054
<CURRENT-LIABILITIES> 929721
<BONDS> 0
0
2463
<COMMON> 12089
<OTHER-SE> (881667)
<TOTAL-LIABILITY-AND-EQUITY> 48054
<SALES> 155790
<TOTAL-REVENUES> 225041
<CGS> 207377
<TOTAL-COSTS> 596373
<OTHER-EXPENSES> 63259
<LOSS-PROVISION> (87996)
<INTEREST-EXPENSE> 63
<INCOME-PRETAX> (451255)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (451255)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
