SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant |X
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
|_| Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
NUMED HOME HEALTH CARE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NUMED HOME HEALTH CARE, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee previously paid with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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NuMED HOME HEALTH CARE, INC.
NOTICE OF THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 28, 1999
Notice is hereby given that the 1998 Annual Meeting of Stockholders of
NuMED HOME HEALTH CARE, INC.. (the "Company") will be held at the offices of
Foley & Lardner, 100 North Tampa Street, Suite 2700, Tampa, Florida 33602, on
Thursday, January 28, 1999 at 10:00 A.M., local time, for the following
purposes:
1. To elect six (6) Directors to the Company's Board of Directors to serve
a one-year term or until their respective successors are elected.
2. To consider and act upon matters incidental to the foregoing purpose and
to transact such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has selected the close of business on Tuesday,
December 22, 1998, as the record date for the determination of Stockholders
entitled to notice of and to vote at this Annual Meeting and any adjournment or
postponement thereof.
Enclosed is your copy of (i) the Company's Amended Annual Report on
Form 10-KSB/A as filed with the Securities and Exchange Commission for the
fiscal year ended March 31, 1998; and (ii) the Company's Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1998.
You are cordially invited to attend the meeting in person. Whether or
not you expect to attend in person, you are urged to complete, date, sign and
return the enclosed proxy card, which is solicited by the Board of Directors, in
the self-addressed envelope enclosed for your convenience which requires no
postage if mailed in the United States. You may revoke your proxy at any time
before it is voted at the meeting by giving written notice to the secretary of
the Company, by delivering to the secretary of the Company a duly executed proxy
bearing a later date or by appearing at the meeting and voting by written ballot
in person.
By Order of the Board of Directors
January 11, 1999 SUSAN J. CARMICHAEL
Chief Executive Officer and President
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Stockholders who do not expect to attend the meeting in person are urged
to complete, date and sign the enclosed WHITE PROXY CARD and return it in
the enclosed postage-paid envelope.
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NuMED HOME HEALTH CARE, INC.
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PROXY STATEMENT
-------------------------
This Proxy Statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by the Board of Directors of
NuMED Home Health Care, Inc., a Nevada corporation (the "Company"), for the 1998
Annual Meeting of Stockholders to be held at the offices of Foley & Lardner, 100
North Tampa Street, Suite 2700, Tampa, Florida 33602, on Thursday, January 28,
1999 at 10:00 a.m., local time, and at any postponements or adjournments thereof
(the "Meeting" or the "Annual Meeting"). The approximate date on which this
Proxy Statement and the accompanying form of proxy will be first sent or given
to Stockholders is January 11, 1999.
The record date for determining Stockholders entitled to vote at the
Meeting has been fixed as the close of business on Tuesday, December 22, 1998
(the "Record Date"). As of the Record Date, there were 5,901,500 shares of the
Common Stock issued and outstanding. Each share of Common Stock entitles the
holder to one vote, however, as noted under the heading "LEGAL PROCEEDINGS," the
former Chairman and Chief Executive Officer, Mr. Jugal K. Taneja, has agreed not
to vote the 744, 680 shares he received in connection with entering into a
Termination, Noncompetition and Mutual Release Agreement with the Company in
connection with the settlement reached with the Turkey Vulture Fund XIII, Ltd.
("Turkey Vulture Fund"). There is no other class of voting securities
outstanding. Votes may not be cumulated in the election of directors. The
presence, in person or by proxy, at the Meeting of the holders of a majority of
the shares of Common Stock entitled to vote will constitute a quorum for
purposes of the Meeting.
If the proxy card accompanying this Proxy Statement is properly
executed and returned, the shares of common stock, par value $.001 per share of
the Company (the "Common Stock"), represented thereby will be voted as
instructed on the proxy card, but if no instructions are given, such shares of
Common Stock will be voted in favor of (i) the election to the Board of each of
the nominees for directors of the Company, and (ii) any other matters incidental
to the foregoing purpose and to transact such other business as may properly
come before the Meeting. Any proxy given may, however, be revoked by the
stockholder executing it at any time before it is voted by giving written notice
to the Secretary of the Company, by delivering to the Secretary of the Company a
duly executed proxy bearing a later date or by appearing at the Meeting and
voting by written ballot in person.
The cost of solicitation of proxies by the Board of Directors will be
borne by the Company. Proxies may be solicited by mail, personal interview,
telephone or telegraph and, in addition, directors, officers and employees of
the Company may solicit proxies by such methods without additional remuneration.
In addition, the Company has retained the services of MacKenzie Partners, Inc.,
a proxy solicitation firm to assist in the solicitation of proxies by the Board.
The Board currently estimates that the additional cost to retain MacKenzie
Partners, Inc. will total a minimum of $25,000 plus expenses. In accordance with
the regulations of the Securities and Exchange Commission (the "SEC"), the
Company will reimburse, upon request, banks, brokers and other institutions,
nominees and fiduciaries for their expenses incurred in sending proxies and
proxy materials to the beneficial owners of the Company's Common Stock.
LEGAL PROCEEDINGS
On November 17, 1998, the Company filed a suit against Turkey Vulture
Fund, in the United States District Court, Middle District of Florida, Tampa
Division. At such time, Turkey Vulture Fund owned about 10.2% of the outstanding
Common Stock of the Company. Although the suit was filed on November 17, 1998,
it was not served until November 24, 1998, because certain directors of the
Company were attempting to amicably resolve the disagreements with Turkey
Vulture Fund. In the Complaint, the Company seeks injunctive relief for Turkey
Vulture Fund's alleged violations of Section 13(d) of the Securities Exchange
Act of 1934. Specifically, the Company alleged that Turkey Vulture Fund failed
to timely amend its Schedule 13D to (i) reflect its true intention, as stated in
its November 12, 1998 Proxy Statement, to oust current management, gain control
of the Company through a proxy fight, and eliminate the Company's staggered
Board of Directors, and (ii) indicate its increased ownership of shares. As a
result of these allegations, the Company sought (i) a temporary and permanent
injunction requiring the Turkey Vulture Fund to file an amendment to the
Schedule 13D, which will accurately reflect its true purpose, (ii) a temporary
injunction enjoining Turkey Vulture Fund from exercising voting rights and
soliciting proxies during the pendancy of this lawsuit, (iii) an appropriate
"cooling off period," to permit the investing public a reasonable amount of time
to digest any amendment to the Schedule 13D ordered by the Court, and (iv) a
judgment in favor of the Company for the costs and attorneys' fees associated
with bringing lawsuit.
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On December 16, 1998, the Company was served with a Verified Amended
Answer and Counterclaim for Preliminary Injunction. In its Answer, Turkey
Vulture Fund denied the material allegations against it and alleged that any
violations of Section 13(d) were cured. In its Counterclaim, Turkey Vulture Fund
requested that the court (i) preliminarily and permanently enjoin Mr. Taneja
from voting any of the 744,680 shares issued to him as part of his November 23,
1998 Termination, Noncompetition and Mutual Release Agreement; (ii)
preliminarily and permanently enjoin the Company and its directors from (a)
taking or authorizing any action outside of the ordinary course of business, and
(b) taking any action that have the effect of bestowing a benefit upon the
Company's directors, officers, or employees; (iii) preliminarily and permanently
enjoin the Company from changing the date of the stockholders' meeting or
advancing the record date of the meeting; and (iv) require the Company to
provide Turkey Vulture Fund an updated stockholders' ledger. On December 29,
1998, the Company filed a Motion to Dismiss the Counterclaim.
On December 16, 1998, the Company was served with a Motion for Summary
Judgment in which Turkey Vulture Fund alleged that it cured the deficiencies in
its Schedule 13D and that the Company's Complaint was moot. The Company's
response was filed on December 31, 1998.
On December 17, 1998, the Company was served with a Motion for
Preliminary Injunction, which also named the individual directors that were
previously named in the Counterclaim. The Company, together with the named
directors, filed its Opposition to the Motion for Preliminary Injunction on
December 29, 1998. A hearing on this Motion for Preliminary Injunction was held
on December 30, 1998. Following the hearing, the Court issued an Order finding
that "it needs further information with respect to the complex factual matters
involved," and accordingly, the court appointed an independent mediator with
authority in the nature of a special master. The mediator held hearings on
January 4 though January 6, 1998.
On January 6, 1998, the Company and its Board of Directors reached an
agreement with Turkey Vulture Fund to settle all outstanding litigation and
present to NuMED stockholders a combined slate of nominees to the Board of
Directors for this Stockholders' Meeting. Pursuant to the settlement agreement,
Turkey Vulture Fund agreed to withdraw its proxy statement that had been filed
in opposition to the Board of Directors' proxy statement. In the settlement
agreement, Turkey Vulture Fund agreed to purchase an additional 744,680 of NuMED
common stock directly from the company in exchange for $350,000 cash. Management
agreed to recommend a slate consisting of the following six (6) directors: Jugal
K. Taneja, Susan J. Carmichael, Thomas V. Chema, Richard M. Osborne, J. Michael
Gorman and Thomas J. Smith. Additionally, all of the parties agreed to vote all
of their shares which are eligible to vote in favor of the foregoing slate.
However, Jugal K. Taneja, the Companies former Chairman and Chief Executive
Officer, is not eligible to vote (at the January 28, 1999 Stockholders Meeting)
the 744,680 shares of NuMED common stock he received in connection with the
entering into of his Termination Noncompetition and Mutual Release Agreement.
Finally, the parties from the settlement agreement agreed to enter into a
standstill agreement on proxy fights through the year 2000 Annual Stockholders
Meeting.
THE HOME HEALTH INDUSTRY CLIMATE
Effective October 1, 1997 (signed August 5, 1997) Congress and the
President enacted the Balanced Budget Act of 1997. The goal was to cut $115
billion from the Medicare budget in five years of which $16.2 billion would be
cut from home care Medicare and $13 billion cut in Medicaid through systems
termed Interim Payment System ("IPS") and Prospective Payment System ("PPS").
Both the home health and long term care facilities (thus contract rehabilitation
companies like NuMED Rehabilitation) were critically affected.
What It Meant to Home Care:
1. The major strategy was to cut home care dollars through the use of the
IPS using data from three year old cost reports of 1994. Thus, revenue
dramatically declined.
2. The cost limits per discipline (Nursing, Physical Therapy, Occupational
Therapy, Speech/Language Therapy, Medical Social Work) were reduced
about 15%.
3. Reimbursement is to be cut 20% in 1999.
According to the National Association of Home Care, since 1/1/98 over
1000 agencies or 10% of the industry has been eliminated directly or indirectly
as a result of this legislation.
Remaining firms will be subjected to new demands for increased data
collection, extended client assessments and statistical analysis through a
federal project called OASIS that will begin in 1999. "Home health agencies and
state governments are being squeezed by HCFA's failure to pay for the costs of
OASIS." (Eli's Home Care Week 11/23/98, Volume VIII #45) OASIS will be expensive
to home care. Costs will include increased technology, increased software,
increased datamining vendor costs, and increased time to complete assessments
thus decreasing employee productivity.
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Other problems home health incurred were Fiscal Intermediary Auditor
tactics scaring off referrals. "All it takes is one call from an intermediary's
auditor to frighten a physician who was an excellent referral source into
ceasing home care referrals altogether . . . " (Eli's Home Care Week 11/23/98,
Volume VIII #45).
We note that the Vulture Proxy includes a graph comparing the Company's
Common Stock performance with the performance of the Standard & Poor's 500 Index
and the Standard & Poor's SmallCap 600 Index. Such a comparison graph fails to
compare the Company's Common Stock performance with the performance of the
stocks of companies in the home health industry.
How Does NuMED Compare to Other Public Companies?
As you can see from the following chart which was published by the Home Health
Business Report:, as of November 30, 1998 publicly held companies in the home
Health Industry have generally seen their stock prices perform below Standard &
Poor's 500 Index this past year.
Company % of Change This Year
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Amedisys Inc. -44.44
American HomePatient Inc. -90.96
Apria Healthcare Group Inc. -47.91
Caretenders HealthCorp. -59.82
Chemed Corp. -18.25
Columbia HCA Healthcare -16.88
Community Care Services -86.67
Coram Healthcare Corp. -44.44
Fresenius Medical Care -9.48
Graham-Field Health Products Inc. -81.27
Healthcor Holdings Inc. -93.55
Help at Home Inc. 7.14
Home Health Corp. -95.78
In Home Health Inc. -40.00
Infu-Tech Inc. -40.70
Integrated Health Services Inc. -64.13
Interwest 8.33
Invacare Corp. 10.06
Kelly Services Inc. -3.73
Lincare Holdings Inc. 21.05
Malinckrodt -14.97
Matria Healthcare -65.00
Mid Atlantic Medical Services -30.39
National HealthCare -73.10
National Home Health Care Corp. -2.56
New York Health Care Inc. -60.00
NuMED Home Health Care, Inc. -50.06
Olsten Corp. (The) -50.00
Option Care Inc. -61.36
Pediatric Services of America -79.08
Respironics Inc. -15.64
Sabratek -41.56
ServiceMaster L.P. 10.26
Staff Builders Inc. -76.12
Star MultiCare Services Inc. -75.00
Sunrise Medical Inc. -17.41
Transworld Home HealthCare Inc. -40.18
What Has NuMED Done to Deal with IPS and Prepare for PPS?
* In the fall of '97 NuMED personnel attended seminars taught by or based
on the seminar developed by Reingruber & Associates to explain IPS and PPS
and explain cost cuts and work efficiencies expected.
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* To prevent loss of referral sources, physicians were made aware of the
Medicare firm's visit utilization history and Fiscal Intermediary denial
rate (in Florida) to aid in increasing their comfort in referring to the
firm.
* Several data tracking and trending systems were established to capture data
as to specific diagnostic categories and numbers of visits per category. If
the per beneficiary rate, for example at Total Professional Health Care was
an average of $3,500 then an average of 60 visits per client could be
reimbursed if justified. Ratios were then established as to the number of
short term clients necessary in order to care for a long term client.
* Since there was a reduction in the number of visits per patient and a
reduction in total volume of services and in total revenue, specialty
programs were established such as diabetes, orthopedics and congestive
heart failure. Increased productivity was stressed with personnel. There
was a change in clinical models to respond to external case management and
to better manage quality and utilization internally. Greater emphasis was
placed on strengthening existing referral sources and identifying new
referral sources.
* More emphasis was placed on protecting the agency as to fraud and abuse in
billing, in service delivery, in eligibility and in recruitment of
patients. Greater emphasis was placed on nursing and therapist education as
to measuring clinical outcomes, measuring client satisfaction outcomes, and
in measuring comparative diagnostic outcomes.
What Else Was Done?
o An intensive differentiated customer service program was created to
strengthen referral sources.
o Overtime for personnel was eliminated or significantly decreased.
o Cuts in direct cost per visit to increase efficiency/productivity
standards were established.
o A case management model was established. Internally personnel were
educated as to the IPS/Managed Care mindset so the nurse set the goals
with patient on the first visit - education -> oversight -> patient
demonstrates proficiency -> discharge.
o Tracking of service mix and cost by diagnostic codes was monitored.
o Most offices were consolidated
* St. Petersburg offices of Florida Nursing Services shared
space with Total Professional Health Care.
* Clearwater Total Professional Health Care and the Dunedin
Countryside Health Services, Inc. were consolidated into one
Northern Pinellas County office.
* Consolidated four storage areas to one location with an
organized system to retrieve data as needed.
* NuMED Rehabilitation (Cincinnati) moved into the Parke Home
Health Care, Inc. offices to share overhead (NuMED
Rehabilitation in Ohio, Kentucky and the surrounding areas
will remain open and continue to contribute to revenues).
* NuMED Rehabilitation (Horsham office) will be shut down
effective January 1, 1999.
o Human Resources Department was centralized for Florida. The Florida HR
Director became the health insurance and 401K Plan Administrator for
all of NuMED. All Workers Compensation monitoring for the entire
company was placed in that department.
What Does the Future Hold for NuMED?
Though management cannot make predictions for NuMED, it can say that in
1999 NuMED will be smaller but stronger and ready to grow in specific markets:
o Though select revenues will be eliminated in NuMED Rehabilitation through
closing the Horsham office, direct costs and corresponding G & A will also
be eliminated allowing a plan toward a breakeven point in that Division in
1999. The focus for NuMED Rehabilitation will be on facilities in the Ohio
Region. This also complements the Ohio Home Health agencies owned by NuMED.
It is believed a stronger Rehab component can be developed as a result.
o Centralization of all back office functions will be completed in 1999 to
further streamline functions and free Ohio firm's management to have more
community involvement and to effect quicker trending capabilities.
o A Homemaker Program is being started in Western Florida as there appears to
be a responsive market. Management believes the low acuity market is
growing.
o The In-Home Psych Program is being expanded and is expected to provide over
10% of Florida's Total Professional Health Care revenues.
o Disease management Clinical Pathways are being developed for six key
diagnostic categories to grow the business:
* Disease State Management Program through Clinical Pathways
is an integrated systematic approach of aggressive case management to
provide proactive interventions, measurements and refinements along the
continuum of care.
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- Benefits: Very attractive to managed care providers and
Medicare providers as a method to decrease: utilization of
hospitalization length of stay, the number of emergency
department visits, and unnecessary physician office visits.
* Disease State Management programs empower clients thus enhancing the
client's quality of life and well being. Clinical Pathways provide the
client with a highly organized, detailed standardized plan of care,
delineating key care elements and typical interventions associated with
a certain disease process.
* Clinical Pathways guide clinicians to measure delivery of care
outcomes for the client. Home Care specific educational tools focus on
disease control and client self care management.
* The use of these standardized teaching tools enhances patient
understanding and management of all phases of their disease including
prevention, acute occurrences, remissions and maintenance.
Clinical pathways offer physicians compliance comfort since they will
know the number of visits required for a specific diagnosis. Payor sources
appreciate data supporting client outcome expectations within a specific number
of visits. Management believes it can more efficiently plan client visits, costs
and profitability with clinical pathways.
o NuMED Management is exploring the development of strategic alliances
through horizontal integration to build service products, vertical
integration to increase care/service delivery networks to improve
geographic coverage and to affiliate with other providers by offering
shared services such as back office which could allow a stronger position
for payor source contract negotiation.
With an experienced management team, new client programs, technology
capability for the statistical datamining now sought by payor sources, and a
goal to provide quality service delivery, management believes it can deal with
the challenges presented today.
The matters discussed under this subsection may be considered
forward-looking statements and may be subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected. The
Company assumes no obligation to update the information in this subsection.
PROPOSAL 1 ELECTION OF DIRECTORS
As previously noted under the section titled "LEGAL PROCEEDINGS", the
Board of Directors agreed to eliminate the staggered board provisions formerly
contained in the Company's By-Laws, and consequently, each of the nominees, if
elected, will serve for a term of one (1) year, and until their successors are
duly elected and qualified.
If any nominee declines or is unable to serve, which the Board of
Directors has no reason to expect, the persons named in the accompanying Proxy
intend to vote for the balance of those nominees named, and, if they deem it
advisable, for a substitute nominee. The following table sets forth information
with respect to each nominee for election and for each continuing director of
the Company.
NOMINEES
NAME AGE POSITION
Susan J. Carmichael 50 Chief Executive Officer, President
and Director
Thomas V. Chema 52 Director
J. Michael Gorman 46 Director
Richard M. Osborne 53 Director
Thomas J. Smith 54 Director
Jugal K. Taneja 54 Director
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BUSINESS EXPERIENCE OF DIRECTORS AND NOMINEES
Susan J. Carmichael has served as a Director of the Company since
October 1991 and as President of the Company since September 1993. On November
23, 1998, the Board appointed Ms. Carmichael to the additional position of Chief
Executive Officer. She held the position of President of Whole Person in PA and
PA Medical Concepts (companies acquired by the Company in 1991) since 1985 and
is responsible for the Company's overall operation and expansion. Ms. Carmichael
also serves on the President's Council; American Lung Association. Ms.
Carmichael previously served on the Erie County, Pennsylvania Mental Health and
Mental Retardation Board by appointment of the Erie County Executive. Ms.
Carmichael is a Doctoral Candidate at Pennsylvania State University.
Thomas V. Chema has been a Director of the Company since April 1994.
Mr. Chema has been a partner with the law firm of Arter & Hadden, Cleveland,
Ohio from 1979 to 1983 and from 1989 to the present. He served as Executive
Director of the Ohio Lottery Commission and the Public Utilities Commission at
various times between 1983 and 1989. He also served as the Executive Director of
the Gateway Economics Development Corporation of Greater Cleveland, which
managed the financing and construction of the Jacobs Field and Gund Arena
sporting venues.
J. Michael Gorman is the President and Chief Executive Officer of
Harmony Laboratories, Inc., which develops and distributes over-the-counter
pharmaceuticals and health and beauty aids. From 1990 through 1995, Mr. Gorman
was President of Knox International, Inc., a company that produces and
distributes medical gases and equipment. Prior to that time, Mr. Gorman served
as President of GPI, Inc., a producer of custom plastic devices for the medical
industry.
Richard M. Osborne is President and Chief Executive Officer of OsAir,
Inc., a company he founded in 1963. OsAir is a manufacturer of industrial gases
for pipeline delivery and a real property developer. Mr. Osborne is the Manager
of Turkey Vulture Fund XIII, Ltd., which began operations in January 1995. The
Fund acquires, holds, sells or otherwise invests in all types of securities and
other instruments. Mr. Osborne is a director of TIS Mortgage Investment Company,
a publicly-held real estate investment trust, a trustee and Chairman of the
Board of Trustees of Meridian Point Realty Trust =83, a publicly-held real
estate investment trust, a director of Central Reserve Life Corporation, a
publicly-held insurance holding company, a director and Chairman of the Board of
Pacific Gateway Properties, Inc., a publicly-held real estate company, and a
director and Vice Chairman of the Board of GLB Bancorp, Inc., a bank holding
company.
Thomas J. Smith has been the President of Retirement Management
Company, which manages assisted living and retirement facilities, since 1992.
Since April 1996, Mr. Smith has served as the Executive Operating Manager of
Liberty Self-Stor, Ltd., which owns and operates 13 self-storage facilities. Mr.
Osborne controls both Retirement Management and Liberty Self-Stor. Mr. Smith is
also a director of GLB Bancorp, a bank holding company, and a trustee of
Meridian Point Realty Trust =83, a publicly-held real estate investment trust.
Jugal K. Taneja was Chairman of the Board, Chief Executive Officer and
a Director of the Company from October of 1991 until November 23, 1998 when he
entered into a Termination, Noncompetition and Mutual Release Agreement pursuant
to which Mr. Taneja relinquished his duties as Chairman and Chief Executive
Officer. As the Company's largest stockholder, Mr. Taneja remains a Director.
Mr. Taneja is currently Chairman of Dynamic Health Products, Inc. (a 1934
Exchange Act Reporting Company). Mr. Taneja also served as a Director and as
Chief Executive Officer of National Diagnostics, Inc. until he resigned in
January of 1998. Mr. Taneja also served as a director and Chairman of NuWave
Health Care Products, Inc. the parent company of DRx, Inc., and the Chairman of
DRx, Inc. Mr. Taneja is also Chairman of Netriceutical.com.
VOTE REQUIRED FOR APPROVAL
Nominees for directors who receive a plurality of the votes cast by the
holders of the shares of Common Stock in person or by proxy at the Meeting shall
be elected. Abstentions, broker nonvotes and withheld votes are not counted in
determining the number of votes cast for any nominee for director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE
NOMINEES FOR ELECTION AS DIRECTORS OF THE COMPANY.
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BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of January 8, 1999 with respect to: (i)
each of the Company's directors and the executive officers named in the Summary
Compensation Table; (ii) all directors and executive officers of the Company as
a group; and (iii) each person known by the Company to own beneficially more
than 5% of the Common Stock. An asterisk indicates beneficial ownership of less
than 1% of the outstanding Common Stock. Except as otherwise indicated, each of
the shareholders listed below has sole voting and investment power over the
shares beneficially owned.
Shares Beneficially Owned
Beneficial Owner Number Percent
Susan J. Carmichael (2).........................495,000 7.8%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Thomas V. Chema (3)..............................29,120 *
1100 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115
J. Michael Gorman ....................................0 *
1109 S. Main Street
Landis, North Carolina 28088
Richard M. Osborne (6)..........................583,500 9.9%
7001 Center Street
Mentor, Ohio 44060
Thomas J. Smith.......................................0 *
8500 Station Street
Suite 100
Mentor, Ohio 44060
Jugal K. Taneja (1) ..........................2,301,954 33.8%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760
Turkey Vulture Fund XIII, Ltd.................. 583,500 9.9%
7001 Center Street
Mentor, Ohio 44060
Executive Officers and Directors
as a Group (7 Persons) (5)....................3,380,454 46.4%
* Less than one percent.
(1) Includes beneficial ownership of (i) 182,578 shares of Common Stock
owned by First Delhi Trust, a trust for Mr. Taneja's children over
which he exercises voting rights, (ii) 328,300 shares of Common Stock
and 540,000 currently exercisable Common Stock Purchase Warrants owned
by Twenty-First Century Healthcare Fund, L.L.D., a limited liability
company controlled by Mr. Taneja and his family members, and (iii)
380,000 shares issuable under currently exercisable stock options.
Excludes 209,820 shares beneficially owned by his wife, Manju Taneja,
as to which Mr. Taneja exercises no voting or disposition rights.
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(2) Includes (i) 190,000 shares issuable under currently exercisable stock
options, and (ii) 270,000 currently exercisable Common Stock Purchase
Warrants.
(3) Includes shares issuable under 12,060 currently exercisable stock
options granted to each of Messrs. Ottman and Chema pursuant to the
Outside Director and Advisory Board Member Stock Option Plan.
(4) Includes 10,000 shares issuable under currently exercisable common
stock purchase warrants.
(5) Includes 1,404,120 shares issuable under common stock purchase
warrants and/or stock options that are currently exercisable.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During fiscal 1998, the following persons were required to file Forms
3,4, and 5 with the Securities and Exchange Commission pursuant to Section 16(a)
of the Securities Exchange Act of 1934 (the "Act") because such person was a
director, officer, or beneficial owner of more than 10% of the Company's Common
Stock: Jugal K. Taneja, Susan J. Carmichael, Thomas V. Chema, Robert P. Ottman,
and Turkey Vulture Fund. Based solely upon a review of Forms 3,4, and 5
furnished to the Company pursuant to Rule 16-3 (e) of the Act, no transactions
were reported on an untimely basis and no person failed to file a Form 3, Form 4
or Form 5 as required by Section 16(a) of the Act.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the cash and
noncash compensation for the last three fiscal years earned by or awarded to the
Company's Former Chief Executive Officer and the President. No other executive
officer of the Company earned salary and bonus in excess of $100,000 for the
fiscal year ended March 31, 1998.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Fiscal Salary Bonus sation Award(s) SARs Payouts sation
Name and Principal Position Year_ ($)_____ ($) ($) ($)______ (#)_____ ($)_____ ($) ______
- --------------------------- ------ --------- --- --- --------- -------- -- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jugal K. Taneja 1998 $160,000 $ -0- $44,000 1
Chairman of the Board and Chief 1997 $160,000 $ 17,877 $30,000 2 640,000 5
Executive Officer 1996 $160,000 $116,381 $30,000 2 120,000
Susan J. Carmichael 1998 $130,000 $ -0- $ 9,000 3
President 1997 $130,000 $ 16,677 $35,075 4 350,000 5
1996 $130,000 $ 99,348 $ -0- 80,000
FOOTNOTES:
1 Represents meal and lodging expenses of $2,000 per month paid to Mr. Taneja
for nine months during fiscal year 1998, a monthly automobile expense allowance
of $500 per month, and moving expenses totaling $20,000 paid during fiscal 1998.
2 Represents meal and lodging expenses of $2,000 per month paid to Mr. Taneja
and a monthly automobile expense allowance of $500 per month paid to Mr. Taneja
during fiscal years 1997 and 1998.
3 Represents lodging expenses of $500 per month for nine months and a monthly
automobile allowance of $500 per month for nine months paid during fiscal 1998.
4 Represents accumulated vacation of $29,075 and lodging expenses of $500 per
month paid during fiscal 1997.
8
<PAGE>
5 Includes 540,00 warrants issued to Mr. Taneja and 270,000 warrants issued to
Ms. Carmichael in exchange for the elimination of certain "put provisions" in
their respective employment agreements with the Company. As of 9/30/96, section
7.7 of their employment agreements, "if the executive is terminated without just
cause, or his or her duties are reduced such that his or her position is
ineffective in directing the business or operations of the Company, each
executive has the right to put all securities of the Company owned by the
executive and the executive's affiliates to the Company at a per share price
calculated at the greater of (i) $6.00 per share, (ii) the average of the
current bid and ask price, (iii) book value per share, or (iv) the appraised
value per share, and the Company is required to purchase all such securities for
the applicable price" was deleted.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not make any grants of options or SAR's during fiscal year
1998.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of
Shares Unexercised Value of Unexercised
Acquired Value Options/SARs In-the-Money Options/SARs
on Realized at FY-End (#) at FY-End ($)*
Name____________ Exercise ($)_____ Exercisable Unexercisable Exercisable Unexercisable
- ---------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jugal K. Taneja 0 920,000 -0- $27,600 -0-
Susan J. Carmichael 0 460,000 -0- $22,400 -0-
*Based on the closing price of the Company's Common Stock on March 31, 1998 as quoted on The Nasdaq
Stock Market.
</TABLE>
COMMITTEES, MEETINGS, AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors held 6 meetings during fiscal 1998. In addition
to formal meetings of the Board of Directors and its committees, the directors
have frequent informal communications among themselves and with other executives
regarding Board and Committee issues.
The Board of Directors has established standing Audit, Compensation,
Capital, Executive and Nominating Committees. In addition, the Company has three
committees to administer each of the Company's stock plans described below.
The Audit Committee recommends the engagement, continuation and
discharge of the Company's independent auditors, reviews the scope and timing of
the audit of the Company's financial statements, approves the fee arrangement
with the Company's independent auditors, reviews the Company's financial
statements and the independent auditors' report, reviews the activities and
recommendations of the Company's independent auditors, considers recommendations
made by the Company's independent auditors regarding the Company's internal
control structure, and reviews the Company's internal accounting procedures and
controls with the Company's financial and accounting staff. The members of the
Audit Committee are Messrs. Chema and Ottman. The Audit Committee did not meet
during fiscal year 1998.
The Compensation Committee establishes the Company's executive
compensation policy, including the recommendation of compensation arrangements
for the Company's executive officers and directors. The members of the
Compensation Committee are Messrs. Chema and Ottman.* The Compensation Committee
met once during fiscal year 1998.
The Capital Committee reviews and oversees the Company's investment
policy. The members of the Capital Committee are Ms. Carmichael and Messrs.
Ottman and Taneja. The Capital Committee did not meet during fiscal year 1998.
The Executive Committee consists of Ms. Carmichael* and Mr. Taneja and
the Nominating Committee consists of Messrs. Taneja, Ottman and Chema. The
Executive Committee did not meet during fiscal year 1998.
The Outside Director and Advisory Board Member Stock Option Plan
Administration Committee consists of Messrs. Taneja and Ms. Carmichael. The 1994
Employee Stock Option Plan Administration Committee consists of Messrs. Ottman
plus a vacant seat created by the resignation of Mr. Mark A. Rowland. The
Employee Stock Purchase Plan Administration
9
<PAGE>
Committee consists of Messrs. Taneja and Chema plus a vacant seat created by the
resignation of Mr. Diroff. None of the Stock Plan committees met during fiscal
1998.
DIRECTOR COMPENSATION
Each outside director of the Company receives $500, plus reimbursement
for actual travel expenses, for each board meeting and $100 for each committee
meeting attended, if held on the same day as a board meeting, or $250 for each
committee meeting, if held on a day other than the date of a board meeting.
Outside directors receive a minimum of $3,000 annually if five meetings are
attended. Directors who are also employees of the Company receive no fees for
meetings attended. Additionally, outside directors receive options to purchase
Common Stock under the Outside Director and Advisory Board Member Stock Option
Plan, and directors of the Company who are executive officers have previously
received, and may receive in the future additional options.
EMPLOYMENT AGREEMENTS
Effective November 23, 1998, the Company entered into a new one-year
employment agreement with Susan J. Carmichael, the Company's newly appointed
Chief Executive Officer and President. Pursuant to the agreement, Ms. Carmichael
receives $175,000 in base salary per year and a bonus at the discretion of the
Board. Additionally, Ms. Carmichael received 200,000 options in connection with
the replacement of her prior three-year employment agreement with the new
one-year agreement.
On November 23, 1998, the Company and Mr. Taneja entered into a
Termination, Noncompetition and Mutual Release Agreement (the "Departure
Agreement") superseding the terms of his employment agreement. Under the terms
of the Departure Agreement, Mr. Taneja's employment as Chief Executive Officer
of the Company was terminated effective November 23, 1998. Upon termination, Mr.
Taneja received 744,680 shares of the Company's Common Stock and the right to
receive $250,000 cash upon receipt by the Company of a certain cash receivable,
and the terms of all of his existing options and warrants were extended until
November 23, 2001.
Prior to November 23, 1998, Ms. Carmichael and Mr. Taneja had
employment agreements which were originally entered into on September 1, 1995
(the Superseded Employment Agreements). The Superseded Employment Agreements
with Ms. Carmichael and Mr. Taneja were originally for three-year terms, but had
been renewed annually such that the remaining term following each such renewal
was for three additional years. The Superseded Employment Agreements were
substantially similar providing Mr. Taneja with an annual base salary of
$200,000 and Ms. Carmichael with an annual base salary of $150,000. For a
complete discussion of the Superseded Employment Agreements see the copy of the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission for the fiscal year ended March 31, 1998 which accompanies this Proxy
Statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Company's equity offering in February, 1995 (the
"Offering"), the Company engaged A.T. Brod & Co., Inc. ("Brod") for the purpose
of offering and selling the Company's units on a firm commitment basis. Brod was
a wholly-owned subsidiary of Bancapital Financial Corporation, of which Mr.
Taneja was the Chief Executive Officer and owner of a majority of its issued and
outstanding shares of capital stock. Pursuant to the terms of the Underwriting
Agreement entered into between the Company and A. T. Brod, Brod received in
connection with the Offering various fees, commissions and underwriting
discounts totaling approximately $1.3 million. The Company granted Brod an
option to purchase 100,000 units as the underwriters. The exercise price of the
units purchased pursuant to the option was $11.96 per unit. In April of 1997,
the Company exchanged one share of common stock for each unit.
During fiscal 1998 and 1997, the Company leased certain office
furniture and equipment from Bancapital for a total cost of $28,000 per year.
Bancapital also held the lease for the Company's Cleveland financial office. The
lease was terminated March 31, 1997 when operations were moved to Florida.
All material affiliated transactions will be made or entered into on
terms no less favorable to the Company than those that can be obtained from
unaffiliated third parties, and all material affiliated transactions must be
approved by a majority of the independent outside members of the Board of
Directors of the Company who do not have an interest in the transactions.
10
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as independent public accountants
for the Company for its most recently completed fiscal year. On December 1,
1998, the Company and Ernst & Young LLP, its auditors, ceased their
relationship. Ernst & Young had no disagreements or reportable events during the
Company's two most recent fiscal years, nor for the current fiscal year through
the date of termination on December 1, 1998.
Neither Ernst & Young's report dated June 29, 1998 on the Company's
financial Statements for the fiscal year ended March 31, 1998 nor its report
dated June 20, 1997 for the fiscal year ended March 31, 1997 contained an
adverse opinion or a disclaimer of opinion and neither report was qualified or
modified as to uncertainty, audit scope or accounting principles.
Furthermore, there were no disagreements with Ernst & Young, whether or
not resolved, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
Ernst & Young's satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its report.
The decision to cease relations with Ernst & Young and engage a new
auditor was mutual due to distance and economics. The decision was approved by
the Board of Directors and was based on the fact that Ernst & Young was sending
a team from Cleveland, Ohio because the Company once maintained its financial
office in Cleveland. Now that the Company has relocated financial operations to
Florida, it will seek auditors in the Tampa Bay Region in an effort to reduce
fees.
STOCKHOLDER PROPOSALS
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in the Company's proxy statement for its 1999 Annual Meeting of
Shareholders is March 31, 1999. Notice to the Company of a shareholder proposal
submitted other than pursuant to Rule 14a-8 will be considered untimely, and may
not be properly brought before the 1999 Annual Meeting by a shareholder, if
received by the Company after March 31, 1999.
OTHER MATTERS
The solicitation of proxies is made by and on behalf of the Board. The
cost of the solicitation will be borne by the Company, including the reasonable
expenses of brokerage firms or other nominees for forwarding proxy materials to
beneficial owners. In addition to solicitation by mail, proxies may be solicited
by telephone, telegraph or personally. Proxies may be solicited by directors,
officers and employees of the Company without additional compensation.
If the enclosed proxy is executed and returned, the shares represented
thereby will be voted in accordance with any specifications made by the
stockholder. In the absence of any such specification, they will be voted "FOR"
the election of each of the nominees for director as set forth in Proposal 1
above. Pursuant to the Company's Articles of Incorporation and applicable law,
broker nonvotes and abstaining votes will not be counted in favor of or against
the election of any nominee for director or any of the proposals to be presented
at the meeting.
The presence of a stockholder at the meeting will not operate to revoke
his proxy. A proxy may be revoked at any time insofar as it has not been
exercised by giving written notice to the Company.
If any other matters shall come before the meeting, the persons named
in the proxy, or their substitutes, will vote thereon in accordance with their
judgment. The Board does not know of any other matters which will be presented
for action at the meeting.
By Order of the Board of Directors
January 11, 1999 SUSAN J. CARMICHAEL
Chief Executive Officer and President
11
<PAGE>
PROXY
NuMED HOME HEALTH CARE, INC.
1998 ANNUAL MEETING OF STOCKHOLDERS
JANUARY 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Thomas V. Chema and Susan
J. Carmichael, or either of them, as proxies of the undersigned, and revokes all
prior proxies with respect to the matters covered by this proxy, with power of
substitution to each, to vote all shares of stock of NuMED HOME HEALTH CARE,
INC. (the "Company") which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the offices of Foley &
Lardner located at 100 North Tampa Street, Tampa, Florida, on Thursday, January
28, 1999 at 10:00 A.M., local time, and at any adjournment or postponements
thereof, with authority to vote said stock on the following matters:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ALL OF THE NOMINEES IN PROPOSAL 1:
(1) The election of the following directors:
Ms. Susan J. Carmichael
Mr. Thomas V. Chema
Mr. J. Michael Gorman
Mr. Richard M. Osborne
Mr. Robert P. Ottman
Mr. Thomas J. Smith
Mr. Jugal K. Taneja
/ / VOTE FOR all nominees listed above, with the following exceptions:
Exceptions:___________________________________________________________
/ / WITHHOLD AUTHORITY to vote for all nominees listed above.
(Continued and to be signed and dated on the reverse side)
<PAGE>
THIS PROXY REVOKES ALL PRIOR PROXIES AND VOTING INSTRUCTIONS.
Should any other matters requiring a vote of the stockholders arise,
including matters incident to the conduct of the meeting, the above named
proxies are authorized to vote the same in accordance with their best judgment
in the interest of the Company. The Board of Directors is not aware of any
matter which is to be presented for action at the meeting other than the matters
set forth herein.
NOTE: Please sign and return promptly in the envelope provided. No
postage is required if mailed in the United States.
Date: January ___, 1999 ____________________________________
Signature
------------------------------------
Signature
Please sign exactly as your name
appears. When signing as attorney,
executor, administrator, trustee or
guardian, please set forth your full
title. If signer is a corporation,
please sign the full corporation
name by a duly authorized officer.
Joint Stockholders should each sign.
