EUROMED, INC.
8214 WESTCHESTER SUITE 500
DALLAS, TEXAS 75225
214-692-3544
214-987-2091
December 01, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: John L. Krug
Mail Stop 7-6
Re: EuroMed, Inc.
Dear Mr. Krug:
On behalf of EuroMed, Inc. I hereby transmitt the 10k for the period
end 12/31/97.
Best Regards,
Elbert G. Tindell
Chairman of the Board
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
(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, 1997
OR
[ ] 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.0-27720
EUROMED, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-031770
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
8214 Westchester, Suite 500
Dallas, TX 752254
(Address of principal executive offices)
214-220-0693
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
None None Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $.01 per share (Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ ] No [x]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of
the registrant as computed by reference to the average of the closing bid and
asked prices of such stock, as reported by the Bulletin Board, on December
1,1998 ($0.75). Shares of voting stock held by each officer and director and by
each person who owns 10% or more of the Company's outstanding voting stock have
been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
The number shares outstanding of the registrant's common stock as of
December 1, 1998 was:
1,407,000 shares of common stock, par
value $.01 per share.
<PAGE>
EUROMED, INC.
For the Year Ended December 31, 1997
Table of Contents
Page
Part I
Item 1: Business............................................. .....3
Item 2: Properties.................................. ..... .....
Item 3: Legal Proceedings............................. ......3
Item 4: Submission of Matters to a Vote of Security Holders... ...
Executive Officers of the Registrant............................... .
Part II
Item 5: Market for the Registrant's Common Equity and Related
Stockholder Matters............................. 4
Item 6: Selected Financial Data.................. .... ....5
Item 7: Management's Discussion and Analysis of Financial Condition
and Results of Operations................. 6
Item 8: Financial Statements and Supplementary Data.................7
Item 9: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................. 25
Part III
Item 10: Directors and Executive Officers of EuroMed, Inc...........25
Item 11: Executive Compensation.................................. 25
Item 12: Security Ownership of Certain Beneficial Owners and
Management....................................... 29
Item 13: Certain Relationships and Related Transactions..... . ..
Part IV
Item 14: Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.................................... .30
PART I
Item 1. Business
Swiss Nassau Corporation was incorporated on May 17, 1994 in the state of
Nevada, United States of America, with authorized and issued share capital of
1,000 shares of common stock with no par value (the "Common Stock). On June 15,
1994, computer equipment with estimated value of $4,998 was contributed in
exchange for all of the shares of Swiss Nassau Corporation. On October 20, 1995,
Swiss Nassau Corporation changed its name into EuroMed, Inc. ("EuroMed" or the
"Company") and increased its authorized shares to 20,000,000 shares of Common
Stock with a new par value of $0.01 per share, and 5,000,000 preferred shares
with a par value of $0.01 per share. On October 20, 1995, EuroMed, Inc. effected
a 150 for 1 stock split of its Common Stock.
On November 17, 1995, all of the shares of Galenica B.V. ("Galenica") and
Confedera B.V. ("Confedera"), both based in Oosterhout, the Netherlands, were
exchanged by the ultimate shareholder of both companies for all of the shares of
a newly-formed company, EuroMed Europe B.V. ("EuroMed Europe"). Prior to this
transaction Galenica and Confedera were owned by B.V. Wisteria ("Wisteria"), a
Netherlands limited liability company, which is owned by Pantapharma B.V., which
is owned by A. Francois Hinnen. All of the shares of EuroMed Europe were then
exchanged for 1,850,000 shares of Common Stock. Neither EuroMed Europe nor the
Company had any operations, and these transactions were completed in
contemplation of an initial public offering ("IPO") of shares of EuroMed. In
March 1996 EuroMed completed its IPO by selling 1,150,000 shares of its common
stock at $6.50 per share. The proceeds of the IPO and 850,000 shares of its
common stock were used to acquire Mutarestes B.V. and Subsidiary ("Mutarestes")
in July 1996 (estimated acquisition price of $11,729,500). Almost immediately,
upon completion of the acquisition of Mutarestes, differences developed between
various officers, directors and shareholders. Mutarestes was subsequently sold
in July 1997 with a significant loss being recognized and the 850,000 shares of
common stock being returned to the Company. In addition, A. Francois Hinnen
returned 850,000 shares of common stock to the Company to mitigate the effect of
the loss on the Mutarestes transactions.
As a result of the failed acquisition of Mutarestes and a significant change in
the Dutch law as it related to the wholesale price of pharmaceuticals, the Board
of Directors concluded that it was in the best interest of EuroMed to divest
itself of its remaining Dutch pharmaceutical operations. In November 1997,
EuroMed Europe and its subsidiaries were sold. EuroMed recognized a substantial
loss on the disposal of EuroMed Europe; therefore, the Board of Directors
negotiated with A. Francois Hinnen the return of 1,000,000 shares of EuroMed's
common stock to lessen the effects of the loss on disposal for the remaining
shareholders of EuroMed.
EuroMed currently has no business operations; however, its President and Board
of Directors are actively seeking appropriate business acquisitions.
Item 3. Legal Proceedings
The Company is still involved in three legal proceedings, two in Nevada
State Court and one in the United States District Court for the Northern
District of Texas. There has been no substantive activity in the past three
months in the first Nevada suit filed by the Company against former directors
Gregory Alan Gaylor and Robert Jansonius.
The second legal proceeding is a lawsuit filed by the Company in the United
States District Court for the Northern District of Texas against Gaylor in which
a Final Judgment in the total amount of approximately $16 million was awarded in
favor of the Company against Gaylor. Gaylor has not tendered any payments under
the Final Judgment and it remains wholly unsatisfied.
The third legal proceeding is a Nevada lawsuit filed by Gaylor and Jan
Bouwman (another former director), on behalf of themselves and the Company's
minority shareholders, against the Company. A special master was appointed, with
the Company's agreement, to investigate Gaylor and Bouwman's allegations against
the Company. The special master conducted hearings in December 1997, but no
report has been issued by the special master as of yet.
PART II
Item 5: Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock has been included for quotation of the
Bulletin Board National Market under the symbol "EMED" since December 1996.
Before this time from March 19, 1996 to December 30, 1996 the stock was traded
on the Nasdaq National market under the symbol "EMED".
The following table sets forth the high and low sales prices on the Nasdaq for
the Common Stock for fiscal year 1997.
1997
Dividends
Quarter High Low per Share
- ------------------------------------------------------------------------------
First Quarter $2.63 $0.63 -
Second Quarter 1.50 0.50 -
Third Quarter 0.75 0.19 -
Fourth Quarter 0.75 0.16 -
At November 27, 1998 the Company had 31 stockholders of record of its
common stock and 1,407,000 shares outstanding.
Dividend Policy
The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain all cash for use in the operation and
expansion of the Company's business and does not anticipate paying any cash
dividends in the near future. In addition, the Company's existing bank credit
agreement prohibits the declaration or payment of cash dividends on its Common
Stock.
<PAGE>
Item 6: Selected Financial Data
The following selected consolidated financial data for each of the five
years in the period ended December 31, 1997, have been derived from the audited
consolidated financial statements of the Company included herein. The selected
consolidated financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto included
elsewhere in this report.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
1993* 1994* 1995* 1996 1997
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Sales $ -- $ -- $ -- $ -- $ --
Gross Profit -- -- -- -- --
Selling, General and Administrative Expenses -- -- -- 590,313 618,198
Net (Loss) from Continuing Operations -- -- -- (538,798) (618,198)
Net Income (Loss) 444,000 637,000 836,000 (7,708,361) (2,273,879)
Weighted Average Number of Shares Outstanding 2,000,000 2,000,000 2,000,000 3,276,923 2,940,769
Income (Loss) per Share:
Continuing Operations $ (.21) $ (.16)
Discontinued Operations
Income (Loss) on Operations $.22 $.34 $.42 (2.19) (0.24)
Estimated Loss on Disposal (0.32)
Total $.22 $ .34 $ .42 $ (2.35) $ (.77)
Balance Sheet Data at Year End $ -- $ -- $ -- $ -- $ --
Total Current Assets -- -- -- $ 32,347 $ 1,202,170
Net Assets of Discontinued Operations -- -- -- 5,207,529 --
Total Assets -- -- -- 5,239,876 1,202,170
Current Liabilities -- -- -- 13,576 88,223
Stockholders' Equity -- -- -- 5,226,300 1,113,947
</TABLE>
*There were no operating activities in EuroMed, Inc. in these years.
<PAGE>
Item 7: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
.........
Year ended December 31, 1997 Compared to Year ended December 31, 1996
As of December 31, 1997 the Company had no sales. Selling, general and
administrative expenses for the year ended December 31, 1997 were $618,198 and
were comprised primarily of legal and professional fees incurred as part of the
legal proceeding described in Part I, Item 3, Legal Proceedings.
Selling, general and administrative expenses for the year ended December 31,
1996 were $590,313 and were comprised primarily of legal and accounting expenses
incurred with the Company's initial public offering and professional fees for
the recurring public reporting. The $69,600 interest was earned on the funds
raised on the initial public offering prior to the time the funds were expended
for the investment in Mutarestes B.V.
Liquidity and Capital Resources
Cash (used in) continuing operations was $(509,524) for the year ended December
31, 1997 compared with $(530,811) used by operations for the year ended December
31, 1996. The cash used in operations was offset partially by advances from the
discontinued operations.
Net cash provided by financing activities was $0 for the year ended December 31,
1997 compared with $6,115,250 for the year ended December 31, 1996. The
Company's initial public offering of shares on March 19, 1996, was the
significant source of cash for the year ended December 31, 1996.
Cash and cash equivalents at the end of the year ended December 31, 1997 was
$232,170 compared with $26,757 at the year ended December 31, 1996. The increase
is due to collection of amounts due from the disposal of the subsidiary.
Management is of the opinion that proceeds from the sale of discontinued
operations should be sufficient to finance and sustain operations at the present
level for at least twelve months or until such time as a merger is completed.
Nasdaq Delisting
.........On November 22, 1996, the Nasdaq Market Authorities notified and
removed EuroMed from trading on the Nasdaq market. This step was confirmed as a
result of a hearing held December 3, 1996. The hearing established that EuroMed
had violated several of Nasdaq's statutory requirements for participation in its
markets including, the nondisclosure of a material business acquisition in which
the Company would expend stockholder cash assets as well as a common stock
dilution by filing the 13d late, the release of public information before the
Nasdaq markets were informed, and nonpayment to Nasdaq fees for said
transactions. On December 30, 1996, the EuroMed Stock was listed on the Bulletin
Board Exchange.
Item 8: Financial Statements and Supplementary Data
.........TABLE OF CONTENTS
Auditors' Reports F-3 and F-4
Balance Sheets as of December 31, 1996 and 1997 F-5
Statements of Operations for the years ended December
31, 1995, 1996 and 1997 F-7
Statements of Shareholders' Equity and Comprehensive Income (Loss)
.........for the years ended December 31, 1995, 1996 and 1997 F-8
Statements of Cash Flows for the years ended December 31, 1995, 1996
.........and 1997 F-9
Notes to the Financial Statements F-11
AUDITOR'S REPORT
Board of Directors and Stockholders
EuroMed, Inc. and Subsidiaries
We have audited the balance sheets of EuroMed, Inc. and Subsidiaries as of
December 31, 1997 and 1996, and the related statements of operations,
shareholders' equity and comprehensive income (loss), and cash flows for the
years then ended. These financial statements are the responsibility of EuroMed,
Inc. and Subsidiaries' management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EuroMed, Inc. and Subsidiaries
as of December 31, 1997 and 1996, and the results of their operations and cash
flows for the years then ended, in conformity with generally accepted accounting
principles in the United States of America.
/s/ KILLMAN, MURRELL & COMPANY, P.C.
KILLMAN, MURRELL & COMPANY, P.C.
October 16, 1998
Dallas, Texas
AUDITOR'S REPORT
To the Board of Directors of
EuroMed, Inc. and subsidiaries
We have audited the consolidated balance sheets of EuroMed, Inc., and
subsidiaries as of December 31, 1994 and 1995, the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1995. These consolidated financial
statements are the responsibility of EuroMed, Inc. and subsidiaries management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of EuroMed,
Inc. and subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and cash flows for each of the years in the three-year period ended
December 31, 1995, in conformity with generally accepted accounting principles
in the United States of America.
/s/ KPMG ACCOUNTANTS N.V.
KPMG Accountants N.V.
Amstelveen, The Netherlands
February 15, 1996
EUROMED, INC. AND SUBSIDIARIES
BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
ASSETS
<TABLE>
<CAPTION>
1996 1997
-------------- ----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 26,757 $ 232,170
Receivables - Note 4
Proceeds from sale of subsidiary - 670,000
Due from EuroMed Europe, B.V. - 300,000
Prepaid expenses 5,590 -
------------- ---------------
TOTAL CURRENT ASSETS 32,347 1,202,170
Net Assets of Discontinued Operations 5,207,529 -
----------- ---------------
TOTAL ASSETS $ 5,239,876 $ 1,202,170
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and other accrued liabilities $ 13,576 $ 88,223
------------ ------------
Commitments and contingencies - Notes 2 and 3 - -
Stockholders' Equity - Note 3
Common Stock, par value $.01 per share;
20,000,000 shares authorized; 4,000,000
and 1,430,000 shares issued and outstanding,
respectively 40,000 14,300
Additional paid-in capital 12,013,000 10,167,138
Retained (deficit) (6,661,362) (8,935,241)
Cumulative currency translation
adjustment (33,088) -
------------ ---------------
5,358,550 1,246,197
Less: 23,000 Treasury
Shares, at cost (132,250) (132,250)
------------ -------------
TOTAL STOCKHOLDERS' EQUITY 5,226,300 1,113,947
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,239,876 $ 1,202,170
=========== ===========
</TABLE>
The accompanying notes are an
integral part of these financial statements.
EUROMED, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<S> <C> <C> <C>
1995 1996 1997
------------- ------------ --------
Selling, general and administrative
expenses $ - $ (590,313) $ (618,198)
------------- ----------- -----------
Operating (loss) - (590,313) (618,198)
Other Income (Expense)
Interest income - 69,602 -
Interest (expense) - (18,087) -
------------- ------------ ---------------
Loss before income taxes - (538,798) (618,198)
Income taxes - Note - - -
------------- --------------- ---------------
Net (loss) from continuing operations - $ (538,798) $ (618,198)
Discontinued operations - Note 4
Operating income (loss) from
discontinued operations 836,000 (7,169,563) (713,695)
Loss on sale of
discontinued
operations - - (941,986)
------------- ------------- ------------
Net income (loss) $ 836,000 $(7,708,361) $(2,273,879)
========== =========== ===========
Weighted average number of shares
outstanding 2,000,000 3,276,923 2,940,769
========== =========== ===========
Income (loss) per share:
Continuing operations $ - $ (.16) $ (.21)
Discontinued operations -
Income (loss) on operations .42 (2.19) (.24)
Estimated loss on disposal of
discontinued operations - - (.32)
------------- --------------- --------------
Total $ .42 $ (2.35) $ (.77)
========== ============= =============
</TABLE>
The accompanying notes are an
integral part of these financial statements.
EUROMED, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS OF U.S. DOLLARS)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
Common Common Cumulative
Stock Stock Additional Retained currency Treasury Total
EuroMed Galenica & Paid-in Earnings/ translation Share Shareholders'
Inc. Confedera Capital (Deficit) adjustment Purchase Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of December 31,
1994 $ - $ 56 $ 12 $ 211 $ (22)$ - $ 257
Formation of the operating group:
Change in par value and 150
for 1 stock split 2 - (2) - - - -
Acquisition of Galenica B.V.
and Confedera B.V. by
EuroMed, Inc. through
the issuance of 1,850,000
shares of common
stock 18 (56) 38 - - - -
Comprehensive income:
Net income - - - 836 - - 836
Currency translation
adjustment - - - - 24 - 24
------------
Total comprehensive
income - - - - - - 860
------- ----------- ---------- --------- ----------- --------- -----------
Balance as of December 31, 1995 20 - 48 1,047 2 - 1,117
Sale of common stock
March 1996, net of
issuing cost of $1,228 12 - 6,236 - - - 6,248
Acquisition of subsidiary
July 1996 - note 8 - 5,729 - - - 5,737
Treasury stock purchase - - - - - (132) (132)
Comprehensive (loss):
Net loss - - - (7,708) - - (7,708)
Currency translation
adjustment - - - - (35) - (35)
Total comprehensive
loss - - - - - - (7,743)
------- ----------- ---------- --------- ----------- --------- -----------
Balance as of December 31, 1996 40 - 12,013 (6,661) (33) (132) 5,227
Shares acquired in the disposal
of an investment in
Mutarestes, B.V. (17) - (1,683) - - - (1,700)
Shares acquired from stockholder
in settlement of claims (10) - (190) - - - (200)
Share issued in exchange for
services 1 - 27 - - - 28
Comprehensive (loss):
Net loss - - - - (2,274) - - (2,274)
Currency translation
adjustment - - - - 33 - 33
------------
Total comprehensive
(loss) - - - - - - (2,241)
------- ----------- ---------- --------- ----------- --------- -----------
Balance as of December 31, 1997 $ 14 $ - $10,167 $(8,935)$ - $ (132) $ 1,114
===== =========== ======= ======= =========== ======= ==========
</TABLE>
The accompanying notes are an
integral part of these financial statements.
EUROMED, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
1995 1996 1997
------- ----------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) from continuing activities $ - $ (538,798) $ (618,198)
Adjustments to reconcile net income (loss) to cash
flow from operations
Stock issued for services rendered - - 28,438
Changes in operating assets and liabilities:
Other receivables and prepaid expenses - (5,590) 5,590
Accounts payable and other accrued liabilities - 13,577 74,646
-------- ------------ ------------
Net cash (used in) continuing
operations - (530,811) (509,524)
-------- ----------- -----------
Net cash provided by discontinued operations - 434,318 414,937
-------- ----------- -----------
Net cash (used in) operating activities - (96,493) (94,587)
-------- ------------ ------------
Cash flows from investing activities:
Proceeds from disposal of discontinued operations - - 300,000
Investment in Mutarestes B.V. and Subsidiary - (5,992,000) -
----------- ----------- --------------
Net cash (used in) provided by investing activities - (5,992,000) 300,000
----------- ----------- -----------
Cash flows from financing activities:
Common stock issued - 6,247,500 -
Purchase of Treasury Shares - (132,250) -
----------- ------------ --------------
Net cash provided by financing activities - 6,115,250 -
----------- ----------- --------------
Net increase in cash and cash equivalents - 26,757 205,413
Cash and cash equivalents at the beginning of the year - - 26,757
----------- --------------- ------------
Cash and cash equivalents at the end of the year $ - $ 26,757 $ 232,170
========== ============ ===========
Cash paid during the year:
Interest $ - $ 18,087 $ -
========== ============ ==============
Income taxes $ - $ - $ -
========== ============== ==============
Supplemental schedule of noncash investing and financing activities:
Increase in assets $ - $ 62,096 -
Assumption of liabilities - (33,403) -
Reduction in due from affiliated companies in
connection with acquisition of Galenica Belgium S.A. - (28,693) -
Common stock - (8,500) 17,000
Additional paid-in-capital (5,729,000) 1,683,000
Investment in Mutarestes - 5,737,500 (1,700,000)
---------- ---------- -----------
$ - $ - $ -
========== ============= ==============
The accompanying notes are an
integral part of these financial statements.
</TABLE>
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company History
Swiss Nassau Corporation was incorporated on May 17, 1994 in the state of
Nevada, United States of America, with authorized and issued share capital of
1,000 shares of common stock with no par value (the "Common Stock). On June 15,
1994, computer equipment with estimated value of $4,998 was contributed in
exchange for all of the shares of Swiss Nassau Corporation. On October 20, 1995,
Swiss Nassau Corporation changed its name into EuroMed, Inc. ("EuroMed" or the
"Company") and increased its authorized shares to 20,000,000 shares of Common
Stock with a new par value of $0.01 per share, and 5,000,000 preferred shares
with a par value of $0.01 per share. On October 20, 1995, EuroMed, Inc. effected
a 150 for 1 stock split of its Common Stock.
On November 17, 1995, all of the shares of Galenica B.V. ("Galenica") and
Confedera B.V. ("Confedera"), both based in Oosterhout, the Netherlands, were
exchanged by the ultimate shareholder of both companies for all of the shares of
a newly-formed company, EuroMed Europe B.V. ("EuroMed Europe"). Prior to this
transaction Galenica and Confedera were owned by B.V. Wisteria ("Wisteria"), a
Netherlands limited liability company, which is owned by Pantapharma B.V., which
is owned by A. Francois Hinnen. All of the shares of EuroMed Europe were then
exchanged for 1,850,000 shares of Common Stock. Neither EuroMed Europe nor the
Company had any operations, and these transactions were completed in
contemplation of an initial public offering ("IPO") of shares of EuroMed. In
March 1996 EuroMed completed its IPO by selling 1,150,000 shares of its common
stock at $6.50 per share. The proceeds of the IPO and 850,000 shares of its
common stock were used to acquire Mutarestes B.V. and Subsidiary ("Mutarestes")
in July 1996 (estimated acquisition price of $11,729,500). Almost immediately,
upon completion of the acquisition of Mutarestes, differences developed between
various officers, directors and shareholders. Mutarestes was subsequently sold
in July 1997 with a significant loss being recognized and the 850,000 shares of
common stock being returned to the Company. In addition, A. Francois Hinnen
returned 850,000 shares of common stock to the Company to mitigate the effect of
the loss on the Mutarestes transactions.
As a result of the failed acquisition of Mutarestes and a significant change in
the Dutch law as it related to the wholesale price of pharmaceuticals, the Board
of Directors concluded that it was in the best interest of EuroMed to divest
itself of its remaining Dutch pharmaceutical operations. In November 1997,
EuroMed Europe and its subsidiaries were sold. EuroMed recognized a substantial
loss on the disposal of EuroMed Europe; therefore, the Board of Directors
negotiated with A. Francois Hinnen the return of 1,000,000 shares of EuroMed's
common stock to lessen the effects of the loss on disposal for the remaining
shareholders of EuroMed.
EuroMed currently has no business operations; however, its President and Board
of Directors are actively seeking appropriate business acquisitions.
Description of Business
Prior to November 1997, EuroMed and its operating companies, Galenica and
Confedera (collectively, the "Companies"), which are based in Oosterhout, The
Netherlands, primary business was the wholesale distribution of medicines. The
Companies' customers were primarily located in The Netherlands. The Companies'
products were readily available and the companies are not dependent on a single
supplier or a few suppliers. Business operations ceased in November 1997 upon
the disposal of Galenica and Confedera.
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Taxation
Income taxes are accounted for in accordance with the provisions of Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes." Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recognized or settled. The effect on tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment
date.
EuroMed has recognized significant losses from its disposal of subsidiaries and
general corporate expenses incurred in the United States. Realization of any
portion of the deferred tax asset resulting from the net operating loss
carryforward is not considered more likely than not. No deferred tax asset or
valuation allowance has been estimated due to the anticipated change in
ownership which severely restricts the use of the net operating carryforward.
Pension and Other Post-Retirement and Post-Employment Plans
The Companies have no defined benefit pension plan nor other post-retirement or
post-employment plans.
Foreign Currencies Translation
The functional currency of the foreign subsidiaries was the Dutch guilder. The
reporting currency herein is the US dollar. The translation of guilders into US
dollars is performed for balance sheet accounts using exchange rates in effect
at the balance sheet dates and for income statement amounts using average
exchange rates during the period. The gains and losses resulting from
translations are included in stockholders' equity.
Cash Equivalents
All highly liquid investments purchased with original maturities of
approximately three months or less are considered to be cash equivalents.
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings (Loss) Per Share
Earnings per share for the year ended December 31, 1995 is based upon net income
divided by 2,000,000 shares of Common Stock outstanding. Loss per share for the
years ended December 31, 1996 and 1997 is based upon the weighted average number
of common shares outstanding during the year.
Reclassification of 1996 Balance Sheet
Due to the disposal of all subsidiaries in 1997, the assets, liabilities and
operations applicable to these subsidiaries as of December 31, 1996 were
reclassified into single balances in the accompanying balance sheet and
statements of operations and cash flows.
NOTE 2: LONG-TERM INCENTIVE PLAN
The Company adopted its 1995 Long-Term Incentive Plan ("Plan") as of November
18, 1995. An aggregate of 300,000 shares of Common Stock has been authorized and
reserved for issuance under the plan pursuant to the exercise of options or the
grant of restricted stock awards. The Plan provides for the grant of incentive
stock options, non-qualified stock options, restricted stock awards and stock
appreciation rights. All of the Company's and its subsidiaries' employees,
independent directors and advisors are eligible to receive awards under the
plan, but only employees of EuroMed and its subsidiaries are eligible to receive
incentive stock options. The exercise price for incentive stock options granted
under the Plan may be no less than the fair market value of the Common Stock on
the day of the grant.
As of December 31, 1997, 1996 and 1995, no grants have been awarded under this
plan.
NOTE 3: RELATED PARTY TRANSACTION
The Board of Directors authorized the issuance of common stock to EuroMed's
President and to an unaffiliated individual for services rendered to EuroMed in
November and December 1997. The summary below sets forth these transaction:
<TABLE>
<S> <C> <C> <C> <C>
Fair Number
Month Value Per of Expense
Individual Issued Share Shares Amount
-------------------------------------------------------------------------------------------------------
Elbert Tindell, President December 1997 $ .20 100,000 $ 20,000
William Rapaglia November 1997 $ .28 1/8 30,000 8,438
------------------------
130,000 $ 28,438
========================
</TABLE>
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 3: RELATED PARTY TRANSACTION (CONTINUED)
In addition to the $28,438 charge against fourth (4th) quarter operations, a
$23,000 bonus for Elbert Tindell was approved in December 1997.
In December 1997, the Board of Directors authorized the issuance of 100,000
warrants to purchase common stock of EuroMed to each of the three (3) Directors
of EuroMed at a price of $.30. The fair value of the common shares was $.20 (Bid
Price) at the date the warrants were authorized; therefore, no expense was
recognized in connection with the warrant issue.
In December 1997, the Board of Directors authorized the following monthly
compensation:
<TABLE>
<S> <C> <C>
Monthly
Name Position Amounts
Elbert Tindell Chief Executive Officer and
Chairman of the Board $5,000
Robert A. Shuey, III Chief Financial Officer and
Director $3,000
Jesse Shelmire, IV Director $3,000
</TABLE>
In December, Mr. Shuey and Mr. Shelmire were each paid $7,000 for services
rendered as Directors of EuroMed.
NOTE 4: DISCONTINUED OPERATIONS
In the summer of 1997, EuroMed's management concluded the sale of its investment
in Mutarestes B.V. and Subsidiary and determined that EuroMed should divest
itself of the remaining operating subsidiaries. On November 26, 1997, the
Company executed the "Purchase Agreement by and between EuroMed, Inc. and
Neopharm B.V." Selected provisions of the agreement are as follows:
! 80% of capital stock sold to Neopharm B.V. of EuroMed Europe B.V.
! Sale Proceeds $1,000,000
! Retainment of $300,000 receivable from EuroMed Europe B.V.
! Assignment to the Company of $500,000 of the claim against
the purchaser of Mutarestes B.V.
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 4: DISCONTINUED OPERATIONS (CONTINUED)
Management has determined that the remaining 20% interest held in EuroMed Europe
B.V. had no realizable value and the collection of the $500,000 claim against
the purchase of Mutarestes B.V. was not probable; therefore no value was given
to these assets at September 30, 1997. Additionally, in connection with the sale
of EuroMed Europe B.V., the Company entered into a settlement agreement with Dr.
A.
Francois Hinnen and his affiliates which included the following provisions:
! Hinnen's affiliate to return 1,000,000 shares of EuroMed's common
stock
! Hinnen to resign as director of EuroMed
! Hinnen and his affiliates resign as the managers of EuroMed's
operating subsidiaries
! Hinnen to receive EuroMed's 51% interest in Confedera Philippines,
Inc. and title to a used automobile and personal computer
! Each party to the agreement to release each other for any claims
they may have against each other
The financial statement of EuroMed Europe B.V. as of September 30, 1997
are as follows:
EUROMED EUROPE, B.V.
BALANCE SHEET
September 30, 1997
<TABLE>
<S> <C>
ASSETS
Current Assets $6,850,655
Vehicles, Furniture and Equipment, net 399,959
Other Assets 510,281
Total Assets $7,760,895
LIABILITIES AND EQUITY
Liabilities $5,963,189
Equity 1,797,706
$7,760,895
</TABLE>
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 4: DISCONTINUED OPERATIONS (CONTINUED)
EUROMED EUROPE, B.V.
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
('000 omitted)
Sale $ 26,395
Cost of Sale 24,760
Gross Profit 1,635
Selling, general and administrative expense 2,349
Net (Loss) $ (714)
==========
The loss on the disposal of the Subsidiary is as follows:
Net investment in EuroMed Europe, B.V. $ 2,063,763
Professional fees incurred in connection
with sale of EuroMed Europe 55,223
2,118,986
Proceeds from sale (1,000,000)
Fair value of A. Francois Hinnen's affiliate
stock returned to company (1,000,000 shares @ $.20) (200,000)
------------
Net loss $ 918,986
============
</TABLE>
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 5: ACQUISITION AND DISPOSAL OF A SIGNIFICANT ASSET
EuroMed, Inc. and EuroMed Europe entered into a Stock Purchase Agreement, dated
as of June 19, 1996 (the "Purchase Agreement") with Mr. A. Doets, Dr. N. Th. P.
Roozekrans, Mutarestes B.V. ("Mutarestes"), Pluripharm, a wholly-owned
subsidiary of Mutarestes ("Pluripharm"), and Financieringsmaatschappij De Nieuwe
Wereld, B.V., a wholly-owned subsidiary of Pluripharm ("FDNW"), pursuant to
which Doets and Roozekrans sold to EuroMed Europe all of the capital stock of
Mutarestes, Pluripharm and FDNW. The purchase price paid by EuroMed for such
companies consisted of: (i) $5,992,000 (10 million Dutch guilders); and (ii)
850,000 shares of Common Stock. The closing of the Purchase Agreement occurred
on July 5, 1996. The purchase price paid under the Purchase Agreement was
determined pursuant to arms-length transactions, and were based upon, among
other things, multiples of earnings and potential earnings. The cash portion of
the purchase price was funded by the use of available funds of EuroMed
(8,560,000 Dutch guilders), which included proceeds from the Company's initial
public offering completed on March 19, 1996, with the remaining portion of the
purchase price (1,440,000 Dutch guilders) being funded through a loan to the
Company from Bank MeesPierson, N.V. The purchase price was determined by mutual
agreement of the companies' management and no independent valuation was used to
arrive at the purchase price. Pluripharm, the operating company, is engaged in
the wholesale distribution of branded and generic medicines within the
Netherlands. Prior to the acquisition of Mutarestes B.V. by EuroMed Europe, the
only relationship the two companies had was that each sold pharmaceuticals to
the other. These sales between the two companies were as follows:
Amount
Year ended December 31, 1995 $2,914,000
Six months ended June 30, 1996 $1,798,000
The Company divested itself of the capital stock of Pluripharm and other related
assets in the second quarter of 1997. The Company took this step primarily as a
result of the changing pharmaceutical wholesale market in The Netherlands, which
has resulted in significantly lowered prices and decreased margins, and the
Company's inability to consolidate the Pluripharm operations into the Company's
operations in The Netherlands. The operations were not consolidated due to the
objections of the management of Pluripharm and the problems resulting from the
litigation initiated by the various owners/managers of the companies. The
divestiture includes; (i) Houdstermaatschappij Singultus B.V. ( a private
company with limited liability under the laws of the Netherlands, which is owned
by management of Pluripharm) will acquire all of the capital stock of Pluripharm
for an estimated $3,104,000 (6,100,000 Dutch guilders), and (ii) the return of
850,000 shares of common stock. The terms of divestiture agreement included the
provision that EuroMed will not be entitled to any of the earnings of Pluripharm
during the time of ownership.
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 5: ACQUISITION AND DISPOSAL OF A SIGNIFICANT ASSET (CONTINUED)
The following summarizes the investment in Mutarestes B.V. and Subsidiary and
the resulting estimated loss upon disposal:
Acquisition
Cash $ 5,877,000
Cost of acquisition 115,000
------------
Total cash advanced 5,992,000
850,000 shares of common stock issued
at a fair value of $6.75 per share 5,737,500
Total investment 11,729,500
Disposal
Estimated cash proceeds 3,104,000
Disposal costs (302,000)
Net cash provided 2,802,000
Stock returned to Company:
850,000 shares of common stock
held by the owners of Mutarestes
B.V. at a fair value of $1.50
(March 1997) 1,275,000
850,000 shares of common stock
held by Francois Hinnen at a
fair value of $.50 (September 1997) 425,000
------------
4,502,000
Estimated net loss $ 7,227,500
===========
The fair value, of 850,000 shares returned to EuroMed by Mr. Francois Hinnen,
CEO of EuroMed, is included in the loss estimate since the Board of Directors
requested that Mr. Hinnen give up shares to help mitigate the loss on the
disposal for those shareholders who purchased stock in the March 1996 initial
public offering.
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 5: ACQUISITION AND DISPOSAL OF A SIGNIFICANT ASSET (CONTINUED)
The following pro forma balance sheet (balance sheet does not include
reclassifications related to discontinued operations) reflects the sale of the
investment as if it had occurred on December 31, 1996 (in thousands of U.S.
dollars):
EUROMED, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Total
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 411 $ 2,802 $ 3,213
Receivable and prepaid assets 2,747 - 2,747
Inventory 4,526 - 4,526
Investment in Mutarestes B.V. and Subsidiary 4,502 (4,502) -
-------- ------- ----------
Total Current Assets 12,186 (1,700) 10,486
Net Vehicles, Furniture and Equipment 409 - 409
Other Assets 779 - 779
-------- --------- --------
Total Assets $13,374 $(1,700) $11,674
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 8,057 $ - $8,057
Long-Term Debt 90 - 90
--------- --------- ---------
Total Liabilities 8,147 - 8,147
Stockholders' Equity 5,227 (1,700) 3,527
-------- ------- --------
Total Liabilities and Stockholders ' Equity $13,374 $(1,700) $11,674
======= ======= =======
</TABLE>
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 5: ACQUISITION AND DISPOSAL OF A SIGNIFICANT ASSET (CONTINUED)
The following pro forma statement of operations for the year ended December 31,
1996 reflects the operations of EuroMed, Inc. and Subsidiaries (statement does
not include reclassifications related to the discontinued operations of EuroMed
Europe) without the loss on the disposal of a significant asset (in thousands of
U.S. dollars, except loss per share):
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Total
<S> <C> <C> <C>
Sales $35,471 $ - $ 35,471
Cost of Goods Sold 32,426 - 32,426
------- -------- ----------
Gross Profit 3,045 - 3,045
Selling, general and administrative expense 3,342 - 3,342
------- -------- -----------
Operating Loss (297) - (297)
Other Income (Expense)
Interest Income 187 - 187
Interest Expense (359) - (359)
Loss on investment in Mutarestes B.V. and
Subsidiary (7,227) 7,227 -
------- ------ -------------
Loss before income taxes (7,696) 7,227 (469)
Income Taxes 12 - 12
-------- -------- ------------
Net (Loss) $(7,708) $7,227 $ (481)
======= ====== ===========
Pro Forma (Loss) per share $ (.15)
===========
Weighted average number of shares outstanding 3,276,923
=========
</TABLE>
(Continued)
EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 6: QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Continuing Operations
Income
(Loss) Before Net Income Earnings
Revenues Income Taxes (Loss) Per Share
<S> <C> <C> <C> <C>
1997
December $ - $ (26,839) $ (26,839) $ (.01)
September - (147,839) (147,839) (.06)
June - (177,408) (177,408) (.05)
March - (266,112) (266,112) (.07)
1996
December - (107,458) (107,458) (.03)
September - (45,578) (45,578) (.01)
June- 33,024 33,024 .01
March - (418,786) (418,786) (.18)
</TABLE>
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On November 19, 1996, KPMG Accountants N.V. ("KPMG") resigned as
EuroMed's independent public accountant. No report of KPMG for EuroMed has
contained an adverse opinion or a disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope, or accounting principles. There have
been no disagreements between KPMG and EuroMed as described in Item
304(a)(1)(iv) of Regulation S-K or events of the kind set forth in Item
304(a)(1)(v) of Regulation S-K.
EuroMed provided KPMG with the above disclosures prior to filing a
Current Report Form 8-K with the Commission. KPMG responded to the above
disclosures by stating that they resigned as principal accountants for EuroMed
because they believe that the current internal control structure of EuroMed is
not adequate to develop reliable financial statements. KPMG did not disclose to
EuroMed specific concerns or problems.
On February 20, 1997, EuroMed engaged Killman, Murrell and Company, P.C.
("Killman") as its independent public accountant. Prior to engaging Killman,
EuroMed discussed with Killman the reason given by KPMG for its resignation.
Killman has told EuroMed that it believes EuroMed has resolved the problems that
led to KPMG's resignation. EuroMed provided Killman with the above disclosures
prior to filing a Current Report on Form 8-K with the Commission and Killman did
not file any response to such disclosures.
PART III
Item 10. Directors and Executive Officers of EuroMed, Inc.
<TABLE>
<S> <C> <C>
Name Age Position
Elbert G. Tindell 51 President, Chief Executive Officer and Chairman
of the Board
Jesse Shelmire, IV 40 Director
Robert A. Shuey, III(1) 42 Director
</TABLE>
(1) Member of the Audit Committee and the Compensation Committee
Elbert G. Tindell, has served as CEO and a director of the Company since
October 15, 1997. Mr. Tindell is involved in the management and direction of
public and private Companies in the United States, Asia Pacific, and Europe.
Specializing in the re-engineering of corporate environments through
implementing capital restructuring and planning strategies. Prior to graduating
from the University of North Texas, Mr. Tindell served in the United States
Marine Corps from January 1967 to December 1970.
Jesse Shelmire, IV has served as a director of the Company since November
27, 1996. Mr. Shelmire has 15 years of experience in the investment banking and
stock underwriting business. Upon graduating from the Warton School of Business
he worked from 1981 to 1989, for Smith Barney, Inc. in their Dallas, Texas
office. From 1989 to 1993, he served as the Portfolio Manager for Stonegate
Securities, Inc. of Dallas, Texas where he managed $250 million of assets in
equity and fixed income accounts, he served at Dillon-Gage Securities corp. as
Director of Corporate Finance from 1993 to 1995 and he served as Director of
Corporate Finance for LaJolla Securities Corporation from 1994 to 1995. Mr.
Shelmire currently serves as Managing Director of Investment Banking for First
London Securities Corporation in Dallas, Texas.
Robert A. Shuey, III has served as a director of the Company since June
1996. Mr. Shuey is employed by National Securities corporation of Dallas, Texas
as the Director of Corporate Finance. Prior to that, Mr. Shuey was with LaJolla
Securities Corporation from 1994 to 1995 in the position of Director of
Corporate Finance. Mr. Shuey was employed as Director of Corporate Finance by
Dillon-Gage Securities Corp., an investment banking firm, from 1994 to 1995, and
prior to that held the position of Senior Vice President, Corporate finance, of
Dickinson & Company, a brokerage firm. Mr. Shuey was Vice President of Rauscher
Pierce Refnes, Inc. from June 1984 to September 1987. From May 1980 until June
1984, he was director of the corporate finance department and a Vice President
of Institutional Equity Corporation. Prior to that time, Mr. Shuey was an
associate in the corporate finance department of Salomon Brothers, Inc.
Meetings and Committees of the Board of Directors
The business of the Company is managed under the direction of the Board
of Directors. The Board of Directors meets on a regularly scheduled basis to
review significant developments affecting the Company and to act on matters
requiring approval of the Board of Directors. It also holds special meetings
when an important matter requires action by the Board of Directors between
scheduled meetings. The Board of Directors met 17 times and acted by unanimous
written consent 0 times during 1997. During 1997, each member of the Board of
Directors participated in at least 75% of all Board of Directors meetings during
the period for which he was a director.
The Board of Directors has two standing committees: the Audit Committee
and the Compensation Committee. The functions of these committees, their current
members, and the number of meetings held during fiscal 1997 are described below.
Audit Committee. The Audit Committee makes recommendations to the Board of
Directors regarding the appointment of independent auditors, reviews the plan
and cope of any audit to the Company's financial statements and reviews the
Company's significant accounting policies and related matters. Mr. Shuey
currently is the sole member of the Audit Committee. The Audit Committee did not
meet in 1997.
Compensation Committee. The Compensation Committee makes recommendations to
the Board of Directors regarding the compensation of executive officers and the
administration of the Company's 1995 Long-Term Incentive Plan. Mr. Shuey
currently is the sole member of the Compensation Committee. The Compensation
Committee did not meet in 1997.
Nominating Committee. The Company does not have a nominating committee. The
functions customarily performed by a nominating committee are performed by the
Board of Directors as a whole.
Item 11. Executive Compensation.
The following table sets forth certain information regarding compensation
paid during the Company's last completed fiscal year to the Company's Chief
Executive Officer and each of the Company's executive officers (other than the
Chief Executive Officer) whose total annual salary and bonuses earned during the
fiscal year ended December 31,1997, exceeded $100,000:
Management Compensation and Transactions
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term
Compensation Awards
Name/Title Year Salary($) Bonus($) Other Securities All Other
Compensation($) Underlying Compensation($)
Options/
SARs(#)
<S> <C> <C> <C> <C> <C> <C>
A. Francois Hinnen(1) 1997 -- -- -- --
1996 $125,000 -- -- -- --
1995 $125,000 -- -- -- --
Elbert G. Tindell(2) 1997 $23,000 20,000(3)
1996 -- -- -- --
1995 -- -- -- --
</TABLE>
(1) Mr. Hinnen contracted his services to Confedera and Galenica through
Pantapharma B.V. Mr. Hinnen resigned effective November 27, 1997.
(2) Mr. Tindell was appointed Chief Executive Officer on October 15, 1997.
(3) All other compensation is comprised of 100,000 shares of common stock
issued to Mr. Tindell having a fair market value of $0.20 per
share.
Compensation of Directors
During 1997 the Company paid Mr. Shelmire and Mr. Shuey $7,000 each for
serving on the Board of directors and warrants to purchase 100,000 shares of
Common Stock at $0.30 per share.
Report of the Compensation Committee of the Board of Directors on Executive
Compensation
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The compensation Committee
presently consists of one member, Mr. Shuey, who is an independent, nonemployee
director. The Compensation Committee is committed to a strong, positive link
between business, performance and strategic goals, and compensation and benefit
programs.
Overall Executive Compensation Policy
The Company's compensation policy is designed to support the overall
objective of enhancing value for the Company's stockholders by:
C Attracting, developing, rewarding and retaining highly qualified and
productive individuals. C Relating compensation to both Company and
individual performance. C Ensuring compensation levels that are
externally competitive and internally equitable. C Encouraging executive
stock ownership to enhance a mutuality of interest with other
stockholders.
The following is a description of the elements of the Company's executive
compensation and how each relates to the objectives and policy outlined above.
Base Salary
The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, the Committee considers individual
performance, internal equity, as well as pay practices of other companies
relating to executives of similar responsibility.
By design, the Committee strives to set executives' salaries at
competitive market levels. The Committee believes maximum performance can be
encouraged through the use of appropriate incentive programs. The Company's
long-term compensation philosophy is that long-term incentives should be related
to improvement in long-term stockholder value, thereby creating a mutuality of
interest with stockholders. In furtherance of this objective, the Company
intends to award to its executive officers stock options. Stock options
encourage and reward effective management that results in long-term corporate
financial success, as measured by stock price appreciation.
Rationale for CEO Compensation
During Mr. Hinnen's tenure as CEO in 1997, he received no compensation from
Euromed Inc. Mr. Tindell was appointed CEO after the resignation of Mr. Hinnen
effective November 27, 1997. Prior to the year end, Mr. Tindell received
commissions and directors fee in the amount of $43,000.
Section 16 Requirements
Section 16(a) of the Exchange Act, requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it
with respect to fiscal 1997, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities have been complied with.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Principal Stockholders and Management Ownership.
The following table sets forth information with respect to beneficial
ownership of Common Stock as of December 31, 1997 by (i) all persons
known to the Company to be the beneficial owner of 5% or more of the
Common Stock, (ii) each director of the Company, (iii) the chief
executive officer and each of the Company's four other most highly
compensated executive officers whose total annual compensation for 1996
based on salary and bonus earned during 1997 exceeded $100,000 (the
"Named Executive Officers"), and (iv) all the Company directors and
executive officers as a group. This table does not include shares of
Common Stock that may be purchased pursuant to options not exercisable
within 60 days of December 31, 1997. All persons listed have sole voting
and investment power with respect to their shares unless otherwise
indicated.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and Nature Percent
of Beneficial of
Ownership Class
<S> <C> <C>
A. Francois Hinnen (1) 71,500 5.00%
Jesse Shelmire, IV 100,000 (2) 6.99%
Robert A. Shuey, III 100,000 (2) 6.99%
Elbert G. Tindell 200,000 (3) 13.98%
All directors and executive officers as a group (3 persons) 400,000 (4) 27.96%
</TABLE>
* Less than 1%
(1) Of the shares beneficially owned by Mr. Hinnen 71,500 are owned directly
through B.V. Wisteria, a Netherlands limited liability company, which
company is owned is owned by Pantapharma B.V., which is owned by Mr.
Hinnen.
(2) These shares represent 100,000 options to purchase 100,000 shares of
common stock.
(3)Included in the 200,000 shares, 100,000 represents the option
to purchase 100,000 shares of common stock.
(4) Of these shares 300,000 (20.98%) represent the option to purchase
100,000 shares of common stock.
<PAGE>
PART IV
Item 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a. Exhibit
Number Description of Exhibit
<TABLE>
<S> <C>
3.1 Articles of Incorporation(1)
3.2 Bylaws of the Company(1)
4.1 Specimen of Series A Common Stock Certificate(1)
10.1 Consulting, Management and Noncompetition Agreement, dated as of July 5, 1996, by and between Purchaser and Doets.(3)
10.2 Consulting, Management and Noncompetition Agreement, dated as of July 5, 1996, by and between Purchaser and
Roozekrans.(3)
10.3 Consulting, Management and Noncompetition Agreement,dated as of July 5, 1996, by and between Purchaser and Hinnen.(3)
16.1 Letter of the Change of Certified Accountants(2)
23.1 Murrell & Company, P.C., Certified Public Accountants.*
21.1 Subsidiaries of the Registrant(4)
27.1 Financial Data Schedule*
</TABLE>
* Filed Herein
(1) Previously filed as
an exhibit to the
Company's
Registration
Statement No.
33-80805 on Form
S-1 and
incorporated herein
by reference.
(2) Previously filed as
an exhibit to the
Company's Current
Report on Form
8-K/A (Amendment
No. 1) dated
November 19, 1996
and incorporated
herein by
reference.
(3) Previously filed as
an exhibit to the
Company's Current
Report on Form
8-K/A (Amendment
No. 1) dated July
5, 1996 and
incorporated herein
by reference.
(4) Previously filed.
b. Form 8-K.
The Company filed a report o Form 8-K dated December 8, 1997 to
report on Item 2 event.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EuroMed, Inc.
Dated: December 1, 1998 By: /s/ Elbert G. Tindell
-------------------
Chairman of the Board and President
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Elbert G. Tindell President and December 1, 1998
Elbert G. Tindell Chairman of the Board
/s/ Robert A. Shuey, III Chief Executive Officer, December 1, 1998
- ---------------------------
Robert A. Shuey, III Chief Financial Officer,
Treasurer and Director
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby concent to the incorporation of our report dates October 16,
1998, which is incorporated in this Annual Report on Form 10-K.
/S/: Killman, Murrell & Company, P.C.
Killman, Murrell & Company, P.C.
Dallas, Texas
December 1, 1998
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