SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO __________________
EUROMED, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-27720
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NEVADA 88-0317700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8214 Westchester, Suite 500
DALLAS, TX 75225
(Address of principal executive offices) (Zip Code)
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(214) 220-0693
(Registrant's telephone number, including area code)
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
As of December 01, 1997, there were 1,407,000 shares outstanding of the
registrant's common stock, $0.01 par value.
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INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------------
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):
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Balance Sheets -
December 31, 1997 and September 30, 1998 3
Statements of Operations -
Three months and nine months ended September 30, 1997 and 1998 4
Statements of Cash Flows -
Nine months ended September 30, 1997 and 1998 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
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1
EUROMED, INC.
BALANCE SHEETS
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<CAPTION>
December 31, September 30,
1997 1998
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets
Cash $ 232,170 $ 299,900
Receivables -
Proceeds from sale of subsidiary 670,000 -
Due from EuroMed Europe, B.V. 300,000 300,000
12% Unsecured note receivable, due
November 6, 1998 - 300,000
Prepaid assets - 25,000
---------------- ------------
TOTAL CURRENT ASSETS 1,202,170 924,900
----------- -----------
TOTAL ASSETS $ 1,202,170 $ 924,900
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 88,223 $ -
------------ --------------
TOTAL CURRENT LIABILITIES 88,223 -
--------------
Stockholders' Equity
Common Stock, par value $.01 per share;
20,000,000 shares authorized; 1,430,000
shares issued and outstanding 14,300 14,300
Additional paid-in capital 10,167,138 10,167,138
Retained (deficit) (8,935,241) (9,124,288)
----------- -----------
1,246,197 1,057,150
Less: 23,000 Treasury Shares, at cost (132,250) (132,250)
------------
TOTAL STOCKHOLDERS' EQUITY 1,113,947 924,900
-------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,202,170 $ 924,900
=========== ===========
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See accompanying notes to
financial statements.
EUROMED, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three months ended Nine months ended
September 30, September 30, September 30, September 30
1997 1998 1997 1998
------------------ ------------------------------------ - --
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Sales $ - $ $ - $
Cost of goods sold - -
-------------- ------------- ---------------
Gross profit - - - -
Selling, general and administrative expenses 147,839 60,240 591,359 (189,047)
------------ ----------- ------------ ----------
Operating Profit (Loss) (147,839) (60,240) (591,359) (189,047)
Income tax (expense) benefit - - - -
----------------------------------- ----------------- ---------------
(Loss) from continuing operations (147,839) (60,240) (591,359) (189,047)
Discontinued operations:
Loss from discontinued operations (271,051) - (713,695) -
Estimated loss on disposal of
discontinued operations (918,986) - (918,986) -
----------------------------- ----------- ---------------
Net (loss) $(1,337,876) $ (60,240) $(2,224,040) $ (189,047)
=========== ========== =========== ==========
Weighted Average Number of
Common Shares Outstanding 2,300,000 1,430,000 3,320,000 1,430,000
=========== ========== =========== ==========
(Loss) per share:
Continuing operations $ (.06) $ (.04) $ (.18) $ (.13)
Discontinued operations -
Loss on operations (.12) - (.21) -
Estimated loss on disposal of
discontinued operations (.40) - (.28) -
------------- ------------- -------------- -------------
Total $ (.58) $ (.04) $ (.67)$ (.13)
============= ============ ============= ============
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See accompanying notes to
financial statements.
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EUROMED, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine months ended
September 30, September 30,
1997 1998
----------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) from continuing operations $(591,359) $(189,047)
Changes in operating assets and liabilities:
Prepaid expenses 5,590 (25,000)
Accounts payable 151,075 (88,223)
--------- ----------
Net cash (used in) continuing operations (434,694) (302,270)
--------- ---------
Net cash provided by discontinued operations 407,937 -
--------- --------------
Net cash (used in) operating activities (26,757) (302,270)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of subsidiary - 670,000
Note receivable advance - (300,000)
------------ ---------
Net cash provided by investing activities - 370,000
------------ ---------
Net increase (decrease) in cash and cash equivalents (26,757) 67,730
Cash and cash equivalents
at the beginning of the nine month period 26,757 232,170
---------- ---------
Cash and cash equivalents
at the end of the nine month period $ - $ 299,900
============ =========
Cash paid during the nine month period:
Interest $ - $ -
Income taxes $ - $ -
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See accompanying notes to
financial statements.
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EUROMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
a. Interim Financial Statements
The consolidated financial information for the interim periods presented herein
has not been audited by independent accountants, but in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the condensed consolidated balance sheets
and the condensed consolidated statements of earnings and cash flows at the
dates and for the periods indicated have been made. Results of operations for
interim periods are not necessarily indicative of results of operations for the
respective full years.
b. Description of business
EuroMed had no business operations from November 1997 to September 30, 1998. The
expenses incurred are directors' fees and other general expenses required to
maintain the corporate shell. The Board of Directors is currently searching for
appropriate business acquisitions.
c. Net Loss Per Share
Net loss per share is computed using the weighted average number of shares
outstanding during the period; however, the net loss per share computations do
not include the exercise of the outstanding stock warrants due to the
antidilutive effect.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
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.
EuroMed currently has no business operations; however, its President and Board
of Directors are actively seeking appropriate business acquisitions.
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RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared to three months ended
September 30, 1997 and nine months ended September 30, 1998 compared to nine
months ended September 30, 1997.
As of September 30, 1998 the Company had no sales. Selling, general and
administrative expenses for the three and nine months ended September 30, 1998
were $60,240 and $189,047, respectively, and were comprised primarily of
directors fees, and legal and professional fees incurred as part of the legal
proceedings described in Part II, Legal Proceedings.
Selling, general and administrative expenses for the three and nine
months ended September 30, 1997 were $147,839 and $591,359, respectively, and
were comprised primarily of legal and professional fees incurred as part of the
legal proceedings the Company was involved in during those periods.
LIQUIDITY AND CAPITAL RESOURCES
Cash (used in) continuing operations was ($302,270) for the nine months
ended September 30, 1998 compared with ($434,694) provided by operations for the
nine months ended September 30, 1997. This decrease is a result of reduced legal
and professional fees.
Cash and cash equivalents at the end of the nine months ended September
30, 1998 was $299,900 compared with $0 at the end of nine months ended September
30, 1997.
Management is of the opinion that the proceeds from the sale of the
discontinued operations, together with existing borrowing capacity, should be
sufficient to finance and sustain operations at the present level for at least
six months.
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PART II
Item 1. 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 Final Judgment was awarded in favor of the Company against Gaylor, and
Gaylor and Jan Bouwman (another former Company Director) were also held in
contempt of court for intentionally violating the Final Judgment and federal
securities laws.
On July 29, 1998, the Company filed a second motion for contempt
against Gaylor and Bouwman arising from their continued violation of federal
securities laws; specifically, their intentional failure to file a Schedule
13(d) despite their control of more than 5% of the Company's shares and their
intent to overthrow management by filing a second receivership action in Nevada
against the Company on July 27, 1998, as explained below. In response to this
second contempt motion, Gaylor filed several motions attempting to overturn the
Final Judgment and the prior contempt order, and a motion to stay the contempt
proceedings. On August 17, 1998, the Fifth Circuit Court of Appeals also
dismissed Gaylor's appeal of the first contempt order because he failed to file
an appellate brief with the court.
In September 1998, a United States Magistrate Judge conducted a two day
evidentiary hearing on all of these matters, and recommended that all of
Gaylor's motions be denied and that Gaylor and Bouwman be held in contempt of
court for a second time. The contempt recommendation was issued because of
Gaylor and Bouwman's intentional failure to file a Schedule 13(d), their failure
to satisfy the Final Judgment prior to soliciting further proxies, and Gaylor's
failure to disclose the existence of the Final Judgment or his prior indictment
by the State of New Hampshire for theft and misappropriation of partnership
assets in an unrelated matter while soliciting proxies. As sanctions for their
continued contempt of court, the Magistrate Judge recommended that Gaylor and
Bouwman be permanently enjoined from voting or exercising control of any of the
Company's stock that they may own, or to which they have proxies, including any
shares or proxies acquired in the future. Gaylor was also enjoined from
contacting the Securities and Exchange Commission, or the Nasdaq Stock Market,
Inc. regarding the Company or its officers, directors, or attorneys without
prior approval from the court. The U.S. Senior District Judge has yet to rule
upon the Magistrate Judge's recommendations.
The third legal proceeding is a Nevada lawsuit filed by Gaylor and
Bouwman, on behalf of themselves and the Company's minority shareholders,
against the Company in which a special master was appointed, with the Company's
agreement, to investigate Gaylor and Bouwman's allegations against the Company.
On July 27, 1998, Gaylor and Bouwman filed a second receivership application
against the Company seeking to overthrow Company management. This second
application was based upon the same allegations made by Gaylor and Bouwman in
May 1997 in their first receivership application, despite the Nevada State
Court's denial of the first receivership application. On July 30, 1998, the
special master issued a written report absolving the Company of any wrongdoing
with regard to Gaylor and Bouwman's allegations. After conducting a hearing on
Gaylor and Bouwman's second receivership application, and after reviewing the
special master's report, the Nevada State Court denied all relief requested by
Gaylor and Bouwman in their receivership application. On September 29, 1998,
Gaylor and Bouwman's Nevada counsel filed a motion with the Nevada State Court
to withdraw from their representation of Gaylor, Bouwman, and the Company's
minority shareholders. The Company has taken steps to execute on Gaylor's
portion of this Nevada lawsuit in partial satisfaction of the approximately $16
million that Gaylor owes the Company pursuant to the Final Judgment from the
U.S. District Court for the Northern District of Texas.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number and Description of Exhibit
Number Exhibit Description
3.1 Restated Articles of Incorporation of the Registrant.(1)
3.2 Bylaws of the Registrant.(1)
4.1 Specimen Common Stock Certificate.(1)
27.1 Financial Data Schedule.(*)
* Filed herewith.
(1) Previously filed as an Exhibit to the company's Registration
Statement No. 33-80805 on Form S-1 and incorporated by herein
reference.
(b) Reports of Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EuroMed, Inc.
Dated: December 1, 1998
Signature Title
/s/ Elbert G. Tindell President and
Elbert G. Tindell Cahirman of the Board
/s/ Robert A. Shuey, III Chief Executive Officer,
Robert A. Shuey, III Chief Financial Officer,
Treasurer and Director
<PAGE>
Exhibit Index
Exhibit No. Description
27.1 Financial Data Schedule.(*)
(*) Filed herewith
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<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000852447
<NAME> EUROMED INC
<MULTIPLIER> 1
<CURRENCY> $US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 299,900
<SECURITIES> 0
<RECEIVABLES> 600,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 924,900
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 924,900
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 14,300
<OTHER-SE> 910,600
<TOTAL-LIABILITY-AND-EQUITY> 924,900
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 189,047
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (189,047)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,047)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,047)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
