-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F98zr4WbS2zSwJjjJl/b7npb7rT8oIUxJe5UcmrZYS2VG4wENRiubTkc1Pq8Wytu +rLpe1c8m3gr0koMlvioEQ== 0001018375-98-000032.txt : 19981228 0001018375-98-000032.hdr.sgml : 19981228 ACCESSION NUMBER: 0001018375-98-000032 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19981222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EUROMED INC CENTRAL INDEX KEY: 0000852447 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 222921568 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-27720 FILM NUMBER: 98773808 BUSINESS ADDRESS: STREET 1: WILHELMINASKAAL NOORD 6 STREET 2: NL 4902VR OOSTERHOUT CITY: THE NETHERLANDS STATE: P7 ZIP: 08034 BUSINESS PHONE: 6093541711 MAIL ADDRESS: STREET 1: WILHELMINASKAAL NOORD 6 STREET 2: NL 4902VR OOSTERHOUT CITY: THE NETHERLANDS STATE: P7 10-K 1 EUROMED INC 97 10K 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 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. 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. 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.
FISCAL YEAR ENDED DECEMBER 31, 1993* 1994* 1995* 1996 1997 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
*There were no operating activities in EuroMed, Inc. in these years. 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
1996 1997 -------------- ---------- 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 =========== ===========
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 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) ========== ============= =============
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
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 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 ===== =========== ======= ======= =========== ======= ==========
The accompanying notes are an integral part of these financial statements. EUROMED, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 1995 1996 1997 ------- ----------- --------- 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.
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: 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 ========================
(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: 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
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 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
(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 ('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 ============
(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
Pro Forma Pro Forma Historical Adjustments Total 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 ======= ======= =======
(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):
Pro Forma Pro Forma Historical Adjustments Total 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 =========
(Continued) EUROMED, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995, 1996 AND 1997 NOTE 6: QUARTERLY FINANCIAL DATA (UNAUDITED)
Continuing Operations Income (Loss) Before Net Income Earnings Revenues Income Taxes (Loss) Per Share 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)
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. 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
(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 $100,000: Management Compensation and Transactions Summary Compensation Table
Annual Compensation Long-Term Compensation Awards Name/Title Year Salary($) Bonus($) Other Securities All Other Compensation($) Underlying Compensation($) Options/ SARs(#) A. Francois Hinnen(1) 1997 -- -- -- -- 1996 $125,000 -- -- -- -- 1995 $125,000 -- -- -- -- Elbert G. Tindell(2) 1997 $23,000 20,000(3) 1996 -- -- -- -- 1995 -- -- -- --
(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. 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.
Name of Beneficial Owner Amount and Nature Percent of Beneficial of Ownership Class 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%
* 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. PART IV Item 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K a. Exhibit Number Description of Exhibit 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*
* 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. 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 EX-23.1 2 KILLMAN, MURRELL & COMPANY, P.C., CPA 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 EX-27.1 3 FDS
5 (Replace this text with the legend) 0000852447 EUROMED INC 1 $US YEAR DEC-31-1997 OCT-1-1997 DEC-31-1997 1 232,170 0 970,000 0 0 1,202,170 0 0 1,202,170 88,223 0 0 0 14,300 1,099,647 1,202,170 0 0 0 618,198 0 0 0 (618,198) 0 (618,198) (1,655,681) 0 0 (2,273,879) (0.77) (0.77)
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