1
EXHIBIT 2(b)
ACQUISITION AGREEMENT
This Acquisition Agreement ("Agreement") is made this 2nd day of February 1996,
by and among Universal Medical Systems, Inc., a Nevada corporation, having its
principal office at 00000 Xxxx Xxxxxxxxx Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000
("UMSI"), MHTI Acquisition Corporation, a corporation to be formed under the
laws of the State of Florida as a wholly owned subsidiary corporation of UMSI,
whose principal office will be located at 00000 Xxxx Xxxxxxxxx Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000 ("MHTIAC"), Medical High Technology, Inc., a Florida
corporation having its principal office located at 00000 00xx Xxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000 ("MHTI"), and the following named Shareholders of
MHTI whose address is c/o MHTI 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx
00000, which shareholders are hereinafter sometimes referred to as the
"Shareholders".
Number of
Name of Shares Owned
Shareholder and Address Common Preferred
----------------------- ------ ---------
Xxxxxx X. Xxxxxxx 000
Xxxxx X. Xxxxx 000
Xxxxxx X. Xxxxxx 495
Xxxxx X. Xxxxxxxx 15
Transmillennial Resource Corporation 1,385 225,224
RECITALS:
WHEREAS: The Shareholders are the owners of record of all of the
issued and outstanding shares of common and preferred stock of MHTI;
WHEREAS: UMSI is a corporation duly organized and in good standing
under the laws of the State of Nevada, having been incorporated on January 14,
1987;
WHEREAS: MHTI is a corporation duly organized and in good standing
under the laws of the State of Florida, having been incorporated on January 18,
1982;
WHEREAS: The parties hereto desire to effect a merger of MHTI with
and into a wholly owned subsidiary corporation of UMSI to be formed in the
State of Florida as hereinafter provided, on the terms and conditions
hereinafter set forth and in accordance with the applicable laws of the State
of Florida; and
WHEREAS: The parties hereto desire that this transaction constitute
a tax-free reorganization within the meaning of Section 368 (a)(1)(A), or other
applicable section, of the Internal Revenue Code.
In consideration of the above premises, for the consideration set
forth below, and subject to the terms and conditions set forth below, the
parties agree as follows:
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ACQUISITION AGREEMENT - Page 2 of 11
Section I. Formation of Wholly Owned Subsidiary Corporation of
UMSI. Upon execution of this Agreement, UMSI will take all action necessary
and cause the incorporation in Florida of a new wholly owned subsidiary
corporation of UMSI to be named (if available) "MHTI Acquisition Corporation"
("MHTIAC") whose Board of Directors will ratify, approve and adopt this
Agreement. MHTIAC shall be authorized to issue 1,000 shares of common stock
with a par value of $.001 per share of which 100 shares shall be duly issued
and outstanding in the name of UMSI at the time of closing.
Section II. Exchange of Stock. On the closing date, as fixed
below, the Shareholders shall deliver to MHTIAC certificates representing all
of the issued and outstanding shares of the common and preferred stock of MHTI,
duly endorsed. In exchange, UMSI shall deliver to the Shareholders, at
closing, certificates representing one million (1,000,000) shares of the
preferred stock of UMSI, such shares to be issued pro-rata to the Shareholders
based upon the percentage share holdings of each Shareholder of MHTI shares of
common stock. No fractional shares will be issued. One hundred thousand
(100,000) shares of the UMSI preferred stock to be issued to shareholder
Transmillennial Resource Corporation shall be returned by Transmillennial
Resource corporation to UMSI who will then deliver these 100,000 shares of UMSI
preferred stock to the current landlord for MHTI as part of the consideration
for the landlord agreeing to modify or amend the existing lease between
landlord and MHTI.
Section III. Merger of MHTI and MHTIAC.
(a) The delivery by the Shareholders of all the issued
and outstanding shares of common and preferred stock of MHTI to MHTIAC in
exchange for shares of preferred stock of UMSI shall result in a merger of MHTI
with and into MHTIAC, whereupon the separate existence of MHTI shall cease,
MHTI shall be merged into MHTIAC, and MHTIAC shall be the surviving corporation
(the "Surviving Corporation").
(b) As soon as practicable after closing, UMSI, MHTI and
MHTIAC will file, or cause to be filed, with the Secretary of State of the
State of Florida a certificate of merger for the merger of MHTI and MHTIAC, in
accordance with Florida law.
(c) From and after the date of closing and filing of the
certificate of merger, MHTIAC as the Surviving Corporation, shall possess all
the rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of MHTI and MHTIAC, as provided under
Florida law.
(d) The laws which are to govern MHTIAC as the surviving
corporation are Florida law. The certificate of incorporation of the Surviving
Corporation shall be the certificate of incorporation of MHTIAC, and the
by-laws of the Surviving Corporation shall be the by-laws of MHTIAC, until the
same shall be further amended or modified in accordance with the provisions of
Florida law.
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ACQUISITION AGREEMENT - Page 3 of 11
Section IV. Voting Rights.
(a) In accordance with the laws of the State of Florida,
the holder of each share of the common and preferred stock of MHTI and the
common stock of MHTIAC is entitled to vote upon the adoption of this Agreement,
including the plan of merger and reorganization included herein, each such
share being entitled to one (1) vote. The approval of the holders of a
majority of the outstanding shares of common and preferred stock of MHTI and of
the holders of a majority of the outstanding shares of common stock of MHTIAC
is required.
(b) Special meetings of the shareholders of MHTI and
MHTIAC shall be called and held in accordance with the laws of the State of
Florida as soon as may be practicable after the execution of this Agreement for
the purpose of voting upon the approval and adoption of this Agreement.
(c) Notwithstanding the provisions of this Agreement,
shareholders of MHTI who have not voted in favor of the merger of MHTI with and
into MHTIAC or consented thereto in writing and have demanded appraisal rights,
shall have all such appraisal rights or dissenting shareholder rights as may be
provided under the laws of the State of Florida, and the directors and officers
and MHTI shall do all things required by said laws to notify said shareholders
of their respective appraisal rights.
Section V. Approval by Respective Boards of Directors. By
execution of this Agreement below, the respective officers of UMSI and MHTI
acknowledge, confirm and verify that this Agreement has been approved by the
Boards of Directors of UMSI and MHTI.
Section VI. Approval by Board of Directors and Shareholders of
MHTIAC. UMSI as the sole and only shareholder of MHTIAC, represents and
warrants that on or before the date of closing this Agreement will be approved
and adopted by the Board of Directors of MHTIAC and at MHTIAC's special meeting
of shareholders called for the purpose of acting upon the approval and adoption
of this Agreement, UMSI will vote all of its shares or capital stock of MHTIAC
in favor of the approval and adoption of this Agreement or in lieu thereof will
cause this Agreement to be approved by written consent of the shareholders of
MHTIAC.
Section VI. Closing. The closing of the exchange of shares of
stock shall take place on or before February 16, 1996, at the offices of UMSI,
subject to extension or change by mutual agreement of the parties.
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ACQUISITION AGREEMENT - Page 4 of 11
Section VII. Warranties and Covenants of Shareholders. The
Shareholders jointly and severally represent, warrant, and covenant as follows:
(a) Each of the Shareholders is the owner of record of
the number of fully paid and nonassessable shares of the common and preferred
stock of MHTI set forth opposite his or her name below:
Number of Shares Owned
Shareholder Common Preferred
----------- ------ ---------
Xxxxxx X. Xxxxxxx 000
Xxxxx X. Xxxxx 000
Xxxxxx X. Xxxxxx 495
Xxxxx X. Xxxxxxxx 15
Transmillennial Resource Corp. 1,385 225,224
----- -------
Total: 2,885 225,224
(b) As of the date of this Agreement, MHTI is authorized
to issue 250,000 common shares, of which 2,885 shares are issued and
outstanding; and MHTI is authorized to issue 225,400 preferred shares, of which
225,224 shares are issued and outstanding. No options or warrants are
currently outstanding for the purchase of any shares of MHTI.
(c) MHTI is duly incorporated and authorized to do
business under the laws of the State of Florida.
(d) MHTI has the power and authority to carry on its
business as currently conducted, and holds, or is duly licensed under, all
patents, trademarks, trade names, copy-rights, licenses, processes, and
formulas necessary for the operation of its business as currently conducted,
free and clear of all liens, encumbrances, and claims of any kind.
(e) The balance sheet and income statement of MHTI
attached as Exhibit "A" and incorporated herein by this reference, fully and
accurately reflect respectively the financial condition of the corporation as
of December 31, 1995, and the operations of the corporation for the period
ending December 31, 1995.
(f) No transactions, other than in the ordinary and usual
course of business, have been engaged in by MHTI from December 31, 1995, to the
date of this Agreement, and there has been no material adverse change in the
financial or operating condition of MHTI since December 31, 1995.
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ACQUISITION AGREEMENT - Page 5 of 11
(g) Except as set forth on Exhibit "B", attached hereto
and incorporated herein by this reference, as of the date of this Agreement
MHTI is not, and as of the closing date MHTI will not be, in default under any
contract or agreement, or under the order or decree of any court. To the best
knowledge of the Shareholders there are no actions or proceedings pending or
threatened against MHTI as of the date of this Agreement, and neither the
execution and delivery of this Agreement nor the consummation of the
transaction contemplated in this Agreement will conflict with, result in the
breach of, or accelerate the performance required by any contract or agreement
to which MHTI or any of the Shareholders is now a party.
(h) There are no dividends declared and unpaid on any of
the common shares of common or preferred stock of MHTI.
(i) MHTI is not a party to any contract or agreement, and
is not subject to any other restriction, materially and adversely affecting its
business, property, or assets.
(j) MHTI has good and marketable title to all assets
reflected on the balance sheet included in Exhibit "A", which assets are "as
is" and "where is".
(k) Attached as Exhibit "C", and incorporated herein by
this reference, is an accurate list of all insurance policies in effect with
respect to the business and property of MHTI as of the date of this Agreement.
Insurance, or comparable coverage, shall be kept in effect until the closing
date.
(l) Attached as Exhibit "D", and incorporated herein by
this reference, is an accurate list of every lease to which MHTI is a party,
together with the terms of each lease.
(m) Attached as Exhibit "E", and incorporated herein by
this reference, is an accurate list of accounts and notes receivable by MHTI as
of the date of this Agreement.
(n) Attached as Exhibit "F, and incorporated herein by
this reference, is an accurate itemization of the liabilities of MHTI as of the
date of this Agreement.
(o) All of the holders of common stock of MHTI have
consented to the transfer of all of the issued and outstanding shares of
preferred stock of MHTI pursuant to the terms of this Agreement, as evidenced
by the written consent of the holders of all issued and outstanding shares of
common stock of MHTI, which written consent is attached hereto as Exhibit "G",
and incorporated herein by this reference.
(p) The Shareholders, officers and directors of MHTI have
informed UMSI of the on-going cash flow needs of MHTI in order that UMSI can
include these cash flow needs in plans for funding the on-going operations of
MHTI.
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ACQUISITION AGREEMENT - Page 6 of 11
Section VIII. Interim Operations; Additional Covenants of
Shareholders. The Shareholders represent, warrant, and covenant that MHTI will
not enter into any transaction, prior to the closing date, other than in the
ordinary course of business, and that the Shareholders will take any action
that is necessary to insure that MHTI will not enter into any such
transactions, and in particular will not, without the prior written consent of
UMSI:
(a) Create or incur any indebtedness other than unsecured
current liabilities incurred in the ordinary course of business;
(b) Grant or permit to arise any mortgage, security
interest, lien, or encumbrance of any kind;
(c) Sell or otherwise dispose of any of its assets other
than merchandise inventories sold in the ordinary course of business:
(d) Declare or pay any dividends, or repurchase or redeem
any of its shares, or establish a sinking fund or other reserve for such
purpose;
(e) Issue, sell, or grant options for the sale of any of
its shares, whether or not previously authorized or issued;
(f) Expend any funds for capital additions or
improvements other than ordinary expenditures for maintenance, repairs, and
replacements.
(g) Acquire an interest in any other business enterprise,
whether for cash or in exchange for the stock or other securities of MHTI; or
(h) Increase the compensation paid to any of its
officers, directors, or employees above the level paid on the date of this
Agreement or agree to pay to any of its officers, directors or employees any
bonus, severance pay, or pension, whether under an existing compensation or
deferred compensation plan, or otherwise.
Section IX. Covenants of UMSI as to Stock. UMSI represents,
covenants, and warrants as follows:
(a) As of the date of this Agreement, UMSI is authorized
to issue, in the aggregate, twenty-five million (25,000,000) shares of common
stock, with a par value of $.001 per share, of which not more than 5,500,000
shares are issued and outstanding. As of the date of this Agreement, UMSI is
authorized to issue, in the aggregate, ten million (10,000,000) shares of
preferred stock, with a par value of $.001 per share, of which no shares are
issued and outstanding.
(b) Between the date of this Agreement and the closing
date, UMSI will not without the prior written consent of the Shareholders,
recapitalize, reclassify, or increase its presently authorized common stock.
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ACQUISITION AGREEMENT - Page 7 of 11
(c) The one million (1,000,000) shares of preferred stock
of UMSI to be issued to the Shareholders in exchange for all of the issued and
outstanding shares of common stock of MHTI shall include the following rights
and privileges.
(i) Each share of preferred stock shall have a
stated value of $3.00, but shall have no guaranteed dividend or interest.
(ii) The holders of preferred stock shall have the
same voting rights at all meetings of shareholders of UMSI as the holders of
common shares of stock of UMSI.
(iii) The preferred shares of stock may be
converted to shares of common stock of UMSI when any one of the following
events occurs:
A. At any time after the common shares
of stock of UMSI are trading at $6.00 per share over ten (10) consecutive
trading days.
B. UMSI authorizes the conversion of
the preferred shares of stock to common shares of stock.
C. One year following the closing date,
all remaining shares of preferred stock, not already converted to shares of
common stock of UMSI, automatically shall be converted to shares of common
stock of UMSI.
D. In all cases, the number of shares
of UMSI common stock to be issued pursuant to the above described conversion
options shall be determined based upon the average bid price for shares of
common stock of UMSI over the fifteen (15) trading days prior to the conversion
date. For example, if the average bid price over the fifteen (15) trading days
prior to the conversion date is $1.00 per share then each share of preferred
stock would be converted into three (3) shares of common stock; if the average
bid price is $3.00 per share then each share of preferred stock would be
converted into one (1) share of common stock.
(d) Each certificate representing a share of preferred
stock of UMSI to be issued pursuant to this Agreement shall bear on its face a
legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933. the shares have
been acquired for investment and may not be sold, transferred
or assigned in the absence of an effective registration
statement for these shares under the Securities Act of 1933 or
an opinion of the Company's legal counsel that registration is
not required under such Act."
(e) UMSI will not at any time prior to the conversion of
all of the UMSI preferred shares issue any capital stock of any class which has
superior or prior rights to be preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary liquidation, dissolution
or winding up.
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ACQUISITION AGREEMENT - Page 8 of 11
(f) In the case of any capital reorganization or any
reclassification of the UMSI common stock or in the case of consolidation or
merger of UMSI or the conveyance of all or substantially all of the assets of
UMSI to another corporation, the stated value of UMSI preferred shares shall
thereafter be adjusted so that the UMSI preferred shares shall be convertible
into the number of shares of stock, or other securities or property, to which a
holder of the number of shares of UMSI common stock deliverable upon
conversion of the preferred shares would have been entitled upon such
reorganization, reclassification, consolidation, merger or conveyance.
Section X. Conditions Precedent to Obligations of UMSI and
MHTIAC. The obligations of UMSI and MHTIAC under this Agreement are subject
to the following conditions:
(a) There shall be tendered for exchange by the
Shareholders at the closing, certificates representing all of the issued and
outstanding shares of the common and preferred stock of MHTI in a form approved
by counsel for UMSI.
(b) The representations of the Shareholders contained
herein shall be true as of the closing date, and the Shareholders shall execute
and deliver to UMSI a certificate to that effect in form and substance
satisfactory to counsel for UMSI.
(c) All directors and officers of MHTI shall tender their
resignations effective as of the closing date.
(d) Neither the inventories nor operating assets of MHTI
shall have been substantially damaged or destroyed.
(e) The obligation of MHTI to Pfizer Medical systems,
Inc. shall be restructured on terms and conditions satisfactory to UMSI and
MHTIAC.
(f) The lease for the premises presently occupied by MHTI
shall be restructured on terms and conditions satisfactory to UMSI and MHTIAC.
(g) MHTI shall execute employment agreements with the
present employees of MHTI on terms and conditions satisfactory to MHTI, UMSI
and MHTIAC.
(h) UMSI and MHTIAC shall have received an opinion of
legal counsel to UMSI, satisfactory in form and substance to UMSI and MHTIAC,
to the effect that (i) all necessary corporate proceedings of UMSI and MHTIAC
have been duly taken to authorize and enable the exchange of the shares as
provided for herein, (ii) the delivery of the shares of preferred stock of UMSI
to the Shareholders of MHTI in exchange for their shares of common and
preferred stock of MHTI being delivered to MHTIAC pursuant to this Agreement is
exempted from the registration requirements under the Securities Act of
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ACQUISITION AGREEMENT - Page 9 of 11
1933, as amended, by reason of the applicability of Section 4(2) of the Act,
Regulation D promulgated under Section 3(b) of the Act, or any other exemption
provided for under the Act, and (ii) the transactions herein provided for will
not result in the recognition of taxable gain to the Shareholders of MHTI upon
the transfer of their stock of MHTI in exchange solely for stock of UMSI, nor
in the recognition of taxable gain to UMSI, or its shareholders, or MHTIAC upon
said transfer, by reason of the transaction qualifying as a tax-free
reorganization under the Internal Revenue Code.
Section XI. Conditions Precedent to Obligations of Shareholders;
Non taxability of Exchange. The obligation of the Shareholders under this
Agreement to deliver to UMSI their shares of the common and preferred stock of
MHTI is subject to the following conditions:
(a) No Shareholder shall have received prior to closing
an opinion from legal counsel to the effect that the exchange of their shares
of MHTI common and preferred stock for shares of preferred stock of UMSI under
the terms of this Agreement does not constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.
(b) As of the closing UMSI shall make available funds in
the amount of $250,000 for MHTIAC corporate operating expenses.
Section XII. Investment Intent. Each of the Shareholders
represents that the shares of stock of UMSI being acquired by him or her under
this Agreement are being acquired for investment purposes only, and not with a
view to reselling the same or dividing participation with others. Each
Shareholder represents that he or she has no present intent to resell or
otherwise dispose of all or any part of such shares.
Section XIII. Access to Records and Information
(a) UMSI, and its counsel, accountants, engineers, and
other representatives, shall have the right at all times during ordinary
business hours to inspect all of the properties, books, and records of MHTI,
and the Shareholders shall cooperate with and furnish to UMSI and its
representatives, all such information and documents with respect to the affairs
of MHTI as UMSI or its representatives may reasonably request.
(b) The Shareholders, and their counsel, accountants,
engineers, and other representatives, shall have the right at all times during
ordinary business hours to inspect all of the properties, books and records of
UMSI, and UMSI shall cooperate with and furnish to the Shareholders and their
representatives, all such information and documents with respect to the affairs
of UMSI as the Shareholders or their representatives may reasonably request.
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ACQUISITION AGREEMENT - Page 10 of 11
Section XIV. Accounting. For accounting purposes, this
transaction shall be deemed to have occurred as of December 31, 1995.
Section XV. Limitation on Liability of MHTI Shareholders. UMSI
and MHTIAC hereby agree and acknowledge that any and all liability of the
shareholders of MHTI related to the accuracy of the warranties, representations
and covenants set forth herein, including but not limited to the warranties,
representations and covenants set forth in Section VII above, shall be subject
to a cumulative deductible in the amount of $25,000 and shall not exceed the
aggregated stated value of the preferred stock.
Section XV. Notices. All notices required or permitted to be
given under this Agreement shall be deemed duly given when delivered personally
or sent by registered or certified mail, postage prepaid, properly addressed to
the party to receive such notice, at the addresses specified above.
Section XVI. Entire Agreement. This Agreement constitutes the
entire agreement between the parties; there are no agreements, warranties, or
representations, express or implied, except those expressly set forth herein.
All agreements, representations, and warranties contained in this Agreement
shall apply as of the closing date and shall survive the closing of this
Agreement.
Section XVII. Modification. This Agreement may not be amended or
modified, except by written agreement of the parties.
Section XVIII. Binding Effect. This Agreement shall bind and inure
to the benefit of the parties and their heirs, legal representatives,
successors, and assigns.
Section XIX. Governing Law. This Agreement shall be construed
under and governed by the laws of the State of Florida.
Section XXX. Counterparts. This Agreement may be executed in
multiple counterparts and on facsimile paper and by facsimile transmission as
necessary. when each of the parties has signed and delivered at least one such
counterpart, each counterpart will be deemed an original and, when taken
together with the other signed counterparts, shall constitute one fully
executed copy of this Agreement, which shall be binding upon and effective as
to the parties according to its terms.
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ACQUISITION AGREEMENT - Page 11 of 11
IN WITNESS WHEREOF, this Agreement has been executed in one or more
duplicate original counter-parts at Clearwater, Florida on the date first above
written.
UNIVERSAL MEDICAL SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx, Chairman, & CEO
MEDICAL HIGH TECHNOLOGY INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxx
-------------------------------------------
XXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
XXXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
XXXXX X. XXXXXXXX
TRANSMILLENNIAL RESOURCE CORPORATION
By /s/ Xxxxx Xxxxx
-----------------------------------------
Xxxxx Xxxxx, President
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EXHIBIT "A"
13
Date: Medical High Technology International, Inc.
Dec. 31, 1995 Page: 1
Balance Sheet
EXHIBIT "A"
For All Departments
As of December 31, 1995
Current Assets
Cash $ 45,328.31
Def. Receivable Related Party 44,892.38
Accounts Receivable - Trade 316,977.72
Reserve for Bad Debts (10,000.00)
Employee Receivables 282.51
Inventory - Systems 96,058.62
Inventory - Parts 583,526.01
Prepaid Expenses 3,485.45
Tax Refund Receivable (6.19)
Total Current Assets $1,080,544.81
Property & Equipment
Furniture & Equipment $ 265,524.66
Tools & Equipment 191,449.10
Leasehold Improvements 21,332.06
Accumulated Depreciation (426,852.47)
Total Property & Equipment $ 51,453.35
Other Assets
Deposits $ 39,231.80
Expense Advances - Permanent 5,600.00
Total Other Assets $ 44,831.80
Total Assets $1,176,829.96
Current Liabilities
Accounts Payable $ 188,641.48
Direct Deposit Payable - P/R 4,151.87
Customer Deposits 451,050.00
Deferred Revenue 245,236.88
Estimated Warranty Liability 8,333.26
Note Payable - Current 150,000.00
Loans From Stockholders 21,613.96
Loans From Related Party 50,000
Sales Tax Payable 137.69
Local Taxes Payable 256.68
Federal Income Tax Withheld 6,872.23
F I C A Payable 3,819.72
State Income Tax Withheld 742.86
Commissions Payable 192.00
Other Accrued Liabilities 83,538.28
Accrued Payroll 189,020.01
S/T Accrued Rent Expense 10,164.00
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Date: Medical High Technology International, Inc.
Dec. 31, 1995 Page: 2
Balance Sheet
EXHIBIT "A"
For All Departments
As of December 31, 1995
Total Current Liabilities $ 1,413,770.92
Long Term Liabilities
Accrued Royalties $ 1,059,815.63
Long Term Debt 123,095.37
L/T Accrued Rent Expense 5,082.00
Total Liabilities $ 2,601,763.92
Stockholders' Equity
Common Stock $ 2,885.00
Additional Pain-In Capital 48,543.96
Preferred Stock At Par 225,224.00
Retained Earnings (1,902,899.19)
Net Profit / (Loss) 201,312.27
Total Stockholders' Equity $(1,424,933.96)
Total Liabilities & Equity $ 1,176,829.96
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Date: Medical High Technology International, Inc.
Dec. 31, 1995 Page: 1
Profit and Loss Statement
For All Departments
For the period December 1, 1995 to December 31, 1995
Current Period Year To Date
Amount Amount
Sales Income
Labor Revenue $71,990.37 $ 439,642.13
Parts Sales 2,190.00 135,650.00
0600 System Sales .00 525,000.00
Travel Revenue .00 1,120.00
Freight Revenue (35.92) 15,895.64
Other Income 3.75 66.47
Net Sales $74,148.20 $1,117,374.24
Cost of Sales
Cost of Labor $26,538.65 $ 140,453.14
Cost of Parts 606.31 24,263.80
Cost - 0600 Systems .00 163,178.31
Cost of Sales - Travel 7,185.20 31,683.90
Cost of Sales - Meals 1,261.33 4,257.83
Cost of Sales - Freight 1,880.75 21,116.76
Cost of Sales - Warranties (833.37) (4,166.72)
Cost of Sales - Other 1,394.10 5,608.20
Cost of Sales - Inv. Shrinkage (3,278.46) (10.,020.25)
Shop Supplies & Expense 13.57 473.40
Cost of Royalties - Pfizer .00 51,305.60
Total Cost of Sales $34,768.08 $ 428,153.97
Gross Profit $39,380.12 $ 689,220.27
Selling, G & A Expenses
Auto Expense $ 5,546.86 $ 29,040.56
Bank Charges 30.00 562.71
Books & Periodicals .00 42.79
Business Meals 966.50 3,254.27
Depreciation Expense 1,301.00 6,505.00
Dues & Subscriptions .00 269.95
Education Expense .00 158.00
Entertainment Expense .00 59.96
Insurance - General 356.72 1,783.60
Insurance - Group 9,277.92 28.071.11
Insurance - Xxxxxxx'x Comp. 2,421.49 4,472.51
Legal & Accounting 2,218.00 9.536.00
Maintenance & Repairs 1,857.01 5,357.46
Office Expense & Supplies 524.09 1.096.51
Postage & Shipping 92.08 927.62
Promotion Expense 576.28 9,234.35
Research & Development 690.07 690.07
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Date: Medical High Technology International, Inc.
Dec. 31, 1995 Page: 2
Profit and Loss Statement
For All Departments
For the period December 1, 1995 to December 31, 1995
Current Period Year To Date
Amount Amount
Rent - Building 25,657.11 128,285.55
Rent - Equipment 176.60 1,096.73
Salaries & Wages 40,542.63 189,742.42
Sales/Marketing Expense 783.96 1,760.37
Taxes & Licenses 1,989.84 9,809.20
Taxes - Payroll 3,631.75 22,999.24
Telephone & Telegraph 2,148.31 8,693.38
Travel - Sales 2,679.08 3,026.48
Utilities 1,382.16 6,829.61
Total Selling, G & A Expenses $104,799,46 $473,305.45
Net Income From Operations $(65,419.34) $215,914.82
Other Income And Expense
Interest Income $80.49 $ 216.88
Interest Expense 3,767.06 14,235.43
Total Other Income / Expense $ 3,686.57 $ 14,018.55
Net Income Before Tax (69,105.91) $201,896.27
Late Income Tax .00 584.00
Net Income / (Loss) (69,105.91) $201,312.27
17
Dec. 31, 1995 5:22 PM Page 1
Medical High Technology International, Inc.
STATEMENT OF CASH FLOWS
For the period 12/01/95 to 12/31/95
-----Current Year Figures-----
Cash Flow from operating activities
Net Income (Loss) (69,105.91)
Charges not using Cash
Depreciation - Florida 1,293.33
Depreciation - North Dakota 7.67
Change in Current Assets
Short-Term Investments .00
Net Receivables
Del. Receivable Related Party 105,400.00
Employee Receivables (33.45)
Expense Advances - Temporary 300.00
A/R - Florida 55,068.78
A/R - Maryland (5,416.67)
A/R - New York (.02)
A/R - Texas (15,427.15)
A/R - MHTI International (226.93)
A/R - New Jersey 2,500.00
Inventory
Inventory - Systems (10,705.16)
Inventory - Parts 2,455.05
Inventory - R & D (4,573.65)
Prepaid Expenses
Deposits 6.00
Change in Current Liabilities
Accounts Payable
Accounts Payable (14,867.29)
Notes Payable (Current) .00
Current Maturities of Long-term Debt .00
Taxes Payable
Local Taxes Payable 5.63
Federal Income Tax Withheld 1,610.20
F I C A Payable 351.42
Sales Tax - Florida 10.50
Accrued Taxes - Florida 26.14
State Tax W/H - North Dakota 51.64
State Tax W/H - New Jersey 107.23
Leases Payable (Current)
L/T Accrued Rent Expense (847.00)
Other Current Liabilities
Accounts Receivable -Deferred 60,706.94
Customer Deposits (5,400.00)
Deferred Revenue (104,142.49)
Estimated Warranty Liability (833.37)
Other Accrued Liabilities (2,517.66)
---------------
Total Cash Flow from operating activities (4,196.22)
Cash Flow from investing activities
Long-Term Investments .00
Property, Plant & Equipment
Accumulated Depreciation 1,301.00
18
Dec. 31, 1995 Page 2
STATEMENT OF CASH FLOWS
For the period 12/01/95 to 12/31/95
-----Current Year Figures-----
Depreciation - Florida (1,293.99)
Depreciation - North Dakota (7.67)
.00
Intangible Assets .00
Other Assets .00
----------
Total Cash Flow from investing activities .00
Cash Flow from financing activities
Long-Term Debt
Loans From Stockholders 1,271.23
N/P - Landlord (23,483.03)
Common Stock .00
Preferred Stock .00
Additional Paid-in Capital - Common .00
Retained Earnings .00
----------
Total Cash Flow from financing activities (22,211.80)
----------
Net Increase (Decrease) in Cash (26,408.02)
==========
Beginning Cash Balance 71,736.33
Net Increase (Decrease) in Cash (26,408.02)
----------
Ending Cash Balance 45,328.31
==========
19
Medical High Technology International, Inc.
Notes to Financial Statements
December 31, 1996
Refer to the attached schedules of inter-company balances between Theratronics
International, Ltd and MHTI. These amounts are still being resolved between
the companies and some of the items may be in dispute.
20
MEMORANDUM
DATE: February 8, 1996
TO: Xxxxxx X. Xxxxxxx
FROM: Xxxx X. Xxxxx
RE: TIL/MHTI Intercompany Balances
Beginning with the statement sent to us by Xxxxxx Xxxxxxx, I have done an
analysis of the balances of the intercompany accounts as follows:
Owed to TIL from MHTI:
Promissory note $ 50,000.00
Interest 25,606.74
St. Joe's Tampa final payment 105,400.00
Credit Memo 2417 (330.87)
Upgrade costs for Victoria TX 50,000.00
230,675.87
Owed to MHTI from TIL:
Balance from TIL statement 123,482.13
Interest on insurance payment 7,216.78
Invoices not shown on TIL schedule:
10050 8/31/94 Frt 41.25
10077 9/30/94 Citizen's install 20,000.00
10100 1/1/95 Frt & Vat 462.56
10162 5/10/95 Frt 240.74
Invoice 9976 PO 26755C6 correct amount 5,016.30
Add back credits of unknown origin 694.37
Meicor trade A/Registration Statement 36,828.79
Interest due from Meicor on 50K note 2,569.50
Tax impact of Meicor transaction 108,600.00
-----------
305,152.42
-----------
NET AMOUNT DUE TO MHTI FROM TIL $ 74,476.55
-----------
21
THERATRONICS INTERNATIONAL LIMITED
Statement of Account
M.H.T.I.
Amounts Owed to Theratronics by M.H.T.I.
Promissory note (due April 1995) $ 50,000.00
Accrued interest on promissory note 22.500.00
Invoice 3276.1-Final 20% due upon customer acceptance 105,400.00
Credit memo 2417 - Customs clearing charges on replacement cables (330.87)
Upgrade costs on #16 unit (Victoria) which
were to be performed free 50,000.00
-----------
TOTAL $227,569.13
Amounts Owed to M.H.T.I. by Theratronics
Insurance claim reimbursement $ 41,692.38
M.H.T.I. Invoices:
P. O. 26756c6 - Service work for Gent Belgium (X. Xxxxxxx) 5,000.00
P.O. 23124c6 - ISOLINK, ETHERNET interface, St. Xxxxxx, Texas 8,000.00
10088 812.59
10048 210.64
10044 - Service work July 14 30/94 (15.5 days @ $278/day) 9,443.75
10016 - XXX 0000XX 1.5 M HU X ray tube #87375 20,628.64
10017 (4,216.00)
10006 152.71
10004 69.03
9994 136.36
9987 59.17
0000 - Xxxxxxx xx Xxxxxxxxxx, XX, plus 10% administration charge 2,817.19
9984 179.47
9972 - XXX 0000XX X-ray tube, St. Barnabas Medical Centre 18,128.80
9974 243.16
9968 - Installation CT-Sim 20,000.00
9966 297.53
9912B (242.33)
9918B (330.87)
9948B (121.17)
9958 118.80
9959 870.86
9957 31.52
-----------
TOTAL $123,482.13
Net Amount Owing to Theratronics from M.H.T.I. $104,087.00
===========
22
EXHIBIT "B"
23
EXHIBIT "B"
None
24
EXHIBIT "C" AND EXHIBIT "D"
25
EXHIBIT "C"
Workers' Compensation Insurance:
FL - FCCI Mutual Insurance 001-WC96A-23464 1/1/96 - 12/31/96
MD - Injured Workers Insurance Fund 582808-1 1/1/96 - 12/31/96
TX - Texas Workers Compensation Ins. Fund SBP-0001039429-950127 1/27/96 - 1/27/97
ND - Workers Compensation Bureau 11079-9 11/1/95 - 10/31/96
NJ - The Travelers 6UB 707K790695 12/1/95 - 11/30/96
EXHIBIT "D"
Leases
Xxxx X. Xxxxxxxx as Ancillary Trustee, etc. - Building lease
Miscellaneous contracts for services with various termination clauses.
26
EXHIBIT "E"
27
[MHTI LOGO]
EXHIBIT "E"
--------------------------------------------------------------------------------
Medical High Technology International,
--------------------------------------------------------------------------------
Inc. - 00000 00xx Xxxxxx X., Xxxxxxxxxx,
Xxxxxxx, 00000
Phone: (000)000-0000
ACCOUNTS RECEIVABLE - DECEMBER 31, 1995
Xxxx Israel Hospital $ 11,436.00
Xxxx Israel Medical Center 59,400.00
Citizens Medical Center 13.500.00
Magnetic Resonance Imagers 2,050.84
Med-Tek International, Ltd. 2,784.41
Misc. International 67,955.65
Misc. Domestic 37,000.00
National MD (1,090.50)
St. Xxxxxx Hospital 1,449.15
Univ. of Maryland Hospital 10,833.34
V. A. Medical Center 11,413.86
-----------
Total $216,732.75
Reserve for bad debt (10,000.00)
-----------
Total per Financial Stmt. $206,732.75
===========
Due from related Party ( Theratronics International, Ltd.) $44,892.38
Advances due from various employees - short term 282.51
long term travel adv. 5,600.00
28
EXHIBIT "F"
29
EXHIBIT "F"
[MHTI LOGO]
--------------------------------------------------------------------------------
- Medical High Technology International, Inc. -
--------------------------------------------------------------------------------
00000 00xx Xxxxxx X., Xxxxxxxxxx, Xxxxxxx 00000
Phone: (000)000-0000 Fax:(000)000-0000
ACCOUNTS PAYABLE - DECEMBER 31, 1995
A 2 J Laser $ 3,340.00 Protocision Machine $ 2,470.00
A-A Electric 409.25 Xxxxxx X. Xxxx (86.25)
Ace Hardware 55.29 Medical Alignment Sys. 956.40
American Paging 98.32 Modular Mailing 8.48
American Plastics 471.14 National Dust Control 128.40
AT&T 1,136.19 National Manufacturing 1,521.60
Avnet Computer 1.567.63 Xxxx Atlantic 33.87
Basetec Office Supply 79.33 Newark Electronics 190.49
Bitec Southeast 28.05 Xxxxxxxx Xxxxx 555.53
Xxxxx, Inc. 340.23 North American Van 3,474.82
CAC - United Healthcare 2,432.74 North Tampa Photo. 149.92
Xxxxxxx Electronics Supply 62.41 Northwest Airlines 120.60
Columbia Scientific 12,000.00 Numonics Corp. 1.966.00
Communication Specialties 220.00 Paralan 827.62
Computer Support Products 825.00 Xxxxxxx Xxxxxx 5,495.72
Control Concepts 1,161.02 Pilot Airfreight 1,470.22
Crenio, Inc. 4,454.58 Buccaneer Blueprint 19.09
Xxxxxx Xxxxxxxx 146.26 Pinellas Cty Utilities 374.33
Danka 507.05 Florida Office Mart 292.65
ABCC 312.83 PixieLink 2,900.00
Xxxxx Xxxxxxx 9,846.66 Printcraft 57.78
DHL Airways, Inc. 948.95 Professional Comm. 35.75
Dunlee -Ray Tubes 14,342.00 LEP Profit 73.25
Xxxxx Worldwide 276.90 Provident 250.23
Enviro-Safe Coatings 845.00 Xxx Xxxxxx 3,279.83
Federal Express 15.50 Xxx Xxxx 354.09
Fiberglass Coatings 522.25 ServTronics 302.06
Florida Power 903.84 Source of Supply 341.62
Xxxxxx Imaging 8,677.56 Sourch Research 598.63
Gates/FA 380.00 Speedy, Inc. 175.10
General Communications 56.00 Strawberry Tree 296.50
GTE Florida 396.63 Theratronics 27,250.00
Hewlett Packard 395.00 Xxxxxx Xxxxxx 2,511.72
Xxxxxxxx Hallmark 83.00 Xxxx Xxxxxx 929.09
Impression Technology 1,291.10 Tri-County Packing 1,732.40
Integrated Power Designs 498.73 UDT Sensors 12,786.41
Bronstein, Carlson, Xxxxx 518.00 Ultra-Cal, Inc. 6,061.25
Xxxxx X. March 4,549.37 United Airlines 55.78
Xxxxxx X. Xxxxxxx 2,599.85 United Health & Life 5,661.03
Xxxx Xxxxxx 90.00 United Parcel 430.42
Xxxx Xxxxxxxx 295.45 US West Paging 25.68
Xxxxx, Xxxxx & Xxxxxxx 853.51 Varian Associates 2,332.91
Maiden Brook Water 22.31 Xxxxxxxx-Xxxxxx 103.99
30
EXHIBIT "F"
[MHTI LOGO]
Accounts Payable
Page 2
Xxx-Garde 90.65
Xxxxxxx Xxxxx 360.00
Wyle Enclosures 8,543.00
Yellow Freight 4,164.36
Zephyrhills 253.19
Pergamon Press 1.083.75
Clean Harbors 615.00
Best Mfg. 339.00
Tektronix 400.10
Hill Mfg. 43.78
Air Cartage 11.65
Mail Marketing 63.46
Airline Profession Svc. 467.84
Xxxxx, Beagles 3,500.00
Digital Equipment 490.00
F-D-C Reports 315.00
CIF/RTK/PPC 1.00
Visiplex Instruments 252.01
TNT Skypak 639.10
Texas Dept. of Health 100.00
Lace, Inc. 330.25
DHL Airways 7.80
-------------
Total $ 188,641.48
=============
Also see Exhibit "A" for additional liabilities listed on balance sheet.
31
EXHIBIT "G"
32
WRITTEN CONSENT OF HOLDERS OF COMMON STOCK
This Written Consent is executed effective the 2nd day of February
1996, by the undersigned, being all the holders of issued and outstanding
shares of common stock of Medical High Technology International, In., a Florida
corporation.
WHEREAS: All the holders of issued and outstanding shares of common
and preferred stock of Medical High Technology International, Inc. ("MHTI")
have approved and adopted an Acquisition Agreement and plan of merger with
Universal Medical Systems, Inc. and its wholly subsidiary MHTI Acquisition
Corporation under the terms of which all of the issued and outstanding shares
of common and preferred stock of MHTI will be delivered to MHTI Acquisition
Corporation in exchange for shares of preferred stock of Universal Medical
Systems, Inc. resulting in a merger of MHTI with and into MHTI Acquisition
Cororation;
WHEREAS: Subparagraph H of Article Four of the Articles of Amendment
to the Articles of Incorporation of Medical High Technology International, Inc.
provides that shares of preferred stock of MHTI may not be transferred without
the prior written consent of all the holders of common stock; and
WHEREAS: All the holders of common stock of MHTI desire to give
their prior written consent to the transfer to MHTI Acquisition Corporation of
all the issued and outstanding shares of preferred stock of MHTI, pursuant to
the terms and provisions of the Acquisition Agreement referenced above.
THEREFORE, the undersigned, being all the holders of all the issued
and outstanding shares of common stock of MHTI hereby consent to the transfer
of all issued and outstanding shares of preferred stock of MHTI to Universal
Medical Systems, Inc. pursuant to the terms and provisions of the Acquisition
Agreement by and among MHTI, MHTI Acquisition Corporation and Universal Medical
Systems, Inc.
/s/ XXXXXX X. XXXXXXX /s/ XXXXX X. XXXXX
------------------------------------- ------------------------------------
XXXXXX X. XXXXXXX XXXXX X. XXXXX
/s/ XXXXXX X. XXXXXX /s/ XXXXX X. XXXXXXXX
------------------------------------- ------------------------------------
XXXXXX X. XXXXXX XXXXX X. XXXXXXXX
TRANSMILLENNIAL RESOURCE CORPORATION
By: /s/ Executive Vice President TMRC
----------------------------------
EXHIBIT "G"
