-----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, RLoOgNhDekhp4I46Z0gAAPszrzRQzHEs4xob6LU2XlSKHcZ5NYRnHevuD/70Rthk PvkzH8RAGbq/C0VpqigWPw== 0001105944-01-500008.txt : 20020620 0001105944-01-500008.hdr.sgml : 20020620 20010904194916 ACCESSION NUMBER: 0001105944-01-500008 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20010905 DATE AS OF CHANGE: 20020620 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERCARE COM DX INC CENTRAL INDEX KEY: 0001103310 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 954304537 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-57780 FILM NUMBER: 01730854 BUSINESS ADDRESS: STREET 1: 900 WILSHIRE BLVD #500 CITY: LOS ANGELES STATE: CA ZIP: 90017 MAIL ADDRESS: STREET 1: 900 WILSHIRE BLVD #500 CITY: LOS ANGELES STATE: CA ZIP: 90017 FORMER COMPANY: FORMER CONFORMED NAME: INTERCARE COM INC DATE OF NAME CHANGE: 20000114 SB-2/A 1 intersb2b.txt POST EFFECTIVE AMENDEMENT#1 SB2 DOCUMENT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 COMMISSION FILE NUMBER: 333-57780 INTERCARE.COM-DX, INC. (Name of small business issuer in its charter) California 7374 95-4304537 (State Or Jurisdiction (Primary Standard Industrial (I.R.S. Employer of Incorporation Classification Code Number) Identification No.) or Organization) 900 Wilshire Blvd., Suite 500 Los Angeles, CA 90017 (213) 627-8878 (Address and Telephone Number of Principal Executive Offices and Principal Place of Business) --------------------------- Anthony C. Dike, Chairman/CEO 900 Wilshire Blvd, Suite 500 Los Angeles, California 90017 (213) 627-8878 (Name, Address and Telephone Number of Agent For Service) --------------------------- Copy To: Randolf W. Katz, Esq Bryan Cave LLP 2020 Main Street, Suite 600 Irvine, California 92614 (949) 223-7000 --------------------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement as determined by market conditions and other factors. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] i
CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Offering Aggregate Amount of Title of Each Class Amount to be Price Per Offering Registration of Securities Registered Share Price Fee Common Stock, (1,2) 5,000,000 $5.00(3) $25,000,000 $6250 No par value (1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(g) under the Securities Act of 1933. (2) Of such 5,000,000 shares, 2,500,000 shares were included in the Registrant's Registration Statement on Form SB-2, as most recently amended and filed with the Securities and Exchange Commission on March 27, 2001. In accordance with Rule 429, the filing fee in respect of such 2,500,000 shares was paid in connection with such previously filed Registration Statement. (2) Our estimated price per share is $5.00
------------------------ ii PART I - INFORMATION REQUIRED IN PROSPECTUS INTERCARE.COM-DX, INC. Cross-Reference Sheet Showing Location in the Prospectus of Information Required by Items of Form SB-2 Form SB-2 Item Number and Caption Location In Prospectus 1. Front of Registration Statement and Outside Front Cover of Prospectus Outside Front Cover 2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front Cover Page 3. Summary Information and Risk Factors Summary; Risk Factors 4. Use of Proceeds Use of Proceeds 5. Determination of Offering Price Determination of Offering Price 6. Dilution Dilution 7. Selling Security Holders 8. Plan of Distribution Plan of Distribution 9. Legal Proceedings Business - Legal Proceedings 10. Directors, Executive Officers, Promoters and Control Persons Management 11. Security Ownership of Certain Beneficial Owners and Management Principal Security Holders 12. Description of Securities Description of Securities 13. Interest of Named Experts and Counsel Legal Matters, Experts 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities Management - Indemnification 15. Organization Within Last Five Years Certain Transactions 16. Description of Business Business 17. Management's Discussion and Analysis or Plan of Operation Management's Discussion and an Analysis of Financial Condition and Results of Operations. 18. Description of Property Business - Facilities 19. Certain Relationships and Related Transactions Certain Transactions 20. Market for Common Equity and Related Stockholder Matters Description of Securities 21. Executive Compensation Management - Executive Compensation 22. Financial Statements Financial Statements 23. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure*_________ (*) None or Not Applicable This Prospectus is not an offer to sell these securities and it is not soliciting anoffer to buy these securities in any state where the offer or sale is not permitted. iii PROSPECTUS 5,000,000 Shares of Common Stock [LOGO] This is our initial public offering of up to 5,000,000 shares of our common stock. We will be selling a minimum of 10,000 and a maximum of 5,000,000 of our shares in this offering. Until we have sold at least 10,000 shares, we will not disburse the funds. We will deposit all proceeds of this offering into a non-interest bearing escrow account. If we are unable to sell at least 10,000 shares within 180 days, we will promptly return all funds, without interest or deductions to subscribers within 30 days. The offering will remain open until all shares offered are sold or 12 months after the date of this prospectus, except that we will have only 180 days to sell at least the first 10,000 shares. We may decide to cease selling efforts prior to such date. No public market currently exists for our shares. The offering price may not reflect the market price of our share after the offering. It is currently estimated that the initial public offering price will be $5 per share. We have retained the services of Corporate Stock Transfer of Denver Colorado as our Escrow Agent. Offering
Price to Public (1) Discount (2) Proceeds to Company (3) Per Share $5.00 $0.50 $4.50 Maximum Shares 5,000,000 $25,000,000 $2,500,000 $22,450,000 Minimum Shares 10,000 $50,000 $5,000 $45,000 1. The price we will sell our common stock. 2. The commission we will pay to licensed broker/dealer for selling our common stock. 3. The funds we will retain after paying the commission to licensed broker/dealer, in addition to estimated $50,000 offering expense.
The effective date of this prospectus is ________, 2001 1 INTERCARE.COM-DX, INC. You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document. Dealer Prospectus Delivery Obligation Until September 3 2002 (360 days after the commencement of this offering), all dealers effecting transactions in the these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters to their unsold allotments or subscriptions. 2
TABLE OF CONTENTS Page Summary 4 Use of Proceeds 5 Risk Factors 5 Dilution 12 Determination of Offering Price 13 Business Overview 13 Plan of Operation 26 Management 28 Certain Transactions 30 Principal Security Holders 32 Description of Securities 33 Selling Stockholders 33 Plan of Distribution 33 Legal Matters 35 Experts 35 Where You Can Find Additional Information 36 Index to Financial Statements for period ended December 31, 2000 and June 30, 2001 respectively 37
3 SUMMARY This summary highlights information we present more fully elsewhere in this prospectus. You should read this entire prospectus carefully. About Us InterCare.com-dx, Inc., formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California. We are an innovative software products and services company specializing in providing healthcare management and information systems solutions. We have created, published and marketed software products that are embedded with sound, text and video, for purpose of relaxation training and stress management. We have also developed Internet-ready applications for healthcare transactions management, medical and health-related contents and information targeted toward the education, general consumer and healthcare industry markets On June 30, 2000, the company signed a master value added reseller agreement with Meridian Holdings, Inc., the parent company to sell and support the MedMaster(tm) suite of software technology. Significant terms of this agreement is that Intercare will sell, support, implement the MedMaster Suite of software programs, in exchange for 40% of net sales proceeds, and 60% of recurrent revenue from software support and implementation. On June 30, 2001, the company discontinued its sale of Medmaster software at the request of Meridian Holings, Inc., and instead embarked upon a joint development effort with Meridian Holdings, Inc., for a new replacement software known as ICE(tm)(InterCare Clinical Explorer), that is scheduled to be released in October 2001. The key elements of our business strategy include the following: - Fully exploit the expanding Integrated Healthcare delivery system Information Technology and Internet market - Expand into related healthcare consumer market with our relaxation training and stress management software program. - Convert all our existing software programs to Internet based applications, in order to attract a larger user base. - Penetrate the National and International markets for large customers such as corporations, correctional facilities, military, hospitals, universities and government with our Internet based applications and healthcare information technologies. Corporate Information We are incorporated under the laws of the State of California in January 1991, and changed our name from Monet Medical Testing, Inc., to Inter-Care Diagnostics, Inc., in April 25th, 1991. On April 25, 2000, in keeping with our new strategy to become an Internet-based company, the Company changed its name to InterCare.com-dx, Inc. Our principal executive offices are located at 900 Wilshire Blvd, Suite 500 Los Angeles, California. Our telephone number at that address is (213) 627-8878. This Offering Securities offered Common Stock, No par value, 5,000,000 share Price per Share $5.00 Common stock outstanding 12,230,902 shares prior to the offering Common stock to be 17,230,902 shares outstanding after the offering 4 Summary Financial And Operating Information This summary financial information below is from and should be read with the financial statements, and the notes to the financial statements, elsewhere in this Prospectus. All numbers are in thousands, except for share and per share amounts. Statement of Operations Data:
Year Ended December 31 2000 1999 Revenues $ 1,562,450 $ 6,629 Gross Profit 716,312 6,377 Income (Loss) before income taxes 367,016 (114,423) Net Income (Loss) 367,016 (114,423) Basic and Diluted Income (Loss) per share (1) 0.033 (0.010) Number of shares outstanding: 11,000,000 11,000,000 Balance Sheet Data: Working capital (deficiency) 440,527 95,903 Total assets 1,482,462 96,156 Total liabilities 1,019,290 - Stockholders equity (deficit) $ 1,482,462 $ 96,156 (1) Net Income (Loss) per Common Share: Stock options and warrants outstanding were not included in calculating diluted loss per share since they were anti-dilutive.
Six Months Ended June 30 2001 2000 Revenues $ 334,199 $ 0 Gross Profit 207,302 0 Income (Loss) before income taxes (253,402) (136,829) Net Income (Loss) (253,402) (136,829) Basic and Diluted Income (Loss) per share (1) 0.02 (0.000) Number of shares outstanding: 12,230,902 11,000,000 Balance Sheet Data: Working capital (deficiency) 179,221 (64,900) Total assets 1,737,929 120,677 Total liabilities 1,527,802 161,171 Stockholders equity (deficit) $ 210,127 $ (40,494) (1)Net Income (Loss) per Common Share: Stock options and warrants outstanding were not included in calculating diluted loss per share since they were anti-dilutive.
USE OF PROCEEDS All proceeds from this offering less approximately $2,550,000 offering costs, will be used for new products research and development, marketing, working capital and general corporate purposes. (See "USE OF PROCEEDS"). RISK FACTORS An investment in our common stock involves a high degree of risk and should only be made by investors who can afford to lose their entire investment. You should carefully consider the risks and uncertainties described below and other information in this Prospectus before deciding to invest in our common Stock. The risks described herein are intended to highlight risks that are specific to us and are not the only ones we face. Additional risks and uncertainties, such as those that apply to the business we acquire may also impair our business operations. Risks and uncertainties, in addition to those we describe below, that are presently not known to us or that we currently believe are not material, may subsequently become material and may also impair our financial condition. If any of the following risks actually occur, our business, results of 5 operations and financial condition could be materially, adversely affected. This could cause the trading price of our common stock to decline and a loss of part or all of any investment in our common stock. WITHOUT SUFFICIENT CAPITAL WE MAY NOT BE ABLE TO FULLY IMPLEMENT OUR BUSINESS OPERATION AND DEVELOPMENT PLANS Since inception we have funded operations with debt and equity capital. Our ability to operate profitably under our current business plan is largely contingent upon success in obtaining additional sources of capital. Assuming the sale of all the shares in this offering, we will receive net proceeds of approximately $22,450,000. Such an amount will be sufficient as a working capital and general corporate expenses for the next two years. If we sold only 10,000 shares during this offering, we will raise approximately $45,000. Such an amount will be sufficient for a limited operation, and will cover just a minimal amount of operation cost. If adequate capital can not be obtained or obtained on satisfactory terms, our Operations could be negatively impacted. WE RELY ON OUR STRATEGIC RELATIONSHIPS. To be successful, we believe that we must establish and maintain strategic relationships with leaders in a number of health care industry segments. This is critical because we are relying on these relationships to - extend the reach of our applications and services to the various participants in the health care industry; - obtain specialized health care expertise; - develop and deploy new applications; - further enhance the InterCare brand; and - generate revenue. Entering into strategic relationships is complex because some of our current and future partners may compete with us. In addition, we may not be able to establish relationships with key participants in the health care industry if we have established relationships with their competitors. Consequently, it is important that we are perceived as independent of any particular customer or partner. Once we have established strategic relationships, we will depend on our partners' ability to generate increased acceptance and use of our platform, applications, and services. For example, we are depending upon Healthcare.com, Inc., Birman Manage Care, Inc., HealthCPR Technologies, Inc., and CGI Communications Services, Inc., to recommend to its clients that they use our software system. If fewer of their clients agree to purchase our products or utilize our services, we will not be able to grow according to our plans. As with most service businesses, the loss of one or more material contracts could have a material adverse effect on our business. We cannot assure you that we will not lose any of our short or long-term contracts. BECAUSE WE ARE NOT ENGAGING UNDERWRITERS THERE WILL BE LESS DUE DILIGENCE THAN IN AN UNDERWRITTEN OFFERING AND WE ARE LESS LIKELY TO SELL THE SHARES WE ARE OFFERING Because we are not engaging an underwriter in connection with this offering, there will be less likelihood that we will sell the minimum number of shares offered and, thereafter, that we will reach the maximum number of shares. In addition, there will not be a broker-dealer to perform the due diligence that is generally performed in an underwritten offering IF WE ARE UNABLE TO ENHANCE OUR CURRENT PRODUCTS AND SUCCESSFULLY MARKET THEM, WE MAY NOT BE SUCCESSFUL Rapid changes in technology pose significant risks to us. To remain successful, we must continue to change, adapt and improve our products and delivery mediums in response to changes in technology. Our future success hinges on our ability to both continue to enhance our current products and to successfully market them. We cannot be sure that we will successfully develop and market new products and services. Any failure by us to timely develop and disseminate new products or to update and enhance our current products could adversely affect our business, operating results and financial condition. OUR SUCCESS DEPENDENTS UPON CONTINUED GROWTH IN THE USE OF THE INTERNET AS A MEDIUM OF COMMERCE If use of the Internet does not grow, our business would be harmed. Our success depends upon continued growth in the use of the Internet as a medium of commerce. Although the Internet is experiencing rapid growth in the number of users, this growth is a recent phenomenon and may not continue. Furthermore, despite this growth in usage, the use of the Internet for commerce is relatively new. As a result, a sufficiently broad base of enterprises and their supply 6 chain partners may not adopt or continue to use the Internet as a medium of commerce. Our business would be seriously harmed if: - - use of the Internet does not continue to increase or increases more slowly than expected; - - the infrastructure for the Internet does not effectively support enterprises and their supply chain partners; - - the Internet does not create a viable commercial marketplace, inhibiting the development of electronic commerce and reducing the demand for our products; or - - concerns over the secure transmission of confidential information over public networks inhibit the growth of the Internet as a means of conducting commercial transactions. - - Capacity Restraints May Restrict the Use of the Internet as a Commercial Marketplace. The Internet infrastructure may not be able to support the demands placed on it by increased usage and bandwidth requirements. Other risks associated with commercial use of the Internet could slow its growth, including: - - inadequate reliability of the network infrastructure; - - slow development of enabling technologies and complementary products; and - - limited availability of cost-effective, high-speed access. - - Delays in the development or adoption of new equipment standards or protocols required to handle increased levels of Internet activity, or increased governmental regulation, could cause the Internet to lose its viability as a means of communication between enterprises and their supply chain partners. If these or any other factors cause use of the Internet for commerce to slow or decline, our business could be harmed. WE MAY NOT BE ABLE TO PROTECT FULLY OUR PROPRIETARY RIGHTS Our future success and ability to compete in the health care information services business may be dependent in part upon our proprietary rights to products and services that we develop. We expect to rely on a combination of patent, copyrights, trademark, and trade secret laws and contractual restrictions to protect our proprietary technology and to rely on similar proprietary rights of any of our content and technology providers. We intend to file patent applications to protect certain of our proprietary technology. We cannot assure you that such applications will be approved or, if approved, will be effective in protecting our proprietary technology. We enter into confidentiality agreements with our employees, as well as with our clients and potential clients seeking proprietary information, and limit access to and distribution of our software, documentation, and other proprietary information. We cannot assure you that the steps we take or the steps such providers take would be adequate to prevent misappropriation of our proprietary rights. We may have to resort to litigation to enforce our intellectual property rights, to protect our trade secrets or know-how or to determine their scope, validity or enforceability. Enforcing or defending our proprietary technology is expensive, could cause the diversion of our resources, and may not prove successful. Our protective measures may prove inadequate to protect our proprietary rights, and any failure to enforce or protect our rights could cause us to lose a valuable asset. Our competitors may independently develop similar technology, duplicate our products or design around any patents that may be issued to us or our other intellectual property. WE MAY FACE INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS FROM THIRD PARTIES We expect that we could be subject to intellectual property infringement claims as the number of competitors grows and the functionality of our applications overlaps with competitive offerings. These claims, even if not meritorious, could be expensive to resolve and divert management's attention from operating the business. If we become liable to a third party for infringing its intellectual property rights, we could be required to pay a substantial damage award. Such a judgment would have a material adverse effect on our business, financial condition, and results of operations. In addition, we may be unable to develop non-infringing technology or obtain a license on commercially reasonable terms, or at all. IF THIRD -PARTY SOFTWARE IS NOT AVAILABLE ON COMMERCIALLY REASONABLE TERMS, WE MAY HAVE TO DELAY SHIPMENT OF OUR PRODUCTS. We integrate third-party software into our products. This third-party software may not continue to be available on commercially reasonable terms. We depend on third party licenses, including licenses for our servers, encryption and security software. If we cannot maintain licenses to this third-party software at an acceptable cost, shipments of our products could be delayed until 7 equivalent software could be developed or licensed and integrated into our products, which could substantially harm our business, operating results and financial condition. BECAUSE WE ARE STILL IN THE EARLY STAGES OF DEVELOPMENT AND EXECUTION OF OUR BUSINESS PLAN, EVALUATING OUR BUSINESS PROSPECTS MAY BE DIFFICULT We are still in the early stages of development and execution of our business plans, so evaluating our business operations and our prospects is difficult. We will encounter risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets. These risks include our: - - need to sell additional licenses and software products to our existing customers; - - need to expand our sales and marketing, customer support and professional services organizations; - - need to build strategic partnerships and relationships; - - need to effectively manage growth; - - need to expand our international operations and customer base; and We may not be able to successfully address these risks, and the failure to do so could seriously harm our business and operating results. In addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business. THE HEALTH CARE INDUSTRY MAY NOT ACCEPT OUR SOLUTION. To be successful, we must attract a significant number of customers throughout the health care industry. We believe that complexities in the nature of the transactions that must be processed have hindered the development and acceptance of information technology solutions by the health care industry. Conversion from traditional methods to electronic information exchange may not occur as rapidly as we expect that it will. Even then, health care industry participants may use applications and services offered by others. We believe that we must gain significant market share before our competitors introduce alternative products, applications, or services with features similar to our current or proposed offerings. Our business model is based on our belief that the value and market appeal of our solution will grow as the number of participants and the scope of the services available on our platform increase. We may not achieve the critical mass of users we believe is necessary to become successful. In addition, we expect to generate a significant portion of our revenue from service offerings. Consequently, any significant shortfall in the number of users would adversely affect our financial results. CHANGES IN THE HEALTH CARE INDUSTRY COULD ADVERSELY AFFECT OUR BUSINESS. The health care industry is subject to changing political, economic, and regulatory influences. These factors affect the purchasing practices and operations of health care organizations. Changes in current health care financing and reimbursement systems could cause us to make unplanned enhancements of applications or services, or result in delays or cancellations of orders, or in the revocation of endorsement of our applications and services by health care participants. Federal and state legislatures have periodically considered programs to reform or amend the U.S. health care system at both the federal and state level. Such programs may increase governmental involvement in health care, lower reimbursement rates, or otherwise change the environment in which health care industry participants operate. Health care industry participants may respond by reducing their investments or postponing investment decisions, including investments in our applications and services. Many health care industry participants are consolidating to create integrated health care delivery systems with greater market power. As the health care industry consolidates, competition to provide products and services to industry participants will become even more intense, as will the importance of establishing a relationship with each industry participant These industry participants may try to use their market power to negotiate price reductions for our products and services. If we were forced to reduce our prices, our operating results could suffer as a result if we cannot achieve corresponding reductions in our expenses. GOVERNMENT REGULATION OF THE HEALTH CARE INDUSTRY COULD ADVERSELY AFFECT OUR BUSINESS. Our business is subject to U.S. and international government regulation. Existing as well as new laws and regulations could adversely affect our business. Laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution, and characteristics and quality of products and services. Moreover, the applicability to the Internet of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Demand for our applications and services may be affected by additional regulation of the Internet. 8 We are subject to extensive regulation relating to the confidentiality and release of patient records. Additional legislation governing the distribution of medical records has been proposed at both the state and federal level. It may be expensive to implement security or other measures designed to comply with new legislation. Moreover, we may be restricted or prevented from delivering patient records electronically. For example, until recently, the Health Care Financing Administration guidelines prohibited transmission of Medicare eligibility information over the Internet. Legislation currently being considered at the federal level could affect our business. For example, the Health Insurance Portability and Accountability Act of 1996 mandates the use of standard transactions, standard identifiers, security, and other provisions by the year 2000. We are designing our platform and applications to comply with these proposed regulations; however, until these regulations become final, they could change, which could cause us to use additional resources and lead to delays as we revise our platform and applications. In addition, our success depends on other health care participants complying with these regulations. INTERNATIONAL EXPANSION MAY IMPACT OUR AVAILABLE RESOURCES We believe that expansion of our international operations will be necessary for our future success as we develop our business plan. Therefore, we believe that we will need to commit significant resources to expand our international operations. A key aspect to our strategy is to expand our sales and support organizations internationally. We employ sales professionals in Europe and are in the early stages of expanding into the Asia Pacific market. If we are unable to successfully enter into and expand these international markets on a timely basis, our business and operating results could be harmed. This expansion may be more difficult or take longer than we anticipate, and we may not be able to successfully market, sell, deliver and support our products internationally. If successful in our international expansion, we will be subject to a number of risks associated with international business activities. These risks include: - - difficulty in providing customer support in multiple time zones; - - need to develop software in multiple foreign languages; - - laws and business practices favoring local competition; - - currency fluctuations; - - longer sales cycles; - - greater difficulty in collecting accounts receivable; - - political and economic instability, particularly in Asia; - - difficulties in enforcing agreements through foreign legal systems; - - unexpected changes in regulatory requirements; - - import or export licensing requirements; - - reduced protection of our intellectual property rights in some countries; and - - multiple conflicting tax laws and regulations. To date, most of our revenues have been denominated in United States dollars. If we experience an increase in the portion of our revenues denominated in foreign currencies, we may incur greater risks in currency fluctuations, particularly since we translate our foreign currency revenues once at the end of each quarter. In the future, our international revenues could be denominated in the Euro, the currency of the European Union. The Euro is an untested currency and may be subject to economic risks that are not currently contemplated. We currently do not engage in foreign exchange hedging activities, and therefore our international revenues and expenses are currently subject to the risks of foreign currency fluctuations. OUR REVENUES MAY BE IMPACTED BASED ON HOW APPLICABLE ACCOUNTING STANDARDS ARE AMENDED OR INTERPRETED OVER TIME We have experienced, and expect to continue to experience, seasonality in our license revenues and results of operations, with a disproportionately greater amount of our license revenues for any fiscal year being recognized in our fourth quarter. Majority of the software licenses renews during the fourth quarter of the fiscal year ending December 31, as a result, our first quarter revenues can be less than those of the preceding quarter. If we introduce products that are sold in a manner different from how we currently market our products, such as requiring payment per number of patients record entered into a licensee's software program, we could recognize revenue differently than under our current accounting policies. Depending on the manner in which we sell future products, this could have the effect of extending the length of time over which we recognize revenues. 9 Furthermore, our quarterly revenues could be significantly affected based on how applicable accounting standards are amended or interpreted over time. Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our common stock may decline. We Will Depend on the Commercial Success of Our Product Suite, Which Has Not Yet Been Shipped We have generated substantially all of our revenues from licenses and services related to current and prior versions of our product suite. OUR QUARTERLY OPERATING RESULTS FLUCTUATES AND ARE DIFFICULT TO PREDICT, AND IF OUR FUTURE RESULTS ARE BELOW THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS OR INVESTORS, THE PRICE OF OUR COMMON STOCK MAY DECLINE License revenues in any quarter can be difficult to forecast because they depend on orders shipped or installed in that quarter. Moreover, we typically recognize a substantial percentage of revenues in the last month of each quarter. A high percentage of our operating expenses are essentially fixed in the short term. As a result, if we experience delays in recognizing revenue, we could experience significant variations in operating results from quarter to quarter. In addition, we expect our operating expenses to increase as we expand our engineering and sales and marketing operations, broaden our customer support capabilities, develop new distribution channels and strategic alliances, fund increased levels of research and development and build our operational infrastructure. If our revenues do not grow faster than the increase in these expenses, our business and operating results could be harmed. WE FACE INTENSE COMPETITION WITH OTHER ONLINE PROVIDERS OF HEALTHCARE TECHNOLOGY. The market for providing healthcare information online is intensely competitive, and we expect competition to increase in the future. Our business has low barriers to entry, and we cannot guarantee that we will compete successfully against our current or potential competitors, especially those with significantly greater financial resources or brand name recognition. Our current competitors include, E-Medsoft.com, Medscape.com, Dr. Koop.com and Healtheon/WebMD. We have yet to derive significant revenues as an online provider of healthcare information and Tele-medicine company. Mergers or consolidations among our competitors, or acquisitions of small competitors by larger companies, would make such combined entities more formidable competitors to us. Large companies may have advantages over us because of their longer operating histories, greater name recognition, or greater financial, technical and marketing resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements. They can also devote greater resources to the promotion and sale of their products or services than we can. For the above reasons, we may not be able to compete successfully against our current and future competitors. Increased competition may result in reduced gross margins and loss of market share. CONFLICT OF INTEREST - MANAGEMENT'S FIDUCIARY DUTIES. Our directors and Officers are or may become, in their individual capacities, officers, directors, controlling shareholder and/or partner of other entities engaged in a variety of businesses. Anthony C. Dike, our founder, chairman and CEO is engaged in business activities outside of us, and the amount of time he will devote to our business will only be about twenty (20) hours per week. There exist potential conflicts of interest including allocation of time between us and such other business entities. THE LOSS OF KEY PERSONNEL OR THE INABILITY TO HIRE OR RETAIN QUALIFIED PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS. Our operations are dependent on continued efforts of the executive officers and Management, in particular, Anthony C. Dike, our Chairman and Chief Executive Officer, and Russell Lyon, our President and Chief Technology officer. If any one of these persons becomes unable or unwilling to continue in his or her role with us, or if we are unable to attract and retain other qualified employees, our business and prospects could be adversely affected. Our success is also dependent to a significant degree on our ability to attract, motivate, and retain highly skilled sales, marketing, and technical personnel, including software programmers and systems architects skilled in the computer language with which our products operate. Competition for such personnel in the software and information services industries is intense. The loss of key personnel or the inability to hire or retain qualified personnel could have a material adverse effect on our business. FUTURE SALES OF OUR COMMON STOCK COULD CAUSE OUR STOCK TO DECLINE IN PRICE. All shares registered in this offering will be freely tradable upon effectiveness of this registration statement. The sale of a significant amount of shares registered in this offering at any given time could cause the trading price of our common stock to decline and to be highly volatile. 10 VOLATILE STOCK PRICE MAY LEAD TO LOSSES BY INVESTORS AND TO SECURITIES LITIGATION Prior to this offering, you could not buy or sell our common stock publicly. An active public market for our common stock may not develop or be sustained after the offering. We will negotiate and determine the initial public offering price with the representatives of the Market Makers based on several factors. This price may vary from the market price of the common stock after the offering. The stock market has experienced significant price and volume fluctuations and the market prices of securities of technology companies, particularly Internet-related companies, have been highly volatile. Investors may not be able to resell their shares at or above the initial public offering price. See "Plan of Distribution." In the past, securities class action litigation has often been instituted against a company following periods of volatility in the company's stock price. This type of litigation could result in substantial costs and could divert our management's attention and resources. IF WE ARE UNABLE TO LIST OUR COMMON STOCK ON NASDAQ SMALLCAP MARKET, OUR COMMON STOCK MAY BE TRADED ON THE OTC BULLETIN BOARD. Our common stock has never been traded in any market. We will apply for listing of our common stock on Nasdaq's SmallCap Market when we believe we meet their listing criteria. In order to qualify for listing on Nasdaq's SmallCap Market: - our common stock must continue to be registered under Section 12 (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") - we must initially EITHER have (i) at least $4,000,000 of net tangible assets, (ii) net income in two of the last three years of at least $750,000 OR (iii) a market capitalization of $50,000,000; and - we must initially have a minimum bid price of $4.00 per share, at least 300 round lot shareholders, a public float of at least 1,000,000 shares and at least three active market makers for our common stock. As of the writing of this prospectus we have not met all these requirements. If we fail to meet Nasdaq's initial listing requirements, trading in our Shares will be conducted in the over-the-counter market on the OTC Bulletin Board (OTCBB). The OTCBB eligibility rule which became effective as of January 6, 1999 was designed to protect investors by ensuring that they have access to companies' current financial information when considering investments in OTCBB-eligible securities. Under this rule, Nasdaq will monitor the filing status of all OTCBB issuers. In the event of a filing delinquency, Nasdaq will append the trading symbol(s) of the delinquent issuer's security with an "E". The fifth character "E" will be removed from the symbol once Nasdaq receives Notification that the security meets the requirements of the Eligibility Rule. After 30 days (60 days for non-SEC filers), if Nasdaq has not been notified that the appropriate filing has been made with the issuer's regulatory authority, the issuer's security will be removed from the OTCBB. This may result in a lower market price for our common stock, if our common were to be delisted. WE MAY BE SUBJECT TO PENNY STOCK RULES IF WE ARE TO LIST OUR COMMON STOCK ON THE OTC BULLETING BOARD. Our stock could be subject to Rule 15g-9 under the Securities Exchange Act of 1934 (the "Exchange Act"). This rule imposes additional sales practice requirements on broker-dealers who sell so-called "penny" stocks to persons other than established customers and "accredited investors." Generally, accredited investors are individuals with a net worth of more than $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction before sale. Consequently, the rule may adversely affect the ability of broker-dealers to sell our shares in the secondary market. Subject to some exceptions, the Commission's regulations define a "penny stock" to be any non-exchange listed equity security that has a market price of less than $5.00 per share, or with an exercise price of less than $5.00 per share. Unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule relating to the penny stock market and the associated risks. The rules also require disclosure about commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, the rules require that broker-dealers send monthly statements disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. If our Common Stock became subject to the rules applicable to penny stocks, the market liquidity for the Common Stock could be adversely affected. WE HAVE ADOPTED CERTAIN ANTI-TAKEOVER PROVISIONS THAT MAY DETER A TAKEOVER. Assuming the sale of all the shares are offered to persons other than 11 existing shareholders, the shares of common stock purchased by the public will represent 9% of our outstanding common stock after the completion of this offering. Therefore, our present stockholders will own 91% of us and will continue to be able to elect our director, appoint our officer, and control our affairs and operations. Our Articles of Incorporation do not provide for cumulative voting. Our Articles of Incorporation and Bylaws contain the following provisions that may deter a takeover, including a takeover on terms that many of our shareholders might consider favorable, such as: - - the authority of our Board of Directors to issue common stock and preferred stock and to determine the price, rights (including voting rights), preferences, privileges and restrictions of each series of preferred stock, without any vote or action by our shareholders; - - the existence of large amounts of authorized but un-issued common stock and preferred stock; - - staggered, three-year terms for our Board of Directors; and - - advance notice requirements for Board of Directors nominations and for shareholder proposals. The rights and preferences of any series of preferred stock could include a preference over the common stock on the distribution of our assets upon a liquidation or sale of our Company, preferential dividends, redemption rights, the right to elect one or more directors and other voting rights. The rights of the holders of any series of preferred stock that may be issued in the future may adversely affect the rights of the holders of the common stock. We have no current plans to issue preferred stock. In addition, certain provisions of California law and our stock option plan may also discourage, delay or prevent a change in control of our Company or unsolicited acquisition proposals. DILUTION The difference between the public offering price per share and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value (total tangible assets less total liabilities) by the number of our outstanding shares of common stock. The following table illustrates, as of June 30, 2001, the dilution to investors in this offering:
Maximum Minimum Offering Offering Public offering price per Share $5.00 $5.00 Net tangible book value per Share, before this offering ($0.01) ($0.01) Increase per Share attributable to Payment by new investors $0.83 $0.0033 Net tangible book value per Share, after this offering $0.83 $0.0033 Dilution to new investors per Share $4.18 $4.997
As of the date of this prospectus, there are currently no plans, proposals arrangements or understandings with respect to the sale of additional securities to any person for the period commencing with the closing of this offering. For the offering following table compares between existing shareholders and Investors if Maximum or Minimum Shares were sold: the number of shares of our common stock held, their percentage ownership of such shares, the total consideration paid, the percentage of total consideration paid, and the average price per share:
Maximum Shares Purchased Total Consideration Price Per Amount Percentage Paid Percentage Share Existing Shareholders 12,230,902 71% $650,628 3% $ 0.05 New Investors 5,000,000 29% $25,000,000 97% $ 5.00 Total 17,230,902 100% $25,650,628 100%
12
Minimum Shares Purchased Total Consideration Price Per Amount Percentage Paid Percentage Share Existing Shareholders 12,230,902 99% $650,628 93% $ 0.05 New Investors 10,000 1% $ 50,000 7% $ 5.00 Total 12,240,902 100% $700,628 100%
USE OF PROCEEDS All proceeds from this offering less the offering costs, will be used for for new products research and development, marketing, working capital and general corporate purposes. Until we use the funds, we will deposit them into an interest bearing account, for the benefit of the company. THE MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock has never been traded in any market. We will apply for Listing of our common stock on Nasdaq's SmallCap Market when we believe we meet their listing criteria. In order to qualify for listing on Nasdaq's SmallCap Market: - our common stock must continue to be registered under Section 12 (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") - we must initially EITHER have (i) at least $4,000,000 of net tangible assets, (ii) net income in two of the last three years of at least $750,000 OR (iii) a market capitalization of $50,000,000; and - we must initially have a minimum bid price of $4.00 per share, at least 300 round lot shareholders, a public float of at least 1,000,000 shares and at least three active market makers for our common stock. If we fail to meet Nasdaq's initial listing requirements, trading in our Shares will be conducted in the over-the-counter market on the OTC Bulletin Board. This may result in a lower market price for our common stock HOLDERS As of June 30, 2001, there are 175 registered share-holders of record. DIVIDEND On December 10, 1999, as provided in Article IV of this Company's Articles of Incorporation, as amended, the Company has one hundred million (100,000,000) shares of common stock authorized and as of December 7, 1999, an aggregate of one hundred thousand (100,000) shares of common stock were issued and outstanding. The Board of Directors by way of a written consent declared a stock dividend of one hundred (100) shares of common stock for every one (1) share of common stock currently issued and outstanding, to be payable to shareholders of record as of December 30th, 1999. Meridian Holdings, Inc., the 51% owner of the outstanding shares of the Company's common stock declared a dividend simultaneously to all its shareholders of record who own a share in Meridian Holdings, Inc., to receive five (5) shares of common stock of InterCare.com-dx,Inc. DETERMINATION OF OFFERING PRICE We set the offering price of $5.00 per share arbitrarily. There is no Relationship between the price of these shares and any standard or accepted method of valuation. This price bears no relation to our assets, book value, or any other customary investment criteria, including our prior operating history. Among factors considered by us in determining the offering price were: Estimates of our business potential Our limited financial resources The amount of equity desired to be retained by present shareholders The amount of dilution to the public The general condition of the securities markets BUSINESS Overview InterCare.com-dx, Inc. formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California. We are an innovative software products 13 and services company specializing in providing healthcare management and information systems solutions. The Company was originally incorporated in 1991 for the purpose of operating a medical diagnostics laboratory and engaging in various medical services to clients. On January 17, 1994, a 6.8 magnitude earthquake centered in Northridge, California caused wide spread damage to commercial and residential structures, and to major freeways, causing business interruptions and disrupting the normal flow of traffic. The Company experienced irreversible damage to all its high-tech computers and diagnostic equipment. Since that time, the Company has been devoting substantially all its efforts to establishing a new business entity that develops software for the healthcare industry and other related activities over the Internet. We have created, published and marketed software products that is embedded with sound, text and video, for purpose of relaxation training and stress management. We have also developed Internet-ready applications for healthcare transactions management, medical and health-related contents and information targeted towards the education, general consumer and healthcare industry markets The Company developed the Mirage Systems Multimedia Biofeedback software program in 1994. This is a cross-platform program available in both Microsoft Windows 3.X including windows 95;98 and Apple Macintosh platforms. This software became the first United States FDA approved software program for neuromuscular re-education and biofeedback training. The Company also has four other software products in the market including the "Body Pain Trigger Points Program", one of our best selling software products, with over 20,000 copies sold. The Company intends to convert all its software programs to run in all the popular operating systems available, including but not limited to Microsoft Windows, Macintosh and Linux or Unix operating systems. On June 30, 2000, the company signed a master value added reseller agreement with Meridian Holdings, Inc., the parent company, to sell and support the MedMaster(tm) suite of software technology. Significant terms of this agreement are that Intercare will sell, support, implement the MedMaster Suite of software programs, in exchange for 40% of net sales proceeds, and 60% of recurrent revenue from software support and implementation. On June 30, 2001, the company discontinued its sale of Medmaster software at the request of Meridian Holings, Inc., and instead embarked upon a joint development effort with Meridian Holdings, Inc., for a new replacement software known as ICE(tm)(InterCare Clinical Explorer), that is scheduled to be released in October 2001. The strength of ICE application is derived from differentiated core technologies consisting of: Mainstream SQL Database with full open architecture ; human anatomy and graphical user interfaces that simplify documentation and information access; data mining and data query tools; end-user tool sets; and interface capabilities to facilitate peaceful coexistence with other systems. Over 10 years of research and development have been spent in the development of ICE(tm) software. InterCare is in the midst of transitioning the ICE solution into an Internet web-browser enabled application. This will facilitate access to the ICE data repository. ICE(tm) Internet capabilities will facilitate the proactive participation of the consumer in the entire care delivery process. As such, InterCare will have ICE(tm) positioned to become a significant player in the growing market of Internet-based, e-healthcare community solutions. This will significantly expand the scope of available healthcare solutions. Benefits of ICE(tm) Products to Healthcare Payors and Providers: Point of Care Documentation Applications enabling all care providers (e.g. physicians, nurses, PA's, technologists, therapists, dieticians, etc.) to document objective and subjective patient data at the point-of-care in a manner that enhances compliance, reduces time, enhances communications, controls resource utilization and enhances revenue generation. Order entry and results reporting Simplified multi-disciplinary communication of orders, referrals, consultations, notes and retrieval of results including Laboratory, Radiology, Pharmacy, Respiratory Therapy, Dietary, Physiotherapy, Nursing and the like. Imaging and general archiving On-line viewing, manipulation and annotation of digital images and documents such as X-rays, CAT Scans, MRIs, Ultrasounds, digitized images, scanned paper documents, etc. This is particularly important in emergency and urgent care settings where speed and provider viewing and interpretation is needed to enhance care delivery. This is the foundation for an integrated healthcare delivery system, using both Local and Wide area networks. 13 Multi-disciplinary Clinical decision support Provision of advanced clinical functionality including protocols, pathways, care plans, order sets, alerts, advanced directives, costing, staffing, time standards and templates that facilitate care management, resources control and outcome management. Clinical workflow and productivity management Personal desktop that organizes individual user tasks, simplifies follow up and documentation requirements, improves workflow, facilitates quality assurance and management intervention in order to make better use of time. Care provider communication management On-line, simplified message routing and communication that interfaces to e-mail, voice mail and like systems to enhance coordination and follow up among care providers. Central Data Repository Aggregation of all patient-centric data in the enterprise from all legacy and newer information systems, including Registration, ADT, lab, radiology, pharmacy PACS, departmental systems and ICE(tm). Medical knowledge base / lexicon Multiple third-party knowledge bases and lexicons can be readily incorporated into ICE(tm) including ICD9, CPT4, DSM-4, application objects, lexicon objects, security objects and individual user preferences. Bi-directional legacy integration middleware Data exchange in real-time between ICE(tm) and legacy systems to facilitate data merging, data normalization and information consolidation. Real-time Electrophysiological and Clinical Data Acqusition InterCare has obtained a developers license from QRS Diagnostics, inc., to integrate their Medic Software application into ICE(tm), thus making it possible to add such medical diagnostic data as ECG, Temperature, Weight Spirometry and Pulse-oximetry into ICE(tm) database real-time. Data discovery, mining and analysis Suite of ad-hoc, programming free tools, enabling novice users experimental "cruising" of all enterprise data in real-time. InterCare's ICE(tm) software operates over a customizable and highly adaptable operating environment. ICE(tm) is designed to concurrently serve all care providers throughout the continuum-of-care from acute and long-term care to ambulatory and home health care: - - The various medical professions (i.e. physician, nurse, therapists, technologists, dietician, etc.) - - The various medical specialties (i.e. Primary care, OB/Gyn, Pediatrics, Surgery, etc.) - - The various facility types (i.e. acute care, ambulatory care, long term care and home care) ICE(tm) can seamlessly integrate with legacy systems (utilizing any off- the- shelf interface engine) through both HL7 and proprietary legacy interfaces. A 12-tier security paradigm offers industry leading confidentiality and control of information. Security "behavior" rules are fully configurable by privileged system administrator(s), without programming, through the underlying knowledge bases. ICE(tm)'s embedded security will be fully HIPAA (Health Insurance Portability and Accountability Act of 1996 ) compliant when the final rulings are released, and supports data compartmentalization down to the level of specific value in any data field. OUR COMPETITION InterCare.com-dx participates in a large and growing marketplace domestically and internationally. The US healthcare information systems and services market currently represents a $20 billion annual market. Electronic Medical Record (EMR), CDR and clinical systems, being a part of an emerging arena, are accountable for $2 US Billion of this sum Clinical systems' market volume is expected to accelerate its growth starting Q3/2000, after Y2K effects are over The EMR / CDR market is primarily dominated by large scale players (see table below). These players primarily emerged from a prior dominant position in the administrative, financial and clinical ancillary market segments for enterprise healthcare IT software programs. In the past few years, resulting from the rapid growth of the Internet, a variety of young companies emerged and quickly became dominant players in the Healthcare IT terrain. Healtheon-WebMD is the most dominant new player in the e-health's administrative and financial arena. Healtheon-WebMD 14 incorporates a crop of young e-health corporations acquired through M&As. Another important player, MedicaLogic, until 1998 a traditional ambulatory EMR player, made a bold strategic move to the Internet in 1998. MedicaLogic's current strategy is to provide an Internet-based EMR software programs for sole practitioners in the ambulatory setting, primarily due to its inability to support complex EMR/CDR enterprise software programs. In light of these rapid market transitions, each of the dominant legacy players is executing a different strategy to capture a leadership position in the emerging e-health market. The most pro-active e-health players are Eclypsis, IDX and McKesson-HBOC. Yet, each of these players has thousands of existing customers operationally using its legacy systems. Thus, their e-health transition strategy is slow both technically and business wise. There are no specific figures available for estimating the portion of Internet EMR/CDR sales within the annual $2 US Billion sales of traditional EMR/CDR and clinical systems. Yet, it is prudent to assume that it is still below the 10% mark. Thus, the sales of traditional (legacy) enterprise EMR/CDR software programs still dominate the market and are expected to continue such dominance for quite some time. Mergers or consolidations among our competitors, or acquisitions of small competitors by larger companies, would make such combined entities more formidable competitors to us. Large companies may have advantages over us because of their longer operating histories, greater name recognition, or greater financial, technical and marketing resources. As a result, they may be able to adapt more quickly to new or emerging technologies and changes in customer requirements. They can also devote greater resources to the promotion and sale of their products or services than we can. For the above reasons, we may not be able to compete successfully against our current and future competitors. Increased competition may result in reduced gross margins and loss of market share. OUR COMPETITIVE ADVANTAGE - OUR KNOWLEDGEABLE AND GROWING SALES FORCE AND TECHNICAL STAFF. We will be making sure that the sales force is trained on the "high-end" networking elements in which we deal so they will be able to service the needs of their customers. - OUR BUSINESS MODEL COST, EFFICIENCY AND FLEXIBILITY. We have addressed the largest cost factor in the methodology for deploying our services through an outsourcing strategy rather than a building the human resources from the scratch strategy. This keeps start-up costs as low as possible. - OUR STRATEGIC PARTNER STRENGTH. Partnerships with CGI Communications Services, Inc., our parent company Meridian Holdings, Inc., Netsales, Inc., Ingram-Micro Inc., DigitalRiver Corporation, Microsoft Corporation, HealthCPR Technologies, Inc., Healthcare.com, Inc., and United Information Systems, Inc., will give us the ability to deliver our software products faster and at a lower cost than the competition - INTEGRATION. We can seamlessly integrate all of the different technological solutions and custom applications development. We use different strategic partners to tailor the optimum solution for our customer. - AUTOMATION AND ADVANCED TELECOMMUNICATIONS TECHNOLOGY. Our Network Management tools are automated which leads to less downtime, and lower labor costs. We use the latest equipment, work closely with strategic partners that are forerunners in their fields, and are not hampered by existing legacy infrastructures. - OUR CUSTOMIZED CUSTOMER APPROACH. We emphasize direct relationships with our customers. These relationships enable us to learn information from our customers about their needs and preferences and help us expand our service offerings to include additional value-added services based on customer demand. We believe that these customer relationships increase customer loyalty and reduce turnover. In addition, our existing customers have provided customer referrals and we believe strong relationships will result in customer referrals in the future. Our success depends upon careful planning and the selection of partners. We can meet the customer's needs more efficiently with entrenched procedures. This enables us to excel at customer service. Our Product Features and Benefits ICE(tm) incorporates a wide variety of capabilities and functionality, which differentiate it from other generally available Electronic Medical Record/Central Database Repository (EMR/CDR) software programs in the global Healthcare Information Technology (IT) market. 16 The most significant differentiators are: Fully integrated Software Program ICE(tm) is not an aggregation of unrelated and disintegrated legacy products acquired through M&As. ICE(tm) is designed and developed as a fully integrated suite of products, which utilize an identical graphic user interface on top of a scaleable and highly adaptable component architecture. Thus, each of the variety of ICE(tm) products is inherently integrated (data model and business rules alike) with the other products, and the underlying CDR/MKB. Human anatomy image annotation and embedding, point-and-click data entry Three-dimensional (3D) MKB (Medical Knowledge Base) navigation utilizing gender-sensitive, human anatomy drawings. Keyboardless medical documentation through drag-and-drop of findings on top of human anatomy . Presentation of lifetime medical history data over a single full-body drawing. Automatic generation of all progress notes and forms from the graphical queues entered by the end user on top of human anatomy drawings as well as annotation of an embedded image referenced in the body of the document. Customizable, component-based architecture Multi-tier, common enterprise architecture for all ICE(tm) products. Multi-threaded engines & components. Automatic and manual load balancing & distribution through multiple engines utilizing entry level PC hardware. Knowledge driven applications Knowledge base driven clinical workstation applications. Most of the Applications' "behavior" (e.g. business rules) is derived from the underlying database(s), which is fully customizable without the need for programming by the novice end user. This also includes extended support for visually "painting" (e.g. designing) additional input & output screens, inclusive of its business rules. Repository, data warehouse and datamart unification While ICE(tm) master central data repository engine(s) will serve the multitude of concurrent enterprise users, its live backup(s) simultaneously will serve as data warehouse and datamart for ad-hoc data discovery, mining and analysis in real-time. Third-party legacy integration Seamless bi-directional integration with ancillary, administrative and financial legacy systems. Concurrent support for both HL7 and proprietary legacy messaging. Plug-and-play legacy interface(s) addition and/or modification. Immediate value and ROI to the enterprise by integration of legacy systems only into the ICE(Tm) CDR prior to any ICE(Tm) application implementation. Current Customers Tenet Healthcare The Company has signed a two year software licensing agreement to supply and implement an inpatient nursing and clinical documentation software, of which six licenses for MedMaster application have been purchased in the past, and will be replaced with ICE(tm) upon final release of the production version. Tenet has over 110 acute care hospitals through-out Continental United States, and the applicant intends to market aggressively to extend the license to all these hospitals within the two year price freeze period. Armstrong County Memorial Hospital A hospital located in Kittaning, Pennysylvania, which we intend to replace their existing software license with the release version of ICE(tm). Waterbury Hospital A hospital located in Waterbury, Connecticut, which we intend to replace their existing software license with the release version of ICE(tm). China Business Chain Group, LLC. The Company has entered into an exclusive reseller agreement with China Business Chain Group to market and implement the Chinese version of ICE(tm), to prospective clients in China and Taiwan. Telehealth, LLC. The Company has entered into an exclusive reseller agreement with Telehealth, LLC. 17 to market and implement the Arabic version of ICE(tm), to prospective clients in the Arabic speaking countries in the Middle-East. The key elements of our business strategy include the following: - Fully exploit the expanding Integrated Healthcare delivery system Information Technology and Internet market - Expand into related healthcare consumer market with our relaxation training and stress management software program. - Convert all our existing software programs to an Internet based applications, in order to attract a larger user and install base. - Penetrate the National and International markets for large customers such as corporations, correctional facilities, military, hospitals, universities and government with our Internet based applications and healthcare information technologies. FUTURE GROWTH OF OUR BUSINESS MODEL The Internet has created new and evolving ways for conducting commerce. According to Forrester Research, business-to-business electronic commerce is expected to grow to $1.3 trillion in 2003, accounting for more than 90% of the dollar value of electronic commerce in the United States. The market for applications that enable business-to-business electronic commerce is expected to reach $1.5 billion by 2002, according to Dataquest. Enterprises that have successfully implemented web-enabled customer interfaces now face the challenge of utilizing the Internet and intranets to gain the same level of increased efficiencies in their supply chain. In the changing world of healthcare, one trend serves the common interests of doctors, patients, and medical administrators: to maintain and increase the quality of care through new and more cost-effective technologies, hence the Company's interest in the emerging healthcare transactions and tele-medicine services and software applications development. There are several different reports and articles discussing the tele-medicine market. Each of them looks at tele-medicine in a slightly different way and provides different estimates, as follows: - - Business Communications Company (BCC): A large consulting firm that produces industry reports on many industry sectors. In February 1998 the firm produced a report titled: Tele-medicine Opportunities for Medical and Electronic Providers (240 pages, cost: $1,350). Ben Grimley, an industry analyst who specializes in health and information technology issues, prepared the report. BCC estimates that the current U.S. market for tele-medicine is $65 million and will reach $3 billion by the year 2002 based on the high growth rates of leading market segments and an assumption that full reimbursement for tele-medicine services will continue to become more common. They predict the overall growth rate for tele-medicine to be 35 percent per year over the next five years with a 42 percent increase in public sector investments and an 89 percent growth in sites over the same period. The report cites provider plans for predicting a 280 percent growth in prison tele-medicine sites over five years and a doubling of military investment over seven years. The predicted rates of growth for tele-medicine is particularly important given the firm's prediction that the market for overall health-care related information is expected to grow only three percent per year. - - Feedback Research Services (FRS): A market research firm that specializes in high-tech health care delivery systems. Overall, FRS states that the current annual U.S. market for telepathology, teleradiology, and videoconferencing tele-medicine systems is under $100 million. According to FRS, tele-medicine-related videoconferencing equipment sales in Europe, North America, and the Pacific Rim accounted for $250 million in revenues in 1996. They estimate that worldwide sales of products and services during the 1990s reached an estimated $520 million, cumulative, through the year-end of 1996. They project the annual worldwide growth rate to be 15 percent. They project that Europe and the Pacific Rim combined may represent cumulative tele-medicine expenditures of $1.4 billion by 2001. - - Frost and Sullivan (F&S): An international marketing, consulting and training firm covering many different markets. A representative from F&S wrote an article in the April 1998 issue of ADVANCE for Administrators in Radiology & Radiation Oncology that provided market forecasts for PACS and Teleradiology. According to the article, the current total PACS and teleradiology systems market revenue for the U.S. and Europe is estimated for 1998 at $368.8 million with the United States generating 81 percent of this market. They project a growth rate of about 28 percent over the next six years yielding a total annual market of $1.6 billion by 2004. In a separate report on U.S. hospital communications equipment markets, including tele-medicine videoconferencing as well as other segments, F&S forecasts a 30 percent growth in this market. - - Waterford Advisors: An investment firm specializing in healthcare and information systems. The firm has developed the Waterford Tele-medicine Index (WTI), an index of stock prices from various tele-medicine-related companies. WTI was debuted in the April 1998 issue 18 of Tele-medicine and Telehealth Networks and will be a regular feature of the magazine. The index does not attempt to predict market size. Rather, the index is designed to be a monitor of the overall performance of the industry and a way to estimate the economic value of tele-medicine companies. Since the index is new, there is little information about the recent performance of tele-medicine companies in the market. The index currently includes 38 companies. - - The Healthcare Information and Systems Society (HIMSS) recently conducted their ninth annual survey of senior healthcare executives. Of the 1,754 respondents, 34 percent reported that their organizations currently use tele-medicine, ten-percent plan on using tele-medicine within the next 21 months and 28 percent are investigating its use in the future. - - Tele-medicine and Telehealth Networks Magazine: This magazine recently completed a survey of selected tele-medicine program managers. Ninety-three percent reported that they expect to expand their operations in the next five years. OUR OTHER PRODUCTS AND SERVICES InterCare.com-dx,Inc., also offers the full Mirage Systems Interactive Multimedia Biofeedback Interface, the Stress Profiling and the Trigger Points programs, originally developed in 1993. The Trigger point program is currently sold as a downloadable product over the Internet, via the Digital River and Netsales Inc. Internet website. A hard-copy version of the program is also available for purchase via the Company's website. Given the rapid rate of change in both hardware and software technology, these programs are at the outskirts of their useful shelf lives. Our current efforts are targeted on taking advantage of our strengths in the application of high technology in the following areas: - The development and/or acquisition, through licensure or purchase, of a low-cost physiological monitoring device as the hardware component for a PC-based, executive and consumer-level biofeedback device. - The development of cutting edge, modular software to interactively display a wide variety of multimedia feedback from the hardware device described above. The software would be highly extensible and would optionally facilitate an Internet connection to InterCare.com-dx and the uploading of generated physiological data for analysis and return to the user via email or web page. - The development, through licensing and/or acquisition, of streaming video technology to facilitate the delivery of high-resolution video-based tele-medicine and other content over the Internet. The server-side software would be marketed to Internet and intranet providers. A basic client-side browser plug-in would be offered as a free download from InterCare.com-dx, while a more robust stand alone player would be offered for sale as an upgrade. - The development of direct reseller relationships with manufacturers of tele-medicine hardware and software (e.g. Sony). In addition to reselling tele-medicine equipment and software, InterCare.com-dx will provide tele-medicine systems design and integration, installation and support services, with the latter entailing both face-to-face client contact and a unique interactive multimedia Internet site devoted to answering most questions about tele-medicine, including tutorials, chat and forum capabilities. - The provision of web-site design & development services, including the production and/or acquisition and conversion of interactive multimedia content, for all of the above areas and for the other subsidiaries of Meridian Holdings, Inc., our parent company. OUR INTERNET BUSINESS STRATEGY The Vision General Providing a virtual community software program, based on Internet technologies And infrastructure, which enables the variety of participants in healthcare delivery: consumers/patients, care providers, healthcare enterprise management, healthcare IT professionals and payers, to improve the quality of care and reduce the cost of care delivery through effective care data standardization, management, sharing and communication. For care providers Facilitate anytime & anywhere secure access, through portable and Internet technologies, to a variety of patient information and personal productivity services. These should continuously encourage improved reimbursement, reduced administrative overhead, reduced medico-legal liability exposure and improved patient care. 19 For consumers / patients Facilitate and encourage consumer/patient participation in the care delivery process through Internet technologies. Facilitate anytime & anywhere secure access to the patient's lifetime medical record as maintained by the healthcare enterprise. Enable the consumer/patient to obtain a variety of services from his care providers and from the healthcare enterprise. Facilitate consumer/patient access to quality healthcare content, encouraging self-treatment of minor healthcare problems outside the care system. For healthcare enterprise management Facilitate optimization of care cost/outcomes standardization throughout the healthcare enterprise. Facilitate improved collaboration and sharing of patient-centric information between care providers and patients. Facilitate increased revenue generation through improvements in reimbursement and reduction in claims rejection. Facilitate reduction of care delivery cost through minimization of redundant/unnecessary procedures. Facilitate improved control over the enterprise's operations through real-time enterprise data mining and analysis. For healthcare IT professionals Facilitate continuous improvements in the central control, management, administration and maintenance of ICE(tm) as a centerpiece component of the healthcare enterprise integrated IT software program. Enable flexible distribution of system management and administration responsibilities between care providers, IT professionals and outsourced / ASP services. For payers Facilitate improvement of care quality while reducing the cost of care. Enabling improved analysis and control over fraud and abuse. Facilitate improvements in automated approval/rejection of care procedures before its execution. Facilitate real-time comparative analysis of performance vs. cost of care providers. Market Positioning Current Market Space Spot The ICE(tm) EMR/CDR software program is currently positioned and competing in the conventional healthcare IT enterprise space. This space is primarily occupied by large strong competitors, each leveraging a large customer base, significant recurring revenue (from maintenance services), and a broad product offering. This market space has been undergoing significant consolidations during last couple of years, and are expected to continue well into this century. A typical healthcare IT sales contract in this market space requires significant capital investments by the customer, and places the entire risk on the customer. (Meta Group estimates that 5-year healthcare IT costs are ~$100M per a typical Hospital in the US, with 70% of the software programs purchased failing expectations and replaced within 2-3 years. The MedMaster software program offers significant advantages over the competition in a variety of technical and functional aspects required from an enterprise EMR/CDR software program. Yet, the market's immaturity and the extent of risk involved with significant up-front capital investments, makes it a greater challenge for Intercare.com-dx to successfully play in this market space. New Market Space Spot With the transition of its enterprise software program to the Internet, and the expansion of its solutions' scope to incorporate support for both consumers and payers, InterCare is now re-positioning its offering into a new market space: eHealth Virtual Community Solution. Unlike the conventional healthcare IT enterprise market, this market space is currently less populated (although all large players are expected to vigorously play in this market space sooner or later). This re-positioning also incorporates a fundamental change in the company's business and revenue models. It involves transitioning from the traditional up-front capital investment sales model into a service-based (per-user, per month fees) turn-key software program sales model, with or without support of a pure ASP model. This transition is focusing on better leveraging the strengths of the InterCare ICE(tm) software program, while trying to minimize the effects of current weaknesses of the company over customers, strategic partners and investors. Strengths and weaknesses Weaknesses Intercare most apparent weaknesses when operating in the US market are: - - Very small customer base in the USA - - Partial proof/testimony of live enterprise sites using ICE(tm) in the USA - - Insufficient customer services and support infrastructure in the USA - - Perception of a small ("thin") company in comparison with well established (and public) US healthcare IT companies - - Limited number of strategic partners in complementary expertise areas - - Limited capability of InterCare (at current size and structure) to effectively operate and contract directly with enterprise customers in the USA 20 Strengths InterCare strengths when operating in the US market are: - - Point-Of-Care EMR management, care standards, workflow management, personal productivity management, common enterprise knowledge base, enterprise data warehouse, legacy integration middleware and data mining, which are generally available (ICE(tm)) - - ICE(tm) architecture initially designed to support Internet (n-tier) implementations - - ICE(tm) architecture supportive of concurrent multi-lingual users - - ICE(tm) architecture supportive of remote administration and maintenance - - InterCare control over competitive product packaging and pricing strategies - - InterCare proven quick turn-around compliance to market trends and demands (6-9 months between major versions) - - InterCare competitive lower cost of enterprise product development - - Extensive, multi-level customization of ICE(tm) software programs' components, requiring no source code intervention - - Compliance with HIPAA through customer controlled security business rules. - - InterCare expects its transition to the eHealth market space, coupled with its revised service-based sales model, to make these strengths a significant competitive advantage over its competition. Competition in the new market space The current and potential competition in the eHealth Virtual Community Solutions market is coming from the following categories: - - Pure Internet players - - Legacy + Internet players - - EMR/Clinical players - - Legacy players (see attached comparison analysis tables of current and potential competitors). Important recent transactions/events in the healthcare IT market space, which are significant to mention in the context of current and potential competition to InterCare: Healtheon acquisition of WebMD and MedE Eclipsys acquisition of Transition Systems/Healthvision McKessonHBOC acquisition of Abaton.com Market segment focus Short Term InterCare intends to primarily focus on the low-to-mid market of Integrated Healthcare Delivery Networks & hospitals in the USA, typically ranging from 150 beds to 350 beds. Within this market segment, InterCare intends to place specific focus on MeditechMAGIC and SMS Allegra/Allegra 2000 customers. The reason: weakness of these vendors in the Internet and EMR space, difficulties of these customers to finance up-front capital investments in healthcare IT and difficulty by such customers to recruit and hold to skilled healthcare IT professionals. Mid-to-Long Term InterCare intends to expand its target market to include: (a) Large Integrated Healthcare Delivery Networks & hospital, typically with 500+ beds (b) Managed care organizations. This market focus expansion requires further functional product support of loosely-coupled healthcare enterprises. Prospective Customer Access/Sales Process Leadership Short-term InterCare intends to establish a strong sales & sales support organization, which will enable the company to pro-actively push sales closure and market penetration. Initially, on a case-by-case basis, the company will take the decision whether to position InterCare as the prime contractor, or one of InterCare's strategic system integration partners as prime contractor (InterCare initially expects to become prime contractor to customers with up to 200 beds). Mid-to-Long Term InterCare expects to "divide" the market between itself and its strategic partners. InterCare will exclusively focus on the low-to-mid market, and its strategic partners, as VARs, will focus on the mid-to-high market. InterCare strategic partners will also exclusively approach national networks (such as Colombia/HCA, Tenet, etc.). InterCare sales and sales support organization will provide extensive support to the strategic partners in its efforts to 21 acquire additional customers. Contract Model Principles Short-term InterCare initially intends to offer its prospective customers a fixed-fee, service-based software application, which defines deliverables (rather than time and materials), and distributes the cost of the entire turn-key software application to 60 monthly payments, starting 6-9 months after contract signing. This type of contract involves some level of risk taking with the customer, but not in a level which can endanger the profitability of each contract. (see definition of such contract principles in an attached document) Mid-to-Long Term InterCare intends to offer its prospective customers, after better studying the risk exposure involved, a risk-sharing contract which incorporates a lower level of monthly fees, yet participates in the financial improvements/upsides as reflected in the "bottom line" of such customers after system implementation. InterCare intends to work with a variety of healthcare market experts in order to formulate and verify its commitments, upsides and exposure levels in pilot contract(s) prior to making such contract model generally available. Product Packaging & Pricing Short Term In order to enable quick transition to the new service-based sales model, InterCare does not intend to modify the current (and simple) packaging of its ICE(tm) software application . This includes 4 "rentable" software components: (a) Acute care workstation (b) Ambulatory care workstation, (c) Care standards workstation, and (d) Imaging archiving workstation. Each of these software components is priced between $49 - $79 per-user per-month for unlimited use (depending on the aggregate number of users), where the customer defines how many users license each of these components. With an expected average of 500 licensed users per a typical healthcare enterprise and $99 average per user per month fees, this should translate into ~$50,000 per month on behalf of software usage. Mid-to-Long Term InterCare intends to "comply" with the developing market conventions in clinical Internet product packaging (i.e. separate packaging and licensing for Lab, Radiology, Prescription, EMR, Reports, etc.). InterCare, however, intends to evaluate another dimension in product packaging. This includes the establishment of Standard, Professional and Enterprise editions per product/component, further enabling the company to exercise effective "foot-in-the-door" customer acquisition strategies. As the number of "products" grow (comparing to the current 4 products packaging), the monthly fees per "product", per user, per month are expected to be lower than the competition. The ASP model Short-term The ASP (Application Service Provider) model is gaining momentum in the IT market, although the healthcare market is slower in adopting it. InterCare expects different variations of the ASP model to be requested by a limited portion of its customers, ranging from remotely operating the system located in the customer's facilities, all the way through full outsourcing using the ASP servers farm model. In order to being able to offer prospective customers a pure ASP model, InterCare needs to establish a relationship with at least one ASP (which yet needs to be established). Any variation of ASP software application model does not mitigate the need to integrate the ICE(tm) software application with the existing legacy systems operational at the customer's enterprise. Mid-To-Long Term InterCare expects a meaningful portion of its customers to contract for the ASP model. By this time, InterCare and its strategic partners are expected to have established relationships with leading healthcare IT ASP providers. InterCare further expects some of the potential system integration partners to expand their offering and start serving as ASPs. This is expected to ease the product support requirements from InterCare, as the same partner will aggregate the expertise necessary for both one time and on-going support services. ICE(tm) Virtual Community Solution Vision & Scope General Overview The ICE(tm) enterprise software application in its generally available Version 1.0 will provide a wide range of capabilities/functionality in the following areas: 22 Lifetime Electronic Medical Record Management - - Acute care - - Ambulatory care - - Long term care - - Home care Multi-disciplinary care standards - - Protocols - - Pathways - - Care plans Quality & cost management - - Staffing - - Cost - - Case management Order entry & Result reporting - - Lab - - Radiology - - Pharmacy - - Nursing - - Diet - - Consultation - - Transcription - - Other Personal productivity - - Personal desktop - - Cover sheet - - Automatic document/form generation - - Automatic encounter codification Groupware productivity - - Unit charting - - Communication & messaging Security (HIPAA compliant) - - Security - - Confidentiality - - Compartmentalization Enterprise Knowledge base (multi-lingual) - - Enterprise lexicon - - Containers - - Legacy normalization Enterprise data warehouse - - Demography/Administrative - - ADT - - Clinical e.g ECG, Temperature, Spirometry, Pulse-Oximetry etc. - - Orders & Results - - Multimedia Legacy system integration - - Mini MPI (Master Patient Index) - - Bi-directional legacy data normalization Although InterCare intends to continue adding capabilities to its core Enterprise platform, the prime effort in the near term will be directed toward completing its transition to support the Internet application server paradigm. In addition, InterCare intends to put both focus and efforts on developing the complementary "pieces" of the ICE(tm) Virtual Community Solution, namely the provider and consumer components utilizing thin client technology. The Enterprise Software application InterCare is now utilizing Microsoft Visual Basic and SQL Server as the Technology infrastructure for ICE(tm). InterCare is also evaluating in parallel 3 additional options for implementing the GUI tier: - - ActiveX/JavaScript GUI components (for the enterprise's Intranet implementation); - - Terminal Server architecture; - - JAVA based GUI. Beyond the Internet transition and the "natural" expansion of clinically-focused functionality, InterCare intends to place significant focus on the integration of financial / administrative topics into the existing ICE(tm) software application . These include: - - Verification of patient eligibility & health plan authorization of procedures being ordered at the point-of-care; - - Improved point-of-care alerts (through rules-based mechanism); - - Automatic optimization of encounter reimbursement codification (ambulatory care & acute care); - - Financial performance of a variety of aspects of the healthcare enterprise's operations. These and additional capabilities are based on off-the-shelf 23 technologies/services commercially available from third-party vendors, and InterCare intends to partner with a variety of such vendors and integrate their products into ICE(tm). Such products includes Video-Conferencing, Voice recognition, Medical transcription, Embededed Images with annotation capabilities etc. Anytime & Anywhere Secure Access by Authorized Enterprise Users Browser-based, thin client software application , enabling care providers with privileges within the healthcare enterprise to access the enterprise CDR with a sub-set of the functions provided by the ICE(tm) enterprise software application . These include: - - Retrieving and reviewing lifetime patient data - - Reviewing and approving new results - - Initiating new orders - - Operating the personal desktop (administrative) This component enables care providers to timely access the system, primarily From home, friends house or when they are on the road. It minimizes the need of the care provider to physically arrive at the enterprise facilities in order to gain access to the system. InterCare intends to incorporate, beyond password-based entry, biometric voice-authentication technologies (such as from Nuance), to further improve patient file access security. Secure Access by Non-affiliated Care Providers A browser-based, thin client software application , enabling care providers not affiliated with the healthcare enterprise access to a specific patient file. The access to the specific patient file is enabled through a patient-controlled password, which provides for secure access into the enterprises CDR to view only the authorizing patient's lifetime medical records. InterCare intends to incorporate, beyond password-based entry, biometric voice-authentication technologies (such as the one from Nuance), to further improve patient file access security. using this component, non affiliated care providers (e.g. with no access privileges within the healthcare enterprise) to use the following functionality: - - Retrieving and reviewing lifetime patient data - - Reviewing new results - - Initiating new orders This component provides significant benefit to the consumer/patient, as it enables care providers distant from his home/community to timely access his lifetime medical records. In the future, InterCare intends to expand its multi-lingual patient data retrieval support, so foreign care providers (when the consumer/patient is abroad), are able to retrieve the patient's medical record in their own language. Health Plan Member Anytime & Anywhere Secure Access A browser-based, thin client software application , which serves as the "entry point" for the consumer/patient in his relationship with the health plan/healthcare enterprise. This component will be comprised of 5 main modules: Electronic Medical Record: Within this module, the consumer/patient will be able to execute the following functions: - - Retrieve, review and print the variety of segments comprising his lifetime medical records - - Enter problem-driven information prior to a physician appointment - - Enter outcome progress data after an acute care / ambulatory care encounter - - Enable non-affiliated physician(s) secure access to his personal lifetime medical records Retrieve and view the log file of who accesses his medical records, and which segments of it Services within this module, the consumer /patient will define service preferences, and gain access to a variety of healthcare enterprise services, including: - - Update personal & address details - - Service preference definition: lab, pharmacy, radiology, care providers, etc. - - Encounter scheduling request & approval - - Prescription generation & routing (to preferred pharmacy) - - Forms / certification generation - - Communication with care providers Medical Content Within this module, the consumer / patient will gain access to a variety of accredited medical content resources. These should help the consumer / patient become more knowledgeable, encourage self-treatment of minor problems, and tighten the relationship between the consumer / patient and the healthcare enterprise. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our financial statements and notes, as well as the other information included elsewhere 24 in this prospectus. Our discussion contains forward-looking statements that involve risks and uncertainties, including those referring to the period of time the Company's existing capital resources will meet the Company's future capital needs, the Company's future operating results, the market acceptance of the services of the Company, the Company's efforts to establish and the development of new services, and the Company's planned investment in the marketing of its current services and research and development with regard to future endeavors. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including: domestic and global economic patterns and trends. RESULTS OF OPERATIONS We have experienced, and expect to continue to experience, seasonality in our license revenues and results of operations, with a disproportionately greater amount of our license revenues for any fiscal year being recognized in our fourth fiscal quarter. As a result, our first quarter revenues can be less than those of the preceding quarter. In some cases, the products will be sold on a consignment basis, in which case, we only get paid by the vendor after the vendor sells the product. Furthermore, our quarterly revenues could be significantly affected based on how applicable accounting standards are amended or interpreted over time. Due to these and other factors, we believe that period-to-period comparisons of our results of operations are not meaningful and should not be relied upon as indicators of our future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our common stock may decline. We will depend on the commercial success of our product suite, which has not yet been shipped. We have generated substantially all of our revenues from licenses and services related to current and prior versions of our product suite. REVENUES. Total revenues for the year ended December 31, 2000 was $1,562,450 compared to $6,629 in the year ending December 31, 1999. The revenue was generated from software license sales and consulting services (see note 2 to the financial statement). On October 11th, 2000, the Company sold software licenses to CGI Communications Services, Inc. ( a related party). Based on a prior agreement, the company is obligated to pay 60% of such sales to Meridian Holdings, Inc. (parent company). The applicable revenue and expense, and related accounts receivable and payable are included in the Income Statement and Balance Sheet as of December 31, 2000. Revenues from sale and related accounts receiveable is $1,382,450, and the licensing expense (cost of goods sold) and related accounts payable is $829,470.(See footnotes number 2 of the audited financial statement) The company is currently developing the next generation of clinical documentation, practice management and data acquisition software program, with multi-tasking, multi-lingual and full multi-media implementation. This soon to be released software application, will replace MedMaster product line, which has been pulled from the market by the applicant at the request of Meridian Holdings, Inc., our affiliated company, due to on going legal dispute regarding the rights to ownership of clear title between Lockheed Martin and the estate of Sirius Computerized Technology of Israel. For six months period ended June 30,2001, the registrant generated approximately $334,199 in total revenue, as oppose to $0 revenue for comparable period in 2000. The increase in revenue was due to sale of software license as well as revenue generated from software implementation and maintenance services. COST OF REVENUES. Cost of revenues increased to $846,138 for the year ending December 31, 2000 compared to $252 in the comparable period in 1999. This increase in the cost of revenue is due to licensing fees incurred from the purchase of MedMaster software license from Meridian Holdings, Inc., a related party. Amortization of capitalized software development costs will continue in the future to bring levels closer to expected future revenues to be generated, or net realizable value. For six months period ended June 30, 2001, the Company recorded a cost of sales of $ 126,897 from a revenue of $334,199, as compared to $0 revenue and cost of sales from the comparable period in 2000. SALES AND MARKETING. Only minimal sales and marketing has been done by the Company, since focusing most of its resources at the moment in our Internet strategies, and software enhancement, testing and debugging. The Company is budgeting over $250,000 for its initial roll-out of new products sales and marketing campaign during the third quarter of the year 2001, assuming more capital is raised from this offering to pay for such an expense. PRODUCT AND CONTENT DEVELOPMENT. Software products and Internet content development expenses is anticipated to 25 increase significantly during the next coming year, due to website redesign and other Internet initiative launch costs, consisting primarily of personnel and consulting costs. The Company projects to spend over $1,250,000 during the next 12 months to fund project and content development. This is contingent upon the Company's ability to raise funds from investors. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 320% for the year ending December 31, 2000 to $453,554, compared to $107,295 in 1999. The increase in operating expense is due to the additional operating costs of increased personnel requirement, consultant fees, as well as research and further development of the MedMaster software program as a value added reseller. Of the $453,554 spent in 2000, $100,000 was for salary paid to Mr. Russ Lyon our President and Chief Technology Officer, $2,664 was for depreciation expense, the remaining balance was for general corporate purposes and product development General and administrative expenses for the second quarter ended June 30, 2001 was $158,299, compared to $0 during the comparable period in 2000. For the year-to-date general administrative expenses, the Company had incurred $285,196 compared to $137,090 in the comparable period in 2000. The increase in operating expense is due to the additional operating costs of increased personnel requirement, consultant fees, as well as research and further development of the MedMaster software program as a value added reseller, and most recently, due to development of new family of software. Of the $285,196 expense in 2001, $157,000 was spent on research and development. Approximately $55,000 was spent on salary to employees, $19,580 for the efforts in the initial public offering and the remaining balance was for facilities and general corporate purposes. The Company anticipates future increases in general and administrative expenses as it embarks on aggressive product development, sales and marketing with its associated increase in personnel costs and legal and accounting expenses related to the public offering of its common stock. OPERATING LOSS. As a result of the factors described above, Company expects further increases in operating expenses for the year 2001, assuming additional funding is raised from this offering to be used in financing future operating costs. There is no guarantee that the Company will be able to raise additional funds to finance all the anticipated operating costs. In absence of such funds being available, the Company may not be able to operate, and this could have a material impact in the overall execution of the Company's business plan. NET INCOME. The Company had a net income of $367,016 or 0.033 per share for the year ended December 31, 2000, compared with net loss of $114,423 or $.010 per share for the year ended December 31, 1999. The net income was due to sale of MedMaster software licenses, as well as services rendered to prospective clients relating to the said software licenses. The Company had a net loss of $(253,402) or (0.002) per share for the year-to-date ended June 30, 2001, compared with net loss of $136,829 in the comparable period in 2000. The increase in net loss was due to increased operating expense as described above. LIQUIDITY AND CAPITAL RESOURCES The Company has experienced a substantial increase in expenditures since entering into a master-value added reseller agreement with Meridian Holdings, Inc., as well as the launch of our Internet strategy, through the growth in those operations and related staffing. Management anticipates that these increased expenditure levels will continue for the foreseeable future. Management anticipates incurring additional expenses to increase our marketing and sales efforts, for content development and for technology and infrastructure development. Additionally, we will continue to evaluate possible investments in businesses, products and technologies and the expansion of our marketing and sales programs. The Company uses working capital to finance ongoing operations, fund the development and introduction of our new business strategy and acquire capital equipment. There is no guarantee that the Company will be able to raise additional funds, and if such funds becomes available, the cost incurred for securing such funds may not be on favorable terms to the Company, and this could have an adverse impact on the entire operation. PLAN OF OPERATIONS Management believes the Company has adequate capital resources to meet anticipated needs for working capital and capital expenditures through the end of November 2001, but the Company needs to enhance its capital resources in order to provide it with sufficient cash to meet its current operating needs and to address such needs through the end of December 2001. If the Company is unable to enhance its capital resources, the Company will be forced to reduce its spending on capital expenditures and product development until such financing is obtained. 26 The Company intends to use part of the funds raised during this offering for acquisitions of businesses or health information content to use in the Company's website or other Internet based product offerings. If adequate funds are not available or not available on acceptable terms, we may be unable to fund our expansion, successfully promote our brandname, take advantage of acquisition opportunities, develop or enhance services or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations. The Company has entered into joint marketing agreement with United System, Inc., HealthCPR Technologies, Inc., NetSales, Inc., Digital River Corporation, China Business Chain Group, LLC. and Telehealth LLC, to market the Company's software product through various retail channels. The Company intends to release the next generation of its software program during the fourth quarter of 2001. The Company will also embark on an advertisement campaign over the next several months in major newspapers and c onsumer and healthcare journals of all its new products and services. There is no assurance that such advertisement campaign will yield any dividend. Employees We presently have five full time employees and seven independent contractors Some of our officers and directors are engaged in business activities outside of us, and the amount of time they will devote to our business will only be approximately 50% of their work week. Upon completion of the public offering, it is anticipated that management will devote the time necessary each month to our affairs. We also intend to out-source some of the personnel requirements to Meridian Holdings, Inc. Facilities We are presently occupying 1/5 of an office space leased by Meridian Holdings, Inc., our parent company, at 900 Wilshire blvd., Suite 500-508 Los Angeles California. The agreed cost attributable to us for the use of the facility is based on 1/5 of the total amount of cost to Meridian Holdings, Inc., for operating the suites. Legal Proceedings We are not currently a party to any material legal proceedings. MANAGEMENT Executive Officers, Directors and Other Significant Employees
Name Age Title Anthony C. Dike, MD 45 Chairman, Director Chief Executive Officer, Secretary Treasurer Russell Lyon, MA 52 President, Director Chief Technology Officer, Philip Falese, MBA, LLM 43 Chief Financial officer, Director
Anthony C. Dike, MD, our Chairman, Chief Executive Officer, Secretary and a Director, will devote approximately 50% of his time to our affairs. Dr. Dike has been the Chairman of the Board, Chief Executive Officer and President of the Company since January, 1991. Anthony C. Dike, a physician by training and an entrepreneur that has funded and developed various start-up high technology businesses from inception to fruition through his private Investment Firm, MMG Investments Inc., a California corporation. He is the founder of CGI Communications Services, Inc., Bolingo.com-the world's largest High Technology Online Store on the Internet, Capnet.com, Bidfair.com, and Capnet.net, all Internet domain registered businesses. He also is the founder of Intercare Diagnostics, Inc., a United States Food and Drug Administration (USFDA) registered Bio-Medical Software Manufacturing Company, with over 5 Multimedia healthcare related software programs in the market. He also pioneered the design and development of the Mirage Systems Biofeedback Software Program, the first United States Food and Drug Administration approved software only for Biofeedback and Relaxation Training. He is also the founder of Capnet IPA, Capnet Gateway On-line Services, Meridian Medical Enterprises Corporation and Meridian Health Systems, Inc. Anthony C. Dike, MD, is also a member of the peer-review standing panel for United States Department of Education National Institute for Disability and Rehabilitation Research. He has served as a consultant to United Nations Development Project-Sustainable Human Development Program . He has given several presentations to various fortune 500 companies 28 including Pacific Bell, AT&T Easylink Services, Apple Computer, Smithkline Laboratories Clinical Trial Division, UHP Health Plan, Mullikin IPA, and Wellpoint Healthcare Network Pharmacy department, about the use of the Internet as a facilitator of global communications, record sharing and electronic-commerce transaction in the healthcare industry using the "Computer Aided Provider Network" or "CAPNET" module. - ---------------------------------- He most recently pioneered the design and development of "The Mirage Systems Internet Based Healthcare Transaction Module." Russell A. Lyon, MA, our President, Chief Technology Officer and a Director, will devote approximately 100% of his time to our affairs. Russell Lyon has been a designer and developer of computer-based educational and training programs for nearly two decades. He has served as both designer and developer on major training projects for a variety of corporate entities, including TRW, Unocal, Union Bank and Southern California Edison. As the founder and principal of Kinetic Media, he was a Level II Authorized Developer for Macromedia Director and has been a featured speaker at the Macromedia International User Conference on innovative uses of Director. He has developed or produced over a dozen separate commercial software titles, including The Mirage Systems Interactive Multimedia Biofeedback Interface for Intercare Diagnostics. He holds a BA degree in Psychology from Cornell University and an MA degree in both Educational Psychology and Instructional Technology form California State University, Long Beach. Philip Falase, MBA, JD, LLM, our Chief Financial Officer and a Director received his MBA from University of Alabama, JD from Northrop University School of Law, Los Angeles, and LLM (Tax) from Golden Gate University, San Francisco. Mr. Falase has been working as a consultant to various clients in the area of strategic business development, tax consultation, asset valuations, and financial planning. He also has worked as a staff accountant for Carter, Turner and Company (CPA firm) based in Los Angeles, California Board of Directors Our Board of Directors consists of three (3) authorized members. The terms of the Board of Directors is staggered over a three year period. Apart from Mr. Russell A. Lyons, none of the other directors have been compensated for their activities as directors or officers of the Company. In the future, our non-employee directors may be reimbursed for expenses incurred in connection with attending board and committee meetings and compensated for their services as board or committee members. Executive Officers Our officers are elected by the Board of Directors and hold office at the will of the Board. Indemnification Our Articles of Incorporation provide that we shall indemnify, to the full extent permitted by California law, any of our directors, officers, employees or agents who are made, or threatened to be made, a party to a proceeding by reason of the fact that he or she is or was one of our directors, officers, employees or agents against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if specified standards are met. Although indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons under these provisions, we have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act of 1933 is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Employment Agreements Mr. Russell A. Lyons, the President and Chief Technology Officer has entered into an employment agreement with the parent company, Meridian Holdings, Inc. None of the other executive officers are subject to an employment agreement at this time. We intend to enter into employment contracts with some of our executive officers in the near future. 29 EXECUTIVE COMPENSATION Summary Compensation Table The following table provides information concerning the compensation of the named executive officers for each of our last nine completed fiscal year.
Annual Compensation Long Term Compensation Awards Securities Name Other Restricted Underlying And Annual Stock Options/ Principal Compen- Award (s) SARs (#) Position Year Salary ($) Bonus ($) sation($) (a) (b) (c) (d) (e) (f) (g) Anthony C Dike 2001 $ 0 0 250,000 Chairman, Chief Chief Executive Officer Russell A. Lyon 2001 $100,000 100,000 0 President Chief Technology Officer (1) Philip Falase 2001 $50,000 39,090 0 Chief Financial Officer (2) Footnotes (1) Mr. Russell Lyon started working for the Company in November 1999 initially as an Independent contractor, and became full time employee as of January 7th, 2000 (Please see note 3 of the financial statement) (2) Mr. Philip Falese commenced working for the Company effective March 1st 2000.
Options/SAR Grants in Last Fiscal year The following table shows information regarding grants of stock options in this last completed fiscal year to executive officers named in the summary Compensation Table above.
Individual Grants Number of % of Total Securities Options/SARs Underlying Granted to Exercise Options/SARs Employees or Base Expiration Name Granted (#) in Fiscal Year Price ($/sh) Date (a) (b) (c) (d) (e) Anthony C. Dike 250,000 100% $5 12-31-2009
CERTAIN TRANSACTIONS In December 1991, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1991, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2001. In December 1992, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1992, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2002. In December 1993, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1993, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2003. 30 In December 1994, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1994, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2004. In December 1995, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1995, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2005. In December 1996, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1996, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2006. In December 1997, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1997, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2007. In December 1998, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1998, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2008. In December 10, 1999, the Board of Directors authorized the issuance of 1,000,000 shares to Anthony C. Dike, our Chairman for services rendered. No options were granted during this period. On March 14th, 2000, the board of directors and shareholders approved the 2000 Stock option plan. Anthony C. Dike, our Chairman was granted option to purchase 250,000 shares of Common Stock, as per the 2000 Incentive Stock Option Plan. Also, in February 1991, the Board of Directors authorized the issuance of 900,000 shares of common stock to MMG Investments, Inc., in consideration for an aggregate of $75,000 equity investment in the Company. During the fiscal year ended December 31, 1999 the company issued 5,100,000 shares (adjusted for 100:1 stock split)to an affiliated Company in exchange for the assumption of long term debt in the amount of $504,932 and cash contribution of $58,996, in addition to the sum of $11,700 representing the value of pre-paid banner advertisement and promotions of the registrants product on Meridian Holdings, Inc., operated websites. The fair value of the banner advertisement is based on a pricing schedule published by Meridian Holdings, Inc. as of December 1999. (See Note 2 of the financial statements) Total shares issued and outstanding was 100,000 as of December 7, 1999. On December 10, 1999, the Company's authorized capital stock was increased and a 1 to 100 forward stock split was effected by an amendment of Article IV of the Company's Articles of Incorporation approved by the Board of Directors. Pursuant to the stock split, the outstanding shares of the common stock of the Company was increased from 100,000 to 100,000,000 and such shares were distributed to all the current shareholders of InterCare.com-dx, Inc. pursuant to a stock dividend distribution approved by the Board of Directors. In January 2000, the shareholders of Meridian Holdings, Inc, the parent Company, approved the employment of Mr. Russ Lyon as our President and Chief Technology Officer. The following are the significant terms of compensation package given to Mr. Russ Lyon, as the President and Chief Technology officer of InterCare.com-dx, Inc.,by Meridian Holdings, Inc., as reported in the 1999 annual report of Meridian Holdings, Inc., filed on 2/15/2000. 1. Base salary is $100,000 per year for two years 2. Executive shall be entitled to earn a bonus with respect to each year of the Term during which Executive is employed under the Employment Agreement up to $25,000 (prorated for partial years) based upon certain criteria being met, and at the discretion of the board of directors. As an additional element of compensation to Executive, in consideration of the services to be rendered hereunder, the PARENT COMPANY shall grant to Executive options to purchase 500,000 restricted shares of the PARENT COMPANY'S common stock, 150,000 of which shall have an exercise price equal to the fair market value of such stock on the date hereof, and the remaining 350,000 options which represents a signing bonus of 200,000 shares, and the first year option of 150,000 restricted shares of common stock shall have an exercise price of $0.50/share being the fair market value of Meridian Holdings, Inc. common stock as of the date of such grant. The 31 terms and conditions of such options shall be governed by a Stock Option Agreement between the Company and Executive, as earlier filed in the 1999 proxy Statement of Meridian Holdings, Inc., incorporated herein by reference. As of this report, Mr. Lyon has not exercised his stock option or received any awards of his grants. Mr. Russ Lyon recently waived his rights to exercise said option during the first quarter of 2001, in lieu of 200,000 shares of the registrant at zero par value, to be issued upon the effectiveness of the registrants registration statement. The shares will be issued pro-rata to the two years of the employment agreement. Also, during the first quarter of 2001, the registrant issued a total of 1,230,902 common shares at 0.0 par value to its employees and various entities as part of the 2000 incentive stock option plan and stock based compensation program. PRINCIPAL SECURITY HOLDERS The following tables set forth information regarding the beneficial owners of our common stock, as of June 30, 2001, by the following individuals or groups: Each of our executive officers; Each of our directors; Each person, or group of affiliated persons, whom we know beneficially owns more than 5% of our outstanding stock; and All of our directors and executive officers as a group. Except as otherwise noted, and, to the best of our knowledge, the persons named in this table have sole voting and investing power with respect to all of the shares of common stock held by them. As of the table date we had 12,230,902 common shares outstanding.
Name and Amount and Percent of Class of Class Address of Nature of Before After After Beneficial Beneficial the the the Owner Ownership Offering Offering (Maximum) Offering (Minimum) Anthony C. Dike (1)(2) 9,250,000 55.8% 42.9% 55.8% 4127 West 62nd Street Los Angeles, CA 90043 Meridian Holdings, Inc.(2)(3) 5,100,000 30.8% 23.6% 30.7% 900 Wilshire Blvd, #500 Los Angeles, CA 90017 MMG Investments, Inc.(2) 900,000 5.4% 4.2% 5.4% 4127 West 62nd Street Los Angeles, CA 90043 Russ Lyon 200,000 1.2% 0.9% 1.2% 900 Wilshire Blvd, #500 Los Angeles, CA 90017 Philip Falese 39,090 0.24% 0.18% 0.23% 900 Wilshire Blvd, #500 Los Angeles, CA 90017 Named Officers and 9,489,090 57.2% 43.98% 57.23% Directors As a Group (1) Officer or Directors' 9,489,090 shares of Common Stock listed includes the 4,250,000 shares of Common Stock options granted as to Anthony C. Dike, and 100,000 granted to Russ Lyon if they were all exercised. (2) Anthony C. Dike, is a majority shareholder. (3) Including their shareholders; excluding their directors, officers, and affiliates.
DESCRIPTION OF SECURITIES COMMON STOCK We are authorized to issue up to 100,000,000 shares of common stock, no par value, of which 12,230,902 shares were issued and outstanding as of June 30, 2001. All outstanding shares of our common stock are fully paid and nonassessable and the shares of our common stock offered by this prospectus will be, upon issuance, fully paid and nonassessable. The following is a summary of the material rights and privileges of our common stock. 32 PREFERRED STOCK We authorized 20,000,000 shares of preferred stock, with no par value. No shares of preferred stock have been issued. VOTING. Holders of our common stock are entitled to cast one vote for each share held at all shareholder meetings for all purposes, including the election of directors. The holders of more than 50% of the voting power of our common stock issued and outstanding and entitled to vote and present in person or by proxy, together with any preferred stock issued and outstanding and entitled to vote and present in person or by proxy, constitute a quorum at all meetings of our shareholders. The vote of the holders of a majority of our common stock present and entitled to vote at a meeting, together with any preferred stock present and entitled to vote at a meeting, will decide any question brought before the meeting, except when California law, our Articles of Incorporation, or our bylaws require a greater vote and except when California law requires a vote of any preferred stock issued and outstanding, voting as a separate class, to approve a matter brought before the meeting. Holders of our common stock do not have cumulative voting for the election of directors. DIVIDENDS. Holders of our common stock are entitled to dividends when, as and if declared by the Board of Directors out of funds available for distribution. The payment of any dividends may be limited or prohibited by loan agreement provisions or priority dividends for preferred stock that may be outstanding. On December 10, 1999, as provided in Article IV of this Company's Articles of Incorporation, as amended, this Company has one hundred million (100,000,000) shares of common stock authorized and as of December 7, 1999, an aggregate of one hundred thousand (100,000) shares of common stock were issued and outstanding. The Board of Directors by way of a written consent declared a stock dividend of one hundred (100) shares of common stock for every one (1) share of common stock currently issued and outstanding, to be payable to shareholders of record as of December 30th, 1999. Meridian Holdings, Inc., the 51% owner of the outstanding shares of the Company's common stock declared a dividend simultaneously to all its shareholders of record who owns a share in Meridian Holdings, Inc., to receive five (5) shares of common stock of InterCare.com-dx. PREEMPTIVE RIGHTS. The holders of our common stock have no preemptive rights to subscribe for any additional shares of any class of our capital stock or for any issue of bonds, notes or other securities convertible into any class of our capital stock. LIQUIDATION. If we liquidate or dissolve, the holders of each outstanding share of our common stock will be entitled to share equally in our assets legally available for distribution to our shareholders after payment of all liabilities and after distributions to holders of preferred stock legally entitled to be paid distributions prior to the payment of distributions to holders of our common stock. TRANSFER AGENT. Corporate Stock Transfer of Denver, Colorado will serve as our transfer agent. Telephone number 303-282-4800. SELLING SECURITY HOLDERS There are no selling security holders in this offering. PLAN OF DISTRIBUTION We offer the right to subscribe for up to 5,000,000 shares at the offering price of $5.00 per share, through our directors and officers, as well as broker/dealers. Corporate Stock Transfer of Denver is our Escrow agent. The estimated broker/dealer compensation for distributing our common stock is $0.50 per share or $2,500,000 if the maximum shares are sold. No payment will be made to our Directors and officers for selling the shares of our common stock, pursuant to this offering. We offer the right to subscribe for up to 5,000,000 shares at the offering price of $5 per share. We are offering the shares directly on a best efforts, 10,000 share minimum basis. No compensation is to be paid to any person for the offer and sale of the shares unless we retain a broker who is also a professional underwriter. Our directors and officers plan to distribute prospectuses related to this offering. We estimate up to 1,000 prospectuses will be distributed in such a manner to acquaintances, friends and business associates. Although our directors and officers are associated persons of us as that term is defined in Rule 3a4-1 under the Exchange Act, they are deemed not to be a broker for the following reasons: They are not subject to a statutory disqualification as that term is defined in Section 3(a)(39) of the Exchange Act at the time of their participation in the 33 sale of our securities. They will not be compensated for their participation in the sale of our securities by the payment of commission or other remuneration based either directly or indirectly on transactions in securities. They are not an associated person of a broker or dealers at the time of their participation in the sale of our securities. - They will restrict their participation to the following activities: Preparing any written communication or delivering such communication through the mails or other means that does not involve oral solicitation by them of a potential purchaser; Responding to inquiries of a potential purchasers in a communication initiated by the potential purchasers, provided however, that the content of such responses are limited to information contained in a registration statement filed under the Securities Act or other offering document; Performing ministerial and clerical work involved in effecting any transaction. As of the date of this Prospectus, no broker has been retained by us for the sale of securities being offered. In the event a broker who may be deemed an underwriter is retained by us, an amendment to our registration statement will be filed. Investors in this offering must make their own decisions regarding whether to hold or sell their shares. We will not exercise any influence over your decisions. The common stock offered by this prospectus is being offered by the Company and the will be no selling shareholders. Such common stock may be sold or distributed from time to time by Company, or by dealers or underwriters who may act solely as agents or may acquire such common stock as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the common stock offered hereby may be effected in one or more of the following methods: - ordinary brokers' transactions; - transactions involving cross or block trades or otherwise on the NASDAQ National Market; - purchases by brokers, dealers or underwriters as principal and resale by such purchasers for their own accounts pursuant to this prospectus; - "at the market" to or through market makers or into an existing market for the common stock; - in other ways not involving market makers or established trading markets, including direct sales to purchasers or sales effected through agents; - in privately negotiated transactions; or - any combination of the foregoing. In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in such state or an exemption from such registration or qualification requirement is available and complied with. Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts or concessions from the selling shareholders and/or purchasers of the common stock for whom such broker-dealers may act as agent, or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be less than or in excess of customary commissions). ANY LICENSED BROKER-DEALERS WHO ACT IN CONNECTION WITH THE SALE OF THE SHARES HEREUNDER MAY BE DEEMED TO BE "UNDERWRITERS" WITHIN THE MEANING OF THE SECURITIES ACT, AND ANY COMMISSIONS THEY RECEIVE AND PROCEEDS OF ANY SALE OF THE SHARES MAY BE DEEMED TO BE UNDERWRITING DISCOUNTS AND COMMISSIONS UNDER THE SECURITIES ACT. InterCare.com-dx can not presently estimate the amount of such compensation. InterCare.com-dx knows of no existing arrangements between any selling shareholders, any other shareholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares. At a time particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters or dealers and any compensation from the selling shareholders and any other required information. InterCare.com-dx will pay all of the expenses incident to the registration, offering and sale of the shares to the public other than commissions or 34 discounts of underwriters, broker-dealers or agents. InterCare.com-dx has also agreed to indemnify the selling shareholders and certain related persons against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of InterCare.com-dx, InterCare.com-dx has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable. InterCare.com-dx has advised its directors and officers that during such time as they may be engaged in a distribution of the shares included in this prospectus they are required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling shareholders, any affiliated purchasers, and any broker-dealer or other person who participates in such distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered hereby. InterCare.com-dx will pay all of the expenses incident to the registration, offering and sale of the shares to the public including commissions or discounts of broker-dealers or agents. TERMS OF SALE OF THE SHARES We will be selling our shares on a 10,000 share minimum 5,000,000 share maximum basis. Until we have sold at least 10,000 shares, we will not accept subscriptions for any shares. All proceeds of this offering will be deposited in a non-interest bearing escrow account with Corporate Stock Transfer Inc. If we are unable to sell at least 10,000 shares before the offering ends, we will return all funds, without interest, to subscribers as soon as practicable after the ending of this offering. We have the right to completely or partially accept or reject any subscription for shares offered in this offering, for any reason or for no reason. The offering will remain open until all shares offered in this offering are sold or 12 months after the date of this prospectus, except that we will have only 180 days to sell at least 10,000 shares. We may decide to cease selling efforts at any time prior to such date. If this offering is oversubscribed, we may consider whether or not you expect to hold the shares purchased in this offering long term in determining whether and to what extent we will accept your subscription. We anticipate having one or more closings of this offering, the first of which cannot be held until we are able to sell at least 10,000 shares. After that, we could have multiple closings whenever we receive and accept new subscriptions. METHOD OF SUBSCRIBING Persons may subscribe by filling in and signing the subscription agreement And delivering it, prior to the expiration date, to us. The subscription price of $5.00 per share must be paid in cash or by check, bank draft or postal express money order payable in United States dollars to our order. EXPIRATION DATE This offering will expire 360 days from the date of this prospectus. KEY TERMS OF ESCROW AGREEMENT Under the terms of our escrow agreement with Corporate Stock Transfer Inc. - - proceeds from the sale of shares will be deposited into a non-interest bearing account until the minimum offering amount is sold; - - in the event the proceeds are insufficient to meet the 10,000 share minimum requirement, proceeds will be returned directly to investors by the escrow agent, without interest and without any deduction for expenses including escrow agent fees; - - the escrowed proceeds are not subject to claims by our creditors, affiliates, associates, or underwriters until the proceeds have been released to us under the terms of the escrow agreement; and - - the regulatory administrator of any state in which the offering is registered has the right to inspect and make copies of the records of the escrow agent relating to the escrowed funds in the manner described in the escrow agreement. LEGAL MATTERS The validity of the common stock offered hereby will be passed upon for us by Bryan Cave LLP, Irvine, California. EXPERTS The financial statements incorporated in this prospectus represents the two 35 consecutive year audited annual financial statements of InterCare.com-dx, Inc. (formerly, Inter-Care Diagnostics, Inc.)for the year ended December 31, 1999 and 2000 respectively, and have been so incorporated in reliance on the report of Andrew M. Smith, independent accountant, given on the authority of Mr. Smith, CPA, as an expert in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION ABOUT US This prospectus is a part of a registration statement on Form SB-2 filed by us with the SEC under the Securities Act. This Prospectus omits certain information contained in the registration statement, and we refer you to the registration statement and to the exhibits to the registration statement for additional information about the common stock and us. We upon registration, will file annual, quarterly and special reports, and other information with the SEC. You may read and copy any document we file with the SEC at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's public reference rooms located at it's regional offices in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the operation of public reference rooms. You can also obtain copies of this material from the SEC's Internet web site (http://www.sec.gov) that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. 36 InterCare.com-dx, Inc. Financial Statements And Independent Auditor's Report As of December 31, 2000
Table of Contents Page Independent Auditor's Report . . . . . . . . . . . . . . . . . . .38 Audited Financial Statements: Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Statements of Operations . . . . . . . . . . . . . . . . . . . . .40 Statements of Changes in Stockholders' Equity . . . . . . . . .41 Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 42 Notes to Financial Statements . . . . . . . . . . . . . . . . . .43
37 INDEPENDENT AUDITOR'S REPORT To the Board of Directors InterCare.com-dx, Inc. I have audited the accompanying balance sheet of InterCare.com-dx, Inc., as of December 31, 2000 and 1999 and the related statements of income, stockholders' equity, and cash flows for the year then ended. My responsibility is to express an opinion on these financial statements based on my audit. I have conducted my audit in accordance with generally accepted auditing standards. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of InterCare.com-dx, Inc., as of December 31, 2000 and 1999 and the results of their operations and their cash flows for the year then ended, in conformity with generally-accepted accounting principles. ANDREW M. SMITH CERTIFIED PUBLIC ACCOUNTANT Long Beach, California March 23, 2001 38 InterCare.com-dx, Inc. Balance Sheet As At December 31st
2000 1999 ========= ======== ASSETS Current assets Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 2,961 $ 864 Accounts Receivable.(Note 2) . . . . . . . . . . . . . . . . 1,390,185 - Less: Allowance for Doubtful Accounts . . . . . . . . . . . - - --------- --------- 1,390,185 - --------- --------- Inventory. . . . . . . . . . . . . . . . . . . . . . 66,671 83,339 Prepaid Expense . . . . . . . . . . . . . . . - 11,700 --------- --------- Total Current Assets . . . . . . . . . . . . . . . . . . 1,459,817 95,903 Property, Plant, and Equipment Net of accumulated Depreciation (Note 1) . . . . . . . . . .. 9,645 253 Other Assets Organizational Costs . . . . . . . . . . . . . . . - - Deferred Public Offering Cost (Note 5) . . . . . . . . . . . 13,000 - --------- ------- Total Assets . . . . . . . . . . . . . . . . . . . . . . $ 1,482,462 $ 96,156 ========= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts Payable (Note 3) . . . . . . . . . . . . . $ 1,019,290 - --------- -------- Total Current Liabilities. . . . . . . . . . . . . . . . $ 1,019,290 - Long term liabilities . . . . . . . . . . . . . . . . - - --------- -------- Total Liabilities. . . . . . . . . . . . . . . . . . . . $ 1,019,290 - ========= ======= Stockholders' equity Common stock (100,000,000 shares authorized, no par value, 11,000,000 shares issued and outstanding) (Note 2). . . . . . . . . . . . . . . . . . 650,628 650,628 Accumulated Deficit. . . . . . . . . . . . . . . . . . . (187,457) (554,472) -------- -------- Total Equity 463,171 96,156 -------- -------- Total Liabilities & Equity . . . . . . . . . . . . . . . $ 1,482,462 $ 96,156 ========= ========
See Accountants Report and Notes to Financial Statements 39 InterCare.com-dx, Inc. Statement of Operations Year ended on as of December 31,
2000 1999 ===== ===== Revenue $ 1,562,450 $ 6,629 --------- ------- Less: Cost of Revenues $ (846,138) (252) --------- ------- Gross Margin $ 716,312 $ 6,377 ========= ======= Operating Expense 453,554 120,800 --------- ------- Other Income and Expense 104,258 - --------- ------- Net Income $ 367,016 $ (114,423) ========= ======= Weighted average number of shares 11,000,000 11,000,000 Earnings (loss) per common share $ 0.033 $ (0.010)
See Accountants Report and Notes to Financial Statements 40 InterCare.com-dx, Inc Statement of Cashflows For the Year Ended December 31
2000 1999 ====== ====== CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 367,016 $ (114,423) Adjustments to reconcile net income to net cash Provided by operating activities Depreciation Expense 2,664 13,505 (Increase) Decrease in Accounts receivable (1,390,185) 47,672 Inventories 16,668 (82,351) Prepaid Expenses 11,700 (11,700) Accounts Payable 1,019,290 (8,768) ---------- -------- NET CASH USED IN OPERATING ACTIVITIES 27,154 (156,065) ========== ========= CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Fixed Assets (12,056) - -------- -------- NET CASH USED IN INVESTING ACTIVITIES (12,056) - ======== ======== CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions from shareholders - 58,996 Repayment of debt - (13,852) Deferred offering costs (13,000) - Proceeds from long-term debt - 75,000 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES (13,000) 120,144 ------- ------- Increase (Decrease in cash) 2,098 (35,921) CASH AT BEGINNING OF PERIOD 863 36,785 -------- ------- CASH AT END OF PERIOD $ $ 2,961 $ 864 ======== =======
See Accountants Report and Notes to Financial Statements 41 InterCare.com-dx, Inc. Statement of Changes in Stockholders' Equity
Common Stock Accumulated Total Transaction and Date Shares Amount Deficit Equity ============ ======= ========= ========= Balance as at December 31, 1998 4,900,000 $ 75,000 $ (440,049) $ (365,049) ------------ -------- -------- -------- Net Loss Year Ended 12/31/99 (114,423) (114,423) Sold 51% to Meridian Holdings, Inc.(Note 2) 5,100,000 575,628 575,628 Shares issued to A. C. Dike for services (Note 3) 1,000,000 ----------- -------- -------- -------- Balance as at December 31, 1999 . . . . . . 11,000,000 650,628 (554,472) 96,156 ========== ========= ========= ======== Net Income Year Ended 12/31/2000 367,016 367,016 ----------- -------- -------- -------- Balance as at December 31, 2000 . . . . . . 11,000,000 $ 650,628 $ (187,456) $ 463,172 ========== ========= ========= ========
See Accountants Report and Notes to Financial Statements 42 InterCare.com-dx, Inc. Notes to the Financial Statements Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES InterCare.com-dx, Inc. formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California to pursue bio-medical software development, as well as Internet based healthcare transactions, contents and programs development. The Company was originally incorporated in 1991 for the purpose of operating a medical diagnostics laboratory and engaging in various medical services to clients. On January 17, 1994, a 6.8 magnitude earthquake centered in Northridge, California caused wide spread damage to commercial and residential structures, and to major freeways, causing business interruptions and disrupting the normal flow of traffic. The Company experienced irreversible damage to all its high-tech computers and diagnostic equipment. Since that time, the Company has been devoting substantially all its efforts to establishing a new business entity that develops software for the healthcare industry and other related activities over the Internet. On September 27, 1999, the Company, announced that it has executed an Electronic Commerce Agreement with Netsales, Inc., in which Netsales will distribute InterCare's software programs through more than 140,000 loyal reseller customers in 130 countries of Ingram Micro, the largest provider of computer technology products and services in the world. The Company had entered into similar agreement earlier, with DigitalRiver, Inc., in which DigitalRiver will market the Company's software program through major retailers such as CompUSA, Wal-Mart, and other Internet software resellers. On June 30, 2000, the Company signed a master value added reseller agreement with Meridian Holdings, Inc., the parent company, to sell and support the MedMaster suite of software technology. Significant terms of this agreement are that Intercare will sell, support, implement the MedMaster Suite of software programs, in exchange for 40% of net sales proceeds, and 60% of recurrent revenue from software support and implementation. InterCare as a value-added reseller, develops, markets, provides professional services and supports for the MedMaster' - a clinically-focused, multi-disciplinary enterprise solution targeting a variety of large-scale healthcare organizations. These include: Integrated Healthcare Delivery Networks (IHDNs), hospitals, HMOs and large clinics. 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. Account Receivable The Company recognizes account receivable to the extent that revenues have been earned, and collections are reasonably assured. Inventory Inventories consists of purchased computer and software products, stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method of valuation. Property and Equipment Property and equipment is recorded at cost. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments are capitalized. When items of property are sold or retired, the related cost and accumulated depreciation is removed from the accounts and any resultant gain or loss is included in the results of operation. Capital assets are depreciated by the straight-line method over estimated useful lives of the related assets, normally five (5) to seven (7) years. 43 Property and equipment consists of the following as of December 31, 2000 and 1999:
2000 1999 ===== ===== Computer Hardware & Software $68,770 $56,967 Less: Accumulated Depreciation 59,125 56,714 ------- ------- $ 9,645 $ 253 ======== =======
Advertising The company has the policy of expensing advertising costs as incurred. There were no advertising costs charged to expense for the years ended December 31, 1999. However, in 2000 $11,700 of prepaid banner advertising from 1999 was charged to expense. Stock-based Compensation Non Employee Stock-based compensation plans are recorded at fair value measurement criteria as described in SFAS 123, "Accounting for Stock-Based Compensation", and EITF 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services" Employee Stock-based compensation plans are accounted for, using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock issued to Employees". Under this method, compensation cost is recognized based on the excess of the fair value at the grant dates for awards under those plans, as determined by the Company's officers and directors. Recognition of Revenues. Revenues from sale of software are recorded upon delivery and installation of software at customer sites. The company provides a limited amount of post-contract customer support (PCS) at no additional charge Pursuant to SOP 97-2, the value of the PCS component of any sale is estimated based on vendor specific evidence of fair value (i.e. catalogue price). Revenues in respect of the value of the PCS, are recognized as earned ratably over the PCS period (generally 90 days). The company provides software implementation and professional services for all its enterprise software sold to its clients on a contractual basis. Professional services are billed on either an hourly rate or flat rate basis, and revenues recognized ratably over the service period, or upon completion of related services. Reimbursable expenses incurred on behalf of the customer are billed to the customer, and credited against the applicable expense. The customer has the option to purchase an implementation services from the Company. Revenues from implementation services contracts are deferred and recognized as earned as services are performed in contracts with hourly billing terms; and as related services are performed or expiration of the terms of the contract in flat rate contracts. The customer has the option to purchase a maintenance contract from the Company. Revenues from maintenance component are deferred and brought recognized income ratably over the maintenance service period. Currently, there are no such contracts in existence. The Company's proposed maintenance charges as based on vendor specific evidence of fair value. Software Development Cost Software development costs are charged to current operations Fair Value of Financial Instruments and Concentration of Credit Risk. The carrying amounts of cash, receivables, prepaid banner advertisements fees by Meridian Holdings, Inc. (the parent company), accounts payables and accrued liabilities approximates fair value because of the immediate or short-term maturity of these financial instruments. Deferred Costs Related To Proposed Public Offering. Costs incurred in connection with the proposed public offering of common stock have been deferred and will be charged against capital if the offering is successful or against operations if it is unsuccessful. The estimated expenses of this offering in connection with the issuance and 44 distribution of the securities being registered, all of which are to be paid by the Registrant, excluding commissions and fees payable to the Escrow Agent and broker/dealers are as follows:
Registration Fee $ 6,600.00 Legal Fees and Expenses 13,000.00 Accounting Fees and Expenses 2,000.00 Printing 240.00 Miscellaneous Expenses 820.80 --------- Total $22,660.80 ==========
Income Taxes. The Company has made no provision for income taxes because of accumulated business and tax losses since its inception. Basic and Diluted Net Loss Per Common Share. In accordance with SFAS No. 128, "Computation of Earnings Per Share," basic Earnings/(loss) per share is computed by dividing the net earnings available to Common stockholders for the period by the weighted average number of common shares outstanding during the period. For purposes of computing the weighted average number of shares, all stock issued with regards to the founding of the Company is considered to be "cheap stock" as defined in SEC Staff Accounting Bulletin 4D and is therefore counted as outstanding for the entire period. Common equivalent shares, consisting of incremental common shares issuable upon the exercise of stock options and warrants are excluded from diluted earnings per share calculation if their effect is anti-dilutive. Recent Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" which was amended by SFAS No. 137. The Company is required to adopt this new standard in April 2001. SFAS No. 133 establishes methods of accounting for derivative financial instruments and hedging activities related to those instruments as well as other hedging activities. Because the Company currently holds no derivative financial instruments and does not currently engage in hedging activities, adoption of SFAS No. 133 is expected to have no material impact on the Company's financial condition or results of operations. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on Costs of Start-up Activities" ("SOP 98-5"), which is effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires that costs of start-up activities and organization costs be expensed as incurred. The adoption of SOP 98-5 had no material effect on the Company's financial position or results of operations. The Company adopted SFAS No. 130, "Reporting Comprehensive Income." For year-end financial statements, SFAS No. 130 requires that comprehensive income, which is the total of net income and all other non-owner changes in equity, be displayed in a financial statement with the same prominence as other consolidated financial statements. The Company displays the components of other comprehensive income in the accompanying statements of stockholders' equity and comprehensive income (loss). The Company has adopted SFAS No. 101, "Revenue Recognition." This rule stipulates that revenue be recognized when the purchase price for the product is fixed and determined between the seller and the buyer, and the collectibility is reasonably assured. This policy will not have a material impact on the companies financial position or results of operation. Note 3. RELATED PARTY TRANSACTIONS For the year ended December 31, 1999, Anthony C. Dike was issued a total of 1,000,000 shares of common stock for the year (adjusted for 100:1 Stock split) at $0.002 per share, as a form of payment for services rendered to the registrant. On March 14th, 2000, the board of directors and shareholders approved the 2000 Stock option plan. Anthony C. Dike, was granted option to purchase 250,000 shares of Common Stock, as per the 2000 Incentive Stock Option Plan. During the fiscal year ended December 31, 1999 the company issued 5,100,000 shares (adjusted for 100:1 stock split) to Meridian Holdings, Inc., an affiliated Company in exchange for the assumption of long term debt in the amount of $504,932 and cash contribution of $58,996, in addition to the sum of $11,700 representing the value of pre-paid banner advertisement and promotions of the registrants product on Meridian Holdings, Inc., operated websites. The fair value of the banner advertisement is based on a pricing schedule published 45 by Meridian Holdings, Inc. as of December 1999. In January 2000, the shareholders of Meridian Holdings, Inc, the parent Company, approved the employment of Mr. Russ Lyon as our President and Chief Technology Officer. The following are the significant terms of compensation package given to Mr. Russ Lyon, as the President and Chief Technology officer of InterCare.com-dx, Inc., by Meridian Holdings, Inc.: 1. Base salary is $100,000 per year for two years beginning January, 2000. 2. Executive shall be entitled to earn a bonus with respect to each year of the Term during which Executive is employed under the Employment Agreement up to $25,000 (prorated for partial years) based upon certain criteria being met, and at the discretion of the board of directors. As an additional element of compensation to Executive, in consideration of the services to be rendered hereunder, the PARENT COMPANY shall grant to Executive options to purchase 500,000 restricted shares of the PARENT COMPANY'S common stock, 150,000 of which shall have an exercise price equal to the fair market value of such stock on the date hereof, and the remaining 350,000 options which represents a signing bonus of 200,000 shares, and the first year option of 150,000 restricted shares of common stock shall have an exercise price of $0.50/share being the fair market value of Meridian Holdings, Inc. common stock as of the date of such grant. The terms and conditions of such options shall be governed by a Stock Option Agreement between the Company and Executive, as earlier filed in the 1999 proxy Statement of Meridian Holdings, Inc., incorporated herein by reference. As of this report, Mr. Lyon has not exercised his stock option or received any awards of grants. Mr. Lyon has not exercised any of his stock option as of this filing, nor has he received any bonus or other awards as per the terms of this agreement, since they will be determined at the end of the fiscal year 2000, and payable within 90 days after the end of the fiscal year if any, and whatever remains of this option will be reported in the year 2000 annual report of Meridian Holdings, Inc. Mr. Lyon's employment agreement is effective as of November 1, 1999 and compensation expense of $16,667 and $100,000 has been included in the 1999 and 2000 financial statements, respectively. During the year, InterCare.com-dx, Inc. (the company) sold software licenses to CGI Communications (a related party). Based on a prior agreement, the company is obligated to pay 60% of such sales to Meridian Holdings, Inc. (parent company). The applicable revenue and expense, and related accounts receivable and payable are included in the Income Statement and Balance Sheet as of December 31, 2000. Revenues from the sale and the related accounts receivable is $1,382,450, and the licensing expense (cost of product sold) and the related accounts payable is $829,470. Note 3. STOCK-BASED COMPENSATION Stock-based compensation plans are accounted for, using the intrinsic value Method Prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock issued To Employees". The following financial statements includes 1,000,000 shares of Common Stock (adjusted for 100:1 stock split) issued in 1999 to Anthony C. Dike as a form of payment for services. No additional Stock was granted for the period ended December 31, 2000, other than the option to purchase 250,000 shares of Common Stock of the Registrant, based on the 2000 stock option plan. The value of the common stock of the registrant was not determinable at the time of these issuance, and a value of $0.002 per share was used as the fair value of services rendered during the period. Because the amounts were considered immaterial, they were not reflected in the accompanying statements of Income and cashflows for the year ended December 31, 2000 or 1999. Note 4. MERIDIAN HOLDINGS, INC., ADVERTISEMENT PROGRAM Significant terms and conditions for pre-paid banner advertisement is that Meridian Holdings, Inc., through its Capnet Gateway Online Services will offer a 25,000 advertisement view at $225 per week to InterCare.com-dx,Inc. The advertisement banners will be prominently displayed at the top of each page the term of the agreement is for one year, and renews automatically unless the InterCare.com-dx, Inc., defaults in payment or Meridian at its own sole discretion decide to discontinue the said advertisement offering for any reason. As of December 31, 1999 prepaid advertising was recognized as a current asset. The entire amount ($11,700) was expensed during the year ended December 31, 2000. NOTE 5. LEGAL FEES The Company has agreed to pay its corporate attorney Mr. Scott Wellman Esq., who is also a stockholder of the Company, $5,000 cash for his legal services relative to the public offering upon the registration statement for the public offering becoming effective. 46 The Company has also agreed to payBryan Cave LLP, for its legal Services in connection with this offering as invoiced, which as of this writing is approximately $8,000. These obligation have been accrued in the accompanying balance sheet and the costs are included in deferred public offering costs. NOTE 6. SUBSEQUENT EVENTS PUBLIC OFFERING OF COMMON STOCK On December 31, 1999, the Board of Directors authorized the Company to sell in a public offering of 2,500,000 shares of common stock pursuant to an effective registration statement on Form SB-2 filed under the Securities Act of 1933. Each share shall have a purchase price of $5.00. On March 23, 2001, the number of shares offered to be sold to the public was increased by the Registrant to 5,000,000 and the offering price was decreased to $5 per share. Proceeds from the public offering shall be for working capital and general corporate purposes. AGREEMENT WITH CHINA BUSINESS CHAIN GROUP, LLC. On March 10, 2001, the Registrant signed an exclusive reseller agreement with China Business Chain Group, LLC, (CBCG) to market the MedMaster Suite of software application in China. Under the terms of the agreement, CBCG will purchase up to US $5 million in units of the Chinese version of the MedMaster suite in order to retain exclusive distribution rights to China. CBCG will work as an integrator, interfacing with other third-party Chinese healthcare applications. For this purpose, InterCare has agreed to license the MedMaster software on reasonable and cooperatively-priced terms. As a result of the multi-language functionality of the MedMaster software, InterCare anticipates that it will be relatively simple to make a Chinese version available to CBCG. 47 Intercare.com-dx, Inc. Supplemental unaudited Financial Statement for the Period Ended June 30, 2001 INDEX PAGE ---- PART I. FINANCIAL INFORMATION Balance Sheets - June 30, 2001 49 Statements of Operations for the Three Months ended June 30, 2001 50 Statement of Cash Flows for the Three Months ended June 30, 2001 51 Notes to Financial Statements 52-53 48 INTERCARE.COM-DX, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
Balance Sheet As At June 30, 2001 2000 ====== ====== ASSETS Current assets Cash $ 5,512 $ 1,232 Accounts Receivable (Note 1 ) 1,385,850 - Less: Allow for Doubtful Accounts 0 - Inventories 302,211 83,339 Prepaid Expenses (50) 11,770 --------- ------ Total Current Assets.. . . . . . . . . . . . . . . . 1,693,523 96,271 --------- ------ Property, Plant, and Equipment Net Accumulated Depreciation (Note 1). . . . . . 9,070 11,406 Other Assets Cash Advance 500 - Deferred Public Offering Costs 34,836 13,000 ---------- -------- Total Assets 1,737,929 120,677 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts Payable (Note 1) . . . . . . . . . . . . . 1,514,302 161,171 --------- -------- Total Current Liabilities . . . . . . . 1,514,302 161,171 --------- -------- Long term liabilities . . . . . .. . . . . 13,500 0 --------- -------- Total Liabilities . . . . . . . . . . . 1,527,802 161,171 --------- -------- Liabilities and Stockholders' Equity Stockholders' Equity Common stock (100,000,000 shares authorized no par value ; 12,230,902 shares issued and Outstanding) (Note 2) . . . . . . . . . . . . . 650,628 650,628 Retained Earnings (187,099) (554,292) Accumulated Deficit (253,402) (136,829) ---------- ---------- Total Stockholders' Equity . . . . . . . 210,127 (40,494) ---------- --------- Total Liabilities & Equity. . . . . . . . . . . . $ 1,737,929 $120,677 ========== =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 49 INTERCARE.COM-DX, INC. Consolidated Statement - Unaudited STATEMENT OF OPERATIONS
For the Six Months ended June 30, 2001 2000 ====== ===== Revenues . . . . . . . . $ 334,199 $ 0 Less: Cost of Revenues . (126,897) 0 --------- ------- Gross Margin . 207,302 0 Operating Expense. . . . 462,321 137,765 Other Income and Expense 1,617 (936) ---------- -------- Net Income . . $ (253,402) $(136,829) ========= ======== Weighted average number of shares 12,230,902 11,000,000 $ (0.02) $ (0.000)
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 50 INTERCARE.COM-DX, INC. STATEMENT OF CASH FLOW UNAUDITED
For the Three Months ended June 30, 2001 2000 ==== ==== CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss). . . . . . . . . . . . . . . $ (253,402) $(136,829) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation Expense 2,986 - (Increase) Decrease in Accounts receivables . . . . . . . . . . . . . 3,834 132 Inventories. . . . . . . . . . . . . . . . . . (235,540) - Prepaid Expenses . . . . . . . . . . . . . . . 50 - Increase(Decrease) in Accounts Payables. . . . . . . . . . . . . . . 495,012 161,219 -------- -------- NETCASH USED IN OPERATING ACTIVITIES . . . . . . . . 12,940 24,521 CASH FLOW FROM INVESTING ACTIVITIES Deferred Public Offering . . . . . . . . . . . - (13,000) Acquisition of Fixed Assets. . . . . . . . . . (2,411) (11,153) --------- --------- NET CASH USED IN INVESTING ACTIVITES . . . . . . . . (2,411) (24,153) CASH FLOW FROM FINANCING ACTIVITIES Loan From MH . . . . . . . . . . . . . . . . 13,500 - Repayment of debt . . . . . . . . . . . . . . . (21,836) - Proceeds from long term debt. . . . . . . . . . 358 - -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . (7,978) 0 Increase (Decrease) in cash . . . . . . . . . . 2,551 368 CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . 2,961 864 ----------- ---------- CASH AT END OF PERIOD. . . . . . . . . . . . . . . . $ 5,512 $ 1,231 =========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 51 The accompanying notes are an integral part of this statement. InterCare.com-dx, Inc. Notes to the Financial Statements Note 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES InterCare.com-dx, Inc. formerly known as Inter-Care Diagnostics, Inc., is organized in the State of California to pursue bio-medical software development, as well as Internet based healthcare transactions, contents and programs development. The Company was originally incorporated in 1991 for the purpose of operating a medical diagnostics laboratory and engaging in various medical services to clients. On June 30, 2000, the Company signed a master value added reseller agreement with Meridian Holdings, Inc., the parent company, to sell and support the now discontinued MedMaster suite of software technology. Significant terms of this agreement are that Intercare will sell, support, implement the MedMaster Suite of software programs, in exchange for 40% of net sales proceeds, and 60% of recurrent revenue from software support and implementation. On June 30, 2001, the company discontinued its sale of Medmaster software at the request of Meridian Holings, Inc., and instead embarked upon a joint development effort with Meridian Holdings, Inc., for a new replacement software known as ICE(tm)(InterCare Clinical Explorer), that is scheduled to be released in the third quarter of 2001. 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. Account Receivable The Company recognizes account receivable to the extent that revenues have been earned, and collections are reasonably assured. Inventory Inventories consists of purchased computer and software products, stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method of valuation. Property and Equipment Property and equipment is recorded at cost. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments are capitalized. When items of property are sold or retired, the related cost and accumulated depreciation is removed from the accounts and any resultant gain or loss is included in the results of operation. Capital assets are depreciated by the straight-line method over estimated useful lives of the related assets, normally five (5) to seven (7) years. Property and equipment consists of the following as of June 30, 2001 and 2000:
2001 2000 ===== ===== Computer Hardware & Software $68,770 $68.120 Less: Accumulated Depreciation 59,700 56,714 ------- ------- $ 9,070 $11,406 ======== =======
Advertising The company has the policy of expensing advertising costs as incurred. There were no advertising costs charged to expense for the quarter ended June 30, 2001. Stock-based Compensation Non Employee Stock-based compensation plans are recorded at fair value measurement criteria as described in SFAS 123, "Accounting for Stock-Based Compensation", and EITF 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services" 52 Employee Stock-based compensation plans are accounted for, using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock issued to Employees". Under this method, compensation cost is recognized based on the excess of the fair value at the grant dates for awards under those plans, as determined by the Company's officers and directors. Recognition of Revenues. Revenues from sale of software are recorded upon delivery and installation of software at customer sites. The company provides a limited amount of post-contract customer support (PCS) at no additional charge Pursuant to SOP 97-2, the value of the PCS component of any sale is estimated based on vendor specific evidence of fair value (i.e. catalogue price). Revenues in respect of the value of the PCS, are recognized as earned ratably over the PCS period (generally 90 days). The company provides software implementation and professional services for all its enterprise software sold to its clients on a contractual basis. Professional services are billed on either an hourly rate or flat rate basis, and revenues recognized ratably over the service period, or upon completion of related services. Reimbursable expenses incurred on behalf of the customer are billed to the customer, and credited against the applicable expense. The customer has the option to purchase an implementation services from the Company. Revenues from implementation services contracts are deferred and recognized as earned as services are performed in contracts with hourly billing terms; and as related services are performed or expiration of the terms of the contract in flat rate contracts. The customer has the option to purchase a maintenance contract from the Company. Revenues from maintenance component are deferred and brought recognized income ratably over the maintenance service period. Currently, there are no such contracts in existence. The Company's proposed maintenance charges as based on vendor specific evidence of fair value. Software Development Cost Software development costs are charged to current operations Fair Value of Financial Instruments and Concentration of Credit Risk. The carrying amounts of cash, receivables, prepaid banner advertisements fees by Meridian Holdings, Inc. (the parent company), accounts payables and accrued liabilities approximates fair value because of the immediate or short-term maturity of these financial instruments. 7 Deferred Costs Related To Proposed Public Offering. Costs incurred in connection with the proposed public offering of common stock have been deferred and will be charged against capital if the offering is successful or against operations if it is unsuccessful. The estimated expenses of this offering in connection with the issuance and distribution of the securities being registered, all of which are to be paid by the Registrant, excluding commissions and fees payable to the Escrow Agent and broker/dealers are as follows:
Registration Fee $ 6,600.00 Legal Fees and Expenses 19,580.00 Accounting Fees and Expenses 2,000.00 Printing 3,785.00 Miscellaneous Expenses 2,871.00 --------- Total $34,836.00 ==========
Basic and Diluted Net Loss Per Common Share. In accordance with SFAS No. 128, "Computation of Earnings Per Share," basic Earnings/(loss) per share is computed by dividing the net earnings available to Common stockholders for the period by the weighted average number of common shares outstanding during the period. For purposes of computing the weighted average number of shares, all stock issued with regards to the founding of the Company is considered to be "cheap stock" as defined in SEC Staff Accounting Bulletin 4D and is therefore counted as outstanding for the entire period. Common equivalent shares, consisting of incremental common shares issuable upon 53 the exercise of stock options and warrants are excluded from diluted earnings per share calculation if their effect is anti-dilutive. Note 2. RELATED PARTY TRANSACTIONS Mr. Russ Lyon recently waived his rights to exercise said option during the first quarter of 2001, in lieu of 200,000 shares of the registrant at zero par value, to be issued upon the effectiveness of the registrants registration statement. The shares will be issued pro-rata to the two years of the employment agreement. NOTE 3. SUBSEQUENT EVENTS Software Developers Agreement with QRS Diagnostics, LLC. On June 26, 2001, the registrant entered into a software developers agreement with QRS Diagnostics, LLC, a Minnesota Corporation. Under the terms of the agreement, QRS grants a non-exclusive, non-transferable license to the registrant to use the Software Developers Kit (SDK) delivered under this Agreement in accordance with the terms and conditions herein, which includes interfacing the software into the registrant next generation of clinical documentation and data acquisition software program known as ICE (InterCare Clinical Explorer). All copies of the SDK shall be the sole and exclusive property of QRS. On June 30, 2001, the company discontinued its sale of Medmaster software at the request of Meridian Holings, Inc., and instead embarked upon a joint development effort with Meridian Holdings, Inc., for a new replacement software known as ICE(tm)(InterCare Clinical Explorer), that is scheduled to be released in the third quarter of 2001. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. California Corporate Code allows us to indemnify our officers, directors and any corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. Our Articles of Incorporation and our bylaws provide for indemnification of our directors, officers, employees and other agents to the extent and under the circumstances permitted by California law. We may enter into agreements with our directors and executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors and executive officers to the fullest extent permitted by California law. We have also purchased directors and officers liability insurance, which provides coverage against certain liabilities including liabilities under the Securities Act. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses of this offering in connection with the issuance and distribution of the securities being registered, all of which are to be paid by the Registrant, excluding commissions and fees payable to the Escrow Agent and broker/dealers are as follows:
Registration Fee $ 6,600.00 Legal Fees and Expenses 19,580.00 Accounting Fees and Expenses 2,000.00 Printing 3,785.00 Miscellaneous Expenses 2,871.00 --------- Total $34,836.00 ==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. (a) The following is a summary of our transactions during the last nine years preceding the date hereof involving sales of our securities that were not registered under the Securities Act. In December 1991, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1991, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2001. In December 1992, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1992, the Chairman was granted 54 options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2002. In December 1993, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1993, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2003. In December 1994, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1994, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2004. In December 1995, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1995, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2005. In December 1996, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1996, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2006. In December 1997, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1997, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2007. In December 1998, the Board of Directors authorized the issuance of 500,000 shares common stock (adjusted for 100:1 stock split) to Anthony C. Dike, our Chairman for services rendered. Also in December 1998, the Chairman was granted options to purchase additional 500,000 shares of our common stock (adjusted for 100:1 stock split), exercisable until December 2008. In December 10, 1999, the Board of Directors authorized the issuance of 1,000,000 shares to Anthony C. Dike, our Chairman for services rendered. No options were granted during this period. On March 14th, 2000, the board of directors and shareholders approved the 2000 Stock option plan. Anthony C. Dike, our Chairman was granted option to purchase 250,000 shares of Common Stock, as per the 2000 Incentive Stock Option Plan. This issuance of these securities was made in reliance on the exemption provided by Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving any public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. Also, in February 1991, the Board of Directors authorized the issuance of 900,000 shares of common stock to MMG Investments, Inc., in consideration for an aggregate of $75,000 equity investment in the Company. Based upon the Registrant's familiarity with the investor, the Registrant determined the investor had such knowledge and experience in financial and business matters as to enable the investor to evaluate the merits and risks of the investment. This issuance and sale of these securities was made in reliance on the exemption provided by Section 4(2) of the Securities Act as a transaction not involving any public offering. During the fiscal year ended December 31, 1999 the company issued 5,100,000 shares (adjusted for 100:1 stock split) to Meridian Holdings, Inc., an affiliated Company in exchange for the assumption of long term debt in the amount of $504,932 and cash contribution of $58,996, in addition to the sum of $11,700 representing the value of pre-paid banner advertisement and promotions of the registrants product on Meridian Holdings, Inc., operated websites The fair value of the banner advertisement is based on a pricing schedule published by Meridian Holdings, Inc. as of December 1999. Mr. Russ Lyon recently waived his rights to exercise its Meridian Holdings, Inc, Stock Option during the first quarter of 2001, in lieu of 200,000 shares of the registrant at zero par value, to be issued upon the effectiveness of the registrants registration statement. The shares will be issued pro-rata to the two years of the employment agreement. Also, during the first quarter of 2001, the registrant issued a total of 1,230,902 common shares at 0.0 par value to its employees and various entities as part of the 2000 incentive stock option plan and stock based compensation program. Based upon the Registrant's familiarity with the investor, the Registrant determined the investor had such knowledge and experience in financial and business matters as to enable the investor to evaluate the merits and risks of the investment. This issuance and sale of these securities was made in 55 reliance on the exemption provided by Section 4(2) of the Securities Act as a transaction not involving any public offering. Total shares issued and outstanding was 100,000 as of December 7, 1999. On December 10, 1999, the Company's authorized capital stock was increased and a 1 to 100 forward stock split was effected by an amendment of Article IV of the Company's Articles of Incorporation approved by the Board of Directors. Pursuant to the stock split, the outstanding shares of the common stock of the Company was increased from 100,000 to 100,000,000 and such shares were distributed to all the current shareholders of InterCare.com, Inc. pursuant to a stock dividend distribution approved by the Board of Directors The sales and issuances of securities in the transactions described above were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder or rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving any public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under rule 701. The recipients of securities in each transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in such transactions. All recipients had adequate access, through their relationship with us to information about us. (b) There were no underwritten offerings employed in connection with any of the transactions set forth in Item 26(a). ITEM 27. EXHIBITS. The following exhibits are filed with this Registration Statement:
Number Description 1.0 Form 8-A (*) 3.1 Articles of Incorporation as amended(*) 3.2 Bylaws as amended (*) 4.1 Specimen Common Stock Certificate (*) 5.1 Opinion Regarding Legality(*) 23.2 Consent of Expert (*) 23.3 Power of Attorney (*) 24.2 Form of Electronic Commerce Agreement with NetSales, as amended (*) 24.3 Form of Telecom Services Agreement with CGI Communications, Services, Inc.(*) 24.4 Form of Stock Option Plan(*) 24.5 Form of Stock Option Agreement(*) 24.6 Form of Technology Commercialization Plan submitted to NASA (filed in paper) 24.7 Form of Copyright Certificate for the Mirage Systems () Biofeedback Interface Form TX issued by the United States Copyright Office (filed in paper) 24.8 Form of United States Food and Drug Administration 510K approval of Mirage Systems Biofeedback Interface (software only to be used solely for relaxation training) (filed in paper.) 24.9 Form of Electronic Commerce agreement between Digital River Corporation and InterCare.com (filed in paper.) 24.10 Picture of the initial mold of the Physiological Monitoring device to be developed by the Company (filed in paper) 24.13 Form of Escrow Agreement (*) 24.14 Form of Escrow Fee Agreement (*) 24.15 Form of Subscription Agreement 25.1 Written Consent of the Board of Directors of Meridian Holdings, Inc. approving the dividend stock distribution.(*) 25.2 Written Consent of the Board of Directors of InterCare.com-dx, Inc. approving the dividend stock distribution.(*) 26.1 Master Value Added Reseller agreement between the registrant and Meridian Holdings, Inc.(*) 26.2 MedMaster Re-marketing and System Integration Agreement(*) 26.3 Teaming And Joint Marketing Agreement with United Information Systems, Inc. 26.4 Teaming And Joint Marketing Agreement with HealthCPR Technologies, Inc. 26.5 Reseller Agreement with China Business Chain Group, LLC. 27.1 Financial Data Schedule (*) ------------------------------ (*) Filed herewith.
ITEM 28. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by section 10(a)(3) of the Securities Act; 56 Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) Include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as express in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication such issue. (5) For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. (6) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities. SIGNATURES In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned in the City of Los Angeles, State of California on the 27 day of August 2001. INTERCARE.COM-DX, INC. (Registrant) By:/s/ Anthony C. Dike __________________________ Anthony C. Dike Chairman and Chief Executive Officer POWER OF ATTORNEY The Registrant and each person whose signature appears below hereby appoints Anthony C. Dike as their attorney-in-fact, with full power to act alone, to sign in the name and in behalf of the Registrant and any such person, individually and in each capacity stated below, any and all amendments, including post-effective amendments, to this Registration Statement. In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities indicated on the 27 day of August 2001: /s/ Anthony C. Dike _______________________________ Anthony C. Dike, Chairman, Director, Chief Executive Officer /s/ Russell Lyons _______________________________ Russell Lyons, President, Director, Chief Technology Officer 57 /s/ Philip Falase ______________________________ Philip Falase, Chief Financial Officer, Director Item 1. Description of Registrant's Securities to be Registered. The information contained in "Description of Capital Stock" in the Registrant's Registration Statement on Form SB-2/A above, is hereby Incorporated by reference. Item 2. Exhibits. The following exhibits are filed as part of this Registration Statement: 1. Articles of Incorporation of InterCare.com, Inc. a California corporation, as amended to date, incorporated by reference to Exhibit 3.1 to the Registrant's Form SB-2/A Registration Statement. 2. Bylaws of InterCare.com, a California corporation incorporated by reference to Exhibit 3.3 to the Registrant's Form SB-2/A Registration Statement 3. OPINION RE LEGALITY 4. CONSENT OF INDEPENDENT ACCOUNTANT 5. Written Consent of Board of Directors of Meridian Holdings, Inc., approving the dividend stock distribution. SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized. InterCare.com, Inc. Date: August 27, 2001 By: /s/ Anthony C. Dike ___________________________________ Anthony C. Dike, Secretary Chairman, Chief Executive Officer 58 EX-3.1 ARTICLES OF INCORPORATION I The name of this corporation is MONET MEDICAL TESTING, INC. II The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporation Code. III The name and address in the State of California of this Corporation's initial agent for service of process is: NAME: Anthony DIKE STREET Address: 1601 Centinela Avenue Suite 5 City: Inglewood State: California ZIP 90302 IV This corporation is authorized to issue only one class of shares of stock; and the total number of shares of which this corporation is authorized to issue is 100,000 (ONE HUNDRED THOUSAND) /S/ Anthony C. Dike __________________________________ Anthony C. Dike, CEO; Secretary AND AMENDED ARTICLES OF INCORPORATION OF MONET MEDICAL TESTING, INC. ANTHONY DIKE AND DR. RAWSON certify 1. They constitute a majority of the directors of MONET MEDICAL TESTING, INC., a California corporation. 2. They hereby adopt the following amendment of the Articles of Incorporation of this corporation: Article I is amended to read as follows: "The name of this corporation is INTER-CARE DIAGNOSTIC, INC. 3. No directors were named in the original articles of incorporation of the above-named corporation and Two (2) have been elected. 4. The corporation has issued no shares. Each of the undersigned declares under penalty of perjury under the laws of the state of California that the matters set forth in this certificate are true and correct of our own knowledge. Executed this 19th day of April 1991, at Los Angeles, California. /s/ Anthony C. Dike _____________________________________ Anthony C. Dike Chairman/CEO, Director /s/ DR RAWSON ______________________________________ DR RAWSON Director 59 AMENDED ARTICLES OF INCORPORATION OF INTER-CARE DIAGNOSTICS, INC. The undersigned certifies that: 1. He is the president and secretary, respectively, of Inter-Care Diagnostic, Inc., a California corporation. 2. Article Four of the Articles of Incorporation of this corporation is amended to read as follows: The corporation is authorized to issue two classes of shares of stock designated "Common Stock" and "Preferred Stock," respectively. The total number of shares of stock which this corporation shall have authority to issue is one hundred twenty million (120,000,000) shares, consisting of one hundred million (100,000,000) shares of Common Stock, and twenty million (20,000,000) shares of Preferred Stock. The Preferred Stock may be divided into such number of series as the Board of Directors may determine. The Board of Directors is authorized to fix the number of shares of any series of Preferred Shares and to determine the designation of any such series. The Board of Directors is also authorized to determine or alter the powers, preferences, rights, qualifications, limitations and restrictions granted to or imposed upon any wholly unissued series of Preferred Shares and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series. 3. The foregoing amendments of the Articles of Incorporation have been duly approved by the board of directors. 4. The foregoing amendments of the Articles of Incorporation have been duly approved by the required vote of the shareholders in accordance with Section 902, California Corporations Code. The total number of outstanding shares of the corporation is one hundred thousand (100,000). The number of shares of voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50 percent. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Date: December __, 1999 /s/ Anthony C. Dike ---------------------- Anthony C. Dike, President and Secretary 60 AMENDED ARTICLES OF INCORPORATION OF Inter-Care Diagnostics, Inc. Corporate No 1492927 The undersigned certifies that: 1. He is the president and secretary, respectively, of Inter-Care Diagnostics, Inc.,(Corporate No. 1492927) a California corporation. 2. Article One of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is InterCare.com-dx, Inc." 3. The foregoing amendments of the Articles of Incorporation have been duly approved by the board of directors. 4. The foregoing amendments of the Articles of Incorporation have been duly approved by the required vote of the shareholders in accordance with section 902, California Corporations Code. The total numbers of outstanding shares of the corporation is ten million (10,000,000). The numbers of shares of voting in favor of the amendment equaled or exceeded the vote required. The percentage of vote required was more than 50 percent. We further declare under the penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our knowledge. April 25, 2000 /s/ Anthony C. Dike DATE:______________________ __________________________ Anthony C. Dike, President and Secretary 61 EX 3.2 Bylaws BYLAWS ------ for the regulation, except as otherwise provided by statute or the Articles of Incorporation, of Intercare Diagnostics, Inc. GENERAL PROVISIONS Principal Executive Office. The Board of Directors shall designate the location - -------------------------- of the principal executive office of the corporation at any place within or without the State of California. The Board of Directors shall have the power to change the principal executive office to another location and may designate and locate one or more subsidiary offices within or without the State of California. Number of Directors. The number of directors of the corporation shall be two - --------------------- (2) until changed by a bylaw amending this Section 1.2 duly adopted by the vote or written consent of a majority of the outstanding shares entitled to vote; provided, however, that a bylaw reducing the number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the case of action by written consent are equal to more than 16-2/3 percent of the outstanding shares entitled to vote. Name. The name of the corporation shall be "Intercare Diagnostics, Inc." The corporation shall be authorized to do business under any fictitious business name, or variation of its legal name, as the Board of Directors may choose from time to time. SHARES AND SHAREHOLDERS Meetings of Shareholders. - -------------------------- Place of Meetings. Meetings of shareholders shall be held at any place within - ------------------- or without the State of California designated by the Board of Directors. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the corporation. Annual Meetings. An annual meeting of the shareholders of the corporation shall - ---------------- be held on such date and at such time as shall be designated by the Board of Directors. Should said day fall upon a legal holiday, the annual meeting of shareholders shall be held at the same time on the next day thereafter ensuing which is a full business day. At each annual meeting directs shall be elected, and any other proper business may be transacted. Special Meetings. Special meetings of the shareholders may be called by the - ----------------- Board of Directors, the chairman of the board, the president, or by the holders of shares entitled to cast not less than 10 percent of the votes at the meeting. Upon request in writing to the chairman of the board, the president, any vice president or the secretary by any person (other than the board) entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the persons entitled to call the meeting may give the notice. Notice of Meetings. Notice of any shareholders' meeting shall be given not less - ------------------ than 10 nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the giving of the notice, intends to present for action by the shareholders. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election. If action is proposed to be taken at any meeting, which action is within Sections 310, 902, 1201, 1900 or 2007 of the General Corporation Law of the State of California, the notice shall also state the general nature of that proposal. Notice of a shareholders' meeting shall be given either personally or by first-class mail, or other means of written communication, charges prepaid, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice. 62 Adjourned Meeting and Notice Thereof. Any meeting of shareholders may be - ---------------------------------------- adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy whether or not a quorum is present. When a shareholders' meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. However, if the adjournment is for more than 45 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Waiver of Notice. The transactions of any meeting of shareholders, however - ------------------ called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of subparagraph (d) of Section 2.1 of this Article II, the waiver of notice or consent shall state the general nature of the proposal. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Quorum. The presence in person or by proxy of the persons entitled to vote a - ------ majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. If a quorum is present, the affirmative vote of the majority of the shares represented and voting at the meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation of the corporation. The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, provided that any action taken (other than adjournment) must be approved by at least a majority of the shares required to constitute a quorum. Action Without a Meeting. Any action which may be taken at any annual or - --------------------------- special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Notwithstanding the foregoing, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors, except as provided by Section 3.4 hereof. Where the approval of shareholders is given without a meeting by less than unanimous written consent, unless the consents of all shareholders entitled to vote have been solicited in writing, the secretary shall give prompt notice of the corporate action approved by the shareholders without a meeting. In the case of approval of transactions pursuant to Section 310, 317, 1201 or 2007 of the General Corporation Law of the State of California, the notice shall be given at least 10 days before the consummation of any action authorized by that approval. Such notice shall be given in the same manner as notice of shareholders' meeting. Voting of Shares. - ------------------ In General. Except as otherwise provided in the Articles of Incorporation and subject to subparagraph (b) hereof, each outstanding share, regardless of class, shall be entitled to one (1) vote on each matter submitted to a vote of shareholders. Cumulative Voting. At any election of directors, every shareholder complying - ------------------ with this paragraph (b) and entitled to vote may cumulate his or her votes and give one (1) candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes on the same principle among as many candidates as the shareholder thinks fit. No shareholder shall be entitled to cumulate votes (i.e., cast for any one (1) or more candidates a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one (1) shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination. In any election of directors, the candidates receiving the highest number of affirmative votes up to the number of directors to be elected by such shares are elected; votes against a director and votes withheld shall have no legal effect. Election by Ballot. Elections for directors need not be by ballot unless a - -------------------- shareholder demands election by ballot at the meeting and before the voting begins. 63 Proxies. Every person entitled to vote shares may authorize another person or - ------- persons to act by proxy with respect to such shares. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise herein provided. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of the California General Corporation Law. Inspectors of Election. - ------------------------ Appointment. In advance of any meeting of shareholders the Board may appoint - ----------- inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one (1) or three (3). If appointed at a meeting on the request of one (1) or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors are to be appointed. Duties. The inspectors of election shall determine the number of shares - ------ outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. Record Date. In order that the corporation may determine the shareholders - ------------ entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action. If no record date is fixed: The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given. The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting, but the board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles of Incorporation or by agreement or in the California General Corporation Law. Share Certificates. - ------------------- In General. The corporation shall issue a certificate or certificates representing shares of its capital stock. Each certificate so issued shall be signed in the name of the corporation by the chairman or vice chairman of the board or the president or a vice president and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, shall state the name of the record owner thereof and shall certify the number of shares and the class or series of shares represented thereby. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a 64 certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. Two or More Classes or Series. If the shares of the corporation are classified - ------------------------------ or if any class of shares has two or more series, there shall appear on the certificate one (1) of the following: A statement of the rights, preferences, privileges, and restrictions granted to or imposed upon the respective classes or series of shares authorized to be issued and upon the holders thereof; or A summary of such rights, preferences, privileges and restrictions with reference to the provisions of the Articles of Incorporation and any certificates of determination establishing the same; or A statement setting forth the office or agency of the corporation from which shareholders may obtain upon request and without charge, a copy of the statement referred to in subparagraph (1). Special Restrictions. There shall also appear on the certificate (unless stated - -------------------- or summarized under subparagraph (1) or (2) of subparagraph (b) above) the statements required by all of the following clauses to the extent applicable: The fact that the shares are subject to restrictions upon transfer. If the shares are assessable, a statement that they are assessable. If the shares are not fully paid, a statement of the total consideration to be paid therefor and the amount paid thereon. The fact that the shares are subject to a voting agreement or an irrevocable proxy or restrictions upon voting rights contractually imposed by the corporation. The fact that the shares are redeemable. The fact that the shares are convertible and the period for conversion. Transfer of Certificates. Where a certificate for shares is presented to the - -------------------------- corporation or its transfer clerk or transfer agent with a request to register a - -- transfer of shares, the corporation shall register the transfer, cancel the certificate presented, and issue a new certificate if: (a) the security is endorsed by the appropriate person or persons; (b) reasonable assurance is given that those endorsements are genuine and effective; (c) the corporation has no notice of adverse claims or has discharged any duty to inquire into such adverse claims; (d) any applicable law relating to the collection of taxes has been complied with; (e) the transfer is not in violation of any federal or state securities law; and (f) the transfer is in compliance with any applicable agreement governing the transfer of the shares. Lost Certificates. Where a certificate has been lost, destroyed or wrongfully - ------------------ taken, the corporation shall issue a new certificate in place of the original if the owner: (a) so requests before the corporation has notice that the certificate has been acquired by a bona fide purchaser; (b) files with the corporation a sufficient indemnity bond, if so requested by the Board of Directors; and (c) satisfies any other reasonable requirements as may be imposed by the Board. Except as above provided, no new certificate for shares shall be issued in lieu of an old certificate unless the corporation is ordered to do so by a court in the judgment in an action brought under Section 419(b) of the California General Corporation Law. DIRECTORS Powers. Subject to the provisions of the California General Corporation Law and - ------ the Articles of Incorporation, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operations of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Committees of the Board. The Board may, by resolution adopted by a majority of - ------------------------ the authorized number of directors, designate one (1) or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any such committee, to the extent provided in the resolution of the Board, shall have all the authority of the Board, except with respect to: The approval of any action which also requires, under the California General Corporation Law, shareholders' approval or approval of the outstanding shares; The filling of vacancies on the Board or in any committee. The fixing of compensation of the directors for serving on the Board or on any committee. The amendment or repeal of bylaws or the adoption of new bylaws. The amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable. A distribution (within the meaning of the California General Corporation Law) to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the Board. 65 The appointment of other committees of the Board or the members thereof. Election and Term of Office. The directors shall be elected at each annual - ------------------------------- meeting of shareholders but, if any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. Vacancies. Except for a vacancy created by the removal of a director, vacancies - --------- on the Board may be filled by approval of the Board or, if the number of directors then in office is less than a quorum, by (a) the unanimous written consent of the directors then in office, (b) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice under the California General Corporation Law, or (c) a sole remaining director. The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent requires the consent of a majority of the outstanding shares entitled to vote. The Board of Directors shall have the power to declare vacant the office of a director who has been declared of unsound mind by an order of court, or convicted of a felony. Removal. Any or all of the directors may be removed without cause if such - ------- removal is approved by the vote of a majority of the outstanding shares entitled to vote, except that no director may be removed (unless the entire board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected. Resignation. Any director may resign effective upon giving written notice to - ----------- the chairman of the board, the president, the secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Meetings of the Board of Directors and Committees. - -------------------------------------------------------- Regular Meetings. Regular meetings of the Board of Directors may be held - ----------------- without notice at such time and place within or without the State as may be designated from time to time by resolution of the Board or by written consent of all members of the Board or in these bylaws. Organization Meeting. Immediately following each annual meeting of shareholders - -------------------- the Board of Directors shall hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of such meetings is hereby dispensed with. Special Meetings. Special meetings of the Board of Directors for any purpose or - ---------------- purposes may be called at any time by the chairman of the board or the president or, by any vice president or the secretary or any two directors. Notices; Waivers. Special meetings shall be held upon four (4) days' notice by - ----------------- mail or forty-eight (48) hours' notice delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail, or other electronic means. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Adjournment. A majority of the directors present, whether or not a quorum is - ----------- present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of such adjournment to another time and place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of adjournment. Place of Meeting. Meetings of the Board may be held at any place within or - ------------------ without the state which has been designated in the notice of the meeting or, if not stated in the notice or there is no notice, then such meeting shall be held at the principal executive office of the corporation, or such other place designated by resolution of the Board. Presence by Conference Telephone Call. Members of the Board may participate in - -------------------------------------- a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. 66 Quorum. A majority of the authorized number of directors constitutes a quorum - ------ of the Board for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Action Without Meeting. Any action required or permitted to be taken by the - ------------------------ Board of Directors may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Committee Meetings. The provisions of Sections 3.7 and 3.8 of these bylaws - ------------------- apply also to committees of the Board and action by such committees, mutatis mutandis. OFFICERS Officers. The officers of the corporation shall consist of a chairman of the - -------- board or a president, or both, a secretary, a chief financial officer, and such additional officers as may be elected or appointed in accordance with Section 4.3 of these bylaws and as may be necessary to enable the corporation to sign instruments and share certificates. Any number of offices may be held by the same person. Elections. All officers of the corporation, except such officers as may be - --------- otherwise appointed in accordance with Section 4.3, shall be chosen by the Board of Directors, and shall serve at the pleasure of the Board of Directors, subject to the rights, if any, of an officer under any contract of employment. Other Officers. The Board of Directors, the chairman of the board, or the - --------------- president at their or his discretion, may appoint one (1) or more vice presidents, one (1) or more assistant secretaries, a treasurer, one (1) or more assistant treasurers, or such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as the Board of Directors, the chairman of the board, or the president, as the case may be, may from time to time determine. Removal. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board of Directors, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors, without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Resignation. Any officer may resign at any time by giving written notice to the - ----------- Board of Directors or to the president, or to the secretary of the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Vacancies. A vacancy in any office because of death, resignation, removal, - --------- disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to such office. Chairman of the Board. The chairman of the board, if there shall be such an - ------------------------ officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors. If there is no president, the chairman of the board shall in addition be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 4.8 below. President. Subject to such supervisory powers, if any, as may be given by the - --------- Board of Directors to the chairman of the board, if there be such an officer, the president shall __ be general manager and chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and affairs of the corporation. He shall preside at all meetings of the shareholders and, in the absence of the chairman of the board, or if there be none, at all meetings of the Board of Directors. He shall be ex-officio a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws. Vice President. In the absence of the president or in the event of the - --------------- president's inability or refusal to act, the vice president, or in the event there be more than one (1) vice president, the vice president designated by the Board of Directors, or if no such designation is made, in order of their election, shall perform the duties of president and when so acting, shall have 67 all the powers of and be subject to all the restrictions upon the president. Any vice president shall perform such other duties as from time to time may be assigned to such vice president by the president or the Board of Directors. Secretary. The secretary shall keep or cause to be kept the minutes of - --------- proceedings and record of shareholders, as provided for and in accordance with Section 5.1(a) of these bylaws. The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by these bylaws or by law to be given, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. Chief Financial Officer. The chief financial officer shall have general - ------------------------- supervision, direction and control of the financial affairs of the corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws. In the absence of a named treasurer, the chief financial officer shall also have the powers and duties of the treasurer as hereinafter set forth and shall be authorized and empowered to sign as treasurer in any case where such officer's signature is required. Treasurer. The treasurer shall keep or cause to be kept the books and records - --------- of account as provided for and in accordance with Section 5.1(a) of these bylaws. The books of account shall at all reasonable times be open to inspection by any director. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws. In the absence of a named chief financial officer, the treasurer shall be deemed to be the chief financial officer and shall have the powers and duties of such office as herein above set forth. MISCELLANEOUS Records and Reports. - --------------------- Books of Account and Proceedings. The corporation shall keep adequate and - ------------------------------------ correct books and records of account and shall keep minutes of the proceedings of its shareholders, Board and committees of the board and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each. Such minutes shall be kept in written form. Such other books and records shall be kept either in written form or in any other form capable of being converted into written form. Annual Report. An annual report to shareholders referred to in Section 1501 of - -------------- the California General Corporation Law is expressly dispensed with, but nothing herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other periodic reports to the shareholders of the corporation as they consider appropriate. Shareholders' Requests for Financial Reports. If no annual report for the last - --------------------------------------------- fiscal year has been sent to shareholders, the corporation shall, upon the written request of any shareholder made more than 120 days after the close of that fiscal year, deliver or mail to the person making the request within 30 days thereafter the financial statements for that year required by Section 1501(a) of the California General Corporation Law. Any shareholder or shareholders holding at least five (5) percent of the outstanding shares of any class of the corporation may make a written request to the corporation for an income statement of the corporation for the three-month, six-month or nine-month period of the current fiscal year ended more than 30 days prior to the date of the request and a balance sheet of the corporation as of the end of such period, and the corporation shall deliver or mail the statements to the person making the request within 30 days thereafter. A copy of the statements shall be kept on file in the principal office of the corporation for 12 months and they shall be exhibited at all reasonable times to any shareholder demanding an examination of them or a copy shall be mailed to such shareholder upon demand. Rights of Inspection. - ---------------------- By Shareholders. - ---------------- Record of Shareholders. Any shareholder or shareholders holding at least five - ------------------------ (5) percent in the aggregate of the outstanding voting shares of the corporation or who hold at least one (1) percent of such voting shares and have filed a Schedule 14A with the United States Securities and Exchange Commission shall have an absolute right to do either or both of the following: (i) inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours upon five (5) business days' prior written demand upon the corporation, or (ii) obtain from the transfer agent for the corporation, upon written demand and upon the tender of its usual charges for such a list (the amount of which charges shall be stated to the shareholder by the transfer agent upon request), a list of the shareholders' names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which it has been compiled or as of a date specified by the shareholder subsequent to the date of demand. The list shall be made 68 available on or before the later of five (5) business days after demand is received or the date specified therein as the date as of which the list is to be compiled. The record of shareholders shall also be open to inspection and copying by any shareholder or holder of a voting trust certificate at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to such holder's interests as a shareholder or holder of a voting trust certificate. Corporate Records. The accounting books and records and minutes of proceedings - ------------------ of the shareholders and the Board and committees of the board shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interests as a shareholder or as the holder of such voting trust certificate. This right of inspection shall also extend to the records of any subsidiary of the corporation. Bylaws. The corporation shall keep at its principal executive office in this - ------ state, the original or a copy of its bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. By Directors. Every director shall have the absolute right at any reasonable - ------------- time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, - ---------------------- notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Representation of Shares of Other Corporations. The chairman of the board, if - ------------------------------------------------ any, president or any vice president of the corporation, or any other person authorized to do so by the chairman of the board, president or any vice president, is authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the corporation. The authority herein granted to said officers to vote or represent on behalf of the corporation any and all shares held by the corporation in any other corporation or corporations may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. Indemnification and Insurance. - ------------------------------- Right to Indemnification. Each person who was or is made a party to or is - -------------------------- threatened to be made a party to or is involuntarily involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "Proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving (during such person's tenure as director or officer) at the request of the corporation, any other corporation, partnership, joint venture, trust or other enterprise in any capacity, whether the basis of a Proceeding is an alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the corporation to the fullest extent authorized by California General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, or penalties and amounts to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending a Proceeding in advance of its final disposition; provided, however, that, if California General Corporation Law requires, the payment of such expenses in advance of the final disposition of a Proceeding shall be made only upon receipt by the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. No amendment to or repeal of this Section 5.5 shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal. Right of Claimant to Bring Suit. If a claim for indemnity under paragraph (a) - --------------------------------- of this Section is not paid in full by the corporation within 90 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim including reasonable attorneys' fees incurred in connection therewith. It shall be a defense to any 69 such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under California General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in California General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Non-Exclusivity of Rights. The rights conferred in this Section shall not be - --------------------------- exclusive of any other rights which any director, officer, employee or agent may have or hereafter acquire under any statute, provision of the Articles of Incorporation, bylaw, agreement, vote of shareholders or disinterested directors or otherwise, to the extent the additional rights to indemnification are authorized in the Articles of Incorporation of the corporation. Insurance. In furtherance and not in limitation of the powers conferred by - --------- statute: the corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify the person against that expense, liability or loss under the California General Corporation Law. the corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the full extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere. Indemnification of Employees and Agents of the Corporation. The corporation - -------------------------------------------------------------- may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, including the right to be paid by the corporation the expenses incurred in defending a Proceeding in advance of its final disposition, to any employee or agent of the corporation to the fullest extent of the provisions of this Section or otherwise with respect to the indemnification and advancement of expenses of directors and officers of the corporation. Employee Stock Purchase Plans. The corporation may adopt and carry out a stock - ------------------------------ purchase plan or agreement or stock option plan or agreement providing for the issue and sale for such consideration as may be fixed of its unissued shares, or of issued shares Acquired or to be acquired, to one (1) or more of the employees or directors of the corporation or of a subsidiary or to a trustee on their behalf and for the payment for such shares in installments or at one (1) time, and may provide for aiding any such persons in paying for such shares by compensation for services rendered, promissory notes or otherwise. A stock purchase plan or agreement or stock option plan or agreement may include, among other features, the fixing of eligibility for participation therein, the class and price of shares to be issued or sold under the plan or agreement, the number of shares which may be subscribed for, the method of payment therefor, the reservation of title until full payment therefor, the effect of the termination of employment, an option or obligation on the part of the corporation to repurchase the shares upon termination of employment, subject to the provisions of the California General Corporation Law, restrictions upon transfer of the shares and the time limits of and termination of the plan. Time Notice Given or Sent. Any reference in these Bylaws to the time a notice - --------------------------- is given or sent means, unless otherwise expressly provided herein or by law, (a) the time a written notice by mail is deposited in the United States mails, postage prepaid; or (b) the time any other written notice, including facsimile, telegram, or electronic mail message, is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or (c) the time any oral notice is communicated, in person or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, or wireless, to the recipient, including the recipient's designated voice mailbox or address on such system, or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Construction and Definitions. Unless the context otherwise requires, the - ------------------------------ general provisions, rules of construction and definitions contained in the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of the foregoing, the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation as well as a natural person. 70 AMENDMENTS Power of Shareholders. New bylaws may be adopted or these bylaws may be amended - --------------------- or repealed by the vote of shareholders entitled to exercise a majority of the voting power of the corporation or by the written assent of such shareholders, except as otherwise provided by law or by the Articles of Incorporation. Power of Directors. Subject to the right of shareholders as provided in Section - ------------------ 6.01 to adopt, amend or repeal bylaws, any bylaw may be adopted, amended or repealed by the Board of Directors other than a bylaw or amendment thereof changing the authorized number of directors, if such number is fixed, or the maximum-minimum limits thereof, if an indefinite number. The undersigned, as the Incorporator of _______________________, hereby adopts the foregoing bylaws as the bylaws of said corporation. Dated as of April 19 1991. ______________________________ , Incorporator The undersigned, constituting the Board of Directors of __________________, hereby adopt the foregoing bylaws as the bylaws of said corporation. Dated as of April 19, 1991. ______________________________ ,Director ______________________________ ,Director , THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of INTER-CARE DIAGNOSTICS, INC., and that the foregoing bylaws were adopted as the bylaws of said corporation as of the day of April 19th, 1991, by the Board of Directors of said corporation. Dated as of April 19th, 1991 /s/ Anthony C. Dike ---------------------- Anthony C. Dike, Chairman/CEO and Secretary 71 BYLAWS ------ for the regulation, except as otherwise provided by statute or the Articles of Incorporation, of INTER-CARE DIAGNOSTICS, INC. ------------------------------- a California corporation
TABLE OF CONTENTS PAGE ---- ARTICLE I. GENERAL PROVISIONS 63 Section 1.1 Principal Executive Office 63 Section 1.2 Number of Directors 63 ARTICLE II. SHARES AND SHAREHOLDERS 63 Section 2.1 Meetings of Shareholders. 63 (a) Place of Meetings. 63 (b) Annual Meetings 63 (c) Special Meetings 63 (d) Notice of Meetings. 63 (e) Adjourned Meeting and Notice Thereof 64 (f) Waiver of Notice 64 (g) Quorum 64 Section 2.2 Action Without a Meeting 64 Section 2.3 Voting of Shares. 64 (a) In General 64 (b) Cumulative Voting 64 (c) Election by Ballot 65 Section 2.4 Proxies 65 Section 2.5 Inspectors of Election. 65 (a) Appointment 65 (b) Duties 65 Section 2.6 Record Date 65 Section 2.7 Share Certificates. 66 (a) In General 66 (b) Two or More Classes or Series 66 (c) Special Restrictions 66 Section 2.8 Transfer of Certificates 66 Section 2.9 Lost Certificates 66 ARTICLE III. DIRECTORS 66 Section 3.1 Powers 66 Section 3.2 Committees of the Board 67 Section 3.3 Election and Term of Office 67 Section 3.4 Vacancies 67 Section 3.5 Removal 67 Section 3.6 Resignation 67 Section 3.7 Meetings of the Board of Directors and Committees. 67 (a) Regular Meetings 67 (b) Organization Meeting 67 (c) Special Meetings 67 (d) Notices; Waivers 67 (e) Adjournment 68 (f) Place of Meeting 68 (g) Presence by Conference Telephone Call 68 (h) Quorum 68 Section 3.8 Action Without Meeting 68 Section 3.9 Committee Meetings 68 ARTICLE IV. OFFICERS 68 Section 4.1 Officers 68 Section 4.2 Elections 68 Section 4.3 Other Officers 68 Section 4.4 Removal 68 Section 4.5 Resignation 68 Section 4.6 Vacancies 68 Section 4.7 Chairman of the Board 69 Section 4.8 President 69 Section 4.9 Vice President 69 Section 4.10 Secretary 69 Section 4.11 Chief Financial Officer 69 Section 4.12 Treasurer 69 ARTICLE V. MISCELLANEOUS 69 Section 5.1 Records and Reports. 69 (a) Books of Account and Proceedings 69 (b) Annual Report 69 (c) Shareholders' Requests for Financial Reports 70 72 Section 5.2 Rights of Inspection. 70 (a) By Shareholders. 70 (b) By Directors 70 Section 5.3 Checks, Drafts, Etc. 70 Section 5.4 Representation of Shares of Other Corporations 70 Section 5.5 Indemnification and Insurance. 71 (a) Right to Indemnification 71 (b) Right of Claimant to Bring Suit 71 (c) Non-Exclusivity of Rights 71 (d) Insurance 71 (e) Indemnification of Employees and Agents of the Corporation 72 Section 5.6 Employee Stock Purchase Plans. 72 Section 5.7 Time Notice Given or Sent 72 Section 5.8 Construction and Definitions 72 ARTICLE VI. AMENDMENTS 72 Section 6.1 Power of Shareholders 72 Section 6.2 Power of Directors 72
73 AMENDED BYLAWS -------------- for the regulation, except as otherwise provided by statute or the Articles of Incorporation, of InterCare.com-dx, Inc. PRINCIPAL EXECUTIVE OFFICE. THE BOARD OF DIRECTORS SHALL DESIGNATE THE LOCATION - -------------------------- OF THE principal executive office of the corporation at any place within or without the State of California. The Board of Directors shall have the power to change the principal executive office to another location and may designate and locate one or more subsidiary offices within or without the State of California. Number of Directors. The number of directors of the corporation shall be two - --------------------- (2) until changed by a bylaw amending this Section 1.2 duly adopted by the vote or written consent of a majority of the outstanding shares entitled to vote; provided, however, that a bylaw reducing the number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the case of action by written consent are equal to more than 16-2/3 percent of the outstanding shares entitled to vote. Name. The name of the corporation shall be "InterCare.com, Inc." The - ---- corporation shall be authorized to do business under any fictitious business name, or variation of its legal name, as the Board of Directors may choose from time to time. SHARES AND SHAREHOLDERS Meetings of Shareholders. - -------------------------- Place of Meetings. Meetings of shareholders shall be held at any place within - ------------------- or without the State of California designated by the Board of Directors. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the corporation. Annual Meetings. An annual meeting of the shareholders of the corporation shall - ---------------- be held on such date and at such time as shall be designated by the Board of Directors. Should said day fall upon a legal holiday, the annual meeting of shareholders shall be held at the same time on the next day thereafter ensuing which is a full business day. At each annual meeting directors shall be elected, and any other proper business may be transacted. Special Meetings. Special meetings of the shareholders may be called by the - ----------------- Board of Directors, the chairman of the board, the president, or by the holders of shares entitled to cast not less than 10 percent of the votes at the meeting. Upon request in writing to the chairman of the board, the president, any vice president or the secretary by any person (other than the board) entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to the shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than 35 nor more than 60 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the persons entitled to__call the meeting may give the notice. Notice of Meetings. Notice of any shareholders' meeting shall be given not less - ------------------ than 10 nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the Board, at the time of the giving of the notice, intends to present for action by the shareholders. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the board for election. If action is proposed to be taken at any meeting, which action is within Sections 310, 902, 1201, 1900 or 2007 of the General Corporation Law of the State of California, the notice shall also state the general nature of that proposal. Notice of a shareholders' meeting shall be given either personally or by first-class mail, or other means of written communication, charges prepaid, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located. The notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice. Adjourned Meeting and Notice Thereof. Any meeting of shareholders may be - ---------------------------------------- adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy whether or not a quorum is present. When a shareholders' meeting is adjourned to another time or place, notice need not be 74 given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. However, if the adjournment is for more than 45 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Waiver of Notice. The transactions of any meeting of shareholders, however - ------------------ called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of subparagraph (d) of Section 2.1 of this Article II, the waiver of notice or consent shall state the general nature of the proposal. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Quorum. The presence in person or by proxy of the persons entitled to vote a - ------ majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. If a quorum is present, the affirmative vote of the majority of the shares represented and voting at the meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation of the corporation. The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, provided that any action taken (other than adjournment) must be approved by at least a majority of the shares required to constitute a quorum. Action Without a Meeting. Any action which may be taken at any annual or - --------------------------- special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Notwithstanding the foregoing, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors, except as provided by Section 3.4 hereof. Where the approval of shareholders is given without a meeting by less than unanimous written consent, unless the consents of all shareholders entitled to vote have been solicited in writing, the secretary shall give prompt notice of the corporate action approved by the shareholders without a meeting. In the case of approval of transactions pursuant to Section 310, 317, 1201 or 2007 of the General Corporation Law of the State of California, the notice shall be given at least 10 days before the consummation of any action authorized by that approval. Such notice shall be given in the same manner as notice of shareholders' meeting. Voting of Shares. - ------------------ In General. Except as otherwise provided in the Articles of Incorporation and subject to subparagraph (b) hereof, each outstanding share, regardless of class, shall be entitled to one (1) vote on each matter submitted to a vote of shareholders. Cumulative Voting. At any election of directors, every shareholder complying - ------------------ with this paragraph (b) and entitled to vote may cumulate his or her votes and give one (1) candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or distribute the shareholder's votes on the same principle among as many candidates as the shareholder thinks fit. No shareholder shall be entitled to cumulate votes (i.e., cast for any one (1) or more candidates a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless such candidate or candidates' names have been placed in nomination prior to the voting and the shareholder has given notice at the meeting prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one (1) shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination. In any election of directors, the candidates receiving the highest number of affirmative votes up to the number of directors to be elected by such shares are elected; votes against a director and votes withheld shall have no legal effect. Election by Ballot. Elections for directors need not be by ballot unless a - -------------------- shareholder demands election by ballot at the meeting and before the voting begins. 75 Proxies. Every person entitled to vote shares may authorize another person or - ------- persons to act by proxy with respect to such shares. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise herein provided. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of the California General Corporation Law. Inspectors of Election. - ------------------------ Appointment. In advance of any meeting of shareholders the Board may appoint - ----------- inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one (1) or three (3). If appointed at a meeting on the request of one (1) or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors are to be appointed. Duties. The inspectors of election shall determine the number of shares - ------ outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. Record Date. In order that the corporation may determine the shareholders - ------------ entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action. If no record date is fixed: The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given. The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting, but the board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles of Incorporation or by agreement or in the California General Corporation Law. SHARE CERTIFICATES. - ------------------- In General. The corporation shall issue a certificate or certificates - ----------- representing shares of its capital stock. Each certificate so issued shall be signed in the name of the corporation by the chairman or vice chairman of the board or the president or a vice president and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, shall state the name of the record owner thereof and shall certify the number of shares and the class or series of shares represented thereby. Any or all of the signatures 76 on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. Two or More Classes or Series. If the shares of the corporation are classified - ------------------------------ or if any class of shares has two or more series, there shall appear on the certificate one (1) of the following: A statement of the rights, preferences, privileges, and restrictions granted to or imposed upon the respective classes or series of shares authorized to be issued and upon the holders thereof; or A summary of such rights, preferences, privileges and restrictions with reference to the provisions of the Articles of Incorporation and any certificates of determination establishing the same; or A statement setting forth the office or agency of the corporation from which shareholders may obtain upon request and without charge, a copy of the statement referred to in subparagraph (1). Special Restrictions. There shall also appear on the certificate (unless stated - -------------------- or summarized under subparagraph (1) or (2) of subparagraph (b) above) the statements required by all of the following clauses to the extent applicable: The fact that the shares are subject to restrictions upon transfer. If the shares are assessable, a statement that they are assessable. If the shares are not fully paid, a statement of the total consideration to be paid therefor and the amount paid thereon. The fact that the shares are subject to a voting agreement or an irrevocable proxy or restrictions upon voting rights contractually imposed by the corporation. The fact that __the shares are redeemable. The fact that the shares are convertible and the period for conversion. Transfer of Certificates. Where a certificate for shares is presented to the - -------------------------- corporation or its transfer clerk or transfer agent with a request to register a - -- transfer of shares, the corporation shall register the transfer, cancel the certificate presented, and issue a new certificate if: (a) the security is endorsed by the appropriate person or persons; (b) reasonable assurance is given that those endorsements are genuine and effective; (c) the corporation has no notice of adverse claims or has discharged any duty to inquire into such adverse claims; (d) any applicable law relating to the collection of taxes has been complied with; (e) the transfer is not in violation of any federal or state securities law; and (f) the transfer is in compliance with any applicable agreement governing the transfer of the shares. Lost Certificates. Where a certificate has been lost, destroyed or wrongfully - ------------------ taken, the corporation shall issue a new certificate in place of the original if the owner: (a) so requests before the corporation has notice that the certificate has been acquired by a bona fide purchaser; (b) files with the corporation a sufficient indemnity bond, if so requested by the Board of Directors; and (c) satisfies any other reasonable requirements as may be imposed by the Board. Except as above provided, no new certificate for shares shall be issued in lieu of an old certificate unless the corporation is ordered to do so by a court in the judgment in an action brought under Section 419(b) of the California General Corporation Law. DIRECTORS Powers. Subject to the provisions of the California General Corporation Law and - ------ the Articles of Incorporation, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operations of the business of the corporation to a management company or other person provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board. Committees of the Board. The Board may, by resolution adopted by a majority of - ------------------------ the authorized number of directors, designate one (1) or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any such committee, to the extent provided in the resolution of the Board, shall have all the authority of the Board, except with respect to: The approval of any action which also requires, under the California General Corporation Law, shareholders' approval or approval of the outstanding shares; The filling of vacancies on the Board or in any committee. The fixing of compensation of the directors for serving on the Board or on any committee. The amendment or repeal of bylaws or the adoption of new bylaws. The amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable. A distribution (within the meaning of the California General Corporation Law) to the shareholders of the corporation, except at a rate or in a periodic amount or 77 within a price range determined by the Board. The appointment of other committees of the Board or the members thereof. Election and Term of Office. The directors shall be elected at each annual - ------------------------------- meeting of shareholders but, if any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. Vacancies. Except for a vacancy created by the removal of a director, vacancies - --------- on the Board may be filled by approval of the Board or, if the number of directors then in office is less than a quorum, by (a) the unanimous written consent of the directors then in office, (b) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice under the California General Corporation Law, or (c) a sole remaining director. The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent requires the consent of a majority of the outstanding shares entitled to vote. The Board of Directors shall have the power to declare vacant the office of a director who has been declared of unsound mind by an order of court, or convicted of a felony. Removal. Any or all of the directors may be removed without cause if such - ------- removal is approved by the vote of a majority of the outstanding shares entitled to vote, except that no director may be removed (unless the entire board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected. Resignation. Any director may resign effective upon giving written notice to - ----------- the chairman of the board, the president, the secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. Meetings of the Board of Directors and Committees. - -------------------------------------------------------- Regular Meetings. Regular meetings of the Board of Directors may be held - ----------------- without notice at such time and place within or without the State as may be designated from time to time by resolution of the Board or by written consent of all members of the Board or in these bylaws. Organization Meeting. Immediately following each annual meeting of shareholders - -------------------- the Board of Directors shall hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of such meetings is hereby dispensed with. Special Meetings. Special meetings of the Board of Directors for any purpose or - ---------------- purposes may be called at any time by the chairman of the board or the president or, by any vice president or the secretary or any two directors. Notices; Waivers. Special meetings shall be held upon four (4) days' notice by - ----------------- mail or forty-eight (48) hours' notice delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail, or other electronic means. Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Adjournment. A majority of the directors present, whether or not a quorum is - ----------- present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of such adjournment to another time and place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of adjournment. Place of Meeting. Meetings of the Board may be held at any place within or - ------------------ without the state which has been designated in the notice of the meeting or, if not stated in the notice or there is no notice, then such meeting shall be held at the principal executive office of the corporation, or such other place designated by resolution of the Board. Presence by Conference Telephone Call. Members of the Board may participate in - -------------------------------------- a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Such participation constitutes presence in person at such meeting. Quorum. A majority of the authorized number of directors constitutes a quorum - ------ 78 of the Board for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. Action Without Meeting. Any action required or permitted to be taken by the - ------------------------ Board of Directors may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Committee Meetings. The provisions of Sections 3.7 and 3.8 of these bylaws - ------------------- apply also to committees of the Board and action by such committees, mutatis mutandis. OFFICERS Officers. The officers of the corporation shall consist of a chairman of the - -------- board or a president, or both, a secretary, a chief financial officer, and such additional officers as may be elected or appointed in accordance with Section 4.3 of these bylaws and as may be necessary to enable the corporation to sign instruments and share certificates. Any number of offices may be held by the same person. Elections. All officers of the corporation, except such officers as may be - --------- otherwise appointed in accordance with Section 4.3, shall be chosen by the Board of Directors, and shall serve at the pleasure of the Board of Directors, subject to the rights, if any, of an officer under any contract of employment. Other Officers. The Board of Directors, the chairman of the board, or the - --------------- president at their or his discretion, may appoint one (1) or more vice presidents, one (1) or more assistant secretaries, a treasurer, one (1) or more assistant treasurers, or such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as the Board of Directors, the chairman of the board, or the president, as the case may be, may from time to time determine. Removal. Subject to the rights, if any, of an officer under any contract of - ------- employment, any officer may be removed, either with or without cause, by the Board of Directors, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors, without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Resignation. Any officer may resign at any time by giving written notice to the - ----------- Board of Directors or to the president, or to the secretary of the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Vacancies. A vacancy in any office because of death, resignation, removal, - --------- disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to such office. Chairman of the Board. The chairman of the board, if there shall be such an - ------------------------ officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors. If there is no president, the chairman of the board shall in addition be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 4.8 below. President. Subject to such supervisory powers, if any, as may be given by the - --------- Board of Directors to the chairman of the board, if there be such an officer, the president shall be general manager and chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and affairs of the corporation. He shall preside at all meetings of the shareholders and, in the absence of the chairman of the board, or if there be none, at all meetings of the Board of Directors. He shall be ex-officio a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws. Vice President. In the absence of the president or in the event of the - --------------- president's inability or refusal to act, the vice president, or in the event there be more than one (1) vice president, the vice president designated by the Board of Directors, or if no such designation is made, in order of their election, shall perform the duties of president and when so acting, shall have 79 all the powers of and be subject to all the restrictions upon the president. Any vice president shall perform such other duties as from time to time may be assigned to such vice president by the president or the Board of Directors. Secretary. The secretary shall keep or cause to be kept the minutes of - --------- proceedings and record of shareholders, as provided for and in accordance with Section 5.1(a) of these bylaws. The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by these bylaws or by law to be given, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors. Chief Financial Officer. The chief financial officer shall have general - ------------------------- supervision, direction and control of the financial affairs of the corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these bylaws. In __ the absence of a named treasurer, the chief financial officer shall also have the powers and duties of the treasurer as hereinafter set forth and shall be authorized and empowered to sign as treasurer in any case where such officer's signature is required. Treasurer. The treasurer shall keep or cause to be kept the books and records - --------- of account as provided for and in accordance with Section 5.1(a) of these bylaws. The books of account shall at all reasonable times be open to inspection by any director. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws. In the absence of a named chief financial officer, the treasurer shall be deemed to be the chief financial officer and shall have the powers and duties of such office herein above set forth. MISCELLANEOUS Records and Reports. - --------------------- Books of Account and Proceedings. The corporation shall keep adequate and - ------------------------------------ correct books and records of account and shall keep minutes of the proceedings of its shareholders, Board and committees of the board and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each. Such minutes shall be kept in written form. Such other books and records shall be kept either in written form or in any other form capable of being converted into written form. Annual Report. An annual report to shareholders referred to in Section 1501 of - -------------- the California General Corporation Law is expressly dispensed with, but nothing herein shall be interpreted as prohibiting the Board of Directors from issuing annual or other periodic reports to the shareholders of the corporation as they consider appropriate. Shareholders' Requests for Financial Reports. If no annual report for the last - --------------------------------------------- fiscal year has been sent to shareholders, the corporation shall, upon the written request of any shareholder made more than 120 days after the close of that fiscal year, deliver or mail to the person making the request within 30 days thereafter the financial statements for that year required by Section 1501(a) of the California General Corporation Law. Any shareholder or shareholders holding at least five (5) percent of the outstanding shares of any class of the corporation may make a written request to the corporation for an income statement of the corporation for the three-month, six-month or nine-month period of the current fiscal year ended more than 30 days prior to the date of the request and a balance sheet of the corporation as of the end of such period, and the corporation shall deliver or mail the statements to the person making the request within 30 days thereafter. A copy of the statements shall be kept on file in the principal office of the corporation for 12 months and they shall be exhibited at all reasonable times to any shareholder demanding an examination of them or a copy shall be mailed to such shareholder upon demand. Rights of Inspection. - ---------------------- By Shareholders. - ---------------- Record of Shareholders. Any shareholder or shareholders holding at least five - ------------------------ (5) percent in the aggregate of the outstanding voting shares of the corporation or who hold at least one (1) percent of such voting shares and have filed a Schedule 14A with the United States Securities and Exchange Commission shall have an absolute right to do either or both of the following: (i) inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours upon five (5) business days' prior written demand upon the corporation, or (ii) obtain from the transfer agent for the corporation, upon written demand and upon the tender of its usual charges for such a list (the amount of which charges shall be stated to the shareholder by the transfer agent upon request), a list of the shareholders' names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most 80 recent record date for which it has been compiled or as of a date specified by the shareholder subsequent to the date of demand. The list shall be made available on or before the later of five (5) business days after demand is received or the date specified therein as the date as of which the list is to be compiled. The record of shareholders shall also be open to inspection and copying by any shareholder or holder of a voting trust certificate at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to such holder's interests as a shareholder or holder of a voting trust certificate. Corporate Records. The accounting books and records and minutes of proceedings - ------------------ of the shareholders and the Board and committees of the board shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interests as a shareholder or as the holder of such voting trust certificate. This right of inspection shall also extend to the records of any subsidiary of the corporation. Bylaws. The corporation shall keep at its principal executive office in this - ------ state, the original or a copy of its bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. By Directors. Every director shall have the absolute right at any reasonable - ------------- time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, - ---------------------- notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Representation of Shares of Other Corporations. The chairman of the board, if - ------------------------------------------------ any, president or any vice president of the corporation, or any other person authorized to do so by the chairman of the board, president or any vice president, is authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the corporation. The authority herein granted to said officers to vote or represent on behalf of the corporation any and all shares held by the corporation in any other corporation or corporations may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. Indemnification and Insurance. - ------------------------------- Right to Indemnification. Each person who was or is made a party to or is - -------------------------- threatened to be made a party to or is involuntarily involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "Proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the corporation or is or was serving (during such person's tenure as director or officer) at the request of the corporation, any other corporation, partnership, joint venture, trust or other enterprise in any capacity, whether the basis of a Proceeding is an alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the corporation to the fullest extent authorized by California General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, or penalties and amounts to be paid in settlement) reasonably incurred or suffered by such person in connection therewith. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending a Proceeding in advance of its final disposition; provided, however, that, if California General Corporation Law requires, the payment of such expenses in advance of the final disposition of a Proceeding shall be made only upon receipt by the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. No amendment to or repeal of this Section 5.5 shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal. 81 Right of Claimant to Bring Suit. If a claim for indemnity under paragraph (a) - --------------------------------- of this Section is not paid in full by the corporation within 90 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim including reasonable attorneys' fees incurred in connection therewith. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under California General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in California General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Non-Exclusivity of Rights. The rights conferred in this Section shall not be - --------------------------- exclusive of any other rights which any director, officer, employee or agent may have or hereafter acquire under any statute, provision of the Articles of Incorporation, bylaw, agreement, vote of shareholders or disinterested directors or otherwise, to the extent the additional rights to indemnification are authorized in the Articles of Incorporation of the corporation. Insurance. In furtherance and not in limitation of the powers conferred by - --------- statute: the corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify the person against that expense, liability or loss under the California General Corporation Law. the corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the full extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere. Indemnification of Employees and Agents of the Corporation. The corporation - -------------------------------------------------------------- may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, including the right to be paid by the corporation the expenses incurred in defending a Proceeding in advance of its final disposition, to any employee or agent of the corporation to the fullest extent of the provisions of this Section or otherwise with respect to the indemnification and advancement of expenses of directors and officers of the corporation. Employee Stock Purchase Plans. The corporation may adopt and carry out a stock - ------------------------------ purchase plan or agreement or stock option plan or agreement providing for the issue and sale for such consideration as may be fixed of its unissued shares, or of issued shares Acquired or to be acquired, to one (1) or more of the employees or directors of the corporation or of a subsidiary or to a trustee on their behalf and for the payment for such shares in installments or at one (1) time, and may provide for aiding any such persons in paying for such shares by compensation for services rendered, promissory notes or otherwise. A stock purchase plan or agreement or stock option plan or agreement may include, among other features, the fixing of eligibility for participation therein, the class and price of shares to be issued or sold under the plan or agreement, the number of shares which may be subscribed for, the method of payment therefor, the reservation of title until full payment therefor, the effect of the termination of employment, an option or obligation on the part of the corporation to repurchase the shares upon termination of employment, subject to the provisions of the California General Corporation Law, restrictions upon transfer of the shares and the time limits of and termination of the plan. Time Notice Given or Sent. Any reference in these Bylaws to the time a notice - --------------------------- is given or sent means, unless otherwise expressly provided herein or by law, (a) the time a written notice by mail is deposited in the United States mails, postage prepaid; or (b) the time any other written notice, including facsimile, telegram, or electronic mail message, is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or (c) the time any oral notice is communicated, in person or by telephone, including a 82 voice messaging system or other system or technology designed to record and communicate messages, or wireless, to the recipient, including the recipient's designated voice mailbox or address on such system, or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient. Construction and Definitions. Unless the context otherwise requires, the - ------------------------------ general provisions, rules of construction and definitions contained in the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of the foregoing, the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, a the term "person" includes a corporation as well as a natural person. AMENDMENTS Power of Shareholders. New bylaws may be adopted or these bylaws may be amended - --------------------- or repealed by the vote of shareholders entitled to exercise a majority of the voting power of the corporation or by the written assent of such shareholders, except as otherwise provided by law or by the Articles of Incorporation. Power of Directors. Subject to the right of shareholders as provided in Section - ------------------ 6.01 to adopt, amend or repeal bylaws, any bylaw may be adopted, amended or repealed by the Board of Directors other than a bylaw or amendment thereof changing the authorized number of directors, if such number is fixed, or the maximum-minimum limits thereof, if an indefinite number. The undersigned, as the Incorporator of _______________________, hereby adopts the foregoing bylaws as the bylaws of said corporation. Dated as of December ___, 1999. ______________________________ , Incorporator The undersigned, constituting the Board of Directors of __________________, hereby adopt the foregoing bylaws as the bylaws of said corporation. Dated as of December ___, 1999.. ______________________________ , Director ______________________________ , Director THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of INTERCARE.DIAGNOSTICS, INC., and that the foregoing bylaws were adopted as the bylaws of said corporation as of the day of December 31st, 1999, by the Board of Directors of said corporation. Dated as of December 31st, 1999. /s/ Anthony C. Dike ---------------------- Anthony C. Dike, Chairman/CEO and Secretary 83 AMENDED BYLAWS -------------- for the regulation, except as otherwise provided by statute or the Articles of Incorporation, of INTERCARE.COM-DX, INC. ------------------------------- a California corporation
TABLE OF CONTENTS PAGE ---- ARTICLE I. GENERAL PROVISIONS 63 Section 1.1 Principal Executive Office 63 Section 1.2 Number of Directors 63 ARTICLE II. SHARES AND SHAREHOLDERS 63 Section 2.1 Meetings of Shareholders. 63 (a) Place of Meetings. 63 (b) Annual Meetings 63 (c) Special Meetings 63 (d) Notice of Meetings. 63 (e) Adjourned Meeting and Notice Thereof 64 (f) Waiver of Notice 64 (g) Quorum 64 Section 2.2 Action Without a Meeting 64 Section 2.3 Voting of Shares. 64 (a) In General 64 (b) Cumulative Voting 64 (c) Election by Ballot 65 Section 2.4 Proxies 65 Section 2.5 Inspectors of Election. 65 (a) Appointment 65 (b) Duties 65 Section 2.6 Record Date 65 Section 2.7 Share Certificates. 66 (a) In General 66 (b) Two or More Classes or Series 66 (c) Special Restrictions 66 Section 2.8 Transfer of Certificates 66 Section 2.9 Lost Certificates 66 ARTICLE III. DIRECTORS 66 Section 3.1 Powers 66 Section 3.2 Committees of the Board 67 Section 3.3 Election and Term of Office 67 Section 3.4 Vacancies 67 Section 3.5 Removal 67 Section 3.6 Resignation 67 Section 3.7 Meetings of the Board of Directors and Committees. 67 (a) Regular Meetings 67 (b) Organization Meeting 67 (c) Special Meetings 67 (d) Notices; Waivers 67 (e) Adjournment 68 (f) Place of Meeting 68 (g) Presence by Conference Telephone Call 68 (h) Quorum 68 Section 3.8 Action Without Meeting 68 Section 3.9 Committee Meetings 68 ARTICLE IV. OFFICERS 68 Section 4.1 Officers 68 Section 4.2 Elections 68 Section 4.3 Other Officers 68 Section 4.4 Removal 68 Section 4.5 Resignation 68 Section 4.6 Vacancies 68 Section 4.7 Chairman of the Board 69 Section 4.8 President 69 Section 4.9 Vice President 69 Section 4.10 Secretary 69 Section 4.11 Chief Financial Officer 69 Section 4.12 Treasurer 69 ARTICLE V. MISCELLANEOUS 69 Section 5.1 Records and Reports. 69 (a) Books of Account and Proceedings 69 (b) Annual Report 69 (c) Shareholders' Requests for Financial Reports 70 Section 5.2 Rights of Inspection. 70 (a) By Shareholders. 70 (b) By Directors 70 Section 5.3 Checks, Drafts, Etc. 70 84 Section 5.4 Representation of Shares of Other Corporations 70 Section 5.5 Indemnification and Insurance. 71 (a) Right to Indemnification 71 (b) Right of Claimant to Bring Suit 71 (c) Non-Exclusivity of Rights 71 (d) Insurance 71 (e) Indemnification of Employees and Agents of the Corporation 72 Section 5.6 Employee Stock Purchase Plans. 72 Section 5.7 Time Notice Given or Sent 72 Section 5.8 Construction and Definitions 72 ARTICLE VI. AMENDMENTS 72 Section 6.1 Power of Shareholders 72 Section 6.2 Power of Directors 72
85 EX 4.1 Specimen Certificate (front) NUMBER INTERCARE.COM, INC. SHARES INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA Authorized Common Stock 100,000,000 No Par Value This certifies that______________________________________________ Is the owner of ____________________________Shares of the Common Stock of InterCare.com, Inc. full paid and non-assessable, transferable only on the books of the Corporation in person or by Attorney, upon surrender of this Certificate properly endorsed. In Witness Whereof, the said Corporation has caused this Certificate to be signed its duly authorized officers, and its Corporate Seal to be hereunto affixed this______________________ day of______________________A.D. 19_ _____________________ _________________________ Secretary President (back) For Value Received,_________________hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER OF ASSIGNEE__________________________________ ________________________________________________________________________ Shares represented by the within Certificate, and do hereby irrevocably Constitute and appoint____________________________________ Attorney to Transfer the said Shares on the book of the named Corporation with full power of substitution in the premises Dated________19______ _______________________________ ___________________________ IN PRESENCE SIGNED NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER. 86 Ex-5.1 OPINION RE LEGALITY [CORPORATE LETTERHEAD] Bryan Cave LLP 2020 Main Street, Suite 600 Irvine, California 92614 September 4, 2001 Intercare.com-Dx, Inc. 900 Wilshire Blvd., Suite 500 Los Angeles, CA 90017 Re: Post-Effective Amendment to Registration Statement on Form SB-2 File Numbers 333-57780 and 333-94813 Gentlemen: At your request, we have examined the Current Post-effective Amendments to Registration Statements on Form SB-2 in connection with the registration and sale of up to 5,000,000 shares of Common Stock of Intercare.com-Dx, Inc., a California corporation (the "Company"), issuable by the Company, which are to be sold by the Company in the manner described in the Registration Statements (the "Shares"). We have examined the proceedings heretofore taken and are familiar with the procedures proposed to be taken by the Company in connection with the authorization, issuance, and sale of the Shares. It is our opinion that the Shares to be sold by the Company pursuant to the Registration Statements will be, when sold and paid for, legally issued, fully paid, and non-assessable. We consent to the use of this opinion as an exhibit to the Registration Statements. Very truly yours, BRYAN CAVE LLP 87 EX-23.2 CONSENT OF EXPERT CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT I consent to the inclusion in this Prospectus on Form SB-2/A and Form-8A of my report dated March 23, 2001 relative to my audit of the financial statements of InterCare.com-dx, Inc. at December 31, 2000, and for the period from January 1st 1999 to December 31st, 2000, and to the reference to me under the heading "Experts" therein. Andrew M. Smith, CPA Long Beach, California August 27, 2001 88 Exhibit 24.1 Power of Attorney POWER OF ATTORNEY The Registrant and each person whose signature appears below hereby appoints Anthony C. Dike as their attorney-in-fact, with full power to act alone, to sign in the name and in behalf of the Registrant and any such person, individually and in each capacity stated below, any and all amendments, including post-effective amendments, to this Registration Statement. In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities indicated on the 27 day of August 2001: /s/ Anthony C. Dike _______________________________ Anthony C. Dike, Chairman, Director, Chief Executive Officer /s/ Russell Lyons _______________________________ Russell Lyons, President, Director, Chief Technology Officer /s/ Philip Falase ______________________________ Philip Falase, Chief Financial Officer, Director 89 Exhibit 24.2 Form of Electronic Commerce Agreement with NetSales, (as amended) ELECTRONIC COMMERCE AGREEMENT THIS ELECTRONIC COMMERCE AGREEMENT (this "Agreement") is made and entered into on September 23, 1999 (the "Effective Date") by and between NETSALES, INC., a Delaware Corporation ("NetSales"), located at 8500 West 110th Street, Overland Park, KS 66210, and INTERCARE --------- DIAGNOSTICS, INC./WWW.INTERCARE.COM ("Vendor"), located at, 1601 Centinela ------------------------------ --------------- Avenue Suite #5, Inglewood, CA 90302. NetSales and Vendor shall be referred to --------------------------------- herein individually as a "Party" or collectively as the "Parties." Other defined terms are set forth on Schedule A attached hereto. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which the Parties acknowledge, the Parties agree as follows: GRANT OF RIGHTS; PARTIES' OBLIGATIONS GRANT OF RIGHTS. Vendor grants to NetSales the right to market and distribute Products to resellers or directly to customers as reseller's agent, at NetSales' sole expense, subject to the terms of this Agreement and as they might apply, additional ESD provisions set forth in Schedule D and physical fulfillment provisions set forth in Schedule E. EXCLUSIVITY. Vendor grants to NetSales the right to serve as the exclusive provider of services related to all online Direct Sales of Vendor's products. This does not prevent Vendor from establishing relationships with other distributors or resellers. NEW AND DISCONTINUED PRODUCTS. Vendor agrees to notify NetSales of new Products thirty (30) days prior to release of updated and/or new Products. Vendor also agrees to notify NetSales thirty (30) days prior to the discontinuation of any Product. ON-LINE ORDER AND COLLECTION. NetSales shall make reasonable efforts to maintain the availability of on-line ordering and payment. However, Vendor acknowledges that periodic computer server and network failures are unavoidable and thus will not hold NetSales liable for damages or losses incurred as a result of such failures. LINKS. Vendor agrees to maintain a Hyper-link from the sales page to the NetSales' Web page. NetSales agrees to maintain a Hyper-link to Vendor's Web page. CUSTOMER LISTS. NetSales agrees to provide to Vendor a copy of the Customer list from Product Sales. Vendor agrees to comply with all Customer-imposed restrictions on the use of such Customer list. EXPORT RESTRICTIONS. NetSales will use its best efforts to screen customers to deny shipments to any countries to which exports of the Products are prohibited by United States law and to deny shipments to parties to which sales are prohibited by United States law, provided however, NetSales shall have no liability to Vendor for any inadvertent violation of these prohibitions. TERM & TERMINATION TERM. This Agreement will continue in effect for one (1) year from the Effective Date (the "Initial Term"). Upon expiration of the Initial Term, this Agreement will be automatically renewed for additional one (1) year periods (each a "Renewal Term") without action by either Party (the Initial Term and any Renewal Term will be referred to herein collectively as the "Term"). TERMINATION FOR CAUSE OR CONVENIENCE. Either Party may terminate this Agreement at any time for any reason upon ninety (90) days prior written notice before the end of a Renewal Term. EFFECT OF TERMINATION. Upon termination, NetSales will remove Products from resale. NetSales shall have the right to hold a reserve balance (the "Reserve") against Product Returns (as defined below) for six (6) months from the termination date. In the event that NetSales takes returns after termination for which there is no account balance, Vendor agrees to reimburse NetSales the total amount of Returns within thirty (30) days after receiving written demand for payment. PAYMENTS & RECORDS SETUP FEES. Vendor agrees to pay to NetSales a one-time, non-refundable payment for setup fees as set forth on Schedule C attached hereto, to be paid upon the execution of this Agreement. PAYMENTS AND REPORTS. NetSales shall pay Vendor (according to Schedule C) any amounts owed hereunder on the 30th day of each month, or the last day of February, for sales of the prior month. NetSales shall provide Vendor a monthly report detailing the Products sold and amounts collected. NetSales shall provide to Vendor a real-time online electronic sales summary and customer data gathering report. RETURNS. If under any circumstance a payment transaction for a Product is reversed (each a "Return"), the net amount of the reversal will be deducted from the amount of the payment due to Vendor. If Returns exceed sales in any given month, Vendor agrees to make payment sufficient to cover the Returns. A defective Product may be exchanged for the same title only and, in this case, the entire package (box, contents, and product-registration card) must be included. NetSales can refuse payment for and distribution of Products to any Customer that is processing a large percentage of Returns. RESERVE. NetSales carries significant risk of excessive returns and/or chargebacks in the event Product Vendor cancels service with NetSales, ships defective products, discontinues products, or terminates business activity. Accordingly, Product Vendor agrees to allow NetSales to hold in reserve an amount equal to 10% of the previous six (6) month's gross Product sales to reduce such risk. NetSales shall remit to Product Vendor any Reserve Escrow 90 Amount that has been held for more than six (6) months and shall be included with monthly sales statement. TAXES. NetSales shall pay any applicable taxes required in connection with the actions contemplated under Schedule C of this Agreement RECORDS AND AUDITS. NetSales shall keep records and accounts in accordance with generally accepted accounting principles to show the amount of proceeds payable to Vendor. NetSales shall keep these records at NetSales' principal place of business. Vendor shall have the right to conduct at its sole expense an audit of such records by an independent auditor during regular business hours upon five (5) days prior written notice once per calendar year to determine NetSales' compliance with this Agreement. CONFIDENTIALITY CONFIDENTIALITY. Each Party will treat all information received or gained from the other Party in confidence. Only by written agreement between the Parties can information about any aspect of the agreements, relationships, products, plans or details of the other Party's business be divulged to a third party. Information shall not be deemed confidential for the purposes of this Agreement that (i) is already known to the non-disclosing Party at the time of disclosure; (ii) is or becomes publicly known through no wrongful act of the non-disclosing Party, including by public announcement by the disclosing Party; (iii) is received from a third Party without similar restrictions and without breach of this Agreement; or (iv) is lawfully required to be disclosed by any governmental agency or otherwise required to be disclosed by law. WARRANTIES; LIABILITIES; INDEMNIFICATION VENDOR'S REPRESENTATIONS AND WARRANTIES. Vendor represents and warrants that (i) it owns, or has valid and current distribution licenses, to the Products and all sub-components thereof, and that no provision of this Agreement violates any prior agreements between Vendor and any third parties (ii) it has the power and authority to enter into this Agreement and to perform its obligations hereunder; (iii) this Agreement has been duly authorized, executed and delivered by Vendor and constitutes a legal, valid and binding obligation of Vendor enforceable against Vendor according with its terms, (iv) Vendor owns the entire right, title and interest in and to the trademarks and intellectual property to be provided to NetSales and included in the Products and the packaging of the Products, (v) Vendor has obtained any applicable export licenses for the Products which are required under United States or any other applicable law, (vi) and Vendor hereby certifies that the Products are Y2K Compliant. For purposes of this Agreement, "Y2K Compliant" means, the Product is designed to be used prior to, during, and after calendar year 2000 A.D., and during each such time period will accurately receive, provide and process data/time data (including, but not limited to, calculating, comparing and sequencing,) from, into and between the twentieth and twenty-first centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of data/time data, to the extent that other information technology used in combination with the Products properly exchanges data/time data with it. NETSALES' REPRESENTATIONS AND WARRANTIES. NetSales represents and warrants that it has the right and authority to enter into this Agreement and to perform its obligations hereunder. MUTUAL INDEMNIFICATION. NetSales and Vendor agree to defend, indemnify and hold harmless each other and their affiliates, their officers, directors, employees, representatives, agents, successors and assigns against and in respect of any and all loss, damage, liability and expense (including attorneys' fees) resulting from; (i) any misrepresentations or breaches of any representation, warranty or non-fulfillment of any obligation under this Agreement; (ii) any defects in the Products, whether such Products are sold by Vendor or NetSales and; (iii) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs and expenses incident to any of the foregoing. VENDOR further indemnifies; (iv) the failure of the Products to satisfy the terms and conditions of any warranty set forth therein and; (v) the Product (in the form supplied hereunder by Vendor and unadapted by NetSales or any third party) infringing a U.S. patent or U.S. copyright. DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES HEREBY SPECIFICALLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICES AND PRODUCTS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF PERFORMANCE. LIMITATION OF LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM ANY PROVISION OF THIS AGREEMENT SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFIT OR LOST BUSINESS, COSTS OF DELAY OR FAILURE OF DELIVERY, OR LIABILITIES TO THIRD PARTIES ARISING FROM ANY SOURCE. MISCELLANEOUS PROVISIONS ASSIGNMENT. This Agreement may not be assigned by either Party without the express written approval of the non-assigning Party; however, NetSales may assign this Agreement without the approval of Vendor to any affiliate of NetSales or to any entity that purchases all the stock or all or substantially all of NetSales' assets. NOTICES. All notices and demands hereunder shall be in writing and shall be served by on the receiving Party via certified or registered mail, return receipt requested or by nationally-recognized private express courier, and shall be deemed complete upon receipt. GOVERNING LAW. This Agreement shall be governed by and construed according to the substantive laws of the State of Kansas. 91 RELATIONSHIP OF THE PARTIES. Each Party is acting as an independent contractor and not as an agent, partner, or joint venture with the other Party for any purpose. SURVIVAL OF CERTAIN PROVISIONS. The indemnification, confidentiality, and payment obligations set forth in the Agreement shall survive the termination of the Agreement by either Party for any reason. ALL AMENDMENTS IN WRITING. All modifications or amendments of this Agreement shall be effective only if they are in writing by a duly authorized representative of each Party to this Agreement. ENTIRE AGREEMENT. This Agreement constitutes the complete and entire agreement of the Parties and supersedes all previous communications, oral or written, and all other communications between them relating to the subject hereof. SEVERABILITY. If a court of law or court of competent jurisdiction finds any provision of this Agreement invalid, illegal or unenforceable, the remaining portions of this Agreement shall remain in full force and effect and construed so as to best effectuate the original intent and purpose of this Agreement. ARBITRATION. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and the judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Any arbitration proceeding shall be held within 30 miles of NetSales' headquarters. ATTORNEYS FEES. In any legal action between the Parties hereto concerning this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys fees and costs. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above. It is assumed that the signer for both companies has company authorization. THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION WHICH IS BINDING ON THE PARTIES. NETSALES, INC. Vendor By:__________ By: ___________ Name:_________ Name:___________ Tile:_________ Title:__________ Date: Date: _________ SCHEDULE A - DEFINITIONS "Customer" shall mean an individual, or single user, at a home or business, who pays for Products through NetSales. "Direct Sale" refers to any sale that is from a Direct URL. "Direct URL" is a URL in NetSales' web site for Product purchases, supplied to Product Vendor by NetSales, hyper-linked to web site, and are controlled by Product Vendor or Product Vendor's affiliates. "Channel Sale" shall mean any sale which occurs within NetSales' channel of online stores or any other Product sales that do not occur from a Direct URL. "Processing Fees" shall mean the fees payable to NetSales by Vendor for Direct Sales. Processing Fees are incurred for each Product sold in a Direct Sale. "Products" shall mean the products identified by title and reference number in Schedule B hereto. Any Products not listed on Schedule B, which are sent by Vendor to NetSales, and which are accepted by NetSales, shall be deemed added to Schedule B. "Payment Fees" shall mean the total costs of a customer purchase transaction charged by a bank or other financial institution. This includes but is not limited to credit card transaction fees. "Return" shall be payment for a Product which is initially collected by NetSales, which is subsequently reversed for any reason. "Reserve" shall refer to proceeds held from a sales transaction as security against the significant risk of excessive returns and/or chargebacks. "Piracy" shall mean the attempted use or distribution of a Product without payment. "Hyper-link" shall mean a direct means of accessing one World Wide Web page from another. "Territory" shall mean a world-wide territory. SCHEDULE B - PRODUCT REF # TITLE STREET PRICE - ------ ----- -------------- SCHEDULE C- FEES - E COMMERCE I. PRODUCT ENROLLMENT (SETUP) FEES Company Setup Fee shall be WAIVED which shall cover up to fifteen (15) Products including any additional SKU's. This fee shall cover only those Products which are submitted at the time of initial enrollment. Setup fees shall be $25 per Product title (additional SKU's included) that exceeds fifteen (15) at the time of initial enrollment, or for additional Products that are added after the Agreement is executed. 92 DIRECT SALES FEES. For Direct Sales, NetSales shall pay Vendor proceeds from sales, calculated as follows: Total gross sales from Products, less the following amounts: Distribution fees equaling fifteen percent (15%) of the gross sale price of the Product, not to be less than $3.50 per Product; Returns (as defined in Section III, C.), if any; and The Reserve. III. CHANNEL SALES FEES. For Channel Sales, NetSales shall pay Vendor proceeds from sales, calculated as follows: Total gross sales from Products, less the following amounts: Distribution discount percentage equaling fifty percent (50%) of the gross sale price of the Product; Returns (as defined in Section III, C.) if any; and The Reserve V. OTHER FEES (IF APPLICABLE) Product/SKU update $25 Page design change $50 VI. Customization Fees. Any non-standard customization beyond basic catalog creation, pricing, and graphic treatments will be billed to Vendor at a rate of $100 per hour and subject to change. NetSales will obtain approvals from Vendor for such customizations prior to performing such work. SCHEDULE D - ESD GRANT OF RIGHTS; PARTIES' OBLIGATIONS SOFTWARE PRODUCT DELIVERABLES. Vendor agrees to supply to NetSales master distributable images of Products upon execution of this Agreement for any Products that are electronic in nature (e.g. software). Vendor further agrees to send new master distributable images of software Products within fourteen (14) days of release of revised versions of software Products. PROHIBITED ACTS. NetSales is prohibited from the disassembly or decompilation of the object code or the disclosure of any other aspect of the workings of the Products without the prior written consent of Vendor. II. Ownership INTELLECTUAL PROPERTY RIGHTS. NetSales agrees that the Products provided hereunder, and any copies thereof, in whole or in part, and all intellectual property rights, including without limitation, patent, copyright, trademark, trade secret, and any other intellectual or industrial property rights, are and shall remain the sole property of Vendor, and that all rights thereto are reserved by Vendor. NetSales agrees that it will not create derivatives of any Product, nor use, copy, disclose, sell, assign, sublicense, or otherwise transfer any Product except as expressly authorized in the end-user license agreement for such Product. Vendor acknowledges that NetSales owns the content of any information developed by NetSales in exploiting the rights granted herein. PIRACY. Each Party agrees to take strict measures to secure the Products from piracy, and in the event that any piracy is discovered, to notify the other Party, and to take measures to deter further piracy. NetSales' total liability will be limited to damages arising from negligent acts of NetSales which occur after discovery of any piracy is made by NetSales or Vendor notifies NetSales in writing of any piracy. III. Returns NetSales will request a signed letter from the customer stating that all copies made from Product have been permanently destroyed. Vendor will accept the Return or exchange of any normally stocked product purchased from Vendor which is unopened for up to 30 days after the date of purchase. IV. DEFINITIONS A. ESD initials standing for Electronic Software Distribution and refers to the delivery of a digital product electronically. SCHEDULE F- PRODUCT VENDOR CHECKLIST* ______ Remit Executed Agreement. Two hard copies required. ______ Complete online enrollment form at http://www.netsales.net/client.wcgi. You will always be required to provide your User Name (UN) and Password (PW) to gain access to any privileged online client area. If UN and PW are still needed please contact salesadmin@netsales.net for ----------------------- assistance. ______ Complete all applicable field entries. For sales description you may use HTML. ______ Forward graphics to enroll@netsales.net. This includes box shot product images, Logos, and available screen shots. ______ Include any special instructions and/or additional requirements. 93 ______ ESD Product Delivery - If Product will be delivered electronically, please forward to NetSales any and all product files in an auto-installing format. If applicable, these files should contain any online documentation and help files. ______ Physical Product Delivery - If NetSales is to perform physical product fulfillment on your behalf, please contact salesadmin@netsales.net who ----------------------- will provide simple instructions and assistance. ______ After you receive notification that products have been enrolled from a NetSales engineer, thoroughly check that products have been enrolled properly. ______ Check pricing of all products. ______ Check product descriptions for accuracy. ______ Check graphics and License agreement. ______ Perform an actual order process (for ESD, download to insure that product installs and runs properly). ______ When process is complete reply to "Delivery Verification" email to activate products online. ______ If you have executed a direct sale agreement (NetSales performs order process for your direct sales) then prominently display your branded buy page link on your web home page. A NetSales engineer shall provide you with a final order page for you to connect to after your "Delivery Verification" is complete as outlined in step 5 above. *This checklist is designed to help expedite your enrollment process. If more than 24 hours passes between any of the above steps please contact your account coordinator. ADDENDUM TO DISTRIBUTION AGREEMENT This Addendum is made and entered into on September 21, 1999, 1999 by and between NetSales Inc., Located at 8500 West 110th Street, Suite 600 Overland Park, Kansas 66210 ("Electronic Distributor"), and Intercare Diagnostics, Inc. located at 1601 Centinela Avenue Suite #5 , Inglewood ,CA. 90302 ("Product Vendor"). This Addendum shall be deemed added to the original signed Agreement executed on July 16,1999. Section A shall replace any equivalent Direct Sales terms in original agreement if it exists. This addendum supplements and is governed by the terms of the original agreement and in all other respects the original agreement continues on. To the extent this Addendum conflicts with the Distribution Agreement, the terms of this Addendum shall govern. A. AMOUNT FOR DIRECT SALES. For Direct Sales, Electronic Distributor shall pay Product Vendor proceeds from sales, calculated as follows: total gross sales from Products, less the following amounts: 1. Transaction fees equaling fifteen percent (15%) of the gross sale price of the product, not to be less than $3.00 per Product; 2. Returns, if any; B. Y2K COMPLIANCE. Vendor hereby certifies that the Products are Y2K Compliant. For purposes of this Agreement, "Y2K Compliant" means, the Product is designed to be used prior to, during, and after calendar year 2000 A.D., and during each such time period will accurately receive, provide and process data/time data (including, but not limited to, calculating, comparing and sequencing,) from, into and between the twentieth and twenty-first centuries, including the years 1999 and 2000, and leap year calculations and will not malfunction, cease to function, or provide invalid or incorrect results as a result of data/time data, to the extent that other information technology used in combination with the Products properly exchanges data/time data with it. SOFTWARE REVIEW, L.C. PRODUCT VENDOR By:________________ By: __________________________ Name:______________ Name: __________________________ Title:__________________ Title:_________________________ Date:______________ Date: ________________________ 94 Exhibit 24.3 Form of Telecom Services Agreement of CGI Communications Services, with Meridian Holdings, Inc. (Registrants Parent Company) CGI Communications, Inc. 900 Wilshire Blvd., Suite 500 Los Angeles, CA 90017 Tel: 213-627-8878 General Terms and Definitions: Any individual or entity receiving any product or service form CGI Communications, Inc. ("CGI Communications") shall hereafter be referred to as Client. By accepting products and/or services provided by CGI Communications, Inc., Client agrees to observe and abided by all of the provisions, terms, and requirements specified in this document. Billing: CGI Communications, Inc., shall bill Client for services rendered at the published rate of such services at the time rendered. Unless otherwise specified, recurring charges are billed monthly and are due prior to the billed month. Monthly fee for the first month is pro-rated to the end of the month For each month thereafter, the full monthly fee is due for any part of a month in which services is provided. Monthly fees are non-refundable. PAST DUE ACCOUNTS WILL BE CHARGED A LATE FEE OF 1.5% PER MONTH ON ANY UNPAID PAST DUE BALANCE. Disclaimer of Liability: Client acknowledges that CGI Communications, Inc., makes no warranty of any kind, expressed or implied, regarding the reliability or suitability for a particular purpose of its services. CGI Communications disclaims any warranty of merchantability or fitness of a particular purpose Client acknowledges and understands that CGI Communications exercises no control over the nature, content, or reliability of the information delivered to Client from the Internet via CGI Communications. Client acknowledges that CGI Communications is not liable for any errors or interruption in Internet access service provided to Client, whether within or outside the control of CGI Communications. Under no circumstances shall CGI Communications be held responsible for damages of loss suffered by Client, including but limited to special, incidental, consequential, or punitive damages, as a result of Client's or CGI Communication's or a third party's negligence, fault, misconduct, or failure to perform. Client acknowledges that Internet access service may be temporarily unavailable for scheduled or unscheduled maintenance, and for other reasons within and outside the control of CGI Communications. Under no circumstances do any such errors, loss, delays, loss of information, or interruptions in services nullify or modify this agreement or any other agreement or contract entered into by CGI Communications and Client. CGI Communications reserves the right to refuse or terminate service to Client at any time. Client Responsibility: Client is responsible for protecting all account passwords and for any authorized or unauthorized use made of Client's account Client agrees to comply with the rules appropriate to any network to which Client may gain access via the services of CGI Communications. Client acknowledges that any proprietary, confidential, or otherwise valuable information that Client desires to keep confidential should not be transmitted over any part of the Internet without encryption, nor reside without firewall protection on computers connected to the Internet. Client will not transmit nor make available to the Internet any material that is illegal, libelous, tortuous, or likely to result in action against CGI Communications or its clients. Client agrees that under no circumstances ill the Client use CGI Communications' equipment and or electronic mail addresses in connection with the sending of unsolicited electronic mail messages, commercial or otherwise, including, but not limited to, the sending of unsolicited mass mailings from another service which in any way implicates the use of CGI Communications' service, equipment or any CGI Communications electronic mail address. Service Plans and Term Commitment: Client agrees to use services purchases from CGI Communications in the way the account is intended. All DSL accounts have a term commitment of one (1) year. If client terminates service prior to completion of the term commitment, client agrees to pay 50% of the remainder of the contract. Refunds: There are no refunds. All payments are non-refundable. Defective hardware will be replaced within five (5) days of purchase date. Service Termination: Service may be terminated at any time. Termination of service must be in writing to CGI Communications. Installation Support: CGI Communications shall provide support to the customer to establish dedicated connectivity between the customer's router/modem supplied and configured by CGI Communications and CGI Communications' backbone gateway Connectivity is defined as CGI Communications' ability to send 64KB packets over the circuit to the Customer's router without packet loss at speeds equal to 85% of the ordering line speed. CGI Communications may supply additional IP address space to customer, which may be used to connect other hosts and/or workstations to the Internet or other Customer facilities connected to CGI Communications. CGI Communications Services, Inc., my assist customer in resolving connectivity and configuration issues among those other servers and/or workstations as a courtesy to Customer with the understanding that the Customer is solely responsible for the operations and configuration of all services and/or workstations residing on the Customer's local area network (LAN). In the event that the customer makes any configuration changes to the customer's 95 router/modem and loses connectivity, and then CGI Communications will at the customer's request, reconfigure the hardware at the rate of $75.00 per hour with a minimum charge of $150.00. I have read and understood the above terms and conditions, and I authorized these services to be ordered. __________________________ __________ Authorized Signature Date __________________________ Printed Name and Title 96 EXHIBIT 24.4 2000 STOCK OPTION PLAN OF INTERCARE.COM-DX, INC. SECTION 1 - DESCRIPTION OF PLAN. The Stock Option Plan (the "Plan"), of --------------------------------- InterCare.com-dx, Inc. (the "Company"), a corporation organized under the laws of the State of California. Under this Plan, key employees of the Company or any present and future subsidiaries of the Company to be selected as below set forth, may be granted options (the "Options") to purchase shares of the Common Stock, No par value per share, of the Company ("Common Stock"). For purposes of this Plan, the term "subsidiary" mean any corporation 50% or more of the voting stock of which is owned by the Company or by a subsidiary (as so defined) of the Company. It is intended that the Options under this Plan will either qualify for treatment as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and be designated "Incentive Stock Options" or not qualify for such treatment and be designated "Non-qualified Stock Options". SECTION 2 - PURPOSE OF PLAN. The purpose of the Plan and of granting -------------------------------- options to specified employees is to further the growth, development and financial success of the Company and its subsidiaries by providing additional incentives to certain key employees holding responsible positions by assisting them to acquire shares of Common Stock and to benefit directly from the Company's growth, development and financial success. SECTION 3 - ELIGIBILITY. The persons who shall be eligible to receive --------------------------- grants of Options under this Plan shall be the directors, officers, key employees and consultants of the Company or any of its subsidiaries. A person who holds an Option is herein referred to as an"Optionee". More than one Option may be granted to any one Optionee, however no Optionee may be granted options to purchase an aggregate number of shares of Common Stock amounting to thirty percent (30%) or more of the total number of shares that may be issued pursuant to this Plan upon the exercise of Options granted hereunder. For Incentive Stock Options, the aggregate fair market value (determined at the time the Option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by any Optionee during any calendar year (under all Incentive Stock Option plans of the Company or any subsidiary which are qualified under Section 422 of the Code) shall not exceed $5,000,000.00 . SECTION 4 -- ADMINISTRATION. The Plan shall be administered by a ------------------------------- committee (the "Option Committee") to be composed of at least two "disinterested" (as such term is used in Rule 16b-3 promulgated under the Securities Exchange Act of 1934) members of the Board of Directors of the Company (the "Board"). Members of the Option Committee shall be appointed, both initially and as vacancies occur, by the Board, to serve at the pleasure of the Board. The entire Board may serve as the Option Committee, if by the terms of this Plan all Board members are otherwise eligible to serve on the Option Committee. No person may serve as a member of the Option Committee if such person (a) is eligible to receive an Option under the Plan or under any other plan of the Company entitling the participants to acquire Common Stock or stock options of the Company or any of its affiliates (other than plans excepted by Rule 16b-3(c)(2)), or (b) was so eligible at any time within the preceding one-year period. The Option Committee shall meet at such times and places as it determines and may meet through a telephone conference call. A majority of its members shall constitute quorum, and the decision of a majority of those present at any meeting at which a quorum is present shall constitute the decision of the Option Committee. A memorandum signed by all of its members shall constitute the decision of the Option Committee without necessity, in such event, for holding an actual meeting. The Option Committee is authorized and empowered to administer the Plan and, subject to the Plan, including the provisions of Section 17, (i) to select the Optionees, to specify the number of shares of Common Stock with respect to which Options are granted to each Optionee, to specify the Option Price and the terms of the Options, and in general to grant Options; (ii) to determine the dates upon which Options shall be granted and the terms and conditions thereof in a manner consistent with this Plan, which terms and conditions need not be identical as to the various Options granted; (iii) to interpret the Plan; (iv) to prescribe, amend and rescind rules relating to the Plan (v) to accelerate the time during which an Option may be exercised, notwithstanding the provisions of the Option Agreement (as defined in Section 12) stating the time during which it may be exercised; (vi) to accelerate the date by which any unexercised but vested portion of an Option terminates, thereby requiring the Optionee to exercise the vested unexercised portion of such Option or forfeit it, but in no event shall such date be less than two (2) weeks later than the date the Optionee is informed of such acceleration; and (vii) to determine the rights and obligations of participants under the Plan. The interpretation and construction by the Option Committee of any provision of 97 the Plan or of any Option granted under it shall be final. No member of the Option Committee shall be liable for any action or determination made in good faith with respect to the Plan of any Option granted under it. SECTION 5 -- SHARES SUBJECT TO THE PLAN. The aggregate number of shares ----------------------------------------- of Common Stock which may be purchased pursuant to the exercise of Options (whether Incentive Stock Options or Non-qualified Stock Options) granted under the Plan shall not exceed 2,000,000 shares. Upon the expiration or termination for any reason of an outstanding Option which shall not have been exercised in full or upon the repurchase by the Company of shares of Common Stock issued pursuant to rights of repurchase, any shares of Common Stock then remaining unissued which shall have been reserved for issuance upon such exercise or which shall have been repurchased shall again become available for the granting of additional Options under the Plan. SECTION 6 -- OPTION PRICE. Expect as provided in Section 11, the purchase -------------------------- price per share (the "Option Price") of the shares of Common Stock underlying each Option shall be not less than the fair market value of such shares on the date of granting of the Option. Such fair market value shall be determined by the Option Committee on the basis of reported closing sales price on such date or, in the absence of reported sales price on such date, on the basis of the average of reported closing bid and asked prices on such date. In the absence of either reported sales price or reported bid and asked prices, the Option Committee shall determine such market value on the basis of the best available evidence. SECTION 7 -- EXERCISE OF OPTIONS. Subject to all other provisions of ------------------------------------- this Plan, each Option shall be exercisable for the full number of shares of Common Stock subject thereto, or any part thereof, in such installments and at such intervals as the Option Committee may determine in granting such Option, provided that (i) each Option shall become fully exercisable no later than five (5) years from the date the Option is granted, (ii) the number of shares of Common Stock subject to each Option shall become exercisable at the rate of at least 20% per year each year until the Option is fully exercisable, and (iii) no option may be exercisable subsequent to its termination date. Each Option shall terminate and expire, and shall no longer be subject to exercise, as the Option Committee may determine in granting such Option, but in no event later than ten years after the date of grant thereof. The Option shall be exercised by the Optionee by giving written notice to the Company specifying the number of shares to be purchased and accompanied by payment of the full purchase price therefor in cash, by check or in such other form of lawful consideration as the Board may approve from time to time, including, without limitation and in the sole discretion of the Board, the assignment and transfer by the Optionee to the Company of outstanding shares of the Company's Common Stock theretofore held by Optionee. SECTION 8 -- ISSUANCE OF COMMON STOCK. The Company's obligation to issue -------------------------------------- shares of its Common Stock upon exercise of an Option granted under the Plan is expressly conditioned upon the completion by the Company of any registration or other qualification of such shares under any state and/or federal law or ruling or regulations or the making of such investment or other representations and undertakings by the Optionee (or his or her legal representative, heir or legatee, as the case may be) in order to comply with the requirements of any exemption from any such registration or other qualification of such shares which the Company in its sole discretion shall deem necessary or advisable. Such required representations and undertakings may include representations and agreements that such Optionee (or his or her legal representative, heir or legatee): (a) is purchasing such shares for investment and not with any present intention of selling or otherwise disposing thereof; and (b) agrees to have a legend placed upon the face and reverse of any certificates evidencing such shares (or, if applicable, and appropriate data entry made in the ownership records of the Company) setting forth (i) any representations and undertaking which such Optionee and undertaking which such Optionee has given to the Company or a reference thereof, and (ii) that, prior to effecting any sale or other disposition of any such shares, the Optionee must furnish to the Company an opinion of counsel, satisfactory to the Company and its counsel, to the effect that such sale or disposition will not violate the applicable requirements of state and federal laws and regulatory agencies. The Company will make a reasonable good faith effort to comply with such state and/or federal laws, rulings or regulations as may be applicable at the time the Optionee (or his or her legal representative, heir or legatee, as the case may be) wishes to exercise an Option, provided that the Optionee (or his or her legal representative, heir or legatee) also makes a reasonable good faith effort to comply with said laws, rulings and regulations; however, there can be no assurance that either the Company or the Optionee (or his or her legal representative, heir or legatee), each in the respective exercise of their reasonable good faith business judgment, will in fact comply with said laws, ruling and regulations. SECTION 9 -- NONTRANSFERABILITY. No Option shall be assignable or ----------------------------------- transferable, except that an Option may be transferable by will or by the laws of descent and distribution or pursuant to qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, provided such Option explicitly so provides. During 98 the lifetime of an Optionee, any Option granted to him or her shall be exercisable only by him or her. After the death of an Optionee, the Option granted to him (if so transferable) may be exercised, prior to its termination, only by his or her legal representative, his legatee or a person who acquired the right to exercise the Option by reason of the death of the Optionee. SECTION 10 -- RECAPITALIZATION, REORGANIZATION, MERGER OR CONSOLIDATION. -------------------------------------------------------------------------- If the outstanding shares of Common Stock of the Company are increased, decreased, or exchanged for different securities through reorganization, merger, consolidation, recapitalization, reclassification, stock split, stock dividend or like capital adjustment, a proportionate adjustment shall be made (a) in the aggregate number of shares of Common Stock which may be purchased pursuant to the exercised of Options granted under the Plan, as provided in Section 5, and (b) in the number, price, and kind of shares subject to any outstanding Option granted under the Plan. Upon the dissolution or liquidation of the Company or upon any reorganization, merger, or consolidation in which the Company does not survive or in which the equity ownership of the Company prior to such transaction represents less than 50% of the equity ownership of the Company subsequent to the transaction, the Plan and each outstanding Option shall terminate; provided that the Company will give written notice thereof each Optionee at least thirty (30) days prior to the date of such dissolution, liquidation, reorganization, merger or consolidation, and in such event (a) the Company may, but shall not be obligated to, with respect to each Optionee who is not tendered an option by the surviving corporation in accordance with all of the terms of provision (b) immediately below, grant the right, until ten days before the effective date of such dissolution, liquidation, reorganization, merger or consolidation, to exercise, in whole or in part, any unexpired Option or Options issued to him or her, without regard to the surviving entity. SECTION 11 -- OPTION AGREEMENT. Each Option granted under the Plan shall be - ----------------------------------- evidenced by a written stock option agreement executed by the Company and accepted by the Optionee, which (a) shall contain each of the provisions and agreements herein specifically required to be contained therein, (b) shall contain terms and conditions permitting such Option to qualify for treatment as an incentive stock option under Section 422 of the Code if the Option is designated an Incentive Stock Option, (c) may contain the agreement of the Optionee to resell any Common Stock issued pursuant to the exercise of Options granted under the Plan to the Company (or its assignee) for the Option Price of such Options to the extent any vesting restrictions apply to such Common Stock, or for the then fair market value of such Common Stock if no such restrictions then apply, (d) may contain the agreement of the Optionee granting a right of first refusal to the Company (or its assignee) on transfers of Common Stock no subject to vesting restrictions, and (e) may contain such other terms and conditions as the Option Committee deems desirable and which are not inconsistent with the Plan. With regard to agreements of the Optionee contemplated by items (c) and (d) of the previous sentence, the Company's rights pursuant to a right of first refusal and, notwithstanding any other termination provisions, the Company's right to repurchase vested shares shall terminate upon the closing of the first sale of the Common Stock of the Company to the public pursuant to a registration statement filed with, and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, with gross proceeds to the Company as seller of not less than $7.5 million before deducting underwriting commissions, or upon the liquidation or dissolution of the Company. SECTION 12 -- RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an --------------------------------------- Option shall have no rights as a shareholder with respect to any shares covered by this Option until exercise thereof, except that each Optionee shall have the right to receive a copy of the Company's audited financial statements (if available) no later than 120 days following the end of each fiscal year of the Company. No adjustment shall be made for dividends (Ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights of which the record date is prior to the exercise date, except as expressly provided in Section 10. SECTION 13 -- TERMINATION OF OPTIONS. Each Option granted under the Plan ------------------------------------- shall set forth a termination date thereof, which date shall be not later than ten years from the date such Option is granted. In any event all Options shall terminate an expire upon the first to occur of the following events: (a) the expiration of three months from the date of an Optionee's termination of employment (other than by reason of death), except that if an Optionee is then disabled (within the meaning of Section 22(e)(3) of the Code), the expiration of one year from the date of such Optionee's termination of employment; or (b) the expiration of one year from the date of the death of an Optionee if his or her death occurs while he or she is, or not later than three months after he or she has ceased to be, employed by the Company or any of its subsidiaries in a capacity in which he or she would be eligible receive grants of Options under the Plan; or (C) the termination of the Option pursuant to Section 10 of the Plan. 99 The termination of employment of an Optionee by death or otherwise shall not accelerate or otherwise affect the number of shares to which an Option may be exercised and such Option may only be exercised with respect to that number of shares which could have been purchased under the Option had the Option been exercised by the Optionee on the date of such termination. SECTION 14 -- WITHHOLDING OF TAXES. The Company may deduct and withhold ------------------------------------ from the wages, salary, bonus and other compensation paid by the Company to the Optionee the requisite tax upon the amount of taxable income, if any, recognized by the Optionee in connection with the exercise in whole or in part of any Option or the sale of Common Stock issued to the Optionee upon exercise of the Option, all as may be required from time to time under any federal or state laws and regulations. This withholding of tax shall be required from time to time under any federal or state tax laws and regulations. This withholding of tax shall be made from the Company's concurrent or next payment of wages, salary, bonus or other income to the Optionee or by payment to the Company by the Optionee of required withholding tax, as the Option Committee may determine. SECTION 15 -- EFFECTIVENESS AND TERMINATION OF PLAN. The Plan shall be ------------------------------------------------------ effective on the date on which it is adopted by the Board; provided, however, (a) the Plan shall be approved by the shareholders of the Company within 12 months of such date of adoption by the Board, (b) no Option shall be exercised pursuant to the Plan until the Plan has been approved by the shareholders of the Company, and (c) no Option may be granted hereunder on or after that date which is ten years form the effective date of the Plan. The Plan shall terminate when all Options granted hereunder either have been fully exercised, and all shares of Common Stock which may be purchased pursuant to the exercise of such Options have been so purchased, or have expired; provided, however, that the Board may in its absolute discretion terminated the Plan at any time. No such termination, other than as provided for in Section 10 hereof, shall in any way affect any Option then outstanding. SECTION 16 -- AMENDMENT OF PLAN. The Board may (a) make such changes in the terms and conditions of granted Options as it deems advisable, provided each Optionee affected by such change consents thereto, and (b) make such amendments to the Plan as it deems advisable. Such amendments and changes shall include, but not be limited to, acceleration of the time at which an Option may be exercised, but may not, without the written consent or approval of the holders of a majority of that voting stock of the Company which is represented and is entitled to vote at a duly held shareholders meeting (a) increase the maximum number of shares subject to Options, except pursuant to Section 10 of the Plan (b) decrease the Option Price requirement contained in Section 6 (except as contemplated by Section 11) of the Plan (c) change the designation of the class of employees eligible to receive Options (d) modify the limits set forth in Section 3 of the Plan regarding the value of Common Stock for which any Optionee may be granted Options, unless the provisions of Section 422(d) of the Code are likewise modified or (e) in any manner materially increased the benefits accruing to participants under the Plan. BE IT RESOLVED: The terms and conditions of this Stock Option Plan are accepted by the Corporation on this 14th day of March 2000. /S/ Anthony C. Dike - ------------------------- Anthony C. Dike Secretary Chief Executive Officer SEAL EXHIBIT 24.5 STOCK OPTION AGREEMENT AGREEMENT, made this ____ day of ______, 2000, by and between InterCare.com-dx, Inc., a California corporation, hereinafter referred to as the "Company" and , an individual, hereinafter referred to as the "Optionee". WITNESSETH: WHEREAS, pursuant to the resolution adopted by the Board of Directors of the Company, the Company has entered into a Employment Agreement with the Optionee and, pursuant to the Agreement, the Company has agreed to grant to the Optionee an Option to purchase shares of common stock of the Company at the prices per share hereinafter set forth, such option to be for the term and upon the terms and conditions hereinafter stated; NOW THEREFORE, in good consideration of the promises, the mutual covenants herein contained and other good and valuable consideration, the parties hereto agree as follows: 1. OPTION. The Company hereby grants to the Optionee the right and option ------- (hereinafter referred to as the "Option") to purchase all or any part of an aggregate of 500,000 shares of common stock of the Company (hereinafter referred 100 to as the "Shares") on the terms and conditions herein set forth. 2. TERM. The term of the Option shall commence on the September 1, 1999 and ----- shall expire Sixty (60) months from such date on September 1, 2004, save and except that upon termination of the Agreement, the Option granted herein shall cease and expire ninety (90) days from the date of terminating the Agreement. 3. PURCHASE PRICE. The purchase price of the Option shall be ---------------- ______dollars ($XXXX.) the receipt and sufficiency of which is hereby acknowledged. The purchase prices of the Shares covered by the Option shall increase in a range from $5 to $25.00 per share. The Optionee has the right to purchase Shares in accordance with the following schedule, which purchase price shall be payable in full, in cash or note, upon exercise of the Option in accordance with the terms and conditions here provided: A. XXXX SHARES AT A PRICE OF $5.00 PER SHARE B. XXXX SHARES AT A PRICE OF $10.00 PER SHARE C. XXXX SHARES AT A PRICE OF $15.00 PER SHARE D. XXXX SHARES AT A PRICE OF $20.00 PER SHARE E. XXXX SHARES AT A PRICE OF $25.00 PER SHARE 4. SECURITIES TO BE REGISTERED. Both the Option and the Shares covered by the Option shall be "registered securities" as defined for the General Rules and Regulations under the Securities Act of 1933, as amended (the "Act"). 5. EXERCISE. The Option shall be exercisable in whole or in part at any time and from time to time during the term of the Option by written notice delivered to the Company at 900 Wilshire Boulevard, Suite 500, Los Angeles, California 90017. The notice shall state the number of Shares with respect to which the Option is being exercised, shall contain a representation and agreement by the Optionee in form and substance substantially as set forth in the Notice of Exercise, shall be signed by the Optionee and shall be accompanied by payment. The Option shall not be exercised at any time when its exercise or the delivery of the Shares referred to in the notice would be a violation of any law, governmental regulation or ruling. The Option shall be exercisable only by the Optionee. The Option can only be exercised when the underlying price of the common shares of the Company is 125% of the exercise price of the Option for a period of 10 days. 6. ASSIGNMENT AND TRANSFER. The Option and the rights and obligations of parties hereunder shall inure to the benefit of and shall be binding upon their successors and assigns. 7. OPTIONEE AS SHAREHOLDER. Optionee shall have all rights as a shareholder with respect to the Shares covered by the Option on and subsequent to the date of issuance of a stock certificate or stock certificates to it. Adjustments will be made for dividends or other rights with respect to which the record date is on or subsequent to the date such stock certificates were issued 8. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of a change in the capital structure of the Company as a result of any stock dividend, stock split, combination or reclassification of shares, recapitalization or consolidation of, the number of shares covered by the Option shall be appropriately adjusted to ensure the same absolute benefit to the Optionee. 9. NOTICES. All notices required or permitted to be given under this Agreement shall be sufficient if in writing and delivered or sent by registered or certified mail to the principal office of each party. 10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, the parties have executed this instrument on the day and year first written above. ATTEST: INTERCARE.COM, INC. By: /S/ ANTHONY C. DIKE ---------------------- ANTHONY C. DIKE CHIEF EXECUTIVE OFFICER CHAIRMAN OF OPTION COMMITTEE 101 Exhibit 24.12 Form of Escrow Agreement KEY BANK NATIONAL ASSOCIATION ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Agreement") is made and executed this _____ day of ___ , 2000, by and among Intercare.com-dx, Inc. whose address is 900 Wilshire Blvd., Suite 500 Los Angeles, California (facsimile 213-627-9183) and Corporate Stock Transfer,. a Colorado Corporation, (as Transfer Agent), whose address is 3200 Cherry Creek South Dr. Suite 430 (facsimile no.202-282-5800), collectively, the "Depositors"), and Key Bank National Association, Cherry Creek Branch ("Escrow Holder"), whose address is 1675 Broadway, Suite 200, Denver, Colorado 80202, Attention: Denise Garcia (facsimile no. (720) 904-4241). 1. Deposits. Depositors shall deposit with Escrow Holder the items described below (collectively, the "Deposits"), which items shall be held and disbursed in accordance with and subject to the terms and conditions of this Agreement. The items to be deposited with Escrow Holder pursuant to this Agreement are as follows: Escrow Holder shall receive payments pursuant to the Private Placement Memorandum dated_________, a copy of which has been delivered to Escrow Holder. Escrow Holder will hold all Monies and other property in the Escrow account free from any lien, claim or offset, except as set forth herein, and such debts thereof, unless and until the conditions set forth in these instructions to disbursement of such Monies have been fully satisfied. Escrow Holder shall be provided the name and address of each subscriber and amounts to be deposited into the escrow by Corporate Stock Transfer, Inc. 2. Disbursements. The Deposits are to be disbursed by Escrow Holder to the following persons and/or entities upon the occurrence of the following events: The escrow account will remain open until receipt by the Escrow Holder of subscriptions and deposits totaling a minimum $XXXXXXXX Escrow Holder shall ---------- provide written notice to all parties to this agreement at such time that collected funds of $XXXXXXXXX have been deposited. ---------- Escrow Holder will receive written instructions from Corporate Stock Transfer, Inc., signed by Carylyn K. Bell, President that all subscribers have been accepted and to disburse funds. These instructions must have been preceded by instructions from Intercare.com, Inc. specifying amounts of the outgoing disbursements. After the minimum amount has been disbursed, deposits will continue to be sent the Escrow Holder until the termination of the offering or $25,000,000 total has been deposited. Funds will be disbursed from time to time based on instructions from Corporate Stock Transfer, Inc., signed by Carylyn K. Bell, President. 3. Automatic Termination of Escrow. If any or all of the Deposits are not disbursed by Escrow Holder pursuant to the provisions of paragraph 2 above or otherwise withdrawn on or before__________, subsequent to a 60 day extension, Escrow Holder may mail the same to the following Depositor(s) at their addresses as noted below: All funds shall be returned to the subscribers referred to in paragraph 1 at a fee of $10.00 per check payable by_____ Upon mailing such items to the proper persons or entities pursuant to this paragraph 3, Escrow Holder shall be relieved of and released from any and all further obligations, duties and liability pursuant to this Agreement, and, subject to the survival of paragraph 10 below, this Agreement immediately and automatically shall terminate and shall be of no further force or effect. 4. Amendment. These instructions may be altered, amended, modified or revoked by writing only, signed by all Depositors and Escrow Holder, and upon payment of all fees, costs and expenses incident thereto. 5. Assignment. No assignment, transfer, conveyance or hypothecation of any right, title or interest in and to any or all of the Deposits shall be binding upon Escrow Holder unless: (a) approved in writing by all Depositors, (b) written notice thereof shall be served upon Escrow Holder and (c) all fees, costs and expenses incident to such assignment, conveyance or other transfer of interest shall have been paid. 6. Notices. Any notice required or desired to be given to any party to this Agreement may be given either by personal delivery, or by Western Union telegram, by facsimile transmission, or by certified mail, return receipt requested, postage prepaid; provided, however, any notice given by facsimile transmission, to be effective, shall be followed by delivery of same by personal delivery or by certified mail, return receipt requested. All such notices shall be sent to a party at its address noted above, and such notice shall for all purposes be as effectual as though served upon such party in person at the time of personal delivery, or on the date of receipt in the case of transmission by 102 telegram, or on the date of receipt of the original, in the case of transmission by facsimile, or two business days after the date of deposit in the U.S. mail, as applicable. 7. Limitations on Duties. Escrow Holder shall hold and disburse the Deposits in accordance with the terms and conditions of this Agreement. If at any time in the performance of its duties as set forth in this Agreement it is necessary for Escrow Holder to receive, accept or act upon any notice or writing purported to have been executed or issued by or on behalf of any of the parties hereto, it shall not be necessary for Escrow Holder to ascertain whether or not the person or persons who have executed, signed or otherwise issued or authenticated the writing had the authority to so execute, sign or otherwise issue or authenticate said writing, or that they are the same persons named therein or otherwise to pass upon any requirements of such instruments that may be essential for their validity. Further, Escrow Holder shall have no responsibility or liability for the sufficiency or correctness as to form, manner, execution or validity of any instrument deposited or delivered pursuant to this Agreement, nor as to the truth or accuracy of any information contained therein, nor as to the identity, authority, capacity or rights of any person executing the same, nor for the failure to comply with the provisions, requirements or conditions of any agreement, contract or other instrument deposited with or delivered to Escrow Holder or referred to herein. Rather, the duties of Escrow Holder pursuant to this Agreement in all events shall be limited to the safekeeping of the funds, documents and other items actually received by Escrow Holder and the disposition of same in accordance with the instructions set forth above. 8. No Liability for Actions Taken in Good Faith. Escrow Holder shall not be personally liable for any act it may do or omit to do hereunder while acting in good faith and in the exercise of its own subjective best judgment, and any act done or omitted by it pursuant to the advice of its own attorney shall be conclusive evidence of such good faith and best judgment. 9. Notices and Warnings. Escrow Holder is hereby expressly authorized and directed to disregard any and all notices or warnings given by any of the parties hereto, or by any other person or entity, except as otherwise expressly set forth in this Agreement and except for orders or process of court, and Escrow Holder is expressly authorized to comply with and obey any and all orders, judgments or decree of any court. Escrow Holder shall not be liable to any of the parties hereto or to any other person or entity by reason of compliance with any order, judgment or decree of any court, even if such order, judgment or decree is reversed, modified, annulled, set aside or vacated, or is found to have been entered without jurisdiction. 10. Indemnity. In consideration of the acceptance of this escrow by Escrow Holder, Depositors, jointly and severally, for themselves, their heirs, executors, administrators, successors and assigns (collectively, "Indemnitors"), covenant and agree to pay Escrow Holder its charges, costs and expense hereunder and to indemnify and hold Escrow Holder harmless as to any liability by it incurred to any person or entity by reason of its having accepted the same, or in connection with any performance by Escrow Holder in its capacity as the escrow holder pursuant to this Agreement. Further, Indemnitors covenant and agree to reimburse Escrow Holder for all costs and expenses, including, among other things, counsel fees and court costs incurred in connection with this Agreement and/or the Deposits. In case of any suit, proceeding, cause of action, demand or other claim to which Escrow Holder is or at any time may be a party, Indemnitors agree to pay, promptly upon Escrow Holder's demand, any and all costs and expenses, including without limit attorneys' fees, incurred by Escrow Holder in connection with same. Escrow Holder shall have a first and prior lien upon the Deposits to secure the performance of the indemnity and the other covenants of Indemnitors pursuant to this paragraph 10, and to secure the payment of any and all other charges, fees, costs and expenses payable to Escrow Holder pursuant to this Agreement. Notwithstanding any contrary provision of this Agreement, the provisions of this paragraph 10 shall survive the expiration and/or termination of this Agreement. 11. Interpleader. If at any time a dispute shall exist as to the duty of Escrow Holder under the terms of this Agreement, or if at any time conflicting demands are served upon Escrow Holder, whether verbally or in writing, concerning the possession of, title to or proceeds of any or all of the Deposits, or if any dispute arises between or among Depositors and/or any other person or entity relating in any way to any item deposited, held or disbursed pursuant to or otherwise relating to this Agreement, Escrow Holder may deposit this Agreement and the items then or thereafter held by it pursuant to this Agreement with the Clerk of the District Court of the City and County of Denver, State of Colorado, and may interplead the parties hereto. Upon so depositing this Agreement and such items and filing its complaint in interpleader, Escrow Holder shall be relieved of and released from all liability under the terms hereof as to the items so deposited. If the Court does not provide for reimbursement to Escrow Holder for its attorney fees, costs and expenses related to the interpleader action out of the interplead funds, then Escrow Holder shall have a claim enforceable by separate action in Court against the parties, jointly and severally, for said attorney fees, costs and expenses. 12. FDIC Insurance. In consideration of the fee paid to Escrow Holder as set forth in this Agreement and the covenants and agreements of Depositors as set forth above, Escrow Holder agrees to hold the Deposits in accordance and 103 subject to the terms of this Agreement. During the period the Company is in possession of the deposit, the money will be deposited in an FDIC-insured depository (which depository may be Escrow Holder or any other bank owned or controlled by Key Corp.). Under no circumstances shall Escrow Holder have liability for loss of funds due to bank, savings and loan association or other depository failure, suspension or cessation of business, or any action or inaction on the part of the bank, savings and loan association or other depositor, or any delivery service transporting funds to and from such depository. 13. Successors; No Third Party Rights. Subject to the provisions of paragraph 5 above, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. This Agreement is only for the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, and no other person or entity shall be entitled to rely on, receive any benefit from or to enforce against any party hereto any provisions of this Agreement. 14. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Colorado. 15. Entire Agreement; Waiver. This Agreement constitutes the entire understanding between the parties with respect to the escrow arrangement contemplated herein, and all prior or contemporaneous oral agreements, understandings, discussions, representations and statements relating to said escrow are superseded by this Agreement. The waiver of any particular condition precedent, provision or remedy provided by this Agreement shall not constitute the waiver of any other. 16. Business Day. If any date herein set forth for the performance of any obligation by Escrow Holder or any Depositor, or for the delivery of any funds, instrument or notice as herein provided, is a Saturday, Sunday or legal holiday, the compliance with such obligation or delivery shall be deemed acceptable if effected on the next business day following such Saturday, Sunday or legal holiday. As used herein, the term "legal holiday" means any state or federal holiday for which financial institutions or post offices are generally closed in the State of Colorado for observance thereof. 17. Construction. This Agreement shall not be construed more strictly against one party than against any other merely by virtue of the fact that it may have been prepared by counsel for one of the parties, it being recognized that Escrow Holder and the Depositors have contributed substantially and materially to the preparation of this Agreement. The headings of various paragraphs in this Agreement are for convenience only and are not to be utilized i0 construing the content or meaning of the substantive provisions hereof. 18. Time is of the Essence. All times, wherever specified herein, are of the essence of this Agreement. 19. Validity. If any term or provision of this Agreement shall be held illegal and unenforceable or inoperative as a matter of law, the remaining terms and provisions of this Agreement shall not be affected thereby, but each such term and provision shall be valid and shall remain in full force and effect. 20. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall be taken to be one and the same instrument, to the same effect as if all of the parties hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages. 22. Escrow Fee. The parties agree that Escrow Holder's fee for its services pursuant to this Agreement shall be $ 250.00, payable in full upon Depositors' execution of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement on the date first above written. ESCROW AGENT: KEY BANK NATIONAL ASSOCIATION By:______________________________ Name: Its: DEPOSITORS: .InterCare.com-dx, Inc. /s/ Anthony C. Dike By:_______________________________ Name: Its: Chairman/CEO CORPORATE STOCK TRANSFER, INC. /s/ Carylyn K Bell By:________________________________ Name: Carylyn K. Bell Its: President 104 Exhibit 24.13 Form of Escrow Fee Agreement ESCROW FEE AGREEMENT Corporate Stock Transfer, Inc. (hereinafter referred to as "CST") will charge Intercare.com, Inc. the following for CST's services. These services shall include all responsibilities entailed in acting as "Escrow Agent for the SB-2 Offering" with a $50,000 minimum and a $25,000,000 maximum. Fee - --- Up to the first $1,000,000= $2,500 Thereafter, each additional $1,000,000 raised will be an additional $1,000.00 (Plus out of pocket expenses) CORPORATE STOCK TRANSFER, INC. INTERCARE.COM-DX, INC. /s/ Carylyn Bell /s/ Anthony C. Dike - ---------------------- ---------------------- Carylyn Bell Anthony C. Dike, President Chairman/CEO Date:_______________________ Date:__________________ 105 Exhibit 24.14 Form of Subscription Agreement INVESTOR SUBSCRIPTION AGREEMENT FOR INTERCARE.COM-DX, INC. Persons interested in purchasing shares in the Common Stock of InterCare.com, Inc. (the Shares) must complete and return this Subscription Agreement along with their check or money order made payable to InterCare.com-dx, Inc. C/O Corporate Stock Transfer (CST), 3200 Cherry Creek Drive South/Suite 430 Denver, Colorado, 80209. Telephone (303) 282-4800, Fax (303) 282-5800. If and when accepted by InterCare.com-dx, Inc., a California Corporation (the "Company"), the subscription Agreement shall constitute a Subscription for shares of Common Stock, 0.00 Par Value per share, of the Company. A subscription Agreement may only be deemed complete when payment for shares is made. The minimum investment is $500 (100 shares). The maximum investment, subject to waiver by the Company is $500,000 (100,000 shares). An accepted copy of this Subscription Agreement will be returned to you as your receipt, and a stock certificate will be issued to you shortly thereafter. Method of Payment: Check or money order payable to Intercare.com, Inc. I hereby irrevocably tender this Subscription Agreement for the purchase of __________Shares at $5.00 per share. With this Subscription Agreement, I tender Payment in the amount of $________ ($5.00 per share) for Shares subscribed. In connection with this investment in the Company, I represent and warrant as follows: a). Prior to tendering payment for Shares, I receive the Company's Offering Prospectus dated ____________, 2000. b). I am a bona fide resident of the state of__________________________ 1. Individual(s)-- if more than one owner, I am purchasing as follows: ( ) Tenants-in-Common (all parties must sign-- each joint ownership) ( ) Joint Tenants with Right Survivorship (all parties must sign--joint ownership) ( ) Minor with adults custody under the Uniform Gift to Minors Act in your state(the minor will have sole beneficial ownership) ___________________________ _____________________________ Investor No. 1 (print name above) Investor No. 2(print name above) ___________________________ _____________________________ Street (residence address) Street(residence address) ___________________________ ________________________________ City State Zip City State Zip _______________________ _______________________ Home Phone Home Phone _____________________ _________________________ Social Security Number Social Security Number ____________________ _______________________ Date of Birth Date of Birth _________________________ _____________________ Signature Signature ________________ __________________ Date Date 2. Entity ( ) Corporation (authorized agent of corporation must sign) ( ) Existing Partnership (at least one partner must sign) ____________________________ _____________________________ Name of Corporation or Partnership Authorized Agent (print name above) ________________________________ ____________________________ Street (business address) Title of Authorized Agent 100 _ __________________________________ _______________________________ City State Zip Federal Identification Number The undersigned acknowledges under the penalties of perjury that the foregoing information is true, accurate and complete. Signature of Authorized Agent ______________________________ Date 3. Trust ( ) Trust (all trustees must sign) _________________________ _________________________ Trustee (print name above) Trust (print name above) __________________________ ________________________ Street Address Date of Trust Agreement __________________________________ ________________________ City State Zip Social Security Number or Federal Identification Number _______________________________________ Phone The undersigned acknowledges under the penalties of perjury that the foregoing information is true, accurate and complete. ________________________ _____________________ Signature Signature ____________ _________ Date Date ACCEPTED BY: INTERCARE.COM, INC. By:_________________________________ ____________ Date 106 Exhibit 24.6 Form of Technology Commercialization Plan submitted to NASA by the registrant and Meridian Holdings, Inc.(The Parent Company) filed in paper. Exhibit 24.7 Form of Copyright Certificate for the Mirage Systems Biofeedback Interface Form TX issued by the United States Copyright Office (filed in paper) Exhibit 24.8 Form of United States Food and Drug Administration 510K approval of Mirage Systems Biofeedback Interface (software only to be used solely for relaxation training) filed in paper. Exhibit 24.9 Form of Electronic Commerce agreement between Digital River Corporation and InterCare.com (filed in paper.) Exhibit 24.10 Picture of the initial mold of the physiological monitoring Device to be developed by the Company (filed in paper) Exhibit 24.11 Copy of recent promotional material used in advertising the Mirage Systems software programs (filed in paper) 107 Exhibit 25.1 WRITTEN CONSENT OF THE SOLE DIRECTOR OF MERIDIAN HOLDINGS, INC. ---------------------- a Colorado corporation Pursuant to the authority of Section 7-108 of the Colorado Business Corporation Act, the undersigned, being the Sole Director of Meridian Holdings, Inc., a Colorado corporation, does hereby adopt and consent to the following recitals and resolution: Approval of Dividend Distribution WHEREAS, this corporation has purchased fifty one percent (51%) interest in Inter-Care Diagnostic, Inc., a California corporation ("Inter-Care") and holds five million one hundred thousand (5,100,000) shares of the outstanding Common stock of Inter-care (the "Stock"); WHEREAS, it is proposed that this corporation declare a dividend of the Stock to each of its shareholders with the exception of all current and past officers, directors and affiliates, by transferring or causing to be issued five (5) shares of the Stock for each share of this corporation's Common Stock held by each such shareholder ("Dividends"); and WHEREAS, it is deemed advisable and in the best interest of this corporation and its shareholders that the Dividends be approved; NOW THEREFORE BE IT RESOLVED, that the Dividends be, and hereby are, approved and authorized; RESOLVED FURTHER, that this corporation hereby declares the Dividends be payable to the shareholders of record as of December 30, 1999; and RESOLVED FURTHER, that the officers of this corporation, and any of them, be, and they hereby are, authorized, empowered and directed for and on behalf of this corporation and in its name to execute, deliver and cause the performance of all such further documents and to take such further actions as such officer, or any of them, may in their discretion deem necessary, appropriate or advisable in order to carry out and perform the intent of the foregoing resolution. This Written Consent shall be filed in the minute book of this corporation and shall become part of the records of this corporation. Dated as of December __, 1999. /s/ Anthony C. Dike ______________________________________ Anthony C. Dike, M.D., Sole Director 108 Exhibit 25.2 MINUTES OF MEETING OF DIRECTORS OF INTERCARE.COM A Meeting of the Board of Directors of INTERCARE.COM was held on the 3rd day of JANUARY 2000. A quorum constituting a majority of the Directors of the Corporation were present and signed the Waiver of Notice which is on file herewith: On motion duly made and seconded it was voted: RESOLVED, that the Company hereby authorizes the issuance of the following stock dividend: EACH SHAREHOLDER OF MERIDIAN HOLDINGS, INC. SHALL RECEIVE 5 SHARES OF INTERCARE.COM., WHICH DISTRIBUTION SHALL BE REGISTERED. ONLY THOSE SHAREHOLDERS OF MERIDIAN HOLDINGS, INC. WITH FREE TRADING SHARES ON THE RECORD DATE SHALL BE ELIGIBLE FOR THE STOCK DIVIDEND. THE RECORD DATE FOR THE DIVIDEND IS DECEMBER 30, 1999 THE DISTRIBUTION DATE FOR THE DIVIDEND IS JANUARY 15, 2000. There being no further business to come before the Meeting at this time, it was voted to adjourn. /s/ Anthony C. Dike _____________________ Chairman of the Board /s/ Anthony C. Dike ________________________ Secretary 109 Exhibit 26.3 TEAMING AND JOINT MARKETING AGREEMENT WITH UNITED INFORMATION SYSTEMS, INC. This AGREEMENT is made this _______ day of August, 2000 by and between United Information Systems, Inc. ("UIS"), having its principal place of business at 10401 Fernwood Road, Suite 200, Bethesda, Maryland 20817 and Intercare.com-dx, Inc. ("Intercare"), having its principal place of business at 900 Wilshire Boulevard, Suite 500, Los Angeles, California 90017. The parties desiring to enter into a Joint Marketing and Project Teaming Agreement ("Agreement") for the purpose of promoting the sale of their products and services and supporting the pursuit of mutually advantageous business opportunities, they have entered into the following Agreement. While this Agreement sets forth the framework of the relationship between the companies in so doing, it is understood that any terms set forth herein are and will be subordinate in any specific transaction to the express terms of any separate written contract, purchase order, licensing agreement, or other appropriate document governing such transaction, validly executed between the parties to this Agreement. Subject to the above reservation, the parties hereby agree that: 1. UIS and Intercare will undertake to jointly market UIS's and Intercare's products to their respective customers, and cooperatively to market and co-brand their products and services to current and prospective customers for such combined products. In particular, each agrees to include and promote the other's products in its proposals to international and private-sector customers. 2. This co-branding and co-marketing shall include, but not be limited to, each of the parties listing the other as a strategic partner in their advertising, promotional, product description and corporate and sales literature and materials, websites, graphic interfaces, and other "point of presence" materials, wherever appropriate. 3. Each party agrees to license the other's products from the other party where appropriate sales and marketing opportunities develop; and each party agrees to use all commercially reasonable best efforts actively to seek to develop such opportunities. UIS specifically seeks to work with Intercare's CPR/CDR products as an integrator and interface other healthcare products to the CPR/CDR, where appropriate and mutually advantageous. In such events, Intercare hereby agrees work with and license the CPR/CDR on reasonable and cooperatively-priced terms to be determined in good faith between the parties. 4. Each party agrees that it will use all best efforts to fully support the other in marketing the joint or co-branded products and services, and to support and service the other's customers in such a fashion as to maintain the goodwill and repute of the other's and the co-branded products. 5. Each party agrees that it will also, as part of the joint marketing and project teaming under this Agreement, provide the other with all necessary technical support, in a timely fashion to support the applications licensed under this Agreement. It is also agreed that the parties will provide all such technical support reasonably necessary to support all bid proposals, sales presentations, product demonstrations, pilot projects, and other specific efforts to market the co-branded or licensed applications, products and services. 6. Each party will keep confidential all proprietary business information of the other, and that of its customers and partners, made available to or discovered by the party during the course of any project, program or sale under this agreement, including but not limited to financial information, trade secrets, technology, sales plans or customer data. Any unauthorized disclosure of proprietary information to any third party, or misappropriation of it by the party itself, shall be regarded as a material breach of this Agreement and may render that party liable for damages therefrom and any and all remedies legally available to the injured party, including but not limited to injunctive relief. 7. It is understood that nothing in this Agreement shall be construed to create in either party any right or claim upon any assets, licenses, trademarks, patents or patent applications, products, intellectual or other property of the other, other than may be granted by the terms of a subsequent express written agreement between the parties. 8. This Agreement and transactions arising under it shall be subject to the laws and jurisdiction of the State of Maryland and of the United States District Court therein. Any subsequent modification of its terms must be in a writing validly executed between the parties. 9. The term of this Agreement shall be for two (2) years from the date indicated below, unless extended by the express written mutual consent of the parties. ACCEPTED, AGREED AND UNDERSTOOD: 110 FOR UNITED INFORMATION SYSTEMS, INC. FOR INTERCARE.COM-DX, INC. _______________________ Date:______ ___________________Date: _______ William Johnston, CEO Anthony C. Dike, MD (CEO) 111 Exhibit 26.4 TEAMING AND JOINT MARKETING AGREEMENT This AGREEMENT is made this _______ day of July, 2000 by and between Health CPR Technologies, Inc. ("HCPR"), having its principal place of business at 11 Dupont Circle, NW Suite 325, Washington DC, and Intercare.com-dx, Inc. ("Intercare"),having its principal place of business at 900 Wilshire Boulevard, Suite 500, Los Angeles, CA. The parties desiring to enter into a Joint Marketing and Project Teaming Agreement ("Agreement") for the purpose of promoting the sale of their products and services and supporting the pursuit of mutually advantageous business opportunities, they have entered into the following Agreement. While this Agreement sets forth the framework of the relationship between the companies in so doing, it is understood that any terms set forth herein are and will be subordinate in any specific transaction to the express terms of any separate written contract, purchase order, licensing agreement, or other appropriate document governing such transaction, validly executed between the parties to this Agreement. Subject to the above reservation, the parties hereby agree that: 1.HCPR and Intercare will undertake to jointly market HCPR's and Intercare's products to their respective customers, and cooperatively to market and co-brand their products and services to current and prospective customers for such combined products. In particular, each agrees to include and promote the other's products in its proposals to international and private-sector customers. 2. This co-branding and co-marketing shall include, but not be limited to, each of the parties listing the other as a strategic partner in their advertising, promotional, product description and corporate and sales literature and materials, websites, graphic interfaces, and other "point of presence" materials, wherever appropriate. 3. Each party agrees to license the other's products from the other party where appropriate sales and marketing opportunities develop; and each party agrees to use all commercially reasonable best efforts actively to seek to develop such opportunities. HCPR specifically seeks to license Intercare's CDR products and interface engine for its BankofHealthPersonal Health Record and its BankofHealthExchange ("BOHNET"), where appropriate and mutually advantageous. In such events, Intercare hereby agrees to license these products to HCPR on reasonable and cooperatively-priced terms to be determined in good faith between the parties. 4. Each party agrees that it will use all best efforts to fully support the other in marketing the joint or co-branded products and services, and to support and service the other's customers in such a fashion as to maintain the goodwill and repute of the other's and the co-branded products. 5. Each party agrees that it will also, as part of the joint marketing and project teaming under this Agreement, provide the other with all necessary technical support, in a timely fashion to support the applications licensed under this Agreement. It is also agreed that the parties will provide all such technical support reasonably necessary to support all bid proposals, sales presentations, product demonstrations, pilot projects, and other specific efforts to market the co-branded or licensed applications, products and services. 6. Each party will keep confidential all proprietary business information of the other, and that of its customers and partners, made available to or discovered by the party during the course of any project, program or sale under this agreement, including but not limited to financial information, trade secrets, technology, sales plans or customer data. Any unauthorized disclosure of proprietary information to any third party, or misappropriation of it by the party itself, shall be regarded as a material breach of this Agreement and may render that party liable for damages there from and any and all remedies legally available to the injured party, including but not limited to injunctive relief. 7. It is understood that nothing in this Agreement shall be construed to create in either party any right or claim upon any assets, licenses, trademarks, patents or patent applications, products, intellectual or other property of the other, other than may be granted by the terms of a subsequent express written agreement between the parties. 8. This Agreement and transactions arising under it shall be subject to the laws and jurisdiction of the District of Columbia and of the United States District Court therein. Any subsequent modification of its terms must be in a writing validly executed between the parties. 9. The term of this Agreement shall be for two (2) years from the date indicated below, unless extended by the express written mutual consent of the parties. 112 ACCEPTED, AGREED AND UNDERSTOOD: FOR HEALTHCPR TECHNOLOGIES, INC. FOR INTERCARE.COM, INC. _______________________ Date:______ ___________________Date: _______ Peter Ramsaroop, Chairman Anthony C. Dike, MD Chairman/CEO 113 115 -----END PRIVACY-ENHANCED MESSAGE-----