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March 30, 2001
Dear Shareholder:
The year 2000, and the fourth quarter in particular, has been a time
of transition for your Company. At times this transition has been a difficult
period in the Company's development, but I believe the Company is now supremely
well positioned for growth during the coming year and beyond. Important
developments during the year included:
o A preliminary, reported revenue increase of 44%, from $10.2
million to $14.7 million, and, together with acquired business,
growth in combined annual revenues to $26 million;
o Development of a strategic relationship with Diligenti Limited
("Diligenti"), a London-based global life sciences group;
o Expansion of information-based solutions for our customers;
o Acquisition of the Preventive Services Division of US HealthWorks,
Inc.; and
o Significant additions to the management team.
DILIGENTI
In September, the Company entered into a strategic relationship with
Diligenti whereby Diligenti has invested $10.0 million in the Company, a
portion of which was converted into equity in November to purchase
approximately 51% of the Company's common stock on a fully diluted basis. More
importantly, Diligenti brings core skills in technology, informatics and
science that will be critical to the Company as we continue to develop and
expand knowledge-based solutions for our customers. As the occupational health
screening industry becomes more sophisticated, information about the health and
availability of employee populations, compliance with federal and state
regulations and real time reporting will become increasingly important to
corporate human resource and safety departments and insurers. Our relationship
with Diligenti will help us to strengthen our market-leading position in these
critical areas.
PRODUCTS AND SERVICES
During 1999, we had expanded the Company's service delivery
capabilities beyond substance abuse screening programs to encompass broader
occupational health screening services - on-site medical testing, wellness
programs, medical staffing services and health management programs. During the
past year, the Company implemented sophisticated proprietary software to
gather, maintain, analyze and report data concerning a customer's employees
covered by some or all of the Company's health screening programs or by
self-administered or third-party programs. These reporting services summarize
the frequency and necessity of testing services, compliance with federal or
state regulations, exposure to hazardous substances, completion of physical
examinations, employees' fitness to perform their duties and overall
administration of customers' health programs. We also introduced real time,
Web-based reporting for a number of our substance abuse screening customers and
expect to expand this service further during the coming year.
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The year 2000 also saw the addition of our Clinic Management Network
that provides centralized management of healthcare facilities, allowing our
clients to integrate standard fixed site services with our mobile service
organization using state-of-the-art technology and clinic review protocols.
Through this program, the Company offers a full array of standard report
formats as well as customizable features. Comprehensive Web-based reporting
combined with multi-level data security ensures timely and accurate reports
while protecting the confidentiality of test results.
PREVENTIVE SERVICES DIVISION
During September, the Company acquired substantially all of the assets
of the Preventive Services Division ("PSD") of U.S. HealthWorks, Inc., a
leading provider of clinic-based occupational health services, for cash and a
promissory note. PSD provides mobile audiometric and respiratory testing
services, industrial hygiene and safety consulting and data processing and
health evaluation services. PSD's national corporate and government client base
was excellent and will complement the Company's existing customer profile. The
assets acquired by the Company are being integrated into the Company's worksite
medical surveillance business and will provide tremendous synergies and
national coverage.
The Company and U.S. HealthWorks also expect to enter into a strategic
alliance incorporating U.S. HealthWorks' national system of occupational health
clinics into our Clinic Management Network. In turn, the Company expects to
support on-site occupational health services to U.S. HealthWorks' customers
through our fleet of mobile testing vehicles.
MANAGEMENT
In the last few months, we have been fortunate to add three
professionals to our management team - Harry Chororos, Derrick Johnson and Jeff
Kerns. Harry comes to us with extensive experience in healthcare and insurance
services and will head up our Sales & Marketing team. Derrick has joined us
from Burlington Northern-Santa Fe's industrial hygiene and medical services
organization with responsibility for running our Information and Consulting
Services. Jeff has taken over as Chief Financial Officer and will oversee the
consolidation of our financial operations to our Kansas City office. Meanwhile,
Tom Hartnett has taken over responsibility for our Commercial Affairs and will
work closely with the operating units in developing their business
opportunities.
Lastly, John Thomas has decided to retire after nurturing the
Company's growth during the past five years. We have been fortunate to retain
John in a consulting role with responsibility for furthering the development of
our substance abuse TPA business. At the same time, I have assumed John's
former responsibilities as Chairman and Chief Executive Officer.
COMPANY NAME
In addition to the many changes I have described, you will soon be
hearing a new name: EXEMPLAR INTERNATIONAL, INC. This change reflects the next
step in your Company's development, evolving from being merely a provider of
medical screening services toward being a knowledge, data and solutions
provider to our domestic customers and, in partnership with Diligenti, to
multinational and international clients as well. The name is taken from the
Latin "exemplaris" (representing an ideal) and embodies our objective of
becoming the leading international provider of knowledge-based occupational
health services.
We are now completing the regulatory requirements to issue our proxy
statement in preparation for our annual shareholders' meeting where you will
have an opportunity to learn more about our name change and strategic
direction.
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We are entering this new year poised for strong, profitable growth in
our core markets and many opportunities in new business segments. The new name
and direction that our Company is undertaking will assist us in securing a
major share of the occupational health outsourcing market throughout Corporate
America. These factors and the strengthening of our management team will ensure
that we are properly positioned to secure a leading role now and in the future.
To this end, we are also in the process of finalizing our financial audits and
will assure you that we are aggressively working toward relisting our shares on
the OTC Bulletin Board as quickly as possible.
I thank you all for your support in the past and look forward to your
help in making our future bright.
/s/ Martin J. Clegg
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Martin J. Clegg
Chairman of the Board and
Chief Executive Officer
This letter contains forward-looking statements including statements regarding,
among other items, the Company's growth strategies, and anticipated trends in
its business and demographics. These forward-looking statements are based
largely on Management's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond Management's control. Actual results
could differ materially from these forward-looking statements as a result of a
number of factors, including, among others, regulatory or economic influences.